GR 220546; (December, 2016) (Digest)
G.R. No. 220546. December 07, 2016.
LUZON IRON DEVELOPMENT GROUP CORPORATION AND CONSOLIDATED IRON SANDS, LTD., PETITIONERS, V. BRIDESTONE MINING AND DEVELOPMENT CORPORATION AND ANACONDA MINING AND DEVELOPMENT CORPORATION, RESPONDENTS.
FACTS
Respondents Bridestone and Anaconda filed separate complaints for rescission of contract and damages against petitioners Luzon Iron and Consolidated Iron before the Regional Trial Court (RTC). The suits sought to rescind a Tenement Partnership and Acquisition Agreement (TPAA) concerning mining exploration permits. Petitioners moved to dismiss, arguing the RTC lacked jurisdiction over Consolidated Iron, a foreign corporation not doing business in the Philippines, and over the subject matter due to an arbitration clause in the TPAA. They also alleged respondents were guilty of forum shopping for filing a similar complaint before the Department of Environment and Natural Resources (DENR).
The RTC denied the motions to dismiss, finding Consolidated Iron was doing business through its agent, Luzon Iron, and that the arbitration clause allowed direct court action for blatant violations. It also ruled no forum shopping existed due to lack of identity of parties and reliefs. The Court of Appeals affirmed the RTC’s orders.
ISSUE
The core issues were whether the RTC acquired jurisdiction over Consolidated Iron, whether it had jurisdiction over the subject matter despite the arbitration clause, and whether respondents committed forum shopping.
RULING
The Supreme Court reversed the lower courts. On jurisdiction over Consolidated Iron, the Court held that being a foreign corporation not licensed or doing business in the Philippines, the RTC could not acquire jurisdiction over its person. Luzon Iron, as a separate corporate entity, could not be considered a resident agent for service of summons absent clear proof it was a mere business conduit. The general rule of separate corporate personality was not pierced.
Crucially, the Court found respondents guilty of forum shopping. While the causes of action before the RTC (rescission based on contractual violations) and the DENR (cancellation of permits for violations of mining laws) were technically different, the reliefs sought were identical: the return of the exploration permits. This identity of reliefs, coupled with the possibility of conflicting decisions from the two tribunals, constituted forum shopping. This violation warranted the dismissal of the complaints. However, the Court ordered the parties to commence arbitration proceedings as stipulated in the TPAA, upholding the agreement to arbitrate despite the dismissal for forum shopping.