- Petitioner
- Golden Valley Exploration
- Respondent
- Pinkian Mining Company
- Citation
- G.R. No. 190080
- Court
- Supreme Court
- Division
- Second Division
- Ponente
- Perlas-Bernabe, J.
- Decided
- June 11, 2014
Summary
This case involves the validity of an extra-judicial rescission of an Operating Agreement for mining claims. PMC owned 81 mining claims and granted GVEI exclusive rights through a 25-year Operating Agreement in 1987. After 7 years of GVEI's non-performance including failure to pay royalties, conduct commercial operations, and fulfill various contractual obligations, PMC rescinded the agreement in 1999 and entered into a new agreement with CVI in 2000. The Supreme Court applied Article 1191 of the Civil Code on rescission of reciprocal obligations, distinguishing between extra-judicial rescission (when contractually provided) and judicial rescission (general rule). The Court found that the OA expressly allowed PMC to cancel for non-payment of royalties, making the extra-judicial rescission valid. Additionally, GVEI's substantial breaches including failure to develop the mining claims for commercial operation over 7 years would have justified rescission under general Civil Code principles. The decision affirmed the validity of PMC's rescission and its subsequent agreement with CVI.