LEPANTO CONSOLIDATED MINING COMPANY, PETITIONER, VS. WMC RESOURCES INTERNATIONAL PTY. LTD., AND WMC (PHILIPPINES), INC., RESPONDENTS.

Lepanto Consolidated Mining versus WMC Resources International

The Case

This is a consolidated review of two petitions that arose from one commercial quarrel. Lepanto Consolidated Mining Company, the petitioner, bought from WMC Resources International the latter's shares in its Philippine subsidiary, and then found that the same shares had been promised to another group of mining companies. Lepanto sued in the Makati Regional Trial Court while also pressing the same claim before the Mines and Geosciences Bureau. The case matters because the Supreme Court uses it to apply the rule against forum shopping and the rule on exhaustion of administrative remedies to a party who runs to two fora at once, and because it clarifies when a lower court may dismiss a case while an appeal to the Supreme Court is still pending.

Procedural History

Lepanto filed a complaint for specific performance, annulment of contracts, contractual interference and injunction before Branch 135 of the Makati Regional Trial Court. The defendants, WMC Resources International, WMC Philippines and the Tampakan companies, moved to dismiss on the grounds of lack of jurisdiction, no cause of action, forum shopping and failure to exhaust administrative remedies. The trial court denied the motion, and denied reconsideration.

The defendants then went to the Court of Appeals on a special civil action for certiorari and prohibition. The Court of Appeals granted the petition. It declared the trial court's orders null and void, directed the trial court to desist from proceeding, and ordered the complaint dismissed on the ground of forum shopping. Lepanto's motion for reconsideration was denied.

Lepanto then came to the Supreme Court by petition for review on certiorari, which became the first case. Meanwhile, the trial court, acting on the Court of Appeals decision, dismissed the complaint. It later suspended that dismissal, but after the appellate court denied reconsideration, the trial court dismissed the case again, holding that the appeal to the Supreme Court did not stay the dismissal absent a restraining order or writ of injunction. Lepanto's appeal from those orders became the second case. The two were consolidated.

Facts

In April 1991, WMC Resources International, an Australian company acting through its Philippine subsidiary WMC Philippines, acquired the Tampakan mining claims of Southcot Mining, Tampakan Mining and Sagittarius Mines under a contract called the Tampakan Option Agreement. Later amendments gave the Tampakan companies a preferential option, or right of first refusal, to buy WMC's shares in WMC Philippines and in Hillcrest Incorporated should WMC decide to sell.

In March 1995, the Republic, through then President Ramos, entered into a Financial and Technical Assistance Agreement with WMC Philippines over a large tract of land in South Cotabato, Sultan Kudarat, Davao del Sur and North Cotabato. In July 2000, WMC sold its shares in WMC Philippines and Hillcrest to Lepanto for ten million dollars, subject to the condition that the Tampakan companies did not accept an offer under their right of first refusal. WMC Philippines tendered that offer the next day. Lepanto then asked the Secretary of the Department of Environment and Natural Resources to approve the transfer of the Financial and Technical Assistance Agreement to it.

The Tampakan companies later exercised their preferential right, and WMC concluded a sale and purchase agreement with them over the same shares. Lepanto protested to the Department, and the Mines and Geosciences Bureau required comments from all sides. The Tampakan companies eventually took the shares through Sagittarius Mines. Lepanto then sued in the Makati Regional Trial Court to enforce its own sale and to nullify WMC's later agreements, even as its claim was still pending before the Bureau.

Issues

• Whether or not Lepanto committed forum shopping by pursuing reliefs before both the Mines and Geosciences Bureau and the Makati Regional Trial Court.
• Whether or not Lepanto failed to exhaust administrative remedies.
• Whether or not the petition for certiorari in the Court of Appeals should have been dismissed for defective verification.
• Whether or not the trial court erred in dismissing the civil case while Lepanto's appeal to the Supreme Court was pending.

Applicable Provisions

The decision cites Section 7 of Rule 65 of the Rules of Court, on the effect of an appeal on the judgment of the Court of Appeals:

Section 7. Expediting proceedings; injunctive relief. The Court in which the petition is filed may issue orders expediting the proceedings, and it may also grant a temporary restraining order or a writ of preliminary injunction for the preservation of the rights of the parties pending such proceedings. The petition shall not interrupt the course of the principal case unless a temporary restraining order or a writ of preliminary injunction has been issued against the public respondent from further proceeding in the case.

This provision bears on the second case, because the trial court relied on it in holding that Lepanto's appeal did not stay the dismissal of its complaint.

Ruling

On the first issue, the Court held that Lepanto was indeed guilty of forum shopping. The Court defined the test this way:

Forum shopping exists when both actions involve the same transactions, same essential facts and circumstances and raise identical causes of actions, subject matter, and issues.

The Court explained that the Mines and Geosciences Bureau could not assess who was qualified to become transferee of the Financial and Technical Assistance Agreement without also resolving who had the better right to it. The shares being sold represented ownership of mining rights, so the validity of the questioned sales was linked to the Bureau's jurisdiction. There was thus an identity of reliefs sought from both the Bureau and the trial court.

On the second issue, the Court held that Lepanto also failed to exhaust administrative remedies, because it sought from the court the very reliefs still awaiting resolution by the Bureau.

On the third issue, the Court rejected the attack on the verification. The verification and certification against forum shopping were signed by Terence Gardner, Chairman of the Board and President of WMC Philippines, who had been the signing representative of WMC in the sale to Lepanto, and who was therefore a duly authorized officer.

On the fourth issue, the Court set aside the trial court's orders dismissing the civil case. Those orders were patently erroneous because the Court of Appeals decision directing the dismissal had not yet become final and executory, the appeal to the Supreme Court having been duly perfected.

Doctrine

First, forum shopping exists when both actions involve the same transactions, the same essential facts and circumstances, and identical causes of action, subject matter and issues. A party may not seek the same relief from an administrative body and from a court at the same time.

Second, a party who goes to court while the same reliefs are pending before an administrative agency fails to exhaust administrative remedies, and the complaint may be dismissed on that ground.

Third, the perfection of an appeal keeps a judgment from becoming final and executory, so a lower court errs in acting on a dismissal before the appeal is resolved.

Disposition

The Court affirmed the Court of Appeals decision dismissing Lepanto's complaint for forum shopping, and set aside the trial court's orders dismissing the case while the appeal was pending.

Remember This

The line to memorize is that forum shopping exists when both actions involve the same transactions, same essential facts and circumstances, and identical causes of action, subject matter and issues. Examiners use this case to test forum shopping and exhaustion of administrative remedies where a party runs to both an administrative agency and a court over the same mining or commercial dispute.