SECOND DIVISION

THE CITY GOVERNMENT OF G.R. No. 180206

BAGUIO CITY, represented by
REINALDO BAUTISTA, JR., Present:
City Mayor; THE ANTI-SQUATTING
COMMITTEE, represented by ATTY. QUISUMBING, J.,
MELCHOR CARLOS R. RAGANES, Chairperson,
CITY BUILDINGS and CARPIO MORALES,
ARCHITECTURE office, represented TINGA,
by OSCAR FLORES; and PUBLIC VELASCO, JR., and
ORDER and SAFETY OFFICE, BRION, JJ.
Represented by EMMANUEL REYES,
Petitioners.

- versus -
Promulgated:
February 4, 2009
ATTY. BRAIN MASWENG, Regional
Officer-National Commission on
Indigenous People-CAR, ELVIN
GUMANGAN, NARCISO BASATAN
and LAZARO BAWAS,
Respondents.

x--------------------------------------------------------------------------x

DECISION

TINGA, J.:

Petitioners, the City Government of Baguio City, represented by its Mayor,

Reinaldo Bautista, Jr., the Anti-Squatting Committee, represented by Atty. Melchor
Carlos R. Rabanes; the City Buildings and Architecture Office, represented by Oscar
Flores; and the Public Order and Safety Office, represented by Emmanuel Reyes and
later substituted by Gregorio Deligero, assail the Decision[1] of the Court of Appeals
in CA G.R. SP No. 96895, dated April 16, 2007, and its Resolution [2] dated
September 11, 2007, which affirmed the injunctive writ issued by the National
Commission on Indigenous Peoples (NCIP) against the demolition orders of
petitioners.

The following undisputed facts are culled from the assailed Decision:

The case stemmed from the three (3) Demolition Orders issued
by the City Mayor of Baguio City, Braulio D. Yaranon, ordering the
demolition of the illegal structures constructed by Lazaro Bawas,
Alexander Ampaguey, Sr. and a certain Mr. Basatan on a portion of
the Busol Watershed Reservation located at Aurora Hill, Baguio City,
without the required building permits and in violation of Section 69
of Presidential Decree No. 705, as amended, Presidential Decree No.
1096 and Republic Act No. 7279.

Pursuant thereto, the corresponding demolition advices dated

September 19, 2006 were issued informing the occupants thereon of the
intended demolition of the erected structures on October 17 to 20, 2006.
Consequently, Elvin Gumangan, Narciso Basatan and Lazaro Bawas
(hereinafter private respondents) filed a petition for injunction with prayer
for the issuance of a temporary restraining order and/or writ of
preliminary injunction against the Office of the City Mayor of Baguio
City through its Acting City Mayor, Reynaldo Bautista, the City Building
and Architecture Office, the Anti-Squatting Task Force, and the Public
Order and Safety Division, among others, (collectively called petitioners)
before the National Commission on Indigenous Peoples, Cordillera
Administrative Region (NCIP-CAR), Regional Hearing Office, La
Trinidad, Benguet, docketed as Case No. 31-CAR-06.

In their petition, private respondents basically claimed that the

lands where their residential houses stand are their ancestral lands
which they have been occupying and possessing openly and
continuously since time immemorial; that their ownership thereof
have been expressly recognized in Proclamation No. 15 dated April
27, 1922 and recommended by the Department of Environment and
Natural Resources (DENR) for exclusion from the coverage of the
Busol Forest Reserve. They, thus, contended that the demolition of
their residential houses is a violation of their right of possession and
ownership of ancestral lands accorded by the Constitution and the
law, perforce, must be restrained.
 On October 16 and 19, 2006, Regional Hearing Officer Atty. Brain
S. Masweng of the NCIP issued the two (2) assailed temporary restraining
orders (TRO) directing the petitioners and all persons acting for and in
their behalf to refrain from enforcing Demolition Advice dated September
18, 2006; Demolition Order dated September 19, 2006; Demolition Order
No. 25, Series of 2004; Demolition Order No. 33, Series of 2005; and
Demolition Order No. 28, Series of 2004, for a total period of twenty (20)
days.

Subsequently, the NCIP issued the other assailed Resolution

dated November 10, 2006 granting the private respondents application for
preliminary injunction subject to the posting of an injunctive bond each in
the amount of P10,000.00.[3]

Acting on the petition for certiorari filed by petitioners,[4] the Court of

Appeals upheld the jurisdiction of the NCIP over the action filed by private
respondents and affirmed the temporary restraining orders dated October
16[5] and 19, 2006,[6] and the Resolution dated November 10, 2006,[7] granting
the application for a writ of preliminary injunction, issued by the NCIP. The
appellate court also ruled that Baguio City is not exempt from the coverage of
Republic Act No. 8371, otherwise known as the Indigenous Peoples Rights Act
of 1997 (IPRA).

Petitioners assert that the NCIP has no jurisdiction to hear and decide
main actions for injunction such as the one filed by private respondents. They
claim that the NCIP has the authority to issue temporary restraining orders
and writs of preliminary injunction only as auxiliary remedies to cases pending
before it.

Further, the IPRA provides that Baguio City shall be governed by its Charter.
Thus, private respondents cannot claim their alleged ancestral lands under the
provisions of the IPRA.

Petitioners contend that private respondents are not entitled to the

protection of an injunctive writ because they encroached upon the Busol Forest
Reservation and built structures thereon without the requisite permit.
Moreover, this Court, in Heirs of Gumangan v. Court of Appeals,[8] had already
declared that the Busol Forest Reservation is inalienable and possession
thereof, no matter how long, cannot convert the same into private
property. Even assuming that private respondents have a pending application
for ancestral land claim, their right is at best contingent and cannot come under
the protective mantle of injunction.

Petitioners also claim that the Busol Forest Reservation is exempt from
ancestral claims as it is needed for public welfare. It is allegedly one of the few
remaining forests in Baguio City and is the citys main watershed.

Finally, petitioners contend that the demolition orders were issued pursuant to
the police power of the local government.

In their Comment[9] dated March 1, 2007, private respondents defend the

jurisdiction of the NCIP to take cognizance of and decide main actions for injunction
arguing that the IPRA does not state that the NCIP may only issue such writs of
injunction as auxiliary remedies. Private respondents also contend that the IPRA
does not exempt Baguio Cityfrom its coverage nor does it state that there are no
ancestral lands in Baguio City.

As members of the Ibaloi Indigenous Community native to Baguio City,

private respondents are treated as squatters despite the fact that they hold native title
to their ancestral land. The IPRA allegedly now recognizes ancestral lands held by
native title as never to have been public lands.

Private respondents aver that the Busol Forest Reservation is subject to

ancestral land claims. In fact, Proclamation No. 15[10] dated April 27, 1922,
which declared the area a forest reserve, allegedly did not nullify the vested
rights of private respondents over their ancestral lands and even identified the
claimants of the particular portions within the forest reserve. This claim of
ownership is an exception to the governments contention that the whole area is
a forest reservation.

Lastly, private respondents assert that the power of the city mayor to
order the demolition of certain structures is not absolute. Regard should be
taken of the fact that private respondents cannot be issued building permits
precisely because they do not have paper titles over their ancestral lands, a
requirement for the issuance of a building permit under the National Building
Code.

Petitioners Reply to Comment[11] dated June 11, 2008 merely reiterates their
previous arguments.

We shall first dispose of the elemental issue of the NCIPs jurisdiction.

The NCIP is the primary government agency responsible for the formulation
and implementation of policies, plans and programs to protect and promote the rights
and well-being of indigenous cultural communities/indigenous peoples (ICCs/IPs)
and the recognition of their ancestral domains as well as their rights thereto.[12] In
order to fully effectuate its mandate, the NCIP is vested with jurisdiction over all
claims and disputes involving the rights of ICCs/IPs. The only condition precedent
to the NCIPs assumption of jurisdiction over such disputes is that the parties thereto
shall have exhausted all remedies provided under their customary laws and have
obtained a certification from the Council of Elders/Leaders who participated in the
attempt to settle the dispute that the same has not been resolved.[13]

In addition, NCIP Administrative Circular No. 1-03 dated April 9, 2003,

known as the Rules on Pleadings, Practice and Procedure Before the NCIP, reiterates
the jurisdiction of the NCIP over claims and disputes involving ancestral lands and
enumerates the actions that may be brought before the commission. Sec. 5, Rule III
thereof provides:

Sec. 5. Jurisdiction of the NCIP.The NCIP through its Regional

Hearing Offices shall exercise jurisdiction over all claims and disputes
involving rights of ICCs/IPs and all cases pertaining to the
implementation, enforcement, and interpretation of R.A. 8371, including
but not limited to the following:

(1) Original and Exclusive Jurisdiction of the Regional Hearing Office

(RHO):
 a. Cases involving disputes and controversies over ancestral
lands/domains of ICCs/IPs;
b. Cases involving violations of the requirement of free and prior and
informed consent of ICCs/IPs;
c. Actions for enforcement of decisions of ICCs/IPs involving
violations of customary laws or desecration of ceremonial sites,
sacred places, or rituals;
d. Actions for redemption/reconveyance under Section 8(b) of R.A.
8371; and
e. Such other cases analogous to the foregoing.

(2) Original Jurisdiction of the Regional Hearing Officer:

a. Cases affecting property rights, claims of ownership, hereditary

succession, and settlement of land disputes, between and among
ICCs/IPs that have not been settled under customary laws; and
b. Actions for damages arising out of any violation of Republic Act
No. 8371.

(3) Exclusive and Original Jurisdiction of the Commission:

a. Petition for cancellation of Certificate of Ancestral Domain

Titles/Certificate of Ancestral Land Titles (CADTs/CALTs)
alleged to have been fraudulently acquired by, and issued to, any
person or community as provided for under Section 54 of R.A.
8371. Provided that such action is filed within one (1) year from
the date of registration.

In order to determine whether the NCIP has jurisdiction over the dispute in
accordance with the foregoing provisions, it is necessary to resolve, on the basis of
the allegations in their petition, whether private respondents are members of
ICCs/IPs. In their petition[14] filed before the NCIP, private respondents, members
of the Ibaloi tribe who first settled in Baguio City, were asserting ownership of
portions of the Busol Forest Reservation which they claim to be their ancestral lands.
Correctly denominated as a petition for injunction as it sought to prevent the
enforcement of the demolition orders issued by the City Mayor, the petition traced
private respondents ancestry to Molintas and Gumangan and asserted their
possession, occupation and utilization of their ancestral lands. The petition also
alleged that private respondents claim over these lands had been recognized by
Proclamation No. 15 which mentions the names of Molintas and Gumangan as
having claims over portions of the Busol Forest Reservation.[15]

Clearly then, the allegations in the petition, which axiomatically determine the
nature of the action and the jurisdiction of a particular tribunal,[16] squarely qualify
it as a dispute(s) or controversy(s) over ancestral lands/domains of ICCs/IPs within
the original and exclusive jurisdiction of the NCIP-RHO.

The IPRA, furthermore, endows the NCIP with the power to issue temporary
restraining orders and writs of injunction. Sec. 69 thereof states:

Sec. 69. Quasi-Judicial Powers of the NCIP.The NCIP shall have the
power and authority:

a) To promulgate rules and regulations governing the hearing and

disposition of cases filed before it as well as those pertaining to its internal
functions and such rules and regulations as may be necessary to carry out
the purposes of this Act;

b) To administer oaths, summon the parties to a controversy, issue

subpoenas requiring the attendance and testimony of witnesses or the
production of such books, papers, contracts, records, agreements, and
other document of similar nature as may be material to a just
determination of the matter under investigation or hearing conducted in
pursuance of this Act;

c) To hold any person in contempt, directly or indirectly, and impose

appropriate penalties therefor; and

d) To enjoin any or all acts involving or arising from any case

pending before it which, if not restrained forthwith, may cause grave
or irreparable damage to any of the parties to the case or seriously
affect social or economic activity. [Emphasis supplied]
 NCIP Administrative Circular No. 1-03 echoes the above-quoted provision in
Sec. 82, Rule XV, which provides:

Sec. 82. Preliminary Injunction and Temporary Restraining

Order.A writ of preliminary injunction or restraining order may be
granted by the Commission pursuant to the provisions of Sections 59 and
69 of R.A. [No.] 8371 when it is established, on the basis of sworn
allegations in a petition, that the acts complained of involving or arising
from any case, if not restrained forthwith, may cause grave or irreparable
damage or injury to any of the parties, or seriously affect social or
economic activity. This power may also be exercised by RHOs in cases
pending before them in order to preserve the rights of the parties.

As can be gleaned from the foregoing provisions, the NCIP may issue
temporary restraining orders and writs of injunction without any prohibition against
the issuance of the writ when the main action is for injunction. The power to issue
temporary restraining orders or writs of injunction allows parties to a dispute over
which the NCIP has jurisdiction to seek relief against any action which may cause
them grave or irreparable damage or injury. In this case, the Regional Hearing
Officer issued the injunctive writ because its jurisdiction was called upon to protect
and preserve the rights of private respondents who are undoubtedly members of
ICCs/IPs.

Parenthetically, in order to reinforce the powers of the NCIP, the IPRA even
provides that no restraining order or preliminary injunction may be issued by any
inferior court against the NCIP in any
case, dispute or controversy arising from or necessary to the
interpretation of the IPRA and other laws relating to ICCs/IPs and ancestral
domains.[17]

Petitioners argue that Baguio City is exempt from the provisions of the IPRA,
and necessarily the jurisdiction of the NCIP, by virtue of Sec. 78 thereof, which
states:

SEC. 78. Special Provision.The City of Baguio shall remain to be

governed by its Charter and all lands proclaimed as part of its townsite
reservation shall remain as such until otherwise reclassified by appropriate
legislation: Provided, That prior land rights and titles recognized
and/or acquired through any judicial, administrative or other
processes before the effectivity of this Act shall remain
valid: Provided, further, That this provision shall not apply to any
territory which becomes part of the City of Baguio after the effectivity of
this Act. [Emphasis supplied]

The foregoing provision indeed states that Baguio City is governed by its own
charter. Its exemption from the IPRA, however, cannot ipso facto be deduced
because the law concedes the validity of prior land rights recognized or
acquired through any process before its effectivity. The IPRA demands that the
citys charter respect the validity of these recognized land rights and titles.

The crucial question to be asked then is whether private respondents

ancestral land claim was indeed recognized by Proclamation No. 15, in
which case, their right thereto may be protected by an injunctive writ. After
all, before a writ of preliminary injunction may be issued, petitioners must show
that there exists a right to be protected and that the acts against which
injunction is directed are violative of said right.[18]

Proclamation No. 15, however, does not appear to be a definitive

recognition of private respondents ancestral land claim. The proclamation
merely identifies the Molintas and Gumangan families, the predecessors-in-
interest of private respondents, as claimants of a portion of the Busol Forest
Reservation but does not acknowledge vested rights over the same. In fact,
Proclamation No. 15 explicitly withdraws the Busol Forest Reservation from
sale or settlement. It provides:

Pursuant to the provisions of section eighteen hundred and twenty-

six of Act Numbered Twenty-seven Hundred and eleven[,] I hereby
establish the Busol Forest Reservation to be administered by the Bureau
of Forestry for the purpose of conserving and protecting water and timber,
the protection of the water supply being of primary importance and all
other uses of the forest are to be subordinated to that purpose. I therefore
withdraw from sale or settlement the following described parcels of the
public domain situated in the Township of La Trinidad, City
of Baguio, Mountain Province, Island of Luzon, to wit:

The fact remains, too, that the Busol Forest Reservation was declared by the
Court as inalienable in Heirs of Gumangan v. Court of Appeals.[19] The declaration
of the Busol Forest Reservation as such precludes its conversion into private
property. Relatedly, the courts are not endowed with jurisdictional competence to
adjudicate forest lands.

All told, although the NCIP has the authority to issue temporary restraining
orders and writs of injunction, we are not convinced that private respondents are
entitled to the relief granted by the Commission.

WHEREFORE, the instant petition is GRANTED. The Decision of the Court

of Appeals in CA G.R. SP No. 96895 dated April 16, 2007 and its Resolution
dated September 11, 2007 are REVERSED and SET ASIDE. Case No. 31-CAR-06
entitled, Elvin Gumangan, Narciso Basatan and Lazaro Bawas v. Office of the City
Mayor of Baguio City, et al. is DISMISSED. No pronouncement as to costs.
 EN BANC

CENTRAL MINDANAO UNIVERSITY, G.R. No. 184869

Represented by Officer-In-Charge
Dr. Rodrigo L. Malunhao,
Petitioner, Present:
CORONA, C.J.,
CARPIO,
CARPIO MORALES,
VELASCO, JR.,*
NACHURA,*
LEONARDO-DE CASTRO,*
- versus - BRION,*
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA,* and
SERENO,** JJ.
THE HONORABLE EXECUTIVE SECRETARY, THE
HONORABLE SECRETARY OF THE DEPARTMENT OF
ENVIRONMENT AND NATURAL RESOURCES, THE
CHAIRPERSON AND COMMISSIONERS OF THE
NATIONAL COMMISSION ON INDIGENOUS
PEOPLES, and THE LEAD CONVENOR OF THE
NATIONAL ANTI-POVERTY COMMISSION,
Respondents. Promulgated:

September 21, 2010

x --------------------------------------------------------------------------------------- x

DECISION

ABAD, J.:

This case concerns the constitutionality of a presidential proclamation that

takes property from a state university, over its objections, for distribution to
indigenous peoples and cultural communities.

The Facts and the Case

Petitioner Central Mindanao University (CMU) is a chartered educational

institution owned and run by the State.[1] In 1958, the President issued Presidential
Proclamation 476, reserving 3,401 hectares of lands of the public domain in
Musuan, Bukidnon, as school site for CMU. Eventually, CMU obtained title in its
name over 3,080 hectares of those lands under Original Certificates of Title (OCTs)
0-160, 0-161, and 0-162. Meanwhile, the government distributed more than 300
hectares of the remaining untitled lands to several tribes belonging to the areas
cultural communities.

Forty-five years later or on January 7, 2003 President Gloria Macapagal-

Arroyo issued Presidential Proclamation 310 that takes 670 hectares from CMUs
registered lands for distribution to indigenous peoples and cultural communities in
Barangay Musuan, Maramag, Bukidnon.

On April 3, 2003, however, CMU filed a petition for prohibition against respondents
Executive Secretary, Secretary of the Department of Environment and Natural
Resources, Chairperson and Commissioner of the National Commission on
Indigenous Peoples (NCIP), and Lead Convenor of the National Anti-Poverty
Commission (collectively, NCIP, et al) before the Regional Trial Court (RTC) of
Malaybalay City (Branch 9), seeking to stop the implementation of Presidential
Proclamation 310 and have it declared unconstitutional.

The NCIP, et al moved to dismiss the case on the ground of lack of

jurisdiction of the Malaybalay RTC over the action, pointing out that since the act
sought to be enjoined relates to an official act of the Executive Department done
in Manila, jurisdiction lies with the Manila RTC. The Malaybalay RTC denied the
motion, however, and proceeded to hear CMUs application for preliminary
injunction. Meanwhile, respondents NCIP, et al moved for partial reconsideration
of the RTCs order denying their motion to dismiss.

On October 27, 2003, after hearing the preliminary injunction incident, the
RTC issued a resolution granting NCIP, et als motion for partial reconsideration and
dismissed CMUs action for lack of jurisdiction. Still, the RTC ruled that Presidential
Proclamation 310 was constitutional, being a valid State act. The RTC said that the
ultimate owner of the lands is the State and that CMU merely held the same in its
behalf. CMU filed a motion for reconsideration of the resolution but the RTC denied
the same on April 19, 2004.This prompted CMU to appeal the RTCs dismissal order
to the Court of Appeals (CA) Mindanao Station.[2]

CMU raised two issues in its appeal: 1) whether or not the RTC deprived it of
its right to due process when it dismissed the action; and 2) whether or not
Presidential Proclamation 310 was constitutional.[3]
 In a March 14, 2008 decision,[4] the CA dismissed CMUs appeal for lack of
jurisdiction, ruling that CMUs recourse should have been a petition for review
on certiorarifiled directly with this Court, because it raised pure questions
lawbearing mainly on the constitutionality of Presidential Proclamation 310. The
CA added that whether the trial court can decide the merits of the case based solely
on the hearings of the motion to dismiss and the application for injunction is also a
pure question of law.

CMU filed a motion for reconsideration of the CAs order of dismissal but it
denied the same,[5] prompting CMU to file the present petition for review.

The Issues Presented

The case presents the following issues:

1. Whether or not the CA erred in not finding that the RTC erred in dismissing
its action for prohibition against NCIP, et al for lack of jurisdiction and at the same
time ruling that Presidential Proclamation 310 is valid and constitutional;

2. Whether or not the CA correctly dismissed CMUs appeal on the ground

that it raised purely questions of law that are proper for a petition for review filed
directly with this Court; and

3. Whether or not Presidential Proclamation 310 is valid and constitutional.

The Courts Rulings

 One. The RTC invoked two reasons for dismissing CMUs action. The first is
that jurisdiction over the action to declare Presidential Proclamation 310 lies with
the RTC of Manila, not the RTC of Malaybalay City, given that such action relates to
official acts of the Executive done in Manila. The second reason, presumably made
on the assumption that the Malaybalay RTC had jurisdiction over the action,
Presidential Proclamation 310 was valid and constitutional since the State, as
ultimate owner of the subject lands, has the right to dispose of the same for some
purpose other than CMUs use.

There is nothing essentially wrong about a court holding on the one hand
that it has no jurisdiction over a case, and on the other, based on an assumption
that it has jurisdiction, deciding the case on its merits, both with the same results,
which is the dismissal of the action. At any rate, the issue of the propriety of the
RTC using two incompatible reasons for dismissing the action is academic. The CA
from which the present petition was brought dismissed CMUs appeal on some
technical ground.

Two. Section 9(3) of the Judiciary Reorganization Act of 1980[6] vests in the
CA appellate jurisdiction over the final judgments or orders of the RTCs and quasi-
judicial bodies. But where an appeal from the RTC raises purely questions of law,
recourse should be by a petition for review on certiorari filed directly with this
Court. The question in this case is whether or not CMUs appeal from the RTCs order
of dismissal raises purely questions of law.

As already stated, CMU raised two grounds for its appeal: 1) the RTC
deprived it of its right to due process when it dismissed the action; and 2)
Presidential Proclamation 310 was constitutional. Did these grounds raise factual
issues that are proper for the CA to hear and adjudicate?

Regarding the first reason, CMUs action was one for injunction against the
implementation of Presidential Proclamation 310 that authorized the taking of
lands from the university. The fact that the President issued this proclamation
in Manila and that it was being enforced in Malaybalay City where the lands were
located were facts that were not in issue. These were alleged in the complaint and
presumed to be true by the motion to dismiss. Consequently, the CMUs remedy for
assailing the correctness of the dismissal, involving as it did a pure question of law,
indeed lies with this Court.

As to the second reason, the CMU claimed that the Malaybalay RTC deprived
it of its right to due process when it dismissed the case based on the ground that
Presidential Proclamation 310, which it challenged, was constitutional. CMU points
out that the issue of the constitutionality of the proclamation had not yet been
properly raised and heard.NCIP, et al had not yet filed an answer to join issue with
CMU on that score. What NCIP, et al filed was merely a motion to dismiss on the
ground of lack of jurisdiction of the Malaybalay RTC over the injunction
case. Whether the RTC in fact prematurely decided the constitutionality of the
proclamation, resulting in the denial of CMUs right to be heard on the same, is a
factual issue that was proper for the CA Mindanao Station to hear and ascertain
from the parties. Consequently, the CA erred in dismissing the action on the ground
that it raised pure questions of law.

Three. Since the main issue of the constitutionality of Presidential

Proclamation 310 has been raised and amply argued before this Court, it would
serve no useful purpose to have the case remanded to the CA Mindanao Station or
to the Malaybalay RTC for further proceedings. Ultimately, the issue of
constitutionality of the Proclamation in question will come to this Court however
the courts below decide it. Consequently, the Court should, to avoid delay and
multiplicity of suits, now resolve the same.

The key question lies in the character of the lands taken from CMU. In CMU
v. Department of Agrarian Reform Adjudication Board (DARAB),[7] the DARAB, a
national government agency charged with taking both privately-owned and
government-owned agricultural lands for distribution to farmers-beneficiaries,
ordered the segregation for this purpose of 400 hectares of CMU lands. The Court
nullified the DARAB action considering the inalienable character of such lands,
being part of the long term functions of an autonomous agricultural educational
institution. Said the Court:

The construction given by the DARAB to Section 10 restricts the

land area of the CMU to its present needs or to a land area presently,
actively exploited and utilized by the university in carrying out its
present educational program with its present student population and
academic facility overlooking the very significant factor of growth of
the university in the years to come. By the nature of the CMU, which is
a school established to promote agriculture and industry, the need for
a vast tract of agricultural land for future programs of expansion is
obvious. At the outset, the CMU was conceived in the same manner as
land grant colleges in America, a type of educational institution which
blazed the trail for the development of vast tracts of unexplored and
undeveloped agricultural lands in the Mid-West. What we now know
as Michigan State University, Penn State University and IllinoisState U
niversity, started as small land grant colleges, with meager funding to
support their ever increasing educational programs. They were given
extensive tracts of agricultural and forest lands to be developed to
support their numerous expanding activities in the fields of agricultural
technology and scientific research. Funds for the support of the
educational programs of land grant colleges came from government
appropriation, tuition and other student fees, private endowments and
gifts, and earnings from miscellaneous sources. It was in this same spirit
that President Garcia issued Proclamation No. 476, withdrawing from
sale or settlement and reserving for
the Mindanao Agricultural College(forerunner of the CMU) a land
reservation of 3,080 hectares as its future campus. It was set up in
Bukidnon, in the hinterlands of Mindanao, in order that it can have
enough resources and wide open spaces to grow as an agricultural
educational institution, to develop and train future farmers
of Mindanao and help attract settlers to that part of the country.

xxxx
 The education of the youth and agrarian reform are admittedly
among the highest priorities in the government socio-economic
programs. In this case, neither need give way to the other. Certainly,
there must still be vast tracts of agricultural land in Mindanao outside
the CMU land reservation which can be made available to landless
peasants, assuming the claimants here, or some of them, can qualify as
CARP beneficiaries. To our mind, the taking of the CMU land which had
been segregated for educational purposes for distribution to yet
uncertain beneficiaries is a gross misinterpretation of the authority and
jurisdiction granted by law to the DARAB.

The decision in this case is of far-reaching significance as far as it

concerns state colleges and universities whose resources and research
facilities may be gradually eroded by misconstruing the exemptions
from the CARP. These state colleges and universities are the main
vehicles for our scientific and technological advancement in the field of
agriculture, so vital to the existence, growth and development of this
country.[8]

It did not matter that it was President Arroyo who, in this case, attempted
by proclamation to appropriate the lands for distribution to indigenous peoples and
cultural communities. As already stated, the lands by their character have become
inalienable from the moment President Garcia dedicated them for CMUs use in
scientific and technological research in the field of agriculture. They have ceased to
be alienable public lands.

Besides, when Congress enacted the Indigenous Peoples Rights Act (IPRA) or
Republic Act 8371[9] in 1997, it provided in Section 56 that property rights within
the ancestral domains already existing and/or vested upon its effectivity shall be
recognized and respected. In this case, ownership over the subject lands had been
vested in CMU as early as 1958. Consequently, transferring the lands in 2003 to the
indigenous peoples around the area is not in accord with the IPRA.
 Furthermore, the land registration court considered the claims of several
tribes belonging to the areas cultural communities in the course of the proceedings
for the titling of the lands in CMUs name. Indeed, eventually, only 3,080 hectares
were titled in CMUs name under OCTs 0-160, 0-161 and 0-162. More than 300
hectares were acknowledged to be in the possession of and subject to the claims
of those tribes.

WHEREFORE, the Court GRANTS the petition, SETS ASIDE the March 14,
2008 decision and September 22, 2008 resolution of the Court of Appeals in CA-
G.R. SP 85456, and DECLARES Presidential Proclamation 310 as null and void for
being contrary to law and public policy.
BENGUET CORPORATION, G.R. No. 163101
Petitioner,
Present:
- versus - QUISUMBING, J., Chairperson,
CARPIO,
CARPIO MORALES,
TINGA, and
DEPARTMENT OF ENVIRONMENT VELASCO, JR., JJ.
AND NATURAL RESOURCES
-MINES ADJUDICATION BOARD
and J.G. REALTY AND MINING Promulgated:
CORPORATION,
Respondents. February 13, 2008
x-----------------------------------------------------------------------------------------x

DECISION
VELASCO, JR., J.:

The instant petition under Rule 65 of the Rules of Court seeks the annulment of the
December 2, 2002 Decision[1] and March 17, 2004 Resolution[2] of the Department
of Environment and Natural Resources-Mining Adjudication Board (DENR-MAB)
in MAB Case No. 0124-01 (Mines Administrative Case No. R-M-2000-01)
entitled Benguet Corporation (Benguet) v. J.G. Realty and Mining
Corporation (J.G. Realty). The December 2, 2002 Decision upheld the March 19,
2001 Decision[3] of the MAB Panel of Arbitrators (POA) which canceled the Royalty
Agreement with Option to Purchase (RAWOP) dated June 1, 1987[4] between
Benguet and J.G. Realty, and excluded Benguet from the joint Mineral Production
Sharing Agreement (MPSA) application over four mining claims. The March 17,
2004 Resolution denied Benguets Motion for Reconsideration.

The 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. The parties also executed a Supplemental
Agreement[5] dated June 1, 1987. The mining claims were covered by MPSA
Application No. APSA-V-0009 jointly filed by J.G. Realty as claimowner and
Benguet as operator.

In the RAWOP, Benguet obligated itself to perfect the rights to the mining claims
and/or otherwise acquire the mining rights to the mineral claims. Within 24 months
from the execution of the RAWOP, Benguet should also cause the examination of
the mining 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. Realty with a report on the examination, within a reasonable time
after the completion of the examination. Moreover, also within the examination
period, Benguet shall conduct all necessary exploration in accordance with a
prepared exploration program. If it chooses to do so and before the expiration of the
examination period, Benguet may undertake to develop the mining claims upon
written notice to J.G. Realty. Benguet must then place the mining claims into
commercial productive stage within 24 months from the written notice. [6] It is also
provided in the RAWOP that if the mining claims were placed in commercial
production by Benguet, J.G. Realty should be entitled to a royalty of five percent
(5%) of net realizable value, and to royalty for any production done by Benguet
whether during the examination or development periods.

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.[7]

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

wrote J.G. Realty a letter dated March 8, 1999,[8] therein alleging that Benguet
complied with its obligations under the RAWOP by investing PhP 42.4 million to
rehabilitate the mines, and that the commercial operation was hampered by the non-
issuance of a Mines Temporary Permit by the Mines and Geosciences Bureau
(MGB) which must be considered as force 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 prior to Benguets taking
over of the premises, and that J.G. Realty had the obligation of ejecting such small
scale miners. Benguet also alleged that the nature of the mining business made it
difficult to specify a time limit for the RAWOP. Benguet then argued that the
royalties due to J.G. Realty were in fact in its office and ready to be picked up at any
time. It appeared that, previously, the practice by J.G. Realty was to pick-up checks
from Benguet representing such royalties. However, starting August 1994, J.G.
Realty allegedly refused to collect such checks from Benguet. Thus, Benguet posited
that there was no valid ground for the termination of the RAWOP. It also reminded
J.G. Realty that it should submit the disagreement to arbitration rather than
unilaterally terminating the RAWOP.

On June 7, 2000, J.G. Realty filed a Petition for Declaration of

Nullity/Cancellation of the RAWOP[9] with the Legaspi City POA, Region V,
docketed as DENR Case No. 2000-01 and entitled J.G. Realty v. Benguet.

On March 19, 2001, the POA issued a Decision,[10] dwelling upon the issues of (1)
whether the arbitrators had jurisdiction over the case; and (2) whether Benguet
violated the RAWOP justifying the unilateral cancellation of the RAWOP by J.G.
Realty. The dispositive portion stated:

WHEREFORE, premises considered, the June 01, 1987 [RAWOP]

and its Supplemental Agreement is hereby declared cancelled and without
effect. BENGUET is hereby excluded from the joint MPSA Application
over the mineral claims denominated as BONITO-I, BONITO-II,
BONITO-III and BONITO-IV.
 SO ORDERED.

Therefrom, Benguet filed a Notice of Appeal[11] with the MAB on April 23, 2001,
docketed as Mines Administrative Case No. R-M-2000-01. Thereafter, the MAB
issued the assailed December 2, 2002 Decision. Benguet then filed a Motion for
Reconsideration of the assailed Decision which was denied in the March 17,
2004 Resolution of the MAB. Hence, Benguet filed the instant petition.

The Issues

1. There was serious and palpable error when the Honorable

Board failed to rule 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 cancellation of the Royalty Agreement for alleged breach of
contract despite the absence of evidence.

3. The Questioned Decision of the Honorable Board in cancelling

the RAWOP prejudice[d] the substantial rights of Benguet under the
contract to the unjust enrichment of JG Realty.[12]

Restated, the issues are: (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?
The Courts Ruling

Before we dwell on the substantive issues, we find that the instant petition can
be denied outright as Benguet resorted to an improper remedy.
The last paragraph of Section 79 of Republic Act No. (RA) 7942 or the Philippine
Mining Act of 1995 states, A petition for review by certiorari and question of law
may be filed by the aggrieved party with the Supreme Court within thirty (30) days
from receipt of the order or decision of the [MAB].
However, this Court has already invalidated such provision in Carpio v. Sulu
Resources Development Corp.,[13] 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
recourse to this Court may be had. We held, thus:
To summarize, there are sufficient legal footings authorizing a review of the
MAB Decision under Rule 43 of the Rules of Court. First, Section 30 of Article VI
of the 1987 Constitution, mandates that [n]o law shall be passed increasing the
appellate jurisdiction of the Supreme Court as provided in this Constitution without
its advice and consent. On the other hand, Section 79 of RA No. 7942 provides that
decisions of the MAB may be reviewed by this Court on a petition for review by
certiorari. This provision is obviously an expansion of the Courts appellate
jurisdiction, an expansion to which this Court has not consented. Indiscriminate
enactment of legislation enlarging the appellate jurisdiction of this Court would
unnecessarily burden it.
Second, when the Supreme Court, in the exercise of its rule-making
power, transfers to the CA pending cases involving a review of a quasi-
judicial bodys decisions, such transfer relates only to procedure; hence, it
does not impair the substantive and vested rights of the parties. The
aggrieved partys right to appeal is preserved; what is changed is only the
procedure by which the appeal is to be made or decided. The parties still
have a remedy and a competent tribunal to grant this remedy.

Third, the Revised Rules of Civil Procedure included Rule 43 to

provide a uniform rule on appeals from quasi-judicial agencies. Under the
rule, appeals from their judgments and final orders are now required to be
brought to the CA on a verified petition for review. A quasi-judicial
agency or body has been defined as an organ of government, other than a
court or legislature, which affects the rights of private parties through
either adjudication or rule-making. MAB falls under this definition;
hence, it is no different from the other quasi-judicial bodies enumerated
under Rule 43. Besides, the introductory words in Section 1 of Circular
No. 1-91among these agencies areindicate that the enumeration is not
exclusive or conclusive and acknowledge the existence of other quasi-
judicial agencies which, though not expressly listed, should be deemed
included therein.

Fourth, the Court realizes that under Batas Pambansa (BP) Blg. 129
as amended by RA No. 7902, factual controversies are usually involved
in decisions of quasi-judicial bodies; and the CA, which is likewise tasked
to resolve questions of fact, has more elbow room to resolve them. By
 including questions of fact among the issues that may be raised in an
appeal from quasi-judicial agencies to the CA, Section 3 of Revised
Administrative Circular No. 1-95 and Section 3 of Rule 43 explicitly
expanded the list of such issues.

According to Section 3 of Rule 43, [a]n appeal under this Rule may
be taken to 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, appeals from quasi-judicial
agencies even only on questions of law may be brought to the CA.

Fifth, the judicial policy of observing the hierarchy of courts

dictates that direct resort from administrative agencies to this Court will
not be entertained, unless the redress desired cannot be obtained from the
appropriate lower tribunals, or unless exceptional and compelling
circumstances justify availment of a remedy falling within and calling for
the exercise of our primary jurisdiction.[14]

The above principle was reiterated in Asaphil Construction and Development

Corporation v. Tuason, Jr. (Asaphil).[15] However, the Carpio ruling was not applied
to Asaphil as the petition in the latter case was filed in 1999 or three years before the
promulgation of Carpio in 2002. Here, the petition was filed on April 28, 2004 when
the Carpio decision was already applicable, thus Benguet should have filed the
appeal with the CA.

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.

Even if we entertain the petition although Benguet skirted the appeal to the
CA via Rule 43, still, the December 2, 2002 Decision and March 17, 2004 Resolution
of the DENR-MAB in MAB Case No. 0124-01 should be maintained.

First Issue: 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.

xxxx
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.[16]

Thus, Benguet argues that the POA should have first referred the case to voluntary
arbitration before taking cognizance of the case, citing Sec. 2 of RA 876 on persons
and matters subject to arbitration.

On the other hand, in denying such argument, the POA ruled that:

While the parties may establish such stipulations clauses, terms and
conditions as they may deem convenient, the same must not be contrary
to law and public policy. At a glance, there is nothing wrong with the
terms and conditions of the agreement. But to state that an aggrieved party
cannot initiate an action without going to arbitration would be tying ones
hand even if there is a law which allows him to do so.[17]

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

stating:

Besides, by its own act, Benguet is already estopped in questioning the

jurisdiction of the Panel of Arbitrators to hear and decide the case. As
pointed out in the appealed Decision, Benguet initiated and filed an
 Adverse Claim docketed as MAC-R-M-2000-02 over the same mining
claims without undergoing contractual arbitration. In this particular case
(MAC-R-M-2000-02) now subject of the appeal, Benguet is likewise in
estoppel from questioning the competence of the Panel of Arbitrators to
hear and decide in the summary 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 reliefs from the
Panel of Arbitrators.[18]

Moreover, the MAB ruled that the contractual provision on arbitration merely
provides for an additional forum or venue and does not divest the POA of the
jurisdiction to hear the case.[19]

In its July 20, 2004 Comment,[20] J.G. Realty reiterated the above rulings of the 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,
such as RA 876. It also argued that the POA cannot be considered as a court under
the contemplation of RA 876 and that jurisprudence saying that there must be prior
resort to arbitration before filing a case with the courts is inapplicable to the instant
case as the POA is itself already engaged in arbitration.

On this issue, we rule for Benguet.

Sec. 2 of RA 876 elucidates the scope of arbitration:
Section 2. Persons and matters subject to arbitration.Two or more persons
or parties may submit to the arbitration of one or more arbitrators any
controversy existing between them at the time of the submission and which
may be the subject of 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 contract shall be valid, enforceable and irrevocable,
save upon such grounds as exist at law for the revocation of any contract.

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

valuations, appraisals or other controversies which may be collateral, incidental,
precedent or subsequent to any issue between the parties. (Emphasis supplied.)

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

reiterated the efficacy of arbitration as an alternative mode of dispute resolution by
stating in Sec. 32 thereof that domestic arbitration shall still be governed by RA
876. Clearly, 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. Thus, petitioner correctly cites several cases whereby
arbitration clauses have been upheld by this Court.[21]

Moreover, the contention that RA 7942 prevails over RA 876 presupposes a conflict
between the two laws. Such is not the case here. 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.
As stated in Secs. 6 and 7 of RA 876:
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
proceed in the manner provided for in such agreement. Five days notice in
writing of the hearing of such application shall be served either personally or by
registered mail upon the party in default. The court shall hear the parties, and
upon being satisfied that the making of the agreement or such failure to
comply therewith is not in issue, shall make an order directing the parties to
proceed to arbitration in accordance with the terms of the agreement. If the
making of the agreement or default be in issue the court shall proceed to
summarily hear such issue. If the finding be that no agreement 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, an order shall be made summarily directing the
parties to proceed with the arbitration in accordance with the terms thereof.

xxxx

Section 7. Stay of civil action.If any suit or proceeding be brought upon an

issue arising out of an agreement providing for the arbitration thereof, the court in
which such suit or proceeding is pending, upon being satisfied that the issue
involved in such suit or proceeding is referable to arbitration, shall stay the action
or proceeding until an arbitration has been had in accordance with the terms of the
agreement: Provided, That the applicant, for the stay is not in default in proceeding
with such arbitration. (Emphasis supplied.)

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.
Besides, in BF Corporation v. Court of Appeals, we already ruled:

In this connection, it bears stressing that the lower court has not lost
its jurisdiction over the case. Section 7 of Republic Act No. 876 provides
that proceedings therein have only been stayed. After the special
proceeding of arbitration has been pursued and completed, then the lower
court may confirm the award made by the arbitrator.[22]

J.G. Realtys contention, that prior resort to arbitration is unavailing in the instant
case because the POAs mandate is to arbitrate disputes involving mineral
agreements, is misplaced. A distinction must be made between voluntary and
compulsory arbitration. In Ludo and Luym Corporation v. Saordino, the Court had
the occasion to distinguish between the two types of arbitrations:
Comparatively, 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
departments personnel, said arbitrator renders arbitration services
provided for under labor laws.[23] (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
provision in the RAWOP is voluntary, not involving any government agency. Thus,
J.G. Realtys argument on this matter must fail.
As to J.G. Realtys contention that the provisions of RA 876 cannot apply to the
instant case which involves an administrative agency, it must be pointed out that
Section 11.01 of the RAWOP states that:

[Any controversy with regard to the contract] 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 arbiters so appointed.[24] (Emphasis
supplied.)

There can be no quibbling that POA is a quasi-judicial body which forms part of the
DENR, an administrative agency. Hence, the provision on mandatory resort to
arbitration, freely entered into by the parties, must be held binding against them.[25]

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, we find that Benguet is already estopped from questioning the POAs
jurisdiction. As it were, when J.G. Realty filed DENR Case No. 2000-01, Benguet
filed its answer and participated in the proceedings before the POA, Region
V. Secondly, when the adverse March 19, 2001 POA Decision was rendered, it filed
an appeal with the MAB in Mines Administrative Case No. R-M-2000-01 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 MAB Resolution was issued, Benguet
filed a petition with this Court pursuant to Sec. 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 Benguet at this late hour. What
Benguet should have done was to immediately challenge the POAs 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.
Second Issue: The cancellation of the RAWOP
was supported by evidence

The cancellation of the RAWOP by the POA was based on two grounds: (1)
Benguets failure to pay J.G. Realtys royalties for the mining claims; and (2)
Benguets failure to seriously pursue MPSA Application No. APSA-V-0009 over the
mining claims.
 As to the royalties, Benguet claims that the checks representing payments for
the royalties of J.G. Realty were available for pick-up in its office and it is the latter
which refused to claim them. Benguet then thus concludes that it did not violate the
RAWOP for 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 complainants must prove their affirmative allegations.

With regard to the failure to pursue the MPSA application, Benguet claims
that the lengthy time of approval of the application is due to the failure of the MGB
to approve it. In other words, Benguet argues that the approval of the application is
solely in the hands of the MGB.

Benguets arguments are bereft of merit.

Sec. 14.05 of the RAWOP provides:

14.05 Bank Account

OWNER shall maintain a bank account at ___________ or any other bank

from time to time selected by OWNER with notice in writing to
BENGUET where BENGUET shall deposit to the OWNERs credit any
and all advances and payments which may become due the OWNER under
this Agreement as well as the purchase price herein agreed upon in the
event that BENGUET shall exercise the option to purchase provided for
in the Agreement. Any and all deposits so made by BENGUET shall be
a full and complete acquittance and release to [sic] BENGUET from
any further liability to the OWNER of the amounts represented by
such deposits. (Emphasis supplied.)

Evidently, the RAWOP itself provides for the mode of royalty payment by Benguet.
The fact that there was the previous practice whereby J.G. Realty picked-up the
checks from Benguet is unavailing. The mode of payment is embodied in a contract
between the parties. As such, the contract must be considered as the law between the
parties and binding on both.[26] Thus, after J.G. Realty informed Benguet of the bank
account where deposits of its royalties may be made, Benguet had the obligation to
deposit the checks. J.G. Realty had no obligation to furnish Benguet with a Board
Resolution considering that the RAWOP itself provided for such payment scheme.
 Notably, Benguets claim that J.G. Realty must prove nonpayment of its
royalties is both illogical and unsupported by law and jurisprudence.

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 burden of proof to Benguet. Thus, this Court ruled in Jimenez
v. National Labor Relations Commission:
As a general rule, one who pleads payment has the burden of proving it.
Even where the plaintiff must allege non-payment, the general rule is that the
burden rests on the defendant to prove payment, rather than on the plaintiff to prove
non-payment. The debtor has the burden of showing with legal certainty that
the obligation has been discharged by payment.[27](Emphasis supplied.)

In the instant case, the obligation of Benguet to pay royalties to J.G. Realty
has been admitted and supported by the provisions of the RAWOP. Thus, the burden
to prove such obligation rests on Benguet.

It should also be borne in mind that MPSA Application No. APSA-V-0009 has been
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 exerted efforts to speed up and have the application approved. In fact, Benguet
never even alleged that it continuously followed-up the application with the MGB
and that it was in constant communication with the government agency for the
expeditious resolution of the application. Such allegations would show that, indeed,
Benguet was remiss in prosecuting the MPSA application and clearly failed to
comply with its obligation in the RAWOP.

Third Issue: There is no unjust enrichment in the instant case

Based on the foregoing discussion, the cancellation of the RAWOP was based on
valid grounds and is, therefore, justified. The necessary implication of the
cancellation is the cessation of Benguets right to prosecute MPSA Application No.
APSA-V-0009 and to further develop such mining claims.
In Car Cool Philippines, Inc. v. Ushio Realty and Development Corporation, we
defined unjust enrichment, as follows:

We have held that [t]here is unjust enrichment when a

person unjustly retains a benefit to the loss of another, or when a person
retains money or property of another against the fundamental principles
of justice, equity and good conscience. Article 22 of 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 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 anothers
expense or damage.

There is no unjust enrichment when the person who will benefit

has a valid claim to such benefit.[28] (Emphasis supplied.)

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.

WHEREFORE, we DISMISS the petition, and AFFIRM the December 2, 2002

Decision and March 17, 2004 Resolution of the DENR-MAB in MAB Case No.
0124-01 upholding the cancellation of the June 1, 1987 RAWOP. No costs.
SO ORDERED.