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Golden Valley Exploration, Inc. vs. Pinkian Mining Company and Copper Valley, Inc. G.R. No. 190080, June 11, 2014 Facts

Pikian Mining Company (PMI) entered into an Operating Agreement (OA) with Golden Valley Exploration, Inc. (GVEI) granting the latter rights to PMI's mining claims. PMI later extra-judicially rescinded the OA, claiming GVEI violated the agreement. GVEI contested the rescission. The issue was whether PMI's rescission of the OA was valid. The Supreme Court held the rescission was valid, as the OA expressly allowed either party to cancel the agreement if the other violated its terms, such as GVEI's non-payment of royalties, so PMI did not need to seek judicial action for the rescission to

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55 views3 pages

Golden Valley Exploration, Inc. vs. Pinkian Mining Company and Copper Valley, Inc. G.R. No. 190080, June 11, 2014 Facts

Pikian Mining Company (PMI) entered into an Operating Agreement (OA) with Golden Valley Exploration, Inc. (GVEI) granting the latter rights to PMI's mining claims. PMI later extra-judicially rescinded the OA, claiming GVEI violated the agreement. GVEI contested the rescission. The issue was whether PMI's rescission of the OA was valid. The Supreme Court held the rescission was valid, as the OA expressly allowed either party to cancel the agreement if the other violated its terms, such as GVEI's non-payment of royalties, so PMI did not need to seek judicial action for the rescission to

Uploaded by

Queen Rielle
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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GOLDEN VALLEY EXPLORATION, INC. vs.

PINKIAN MINING COMPANY and


COPPER VALLEY, INC.
G.R. No. 190080, June 11, 2014

Facts:
Pikian Mining Company (PMI) is the owner of 81 mining, 15 of which are covered by
Mining Lease Contracts, the remaining 66 had pending applications for lease. It entered into
an Operating Agreement (OA) with Golden Valley Exploration, Inc. (GVEI), granting the latter
"full, exclusive and irrevocable possession, use, occupancy, and control over the [mining
claims], and every matter pertaining to the examination, exploration, development and mining
of the [mining claims] and the processing and marketing of the products for a period of 25
years. Later, PMC extra-judicially rescinded the OA upon GVEI’s violation of Section 5.01,
Article V thereof.

GVEI contested PMC’s extra-judicial rescission of the OA averring therein that its
obligation to pay royalties to PMC arises only when the mining claims are placed in
commercial production which condition has not yet taken place. PMC no longer responded to
GVEI’s letter. It also reminded PMC of its prior payment of the amount of P185, 000.00 as
future royalties in exchange for PMC’s express waiver of any breach or default on the part of
GVEI. Instead, it entered into a Memorandum of Agreement with Copper Valley Inc., (CVI),
whereby the latter was granted the right to "enter, possess, occupy and control the mining
claims" and "to explore and develop the mining claims, mine or extract the ores, mill, process
and beneficiate and/or dispose the mineral products in any method or process," among others,
for a period of 25 years.

Issue: Whether or not there was a valid rescission of the OA.

Held:

The rescission is valid. As a general rule, the power to rescind an obligation must be
invoked judicially and cannot be exercised solely on a party’s own judgment that the other has
committed a breach of the obligation. This is so because rescission of a contract will not be
permitted for a slight or casual breach, but only for such substantial and fundamental violations
as would defeat the very object of the parties in making the agreement. As a well-established
exception, however, an injured party need not resort to court action in order to rescind a contract
when the contract itself provides that it may be revoked or cancelled upon violation of its terms
and conditions.
With that in mind, the Court held that PMC’s unilateral rescission of the OA due to GVEI’s
non-payment of royalties considering the parties’ express stipulation in the OA that said
agreement may be cancelled on such ground.

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