G.R. No. 214923 , August 28, 2019
Shuley Mine, Inc., Petitioner, vs. Department of Environment and Natural Resources, Rep. by Secretary Ramon J.P. Paje, Mines and Geosciences Bureau, Rep. by Acting Director Leo L. Jasareno, Environmental Management Bureau, Rep. by Director Juan Miguel T. Cuna, and Privatization and Management Office Rep. by Chief Privatization Officer, Karen G. Singson, Respondents.

FACTS

On September 2, 1994, the Philippine Government and Philnico Mining and Industrial Corporation (Philnico) entered into a Mineral Production Sharing Agreement (MPSA) No. 072-97-XIII (SMR) for mining operations in Surigao. On May 2, 1997, Philnico assigned its mining rights to Pacific Nickel Philippines, Inc. (Pacific Nickel). On April 27, 2009, Pacific Nickel, as holder of the MPSA, entered into a Mines Operating Agreement (MOA) with petitioner Shuley Mine, Inc. (SMI), where SMI agreed to perform mining activities as an Operator for 48 months from April 27, 2009, to April 27, 2013, and to assume Pacific Nickel’s obligations under the MPSA. The MOA was approved by the MGB Central Office on July 23, 2009. In September 2009, SMI and Pacific Nickel entered into a Supplemental Agreement stating that the MOA’s four-year effectivity would commence on the date of approval of the Partial Declaration of the Mining Project Feasibility (DMPF). The MGB approved the DMPF on April 8, 2010, making the MOA operative from April 8, 2010, to April 8, 2014.
On May 20, 2011, MGB Acting Director Leo L. Jasareno issued a Memorandum directing the suspension of Ore Transport Permits (OTPs) and Mineral Ore Export Permits (MOEPs) for Philnico and its assignees due to Philnico’s non-payment of a substantial debt to the government. Pacific Nickel secured injunctions from the RTC of Surigao City against this suspension. Despite the injunctions, SMI claimed the MGB Regional Office refused to issue it OTPs and MOEPs. On October 12, 2012, the MGB Regional Director issued the requested OTPs and MOEPs to SMI.
On April 22, 2013, Pacific Nickel informed the MGB that it had directed SMI to suspend all mining and hauling activities for allegedly mining beyond the approved ore grade and requested the MGB to suspend SMI’s OTPs and MOEPs. SMI countered that its operations were within the approved scope. On May 7, 2013, Dir. Jasareno directed the MGB Regional Director not to issue any OTP or MOEP under the MPSA and to suspend mining operations pending resolution of the issues. On May 8, 2013, the MGB Regional Director directed SMI to temporarily suspend its mining operations. On May 20, 2013, Dir. Jasareno informed SMI that its MOA with Pacific Nickel had expired on April 27, 2013.
SMI filed a petition for injunction with the RTC of Surigao City, Branch 29, which issued a Writ of Preliminary Injunction on July 25, 2013, enjoining the implementation of the suspension orders. The CA, in its Decision dated June 13, 2014, annulled the Writ of Preliminary Injunction, ruling that the trial court committed grave abuse of discretion. The CA found that SMI’s MOA had expired, thus it no longer had a right to operate that needed protection, and that the issuance of the injunction would allow SMI to continue mining without a valid agreement. SMI’s motion for reconsideration was denied.

ISSUE

Whether the Court of Appeals correctly annulled the Writ of Preliminary Injunction issued by the Regional Trial Court.

RULING

Yes, the Court of Appeals correctly annulled the Writ of Preliminary Injunction. The Supreme Court affirmed the CA’s ruling. A writ of preliminary injunction is an extraordinary remedy to preserve the status quo and prevent irreparable injury, issuable only upon a clear showing of a right to be protected. The Court found that SMI failed to establish such a clear right. The MOA between SMI and Pacific Nickel, which was the basis of SMI’s right to operate, expired on April 27, 2013. The Supplemental Agreement, which SMI claimed extended the term to April 8, 2014, was not duly approved by the government as required by mining laws and regulations. The approval of the MOA by the MGB on July 23, 2009, explicitly stated its term as 48 months from April 27, 2009. Any modification, including the term extension in the Supplemental Agreement, required prior government approval, which was not obtained. Therefore, upon the MOA’s expiration on April 27, 2013, SMI no longer had a right to conduct mining operations in the contract area. Without a clear and existing right, the RTC committed grave abuse of discretion in issuing the injunction. Furthermore, the suspension orders issued by the MGB were in the exercise of its regulatory powers to ensure compliance with mining laws and to protect the government’s interest, given the substantial unpaid debt by the MPSA holder. The Supreme Court emphasized that the State, as owner of mineral resources, has the full control and supervision over their exploration, development, and utilization.