RepublicofthePhilippines

SUPREMECOURT
Manila

SECONDDIVISION

BENGUETCORPORATION,G.R.No.163101
Petitioner,
Present:

versusQUISUMBING,J.,Chairperson,
CARPIO,
CARPIOMORALES,
TINGA,and
DEPARTMENTOFENVIRONMENTVELASCO,JR.,JJ.
ANDNATURALRESOURCES
MINESADJUDICATIONBOARD
andJ.G.REALTYANDMININGPromulgated:
CORPORATION,
Respondents.February13,2008
xx

DECISION

VELASCO,JR.,J.:

TheinstantpetitionunderRule65oftheRulesofCourtseekstheannulmentofthe
[1]
[2]
and March 17, 2004 Resolution of the Department of

December 2, 2002 Decision

EnvironmentandNaturalResourcesMiningAdjudicationBoard(DENRMAB)inMAB
Case No. 012401 (Mines Administrative Case No. RM200001) entitled Benguet
Corporation (Benguet) v. J.G. Realty and Mining Corporation (J.G. Realty). The
December2,2002DecisionupheldtheMarch19,2001Decision

[3]
oftheMABPanelof

Arbitrators (POA) which canceled the Royalty Agreement with Option to Purchase
[4]

(RAWOP)datedJune1,1987

betweenBenguetandJ.G.Realty,andexcludedBenguet

from the joint Mineral Production Sharing Agreement (MPSA) application over four
mining claims. The March 17, 2004 Resolution denied Benguets Motion for

Reconsideration.

TheFacts

OnJune1,1987,BenguetandJ.G.RealtyenteredintoaRAWOP,whereinJ.G.
Realty was acknowledged as the owner of four mining claims respectively named as
BonitoI, BonitoII, BonitoIII, and BonitoIV, with a total area of 288.8656 hectares,
situated in Barangay Luklukam, Sitio Bagong Bayan, Municipality of Jose Panganiban,
Camarines Norte. The parties also executed a Supplemental Agreement

[5]

dated June 1,

1987. TheminingclaimswerecoveredbyMPSAApplicationNo.APSAV0009jointly
filedbyJ.G.RealtyasclaimownerandBenguetasoperator.

IntheRAWOP,Benguetobligateditselftoperfecttherightstotheminingclaims
and/orotherwiseacquiretheminingrightstothemineralclaims.Within24monthsfrom
theexecutionoftheRAWOP,Benguetshouldalsocausetheexaminationofthemining
claims for the purpose of determining whether or not they are worth developing with
reasonable probability of profitable production. Benguet undertook also to furnish J.G.
Realtywithareportontheexamination,withinareasonabletimeafterthecompletionof
theexamination.Moreover,alsowithintheexaminationperiod,Benguetshallconductall
necessaryexplorationinaccordancewithapreparedexplorationprogram.Ifitchoosesto
do so and before the expiration of the examination period, Benguet may undertake to
developtheminingclaimsuponwrittennoticetoJ.G.Realty.Benguetmustthenplacethe
miningclaimsintocommercialproductivestagewithin24monthsfromthewrittennotice.
[6]
ItisalsoprovidedintheRAWOPthatiftheminingclaimswereplacedincommercial
productionbyBenguet,J.G.Realtyshouldbeentitledtoaroyaltyoffivepercent(5%)of
netrealizablevalue,andtoroyaltyforanyproductiondonebyBenguetwhetherduringthe
examinationordevelopmentperiods.

Thus, on August 9, 1989, the Executive VicePresident of Benguet, Antonio N.

Tachuling, issued a letter informing J.G. Realty of its intention to develop the mining
claims.However,onFebruary9,1999,J.G.Realty,throughitsPresident,JohnnyL.Tan,

thensentalettertothePresidentofBenguetinformingthelatterthatitwasterminatingthe
RAWOPonthefollowinggrounds:

a. Thefactthatyourcompanyhasfailedtoperformtheobligationssetforthin
the RAWOP, i.e., to undertake development works within 2 years from the execution of
theAgreement

b.ViolationoftheContractbyallowinghighgraderstooperateonourclaim.

c.NostipulationwasprovidedwithrespecttothetermlimitoftheRAWOP.

[7]
d.NonpaymentoftheroyaltiesthereonasprovidedintheRAWOP.

In response, Benguets Manager for Legal Services, Reynaldo P. Mendoza, wrote

J.G.RealtyaletterdatedMarch8,1999,

[8]
thereinallegingthatBenguetcompliedwithits

obligationsundertheRAWOPbyinvestingPhP42.4milliontorehabilitatethemines,and
thatthecommercialoperationwashamperedbythenonissuanceofaMinesTemporary
PermitbytheMinesandGeosciencesBureau(MGB)whichmustbeconsideredasforce
majeure, entitling Benguet to an extension of time to prosecute such permit. Benguet
further claimed that the high graders mentioned by J.G. Realty were already operating
priortoBenguetstakingoverofthepremises,andthatJ.G.Realtyhadtheobligationof
ejecting such small scale miners. Benguet also alleged that the nature of the mining
businessmadeitdifficulttospecifyatimelimitfortheRAWOP.Benguetthenarguedthat
theroyaltiesduetoJ.G.Realtywereinfactinitsofficeandreadytobepickedupatany
time.Itappearedthat,previously,thepracticebyJ.G.Realtywastopickupchecksfrom
Benguetrepresentingsuchroyalties.However,startingAugust1994,J.G.Realtyallegedly
refused to collect such checks from Benguet. Thus, Benguet posited that there was no
validgroundfortheterminationoftheRAWOP.ItalsoremindedJ.G.Realtythatitshould
submitthedisagreementtoarbitrationratherthanunilaterallyterminatingtheRAWOP.

OnJune7,2000,J.G.RealtyfiledaPetitionforDeclarationofNullity/Cancellation
[9]
of the RAWOP with the Legaspi City POA, Region V, docketed as DENR Case No.
200001andentitledJ.G.Realtyv.Benguet.

[10]

OnMarch19,2001,thePOAissuedaDecision,

dwellingupontheissuesof(1)

whetherthearbitratorshadjurisdictionoverthecaseand(2)whetherBenguetviolatedthe
RAWOP justifying the unilateral cancellation of the RAWOP by J.G. Realty. The
dispositiveportionstated:

WHEREFORE, premises considered, the June 01, 1987 [RAWOP] and its
Supplemental Agreement is hereby declared cancelled and without effect. BENGUET is
herebyexcludedfromthejointMPSAApplicationoverthemineralclaimsdenominatedas
BONITOI,BONITOII,BONITOIIIandBONITOIV.

SOORDERED.

Therefrom,BenguetfiledaNoticeofAppeal

[11]
withtheMABonApril23,2001,

docketed as Mines Administrative Case No. RM200001. Thereafter, the MAB issued
theassailedDecember2,2002Decision.BenguetthenfiledaMotionforReconsideration
oftheassailedDecisionwhichwasdeniedintheMarch17,2004ResolutionoftheMAB.
Hence,Benguetfiledtheinstantpetition.

TheIssues

1. TherewasseriousandpalpableerrorwhentheHonorableBoardfailedtorule
that the contractual obligation of the parties to arbitrate under the Royalty Agreement is
mandatory.

2. The Honorable Board exceeded its jurisdiction when it sustained the

cancellationoftheRoyaltyAgreementforallegedbreachofcontractdespitetheabsence
ofevidence.

3. TheQuestionedDecisionoftheHonorableBoardincancellingtheRAWOP
prejudice[d]thesubstantialrightsofBenguetunderthecontracttotheunjustenrichment
[12]
ofJGRealty.

Restated,theissuesare:(1)Shouldthecontroversyhavefirstbeensubmittedto
arbitrationbeforethePOAtookcognizanceofthecase?(2)Wasthecancellationofthe
RAWOPsupportedbyevidence?and(3)DidthecancellationoftheRAWOPamountto
unjustenrichmentofJ.G.RealtyattheexpenseofBenguet?


TheCourtsRuling

Beforewedwellonthesubstantiveissues,wefindthattheinstantpetitioncanbe
deniedoutrightasBenguetresortedtoanimproperremedy.

ThelastparagraphofSection79ofRepublicActNo.(RA)7942orthePhilippine
MiningActof1995states,Apetitionforreviewbycertiorariandquestionoflawmay
be filed by the aggrieved party with the Supreme Court within thirty (30) days from
receiptoftheorderordecisionofthe[MAB].

However, this Court has already invalidated such provision in Carpio v. Sulu
[13]

Resources Development Corp.,

ruling that a decision of the MAB must first be

appealed to the Court of Appeals (CA) under Rule 43 of the Rules of Court, before
recoursetothisCourtmaybehad.Weheld,thus:

Tosummarize,therearesufficientlegalfootingsauthorizingareviewoftheMAB
DecisionunderRule43oftheRulesofCourt.First,Section30ofArticleVIofthe1987
Constitution,mandatesthat[n]olawshallbepassedincreasingtheappellatejurisdiction
oftheSupremeCourtasprovidedinthisConstitutionwithoutitsadviceandconsent.On
the other hand, Section 79 of RA No. 7942 provides that decisions of the MAB may be
reviewedbythisCourtonapetitionforreviewbycertiorari.Thisprovisionisobviously
an expansion of the Courts appellate jurisdiction, an expansion to which this Court has
notconsented.Indiscriminateenactmentoflegislationenlargingtheappellatejurisdiction
ofthisCourtwouldunnecessarilyburdenit.
Second, when the Supreme Court, in the exercise of its rulemaking power,
transferstotheCApendingcasesinvolvingareviewofaquasijudicialbodysdecisions,
suchtransferrelatesonlytoprocedurehence,itdoesnotimpairthesubstantiveandvested
rightsoftheparties.Theaggrievedpartysrighttoappealispreservedwhatischangedis
onlytheprocedurebywhichtheappealistobemadeordecided.Thepartiesstillhavea
remedyandacompetenttribunaltograntthisremedy.

Third,theRevisedRulesofCivilProcedureincludedRule43toprovideauniform
ruleonappealsfromquasijudicialagencies.Undertherule,appealsfromtheirjudgments
andfinalordersarenowrequiredtobebroughttotheCAonaverifiedpetitionforreview.
Aquasijudicialagencyorbodyhasbeendefinedasanorganofgovernment,otherthana
courtorlegislature,whichaffectstherightsofprivatepartiesthrougheitheradjudication
or rulemaking. MAB falls under this definition hence, it is no different from the other
quasijudicial bodies enumerated under Rule 43. Besides, the introductory words in
Section 1 of Circular No. 191among these agencies areindicate that the
enumerationisnotexclusiveorconclusiveandacknowledgetheexistenceofotherquasi
judicialagencieswhich,thoughnotexpresslylisted,shouldbedeemedincludedtherein.


Fourth,theCourtrealizesthatunderBatasPambansa(BP)Blg.129asamendedby
RA No. 7902, factual controversies are usually involved in decisions of quasijudicial
bodiesandtheCA,whichislikewisetaskedtoresolvequestionsoffact,hasmoreelbow
roomtoresolvethem.Byincludingquestionsoffactamongtheissuesthatmayberaised
inanappealfromquasijudicialagenciestotheCA,Section3ofRevisedAdministrative
CircularNo.195andSection3ofRule43explicitlyexpandedthelistofsuchissues.

AccordingtoSection3ofRule43,[a]nappealunderthisRulemaybetakento
the Court of Appeals within the period and in the manner herein provided whether the
appeal involves questions of fact, of law, or mixed questions of fact and law. Hence,
appealsfromquasijudicialagenciesevenonlyonquestionsoflawmaybebroughttothe
CA.

Fifth, the judicial policy of observing the hierarchy of courts dictates that direct
resortfromadministrativeagenciestothisCourtwillnotbeentertained,unlesstheredress
desiredcannotbeobtainedfromtheappropriatelowertribunals,orunlessexceptionaland
compellingcircumstancesjustifyavailmentofaremedyfallingwithinandcallingforthe
[14]
exerciseofourprimaryjurisdiction.

The above principle was reiterated in Asaphil Construction and Development

Corporationv.Tuason,Jr.(Asaphil).

[15]
However,theCarpiorulingwasnotappliedto

Asaphil as the petition in the latter case was filed in 1999 or three years before the
promulgationofCarpioin2002.Here,thepetitionwasfiledonApril28,2004whenthe
Carpio decision was already applicable, thus Benguet should have filed the appeal with
theCA.

PetitionerhavingfailedtoproperlyappealtotheCAunderRule43,thedecisionof
theMABhasbecomefinalandexecutory.Onthisgroundalone,theinstantpetitionmust
bedenied.

EvenifweentertainthepetitionalthoughBenguetskirtedtheappealtotheCAvia
Rule 43, still, the December 2, 2002 Decision and March 17, 2004 Resolution of the
DENRMABinMABCaseNo.012401shouldbemaintained.

FirstIssue:Thecaseshouldhavefirstbeenbroughtto
voluntaryarbitrationbeforethePOA

Secs.11.01and11.02oftheRAWOPpertinentlyprovide:

11.01Arbitration

Anydisputes,differencesordisagreementsbetweenBENGUETandtheOWNER
with reference to anything whatsoever pertaining to this Agreement that cannot be
amicablysettledbythemshallnotbecauseofanyactionofanykindwhatsoeverinany
courtoradministrativeagencybutshall,uponnoticeofonepartytotheother,bereferred
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
aforementionedtwoarbitratorssoappointed.

xxxx

11.02CourtAction

Noactionshallbeinstitutedincourtastoanymatterindisputeashereinabove
[16]
stated,excepttoenforcethedecisionofthemajorityoftheArbitrators.

Thus,BenguetarguesthatthePOAshouldhavefirstreferredthecasetovoluntary
arbitrationbeforetakingcognizanceofthecase,citingSec.2ofRA876onpersonsand
matterssubjecttoarbitration.

Ontheotherhand,indenyingsuchargument,thePOAruledthat:

Whilethepartiesmayestablishsuchstipulationsclauses,termsandconditionsas
theymaydeemconvenient,thesamemustnotbecontrarytolawandpublicpolicy.Ata
glance,thereisnothingwrongwiththetermsandconditionsoftheagreement.Buttostate
that an aggrieved party cannot initiate an action without going to arbitration would be
[17]
tyingoneshandevenifthereisalawwhichallowshimtodoso.

The MAB, meanwhile, denied Benguets contention on the ground of estoppel,

stating:

Besides,byitsownact,Benguetisalreadyestoppedinquestioningthejurisdiction
of the Panel of Arbitrators to hear and decide the case. As pointed out in the appealed
Decision,BenguetinitiatedandfiledanAdverseClaimdocketedasMACRM200002
overthesameminingclaimswithoutundergoingcontractualarbitration.Inthisparticular
case(MACRM200002)nowsubjectoftheappeal,Benguetislikewiseinestoppelfrom
questioningthecompetenceofthePanelofArbitratorstohearanddecideinthesummary
proceedings J.G. Realtys petition, when Benguet itself did not merely move for the
dismissal of the case but also filed an Answer with counterclaim seeking affirmative

reliefsfromthePanelofArbitrators.

[18]

Moreover, the MAB ruled that the contractual provision on arbitration merely
providesforanadditionalforumorvenueanddoesnotdivestthePOAofthejurisdiction
[19]

tohearthecase.

[20]
InitsJuly20,2004Comment,
J.G.Realtyreiteratedtheaboverulingsofthe
POA and MAB. It argued that RA 7942 or the Philippine Mining Act of 1995 is a
special law which should prevail over the stipulations of the parties and over a general
law,suchasRA876.ItalsoarguedthatthePOAcannotbeconsideredasacourtunder
thecontemplationofRA876andthatjurisprudencesayingthattheremustbepriorresort
toarbitrationbeforefilingacasewiththecourtsisinapplicabletotheinstantcaseasthe
POAisitselfalreadyengagedinarbitration.

Onthisissue,weruleforBenguet.
Sec.2ofRA876elucidatesthescopeofarbitration:

Section2.Personsandmatterssubjecttoarbitration.Twoormorepersonsor
parties may submit to the arbitration of one or more arbitrators any controversy
existingbetweenthematthetimeofthesubmissionandwhichmaybethesubjectof
an action, or the parties to any contract may in such contract agree to settle by
arbitration a controversy thereafter arising between them. Such submission or
contractshallbevalid,enforceableandirrevocable,saveuponsuchgroundsasexist
atlawfortherevocationofanycontract.

Such submission or contract may include question[s] arising out of valuations,

appraisals or other controversies which may be collateral, incidental, precedent or
subsequenttoanyissuebetweentheparties.(Emphasissupplied.)

In RA 9285 or the Alternative Dispute Resolution Act of 2004, the Congress

reiteratedtheefficacyofarbitrationasanalternativemodeofdisputeresolutionbystating
inSec.32thereofthatdomesticarbitrationshallstillbegovernedbyRA876.Clearly, a
contractualstipulationthatrequirespriorresorttovoluntaryarbitrationbeforetheparties
cangodirectlytocourtisnotillegalandisinfactpromotedbytheState.Thus,petitioner
correctlycitesseveralcaseswherebyarbitrationclauseshavebeenupheldbythisCourt.

[21]

Moreover,thecontentionthatRA7942prevailsoverRA876presupposesaconflict
between the two laws. Such is not the case here. To reiterate, availment of voluntary
arbitrationbeforeresortismadetothecourtsorquasijudicialagenciesofthegovernment
isavalidcontractualstipulationthatmustbeadheredtobytheparties.AsstatedinSecs.6
and7ofRA876:

Section 6. Hearing by court.

A party aggrieved by the failure, neglect or

refusal of another to perform under an agreement in writing providing for

arbitration may petition the court for an order directing that such arbitration
proceedinthemannerprovidedforinsuchagreement.Fivedaysnoticeinwritingof
thehearingofsuchapplicationshallbeservedeitherpersonallyorbyregisteredmailupon
thepartyindefault.Thecourtshallheartheparties,anduponbeingsatisfiedthatthe
making of the agreement or such failure to comply therewith is not in issue, shall
makeanorderdirectingthepartiestoproceedtoarbitrationinaccordancewiththe
terms of the agreement. If the making of the agreement or default be in issue the
courtshallproceedtosummarilyhearsuchissue.Ifthefindingbethatnoagreement
in writing providing for arbitration was made, or that there is no default in the
proceeding thereunder, the proceeding shall be dismissed. If the finding be that a
written provision for arbitration was made and there is a default in proceeding
thereunder,anordershallbemadesummarilydirectingthepartiestoproceedwith
thearbitrationinaccordancewiththetermsthereof.

xxxx

Section7.Stayofcivilaction.Ifanysuitorproceedingbebroughtuponanissue
arisingoutofanagreementprovidingforthearbitrationthereof,thecourtinwhichsuch
suitorproceedingispending,uponbeingsatisfiedthattheissueinvolvedinsuchsuitor
proceedingisreferabletoarbitration,shallstaytheactionorproceedinguntilanarbitration
hasbeenhadinaccordancewiththetermsoftheagreement:Provided,Thattheapplicant,
forthestayisnotindefaultinproceedingwithsucharbitration.(Emphasissupplied.)

Inotherwords,intheeventacasethatshouldproperlybethesubjectofvoluntary
arbitrationiserroneouslyfiledwiththecourtsorquasijudicialagencies,onmotionofthe
defendant, the court or quasijudicial 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. Besides, in BF
Corporationv.CourtofAppeals,wealreadyruled:

Inthisconnection,itbearsstressingthatthelowercourthasnotlostitsjurisdiction
overthecase.Section7ofRepublicActNo.876providesthatproceedingsthereinhave

only been stayed. After the special proceeding of arbitration has been pursued and
[22]
completed,thenthelowercourtmayconfirmtheawardmadebythearbitrator.

J.G.Realtyscontention,thatpriorresorttoarbitrationisunavailingintheinstant
casebecausethePOAsmandateistoarbitratedisputesinvolvingmineralagreements,is
misplaced.Adistinctionmustbemadebetweenvoluntaryandcompulsoryarbitration.In
Ludo and Luym Corporation v. Saordino, the Court had the occasion to distinguish
betweenthetwotypesofarbitrations:
Comparatively,inReformist 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
agencywhichhastheauthoritytoinvestigateandtomakeanawardwhichisbinding
onalltheparties,andasamodeofarbitrationwherethepartiesarecompelledtoaccept
the resolution of their dispute through arbitration by a third party. While a voluntary
arbitratorisnotpartofthegovernmentalunitorlabordepartmentspersonnel, said
[23]
arbitrator renders arbitration services provided for under labor laws.
(Emphasis
supplied.)

There is a clear distinction between compulsory and voluntary arbitration. The

arbitration provided by the POA is compulsory, while the nature of the arbitration
provisionintheRAWOPisvoluntary,notinvolvinganygovernmentagency.Thus,J.G.
Realtysargumentonthismattermustfail.

AstoJ.G.RealtyscontentionthattheprovisionsofRA876cannotapplytothe
instantcasewhichinvolvesanadministrativeagency,itmustbepointedoutthatSection
11.01oftheRAWOPstatesthat:

[Anycontroversywithregardtothecontract]shallnotbecauseofanyactionof
anykindwhatsoeverinanycourtoradministrativeagencybutshall,uponnoticeofone
partytotheother,bereferredtoaBoardofArbitratorsconsistingofthree(3)members,
onetobeselectedbyBENGUET,anothertobeselectedbytheOWNERandthethirdto
[24]
beselectedbytheaforementionedtwoarbiterssoappointed.
(Emphasissupplied.)

TherecanbenoquibblingthatPOAisaquasijudicialbodywhichformspartofthe
DENR,anadministrativeagency.Hence,theprovisiononmandatoryresorttoarbitration,
freelyenteredintobytheparties,mustbeheldbindingagainstthem.

[25]

Insum,ontheissueofwhetherPOAshouldhavereferredthecasetovoluntary
arbitration, we find that, indeed, POA has no jurisdiction over the dispute which is
governedbyRA876,thearbitrationlaw.

However,wefindthatBenguetisalreadyestoppedfromquestioningthePOAs
jurisdiction.Asitwere,whenJ.G.RealtyfiledDENRCaseNo.200001,Benguetfiled
itsanswerandparticipatedintheproceedingsbeforethePOA,RegionV.Secondly,when
theadverseMarch19,2001POADecisionwasrendered,itfiledanappealwiththeMAB
in Mines Administrative Case No. RM200001 and again participated in the MAB
proceedings. When the adverse December 2, 2002 MAB Decision was promulgated, it
filed a motion for reconsideration with the MAB. When the adverse March 17, 2004
MABResolutionwasissued,BenguetfiledapetitionwiththisCourtpursuanttoSec.79
of RA 7942 impliedly recognizing MABs jurisdiction. In this factual milieu, the Court
rules that the jurisdiction of POA and that of MAB can no longer be questioned by
Benguetatthislatehour.WhatBenguetshouldhavedonewastoimmediatelychallenge
thePOAsjurisdictionbyaspecialcivilactionforcertiorariwhenPOAruledthatithas
jurisdictionoverthedispute.Toredotheproceedingsfullyparticipatedinbytheparties
afterthelapseofsevenyearsfromdateofinstitutionoftheoriginalactionwiththePOA
wouldbeanathematothespeedyandefficientadministrationofjustice.

SecondIssue:ThecancellationoftheRAWOP
wassupportedbyevidence

The cancellation of the RAWOP by the POA was based on two grounds: (1)
BenguetsfailuretopayJ.G.Realtysroyaltiesfortheminingclaimsand(2)Benguets
failuretoseriouslypursueMPSAApplicationNo.APSAV0009overtheminingclaims.

As to the royalties, Benguet claims that the checks representing payments for the
royalties of J.G. Realty were available for pickup in its office and it is the latter which
refusedtoclaimthem.BenguetthenthusconcludesthatitdidnotviolatetheRAWOPfor
nonpayment of royalties. Further, Benguet reasons that J.G. Realty has the burden of
proving that the former did not pay such royalties following the principle that the
complainantsmustprovetheiraffirmativeallegations.


WithregardtothefailuretopursuetheMPSAapplication,Benguetclaimsthatthe
lengthytimeofapprovaloftheapplicationisduetothefailureoftheMGBtoapproveit.
Inotherwords,Benguetarguesthattheapprovaloftheapplicationissolelyinthehands
oftheMGB.

Benguetsargumentsarebereftofmerit.

Sec.14.05oftheRAWOPprovides:

14.05BankAccount

OWNERshallmaintainabankaccountat___________oranyotherbankfrom
timetotimeselectedbyOWNERwithnoticeinwritingtoBENGUETwhereBENGUET
shall deposit to the OWNERs credit any and all advances and payments which may
becomeduetheOWNERunderthisAgreementaswellasthepurchasepricehereinagreed
uponintheeventthatBENGUETshallexercisetheoptiontopurchaseprovidedforinthe
Agreement.AnyandalldepositssomadebyBENGUETshallbeafullandcomplete
acquittanceandreleaseto[sic]BENGUETfromanyfurtherliabilitytotheOWNER
oftheamountsrepresentedbysuchdeposits.(Emphasissupplied.)

Evidently,theRAWOPitselfprovidesforthemodeofroyaltypaymentbyBenguet.
The fact that there was the previous practice whereby J.G. Realty pickedup the checks
fromBenguetisunavailing.Themodeofpaymentisembodiedinacontractbetweenthe
parties. As such, the contract must be considered as the law between the parties and
bindingonboth.

[26]
Thus,afterJ.G.RealtyinformedBenguetofthebankaccountwhere

deposits of its royalties may be made, Benguet had the obligation to deposit the checks.
J.G.RealtyhadnoobligationtofurnishBenguetwithaBoardResolutionconsideringthat
theRAWOPitselfprovidedforsuchpaymentscheme.

Notably,BenguetsclaimthatJ.G.Realtymustprovenonpaymentofitsroyaltiesis
bothillogicalandunsupportedbylawandjurisprudence.

The allegation of nonpayment is not a positive allegation as claimed by Benguet.

Rather, such is a negative allegation that does not require proof and in fact transfers the
burdenofprooftoBenguet.Thus,thisCourtruledinJimenezv.NationalLaborRelations

Commission:

As a general rule, one who pleads payment has the burden of proving it. Even
wheretheplaintiffmustallegenonpayment,thegeneralruleisthattheburdenrestsonthe
defendant to prove payment, rather than on the plaintiff to prove nonpayment. The
debtor has the burden of showing with legal certainty that the obligation has been
[27]
dischargedbypayment.
(Emphasissupplied.)

Intheinstantcase,theobligationofBenguettopayroyaltiestoJ.G.Realtyhasbeen
admittedandsupportedbytheprovisionsoftheRAWOP.Thus,theburdentoprovesuch
obligationrestsonBenguet.

ItshouldalsobeborneinmindthatMPSAApplicationNo.APSAV0009hasbeen
pending with the MGB for a considerable length of time. Benguet, in the RAWOP,
obligated itself to perfect the rights to the mining claims and/or otherwise acquire the
mining rights to the mineral claims but failed to present any evidence showing that it
exertedeffortstospeedupandhavetheapplicationapproved.Infact,Benguetnevereven
allegedthatitcontinuouslyfolloweduptheapplicationwiththeMGBandthatitwasin
constantcommunicationwiththegovernmentagencyfortheexpeditiousresolutionofthe
application.Suchallegationswouldshowthat,indeed,Benguetwasremissinprosecuting
theMPSAapplicationandclearlyfailedtocomplywithitsobligationintheRAWOP.

ThirdIssue:Thereisnounjustenrichmentintheinstantcase

Basedontheforegoingdiscussion,thecancellationoftheRAWOPwasbasedon
validgroundsandis,therefore,justified.Thenecessaryimplicationofthecancellationis
thecessationofBenguetsrighttoprosecuteMPSAApplicationNo.APSAV0009andto
furtherdevelopsuchminingclaims.

InCarCoolPhilippines,Inc.v.UshioRealtyandDevelopmentCorporation,we
definedunjustenrichment,asfollows:

Wehaveheldthat[t]hereisunjustenrichmentwhenapersonunjustlyretainsa
benefit to the loss of another, or when a person retains money or property of another
againstthefundamentalprinciplesofjustice,equityandgoodconscience.Article22of
the Civil Code provides that [e]very person who through an act of performance by

another, or any other means, acquires or comes into possession of something at the
expense of the latter without just or legal ground, shall return the same to him. The
principleofunjustenrichmentunderArticle22requirestwoconditions:(1)thatapersonis
benefited without a valid basis or justification, and (2) that such benefit is derived at
anothersexpenseordamage.

There is no unjust enrichment when the person who will benefit has a valid
[28]
claimtosuchbenefit.
(Emphasissupplied.)

Clearly,thereisnounjustenrichmentintheinstantcaseasthecancellationofthe
RAWOP,whichleftBenguetwithoutanylegalrighttoparticipateinfurtherdeveloping
theminingclaims,wasbroughtaboutbyitsviolationoftheRAWOP.Hence,Benguethas
noonetoblamebutitselfforitspredicament.

WHEREFORE,weDISMISSthepetition,andAFFIRMtheDecember2,2002
DecisionandMarch17,2004ResolutionoftheDENRMABinMABCaseNo.012401
upholdingthecancellationoftheJune1,1987RAWOP.Nocosts.

SOORDERED.

PRESBITEROJ.VELASCO,JR.
AssociateJustice

WECONCUR:

LEONARDOA.QUISUMBING
AssociateJustice
Chairperson

ANTONIOT.CARPIOCONCHITACARPIOMORALES
AssociateJusticeAssociateJustice