Masing & Sons Development Corporation (MSDC) v Rogelio (Labor Standards)

Masing & Sons Development Corporation (MSDC) v Rogelio 

GR No. 161787 

April 27, 2011  

FACTS:   

Rogelio is an employee of the Ibajay branch of MSDC, with Lim as Branch Manager. In 1991, he availed himself of the SSS retirement benefits, and in order to facilitate the grant of such benefits, he entered into an internal arrangement with Chan and MSDC to the effect that MSDC would issue a certification of his separation from employment notwithstanding that he would continue working as a laborer in the Ibajay branch but it was only on 1997 that Rogelio was paid his last salary but without retirement benefits, he was 67 years old at that time.  

Rogelio then filed the case for payment of his retirement benefits before the Labor Arbiter. MSDC defense is that they were not engaged in copra buying in Ibajay and they did not ever register in such business in any government agency and that Lim is an independent copra buyer.  

LA: dismissed. no employer-employee relationship between Rogelio & MSDC. NLRC: dismissed. no double retirement in the private sector. CA: granted. Rogelio is an employee of Chan and MSDC, benefits under RA 7641 is apart from the retirement benefits that a qualified employee could claim under the Social Security Law.  

Hence, Masing appealed to the Supreme Court.  

ISSUE:  WON Rogelio had remained the Company's employee from July 6, 1989 up to March 17, 1997; WON Rogelio is entitled to retirement benefits.  

HELD:  YES,  Rogelio is entitled to retirement benefits.  

Even if there is a Certification of Separation from Employment dated August 10, 1991, "... in light of the incontrovertible physical reality that petitioner and his co-workers did go to work day in and day out for such a long period of time, doing the same thing, and in the same place, without apparent discontinuity, except on paper, these documents cannot be taken at their face value."  

In case of doubt, the doubt is resolved in favor of labor, in favor of the safety and decent living for the laborer as mandated by Article 1702 of the Civil Code. The reality of the petitioner's toil speaks louder than words.  

RATIO: 

(1) In any controversy between a laborer and his master, doubts reasonably arising from the evidence are resolved in favor of the laborer. 

(2) The beneficent provisions of Article 287 of the Labor Code, is apart from the retirement benefits that can be claimed by a qualified employee under the social security law. 

(3) The benefits was enacted as a labor protection measure and as a curative statute to respond, in part at least, to the financial well-being of workers during their twilight years soon following their life of labor, can be extended not only from the date of its enactment but retroactively to the time the employment contracts started."  

APPLICABLE LAWS: 

"ART. 287. Retirement. Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract.  

"In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements:  

Provided, however, That an employee's retirement benefits under any collective bargaining and other agreements shall not be less than those provided herein.  

"In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year."  

"Unless the parties provide for broader inclusions, the term 'one-half (1/2) month salary' shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves. "Retail, service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision.  

"Violation of this provision is hereby declared unlawful and subject to the penal provisions provided under Article 288 of this Code." 

Bonaventure Mining Corporation v VIL Mines (Natural Resources)

BONAVENTURE MINING CORPORATION v V.I.L MINES, INC. 

G.R. No. 174918 

August 13, 2008  

FACTS:  

This case involves a conflict over mining claims between BMC and VMI over a mountainous section that transcends the common boundaries of the provinces of Quezon and Camarines Norte, specifically within the municipal jurisdictions of Tagkawayan and Guinigayangan in Quezon, and Labo and Sta. Elena in Camarines Norte.  

On October 4, 1999, VMI filed a petition for the cancellation of BMC's exploration permit application claiming that it overlaps with its prior and existing application.  The petition was later amended on February 28, 2000, to include the cancellation and confirmation of the nullity of St. Joe Mining Corporation's EPA-IVA-24.  

DECISION OF LOWER COURTS: 

* POA: upholding the validity of VMI's exploration permit application and declaring BMC's and St. Joe Mining Corporation's applications as null and void. * MAB: gave due course to BMC's application for an exploration permit but allowed VMI's application to proceed, sans the areas covered by BMC's application. * CA: reversed and set aside the decision of the MAB and reinstated the decision of the Panel of Arbitrators  

ISSUE & RULING: 

WHETHER THE COURT OF APPEALS COMMITTED A GRAVE AND REVERSIBLE ERROR WHEN IT RULED THAT FAILURE TO COMPLY WITH DENR MEMORANDUM ORDER NO. 97-07 ON RETENTION REQUIREMENTS WOULD CAUSE THE CANCELLATION OF THE FTAA APPLICATION BY OPERATION OF LAW.  

NO, cancellation was proper.  

Section 12 of DMO 97-07 reads:  

SECTION 12. Divestment/Relinquishment of Areas in Excess of Maximum FTAA Contract Area  

All FTAA applications filed prior to the effectivity of the Act which exceed the maximum contract area as set forth in Section 34 of the Act and Section 51 of the IRR must conform to said maximum on or before September 15, 1997. For this purpose, all applicants who have not otherwise relinquished or divested any areas held in excess of the allowable maximum by September 15, 1997 must relinquish/divest said areas on such date in favor of the Government by filing a Declaration of Areas Relinquished/Divested, containing the technical description of such area/s, with the Bureau/ concerned Regional Office. The concerned applications shall be accordingly amended and areas relinquished/divested shall be open for Mining Applications.  

x  x  x  

Failure to relinquish/divest areas in excess of the maximum contract area as provided for in this section will result in the denial or cancellation of the FTAA application after which, the areas covered thereby shall be open for Mining Applications. (Emphasis supplied)  

Section 12 of DMO 97-07 must be read in conjunction with Section 14 which states that the deadlines therein are not subject to extension, viz:  

SECTION 14. No Extension of Periods  

The deadline set at September 15, 1997 pursuant to Section 4 hereof and all other periods prescribed herein shall not be subject to extension. (Emphasis supplied)  

DMO 97-07 was promulgated precisely to set a specific date for all FTAA applicants within which to relinquish all areas in excess of the maximum prescribed by law.  Accordingly, the deadline cannot be extended or changed except by amending DMO 97-07.  OIC-Regional Director Reynulfo Juan had no authority to extend the deadline set by DMO 97-07.  

The language of the memorandum order is plain, precise and unequivocal – the period cannot be extended.  Beyond that, the pending FTAA applications could no longer be officially acted upon as they were deemed to have expired. DMO 97-07 could only be extended by another memorandum order or law specifically amending the deadline set forth therein.  No government officer or employee can do so. 

Philex Mining Corporation v Zaldivia (Natural Resources)

PHILEX MINING CORPORATION v ZALDIVIA 

G.R. No. L-29669 

February 29, 1972  

FACTS:  

In a registered deed of assignment, dated 24 September 1955, George T. Scholey, as locator of the aforesaid mining claim, sold, transferred and assigned all his rights, title and interest therein to Milagros Yrastorza; on 7 December 1959, Yrastorza filed Lode Lease Application No. V-4671 covering the said mining claim, but on 15 October 1963, she sold, transferred and conveyed all her rights and interest in the claim to herein respondent Luz Zaldivia. The transfer approved by the Director of Mines on 29 December 1966; hence, Lode Lease Application No. V-4671 was recorded in Zaldivia's name and given due course.  

Upon publication of the lease application, herein petitioner Philex Mining Corporation interposed an adverse claim to the lease application, alleging that it is the beneficial and equitable owner of the mining claim; that it was located on 9 December 1955 by the petitioner corporation's then general manager for the benefit of the corporation; that when Scholey transferred the claim to Yrastorza, Scholey was still the general manager, while Yrastorza was also employed by the company; and that Yrastorza and respondent Zaldivia, who had also been an employee of the corporation, merely acted as agents of Scholey, so that, despite the transfers, petitioner remained the equitable owner.  

Respondent Zaldivia moved to dismiss the adverse claim on three (3) grounds, namely: late filing of the adverse claim, lack of jurisdiction of the Director of Mines to resolve the question of ownership raised by herein petitioner, and the alleged defect of the adverse claim for non-compliance with certain requirements of the Mining Act, as amended. In the course of an oral argument on the motion to dismiss, only the question of jurisdiction was submitted for resolution.  

DECISION OF LOWER COURTS: * Director of Mines: Bureau had no jurisdiction to resolve the question of ownership, because the question was judicial in character and should be ventilated before the courts. * DENR Secretary: affirmed the order of the Director of Mines.  

ISSUE: Is the Director of Mines vested with the jurisdiction over the controverted issues?  

HELD: NO.  

The issue is one to be resolved in conformity with legal rules and standards governing the powers of an agent, and the law's restrictions upon the latter's right to act for his own exclusive benefit while the agency is in force. Decision of such questions involves the interpretation and application of laws and norms of justice established by society and constitutes essentially an exercise of the judicial power under the Constitution is exclusively allocated to the Supreme Court and such courts as the Legislature may establish and one that mining officials are ill-equipped to deal with.  

As already shown, petitioner's adverse claim is not one grounded on overlapping of claims nor is it a mining conflict arising out of mining locations (there being only one involved) but one originating from the alleged fiduciary or contractual relationship between petitioner and locator Scholey and his transferees Yrastorza and respondent Zaldivia. As such, the adverse claim is not within the executive or administrative authority of the mining director solve, but in that of the courts.

PNOC-ENERGY DEVELOPMENT CORPORATION (PNOC-EDC) v VENERACION (Natural Resources)

PNOC-ENERGY DEVELOPMENT CORPORATION (PNOC-EDC) v VENERACION 

G.R. No. 129820             

November 30, 2006  

FACTS:   

This case involves the conflicting claims of the petitioner Philippine National Oil Corporation-Energy Development Corporation and the respondent over the mining rights over Block 159 of the Malangas Coal Reservation, Alicia, Zamboanga del Sur.  

DECISION OF LOWER COURTS:  

*RED of the DENR Office in Zamboanga City: ruled in favor of VENERACION and ordered the PNOC to amend its Mineral Production Sharing Agreement [MPSA] by excluding therefrom Block 159 *DENR secretary: dismissed the appeal on the ground that petitioner's right to appeal had already prescribed.Section 50 of Presidential Decree No. 463 provides therefore for a five-day reglementary period from the receipt of the order or decision of the Director. *DENR secretary (motion for reconsideration): reversed the Decision, dated 4 October 1994, and gave due course to the MPSA of the petitioner. *DENR secretary (2nd motion for reconsideration): ruled that the Orders issued by the RED have already become final and executory when the petitioner failed to file its appeal five days after it had received the Orders. *MAB (took cognizance pursuant to the Philippine Mining Act): filed its appeal beyond the five-day prescriptive period provided under Presidential Decree No. 463, which was then the governing law on the matter.  

ISSUES:  

(1) whether or not the petitioner has already lost its right to appeal the RED's Order dated 12 April 1993; and  

(2) whether or not the petitioner acquired a preferential right on mining rights over Block 159.  

HELD: *On propriety of appeal: The correct mode of appeal would have been to file a petition for review under Rule 43, before the Court of Appeals. Nevertheless, this Court has taken into account the fact that these cases [which provided the doctrine] were promulgated after the petitioner filed this appeal on 4 August 1997, and decided to take cognizance of the present case.  

(1) YES, the right to appeal is lost. Petitioner's insistence that the 30-day reglementary period provided by Section 61 of Commonwealth Act No. 137, as amended, applies, cannot be sustained by this Court. By providing a five-day period within which to file an appeal on the decisions of the Director of Mines and Geo-Sciences, Presidential Decree No. 463 unquestionably repealed Section 61 of Commonwealth Act No. 137.  

Nor can petitioner invoke the doctrine that rules of technicality must yield to the broader interest of substantial justice. The right to appeal is not part of due process of law but is a mere statutory privilege to be exercised only in the manner and in accordance with the provisions of the law.  

In the instant case, petitioner failed to state any compelling reason for not filing its appeal within the mandated period. Instead, the records show that after failing to comply with the period within which to file their motion for reconsideration on time, they again failed to file their appeal before the Office of the DENR Secretary within the time provided by law.  

(2) NO, Even if petitioner had not lost its right to appeal, it cannot claim any mining rights over Block 159 for failure to comply with the legal requirements.  

SEC. 15. Government Reserved Land. – Lands reserved by the Government for purposes other than mining are open to prospecting. Any interested party may file an application therefore with the head of the agency administering said land, subject always to compliance with pertinent laws and rules and regulations covering such reserved land. Such application shall be acted upon within thirty (30) days. In such cases, the compensation due the surface owner shall accrue equally to the agency administering the reserved land and the Bureau of Mines.  

The law enumerates the following requirements:  

(1) a prospecting permit from the agency that has jurisdiction over the area, in this case, the OEA;  

(2) an exploration permit from the BMGS; 

(3) if the exploration reveals the presence of commercial deposit, the permitee applies before the BMGS for the exclusion of the area from the reservation; 

(4) granting by the president of the application to exclude the area from the reservation; and  

(5) a mining agreement approved by the DENR Secretary.  

In this case, petitioner complied with the first requirement and obtained a prospecting permit from the OEA. In its correspondence with the petitioner, the OEA, however, advised the petitioner on two separate occasions to obtain a "prospecting permit" from the BMGS, although the OEA was probably referring to an exploration permit. The petitioner did not apply for an exploration permit with the BMGS, nor would the BMGS have granted petitioner an exploration permit because when petitioner wrote to the BMGS informing the latter of its intention to enter into an MPSA with the DENR over Block 159, the BMGS informed the petitioner that the respondent's claim over Block 159 had already preceded that of the petitioner. The advice given by the BMGS was justified since at that time, the respondent already had a pending application for the exclusion of Block 159 from the Malangas Coal Reservation. Thereafter, the petitioner filed his MPSA application, without complying with the second, third and fourth requisites. Since it ignored the sound advice of the OEA and the BMGS, the government agencies concerned, and stubbornly insisted on its incorrect procedure, petitioner cannot complain now that its MPSA was revoked for failure to comply with the legal requirements.  

OBITER DICTA: 

(1) Decisions of the Supreme Court on mining disputes have recognized a distinction between 

(1) the primary powers granted by pertinent provisions of law to the then Secretary of Agriculture and Natural Resources (and the bureau directors) of an executive or administrative nature, such as "granting of license, permits, lease and contracts, or approving, rejecting, reinstating or cancelling applications, or deciding conflicting applications," and 

(2) controversies or disagreements of civil or contractual nature between litigants which are questions of a judicial nature that may be adjudicated only by the courts of justice.  

(2) Findings of fact by the Mines Adjudication Board, which exercises appellate jurisdiction over decisions or orders of the panel of arbitrators, shall be conclusive and binding on the parties, and its decision or order shall be final and executory. But resort to the appropriate court, through a petition for review by certiorari, involving questions of law, may be made within thirty days from the receipt of the order or decision of the Mines Adjudication Board.

BENGUET CORPORATION v DENR-MAB (Natural Resources)

BENGUET CORPORATION v DENR-MAB 

G.R. No. 163101 

February 13, 2008  

FACTS: 

On June 1, 1987, Benguet and J.G. Realty entered into a RAWOP, wherein J.G. Realty was acknowledged as the owner of four mining claims respectively named as Bonito-I, Bonito-II, Bonito-III, and Bonito-IV, with a total area of 288.8656 hectares, situated in Barangay Luklukam, Sitio Bagong Bayan, Municipality of Jose Panganiban, Camarines Norte.  

Thus, on August 9, 1989, the Executive Vice-President of Benguet, Antonio N. Tachuling, issued a letter informing J.G. Realty of its intention to develop the mining claims. However, on February 9, 1999, J.G. Realty, through its President, Johnny L. Tan, then sent a letter to the President of Benguet informing the latter that it was terminating the RAWOP  on the following grounds:   

a.      The fact that your company has failed to perform the obligations set forth in the RAWOP, i.e., to undertake development works within 2 years from the execution of the Agreement;  b.      Violation of the Contract by allowing high graders to operate on our claim.  c.      No stipulation was provided with respect to the term limit of the RAWOP.  d.      Non-payment of the royalties thereon as provided in the RAWOP.  

On June 7, 2000, J.G. Realty filed a Petition for Declaration of Nullity/Cancellation of the RAWOP with the Legaspi City POA, Region V, docketed as DENR Case No. 2000-01 and entitled J.G. Realty v. Benguet.  

DECISION OF LOWER COURTS: *POA: declared the RAWOP cancelled. *MAB: affirmed POA.  

ISSUES: (1) Should the controversy have first been submitted to arbitration before the POA took cognizance of the case?;  (2) Was the cancellation of the RAWOP supported by evidence?; and  (3) Did the cancellation of the RAWOP amount to unjust enrichment of J.G. Realty at the expense of Benguet?  

HELD: On correctness of appeal:  Petitioner having failed to properly appeal to the CA under Rule 43, the decision of the MAB has become final and executory. On this ground alone, the instant petition must be denied.  

(1) YES, the case should have first been brought to voluntary arbitration before the POA.  

Secs. 11.01 and 11.02 of the RAWOP pertinently provide:   

11.01 Arbitration              

Any disputes, differences or disagreements between BENGUET and the OWNER with reference to anything whatsoever pertaining to this Agreement that cannot be amicably settled by them shall not be cause of any action of any kind whatsoever in any court or administrative agency but shall, upon notice of one party to the other, be referred to a Board of Arbitrators consisting of three (3) members, one to be selected by BENGUET, another to be selected by the OWNER and the third to be selected by the aforementioned two arbitrators so appointed.              

x x x x   

11.02  Court Action              

No action shall be instituted in court as to any matter in dispute as hereinabove stated, except to enforce the decision of the majority of the Arbitrators   

A contractual stipulation that requires prior resort to voluntary arbitration before the parties can go directly to court is not illegal and is in fact promoted by the State.  

To reiterate, availment of voluntary arbitration before resort is made to the courts or quasi-judicial agencies of the government is a valid contractual stipulation that must be adhered to by the parties.   

In other words, in the event a case that should properly be the subject of voluntary arbitration is erroneously filed with the courts or quasi-judicial agencies, on motion of the defendant, the court or quasi-judicial agency shall determine whether such contractual provision for arbitration is sufficient and effective. If in affirmative, the court or quasi-judicial agency shall then order the enforcement of said provision.  

In sum, on the issue of whether POA should have referred the case to voluntary arbitration, we find that, indeed, POA has no jurisdiction over the dispute which is governed by RA 876, the arbitration law.  

HOWEVER, ESTOPPEL APPLIES. the Court rules that the jurisdiction of POA and that of MAB can no longer be questioned by Benguet at this late hour. What Benguet should have done was to immediately challenge the POA's jurisdiction by a special civil action for certiorari when POA ruled that it has jurisdiction over the dispute.  To redo the proceedings fully participated in by the parties after the lapse of seven years from date of institution of the original action with the POA would be anathema to the speedy and efficient administration of justice.  

(2) The cancellation of the RAWOP was supported by evidence. 

(3) There is no unjust enrichment in the instant case. There is no unjust enrichment when the person who will benefit has a valid claim to such benefit.  

The principle of unjust enrichment under Article 22 requires two conditions:  (1) that a person is benefited without a valid basis or justification, and  (2) that such benefit is derived at another's expense or damage.  

Clearly, there is no unjust enrichment in the instant case as the cancellation of the RAWOP, which left Benguet without any legal right to participate in further developing the mining claims, was brought about by its violation of the RAWOP. Hence, Benguet has no one to blame but itself for its predicament.  

OBITER DICTA: 

(1) Difference between compulsory & voluntary arbitration --  

In Reformist Union of R.B. Liner, Inc. vs. NLRC, compulsory arbitration has been defined both as “the process of settlement of labor disputes by a government agency which has the authority to investigate and to make an award which is binding on all the parties, and as a mode of arbitration where the parties are compelled to accept the resolution of their dispute through arbitration by a third party.” While a voluntary arbitrator is not part of the governmental unit or labor department's personnel, said arbitrator renders arbitration services provided for under labor laws.  

There is a clear distinction between compulsory and voluntary arbitration. The arbitration provided by the POA is compulsory, while the nature of the arbitration provision in the RAWOP is voluntary, not involving any government agency. 

Celestial Nickel Mining Corporation v Macro-asia (Environmental Law)

CELESTIAL NICKEL MINING CORPORATION v  MACRO-ASIA 

G.R. No. 169080 

December 19, 2007  

FACTS:  

On September 24, 1973, the then Secretary of Agriculture and Natural Resources and Infanta Mineral and Industrial Corporation (Infanta) entered into a Mining Lease Contract (V-1050) for a term of 25 years up to September 23, 1998 for mining lode claims covering an area of 216 hectares at Sitio Linao, Ipilan, Brooke's Point, Palawan.  

Infanta's corporate name was changed to Cobertson Holdings Corporation on January 26, 1994 and subsequently to its present name, Macroasia Corporation, on November 6, 1995. 

Sometime in 1997, Celestial filed a Petition to Cancel the subject mining lease contracts and other mining claims of Macroasia including those covered by Mining Lease Contract No. V-1050, before the Panel of Arbitrators (POA) of the Mines and Geo-Sciences Bureau (MGB) of the DENR.  The petition was docketed as DENR Case No. 97-01.  

Celestial is the assignee of 144 mining claims covering such areas contiguous to Infanta's (now Macroasia) mining lode claims.  

Celestial sought the cancellation of Macroasia's lease contracts on the following grounds: (1) the nonpayment of Macroasia of required occupational fees and municipal taxes; (2) the non-filing of Macroasia of Affidavits of Annual Work Obligations; (3) the failure of Macroasia to provide improvements on subject mining claims; (4) the concentration of Macroasia on logging; (5) the encroachment, mining, and extraction by Macroasia of nickel ore from Celestial's property; (6) the ability of Celestial to subject the mining areas to commercial production; and (7) the  willingness of Celestial to pay fees and back taxes of Macroasia.  

DECISION OF LOWER COURTS: 

* POA: the POA found that Macroasia and Lebach not only automatically abandoned their areas/mining claims but likewise had lost all their rights to the mining claims. The POA granted the petition of Celestial to cancel the following Mining Lease Contracts * MAB: affirmed POA. The MAB found that Macroasia did not comply with its work obligations from 1986 to 1991.  

However, contrary to the findings of the POA, the MAB found that it was Blue Ridge that had prior and preferential rights over the mining claims of Macroasia, and not Celestial. In case Blue Ridge defaults, Celestial could exercise the secondary priority and preferential rights, and subsequently, in case Celestial also defaults, other qualified applicants could file.  

(motion for reconsideration) Macroasia, in its Motion for Reconsideration, reiterated that it did not abandon its mining claims, and even if mining was not listed among its purposes in its amended Articles of Incorporation, its mining activities were acts that were only ultra vires but were ratified as a secondary purpose by its stockholders in subsequent amendments of  its Articles of Incorporation.  

(special motion for reconsideration) Macroasia averred that the power and authority to grant, cancel, and revoke mineral agreements is exclusively lodged with the DENR Secretary.  Macroasia further pointed out that in arrogating upon itself such power, the POA whimsically and capriciously discarded the procedure on conferment of mining rights laid down in Republic Act No. (RA) 7942, The Philippine Mining Act of 1995, and DENR Administrative Order No. (AO) 96-40.  

* MAB (on issue of jurisdiction): The MAB further held that the power to cancel or revoke a mineral agreement was exclusively lodged with the DENR Secretary; that a petition for cancellation is not a mining dispute under the exclusive jurisdiction of the POA pursuant to Sec. 77 of RA 7942; and that the POA could only adjudicate claims or contests during the MPSA application and not when the claims and leases were already granted and subsisting.  

IRONIC DECISIONS OF THE CA 

* CA (Celestial appeal): affirmed the November 26, 2004 MAB Resolution which declared Macroasia's seven mining lease contracts as subsisting; rejected Blue Ridge's claim for preferential right over said mining claims; and upheld  the exclusive authority of the DENR Secretary to approve, cancel, and revoke mineral agreements.  

* CA (Blue Ridge's appeal): granted Blue Ridge's petition; reversed and set aside the November 26, 2004 and July 12, 2005 Resolutions of the MAB; and reinstated the October 24, 2000 Decision in MAB Case Nos. 056-97 and 057-97. The Special Tenth Division canceled Macroasia's lease contracts; granted Blue Ridge prior and preferential rights; and treated the cancellation of a mining lease agreement as a mining dispute within the exclusive jurisdiction of the POA under Sec. 77 of RA 7942, explaining that the power to resolve mining disputes, which is the greater power, necessarily includes the lesser power to cancel mining agreements.  

ISSUE: who has authority and jurisdiction to cancel existing mineral agreements under RA 7942 in relation to PD 463 and pertinent rules and regulations?  

HELD: DENR Secretary, not the POA, has the jurisdiction to cancel existing mineral lease contracts or mineral agreements based on the following reasons:  

1.       The power of the DENR Secretary to cancel mineral agreements emanates from his administrative authority, supervision, management, and control over mineral resources under Chapter I, Title XIV of Book IV of the Revised Administrative Code of 1987;  

It is the DENR, through the Secretary, that a. manages, supervises, and regulates the use and development of all mineral resources of the country; b. has exclusive jurisdiction over the management of all lands of public domain, which covers mineral resources and deposits from said lands; c. has the power to oversee, supervise, and police our natural resources which include mineral resources.  

Derived from the broad and explicit powers of the DENR and its Secretary under the Administrative Code of 1987 is the power to approve mineral agreements and necessarily to cancel or cause to cancel said agreements.  

2.    RA 7942 confers to the DENR Secretary specific authority over mineral resources.  

To enforce PD 463, the CMAO containing the rules and regulations implementing PD 463 was issued.  Sec. 44 of the CMAO provides:  

SEC. 44.  Procedure for Cancellation.––Before any mining lease contract is cancelled for any cause enumerated in Section 43 above, the mining lessee shall first be notified in writing of such cause or causes, and shall be given an opportunity to be heard, and to show cause why the lease shall not be cancelled.  

If, upon investigation, the Secretary shall find the lessee to be in default, the former may warn the lessee, suspend his operations or CANCEL THE LEASE CONTRACT (emphasis supplied).  

Sec. 4 of EO 279 provided that the provisions of PD 463 and its implementing rules and regulations, not inconsistent with the executive order, continue in force and effect.  

When RA 7942 took effect on March 3, 1995, there was no provision on who could cancel mineral agreements. However, since the aforequoted Sec. 44 of the CMAO implementing PD 463 was not repealed by RA 7942 and DENR AO 96-40, not being contrary to any of the provisions in them, then it follows that Sec. 44 serves as basis for the DENR Secretary's authority to cancel mineral agreements.  

Historically, the DENR Secretary has the express power to approve mineral agreements or contracts and the implied power to cancel said agreements.  

3.       Under RA 7942, the power of control and supervision of the DENR Secretary over the MGB to cancel or recommend cancellation of mineral rights clearly demonstrates the authority of the DENR Secretary to cancel or approve the cancellation of mineral agreements.  

Sec. 7.  Organization and Authority of the Bureau (MGB). e.         To CANCEL OR TO RECOMMEND CANCELLATION AFTER DUE PROCESS, MINING RIGHTS, mining applications and mining claims for non-compliance with pertinent laws, rules and regulations.  

It is explicit from the foregoing provision that the DENR Secretary has the authority to cancel mineral agreements based on the recommendation of the MGB Director.  As a matter of fact, the power to cancel mining rights can even be delegated by the DENR Secretary to the MGB Director.  Clearly, it is the Secretary, not the POA, that has authority and jurisdiction over cancellation of existing mining contracts or mineral agreements.  

4.       The DENR Secretary's power to cancel mining rights or agreements through the MGB can be inferred from Sec. 230, Chapter XXIV of DENR AO 96-40 on cancellation, revocation, and termination of a permit/mineral agreement/ FTAA.  

As the MGB is under the supervision of the DENR Secretary, then the logical conclusion is that it is the DENR Secretary who can cancel the mineral agreements and not the POA nor the MAB.  

5.       Celestial and Blue Ridge are not unaware of the stipulations in the Mining Lease Contract Nos. V-1050 and MRD-52,[50] the cancellation of which they sought from the POA. It is clear from said lease contracts that the parties are the Republic of the Philippines represented by the Secretary of Agriculture and Natural Resources (now DENR Secretary) as lessor, and Infanta (Macroasia) as lessee. [which declares that the lessor can order the lease cancelled) 

RATIO: (1) RA 7942, The Philippine Mining Act of 1995 enacted on March 3, 1995, repealed the provisions of PD 463 inconsistent with RA 7942.  Unlike PD 463, where the application was filed with the Bureau of Mines Director, the applications for mineral agreements are now required to be filed with the Regional Director as provided by Sec. 29 of RA 7942. The proper filing gave the proponent the prior right to be approved by the Secretary and thereafter to be submitted to the President. The President shall provide a list to Congress of every approved mineral agreement within 30 days from its approval by the Secretary.  Again, RA 7942 is silent on who has authority to cancel the agreement.  

Compared to PD 463 where disputes were decided by the Bureau of Mines Director whose decisions were appealable to the DENR Secretary and then to the President, RA 7942 now provides for the creation of quasi-judicial bodies (POA and MAB) that would have jurisdiction over conflicts arising from the applications and mineral agreements.  Secs. 77, 78, and 79 lay down the procedure, thus:  

SEC. 77.  Panel of Arbitrators.––There shall be a panel of arbitrators in the regional office of the Department composed of three (3) members, two (2) of whom must be members of the Philippine Bar in good standing and one [1] licensed mining engineer or a professional in a related field, and duly designated by the Secretary as recommended by the Mines and Geosciences Bureau Director.  Those designated as members of the panel shall serve as such in addition to their work in the Department without receiving any additional compensation.  As much as practicable, said members shall come from the different bureaus of the Department in the region.  The presiding officer thereof shall be selected by the drawing of lots.  His tenure as presiding officer shall be on a yearly basis. The members of the panel shall perform their duties and obligations in hearing and deciding cases until their designation is withdrawn or revoked by the Secretary.  Within thirty (30) working days, after the submission of the case by the parties for decision, the panel shall have exclusive and original jurisdiction to hear and decide on the following:  

(a)        DISPUTES INVOLVING RIGHTS TO MINING AREAS;  

[NOTE: The phrase “disputes involving rights to mining areas” refers to any adverse claim, protest, or opposition to an APPLICATION FOR MINERAL AGREEMENTS. The POA therefore has the jurisdiction to resolve any adverse claim, protest, or opposition to a pending application for a mineral agreement filed with the concerned Regional Office of the MGB.  

Clearly, POA's jurisdiction over “disputes involving rights to mining areas” has nothing to do with the cancellation of existing mineral agreements.]  

(b)        DISPUTES INVOLVING MINERAL AGREEMENTS OR PERMITS;  

[A petition for the cancellation of an existing mineral agreement covering an area applied for by an applicant based on the alleged violation of any of the terms thereof, is not a “dispute” involving a mineral agreement under Sec. 77 (b) of RA 7942.  It does not pertain to a violation by a party of the right of another.  The applicant is not a real party-in-interest as he does not have a material or substantial interest in the mineral agreement but only a prospective or expectant right or interest in the mining area.  He has no legal right to such mining claim and hence no dispute can arise between the applicant and the parties to the mineral agreement.  The court rules therefore that a petition for cancellation of a mineral agreement anchored on the breach thereof even if filed by an applicant to a mining claim, like Celestial and Blue Ridge, falls within the jurisdiction of the DENR Secretary and not POA. Such petition is excluded from the coverage of the POA's jurisdiction over disputes involving mineral agreements under Sec. 77 (b) of RA 7942.]  

(c)        Disputes involving surface owners, occupants and          claimholders/concessionaires; and  

(d)        Disputes pending before the Bureau and the Department at the date of the effectivity of this Act.  

SEC. 78.  Appellate Jurisdiction.—The decision or order of the panel of arbitrators may be appealed by the party not satisfied thereto to the Mines Adjudication Board within fifteen (15) days from receipt thereof which must decide the case within thirty (30) days from submission thereof for decision.  

SEC. 79.  Mines Adjudication Board.—The Mines Adjudication Board shall be composed of three (3) members. The Secretary shall be the chairman with the Director of the Mines and Geosciences Bureau and the Undersecretary for Operations of the Department as members thereof.  

(2) SEC. 8. Authority of the Department.––The Department shall be the primary government agency responsible for the conservation, management, development, and proper use of the States mineral resources including those in reservations, watershed areas, and lands of the public domain.  THE SECRETARY SHALL HAVE THE AUTHORITY TO ENTER INTO MINERAL AGREEMENTS ON BEHALF OF THE GOVERNMENT UPON THE RECOMMENDATION OF THE DIRECTOR, promulgate such rules and regulations as may be necessary to implement the intent and provisions of this Act.  

SEC. 29. Filing and approval of Mineral Agreements.––x x x.  

The filing of a proposal for a mineral agreement shall give the proponent the prior right to areas covered by the same. THE PROPOSED MINERAL AGREEMENT WILL BE APPROVED BY THE SECRETARY and copies thereof shall be submitted to the President. Thereafter, the President shall provide a list to Congress of every approved mineral agreement within thirty (30) days from its approval by the Secretary.  (Emphasis supplied.)  

OBITER DICTA: 

(1) a preferential right would at most be an inchoate right to be given priority in the grant of a mining agreement. It has not yet been transformed into a legal and vested right unless approved by the MGB or DENR Secretary.  Even if Blue Ridge has a preferential right over the subject mining claims, it is still within the competence and discretion of the DENR Secretary to grant mineral agreements to whomever he deems best to pursue the mining claims over and above the preferential status given to Blue Ridge. Besides, being simply a preferential right, it is ineffective to dissolve the pre-existing or subsisting mining lease contracts of Macroasia.

Pryce Corporation v PAGCOR (Obligations and Contracts)

Pryce Corporation v PAGCOR 

GR No. 157480 

May 6, 2005  

RESCISSION OR TERMINATION  

FACTS: PAGCOR set up a casino in Pryce Plaza Hotel for a period of 3 years. However, there has been interruptions in the operations which ultimately caused the operations to cease prematurely upon order of the Office of the President.   

ISSUE: 

(1) Whether or not Pryce is entitled to future rentals as provided in the contract even if PAGCOR contends, as the CA ruled, that Article 1659 of the Civil Code governs; hence, PPC is allegedly no longer entitled to future rentals, because it chose to rescind the Contract. 

(2) Whether or not PAGCOR should be exempt from complying with its contractual obligations due to fortuitous events 

(3) Whether or not the future rentals constitute a penalty clause  

CA: The CA ruled that the PAGCOR'S pretermination of the Contract of Lease was unjustified. The appellate court explained that public demonstrations and rallies could not be considered as fortuitous events that would exempt the gaming corporation from complying with the latter's contractual obligations. Therefore, the Contract continued to be effective until PPC elected to terminate it on November 25, 1993.  

Regarding the contentions of PPC, the CA held that under Article 1659 of the Civil Code, PPC had the right to ask for (1) rescission of the Contract and indemnification for damages; or (2) only indemnification plus the continuation of the Contract. These two remedies were alternative, not cumulative, ruled the CA.  

As PAGCOR had admitted its failure to pay the rentals for September to November 1993, PPC correctly exercised the option to terminate the lease agreement.  

--------------------------------------------------------------------------------------------------------------- APPLICABLE LAW/S: • Art. 1659. If the lessor or the lessee should not comply with the obligations set forth in Articles 1654 and 1657, the aggrieved party may ask for the rescission of the contract and indemnification for damages, or only the latter, allowing the contract to remain in force. (1556)  

• Art. 1654. The lessor is obliged:     (1) To deliver the thing which is the object of the contract in such a condition as to render it fit for the use intended;     (2) To make on the same during the lease all the necessary repairs in order to keep it suitable for the use to which it has been devoted, unless there is a stipulation to the contrary;     (3) To maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract. (1554a)  

• Art. 1159. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. (1091a)  

• Art. 1226. In obligations with a penal clause, the penalty shall substitute the indemnity for damages and the payment of interests in case of noncompliance, if there is no stipulation to the contrary. Nevertheless, damages shall be paid if the obligor refuses to pay the penalty or is guilty of fraud in the fulfillment of the obligation.  

The penalty may be enforced only when it is demandable in accordance with the provisions of this Code. (1152a)  

• Art. 1229. The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. Even if there has been no performance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable.  

• Art. 2227. Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable.  

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HELD: (1) Pryce is entitled to future rentals as the provisions are not contrary to law, morals, public order, or public policy.  

The above provisions leave no doubt that the parties have covenanted 1) to give PPC the right to terminate and cancel the Contract in the event of a default or breach by the lessee; and 2) to make PAGCOR fully liable for rentals for the remaining term of the lease, despite the exercise of such right to terminate. Plainly, the parties have voluntarily bound themselves to require strict compliance with the provisions of the Contract by stipulating that a default or breach, among others, shall give the lessee the termination option, coupled with the lessor's liability for rentals for the remaining term of the lease. Article XX (c) provides that, aside from the payment of the rentals corresponding to the remaining term of the lease, the lessee shall also be liable "for any and all damages, actual or consequential, resulting from such default and termination of this contract." Having entered into the Contract voluntarily and with full knowledge of its provisions, PAGCOR must be held bound to its obligations. It cannot evade further liability for liquidated damages.  

(2) PAGCOR is not exempt from complying with the provisions as rallies and demonstrations are not considered fortuitous events.  

In this case, PAGCOR's breach was occasioned by events that, although not fortuitous in law, were in fact real and pressing. From the CA's factual findings, which are not contested by either party, we find that PAGCOR conducted a series of negotiations and consultations before entering into the Contract. It did so not only with the PPC, but also with local government officials, who assured it that the problems were surmountable. Likewise, PAGCOR took pains to contest the ordinances before the courts, which consequently declared them unconstitutional. On top of these developments, the gaming corporation was advised by the Office of the President to stop the games in Cagayan de Oro City, prompting the former to cease operations prior to September 1993.  

Also worth mentioning is the CA's finding that PAGCOR's casino operations had to be suspended for days on end since their start in December 1992; and indefinitely from July 15, 1993, upon the advice of the Office of President, until the formal cessation of operations in September 1993. Needless to say, these interruptions and stoppages meant that PAGCOR suffered a tremendous loss of expected revenues, not to mention the fact that it had fully operated under the Contract only for a limited time.  

(3) Pryce's right to penalty is affirmed but proved iniquitous.  

While petitioner's right to a stipulated penalty is affirmed, we consider the claim for future rentals to the tune of P7,037,835.40 to be highly iniquitous. The amount should be equitably reduced. Under the circumstances, the advanced rental deposits in the sum of P687,289.50 should be sufficient penalty for respondent's breach.  

Accordingly, respondent is ordered to pay petitioner the additional amount of P687,289.50 as penalty, which may be set off or applied against the former's advanced rental deposits.    

OTHER NOTES: 

In legal contemplation, the termination of a contract is not equivalent to its rescission. When an agreement is terminated, it is deemed valid at inception. Prior to termination, the contract binds the parties, who are thus obliged to observe its provisions. However, when it is rescinded, it is deemed inexistent, and the parties are returned to their status quo ante. Hence, there is mutual restitution of benefits received. The consequences of termination may be anticipated and provided for by the contract. As long as the terms of the contract are not contrary to law, morals, good customs, public order or public policy, they shall be respected by courts. The judiciary is not authorized to make or modify contracts; neither may it rescue parties from disadvantageous stipulations. Courts, however, are empowered to reduce iniquitous or unconscionable liquidated damages, indemnities and penalties agreed upon by the parties.  

DIFFERENCE BETWEEN RESCISSION & TERMINATION RESCISSION (OR RESOLUTION)

 • Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him.  

The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.  

The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period.  

This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law. (1124)  

• Art. 1659. If the lessor or the lessee should not comply with the obligations set forth in Articles 1654 and 1657, the aggrieved party may ask for the rescission of the contract and indemnification for damages, or only the latter, allowing the contract to remain in force. (1556)  

• To rescind is to declare a contract void in its inception and to put an end to it as though it never were. It is not merely to terminate it and release parties from further obligations to each other but to abrogate it from the beginning and restore the parties to relative positions which they would have occupied had no contract ever been made.  

• Rescission has likewise been defined as the "unmaking of a contract, or its undoing from the beginning, and not merely its termination." Rescission may be effected by both parties by mutual agreement; or unilaterally by one of them declaring a rescission of contract without the consent of the other, if a legally sufficient ground exists or if a decree of rescission is applied for before the courts  

TERMINATION (OR CANCELLATION) 

• The termination or cancellation of a contract would necessarily entail enforcement of its terms prior to the declaration of its cancellation in the same way that before a lessee is ejected under a lease contract, he has to fulfill his obligations thereunder that had accrued prior to his ejectment. However, termination of a contract need not undergo judicial intervention.

 •  "end in time or existence; a close, cessation or conclusion." With respect to a lease or contract, it means an ending, usually before the end of the anticipated term of such lease or contract, that may be effected by mutual agreement or by one party exercising one of its remedies as a consequence of the default of the other