Semirara Coal Corporation vs. HGL Development Corporation

G.R. NO.
166854, December 06, 2006

SEMIRARA COAL CORPORATION VS. HGL DEVELOPMENT
CORPORATION
Facts:
Petitioner Semirara Mining Corporation is a grantee by the Department of

Energy (DOE) of a Coal Operating Contract under Presidential Decree No.
972 over the entire Island of Semirara, Antique, which contains an area of
5,500 hectares more or less.
Private respondent HGL Development Corporation is a grantee of Forest
Land Grazing Lease Agreement (FLGLA) No. 184 by the then Ministry of
Environment and Natural Resources, over 367 hectares of land located at the
barrios of Bobog and Pontod, Semirara, Caluya, Antique Since its grant,
HGL has been grazing cattle on the subject property.
Sometime in 1999, petitioner's representatives approached HGL and
requested for permission to allow petitioner's trucks and other equipment to
pass through the property covered by the FLGLA. HGL granted the request
on condition that petitioner's use would not violate the FLGLA in any way.
Subsequently, however, petitioner erected several buildings for petitioner's
administrative offices and employees' residences without HGL's permission.
Petitioner also conducted blasting and excavation; constructed an access road
to petitioner's mine site in the Panaan Coal Reserve, Semirara; and
maintained a stockyard for the coal it extracted from its mines. Thus, the land
which had been used for cattle grazing was greatly damaged, causing the
decimation of HGL's cattle.
On September 22, 1999, HGL wrote petitioner demanding full disclosure of
petitioner's activities on the subject land as well as prohibiting petitioner from
constructing any improvements without HGL's permission. Petitioner ignored
the demand and continued with its activities.
On December 6, 2000, the Department of Environment and Natural
Resources (DENR) unilaterally cancelled FLGLA No. 184 and ordered HGL
to vacate the premises.
HGL filed a complaint against the DENR for specific performance and
damages with prayer for a temporary restraining order and/or writ of
preliminary injunction. A writ of preliminary injunction was
issued by the Caloocan City RTC on December 22, 2003, enjoining the
DENR from enforcing its December 6, 2000 Order of Cancellation.
Meanwhile, HGL had also filed on November 17, 2003, a complaint against
petitioner for Recovery of Possession and Damages with Prayer for TRO and/
or Writ of Preliminary Mandatory Injunction
Because of petitioner's failure to attend the two scheduled hearings, the trial
court, in an Order dated March 24, 2004, deemed the application for issuance
of a Writ of Preliminary Mandatory Injunction submitted for decision.
Meanwhile, petitioner had filed its Answer dated February 26, 2004, raising
among others the affirmative defense that HGL no longer had any right to
possess the subject property since its FLGLA has already been cancelled and
said cancellation had already become final.
On September 16, 2004, the trial court granted the prayer for issuance of a
Writ of Preliminary Mandatory Injunction. The writ restrained petitioner or
its agents from encroaching on the subject land or conducting any activities
in it, and commanded petitioner to restore possession of the subject land to
HGL or its agents.
Issue:
WON the CA seriously erred or committed GAD in affirming the Antique
RTC granting the writ of preliminary mandatory injunction
Ruling:
Under Article 539 of the New Civil Code, a lawful possessor is entitled to be
respected in his possession and any disturbance of possession is a ground for
the issuance of a writ of preliminary mandatory injunction to restore the
possession. Thus, petitioner's claim that the issuance of a writ of preliminary
mandatory injunction is improper because the instant case is allegedly one for
accion publiciana deserves no consideration. This Court has already ruled in
Torre, et al. v. Hon. J. Querubin, et al. that prior to the promulgation of the
New Civil Code, it was deemed improper to issue a writ of preliminary
injunction where the party to be enjoined had already taken complete material
possession of the property involved. However, with the enactment of Article
539, the plaintiff is now allowed to avail of a writ of preliminary mandatory
injunction to restore him in his possession during the pendency of his action
to recover possession.
It is likewise established that a writ of mandatory injunction is granted upon a
showing that (a) the invasion of the right is material and substantial; (b) the
right of complainant is clear and unmistakable; and (c) there is an urgent and
permanent necessity for the writ to prevent serious damage.
In the instant case, it is clear that as holder of a pasture lease agreement under
FLGLA No. 184, HGL has a clear and unmistakable right to the possession
of the subject property.
As lawful possessor, HGL is therefore entitled to protection of its possession
of the subject property and any disturbance of its possession is a valid ground
for the issuance of a writ of preliminary mandatory
injunction in its favor. The right of HGL to the possession of the property is
confirmed by petitioner itself when it sought permission from HGL to use the
subject property in 1999. In contrast to HGL's clear legal right to use and
possess the subject property, petitioner's possession was merely by tolerance
of HGL and only because HGL permitted petitioner to use a portion of the
subject property so that the latter could gain easier access to its mining area
in the Panaan Coal Reserve.
The urgency and necessity for the issuance of a writ of mandatory injunction
also cannot be denied, considering that HGL stands to suffer material and
substantial injury as a result of petitioner's continuous intrusion into the
subject property. Petitioner's continued occupation of the property not only
results in the deprivation of HGL of the use and possession of the subject
property but likewise affects HGL's business operations. It must be noted that
petitioner occupied the property and prevented HGL from conducting its
business way back in 1999 when HGL still had the right to the use and
possession of the property for another 10 years or until 2009. At the very
least, the failure of HGL to operate its cattlegrazing business is perceived as
an inability by HGL to comply with the demands of its customers and sows
doubts in HGL's capacity to continue doing business. This damage to HGL's
business standing is irreparable injury because no fair and reasonable redress
can be had by HGL insofar as the damage to its goodwill and business
reputation is concerned.
The Court of Appeals found that the construction of numerous buildings and
blasting activities by petitioner were done without the consent of HGL, but in
blatant violation of its rights as the lessee of the subject property. It was
likewise found that these unauthorized activities effectively deprived HGL of
its right to use the subject property for cattlegrazing pursuant to the FLGLA.
It cannot be denied that the continuance of petitioner's possession during the
pendency of the case for recovery of possession will not only be unfair but
will undeniably work injustice to HGL. It would also cause continuing
damage and material injury to HGL.

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G.R. NO.

166854, December 06, 2006

Petitioner Semirara Mining Corporation is a grantee by the Department of

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