Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. 175368 April 11, 2013

LEAGUE OF PROVINCES OF THE PHILIPPINES, Petitioner, vs.DEPARTMENT OF ENVIRONMENT and NATURAL RESOURCES and HON. ANGELO T. REYES, in his capacity as Secretary of DENR, Respondents.

D E C I S I O N

PERALTA, J.:

This is a petition for certiorari, prohibition and mandamus,1 praying that this Court order the following: ( 1) declare as unconstitutional Section 17(b)(3)(iii) of Republic Act (R.A.) No. 7160, otherwise known as The Local Government Code of 1991 and Section 24 of Republic Act (R.A.) No. 7076, otherwise known as the People's Small-Scale Mining Act of 1991; (2) prohibit and bar respondents from exercising control over provinces; and (3) declare as illegal the respondent Secretary of the Department of Energy and Natural Resources' (DENR) nullification, voiding and cancellation of the Small-Scale Mining permits issued by the Provincial Governor of Bulacan.

The Facts are as follows:

On March 28, 1996, Golden Falcon Mineral Exploration Corporation (Golden Falcon) filed with the DENR Mines and Geosciences Bureau Regional Office No. III (MGB R-III) an Application for Financial and Technical Assistance Agreement (FTAA) covering an area of 61,136 hectares situated in the Municipalities of San Miguel, San Ildefonso, Norzagaray and San Jose del Monte, Bulacan.2

On April 29, 1998, the MGB R-III issued an Order denying Golden Falcon's Application for Financial and Technical Assistance Agreement for failure to secure area clearances from the Forest Management Sector and Lands Management Sector of the DENR Regional Office No. III.3

On November 11, 1998, Golden Falcon filed an appeal with the DENR Mines and Geosciences Bureau Central Office (MGB-Central Office), and sought reconsideration of the Order dated April 29, 1998.4

On February 10, 2004, while Golden Falcon's appeal was pending, Eduardo D. Mercado, Benedicto S. Cruz, Gerardo R. Cruz and Liberato Sembrano filed with the Provincial Environment and Natural Resources Office (PENRO) of Bulacan their respective Applications for Quarry Permit (AQP), which covered the same area subject of Golden Falcon's Application for Financial and Technical Assistance Agreement.5

On July 16, 2004, the MGB-Central Office issued an Order denying Golden Falcon's appeal and affirming the MGB R-III's Order dated April 29, 1998.

On September 13, 2004, Atlantic Mines and Trading Corporation (AMTC) filed with the PENRO of Bulacan an Application for Exploration Permit (AEP) covering 5,281 hectares of the area covered by Golden Falcon's Application for Financial and Technical Assistance Agreement.6

On October 19, 2004, DENR-MGB Director Horacio C. Ramos, in response to MGB R-III Director Arnulfo V. Cabantog's memorandum query dated September 8, 2004, categorically stated that the MGB-Central Office's Order dated July 16, 2004 became final on August 11, 2004, fifteen (15) days after Golden Falcon received the said Order, per the Certification dated October 8, 2004 issued by the Postmaster II of the Philippine Postal Corporation of Cainta, Rizal.7

Through letters dated May 5 and May 10, 2005, AMTC notified the PENRO of Bulacan and the MGB R-III Director, respectively, that the subject Applications for Quarry Permit fell within its (AMTC's) existing valid and prior Application for Exploration Permit, and the the former area of Golden Falcon was open to mining location only on August 11, 2004 per the Memorandum dated October 19, 2004 of the MGB Director, Central Office.8

On June 24, 2005, Ricardo Medina, Jr., PENRO of Bulacan, indorsed AMTC's letter to the Provincial Legal Officer, Atty. Eugenio F. Resurreccion, for his legal opinion on which date of denial of Golden Falcon's application/appeal – April 29, 1998 or July 16, 2004 − is to be considered in the deliberation of the Provincial Mining Regulatory Board (PMRB) for the purpose of determining when the land subject of the Applications for Quarry Permit could be considered open for application.

On June 28, 2005, Provincial Legal Officer Eugenio Resurreccion issued a legal opinion stating that the Order dated July 16, 2004 of the MGB-Central Office was a mere reaffirmation of the Order dated April 29, 1998 of the MGB R-III; hence, the Order dated April 29, 1998 should be the reckoning period of the denial of the application of Golden Falcon.

On July 22, 2005, AMTC filed with the PMRB of Bulacan a formal protest against the aforesaid Applications for Quarry Permit on the ground that the subject area was already covered by its Application for Exploration Permit.9

On August 8, 2005, MGB R-III Director Cabantog, who was the concurrent Chairman of the PMRB, endorsed to the Provincial Governor of Bulacan, Governor Josefina M. dela Cruz, the aforesaid Applications for Quarry Permit that had apparently been converted to Applications for Small-Scale Mining Permit of Eduardo D. Mercado, Benedicto S. Cruz, Gerardo R. Cruz and Lucila S. Valdez (formerly Liberato Sembrano).10

On August 9, 2005, the PENRO of Bulacan issued four memoranda recommending to Governor Dela Cruz the approval of the aforesaid Applications for Small-Scale Mining Permit.11

On August 10, 2005, Governor Dela Cruz issued the corresponding Small-Scale Mining Permits in favor of Eduardo D. Mercado, Benedicto S. Cruz, Gerardo R. Cruz and Lucila S. Valdez.12

Subsequently, AMTC appealed to respondent DENR Secretary the grant of the aforesaid Small-Scale Mining Permits, arguing that: (1) The PMRB of Bulacan erred in giving due course to the Applications for Small-Scale Mining Permit without first resolving its formal protest; (2) The areas covered by the Small-Scale Mining Permits fall within the area covered by AMTC's valid prior Application for Exploration Permit; (3) The Applications for Quarry Permit were illegally converted to Applications for Small-Scale Mining Permit; (4) DENR-MGB Director Horacio C. Ramos' ruling that the subject areas became open for mining location only on August 11, 2004 was controlling; (5) The Small-Scale Mining Permits were null and void because they covered areas that were never declared People's Small-Scale Mining Program sites as mandated by Section 4 of the People's Small-Scale Mining Act of 1991; and (6) Iron ore is not considered as one of the quarry resources, as defined by Section 43 of the Philippine Mining Act of 1995, which could be subjects of an Application for Quarry Permit.13

On August 8, 2006, respondent DENR Secretary rendered a Decision14 in favor of AMTC. The DENR Secretary agreed with MGB Director Horacio C. Ramos that the area was open to mining location only on August 11, 2004, fifteen (15) days after the receipt by Golden Falcon on July 27, 2004 of a copy of the MGB-Central Office's Order dated July 16, 2004, which Order denied Golden Falcon's appeal. According to the DENR Secretary, the filing by Golden Falcon of the letter-appeal suspended the finality of the Order of denial issued on April 29, 1998 by the Regional Director until the resolution of the appeal on July 16, 2004 by the MGB-Central Office. He stated that the Applications for Quarry Permit were filed on February 10, 2004 when the area was still closed to mining location; hence, the Small-Scale Mining Permits granted by the PMRB and the Governor were null and void. On the other hand, the DENR Secretary declared that AMTC filed its Application for Exploration Permit when the area was already open to other mining applicants; thus, AMTC’s Application for Exploration Permit was valid. Moreover, the DENR Secretary held that the questioned Small-Scale Mining Permits were issued in violation of Section 4 of R.A. No. 7076 and beyond the authority of the Provincial Governor pursuant to Section 43 of R.A. No. 7942, because the area was never proclaimed to be under the People's Small-Scale Mining Program. Further, the DENR Secretary stated that iron ore mineral is not considered among the quarry resources.

The dispositive portion of the DENR Secretary’s Decision reads:

WHEREFORE, the Application for Exploration Permit, AEP-III-02-04 of Atlantic Mines and Trading Corp. is declared valid and may now be given due course. The Small-Scale Mining Permits, SSMP-B-002-05 of Gerardo Cruz, SSMP-B-003-05 of Eduardo D. Mercado, SSMP-B-004-05 of Benedicto S. Cruz and SSMP-B-005-05 of Lucila S. Valdez are declared NULL AND VOID. Consequently, the said permits are hereby CANCELLED.15

Hence, petitioner League of Provinces filed this petition.

Petitioner is a duly organized league of local governments incorporated under R.A. No. 7160. Petitioner declares that it is composed of 81 provincial governments, including the Province of Bulacan. It states that this is not an action of one province alone, but the collective action of all provinces through the League, as a favorable ruling will not only benefit one province, but all provinces and all local governments.

Petitioner raises these issues:

I

WHETHER OR NOT SECTION 17(B)(3)(III) OF THE, 1991 LOCAL GOVERNMENT CODE AND SECTION 24 OF THE PEOPLE'S SMALL-SCALE MINING ACT OF 1991 ARE UNCONSTITUTIONAL FOR PROVIDING FOR EXECUTIVE CONTROL AND INFRINGING UPON THE LOCAL AUTONOMY OF PROVINCES.

II

WHETHER OR NOT THE ACT OF RESPONDENT [DENR] IN NULLIFYING, VOIDING AND CANCELLING THE SMALL-SCALE MINING PERMITS AMOUNTS TO EXECUTIVE CONTROL, NOT MERELY SUPERVISION AND USURPS THE DEVOLVED POWERS OF ALL PROVINCES.16

To start, the Court finds that petitioner has legal standing to file this petition because it is tasked under Section 504 of the Local Government Code of 1991 to promote local autonomy at the provincial level;17 adopt measures for the promotion of the welfare of all provinces and its officials and employees;18 and exercise such other powers and perform such other duties and functions as the league may prescribe for the welfare of the provinces.19

Before this Court determines the validity of an act of a co-equal and coordinate branch of the Government, it bears emphasis that ingrained in our jurisprudence is the time-honored principle that a statute is presumed to be valid.20This presumption is rooted in the doctrine of separation of powers which enjoins upon the three coordinate departments of the Government a becoming courtesy for each other's acts.21 This Court, however, may declare a law, or portions thereof, unconstitutional where a petitioner has shown a clear and unequivocal breach of the Constitution,22 leaving no doubt or hesitation in the mind of the Court.23

In this case, petitioner admits that respondent DENR Secretary had the authority to nullify the Small-Scale Mining Permits issued by the Provincial Governor of Bulacan, as the DENR Secretary has control over the PMRB, and the implementation of the Small-Scale Mining Program is subject to control by respondent DENR.

Control of the DENR/DENR Secretary over small-scale mining in the provinces is granted by three statutes: (1) R.A. No. 7061 or The Local Government Code of 1991; (2) R.A. No. 7076 or the People's Small Scale Mining Act of 1991; and (3) R.A. No. 7942, otherwise known as the Philippine Mining Act of 1995.24 The pertinent provisions of law sought to be declared as unconstitutional by petitioner are as follows:

R.A. No. 7061 (The Local Government Code of 1991)

SEC. 17. Basic Services and Facilities. - (a) Local government units shall endeavor to be self-reliant and shall continue exercising the powers and discharging the duties and functions currently vested upon them. They shall also discharge the functions and responsibilities of national agencies and offices devolved to them pursuant to this Code. Local government units shall likewise exercise such other powers and discharge such other functions and responsibilities as are necessary,

appropriate, or incidental to efficient and effective provision of the basic services and facilities enumerated herein.

(b) Such basic services and facilities include, but are not limited to, the following:

x x x x

(3) For a Province:c

x x x x

(iii) Pursuant to national policies and subject to supervision, control and review of the DENR, enforcement of forestry laws limited to community-based forestry projects, pollution control law, small-scale mining law, and other laws on the protection of the environment; and mini-hydro electric projects for local purposes; x x x25

R.A. No. 7076 (People's Small-Scale Mining Act of 1991)

Sec. 24. Provincial/City Mining Regulatory Board. - There is hereby created under the direct supervision and control of the Secretary a provincial/city mining regulatory board, herein called the Board, which shall be the implementing agency of the Department, and shall exercise the following powers and functions, subject to review by the Secretary:

(a) Declare and segregate existing gold-rush areas for small-scale mining;

(b) Reserve future gold and other mining areas for small-scale mining;

(c) Award contracts to small-scale miners;

(d) Formulate and implement rules and regulations related to small-scale mining;

(e) Settle disputes, conflicts or litigations over conflicting claims within a people’s small-scale mining area, an area that is declared a small-mining; and

(f) Perform such other functions as may be necessary to achieve the goals and objectives of this Act.26

Petitioner contends that the aforecited laws and DENR Administrative Order No. 9640 (the Implementing Rules and Regulations of the Philippine Mining Act of 1995) did not explicitly confer upon respondents DENR and the DENR Secretary the power to reverse, abrogate, nullify, void, or cancel the permits issued by the Provincial Governor or small-scale mining contracts entered into by the PMRB. The statutes are also silent as to the power of respondent DENR Secretary to substitute his own judgment over that of the Provincial Governor and the PMRB.

Moreover, petitioner contends that Section 17 (b)(3)(iii) of the Local Government Code of 1991 and Section 24 of R.A. No. 7076, which confer upon respondents DENR and the DENR Secretary the power of control are unconstitutional, as the Constitution states that the President (and

Executive Departments and her alter-egos) has the power of supervision only, not control, over acts of the local government units, and grants the local government units autonomy, thus:

The 1987 Constitution:

Article X, Section 4. The President of the Philippines shall exercise general supervision over local governments. Provinces with respect to component cities and municipalities, and cities and municipalities with respect to component barangays, shall ensure that the acts of their component units are within the scope of their prescribed powers and functions.27

Petitioner contends that the policy in the above-cited constitutional provision is mirrored in the Local Government Code, which states:

SEC. 25. National Supervision over Local Government Units. - (a) Consistent with the basic policy on local autonomy, the President shall exercise general supervision over local government units to ensure that their acts are within the scope of their prescribed powers and functions.

The President shall exercise supervisory authority directly over provinces, highly urbanized cities, and independent component cities; through the province with respect to component cities and municipalities; and through the city and municipality with respect to barangays.28

Petitioner contends that the foregoing provisions of the Constitution and the Local Government Code of 1991 show that the relationship between the President and the Provinces or respondent DENR, as the alter ego of the President, and the Province of Bulacan is one of executive supervision, not one of executive control. The term "control" has been defined as the power of an officer to alter or modify or set aside what a subordinate officer had done in the performance of his/her duties and to substitute the judgment of the former for the latter, while the term "supervision" is the power of a superior officer to see to it that lower officers perform their function in accordance with law.29

Petitioner argues that respondent DENR Secretary went beyond mere executive supervision and exercised control when he nullified the small-scale mining permits granted by the Provincial Governor of Bulacan, as the former substituted the judgment of the latter.

Petitioner asserts that what is involved here is a devolved power.

Under the Local Government Code of 1991, the power to regulate small-scale mining has been devolved to all provinces. In the exercise of devolved powers, departmental approval is not necessary.30

Petitioner contends that if the provisions in Section 24 of R.A. No. 7076 and Section 17 (b)(3)(iii) of the Local Government Code of 1991 granting the power of control to the DENR/DENR Secretary are not nullified, nothing would stop the DENR Secretary from nullifying, voiding and canceling the small-scale mining permits that have been issued by a Provincial Governor.

Petitioner submits that the statutory grant of power of control to respondents is unconstitutional, as the Constitution only allows supervision over local governments and proscribes control by the executive departments.

In its Comment, respondents, represented by the Office of the Solicitor General, stated that contrary to the assertion of petitioner, the power to implement the small-scale mining law is expressly limited in Section 17 (b)(3)(iii) of the Local Government Code, which provides that it must be carried out "pursuant to national policies and subject to supervision, control and review of the DENR." Moreover, the fact that the power to implement the small-scale mining law has not been fully devolved to provinces is further amplified by Section 4 of the People's Small-Scale Mining Act of 1991, which provides, among others, that the People's Small-Scale Mining Program shall be implemented by the DENR Secretary.

The petition lacks merit.

Paragraph 1 of Section 2, Article XII (National Economy and Patrimony) of the Constitution31 provides that "the exploration, development and utilization of natural resources shall be under the full control and supervision of the State."

Moreover, paragraph 3 of Section 2, Article XII of the Constitution provides that "the Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens x x x."

Pursuant to Section 2, Article XII of the Constitution, R.A. No. 7076 or the People's Small-Scale Mining Act of 1991, was enacted, establishing under Section 4 thereof a People's Small-Scale Mining Program to be implemented by the DENR Secretary in coordination with other concerned government agencies.

The People's Small-Scale Mining Act of 1991 defines "small-scale mining" as "refer[ring] to mining activities, which rely heavily on manual labor using simple implement and methods and do not use explosives or heavy mining equipment."32

It should be pointed out that the Administrative Code of 198733 provides that the DENR is, subject to law and higher authority, in charge of carrying out the State's constitutional mandate, under Section 2, Article XII of the Constitution, to control and supervise the exploration, development, utilization and conservation of the country's natural resources. Hence, the enforcement of small-scale mining law in the provinces is made subject to the supervision, control and review of the DENR under the Local Government Code of 1991, while the People’s Small-Scale Mining Act of 1991 provides that the People’s Small-Scale Mining Program is to be implemented by the DENR Secretary in coordination with other concerned local government agencies.

Indeed, Section 4, Article X (Local Government) of the Constitution states that "[t]he President of the Philippines shall exercise general supervision over local governments," and Section 25 of the Local Government Code reiterates the same. General supervision by the President means no more than seeing to it that laws are faithfully executed or that subordinate officers act within the law.34

The Court has clarified that the constitutional guarantee of local autonomy in the Constitution Art. X, Sec. 2 refers to the administrative autonomy of local government units or, cast in more

technical language, the decentralization of government authority.35 It does not make local governments sovereign within the State.36 Administrative autonomy may involve devolution of powers, but subject to limitations like following national policies or standards,37 and those provided by the Local Government Code, as the structuring of local governments and the allocation of powers, responsibilities, and resources among the different local government units and local officials have been placed by the Constitution in the hands of Congress38 under Section 3, Article X of the Constitution.

Section 3, Article X of the Constitution mandated Congress to "enact a local government code which shall provide for a more responsive and accountable local government structure instituted through a system of decentralization with effective mechanisms of recall, initiative, and referendum, allocate among the different local government units their powers, responsibilities, and resources, and provide for the qualifications, election, appointment and removal, term, salaries, powers and functions and duties of local officials, and all other matters relating to the organization and operation of the local units."

In connection with the enforcement of the small-scale mining law in the province, Section 17 of the Local Government Code provides:

SEC. 17. Basic Services and Facilities. - (a) Local government units shall endeavor to be self-reliant and shall continue exercising the powers and discharging the duties and functions currently vested upon them. They shall also discharge the functions and responsibilities of national agencies and offices devolved to them pursuant to this Code. Local government units shall likewise exercise such other powers and discharge such other functions and responsibilities as are necessary, appropriate, or incidental to efficient and effective provision of the basic services and facilities enumerated herein.

(b) Such basic services and facilities include, but are not limited to, the following:

x x x x

(3) For a Province:c

x x x x

(iii) Pursuant to national policies and subject to supervision, control and review of the DENR, enforcement of forestry laws limited to community-based forestry projects, pollution control law, small-scale mining law, and other laws on the protection of the environment; and mini-hydro electric projects for local purposes;39

Clearly, the Local Government Code did not fully devolve the enforcement of the small-scale mining law to the provincial government, as its enforcement is subject to the supervision, control and review of the DENR, which is in charge, subject to law and higher authority, of carrying out the State's constitutional mandate to control and supervise the exploration, development, utilization of the country's natural resources.40

Section 17 (b)(3)(iii) of the Local Government Code of 1991 is in harmony with R.A. No. 7076 or the People's Small-Scale Mining Act of 1991,41 which established a People's Small-Scale Mining Program to be implemented by the Secretary of the DENR, thus:

Sec. 2. Declaration of Policy. – It is hereby declared of the State to promote, develop, protect and rationalize viable small-scale mining activities in order to generate more employment opportunities and provide an equitable sharing of the nation's wealth and natural resources, giving due regard to existing rights as herein provided.

x x x x

Sec. 4. People's Small-Scale Mining Program. - For the purpose of carrying out the declared policy provided in Section 2 hereof, there is hereby established a People's Small-Scale Mining Program to be implemented by the Secretary of the Department of Environment and Natural Resources, hereinafter called the Department, in coordination with other concerned government agencies, designed to achieve an orderly, systematic and rational scheme for the small-scale development and utilization of mineral resources in certain mineral areas in order to address the social, economic, technical, and environmental problems connected with small-scale mining activities.

x x x x

Sec. 24. Provincial/City Mining Regulatory Board. – There is hereby created under the direct supervision and control of the Secretary a provincial/city mining regulatory board, herein called the Board, which shall be the implementing agency of the Department, and shall exercise the following powers and functions, subject to review by the Secretary:

(a) Declare and segregate existing gold-rush areas for small-scale mining;

(b) Reserve future gold and other mining areas for small-scale mining;

(c) Award contracts to small-scale miners;

(d) Formulate and implement rules and regulations related to small-scale mining;

(e) Settle disputes, conflicts or litigations over conflicting claims within a people’s small-scale mining area, an area that is declared a small-mining; and

(f) Perform such other functions as may be necessary to achieve the goals and objectives of this Act.42

DENR Administrative Order No. 34, series of 1992, containing the Rules and Regulations to implement R.A. No. 7076, provides:

SEC. 21. Administrative Supervision over the People's Small-Scale Mining Program. − The following DENR officials shall exercise the following supervisory functions in the implementation of the Program:

21.1 DENR Secretrary – direct supervision and control over the program and activities of the small-scale miners within the people's small-scale mining area;

21.2 Director − the Director shall:

a. Recommend the depth or length of the tunnel or adit taking into account the: (1) size of membership and capitalization of the cooperative; (2) size of mineralized areas; (3) quantity of mineral deposits; (4) safety of miners; and (5) environmental impact and other considerations;

b. Determine the right of small-scale miners to existing facilities in consultation with the operator, claimowner, landowner or lessor of an affected area upon declaration of a small-scale mining area;

c. Recommend to the Secretary the withdrawal of the status of the people's small-scale mining area when it can no longer be feasibly operated on a small-scale basis; and

d. See to it that the small-scale mining contractors abide by small-scale mines safety rules and regulations.

x x x x

SEC. 22. Provincial/City Mining Regulatory Board. − The Provincial/City Mining Regulatory Board created under R.A. 7076 shall exercise the following powers and functions, subject to review by the Secretary:

22.1 Declares and segregates existing gold rush area for small-scale mining;

22.2 Reserves for the future, mineralized areas/mineral lands for people's small-scale mining;

22.3 Awards contracts to small-scale miners’ cooperative;

22.4 Formulates and implements rules and regulations related to R.A. 7076;

22.5 Settles disputes, conflicts or litigations over conflicting claims within ninety (90) days upon filing of protests or complaints; Provided, That any aggrieved party may appeal within five (5) days from the Board's decision to the Secretary for final resolution otherwise the same is considered final and executory; and

22.6 Performs such other functions as may be necessary to achieve the goals and objectives of R.A. 7076.

SEC. 6. Declaration of People's Small-Scale Mining Areas. – The Board created under R.A. 7076 shall have the authority to declare and set aside People's Small-Scale Mining Areas in sites onshore

suitable for small-scale mining operations subject to review by the DENR Secretary thru the Director.43

DENR Administrative Order No. 23, otherwise known as the Implementing Rules and Regulations of R.A. No. 7942, otherwise known as the Philippine Mining Act of 1995, adopted on August 15, 1995, provides under Section 12344thereof that small-scale mining applications should be filed with the PMRB45 and the corresponding permits shall be issued by the Provincial Governor, except small-scale mining applications within the mineral reservations.

Thereafter, DENR Administrative Order No. 96-40, otherwise known as the Revised Implementing Rules and Regulations of R.A. No. 7942, otherwise known as the Philippine Mining Act of 1995, adopted on December 19, 1996, provides that applications for Small-Scale Mining Permits shall be filed with the Provincial Governor/City Mayor through the concerned Provincial/City Mining Regulatory Board for areas outside the Mineral Reservations and with the Director though the Bureau for areas within the Mineral Reservations.46 Moreover, it provides that Local Government Units shall, in coordination with the Bureau/ Regional Offices and subject to valid and existing mining rights, "approve applications for small-scale mining, sand and gravel, quarry x x x and gravel permits not exceeding five (5) hectares."47

Petitioner contends that the Local Government Code of 1991, R.A. No. 7076, DENR Administrative Orders Nos. 95-23 and 96-40 granted the DENR Secretary the broad statutory power of control, but did not confer upon the respondents DENR and DENR Secretary the power to reverse, abrogate, nullify, void, cancel the permits issued by the Provincial Governor or small-scale mining contracts entered into by the Board.

The contention does not persuade.

The settlement of disputes over conflicting claims in small-scale mining is provided for in Section 24 of R.A. No. 7076, thus:

Sec. 24. Provincial/City Mining Regulatory Board. − There is hereby created under the direct supervision and control of the Secretary a provincial/city mining regulatory board, herein called the Board, which shall be the implementing agency of the Department, and shall exercise the following powers and functions, subject to review by the Secretary:

x x x x

(e) Settle disputes, conflicts or litigations over conflicting claims within a people's small-scale mining area, an area that is declared a small mining area; x x x

Section 24, paragraph (e) of R.A. No. 7076 cited above is reflected in Section 22, paragraph 22.5 of the Implementing Rules and Regulations of R.A. No. 7076, to wit:

SEC. 22. Provincial/City Mining Regulatory Board. – The Provincial/City Mining Regulatory Board created under R.A. No. 7076 shall exercise the following powers and functions, subject to review by the Secretary:

x x x x

22.5 Settles disputes, conflicts or litigations over conflicting claims within ninety (90) days upon filing of protests or complaints; Provided, That any aggrieved party may appeal within five (5) days from the Board's decision to the Secretary for final resolution otherwise the same is considered final and executory; x x x

In this case, in accordance with Section 22, paragraph 22.5 of the Implementing Rules and Regulations of R.A. No. 7076, the AMTC filed on July 22, 2005 with the PMRB of Bulacan a formal protest against the Applications for Quarry Permits of Eduardo Mercado, Benedicto Cruz, Liberato Sembrano (replaced by Lucila Valdez) and Gerardo Cruz on the ground that the subject area was already covered by its Application for Exploration Permit.48 However, on August 8, 2005, the PMRB issued Resolution Nos. 05-8, 05-9, 05-10 and 05-11, resolving to submit to the Provincial Governor of Bulacan the Applications for Small-Scale Mining Permits of Eduardo Mercado, Benedicto Cruz, Lucila Valdez and Gerardo Cruz for the granting/issuance of the said permits.49 On August 10, 2005, the Provincial Governor of Bulacan issued the Small-Scale Mining Permits to Eduardo Mercado, Benedicto Cruz, Lucila Valdez and Gerardo Cruz based on the legal opinion of the Provincial Legal Officer and the Resolutions of the PMRB of Bulacan.

Hence, AMTC filed an appeal with respondent DENR Secretary, appealing from Letter-Resolution No. 05-1317 and Resolution Nos. 05-08, 05-09, 05-10 and 05-11, all dated August 8, 2005, of the PMRB of Bulacan, which resolutions gave due course and granted, on August 10, 2005, Small-Scale Mining Permits to Eduardo D. Mercado, Benedicto S. Cruz, Lucila Valdez and Gerardo Cruz involving parcels of mineral land situated at Camachin, Doña Remedios Trinidad, Bulacan.

The PMRB of Bulacan filed its Answer, stating that it is an administrative body, created under R.A. No. 7076, which cannot be equated with the court wherein a full-blown hearing could be conducted, but it is enough that the parties were given the opportunity to present evidence. It asserted that the questioned resolutions it issued were in accordance with the mining laws and that the Small-Scale Mining Permits granted were registered ahead of AMTC's Application for Exploration Permit. Further, the Board stated that the Governor of Bulacan had the power to approve the Small-Scale Mining Permits under R.A. No. 7160.

The DENR Secretary found the appeal meritorious, and resolved these pivotal issues: (1) when is the subject mining area open for mining location by other applicants; and (2) who among the applicants have valid applications.1âwphi1 The pertinent portion of the decision of the DENR Secretary reads:

We agree with the ruling of the MGB Director that the area is open only to mining location on August 11, 2004, fifteen (15) days after the receipt by Golden Falcon on July 27, 2004 of a copy of the subject Order of July 16, 2004.1âwphi1The filing by Golden Falcon of the letter-appeal suspended the finality of the Order of Denial issued on April 29, 1998 by the Regional Director until the Resolution thereof on July 16, 2004.

Although the subject AQPs/SSMPs were processed in accordance with the procedures of the PMRB, however, the AQPs were filed on February 10, 2004 when the area is still closed to mining location. Consequently, the SSMPs granted by the PMRB and the Governor are null and void

making thereby AEP No. III-02-04 of the AMTC valid, it having been filed when the area is already open to other mining applicants.

Records also show that the AQPs were converted into SSMPs. These are two (2) different applications. The questioned SSMPs were issued in violation of Section 4 of RA 7076 and beyond the authority of the Provincial Governor pursuant to Section 43 of RA 7942 because the area was never proclaimed as "People's Small-Scale Mining Program." Moreover, iron ore mineral is not considered among the quarry resources.

x x x x

WHEREFORE, the Application for Exploration Permit, AEP-III-02-04 of Atlantic Mines and Trading Corp. is declared valid and may now be given due course. The Small-Scale Mining Permits, SSMP-B-002-05 of Gerardo Cruz, SSMP-B-003-05 of Eduardo D. Mercado, SSMP-B-004-05 of Benedicto S. Cruz and SSMP-B-005-05 of Lucila S. Valdez are declared NULL AND VOID. Consequently, the said permits are hereby CANCELLED.50

The Court finds that the decision of the DENR Secretary was rendered in accordance with the power of review granted to the DENR Secretary in the resolution of disputes, which is provided for in Section 24 of R.A. No. 707651 and Section 22 of its Implementing Rules and Regulations.52 It is noted that although AMTC filed a protest with the PMRB regarding its superior and prior Application for Exploration Permit over the Applications for Quarry Permit, which were converted to Small-Scale Mining Permits, the PMRB did not resolve the same, but issued Resolution Nos. 05-08 to 05-11 on August 8, 2005, resolving to submit to the Provincial Governor of Bulacan the Applications for Small-Scale Mining Permits of Eduardo Mercado, Benedicto Cruz, Lucila Valdez and Gerardo Cruz for the granting of the said permits. After the Provincial Governor of Bulacan issued the Small-Scale Mining Permits on August 10, 2005, AMTC appealed the Resolutions of the PMRB giving due course to the granting of the Small-Scale Mining Permits by the Provincial Governor.

Hence, the decision of the DENR Secretary, declaring that the Application for Exploration Permit of AMTC was valid and may be given due course, and canceling the Small-Scale Mining Permits issued by the Provincial Governor, emanated from the power of review granted to the DENR Secretary under R.A. No. 7076 and its Implementing Rules and Regulations. The DENR Secretary's power to review and, therefore, decide, in this case, the issue on the validity of the issuance of the Small-Scale Mining Permits by the Provincial Governor as recommended by the PMRB, is a quasi-judicial function, which involves the determination of what the law is, and what the legal rights of the contending parties are, with respect to the matter in controversy and, on the basis thereof and the facts obtaining, the adjudication of their respective rights.53 The DENR Secretary exercises quasi-judicial function under R.A. No. 7076 and its Implementing Rules and Regulations to the extent necessary in settling disputes, conflicts or litigations over conflicting claims. This quasi-judicial function of the DENR Secretary can neither be equated with "substitution of judgment" of the Provincial Governor in issuing Small-Scale Mining Permits nor "control" over the said act of the Provincial Governor as it is a determination of the rights of AMTC over conflicting claims based on the law.

In determining whether Section 17 (b)(3)(iii) of the Local Government Code of 1991 and Section 24 of R.A. No. 7076 are unconstitutional, the Court has been guided by Beltran v. The Secretary of Health, 54 which held:

The fundamental criterion is that all reasonable doubts should be resolved in favor of the constitutionality of a statute. Every law has in its favor the presumption of constitutionality. For a law to be nullified, it must be shown that there is a clear and unequivocal breach of the Constitution. The ground for nullity must be clear and beyond reasonable doubt. Those who petition this Court to declare a law, or parts thereof, unconstitutional must clearly establish the basis therefor. Otherwise, the petition must fail. 55

In this case, the Court finds that the grounds raised by petitioner to challenge the constitutionality of Section 17 (b )(3)(iii) of the Local Government Code of 1991 and Section 24 'of R.A. No.7076 failed to overcome the constitutionality of the said provisions of law.

WHEREFORE, the petition is DISMISSED for lack of merit.

No costs.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Baguio City

THIRD DIVISION

G.R. No. 195580 April 21, 2014

NARRA NICKEL MINING AND DEVELOPMENT CORP., TESORO MINING AND DEVELOPMENT, INC., and MCARTHUR MINING, INC., Petitioners, vs.REDMONT CONSOLIDATED MINES CORP., Respondent.

DISSENTING OPINION

LEONEN, J.:

Investments into our economy are deterred by interpretations of law that are not based on solid ground and sound rationale. Predictability in policy is a very strong factor in determining investor confidence.

The so-called "Grandfather Rule" has no statutory basis. It is the Control Test that governs in determining Filipino equity in corporations. It is this test that is provided in statute and by our most recent jurisprudence.

Furthermore, the Panel of Arbitrators created by the Philippine Mining Act is not a court of law. It cannot decide judicial questions with finality. This includes the determination of whether the capital of a corporation is owned or controlled by Filipino citizens. The Panel of Arbitrators renders arbitral awards. There is no dispute and, therefore, no competence for arbitration, if one of the parties does not have a mining claim but simply wishes to ask for a declaration that a corporation is not qualified to hold a mining agreement. Respondent here did not claim a better right to a mining agreement. By forum shopping through multiple actions, it sought to disqualify petitioners. The decision of the majority rewards such actions.

In this case, the majority's holding glosses over statutory provisions1 and settled jurisprudence.2

Thus, I disagree with the ponencia in relying on the Grandfather Rule. I disagree with the finding that petitioners Narra Nickel Mining and Development Corp. (Narra), Tesoro Mining and Development, Inc. (Tesoro), and McArthur Mining, Inc. (McArthur) are not Filipino corporations. Whether they should be qualified to hold Mineral Production Sharing Agreements (MPSA) should be the subject of proper proceedings in accordance with this opinion. I disagree that the Panel of Arbitrators (POA) of the Department of Environment and Natural Resources (DENR) has jurisdiction to disqualify an applicant for mining activities on the ground that it does not have the requisite Filipino ownership.

Furthermore, respondent Redmont Consolidated Mines Corp. (Redmont) has engaged in blatant forum shopping. The Court of Appeals3 is in error for sustaining the POA. Thus, its findings that Narra, Tesoro, and McArthur are not qualified corporations must be rejected.

To recapitulate, Redmont took interest in undertaking mining activities in the Province of Palawan. Upon inquiry with the Department of Environment and Natural Resources, it discovered that Narra, Tesoro, and McArthur had standing MPSA applications for its interested areas.4

Narra, Tesoro, and McArthur are successors-in-interest of other corporations that have earlier pursued MPSA applications:

1. Narra intended to succeed Alpha Resources and Development Corporation and Patricia Louise Mining and Development Corporation (PLMDC), which held the application MPSA-IV-1-12 covering an area of 3,277 hectares in Barangay Calategas and Barangay San Isidro, Narra, Palawan;5

2. Tesoro intended to succeed Sara Marie Mining, Inc. (SMMI), which held the application MPSA-AMA-IVB-154 covering an area of 3,402 hectares in Barangay Malinao and Barangay Princess Urduja, Narra, Palawan;6

3. McArthur intended to succeed Madridejos Mining Corporation (MMC), which held the application MPSA-AMA-IVB-153 covering an area of more than 1,782 hectares in Barangay Sumbiling, Bataraza, Palawan and EPA-IVB-44 which includes a 3,720-hectare area in Barangay Malatagao, Bataraza, Palawan from SMMI.7

Contending that Narra, Tesoro, and McArthur are corporations whose foreign equity disqualifies them from entering into MPSAs, Redmont filed with the DENR Panel of Arbitrators (POA) for Region IV-B three (3) separate petitions for the denial of the MPSA applications of Narra, Tesoro, and McArthur. In these petitions, Redmont asserted that at least sixty percent (60%) of the capital stock of Narra, Tesoro, and McArthur are owned and controlled by MBMI Resources, Inc. (MBMI), a corporation wholly owned by Canadians.8

Narra, Tesoro, and McArthur countered that the POA did not have jurisdiction to rule on Redmont’s petitions per Section 77 of Republic Act No. 7942, otherwise known as the Philippine Mining Act of 1995 (Mining Act). They also argued that Redmont did not have personality to sue as it had no pending application of its own over the areas in which they had pending applications. They contended that whether they were Filipino corporations has become immaterial as they were already pursuing applications for Financial or Technical Assistance Agreements (FTAA), which, unlike MPSAs, may be entered into by foreign corporations. They added that, in any case, they were qualified to enter into MPSAs as 60% of their capital is owned by Filipinos.9

In a December 14, 2007 resolution,10 the POA held that Narra, Tesoro, and McArthur are foreign corporations disqualified from entering into MPSAs. The dispositive portion of this resolution reads:

WHEREFORE, the Panel of Arbitrators finds the Respondents McArthur Mining Inc., Tesoro Mining and Development, Inc., and Narra Nickel Mining and Development Corp. as, DISQUALIFIED for

being considered as Foreign Corporations. Their Mineral Production Sharing Agreement (MPSA) are hereby as [sic], they are DECLARED NULL AND VOID.

Accordingly, the Exploration Permit Applications of Petitioner Redmont Consolidated Mines Corporation shall be GIVEN DUE COURSE, subject to compliance with the provisions of the Mining Law and its implementing rules and regulations.11

Narra, Tesoro, and McArthur then filed appeals before the Mines Adjudication Board (MAB). In a September 10, 2008 order,12 the MAB pointed out that "no MPSA has so far been issued in favor of any of the parties";13 thus, it faulted the POA for still ruling that "[t]heir Mineral Production Sharing Agreement (MPSA) are hereby as [sic], they are DECLARED NULL AND VOID."14

The MAB sustained the contention of Narra, Tesoro, and McArthur that "the Panel does not have jurisdiction over the instant case, and that it should have dismissed the Petition fortwith [sic]."15 It emphasized that:

[W]hether or not an applicant for an MPSA meets the qualifications imposed by law, more particularly the nationality requirement, is a matter that is addressed to the sound discretion of the competent body or agency, in this case the [Securities and Exchange Commission]. In the interest of orderly procedure and administrative efficiency, it is imperative that the DENR, including the Panel, accord full faith and confidence to the contents of Appellants’ Articles of Incorporation, which have undergone thorough evaluation and scrutiny by the SEC. Unless the SEC or the courts promulgate a ruling to the effect that the Appellant corporations are not Filipino corporations, the Board cannot conclude otherwise. This proposition is borne out by the legal presumptions that official duty has been regularly performed, and that the law has been obeyed in the preparation and approval of said documents.16

Redmont then filed with the Court of Appeals a petition for review under Rule 43 of the 1997 Rules on Civil Procedure. This petition was docketed as CA-G.R. SP No. 109703.

In a decision dated October 1, 2010,17 the Court of Appeals, through its Seventh Division, reversed the MAB and sustained the findings of the POA.18

The Court of Appeals noted that the "pivotal issue before the Court is whether or not respondents McArthur, Tesoro and Narra are Philippine nationals under Philippine laws, rules and regulations."19 Noting that doubt existed as to their foreign equity ownerships, the Court of Appeals, Seventh Division, asserted that such equity ownerships must be reckoned via the Grandfather Rule.20 Ultimately, it ruled that Narra, Tesoro, and McArthur "are not Philippine nationals, hence, their MPSA applications should be recommended for rejection by the Secretary of the DENR."21

On the matter of the Panel of Arbitrators’ jurisdiction, the Court of Appeals, Seventh Division, referred to this court’s declarations in Celestial Nickel Mining Exploration Corp. v. Macroasia Corp.22 and considered these pronouncements as "clearly support[ing the conclusion] that the POA has jurisdiction to resolve the Petitions filed by x x x Redmont."23

The motion for reconsideration of Narra, Tesoro, and McArthur was denied by the Court of Appeals through a resolution dated February 15, 2011.24

Hence, this present petition was filed and docketed as G.R. No. 195580.

Apart from these proceedings before the POA, the MAB and the Court of Appeals, Redmont also filed three (3) separate actions before the Securities and Exchange Commission, the Regional Trial Court of Quezon City, and the Office of the President:

First action: On August 14, 2008, Redmont filed a complaint for revocation of the certificates of registration of Narra, Tesoro, and McArthur with the Securities and Exchange Commission (SEC).25 This complaint became the subject of another case (G.R. No. 205513), which was consolidated but later de-consolidated with the present petition, G.R. No. 195580.

In view of this complaint, Redmont filed on September 1, 2008 a manifestation and motion to suspend proceeding[s] before the MAB.26

In a letter-resolution dated September 3, 2009, the SEC’s Compliance and Enforcement Department (CED) ruled in favor of Narra, Tesoro, and McArthur. It applied the Control Test per Section 3 of Republic Act No. 7042, as amended by Republic Act No. 8179, the Foreign Investments Act (FIA), and held that Narra, Tesoro, and McArthur as well as their co-respondents in that case satisfied the requisite Filipino equity ownership.27 Redmont then filed an appeal with the SEC En Banc.

In a decision dated March 25, 2010,28 the SEC En Banc set aside the SEC-CED’s letter-resolution with respect to Narra, Tesoro, and McArthur as the appeal from the MAB’s September 10, 2008 order was then pending with the Court of Appeals, Seventh Division.29 The SEC En Banc considered the assertion that Redmont has been engaging in forum shopping:

It is evident from the foregoing that aside from identity of the parties x xx, the issue(s) raised in the CA Case and the factual foundations thereof x x x are substantially the same as those obtaining the case at bar. Yet, Redmont did not include this CA Case in the Certification Against Forum Shopping attached to the instant Appeal.30

However, with respect to the other respondent-appellees in that case (Sara Marie Mining, Inc., Patricia Louise Mining and Development Corp., Madridejos Mining Corp., Bethlehem Nickel Corp., San Juanico Nickel Corp., and MBMI Resources Inc.), the complaint was remanded to the SEC-CED for further proceedings with the reminder for it to "consider every piece already on record and, if necessary, to conduct further investigation in order to ascertain, consistent with the Grandfather Rule, the true, actual Filipino and foreign participation in each of these five (5) corporations."31

Asserting that the SEC En Banc had already made a definite finding that Redmont has been engaging in forum shopping, Sara Marie Mining, Inc., Patricia Louise Mining and Development Corp., and Madridejos Mining Corp. filed with the Court of Appeals a petition for review under Rule 43 of the 1997 Rules of Civil Procedure. This petition was docketed as CA-G.R. SP No. 113523.

In a decision dated May 23, 2012, the Court of Appeals, Former Tenth Division, found that "there was a deliberate attempt not to disclose the pendency of CA-GR SP No. 109703."32 It concluded that "the partial dismissal of the case before the SEC is unwarranted. It should have been dismissed in its entirety and with prejudice to the complainant."33 The dispositive portion of the decision reads:

WHEREFORE, the Petition is GRANTED. The Decision dated March 25, 2010 of the Securities and Exchange Commission En Banc is REVERSED and SET ASIDE. Accordingly, the complaint for revocation filed by Redmont Consolidated Mines is DISMISSED with prejudice.34 (Emphasis supplied)

On January 22, 2013, the Court of Appeals, Former Tenth Division, issued a resolution35 denying Redmont’s motion for reconsideration.

Aggrieved, Redmont filed the petition for review on certiorari which became the subject of G.R. No. 205513, initially lodged with this court’s First Division. Through a November 27, 2013 resolution, G.R. No. 205513 was consolidated with G.R. No. 195580. Subsequently however, this court’s Third Division de-consolidated the two (2) cases.

Second Action: On September 8, 2008, Redmont filed a complaint for injunction (of the MAB proceedings pending the resolution of the complaint before the SEC) with application for issuance of a temporary restraining order (TRO) and/or writ of preliminary injunction with the Regional Trial Court, Branch 92, Quezon City.36 The Regional Trial Court issued a TRO on September 16, 2008. By then, however, the MAB had already ruled in favor of Narra, Tesoro, and McArthur.37

Third Action: On May 7, 2010, Redmont filed with the Office of the President a petition seeking the cancellation of the financial or technical assistance agreement (FTAA) applications of Narra, Tesoro, and McArthur. In a decision dated April 6, 2011,38 the Office of the President ruled in favor of Redmont. In a resolution dated July 6, 2011,39 the Office of the President denied the motion for reconsideration of Narra, Tesoro, and McArthur. As noted by the ponencia, Narra, Tesoro, and McArthur then filed an appeal with the Court of Appeals. As this appeal has been denied, they filed another appeal with this court, which appeal is pending in another division.40

The petition for review on certiorari subject of G.R. No. 195580 is an appeal from the Court of Appeals’ October 1, 2010 decision in CA-G.R. SP No. 109703 reversing the MAB and sustaining the POA’s findings that Narra, Tesoro, and McArthur are foreign corporations disqualified from entering into MPSAs. The petition also questions the February 15, 2011 resolution of the Court of Appeals denying the motion for reconsideration of Narra, Tesoro, and McArthur.

To reiterate, G.R. No. 195580 was consolidated with another petition – G.R. No. 205513 – through a resolution of this court dated November 27, 2013. G.R. No. 205513 is an appeal from the Court of Appeals, Former Tenth Division’s May 23, 2012 decision and January 22, 2013 resolution in CA-G.R. SP No. 113523. Subsequently however, G.R. No. 195580 and G.R. No. 205513 were de-consolidated.

Apart from G.R. Nos. 195580 and 205513, a third petition has been filed with this court. This third petition is an offshoot of the petitions filed by Redmont with the Office of the President seeking the cancellation of the FTAA applications of Narra, Tesoro, and McArthur.

The main issue in this case relates to the ownership of capital in Narra, Tesoro, and McArthur, i.e., whether they have satisfied the required Filipino equity ownership so as to be qualified to enter into MPSAs.

In addition to this, Narra, Tesoro, and McArthur raise procedural issues: (1) the POA’s jurisdiction over the subject matter of Redmont’s petitions; (2) the supposed mootness of Redmont’s petitions before the POA considering that Narra, Tesoro, and McArthur have pursued applications for FTAAs; and (3) Redmont’s supposed engagement in forum shopping.41

Governing laws

Mining is an environmentally sensitive activity that entails the exploration, development, and utilization of inalienable natural resources. It falls within the broad ambit of Article XII, Section 2 as well as other sections of the 1987 Constitution which refers to ancestral domains42 and the environment.43

More specifically, Republic Act No. 7942 or the Philippine Mining Act, its implementing rules and regulations, other administrative issuances as well as jurisprudence govern the application for mining rights among others. Small-scale mining44 is governed by Republic Act No. 7076, the People’s Small-scale Mining Act of 1991. Apart from these, other statutes such as Republic Act No. 8371, the Indigenous Peoples Rights Act of 1997 (IPRA), and Republic Act No. 7160, the Local Government Code (LGC) contain provisions which delimit the conduct of mining activities.

Republic Act No. 7042, as amended by Republic Act No. 8179, the Foreign Investments Act (FIA) is significant with respect to the participation of foreign investors in nationalized economic activities such as mining. In the 2012 resolution ruling on the motion for reconsideration in Gamboa v. Teves,45 this court stated that "The FIA is the basic law governing foreign investments in the Philippines, irrespective of the nature of business and area of investment."46

Commonwealth Act No. 108, as amended, otherwise known as the Anti-Dummy Law, penalizes those who "allow [their] name or citizenship to be used for the purpose of evading"47 "constitutional or legal provisions requir[ing] Philippine or any other specific citizenship as a requisite for the exercise or enjoyment of a right, franchise or privilege".48

Batas Pambansa Blg. 68, the Corporation Code, is the general law that "provide[s] for the formation, organization, [and] regulation of private corporations."49 The conduct of activities relating to securities, such as shares of stock, is regulated by Republic Act No. 8799, the Securities Regulation Code (SRC).

DENR’s Panel of Arbitratorshas no competence over thepetitions filed by Redmont

The DENR Panel of Arbitrators does not have the competence to rule on the issue of whether the ownership of the capital of the corporations Narra, Tesoro, and McArthur meet the constitutional and statutory requirements. This alone is ample basis for granting the petition.

Section 77 of the Mining Act provides for the matters falling under the exclusive original jurisdiction of the DENR Panel of Arbitrators, as follows:

Section 77. Panel of Arbitrators – x x x Within thirty (30) working days, after the submission of the case by the parties for decision, the panel shall have exclusive and original jurisdiction to hear and decide on the following:

(a) Disputes involving rights to mining areas;

(b) Disputes involving mineral agreements or permit;

(c) Disputes involving surface owners, occupants and claimholders / concessionaires; and

(d) Disputes pending before the Bureau and the Department at the date of the effectivity of this Act.

In 2007, this court’s decision in Celestial Nickel Mining Exploration Corporation v. Macroasia Corp.50 construed the phrase "disputes involving rights to mining areas" as referring "to any adverse claim, protest, or opposition to an application for mineral agreement."51

Proceeding from this court’s statements in Celestial, the ponencia states:

Accordingly, as We enunciated in Celestial, the POA unquestionably has jurisdiction to resolve disputes over MPSA applications subject of Redmont’s petitions. However, said jurisdiction does not include either the approval or rejection of the MPSA applications which is vested only upon the Secretary of the DENR. Thus, the finding of the POA, with respect to the rejection of the petitioners’ MPSA applications being that they are foreign corporation [sic], is valid.52

An earlier decision of this court, Gonzales v. Climax Mining Ltd.,53 ruled on the jurisdiction of the Panel of Arbitrators as follows:

We now come to the meat of the case which revolves mainly around the question of jurisdiction by the Panel of Arbitrators: Does the Panel of Arbitrators have jurisdiction over the complaint for declaration of nullity and/or termination of the subject contracts on the ground of fraud, oppression and violation of the Constitution? This issue may be distilled into the more basic question of whether the Complaint raises a mining dispute or a judicial question.

A judicial question is a question that is proper for determination by the courts, as opposed to a moot question or one properly decided by the executive or legislative branch. A judicial question is raised when the determination of the question involves the exercise of a judicial function; that is, the question involves the determination of what the law is and what the legal rights of the parties are with respect to the matter in controversy.

On the other hand, a mining dispute is a dispute involving (a) rights to mining areas, (b) mineral agreements, FTAAs, or permits, and (c) surface owners, occupants and claimholders/concessionaires. Under Republic Act No. 7942 (otherwise known as the Philippine Mining Act of 1995), the Panel of Arbitrators has exclusive and original jurisdiction to hear and decide these mining disputes. The Court of Appeals, in its questioned decision, correctly stated that the Panel’s jurisdiction is limited only to those mining disputes which raise questions of fact or matters requiring the application of technological knowledge and experience.54 (Emphasis supplied)

Moreover, this court’s decision in Philex Mining Corp. v. Zaldivia,55 which was also referred to in Gonzales, explained what "questions of fact" are appropriate for resolution in a mining dispute:

We see nothing in sections 61 and 73 of the Mining Law that indicates a legislative intent to confer real judicial power upon the Director of Mines. The very terms of section 73 of the Mining Law, as amended by Republic Act No. 4388, in requiring that the adverse claim must "state in full detail the nature, boundaries and extent of the adverse claim" show that the conflicts to be decided by reason of such adverse claim refer primarily to questions of fact. This is made even clearer by the explanatory note to House Bill No. 2522, later to become Republic Act 4388, that "sections 61 and 73 that refer to the overlapping of claims are amended to expedite resolutions of mining conflicts * * *." The controversies to be submitted and resolved by the Director of Mines under the sections refer therfore [sic] only to the overlapping of claims and administrative matters incidental thereto.56 (Emphasis supplied)

The pronouncements in Celestial cited by the ponencia were made to address the assertions of Celestial Nickel and Mining Corporation (Celestial Nickel) and Blue Ridge Mineral Corporation (Blue Ridge) that the Panel of Arbitrators had the power to cancel existing mineral agreements pursuant to Section 77 of the Mining Act.57 Thus:

Clearly, POA’s jurisdiction over "disputes involving rights to mining areas" has nothing to do with the cancellation of existing mineral agreements.58

These pronouncements did not undo or abandon the distinction, clarified in Gonzales, between judicial questions and mining disputes. The former are cognizable by regular courts of justice, while the latter are cognizable by the DENR Panel of Arbitrators.

As has been repeatedly acknowledged by the ponencia,59 the Court of Appeals,60 and the Mines Adjudication Board,61 the present case, and the petitions filed by Redmont before the DENR Panel of Arbitrators boil down to the "pivotal issue x x x [of] whether or not [Narra, Tesoro, and McArthur] are Philippine nationals."

This is a matter that entails a consideration of the law. It is a question that relates to the status of Narra, Tesoro, and McArthur and the legal rights (or inhibitions) accruing to them on account of their status. This does not entail a consideration of the specifications of mining arrangements and operations. Thus, the petitions filed by Redmont before the DENR Panel of Arbitrators relate to judicial questions and not to mining disputes. They relate to matters which are beyond the jurisdiction of the Panel of Arbitrators.

Furthermore nowhere in Section 77 of the Republic Act No. 7942 is there a grant of jurisdiction to the Panel of Arbitrators over the determination of the qualification of applicants. The Philippine Mining Act clearly requires the existence of a "dispute" over a mining area,62 a mining agreement,63 with a surface owner,64 or those pending with the Bureau or the Department65 upon the law’s promulgation. The existence of a "dispute" presupposes that the party bringing the suit has a colorable or putative claim more superior than that of the respondent in the arbitration proceedings. After all, the Panel of Arbitrators is supposed to provide binding arbitration which should result in a binding award either in favor of the petitioner or the respondent. Thus, the Panel of Arbitrators is a qualified quasi-judicial agency. It does not perform all judicial functions in lieu of courts of law.

The petition brought by respondent before the Panel of Arbitrators a quo could not have resulted in any kind of award in its favor. It was asking for a judicial declaration at first instance of the qualification of the petitioners to hold mining agreements in accordance with the law. This clearly was beyond the jurisdiction of the Panel of Arbitrators and eventually also of the Mines Adjudication Board (MAB).

The remedy of Redmont should have been either to cause the cancellation of the registration of any of the petitioners with the Securities and Exchange Commission or to request for a determination of their qualifications with the Secretary of the Department of Environment and Natural Resources. Should either the Securities and Exchange Commission (SEC) or the Secretary of Environment and Natural Resources rule against its request, Redmont could have gone by certiorari to a Regional Trial Court.

Having brought their petitions to an entity without jurisdiction, the petition in this case should be granted.

Mining as a nationalizedeconomic activity

The determination of who may engage in mining activities is grounded in the 1987 Constitution and the Mining Act.

Article XII, Section 2 of the 1987 Constitution reads:

Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least 60 per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the development of waterpower, beneficial use may be the measure and limit of the grant.

The State shall protect the nation’s marine wealth in its archipelagic waters, territorial sea, and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.

The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming, with priority to subsistence fishermen and fish workers in rivers, lakes, bays, and lagoons.

The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local scientific and technical resources.

The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution. (Emphasis supplied)

The requirement for nationalization should always be read in relation to Article II, Section 19 of the Constitution which reads:

Section 19. The State shall develop a self-reliant and independent national economy effectively controlled by Filipinos. (Emphasis supplied)

Congress takes part in giving substantive meaning to the phrases "Filipino x x x corporations or associations at least 60 per centum of whose capital is owned by such citizens"66 as well as the phrase "effectively controlled by Filipinos".67 Like all constitutional text, the meanings of these phrases become more salient in context.

Thus, Section 3 (aq) of the Mining Act defines a "qualified person" as follows:

Section 3. Definition of Terms. - As used in and for purposes of this Act, the following terms, whether in singular or plural, shall mean:

x x x x

(aq) "Qualified person" means any citizen of the Philippines with capacity to contract, or a corporation, partnership, association, or cooperative organized or authorized for the purpose of engaging in mining, with technical and financial capability to undertake mineral resources development and duly registered in accordance with law at least sixty per centum (60%) of the capital of which is owned by citizens of the Philippines: Provided, That a legally organized foreign-owned corporation shall be deemed a qualified person for purposes of granting an exploration permit, financial or technical assistance agreement or mineral processing permit. (Emphasis supplied)

In addition, Section 3 (t) defines a "foreign-owned corporation" as follows:

(t) "Foreign-owned corporation" means any corporation, partnerships, association, or cooperative duly registered in accordance with law in which less than fifty per centum (50%) of the capital is owned by Filipino citizens.

Under the Mining Act, nationality requirements are relevant for the following categories of mining contracts and permits: first, exploration permits (EP); second, mineral agreements (MA); third, financial or technical assistance agreements (FTAA); and fourth, mineral processing permits (MPP).

In Section 20 of the Mining Act, "[a]n exploration permit grants the right to conduct exploration for all minerals in specified areas." Section 3 (q) defines exploration as the "searching or prospecting for mineral resources by geological, geochemical or geophysical surveys, remote sensing, test pitting, trenching, drilling, shaft sinking, tunneling or any other means for the purpose of determining the existence, extent, quantity and quality thereof and the feasibility of mining them for profit." DENR Administrative Order No. 2005-15 characterizes an exploration permit as the "initial mode of entry in mineral exploration."68

In Section 26 of the Mining Act, "[a] mineral agreement shall grant to the contractor the exclusive right to conduct mining operations and to extract all mineral resources found in the contract area."

There are three (3) forms of mineral agreements:

1. Mineral production sharing agreement (MPSA) "where the Government grants to the contractor the exclusive right to conduct mining operations within a contract area and shares in the gross output [with the] contractor x x x provid[ing] the financing, technology, management and personnel necessary for the implementation of [the MPSA]";69

2. Co-production agreement (CA) "wherein the Government shall provide inputs to the mining operations other than the mineral resource";70 and

3. Joint-venture agreement (JVA) "where a joint-venture company is organized by the Government and the contractor with both parties having equity shares. Aside from earnings in equity, the Government shall be entitled to a share in the gross output".71

The second paragraph of Section 26 of the Mining Act allows a contractor "to convert his agreement into any of the modes of mineral agreements or financial or technical assistance agreement x x x."

Section 33 of the Mining Act allows "[a]ny qualified person with technical and financial capability to undertake large-scale exploration, development, and utilization of mineral resources in the Philippines" through a financial or technical assistance agreement.

In addition to Exploration Permits, Mineral Agreements, and FTAAs, the Mining Act allows for the grant of mineral processing permits (MPP) in order to "engage in the processing of minerals."72 Section 3 (y) of the Mining Act defines mineral processing as "milling, beneficiation or upgrading of ores or minerals and rocks or by similar means to convert the same into marketable products."

Applying the definition of a "qualified person" in Section 3 (aq) of the Mining Act, a corporation which intends to enter into a Mining Agreement must have (1) "technical and financial capability to undertake mineral resources development" and (2) "duly registered in accordance with law at least sixty per centum (60%) of the capital of which is owned by citizens of the Philippines".73 Clearly, the Department of Environment and Natural Resources, as an administrative body, determines technical and financial capability. The DENR, not the Panel of Arbitrators, is also mandated to determine whether the corporation is (a) duly registered in accordance with law and (b) at least "sixty percent of the capital" is "owned by citizens of the Philippines."

Limitations on foreign participation in certain economic activities are not new. Similar, though not identical, limitations are contained in the 1935 and 1973 Constitutions with respect to the exploration, development, and utilization of natural resources.

Article XII, Section 1 of the 1935 Constitution provides:

Section 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces or potential energy, and other natural resources of the Philippines belong to the State, and their disposition, exploitation, development, or utilization shall be limited to citizens of the Philippines, or to corporations or associations at least sixty per centum of the capital of which is owned by such citizens, subject to any existing right, grant, lease, or concession at the time of the inauguration of the Government established under this Constitution. Natural resources, with the exception of public agricultural land, shall not be alienated, and no license, concession, or lease for the exploitation, development, or utilization of any of the natural resources shall be granted for a period exceeding twenty-five years, except as to water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, in which cases beneficial use may be the measure and the limit of the grant. (Emphasis supplied)

Likewise, Article XIV, Section 9 of the 1973 Constitution states:

Section 9. The disposition, exploration, development, of exploitation, or utilization of any of the natural resources of the Philippines shall be limited to citizens of the Philippines, or to corporations or association at least sixty per centum of the capital of which is owned by such citizens. The Batasang Pambansa, in the national interest, may allow such citizens, corporations, or associations to enter into service contracts for financial, technical, management, or other forms of assistance with any foreign person or entity for the exploitation, development, exploitation, or utilization of any of the natural resources. Existing valid and binding service contracts for financial, the technical, management, or other forms of assistance are hereby recognized as such. (Emphasis supplied)

The rationale for nationalizing the exploration, development, and utilization of natural resources was explained by this court in Register of Deeds of Rizal v. Ung Siu Si Temple74 as follows:

The purpose of the sixty per centum requirement is obviously to ensure that corporations or associations allowed to acquire agricultural land or to exploit natural resources shall be controlled

by Filipinos; and the spirit of the Constitution demands that in the absence of capital stock, the controlling membership should be composed of Filipino citizens.75 (Emphasis supplied)

On point are Dean Vicente Sinco’s words, cited with approval by this court in Republic v. Quasha:76

It should be emphatically stated that the provisions of our Constitution which limit to Filipinos the rights to develop the natural resources and to operate the public utilities of the Philippines is one of the bulwarks of our national integrity. The Filipino people decided to include it in our Constitution in order that it may have the stability and permanency that its importance requires. It is written in our Constitution so that it may neither be the subject of barter nor be impaired in the give and take of politics. With our natural resources, our sources of power and energy, our public lands, and our public utilities, the material basis of the nation's existence, in the hands of aliens over whom the Philippine Government does not have complete control, the Filipinos may soon find themselves deprived of their patrimony and living as it were, in a house that no longer belongs to them.77 (Emphasis supplied)

Article XII, Section 2 of the 1987 Constitution ensures the effectivity of the broad economic policy, spelled out in Article II, Section 19 of the 1987 Constitution, of "a self-reliant and independent national economy effectively controlled by Filipinos" and the collective aspiration articulated in the 1987 Constitution’s Preamble of "conserv[ing] and develop[ing] our patrimony."

In this case, Narra, Tesoro, and McArthur are corporations of which a portion of their equity is owned by corporations and individuals acknowledged to be foreign nationals. Moreover, they have each sought to enter into a Mineral Production Sharing Agreement (MPSA). This arrangement requires that foreigners own, at most, only 40% of the capital.

Notwithstanding that they have moved to obtain FTAAs — which are permitted for wholly owned foreign corporations —Redmont still asserts that Narra, Tesoro, and McArthur are in violation of the nationality requirements of the 1987 Constitution and of the Mining Act.78

Narra, Tesoro, and McArthur argue that the Grandfather Rule should not be applied as there is no legal basis for it. They assert that Section 3 (a) of the Foreign Investments Act (FIA) provides exclusively for the Control Test as the means for reckoning foreign equity in a corporation and, ultimately, the nationality of a corporation engaged in or seeking to engage in an activity with nationality restrictions. They fault the Court of Appeals for relying on DOJ Opinion No. 20, series of 2005, a mere administrative issuance, as opposed to the Foreign Investments Act, a statute, for applying the Grandfather Rule.79

Standards for reckoningforeign equity participation innationalized economicactivities

The broad and long-standing nationalization of certain sectors and industries notwithstanding, an apparent confusion has persisted as to how foreign equity holdings in a corporation engaged in a nationalized economic activity shall be reckoned. As have been proffered by the myriad cast of

parties and adjudicative bodies involved in this case, there have been two means: the Control Test and the Grandfather Rule.

Paragraph 7 of the 1967 Rules of the Securities and Exchange Commission, dated February 28, 1967, states:

Shares belonging to corporations or partnerships at least 60% of the capital of which is owned by Filipino citizens shall be considered as of Philippine nationality, but if the percentage of Filipino ownership in the corporation or partnership is less than 60%, only the number of shares corresponding to such percentage shall be counted as of Philippine nationality. Thus, if 100,000 shares are registered in the name of a corporation or partnership at least 60% of the capital stock or capital respectively, of which belong to a Filipino citizens, all of the said shares shall be recorded as owned by Filipinos. But if less than 60%, or, say, only 50% of the capital stock or capital of the corporation or partnership, respectively belongs to Filipino citizens, only 50,000 shares shall be counted as owned by Filipinos and the other 50,000 shares shall be recorded as belonging to aliens.80

Department of Justice (DOJ) Opinion No. 20, series of 2005, explains that the 1967 SEC Rules provide for the Control Test and the Grandfather Rule as the means for reckoning foreign and Filipino equity ownership in an "investee" corporation:

The above-quoted SEC Rules provide for the manner of calculating the Filipino interest in a corporation for purposes, among others of determining compliance with nationality requirements (the "Investee Corporation"). Such manner of computation is necessary since the shares of the Investee Corporation may be owned both by individual stockholders ("Investing Individuals") and by corporations and partnerships ("Investing Corporation"). The determination of nationality depending on the ownership of the Investee Corporation and in certain instances, the Investing Corporation.

Under the above-quoted SEC Rules, there are two cases in determining the nationality of the Investee Corporation. The first case is the ‘liberal rule’, later coined by the SEC as the Control Test in its 30 May 1990 Opinion, and pertains to the portion in said Paragraph 7 of the 1967 SEC Rules which states, ‘(s)hares belonging to corporations or partnerships at least 60% of the capital of which is owned by Filipino citizens shall be considered as of Philippine nationality.’ Under the liberal Control Test, there is no need to further trace the ownership of the 60% (or more) Filipino stockholdings of the Investing Corporation since a corporation which is at least 60% Filipino-owned is considered as Filipino.

The second case is the Strict Rule or the Grandfather Rule Proper and pertains to the portion in said Paragraph 7 of the 1967 SEC Rules which states, ‘but if the percentage of Filipino ownership in the corporation or partnership is less than 60%, only the number of shares corresponding to such percentage shall be counted as of Philippine nationality.’ Under the Strict Rule or Grandfather Rule Proper, the combined totals in the Investing Corporation and the Investee Corporation must be traced (i.e., ‘grandfathered’) to determine the total percentage of Filipino ownership.81

DOJ Opinion No. 20, series of 2005, then concluded as follows:

[T]he Grandfather Rule or the second part of the SEC Rule applies only when the 60-40 Filipino-foreign equity ownership is in doubt (i.e., in cases where the joint venture corporation with Filipino and foreign stockholders with less than 60% Filipino stockholdings [or 59%] invests in another joint venture corporation which is either 60-40% Filipino-alien or 59% less Filipino. Stated differently, where the 60-40 Filipino-foreign equity ownership is not in doubt, the Grandfather Rule will not apply.82 (Emphasis supplied)

The conclusion that the Grandfather Rule "applies only when the 60-40 Filipino-foreign equity ownership is in doubt"83 is borne by that opinion’s consideration of an earlier DOJ opinion (i.e., DOJ Opinion No. 18, series of 1989). DOJ Opinion No. 20, series of 2005’s quotation of DOJ Opinion No. 18, series of 1989, reads:

x x x. It is quite clear x x x that the "Grandfather Rule", which was evolved and applied by the SEC in several cases, will not apply in cases where the 60-40 Filipino-alien equity ownership in a particular natural resource corporation is not in doubt.84

A full quotation of the same portion of DOJ Opinion No. 18, series of 1989, reveals that the statement quoted above was made in a very specific context (i.e., a prior DOJ opinion) that necessitated a clarification:

Opinion No. 84, s. 1988 cited in your query is not meant to overrule the aforesaid SEC rule.85 There is nothing in said Opinion that precludes the application of the said SEC rule in appropriate cases. It is quite clear from said SEC rule that the ‘Grandfather Rule’, which was evolved and applied by the SEC in several cases, will not apply in cases where the 60-40 Filipino-alien equity ownership in a particular natural resource corporation is not in doubt.86

DOJ Opinion No. 18, series of 1989, addressed the query made by the Chairman of the Securities and Exchange Commission (SEC) "on whether or not it may give due course to the application for incorporation of Far Southeast Gold Resources Inc., (FSEGRI) to engage in mining activities in the Philippines in the light of [DOJ] Opinion No. 84, s. 1988 applying the so-called ‘Grandfather Rule’ x x x."87

DOJ Opinion No. 84, series of 1988, applied the Grandfather Rule. In doing so, it noted that the DOJ has been "informed that in the registration of corporations with the [SEC], compliance with the sixty per centum requirement is being monitored with the ‘Grandfather Rule’"88 and added that the Grandfather Rule is "applied specifically in cases where the corporation has corporate stockholders with alien stockholdings."89

Prior to applying the Grandfather Rule to the specific facts subject of the inquiry it addressed, DOJ Opinion No. 84, series of 1988, first cited the SEC’s application of the Grandfather Rule in a May 30, 1987 opinion rendered by its Chair, Julio A. Sulit, Jr.90

This SEC opinion resolved the nationality of the investee corporation, Silahis International Hotel (Silahis). 31% of Silahis’ capital stock was owned by Filipino stockholders, while 69% was owned by Hotel Properties, Inc. (HPI). HPI, in turn, was 47% Filipino-owned and 53% alien-owned. Per the Grandfather Rule, the 47% indirect Filipino stockholding in Silahis through HPI combined with the 31% direct Filipino stockholding in Silahis translated to an aggregate 63.43% Filipino stockholding

in Silahis, in excess of the requisite 60% Filipino stockholding required so as to be able to engage in a partly nationalized business.91

In noting that compliance with the 60% requirement has (thus far) been monitored by SEC through the Grandfather Rule and that the Grandfather Rule has been applied whenever a "corporation has corporate stockholders with alien stockholdings,"92 DOJ Opinion No. 84, series of 1988, gave the impression that the Grandfather Rule is all-encompassing. Hence, the clarification in DOJ Opinion No. 18, series of 1989, that the Grandfather Rule "will not apply in cases where the 60-40 Filipino-alien equity ownership x x x is not in doubt."93 This clarification was affirmed in DOJ Opinion No. 20, series of 2005, albeit rephrased positively as against DOJ Opinion No. 19, series of 1989’s negative syntax (i.e., "not in doubt"). Thus, DOJ Opinion No. 20, series of 2005, declared, that the Grandfather Rule "applies only when the 60-40 Filipino-foreign equity ownership is in doubt."94

Following DOJ Opinion No. 18, series of 1989, the SEC in its May 30, 1990 opinion addressed to Mr. Johnny M. Araneta stated:

[T]the Commission En Banc, on the basis of the Opinion of the Department of Justice No. 18, S. 1989 dated January 19, 1989 voted and decided to do away with the strict application/computation of the so-called "Grandfather Rule" Re: Far Southeast Gold Resources, Inc. (FSEGRI), and instead applied the so-called "Control Test" method of determining corporate nationality.95 (Emphasis supplied)

The SEC’s May 30, 1990 opinion related to the ownership of shares in Jericho Mining Corporation (Jericho) which was then wholly owned by Filipinos. Two (2) corporations wanted to purchase a total of 60% of Jericho’s authorized capital stock: 40% was to be purchased by Gold Field Asia Limited (GFAL), an Australian corporation, while 20% was to be purchased by Gold Field Philippines Corporation (GFPC). GFPC was itself partly foreign-owned. It was 60% Filipino-owned, while 40% of its equity was owned by Circular Quay Holdings, an Australian corporation.96

Applying the Control Test, the SEC’s May 30, 1990 opinion concluded that:

GFPC, which is 60% Filipino owned, is considered a Filipino company. Consequently, its investment in Jericho is considered that of a Filipino. The 60% Filipino equity requirement therefore would still be met by Jericho.

Considering that under the proposed set-up Jericho's capital stock will be owned by 60% Filipino, it is still qualified to hold mining claims or rights or enter into mineral production sharing agreements with the Government.97

Some two years after DOJ Opinion No. 18, series of 2009, Republic Act No. 7042, otherwise known as the Foreign Investments Act (FIA), was enacted. Section 3 (a) of the Foreign Investments Act defines a "Philippine National" as follows:

SEC. 3. Definitions. - As used in this Act:

a) the term "Philippine National" shall mean a citizen of the Philippines or a domestic partnership or association wholly owned by citizens of the Philippines; or a corporation organized under the laws of the Philippines of which at least sixty percent (60%) of the capital stock outstanding and entitled to vote is owned and held by citizens of the Philippines or a corporation organized abroad and registered as doing business in the Philippine under the Corporation Code of which one hundred percent (100%) of the capital stock outstanding and entitled to vote is wholly owned by Filipinos or a trustee of funds for pension or other employee retirement or separation benefits, where the trustee is a Philippine national and at least sixty percent (60%) of the fund will accrue to the benefit of Philippine nationals: Provided, That where a corporation and its non-Filipino stockholders own stocks in a Securities and Exchange Commission (SEC) registered enterprise, at least sixty percent (60%) of the capital stock outstanding and entitled to vote of each of both corporations must be owned and held by citizens of the Philippines and at least sixty percent (60%) of the members of the Board of Directors of each of both corporations must be citizens of the Philippines, in order that the corporation shall be considered a Philippine national; (as amended by R.A. 8179). (Emphasis supplied)

Thus, under the Foreign Investments Act, a "Philippine national" is any of the following:

1. a citizen of the Philippines;

2. a domestic partnership or association wholly owned by citizens of the Philippines;

3. a corporation organized under the laws of the Philippines, of which at least 60% of the capital stock outstanding and entitled to vote is owned and held by citizens of the Philippines;

4. a corporation organized abroad and registered as doing business in the Philippines under the Corporation Code, of which 100% of the capital stock outstanding and entitled to vote is wholly owned by Filipinos; or

5. a trustee of funds for pension or other employee retirement or separation benefits, where the trustee is a Philippine national and at least 60% of the fund will accrue to the benefit of Philippine nationals.

The National Economic and Development Authority (NEDA) formulated the implementing rules and regulations (IRR) of the Foreign Investments Act. Rule I, Section 1 (b) of these IRR reads:

RULE IDEFINITIONS

SECTION 1. DEFINITION OF TERMS. — For the purposes of these Rules and Regulations:

x x x x

b. Philippine national shall mean a citizen of the Philippines or a domestic partnership or association wholly owned by the citizens of the Philippines; or a corporation organized under the laws of the Philippines of which at least sixty percent (60%) of the capital stock outstanding and

entitled to vote is owned and held by citizens of the Philippines; or a corporation organized abroad and registered as doing business in the Philippines under the Corporation Code of which 100% of the capital stock outstanding and entitled to vote is wholly owned by Filipinos; or a trustee of funds for pension or other employee retirement or separation benefits, where the trustee is a Philippine national and at least sixty percent (60%) of the fund will accrue to the benefits of the Philippine nationals; Provided, that where a corporation and its non-Filipino stockholders own stocks in Securities and Exchange Commission (SEC) registered enterprise, at least sixty percent (60%) of the capital stock outstanding and entitled to vote of each of both corporations must be owned and held by citizens of the Philippines and at least sixty percent (60%) of the members of the Board of Directors of each of both corporation must be citizens of the Philippines, in order that the corporation shall be considered a Philippine national. The Control Test shall be applied for this purpose.

Compliance with the required Filipino ownership of a corporation shall be determined on the basis of outstanding capital stock whether fully paid or not, but only such stocks which are generally entitled to vote are considered.

For stocks to be deemed owned and held by Philippine citizens or Philippine nationals, mere legal title is not enough to meet the required Filipino equity. Full beneficial ownership of the stocks, coupled with appropriate voting rights is essential. Thus, stocks, the voting rights of which have been assigned or transferred to aliens cannot be considered held by Philippine citizens or Philippine nationals.

Individuals or juridical entities not meeting the aforementioned qualifications are considered as non-Philippine nationals. (Emphasis supplied)

The Foreign Investments Act’s implementing rules and regulations are clear and unequivocal in declaring that the Control Test shall be applied to determine the nationality of a corporation in which another corporation owns stocks.

From around the time of the issuance of the SEC’s May 30, 1990 opinion addressed to Mr. Johnny M. Araneta where the SEC stated that it "decided to do away with the strict application/computation of the so-called ‘Grandfather Rule’ x x x, and instead appl[y] the so-called ‘Control Test’",98 the SEC "has consistently applied the control test".99 This is a matter expressly acknowledged by Justice Presbitero J. Velasco in his dissent in Gamboa v. Teves:100

It is settled that when the activity or business of a corporation falls within any of the partly nationalized provisions of the Constitution or a special law, the "control test" must also be applied to determine the nationality of a corporation on the basis of the nationality of the stockholders who control its equity.

The control test was laid down by the Department of Justice (DOJ) in its Opinion No. 18 dated January 19, 1989. It determines the nationality of a corporation with alien equity based on the percentage of capital owned by Filipino citizens. It reads:

Shares belonging to corporations or partnerships at least 60% of the capital of which is owned by Filipino citizens shall be considered as Philippine nationality, but if the percentage of Filipino

ownership in the corporation or partnership is less than 60% only the number of shares corresponding to such percentage shall be counted as of Philippine nationality.

In a catena of opinions, the SEC, "the government agency tasked with the statutory duty to enforce the nationality requirement prescribed in Section 11, Article XII of the Constitution on the ownership of public utilities," has consistently applied the control test.

The FIA likewise adheres to the control test. This intent is evident in the May 21, 1991 deliberations of the Bicameral Conference Committee (Committees on Economic Affairs of the Senate and House of Representatives), to wit:

CHAIRMAN TEVES. x x x. On definition of terms, Ronnie, would you like anything to say here on the definition of terms of Philippine national?

HON. RONALDO B. ZAMORA. I think we’ve – we have already agreed that we are adopting here the control test. Wasn’t that the result of the –

CHAIRMAN PATERNO. No. I thought that at the last meeting, I have made it clear that the Senate was not able to make a decision for or against the grandfather rule and the control test, because we had gone into caucus and we had voted but later on the agreement was rebutted and so we had to go back to adopting the wording in the present law which is not clearly, by its language, a control test formulation.

HON. ANGARA. Well, I don’t know. Maybe I was absent, Ting, when that happened but my recollection is that we went into caucus, we debated [the] pros and cons of the control versus the grandfather rule and by actual vote the control test bloc won. I don’t know when subsequent rejection took place, but anyway even if the – we are adopting the present language of the law I think by interpretation, administrative interpretation, while there may be some differences at the beginning, the current interpretation of this is the control test. It amounts to the control test.

CHAIRMAN TEVES. That’s what I understood, that we could manifest our decision on the control test formula even if we adopt the wordings here by the Senate version.

x x x x

CHAIRMAN PATERNO. The most we can do is to say that we have explained – is to say that although the House Panel wanted to adopt language which would make clear that the control test is the guiding philosophy in the definition of [a] Philippine national, we explained to them the situation in the Senate and said that we would be – was asked them to adopt the present wording of the law cognizant of the fact that the present administrative interpretation is the control test interpretation. But, you know, we cannot go beyond that.

MR. AZCUNA. May I be clarified as to that portion that was accepted by the Committee. [sic]

MR. VILLEGAS. The portion accepted by the Committee is the deletion of the phrase "voting stock or controlling interest."

This intent is even more apparent in the Implementing Rules and Regulations (IRR) of the FIA. In defining a "Philippine national," Section 1(b) of the IRR of the FIA categorically states that for the purposes of determining the nationality of a corporation the control test should be applied.

The cardinal rule in the interpretation of laws is to ascertain and give effect to the intention of the legislator. Therefore, the legislative intent to apply the control test in the determination of nationality must be given effect.101(Emphasis supplied)

The Foreign Investments Act and its implementing rules notwithstanding, the Department of Justice, in DOJ Opinion No. 20, series of 2005, still posited that the Grandfather Rule is still applicable, albeit "only when the 60-40 Filipino-foreign equity ownership is in doubt."102

Anchoring itself on DOJ Opinion No. 20, series of 2005, the SEC En Banc found the Grandfather Rule applicable in its March 25, 2010 decision in Redmont Consolidated Mines Corp. v. McArthur Mining Corp. (subject of the petition in G.R. No. 205513).103 It asserted that there was "doubt" in the compliance with the requisite 60-40 Filipino-foreign equity ownership:

Such doubt, we believe, exists in the instant case because the foreign investor, MBMI, provided practically all the funds of the remaining appellee-corporations.104

On December 9, 2010, the SEC Office of the General Counsel (OGC) rendered an opinion (SEC-OGC Opinion No. 10-31) effectively abandoning the Control Test in favor of the Grandfather Rule:

We are aware of the Commission's prevailing policy of applying the so-called "Control Test" in determining the extent of foreign equity in a corporation. Since the 1990s, the Commission En Banc, on the basis of DOJ Opinion No. 18, series of 1989 dated January 19, 1989, voted and decided to do away with the strict application/computation of the "Grandfather Rule," and instead applied the "Control Test" method of determining corporate nationality. x x x105

However, we now opine that the Control Test must not be applied in determining if a corporation satisfies the Constitution's citizenship requirements in certain areas of activities. x x x.106

Central to the SEC-OGC’s reasoning is a supposed distinction between Philippine "citizens" and Philippine "nationals". It emphasized that Article XII, Section 2 of the 1987 Constitution used the term "citizen" (i.e., "corporations or associations at least 60 per centum of whose capital is owned by such citizens") and that this terminology was reiterated in Section 3 (aq) of the Mining Act (i.e., "at least sixty per centum (60%) of the capital of which is owned by citizens of the Philippines").107

It added that the enumeration of who the citizens of the Philippines are in Article III, Section 1 of the 1987 Constitution is exclusive and that "only natural persons are susceptible of citizenship".108

Finding support in this court’s ruling in the 1966 case of Palting v. San Jose Petroleum,109 the SEC-OGC asserted that it was necessary to look into the "citizenship of the individual stockholders, i.e., natural persons of [an] investor-corporation in order to determine if the [c]onstitutional and statutory restrictions are complied with."110 Thus, "if there are layers of intervening corporations x x x we must delve into the citizenship of the individual stockholders of each corporation."111 As the SEC-OGC emphasized, "[t]his is the strict application of the Grandfather Rule."112

Between the Grandfather Rule and the Control Test, the SEC-OGC opined that the framers of the 1987 Constitution intended to apply the Grandfather Rule and that the Control Test ran counter to their intentions:

Indeed, the framers of the Constitution intended for the "Grandfather Rule" to apply in case a 60%-40% Filipino-Foreign equity corporation invests in another corporation engaging in an activity where the Constitution restricts foreign participation.113

x x x x

The Control Test creates a legal fiction where if 60% of the shares of an investing corporation are owned by Philippine citizens then all of the shares or 100% of that corporation's shares are considered Filipino owned for purposes of determining the extent of foreign equity in an investee corporation engaging in an activity restricted to Philippine citizens.114

The SEC-OGC reasoned that the invalidity of the Control Test rested on the matter of citizenship:

In other words, Philippine citizenship is being unduly attributed to foreign individuals who own the rest of the shares in a 60% Filipino equity corporation investing in another corporation. Thus, applying the Control Test effectively circumvents the Constitutional mandate that corporations engaging in certain activities must be 60% owned by Filipino citizens. The words of the Constitution clearly provide that we must look at the citizenship of the individual/natural person who ultimately owns and controls the shares of stocks of the corporation engaging in the nationalized/partly-nationalized activity. This is what the framers of the constitution intended. In fact, the Mining Act strictly adheres to the text of the Constitution and does not provide for the application of the Control Test. Indeed, the application of the Control Test has no constitutional or statutory basis. Its application is only by mere administrative fiat.115 (Emphasis supplied)

This court must now put to rest the seeming tension between the Control Test and the Grandfather Rule.

This court’s 1952 ruling in Davis Winship v. Philippine Trust Co.116 cited its 1951 ruling in Filipinas Compania de Seguros v. Christern, Huenefeld and Co., Inc.117 and stated that "the nationality of a private corporation is determined by the character or citizenship of its controlling stockholders."118

Filipinas Compania de Seguros, for its part, specifically used the term "Control Test" (citing a United States Supreme Court decision119) in ruling that the respondent in that case, Christern, Huenefeld and Co., Inc. – the majority of the stockholders of which were German subjects – "became an enemy corporation upon the outbreak of the war."120

Their pronouncements and clear reference to the Control Test notwithstanding, Davis Winship and Filipinas Compania de Seguros do not pertain to nationalized economic activities but rather to corporations deemed to be of a belligerent nationality during a time of war.

In and of itself, this court’s 1966 decision in Palting had nothing to do with the Control Test and the Grandfather Rule. Palting, which was relied upon by SEC-OGC in Opinion No. 10-31, was

promulgated in 1966, months before the 1967 SEC Rules and its bifurcated paragraph 7 were adopted.

Likewise, Palting was promulgated before Republic Act No. 5186, the Investments Incentive Act, was adopted in 1967. The Investments Incentive Act was adopted with the declared policy of "accelerat[ing] the sound development of the national economy in consonance with the principles and objectives of economic nationalism,"121 thereby effecting the (1935) Constitution’s nationalization objectives.

It was through the Investments Incentive Act that a definition of a "Philippine national" was established.122 This definition has been practically reiterated in Presidential Decree No. 1789, the Omnibus Investments Code of 1981;123 Executive Order No. 226, the Omnibus Investments Code of 1987;124 and the present Foreign Investments Act.125

This court’s 2009 decision in Unchuan v. Lozada126 referred to Section 3 (a) of the Foreign Investments Act defining "Philippine national". In so doing, this court may be characterized to have applied the Control Test:

In this case, we find nothing to show that the sale between the sisters Lozada and their nephew Antonio violated the public policy prohibiting aliens from owning lands in the Philippines. Even as Dr. Lozada advanced the money for the payment of Antonio’s share, at no point were the lots registered in Dr. Lozada’s name. Nor was it contemplated that the lots be under his control for they are actually to be included as capital of Damasa Corporation. According to their agreement, Antonio and Dr. Lozada are to hold 60% and 40% of the shares in said corporation, respectively. Under Republic Act No. 7042, particularly Section 3, a corporation organized under the laws of the Philippines of which at least 60% of the capital stock outstanding and entitled to vote is owned and held by citizens of the Philippines, is considered a Philippine National. As such, the corporation may acquire disposable lands in the Philippines. Neither did petitioner present proof to belie Antonio’s capacity to pay for the lots subjects of this case.127(Emphasis supplied)

This court’s 2011 decision in Gamboa v. Teves128 also pertained to the reckoning of foreign equity ownership in a nationalized economic activity (i.e., public utilities). However, it centered on the definition of the term "capital"129which was deemed as referring "only to shares of stock entitled to vote in the election of directors."130

This court’s 2012 resolution ruling on the motion for reconsideration in Gamboa131 referred to the SEC En Banc’s March 25, 2010 decision in Redmont Consolidated Mines Corp. v. McArthur Mining Corp. (subject of G.R. No. 205513), which applied the Grandfather Rule:

This SEC en banc ruling conforms to our 28 June 2011 Decision that the 60-40 ownership requirement in favor of Filipino citizens in the Constitution to engage in certain economic activities applies not only to voting control of the corporation, but also to the beneficial ownership of the corporation.132

However, a reading of the original 2011 decision will reveal that the matter of beneficial ownership was considered after quoting the implementing rules and regulations of the Foreign Investments Act. The third paragraph of Rule I, Section 1 (b) of these rules states that "[f]ull

beneficial ownership of the stocks, coupled with appropriate voting rights is essential." It is this same provision of the implementing rules which, in the first paragraph, declares that "the Control Test shall be applied x x x."

In any case, the 2012 resolution’s reference to the SEC En Banc’s March 25, 2010 decision in Redmont can hardly be considered as authoritative. It is, at most, obiter dictum. In the first place, Redmont was evidently not the subject of Gamboa. It is the subject of G.R. No. 205513, which was consolidated, then de-consolidated, with the present petition. Likewise, the crux of Gamboa was the consideration of the kind/s of shares to which the term "capital" referred, not the applicability of the Control Test and/or the Grandfather Rule. Moreover, the 2012 resolution acknowledges that:

[T]he opinions of the SEC en banc, as well as of the DOJ, interpreting the law are neither conclusive nor controlling and thus, do not bind the Court. It is hornbook doctrine that any interpretation of the law that administrative or quasi-judicial agencies make is only preliminary, never conclusive on the Court. The power to make a final interpretation of the law, in this case the term "capital" in Section 11, Article XII of the 1987 Constitution, lies with this Court, not with any other government entity.133

The Grandfather Rule is notenshrined in the Constitution

In ruling that the Grandfather Rule must apply, the ponencia relies on the deliberations of the 1986 Constitutional Commission. The ponencia states that these discussions "shed light on how a citizenship of a corporation will be determined."134

The ponencia cites an exchange between Commissioners Bernardo F. Villegas and Jose N. Nolledo:135

MR. NOLLEDO: In Sections 3, 9 and 15, the Committee stated local or Filipino equity and foreign equity; namely, 60-40 in Section 3, 60-40 in Section 9, and 2/3-1/3 in Section 15.

MR. VILLEGAS: That is right.

MR. NOLLEDO: In teaching law, we are always faced with this question: "Where do we base the equity requirement, is it on the authorized capital stock, on the subscribed capital stock, or on the paid-up capital stock of a corporation"? Will the Committee please enlighten me on this?

MR. VILLEGAS: We have just had a long discussion with the members of the team from the UP Law Center who provided us a draft. The phrase that is contained here which we adopted from the UP draft is "60 percent of voting stock."

MR. NOLLEDO: That must be based on the subscribed capital stock, because unless declared delinquent, unpaid capital stock shall be entitled to vote.

MR. VILLEGAS: That is right.

MR. NOLLEDO: Thank you.

With respect to an investment by one corporation in another corporation, say, a corporation with 60-40 percent equity invests in another corporation which is permitted by the Corporation Code, does the Committee adopt the Grandfather Rule?

MR. VILLEGAS: Yes, that is the understanding of the Committee.

MR. NOLLEDO: Therefore, we need additional Filipino capital?

MR. VILLEGAS: Yes.136 (Emphasis supplied)

This court has long settled the interpretative value of the deliberations of the Constitutional Commission. In Civil Liberties Union v. Executive Secretary,137 this court noted:

A foolproof yardstick in constitutional construction is the intention underlying the provision under consideration. Thus, it has been held that the Court in construing a Constitution should bear in mind the object sought to be accomplished by its adoption, and the evils, if any, sought to be prevented or remedied. A doubtful provision will be examined in the light of the history of the times, and the condition and circumstances under which the Constitution was framed. The object is to ascertain the reason which induced the framers of the Constitution to enact the particular provision and the purpose sought to be accomplished thereby, in order to construe the whole as to make the words consonant to that reason and calculated to effect that purpose.138

However, in the same case, this court also said:139

While it is permissible in this jurisdiction to consult the debates and proceedings of the constitutional convention in order to arrive at the reason and purpose of the resulting Constitution, resort thereto may be had only when other guides fail as said proceedings are powerless to vary the terms of the Constitution when the meaning is clear. Debates in the constitutional convention "are of value as showing the views of the individual members, and as indicating the reasons for their votes, but they give us no light as to the views of the large majority who did not talk, much less of the mass of our fellow citizens whose votes at the polls gave that instrument the force of fundamental law. We think it safer to construe the constitution from what appears upon its face." The proper interpretation therefore depends more on how it was understood by the people adopting it than in the framers’s understanding thereof.140 (Emphasis supplied)

As has been stated:

The meaning of constitutional provisions should be determined from a contemporary reading of the text in relation to the other provisions of the entire document. We must assume that the authors intended the words to be read by generations who will have to live with the consequences of the provisions. The authors were not only the members of the Constitutional Commission but all those who participated in its ratification. Definitely, the ideas and opinions exchanged by a few of its commissioners should not be presumed to be the opinions of all of them. The result of the

deliberations of the Commission resulted in a specific text, and it is that specific text—and only that text—which we must read and construe.

The preamble establishes that the "sovereign Filipino people" continue to "ordain and promulgate" the Constitution. The principle that "sovereignty resides in the people and all government authority emanates from them" is not hollow. Sovereign authority cannot be undermined by the ideas of a few Constitutional Commissioners participating in a forum in 1986 as against the realities that our people have to face in the present.

There is another, more fundamental, reason why reliance on the discussion of the Constitutional Commissioners should not be accepted as basis for determining the spirit behind constitutional provisions. The Constitutional Commissioners were not infallible. Their statements of fact or status or their inferences from such beliefs may be wrong. x x x.141

It is true that the records of the Constitutional Commission indicate an affirmative reference to the Grandfather Rule. However, the quoted exchange fails to indicate a consensus or the general sentiment of the forty- nine (49) members142 of the Constitutional Commission. What it indicates is, at most, an understanding between Commissioners Nolledo and Villegas, albeit with the latter claiming that the same understanding is shared by the Constitutional Commission’s Committee on National Economy and Patrimony. (Though even then, it is not established if this understanding is shared by the committee members unanimously, or by a majority of them, or is advanced by its leadership under the assumption that it may speak for the Committee.)

The 1987 Constitution is silent on the precise means through which foreign equity in a corporation shall be determined for the purpose of complying with nationalization requirements in each industry. If at all, it militates against the supposed preference for the Grandfather Rule that, its mention in the Constitutional Commission’s deliberations notwithstanding, the 1987 Constitution was, ultimately, inarticulate on adopting a specific test or means.

The 1987 Constitution is categorical in its omission. Its meaning is clear. That is to say, by its silence, it chose to not manifest a preference. Had there been any such preference, the Constitution could very well have said it.

In 1986, when the Constitution was being drafted, the Grandfather Rule and the Control Test were not novel concepts. Both tests have been articulated since as far back as 1967. The Foreign Investments Act, while adopted in 1991, has "predecessor statute[s]"143 dating to before 1986. As earlier mentioned, these predecessors also define the term "Philippine national" and in substantially the same manner that Section 3 (a) of the Foreign Investments Act does.144 It is the same definition: This is the same basis for applying the Control Test.

It is elementary that the Constitution is not primarily a lawyer’s document.145 As the convoluted history of the Control Test and Grandfather Rule shows, even those learned in the law have been in conflict, if not in outright confusion, as to their application. It is not proper to insist upon the Grandfather Rule as enshrined in the Constitution – and as manifesting the sovereign people’s will – when the Constitution makes absolutely no mention of it.

In the final analysis, the records of the Constitutional Commission do not bind this court. As Charles P. Curtis, Jr. said on the role of history in constitutional exegesis:146

The intention of the framers of the Constitution, even assuming we could discover what it was, when it is not adequately expressed in the Constitution, that is to say, what they meant when they did not say it, surely that has no binding force upon us. If we look behind or beyond what they set down in the document, prying into what else they wrote and what they said, anything we may find is only advisory. They may sit in at our councils. There is no reason why we should eavesdrop on theirs.147 (Emphasis provided)

The Control Test isestablished by congressionaldictum

The Foreign Investments Act addresses the gap. As this court has acknowledged, "[t]he FIA is the basic law governing foreign investments in the Philippines, irrespective of the nature of business and area of investment."148

The Foreign Investments Act applies to nationalized economic activities under the Constitution. Section 8 of the Foreign Investments Act149 provides that there shall be two (2) component lists, A and B, with List A pertaining to "the areas of activities reserved to Philippine nationals by mandate of the Constitution and specific laws."

To reiterate, Section 3 (a) of the Foreign Investments Act defines a "Philippine national" as including "a corporation organized under the laws of the Philippines of which at least sixty per cent (60%) of the capital stock outstanding and entitled to vote is owned and held by citizens of the Philippines." This is a definition that is consistent with the first part of paragraph 7 of the 1967 SEC Rules, which, as proffered by DOJ Opinion No. 20, series of 2005, articulates the Control Test: "[s]hares belonging to corporations or partnerships at least 60 per cent of the capital of which is owned by Filipino citizens shall be considered as of Philippine nationality."

Moreover, the Foreign Investments Act admits of situations where a corporation invests in another corporation by owning shares of the latter. Thus, the proviso in Section 3 (a) of the Foreign Investments Act reads:

Provided, That where a corporation and its non-Filipino stockholders own stocks in a Securities and Exchange Commission (SEC) registered enterprise, at least sixty percent (60%) of the capital stock outstanding and entitled to vote of each of both corporations must be owned and held by citizens of the Philippines and at least sixty percent (60%) of the members of the Board of Directors of each of both corporations must be citizens of the Philippines, in order that the corporation shall be considered a Philippine national[.]

Supplementing this is the last sentence of the first paragraph of Rule I, Section 1 (b) of the implementing rules and regulations of the Foreign Investments Act: "The Control Test shall be applied for this purpose."

As such, by congressional dictum, which is properly interpreted by administrative rule making, the Control Test must govern in reckoning foreign equity ownership in corporations engaged in nationalized economic activities. It is through the Control Test that these corporations’ minimum qualification to engage in nationalized economic activities adjudged.

DOJ Opinion No. 20, series of2005, provides a qualifier, nota mere example

The ponencia states that "this case calls for the application of the grandfather rule since, x x x, doubt prevails and persists in the corporate ownership of herein petitioners."150 This position is borne by the ponencia’s consideration of DOJ Opinion No. 20, series of 2005, which states:

[T]he Grandfather Rule or the second part of the SEC Rule applies only when the 60-40 Filipino-foreign equity ownership is in doubt (i.e., in cases where the joint venture corporation with Filipino and foreign stockholders with less than 60% Filipino stockholdings [or 59%] invests in another joint venture corporation which is either 60-40% Filipino-alien or 59% less Filipino. Stated differently, where the 60-40 Filipino-foreign equity ownership is not in doubt, the Grandfather Rule will not apply.151 (Emphasis supplied)

As is clear from the quoted portion of DOJ Opinion No. 20, series of 2005, the phrase "in doubt" is followed by a qualifying clause: "i.e., in cases where the joint venture corporation with Filipino and foreign stockholders with less than 60% Filipino stockholdings [or 59%] invests in another joint venture corporation which is either 60-40% Filipino-alien or 59% less Filipino."

The ponencia states that this clause "only made an example of an instance where ‘doubt’ as to the ownership of a corporation exists"152 and is, thus, not controlling.

This construction is erroneous. The abbreviation "i.e." is an acronym for the Latin "id est", which translates to "that is".153 It is used not to cite an example but "to add explanatory information or to state something in different words."154 Whatever follows "i.e." is a paraphrasing or an alternative way of stating the word/s that preceded it. The words succeeding "i.e.", therefore, refer to the very conception of the words preceding "i.e.".

Had DOJ Opinion No. 20, series of 2005, intended to cite an example or to make an illustration, it should have instead used "e.g." This stands for the Latin "exempli gratia", which translates to "for example."155

Thus, all that DOJ Opinion No. 20, series of 2005, meant was that "doubt" as to Filipino-foreign equity ownership exists when Filipino stockholdings is less than sixty percent (60%). Indeed, there is no doubt where Filipino stockholdings amount to at least sixty percent (60%).

Pursuant to Section 3 (a) of the Foreign Investments Act, a corporation is then already deemed to be of Philippine nationality.

The Control Test serves therationale for nationalizing the

exploration, development,and utilization of naturalresources

The application of the Control Test is by no means antithetical to the avowed policy of a "national economy effectively controlled by Filipinos."156 The Control Test promotes this policy.

It is a matter of transitivity157 that if Filipino stockholders control a corporation which, in turn, controls another corporation, then the Filipino stockholders control the latter corporation, albeit indirectly or through the former corporation.

An illustration is apt.

Suppose that a corporation, "C", is engaged in a nationalized activity requiring that 60% of its capital be owned by Filipinos and that this 60% is owned by another corporation, "B", while the remaining 40% is owned by stockholders, collectively referred to as "Y". Y is composed entirely of foreign nationals. As for B, 60% of its capital is owned by stockholders collectively referred to as "A", while the remaining 40% is owned by stockholders collectively referred to as "X". The collective A, is composed entirely of Philippine nationals, while the collective X is composed entirely of foreign nationals. (N.b., in this illustration, capital is understood to mean "shares of stock entitled to vote in the election of directors," per the definition in Gamboa158). Thus:

By owning 60% of B’s capital, A controls B. Likewise, by owning 60% of C’s capital, B controls C. From this, it follows, as a matter of transitivity, that A controls C; albeit indirectly, that is, through B.

This "control" holds true regardless of the aggregate foreign capital in B and C. As explained in Gamboa, control by stockholders is a matter resting on the ability to vote in the election of directors:

Indisputably, one of the rights of a stockholder is the right to participate in the control or management of the corporation. This is exercised through his vote in the election of directors because it is the board of directors that controls or manages the corporation.159

B will not be outvoted by Y in matters relating to C, while A will not be outvoted by X in matters relating to B. Since all actions taken by B must necessarily be in conformity with the will of A,

anything that B does in relation to C is, in effect, in conformity with the will of A. No amount of aggregating the foreign capital in B and C will enable X to outvote A, nor Y to outvote B.

In effect, A controls C, through B. Stated otherwise, the collective Filipinos in A, effectively control C, through their control of B.

To reiterate, "[t]he purpose of the sixty per centum requirement is x x x to ensure that corporations x x x allowed to x x x exploit natural resources shall be controlled by Filipinos."160 The decisive consideration is therefore control rather than plain ownership of capital.

The Grandfather Rule doesnot guarantee control and canundermine the rationale fornationalization

As against each other, it is the Control Test, rather than the Grandfather Rule, which better serves to ensure that Philippine nationals control a corporation.

As is illustrated by the SEC’s September 21, 1990 opinion addressed to Carag, Caballes, Jamora, Rodriguez and Somera Law Offices, the application of the Grandfather Rule does not guarantee control by Filipino stockholders. In certain instances, the application of the Grandfather Rule actually undermines the rationale (i.e., control) for the nationalization of certain economic activities.

The SEC’s September 21, 1990 opinion related to the nationality of a proposed corporation. Another corporation, Indo Phil Textile Mills, Inc. (Indo Phil), intended to subscribe to 70% of the proposed corporation’s capital stock upon incorporation. The remainder (i.e., 30%) of the proposed corporation’s capital stock would have been subscribed to by Filipinos. For its part, Indo Phil was owned by foreign stockholders to the extent of 56%. Thus, it was only 44% Filipino-owned.

Applying the Grandfather Rule, the aggregate Filipino stockholdings in the proposed corporation was computed to amount to 60.8%. As such, the proposed corporation was deemed to be of Filipino nationality.

A consideration of the same case, with emphasis on the matter of "control" (and therefore in a manner more in keeping with the rationale for nationalization), should yield a different conclusion.

Considering that there is no indication in the SEC opinion that any of the shares in Indo Phil do not have voting rights, it must be assumed that all such shares have voting rights. As the foreign stockholdings in Indo Phil amount to 56%, control of Indo Phil is held by foreign nationals; that is, this 56% can outvote the 44% stockholding of Indo Phil’s Filipino stockholders. Since control of the proposed corporation will rest on Indo Phil (which is to hold 70% of its capital), this control would ultimately rest on those who control Indo Phil; that is, its 56% foreign stockholding.

Had the Control Test been applied, Indo Phil would have, at the onset, been deemed to have failed to satisfy the requisite Filipino equity ownership, and its 70% stockholding in the proposed

corporation would have been deemed not held by Philippine nationals. The Control Test would thus have averted an aberrant result where a corporation ultimately controlled by foreign nationals was deemed to have satisfied the requisite Filipino equity ownership.

The Control Test satisfies thebeneficial ownershiprequirement

Apart from control (through voting rights), also significant is "beneficial ownership". In the 2011 decision in Gamboa,161 this court stated:

Mere legal title is insufficient to meet the 60 percent Filipino-owned "capital" required in the Constitution. Full beneficial ownership of 60 percent of the outstanding capital stock, coupled with 60 percent of the voting rights, is required. The legal and beneficial ownership of 60 percent of the outstanding capital stock must rest in the hands of Filipino nationals in accordance with the constitutional mandate. Otherwise, the corporation is "considered as non-Philippine national[s]."162

The concept of "beneficial ownership" is not novel. The implementing rules and regulations (amended 2004) of Republic Act No. 8799, the Securities Regulation Code (SRC), defines "beneficial owner or beneficial ownership" as follows:

SRC Rule 3 – Definition of Terms Used in the Rules and Regulations

1. As used in the rules and regulations adopted by the Commission under the Code, unless the context otherwise requires:

A. Beneficial owner or beneficial ownership means any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote, or to direct the voting of such security; and/or investment returns or power, which includes the power to dispose of, or to direct the disposition of such security; provided, however, that a person shall be deemed to have an indirect beneficial ownership interest in any security which is:

i. held by members of his immediate family sharing the same household;

ii. held by a partnership in which he is a general partner;

iii. held by a corporation of which he is a controlling shareholder; or

iv. subject to any contract, arrangement or understanding which gives him voting power or investment power with respect to such securities; provided however, that the following persons or institutions shall not be deemed to be beneficial owners of securities held by them for the benefit of third parties or in customer or fiduciary accounts in the ordinary course of business, so long as such shares were acquired by such persons or institutions without the purpose or effect of changing or influencing control of the issuer:

a. a broker dealer;

b. an investment house registered under the Investment Houses Law;

c. a bank authorized to operate as such by the Bangko Sentral ng Pilipinas;

d. an insurance company subject to the supervision of the Office of the Insurance Commission;

e. an investment company registered under the Investment Company Act;

f. a pension plan subject to regulation and supervision by the Bureau of Internal Revenue and/or the Office of the Insurance Commission or relevant authority; and

g. a group in which all of the members are persons specified above.

All securities of the same class beneficially owned by a person, regardless of the form such beneficial ownership takes, shall be aggregated in calculating the number of shares beneficially owned by such person.

A person shall be deemed to be the beneficial owner of a security if that person has the right to acquire beneficial ownership, within thirty (30) days, including, but not limited to, any right to acquire, through the exercise of any option, warrant or right; through the conversion of any security; pursuant to the power to revoke a trust, discretionary account or similar arrangement; or pursuant to automatic termination of a trust, discretionary account or similar arrangement. (Emphasis supplied)

Thus, there are two (2) ways through which one may be a beneficial owner of securities, such as shares of stock: first, by having or sharing voting power; and second, by having or sharing investment returns or power. By the implementing rules’ use of "and/or", either of the two suffices. They are alternative means which may or may not concur.

Voting power, as discussed previously, ultimately rests on the controlling stockholders of the controlling investor corporation. To go back to the previous illustration, voting power ultimately rests on A, it having the voting power in B which, in turn, has the voting power in C.

As to investment returns or power, it is ultimately A which enjoys investment power. It controls B’s investment decisions – including the disposition of securities held by B – and (again, through B) controls C’s investment decisions.

Similarly, it is ultimately A which benefits from investment returns generated through C. Any income generated by C redounds to B’s benefit, that is, through income obtained from C, B gains funds or assets which it can use either to finance itself in respect of capital and/or operations. This is a direct benefit to B, itself a Philippine national. This is also an indirect benefit to A, a collectivity of Philippine nationals, as then, its business – B – not only becomes more viable as a going concern but also becomes equipped to funnel income to A.

Moreover, beneficial ownership need not be direct. A controlling shareholder is deemed the indirect beneficial owner of securities (e.g., shares) held by a corporation of which he or she is a controlling shareholder. Thus, in the previous illustration, A, the controlling shareholder of B, is the indirect beneficial owner of the shares in C to the extent that they are held by

B.

Practical difficulties with theGrandfather Rule

Per SEC-OGC Opinion No. 10-31, the Grandfather Rule calls for the aggregation of stockholdings on the basis of the individual stockholders (i.e., natural persons) of every investor corporation. This construction presents practical problems which, in many circumstances, render the reckoning of foreign equity a futile exercise.

It is a given that a corporation may hold shares in another corporation. Having to reckon equity to that point when natural persons hold rights to stocks makes it conceivable that stockholdings will have to be traced ad infinitum. The Grandfather Rule, as conceived in SEC-OGC Opinion No. 10-31, will never be satisfied for as long as there is a corporation holding the shares of another corporation.

This proposition is rendered even more difficult (and absurd) by how certain corporations are listed and traded in stock exchanges. In these cases, the ownership of stocks and the fractional composition of a corporation can change on a daily basis.

Even Palting, which SEC-OGC Opinion No. 10-31 relied upon to justify resort to the Grandfather Rule, acknowledged these impracticalities and absurdities:

[T]o what extent must the word "indirectly" be carried? Must we trace the ownership or control of these various corporations ad infinitum for the purpose of determining whether the American ownership-control-requirement is satisfied? Add to this the admitted fact that the shares of stock of the PANTEPEC and PANCOASTAL which are allegedly owned or controlled directly by citizens of the United States, are traded in the stock exchange in New York, and you have a situation where it becomes a practical impossibility to determine at any given time, the citizenship of the controlling stock required by the law.163

The Control Test is sustained

by the Mining Act

The Foreign Investments Act’s reckoning of a Philippine national on the basis of control and the requisite application of the Control Test are reinforced by the Mining Act.

Section 3 (aq) of the Mining Act deems as a qualified person (for purposes of a mineral agreement) a "corporation, x x x at least sixty per centum (60%) of the capital of which is owned by citizens of the Philippines." Insofar as the controlling equity requirement is concerned, this is practically a restatement of Section 3 (a) of the Foreign Investments Act.164

Moreover, Section 3 (t), by defining a "foreign-owned corporation" as a "corporation, x x x in which less than fifty per centum (50%) of the capital is owned by Filipino citizens" is merely stating Section 3 (aq)’s inverse. Section 3 (t) remains consistent with the Control Test, for after all, a corporation in which less than half of the capital is owned by Filipino could not possibly be controlled by Filipinos.

Sixty percent Filipino equityownership is indispensable tobe deemed a Philippinenational

But what of corporations in which Filipino equity is greater than 50% but less than 60%?

The Foreign Investments Act is clear. The threshold to qualify as a Philippine national, whether as a stand-alone corporation or one involving investments from or by other corporation/s, is 60% Filipino equity ownership. Failing this, a corporation must be deemed to be of foreign nationality.

The necessary implication of Section 3 (a) of the FIA is that anything that fails to breach this 60% threshold is not a Philippine national. There is no "doubt", as DOJ Opinion No. 20, series of 2005, posits. Any declaration, in the Mining Act or elsewhere, that a corporation in which Filipino equity ownership is less than 50% is deemed foreign-owned is merely to articulate – so as to eliminate uncertainty – the natural consequence of Filipinos’ minority shareholding in a corporation. Ultimately, the positive determination of what makes a Philippine national, per Section 3 (a) of the Foreign Investments Act, is that which controls.

The Grandfather Rule maybe applied as a supplement tothe Control Test

This standard under the Foreign Investments Act is the Control Test. Its application can be nuanced if there is a clear showing that the context of a case requires it. The Foreign Investments Act’s standard should be applied with the end of achieving the rationale for nationalization. Thus, sixty percent equity ownership is but a minimum.

This court’s conception of what constitutes control – as articulated in Gamboa – must be deemed integrated into the Foreign Investment Act’s standard. Bare ownership of 60% of a corporation’s shares would not suffice. What is necessary is such ownership as will ensure control of a corporation.

In Gamboa, "[f]ull beneficial ownership of 60 percent of the outstanding capital stock, coupled with 60 percent of the voting rights, is required."165 With this in mind, the Grandfather Rule may be used as a supplement to the Control Test, that is, as a further check to ensure that control and beneficial ownership of a corporation is in fact lodged in Filipinos.

For instance, Department of Justice Opinion No. 165, series of 1984, identified the following "significant indicators" or badges of "dummy status":

1. That the foreign investor provides practically all the funds for the joint investment undertaken by Filipino businessmen and their foreign partner.

2. That the foreign investors undertake to provide practically all the technological support for the joint venture.

3. That the foreign investors, while being minority stockholders, manage the company and prepare all economic viability studies.166

In instances where methods are employed to disable Filipinos from exercising control and reaping the economic benefits of an enterprise, the ostensible control vested by ownership of 60% of a corporation’s capital may be pierced. Then, the Grandfather Rule allows for a further, more exacting examination of who actually controls and benefits from holding such capital.

Narra, Tesoro, and McArthurostensibly satisfy theminimum requirement of60% Filipino equity holding

Turning now to Narra, Tesoro, and McArthur, a determination of their qualification to enter into MPSAs requires an examination of the structures of their respective stockholdings and controlling interests. This examination must remain consistent with the previously discussed requirements of effective control and beneficial ownership.

Consistent with Gamboa,167 this examination of equity structures must likewise focus on "capital" understood as "shares of stock entitled to vote in the election of directors."168

Proceeding from the findings of the Court of Appeals in its October 1, 2010 decision in CA-G.R. SP No. 109703,169 it appears that at least 60% of equities in Narra, Tesoro, and McArthur is owned by Philippine nationals. Per this initial analysis, Narra, Tesoro, and McArthur ostensibly satisfy the requirements of the Control Test in order that they may be deemed Filipino corporations.

Attention must be drawn to how these findings fail to indicate which (fractional) portion of these equities consist of "shares of stock entitled to vote in the election of directors" or, if there is even any such portion of shares which are not entitled to vote. These findings fail to indicate any distinction between common shares and preferred shares (not entitled to vote). Absent a basis for reckoning non-voting shares, there is, thus, no basis for diminishing the 60% Filipino equity holding in Narra, Tesoro, and McArthur and undermining their having ostensibly satisfied the requirements of the Control Test in order to be deemed Filipino corporations qualified to enter into MPSAs

1. Narra Nickel Mining and Development Corporation

Petitioner Narra Nickel Mining and Development Corporation has P 10 Million in capital stock, divided into 10,000 shares at P 1,000.00 per share, subscribed to as follows:170

Name Nationality Number of Amount Amount Paid

Shares Subscribed

Patricia Louise Mining and Development Corp.

Filipino 5,997 P 5,997,000.00 P 1,667,000.00

MBMI Resources, Inc. Canadian 3,996 P 3,996,000.00 P 1,116,000.00

Higinio C. Mendoza,Jr.

Filipino 1 P 1,000.00 P 1,000.00

Henry E. Fernandez Filipino 1 P 1,000.00 P 1,000.00

Ma. Elena A. Bocalan Filipino 1 P 1,000.00 P 1,000.00

Michael T. Mason American 1 P 1,000.00 P 1,000.00

Robert L. McCurdy Canadian 1 P 1,000.00 P 1,000.00

Manuel A. Agcaoili Filipino 1 P 1,000.00 P 1,000.00

Bayani H. Agabin Filipino 1 P 1,000.00 P 1,000.00

Total 10,000 P 10,000,000.00 P 2,800,000.00

Patricia Louise Mining and Development Corporation (PLMDC) also has P 10 Million in capital stock, divided into 10,000 shares at P 1,000.00 per share, subscribed to as follows:171

Name Nationality Number of Shares

Amount Subscribed

Amount Paid

>Palawan Alpha SouthResource Development Corp.

Filipino 6,596 P 6,596,000.00 P 0

MBMI Resources, Inc. Canadian 3,396 P 3,396,000.00 P 2,796,000.00

Higinio C. Mendoza,Jr.

Filipino 1 P 1,000.00 P 1,000.00

Fernando B. Esguerra Filipino 1 P 1,000.00 P 1,000.00

Henry E. Fernandez Filipino 1 P 1,000.00 P 1,000.00

Lauro L. Salazar Filipino 1 P 1,000.00 P 1,000.00

Michael T. Mason American 1 P 1,000.00 P 1,000.00

Kenneth Cawkel Canadian 1 P 1,000.00 P 1,000.00

Manuel A. Agcaoili Filipino 1 P 1,000.00 P 1,000.00

Bayani H. Agabin Filipino 1 P 1,000.00 P 1,000.00

Total 10,000 P 10,000,000.00 P 2,804,000.00

Palawan Alpha South Resource and Development Corporation, a Filipino corporation, along with Higinio C. Mendoza, Jr., Fernando B. Esguerra, Henry E. Fernandez, Lauro L. Salazar, Manuel A. Agcaoili, and Bayani H. Agabin, who are all Filipinos, collectively own 6,002 shares in or 60.02% of the capital stock of PLMDC. PLMDC is thus ostensibly a Filipino corporation (i.e., it is controlled by Philippine nationals who own more than 60% of its capital as required by Section 3 (a) of the Foreign Investments Act).

PLMDC, along with Higinio C. Mendoza, Jr., Henry E. Fernandez, Ma. Elena A. Bocalan, Manuel A. Agcaoili and Bayani H. Agabin, who are all Filipinos, collectively own 6,002 shares in or 60.02% of the capital stock of Narra. As Narra has satisfied the minimum Filipino equity ownership (i.e., 60%) required by Section 3 (a) of the Foreign Investments Act, it is ostensibly a Filipino corporation. Moreover, as it has satisfied the minimum Filipino equity ownership (i.e., 60%) required by Section 3 (aq) of the Mining Act to be deemed a qualified person for purposes of mineral agreements, Narra is ostensibly qualified to enter into an MPSA.

2. Tesoro Mining and Development, Inc.

Petitioner Tesoro Mining and Development, Inc. has P 10 Million in capital stock, divided into 10,000 shares at P 1,000.00 per share, subscribed to as follows:172

Name Nationality Number of Shares

Amount Subscribed

Amount Paid

Sara Marie Mining, Inc.

Filipino 5,997 P 5,997,000.00 P 825,000.00

MBMI Resources, Inc. Canadian 3,998 P 3,998,000.00 P 1,878,174.60

Lauro L. Salazar Filipino 1 P 1,000.00 P 1,000.00

Fernando B. Esguerra Filipino 1 P 1,000.00 P 1,000.00

Manuel A. Agcaoili Filipino 1 P 1,000.00 P 1,000.00

Michael T. Mason American 1 P 1,000.00 P 1,000.00

Kenneth Cawkel Canadian 1 P 1,000.00 P 1,000.00

Total 10,000 P 10,000,000.00 P 2,708,174.60

Sara Marie Mining, Inc. (SMMI) also has P 10 Million in capital stock, divided into 10,000 shares at P 1,000.00 per share, subscribed to as follows:173

Name Nationality Number of Shares

Amount Subscribed

Amount Paid

Olympic Mines and Development Corp.

Filipino 6,663 P 6,663,000.00 P 0

MBMI Resources, Inc. Canadian 3,331 P 3,331,000.00 P 2,794,000.00

Amanti Limson Filipino 1 P 1,000.00 P 1,000.00

Fernando B. Esguerra Filipino 1 P 1,000.00 P 1,000.00

Lauro Salazar Filipino 1 P 1,000.00 P 1,000.00

Emmanuel G. Hernando Filipino 1 P 1,000.00 P 1,000.00

Michael T. Mason American 1 P 1,000.00 P 1,000.00

Kenneth Cawkel Canadian 1 P 1,000.00 P 1,000.00

Total 10,000 P 10,000,000.00 P 2,809,900.00

Olympic Mines and Development Corporation (OMDC), a Filipino corporation, along with Amanti Limson, Fernando B. Esguerra, Lauro Salazar, and Emmanuel G. Hernando, who are all Filipinos, collectively own 6,667 shares in or 66.67% of the capital stock of SMMI. SMMI is thus ostensibly a Filipino corporation (i.e., it is controlled by Philippine nationals who own more than 60% of its capital as required by Section 3 (a) of the Foreign Investments Act).

SMMI, along with Lauro L. Salazar, Fernando B. Esguerra, and Manuel A. Agcaoili, who are all Filipinos, collectively own 6,000 shares in or 60% of the capital stock of Tesoro. As Tesoro has satisfied the minimum Filipino equity ownership (i.e., 60%) required by Section 3 (a) of the

Foreign Investments Act, it is ostensibly a Filipino corporation. Moreover, as it has satisfied the minimum Filipino equity ownership (i.e., 60%) required by Section 3 (aq) of the Mining Act to be deemed a qualified person for purposes of mineral agreements, Tesoro is ostensibly qualified to enter into an MPSA.

3. McArthur Mining Corporation

Petitioner McArthur Mining Corporation has P 10 Million in capital stock, divided into 10,000 shares at P 1,000.00 per share, subscribed to as follows:174

Name Nationality Number of Shares

Amount Subscribed

Amount Paid

Madridejos Mining Corp.

Filipino 5,997 P 5,997,000.00 P 825,000.00

MBMI Resources, Inc. Canadian 3,998 P 3,998,000.00 P

1,878,174.60

Lauro L. Salazar Filipino 1 P 1,000.00 P 1,000.00

Fernando B. Esguerra Filipino 1 P 1,000.00 P 1,000.00

Manuel A. Agcaoili Filipino 1 P 1,000.00 P 1,000.00

Michael T. Mason American 1 P 1,000.00 P 1,000.00

Kenneth Cawkel Canadian 1 P 1,000.00 P 1,000.00

Total 10,000 P 10,000,000.00 P 2,708,174.60

Madridejos Mining Corporation (Madridejos) also has P 10 Million in capital stock, divided into 10,000 shares at p 1,000.00 per shares, subscribed to as follows:175

Name Nationality Number of Shares

Amount Subscribed

Amount Paid

Olympic Mines and Development Corp.

Filipino 6,663 P 6,663,000.00 P 0

MBMI Resources, Inc. Canadian 3,331 P 3,331,000.00 P 2,803,900.00

Amanti Limson Filipino 1 P 1,000.00 P 1,000.00

Fernando B. Esguerra Filipino 1 P 1,000.00 P 1,000.00

Lauro Salazar Filipino 1 P 1,000.00 P 1,000.00

Emmanuel G. Hernando Filipino 1 P 1,000.00 P 1,000.00

Michael T. Mason American 1 P 1,000.00 P 1,000.00

Kenneth Cawkel Canadian 1 P 1,000.00 P 1,000.00

Total 10,000 P 10,000,000.00 P 2,809,900.00

OMDC, a Filipino corporation, combined with Amanti Limson, Fernando B. Esguerra, Lauro Salazar, and Emmanuel G. Hernando, who are all Filipino, collectively own 6,667 shares in or 66.67% of the capital stock of Madridejos. Madridejos is thus ostensibly a Filipino corporation (i.e., it is controlled by Philippine nationals who own more than 60% of its capital as required by Section 3 (a) of the Foreign Investments Act).

Madridejos combined with Lauro L. Salazar, Fernando B. Esguerra, and Manuel A. Agcaoili, who are all Filipinos, collectively own 6,000 shares in or 60% of the capital stock of McArthur. As McArthur has satisfied the minimum Filipino equity ownership (i.e., 60%) required by Section 3 (a) of the Foreign Investments Act, it is ostensibly a Filipino corporation. Moreover, as it has satisfied the minimum Filipino equity ownership (i.e., 60%) required by Section 3 (aq) of the Mining Act to

be deemed a qualified person for purposes of mineral agreements, McArthur is ostensibly qualified to enter into an MPSA.

In its October 1, 2010 decision, the Court of Appeals, Seventh Division, made much of a joint venture entered into by the Canadian Corporation, MBMI Resources Inc. with OMDC.176 This joint venture was denominated "Olympic Properties". Per MBMI’s 2006 Annual report, MBMI was noted to hold "directly and indirectly an initial 60% interest in [Olympic Properties]."177 This joint venture, however, does not factor into the respective stockholders’ genealogies of Tesoro and McArthur. It is an independent venture entered into by OMDC with MBMI. It is OMDC, and not Olympic Properties, which owns shares in Tesoro and McArthur. It is, therefore, of no consequence that MBMI holds a 60% interest in Olympic Properties.

Having made these observations, it should not be discounted that a more thorough consideration – as has been intimated in the earlier disquisition regarding how 60% Filipino equity ownership is but a minimum and how the Grandfather Rule may be applied to further examine actual Filipino ownership – could yield an entirely different conclusion. In fact, Redmont has asserted that such a situation avails.

However, the contingencies of this case must restrain the court’s consideration of Redmont’s claims. Redmont sought relief from a body without jurisdiction – the Panel of Arbitrators – and has engaged in blatant forum shopping. It has taken liberties with and ran amok of rules that define fair play. It is, therefore, bound by its lapses and indiscretions and must bear the consequences of its imprudence.

Redmont has been engaged in blatant forum shopping

The concept of and rationale against forum shopping was explained by this court in Top Rate Construction and General Services, Inc. v. Paxton Development Corporation:178

Forum shopping is committed by a party who institutes two or more suits in different courts, either simultaneously or successively, in order to ask the courts to rule on the same or related causes or to grant the same or substantially the same reliefs, on the supposition that one or the other court would make a favorable disposition or increase a party's chances of obtaining a favorable decision or action. It is an act of malpractice for it trifles with the courts, abuses their processes, degrades the administration of justice and adds to the already congested court dockets. What is critical is the vexation brought upon the courts and the litigants by a party who asks different courts to rule on the same or related causes and grant the same or substantially the same reliefs and in the process creates the possibility of conflicting decisions being rendered by the different for a upon the same issues, regardless of whether the court in which one of the suits was brought has no jurisdiction over the action.179 (Emphasis supplied)

Equally settled is the test for determining forum shopping.1âwphi1 As this court explained in Yap v. Court of Appeals:180

To determine whether a party violated the rule against forum shopping, the most important factor to ask is whether the elements of litis pendentia are present, or whether a final judgment in one case will amount to res judicata in another; otherwise stated, the test for determining forum

shopping is whether in the two (or more) cases pending, there is identity of parties, rights or causes of action, and reliefs sought.181

Litis pendentia "refers to that situation wherein another action is pending between the same parties for the same cause of action, such that the second action becomes unnecessary and vexatious."182 It requires the concurrence of three (3) requisites: (1) the identity of parties, or at least such as representing the same interests in both actions; (2) the identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (3) the identity of the two cases such that judgment in one, regardless of which party is successful, would amount to res judicata in the other.183

In turn, prior judgment or res judicata bars a subsequent case when the following requisites concur: (1) the former judgment is final; (2) it is rendered by a court having jurisdiction over the subject matter and the parties; (3) it is a judgment or an order on the merits; (4) there is – between the first and the second actions – identity of parties, of subject matter, and of causes of action.184

Redmont has taken at least four (4) distinct routes all seeking substantially the same remedy. Stripped of their verbosity and legalese, Redmont’s petitions before the DENR Panel of Arbitrators, complaint before the Regional Trial Court, complaint before the Securities and Exchange Commission, and petition before the Office of the President all seek to prevent Narra, Tesoro, and McArthur as well as their co-respondents and/or co-defendants from engaging in mining operations. Moreover, these are all grounded on the same cause (i.e., that they are disqualified from doing so because they fail to satisfy the requisite Filipino equity ownership) and premised on the same facts or circumstances.

Redmont has created a situation where multiple tribunals must rule on the extent to which the parties adverse to Redmont have met the requisite Filipino equity ownership. It is certainly possible that conflicting decisions will be issued by the various tribunals over which Redmont’s various applications for relief have been lodged. It is, thus, glaring that the very evil sought to be prevented by the rule against forum shopping is being foisted by Redmont.

The consequences of willful forum shopping are clear. Rule 7, Section 5 of the 1997 Rules of Civil Procedure provides:

Section 5. Certification against forum shopping. — The plaintiff or principal party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed.

Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other initiatory pleading but shall be cause for the dismissal of the case without

prejudice, unless otherwise provided, upon motion and after hearing. The submission of a false certification or non-compliance with any of the undertakings therein shall constitute indirect contempt of court, without prejudice to the corresponding administrative and criminal actions. If the acts of the party or his counsel clearly constitute willful and deliberate forum shopping, the same shall be ground for summary dismissal with prejudice and shall constitute direct contempt, as well as a cause for administrative sanctions. (n)

It strains credulity to accept that Redmont’s actions have not been willful. By filing petitions with the DENR Panel of Arbitrators, Redmont started the .entire series of events that have culminated in: first, the present petition; second, the de-consolidated G.R. No. 205513; and third, at least one (1) more petition filed with this court.186

Following the adverse decision of the Panel of Arbitrators, Narra, Tesoro, and McArthur pursued appeals before the Mines Adjudication Board.· This is all but a logical consequence of the POA's adverse decision. While the appeal before the MAB was pending, Redmont filed a complaint with the SEC and then filed a complaint with the Regional Trial Court to enjoin the MAB from proceeding. Redmont seems to have conveniently forgotten that it was its own actions that gave rise to the proceedings before the MAB in the first place. Moreover, even as all these were pending and in various stages of ap.peal and/or review, Redmont still filed a petition before the Office of the President.

Consistent with Rule 7, Section 5 of the 1997 Rules of Civil Procedure, the actions subject of these consolidated petitions must be dismissed with prejudice.

It should also not escape this court's attention that the vexatious actions of Redmont would not have been possible were it not for the permissiveness of Redmont's counsels. To reiterate, willful forum shopping leads not only to an action's dismissal with prejudice but "shall [also] constitute direct contempt, [and is] a cause for administrative sanctions."187 Redmont's counsels should be reminded that the parameters established by judicial (and even administrative) proceedings, such as the rule against forum shopping, are not to be trifled with.

ACCORDINGLY, I vote to GRANT the petition for review on certiorari subject of G.R. No. 195580. The assailed decision dated October 1, 2010 and the assailed resolution dated February 15, 2011 of the Court of Appeals, Seventh Division, in CA-G.R. SP No. 109703, which reversed and set aside the September 10, 2008 and July 1, 2009 orders of the Mines Adjudication Board (MAB) should be SET ASIDE AND DECLARED NULL AND VOID. The September 10, 2008 order of the Mines Adjudication Board dismissing the petitions filed by Redmont Consolidated Mines with the DENR Panel of Arbitrators must be REINSTATED.

MARVIC MARIO VICTOR F. LEONENAssociate Justice

FIRST DIVISION

G.R. No. 212081, February 23, 2015

DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES (DENR), Petitioner, v. UNITED PLANNERS CONSULTANTS, INC. (UPCI), Respondent.

D E C I S I O N

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 is the Decision2 dated March 26, 2014 of the Court of Appeals (CA) in CA-G.R. SP No. 126458 which dismissed the petition for certiorari filed by petitioner the Department of Environment and Natural Resources (petitioner).chanroblesvirtuallawlibrary

The Facts

On July 26, 1993, petitioner, through the Land Management Bureau (LMB), entered into an Agreement for Consultancy Services3 (Consultancy Agreement) with respondent United Planners Consultants, Inc. (respondent) in connection with the LMB’s Land Resource Management Master Plan Project (LRMMP).4Under the Consultancy Agreement, petitioner committed to pay a total contract price of P4,337,141.00, based on a predetermined percentage corresponding to the particular stage of work accomplished.5 In December 1994, respondent completed the work required, which petitioner formally accepted on December 27, 1994.6 However, petitioner was able to pay only 47% of the total contract price in the amount of P2,038,456.30.7cralawred

On October 25, 1994, the Commission on Audit (COA) released the Technical Services Office Report8(TSO) finding the contract price of the Agreement to be 84.14% excessive.9 This notwithstanding, petitioner, in a letter dated December 10, 1998, acknowledged its liability to respondent in the amount of P2,239,479.60 and assured payment at the soonest possible time.10cralawred

For failure to pay its obligation under the Consultancy Agreement despite repeated demands, respondent instituted a Complaint11 against petitioner before the Regional Trial Court of Quezon City, Branch 222 (RTC), docketed as Case No. Q-07-60321.12cralawred

Upon motion of respondent, the case was subsequently referred to arbitration pursuant to the arbitration clause of the Consultancy Agreement,13 which petitioner did not oppose.14 As a result, Atty. Alfredo F. Tadiar, Architect Armando N. Alli, and Construction Industry Arbitration Commission (CIAC) Accredited Arbitrator Engr. Ricardo B. San Juan were appointed as members of the Arbitral Tribunal. The court-referred arbitration was then docketed as Arbitration Case No. A-001.15cralawred

During the preliminary conference, the parties agreed to adopt the CIAC Revised Rules Governing Construction Arbitration16 (CIAC Rules) to govern the arbitration proceedings.17 They further agreed to submit their respective draft decisions in lieu of memoranda of arguments on or before April 21, 2010, among others.18cralawred

On the due date for submission of the draft decisions, however, only respondent complied with the given deadline,19 while petitioner moved for the deferment of the deadline which it followed with another motion for extension of time, asking that it be given until May 11, 2010 to submit its draft decision.20cralawred

In an Order21 dated April 30, 2010, the Arbitral Tribunal denied petitioner’s motions and deemed its non-submission as a waiver, but declared that it would still consider petitioner’s draft decision if submitted before May 7, 2010, or the expected date of the final award’s promulgation.22 Petitioner filed its draft decision23 only on May 7, 2010.

The Arbitral Tribunal rendered its Award24 dated May 7, 2010 (Arbitral Award) in favor of respondent, directing petitioner to pay the latter the amount of (a) P2,285,089.89 representing the unpaid progress billings, with interest at the rate of 12% per annum from the date of finality of the Arbitral Award upon confirmation by the RTC until fully paid; (b) P2,033,034.59 as accrued interest thereon; (c) ?500,000.00 as exemplary damages; and (d) P150,000.00 as attorney’s fees.25 It also ordered petitioner to reimburse respondent its proportionate share in the arbitration costs as agreed upon in the amount of P182,119.44.26cralawred

Unconvinced, petitioner filed a motion for reconsideration,27 which the Arbitral Tribunal merely noted without any action, claiming that it had already lost jurisdiction over the case after it had submitted to the RTC its Report together with a copy of the Arbitral Award.28cralawred

Consequently, petitioner filed before the RTC a Motion for Reconsideration29 dated May 19, 2010 (May 19, 2010 Motion for Reconsideration) and a Manifestation and Motion30 dated June 1, 2010 (June 1, 2010 Manifestation and Motion), asserting that it was denied the opportunity to be heard when the Arbitral Tribunal failed to consider its draft decision and merely noted its motion for reconsideration.31 It also denied receiving a copy of the Arbitral Award by either electronic or registered mail.32 For its part, respondent filed an opposition thereto and moved for the confirmation33 of the Arbitral Award in accordance with the Special Rules of Court on Alternative Dispute Resolution (Special ADR Rules).34cralawred

In an Order35 dated March 30, 2011, the RTC merely noted petitioner’s aforesaid motions, finding that copies of the Arbitral Award appear to have been sent to the parties by the Arbitral Tribunal, including the OSG, contrary to petitioner’s claim. On the other hand, the RTC confirmed the Arbitral Award pursuant to Rule 11.2 (A)36 of the Special ADR Rules and ordered petitioner to pay respondent the costs of confirming the award, as prayed for, in the total amount of P50,000.00. From this order, petitioner did not file a motion for reconsideration.

Thus, on June 15, 2011, respondent moved for the issuance of a writ of execution, to which no comment/opposition was filed by petitioner despite the RTC’s directive therefor. In an Order37 dated September 12, 2011, the RTC granted respondent’s motion.38cralawred

Petitioner moved to quash39 the writ of execution, positing that respondent was not entitled to its monetary claims. It also claimed that the issuance of said writ was premature since the RTC should have first resolved its May 19, 2010 Motion for Reconsideration and June 1, 2010 Manifestation and Motion, and not merely noted them, thereby violating its right to due process.40cralawred

The RTC Ruling

In an Order41 dated July 9, 2012, the RTC denied petitioner’s motion to quash.

It found no merit in petitioner’s contention that it was denied due process, ruling that its May 19, 2010 Motion for Reconsideration was a prohibited pleading under Section 17.2,42 Rule 17 of the CIAC Rules. It explained that the available remedy to assail an arbitral award was to file a motion for correction of final award pursuant to Section 17.143 of the CIAC Rules, and not a motion for reconsideration of the said award itself.44 On the other hand, the RTC found petitioner’s June 1, 2010 Manifestation and Motion seeking the resolution of its May 19, 2010 Motion for Reconsideration to be defective for petitioner’s failure to observe the three-day notice rule.45 Having then failed to avail of the remedies attendant to an order of confirmation, the Arbitral Award had become final and executory.46cralawred

On July 12, 2012, petitioner received the RTC’s Order dated July 9, 2012 denying its motion to quash.47cralawred

Dissatisfied, it filed on September 10, 2012 a petition for certiorari48 before the CA, docketed as CA-G.R. SP No. 126458, averring in the main that the RTC acted with grave abuse of discretion in confirming and ordering the execution of the Arbitral Award.chanroblesvirtuallawlibrary

The CA Ruling

In a Decision49 dated March 26, 2014, the CA dismissed the certiorari petition on two (2) grounds, namely: (a) the petition essentially assailed the merits of the Arbitral Award which is prohibited under Rule 19.750 of the Special ADR Rules;51 and (b) the petition was filed out of time, having been filed way beyond 15 days from notice of the RTC’s July 9, 2012 Order, in violation of Rule 19.2852 in relation to Rule 19.853 of said Rules which provide that a special civil action for certiorari must be filed before the CA within 15 days from notice of the judgment, order, or resolution sought to be annulled or set aside (or until July 27, 2012).

Aggrieved, petitioner filed the instant petition.chanroblesvirtuallawlibrary

The Issue Before the Court

The core issue for the Court’s resolution is whether or not the CA erred in applying the provisions of the Special ADR Rules, resulting in the dismissal of petitioner’s special civil action for certiorari.

The Court’s Ruling

The petition lacks merit.chanroblesvirtuallawlibrary

I.

Republic Act No. (RA) 9285,54 otherwise known as the Alternative Dispute Resolution Act of 2004,” institutionalized the use of an Alternative Dispute Resolution System (ADR System)55 in the Philippines. The Act, however, was without prejudice to the adoption by the Supreme Court of

any ADR system as a means of achieving speedy and efficient means of resolving cases pending before all courts in the Philippines.56cralawred

Accordingly, A.M. No. 07-11-08-SC was created setting forth the Special Rules of Court on Alternative Dispute Resolution (referred herein as Special ADR Rules) that shall govern the procedure to be followed by the courts whenever judicial intervention is sought in ADR proceedings in the specific cases where it is allowed.57cralawred

Rule 1.1 of the Special ADR Rules lists down the instances when the said rules shall apply, namely: “(a) Relief on the issue of Existence, Validity, or Enforceability of the Arbitration Agreement; (b) Referral to Alternative Dispute Resolution (“ADR”); (c) Interim Measures of Protection; (d) Appointment of Arbitrator; (e) Challenge to Appointment of Arbitrator; (f) Termination of Mandate of Arbitrator; (g) Assistance in Taking Evidence; (h) Confirmation, Correction or Vacation of Award in Domestic Arbitration; (i) Recognition and Enforcement or Setting Aside of an Award in International Commercial Arbitration; (j) Recognition and Enforcement of a Foreign Arbitral Award; (k) Confidentiality/Protective Orders; and (l) Deposit and Enforcement of Mediated Settlement Agreements.”58cralawred

Notably, the Special ADR Rules do not automatically govern the arbitration proceedings itself. A pivotal feature of arbitration as an alternative mode of dispute resolution is that it is a product of party autonomy or the freedom of the parties to make their own arrangements to resolve their own disputes.59 Thus, Rule 2.3 of the Special ADR Rules explicitly provides that “parties are free to agree on the procedure to be followed in the conduct of arbitral proceedings. Failing such agreement, the arbitral tribunal may conduct arbitration in the manner it considers appropriate.”60cralawred

In the case at bar, the Consultancy Agreement contained an arbitration clause.61 Hence, respondent, after it filed its complaint, moved for its referral to arbitration62 which was not objected to by petitioner.63 By its referral to arbitration, the case fell within the coverage of the Special ADR Rules. However, with respect to the arbitration proceedings itself, the parties had agreed to adopt the CIAC Rules before the Arbitral Tribunal in accordance with Rule 2.3 of the Special ADR Rules.

On May 7, 2010, the Arbitral Tribunal rendered the Arbitral Award in favor of respondent. Under Section 17.2, Rule 17 of the CIAC Rules, no motion for reconsideration or new trial may be sought, but any of the parties may file a motion for correction64 of the final award, which shall interrupt the running of the period for appeal,65 based on any of the following grounds, to wit:chanRoblesvirtualLawlibrary

a. an evident miscalculation of figures, a typographical or arithmetical error;ChanRoblesVirtualawlibrary

b. an evident mistake in the description of any party, person, date, amount, thing or property referred to in the award;ChanRoblesVirtualawlibrary

c. where the arbitrators have awarded upon a matter not submitted to them, not affecting the merits of the decision upon the matter submitted;ChanRoblesVirtualawlibrary

d. where the arbitrators have failed or omitted to resolve certain issue/s formulated by the parties in the Terms of Reference (TOR) and submitted to them for resolution, and

e. where the award is imperfect in a matter of form not affecting the merits of the controversy.

The motion shall be acted upon by the Arbitral Tribunal or the surviving/remaining members.66cralawlawlibrary

Moreover, the parties may appeal the final award to the CA through a petition for review under Rule 43 of the Rules of Court.67cralawred

Records do not show that any of the foregoing remedies were availed of by petitioner. Instead, it filed the May 19, 2010 Motion for Reconsideration of the Arbitral Award, which was a prohibited pleading under the Section 17.2,68 Rule 17 of the CIAC Rules, thus rendering the same final and executory.

Accordingly, the case was remanded to the RTC for confirmation proceedings pursuant to Rule 11 of the Special ADR Rules which requires confirmation by the court of the final arbitral award. This is consistent with Section 40, Chapter 7 (A) of RA 9285 which similarly requires a judicial confirmation of a domestic award to make the same enforceable:chanRoblesvirtualLawlibrary

SEC. 40. Confirmation of Award. – The confirmation of a domestic arbitral award shall be governed by Section 2369 of R.A. 876.70cralawred

A domestic arbitral award when confirmed shall be enforced in the same manner as final and executory decisions of the regional trial court.

The confirmation of a domestic award shall be made by the regional trial court in accordance with the Rules of Procedure to be promulgated by the Supreme Court.

A CIAC arbitral award need not be confirmed by the regional trial court to be executory as provided under E.O. No. 1008. (Emphases supplied)cralawlawlibrary

During the confirmation proceedings, petitioners did not oppose the RTC’s confirmation by filing a petition to vacate the Arbitral Award under Rule 11.2 (D)71 of the Special ADR Rules. Neither did it seek reconsideration of the confirmation order in accordance with Rule 19.1 (h) thereof. Instead, petitioner filed only on September 10, 2012 a special civil action for certiorari before the CA questioning the propriety of (a) the RTC Order dated September 12, 2011 granting respondent’s motion for issuance of a writ of execution, and (b) Order dated July 9, 2012 denying its motion to quash. Under Rule 19.26 of the Special ADR Rules, “[w]hen the Regional Trial Court, in making a ruling under the Special ADR Rules, has acted without or in excess of its jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law, a party may file a special civil action for certiorari to annul or set aside a ruling of the Regional Trial Court.” Thus, for failing to avail of the foregoing remedies before resorting tocertiorari, the CA correctly dismissed its petition.chanroblesvirtuallawlibrary

II.

Note that the special civil action for certiorari described in Rule 19.26 above may be filed to annul or set aside the following orders of the Regional Trial Court.

a. Holding that the arbitration agreement is inexistent, invalid or unenforceable;ChanRoblesVirtualawlibrary

b. Reversing the arbitral tribunal’s preliminary determination upholding its jurisdiction;ChanRoblesVirtualawlibrary

c. Denying the request to refer the dispute to arbitration;ChanRoblesVirtualawlibrary

d. Granting or refusing an interim relief;ChanRoblesVirtualawlibrary

e. Denying a petition for the appointment of an arbitrator;ChanRoblesVirtualawlibrary

f. Confirming, vacating or correcting a domestic arbitral award;ChanRoblesVirtualawlibrary

g. Suspending the proceedings to set aside an international commercial arbitral award and referring the case back to the arbitral tribunal;ChanRoblesVirtualawlibrary

h. Allowing a party to enforce an international commercial arbitral award pending appeal;ChanRoblesVirtualawlibrary

i. Adjourning or deferring a ruling on whether to set aside, recognize and or enforce an international commercial arbitral award;ChanRoblesVirtualawlibrary

j. Allowing a party to enforce a foreign arbitral award pending appeal; and

k. Denying a petition for assistance in taking evidence. (Emphasis supplied)

cralawlawlibrary

Further, Rule 19.772 of the Special ADR Rules precludes a party to an arbitration from filing a petition forcertiorari questioning the merits of an arbitral award.

If so falling under the above-stated enumeration, Rule 19.28 of the Special ADR Rules provide that saidcertiorari petition should be filed “with the [CA] within fifteen (15) days from notice of the judgment, order or resolution sought to be annulled or set aside. No extension of time to file the petition shall be allowed.”

In this case, petitioner asserts that its petition is not covered by the Special ADR Rules (particularly, Rule 19.28 on the 15-day reglementary period to file a petition for certiorari) but by Rule 65 of the Rules of Court (particularly, Section 4 thereof on the 60-day reglementary period to file a petition forcertiorari), which it claimed to have suppletory application in arbitration proceedings since the Special ADR Rules do not explicitly provide for a procedure on execution.

The position is untenable.

Execution is fittingly called the fruit and end of suit and the life of the law. A judgment, if left unexecuted, would be nothing but an empty victory for the prevailing party.73cralawred

While it appears that the Special ADR Rules remain silent on the procedure for the execution of a confirmed arbitral award, it is the Court’s considered view that the Rules’ procedural mechanisms cover not only aspects of confirmation but necessarily extend to a confirmed award’s execution in light of the doctrine of necessary implication which states that every statutory grant of power, right or privilege is deemed to include all incidental power, right or privilege. In Atienza v. Villarosa,74 the doctrine was explained, thus:chanRoblesvirtualLawlibrary

No statute can be enacted that can provide all the details involved in its application. There is always an omission that may not meet a particular situation. What is thought, at the time of enactment, to be an all-embracing legislation may be inadequate to provide for the unfolding of events of the future. So-called gaps in the law develop as the law is enforced. One of the rules of statutory construction used to fill in the gap is the doctrine of necessary implication. The doctrine states that what is implied in a statute is as much a part thereof as that which is expressed. Every statute is understood, by implication, to contain all such provisions as may be necessary to effectuate its object and purpose, or to make effective rights, powers, privileges or jurisdiction which it grants, including all such collateral and subsidiary consequences as may be fairly and logically inferred from its terms. Ex necessitate legis. And every statutory grant of power, right or privilege is deemed to include all incidental power, right or privilege. This is so because the greater includes the lesser, expressed in the maxim,in eo plus sit, simper inest et minus.75 (Emphases supplied)cralawlawlibrary

As the Court sees it, execution is but a necessary incident to the Court’s confirmation of an arbitral award. To construe it otherwise would result in an absurd situation whereby the confirming court previously applying the Special ADR Rules in its confirmation of the arbitral award would later shift to the regular Rules of Procedure come execution. Irrefragably, a court’s power to confirm a judgment award under the Special ADR Rules should be deemed to include the power to order its execution for such is but a collateral and subsidiary consequence that may be fairly and logically inferred from the statutory grant to regional trial courts of the power to confirm domestic arbitral awards.

All the more is such interpretation warranted under the principle of ratio legis est anima which provides that a statute must be read according to its spirit or intent,76 for what is within the spirit is within the statute although it is not within its letter, and that which is within the letter but not within the spirit is not within the statute.77 Accordingly, since the Special ADR Rules are intended to achieve speedy and efficient resolution of disputes and curb a litigious culture,78 every interpretation thereof should be made consistent with these objectives.

Thus, with these principles in mind, the Court so concludes that the Special ADR Rules, as far as practicable, should be made to apply not only to the proceedings on confirmation but also to the confirmed award’s execution.

Further, let it be clarified that – contrary to petitioner’s stance – resort to the Rules of Court even in a suppletory capacity is not allowed. Rule 22.1 of the Special ADR Rules explicitly provides that “[t]he provisions of the Rules of Court that are applicable to the proceedings enumerated in Rule

1.1 of these Special ADR Rules have either been included and incorporated in these Special ADR Rules orspecifically referred to herein.”79 Besides, Rule 1.13 thereof provides that “[i]n situations where no specific rule is provided under the Special ADR Rules, the court shall resolve such matter summarily and be guided by the spirit and intent of the Special ADR Rules and the ADR Laws.”

As above-mentioned, the petition for certiorari permitted under the Special ADR Rules must be filed within a period of fifteen (15) days from notice of the judgment, order or resolution sought to be annulled or set aside.80 Hence, since petitioner’s filing of its certiorari petition in CA-G.R. SP No. 126458 was made nearly two months after its receipt of the RTC’s Order dated July 9, 2012, or on September 10, 2012,81 said petition was clearly dismissible.82cralawred

III.

Discounting the above-discussed procedural considerations, the Court still finds that the certioraripetition had no merit.

Indeed, petitioner cannot be said to have been denied due process as the records undeniably show that it was accorded ample opportunity to ventilate its position. There was clearly nothing out of line when the Arbitral Tribunal denied petitioner’s motions for extension to file its submissions having failed to show a valid reason to justify the same or in rendering the Arbitral Award sans petitioner’s draft decision which was filed only on the day of the scheduled promulgation of final award on May 7, 2010.83 The touchstone of due process is basically the opportunity to be heard. Having been given such opportunity, petitioner should only blame itself for its own procedural blunder.

On this score, the petition for certiorari in CA-G.R. SP No. 126458 was likewise properly dismissed.chanroblesvirtuallawlibrary

IV.

Nevertheless, while the Court sanctions the dismissal by the CA of the petition for certiorari due to procedural infirmities, there is a need to explicate the matter of execution of the confirmed Arbitral Award against the petitioner, a government agency, in the light of Presidential Decree No. (PD) 144584otherwise known as the “Government Auditing Code of the Philippines.”

Section 26 of PD 1445 expressly provides that execution of money judgment against the Government or any of its subdivisions, agencies and instrumentalities is within the primary jurisdiction of the COA, to wit:chanRoblesvirtualLawlibrary

SEC. 26. General jurisdiction. The authority and powers of the Commission shall extend to and comprehend all matters relating to auditing procedures, systems and controls, the keeping of the general accounts of the Government, the preservation of vouchers pertaining thereto for a period of ten years, the examination and inspection of the books, records, and papers relating to those accounts; and the audit and settlement of the accounts of all persons respecting funds or property received or held by them in an accountable capacity, as well as the examination, audit, and settlement of all debts and claims of any sort due from or owing to the Government or any of its subdivisions, agencies and instrumentalities. The said jurisdiction extends to all

government-owned or controlled corporations, including their subsidiaries, and other self-governing boards, commissions, or agencies of the Government, and as herein prescribed, including non-governmental entities subsidized by the government, those funded by donation through the government, those required to pay levies or government share, and those for which the government has put up a counterpart fund or those partly funded by the government. (Emphases supplied)cralawlawlibrary

From the foregoing, the settlement of respondent’s money claim is still subject to the primary jurisdiction of the COA despite finality of the confirmed arbitral award by the RTC pursuant to the Special ADR Rules.85 Hence, the respondent has to first seek the approval of the COA of their monetary claim. This appears to have been complied with by the latter when it filed a “Petition for Enforcement and Payment of Final and Executory Arbitral Award”86 before the COA. Accordingly, it is now the COA which has the authority to rule on this latter petition.

WHEREFORE, the petition is DENIED. The Decision dated March 26, 2014 of the Court of Appeals in CA-G.R. SP No. 126458 which dismissed the petition for certiorari filed by petitioner the Department of Environment and Natural Resources is hereby AFFIRMED.

SO ORDERED.cralawlawlibrary

Sereno, C.J., (Chairperson), Leonardo-De Castro, Bersamin, and Perez, JJ., concur.

EN BANC

G.R. No. 180771, April 21, 2015

RESIDENT MARINE MAMMALS OF THE PROTECTED SEASCAPE TANON STRAIT, E.G., TOOTHED WHALES, DOLPHINS, PORPOISES, AND OTHER CETACEAN SPECIES, JOINED IN AND REPRESENTED HEREIN BY HUMAN BEINGS GLORIA ESTENZO RAMOS AND ROSE-LIZA EISMA-OSORIO, IN THEIR CAPACITY AS LEGAL GUARDIANS OF THE LESSER LIFE-FORMS AND AS RESPONSIBLE STEWARDS

OF GOD'S CREATIONS, Petitioners, v. SECRETARY ANGELO REYES, IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF ENERGY (DOE), SECRETARY JOSE L. ATIENZA, IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES (DENR),

LEONARDO R. SIBBALUCA, DENR REGIONAL DIRECTOR-REGION VII AND IN HIS CAPACITY AS CHAIRPERSON OF THE TANON STRAIT PROTECTED SEASCAPE MANAGEMENT BOARD, BUREAU

OF FISHERIES AND AQUATIC RESOURCES (BFAR), DIRECTOR MALCOLM I. SARMIENTO, JR., BFAR REGIONAL DIRECTOR FOR REGION VII ANDRES M. BOJOS, JAPAN PETROLEUM EXPLORATION

CO., LTD. (JAPEX), AS REPRESENTED BY ITS PHILIPPINE AGENT, SUPPLY OILFIELD SERVICES, INC., Respondents.

G.R. No. 181527

CENTRAL VISAYAS FISHERFOLK DEVELOPMENT CENTER (FIDEC), CERILO D. ENGARCIAL, RAMON YANONG, FRANCISCO LABID, IN THEIR PERSONAL CAPACITY AND AS REPRESENTATIVES OF THE SUBSISTENCE FISHERFOLKS OF THE MUNICIPALITIES OF ALOGUINSAN AND PINAMUNGAJAN,

CEBU, AND THEIR FAMILIES, AND THE PRESENT AND FUTURE GENERATIONS OF FILIPINOS WHOSE RIGHTS ARE SIMILARLY AFFECTED, Petitioners,v. SECRETARY ANGELO REYES, IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF ENERGY (DOE), JOSE L. ATIENZA, IN HIS

CAPACITY AS SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES (DENR), LEONARDO R. SIBBALUCA, IN HIS CAPACITY AS DENR REGIONAL DIRECTOR-REGION VII AND AS CHAIRPERSON OF THE TAÑON STRAIT PROTECTED SEASCAPE MANAGEMENT BOARD, ALAN ARRANGUEZ, IN HIS CAPACITY AS DIRECTOR ENVIRONMENTAL MANAGEMENT BUREAU-REGION VII, DOE REGIONAL DIRECTOR FOR REGION VIII1 ANTONIO LABIOS, JAPAN PETROLEUM EXPLORATION CO., LTD. (JAPEX), AS REPRESENTED BY ITS PHILIPPINE AGENT, SUPPLY OILFIELD

SERVICES, INC.,Respondent.

D E C I S I O N

LEONARDO-DE CASTRO, J.:

Before Us are two consolidated Petitions filed under Rule 65 of the 1997 Rules of Court, concerningService Contract No. 46 (SC-46), which allowed the exploration, development, and exploitation of petroleum resources within Tañon Strait, a narrow passage of water situated between the islands of Negros and Cebu.2

The Petition docketed as G.R. No. 180771 is an original Petition for Certiorari, Mandamus, and Injunction, which seeks to enjoin respondents from implementing SC-46 and to have it nullified for willful and gross violation of the 1987 Constitution and certain international and municipal laws.3

Likewise, the Petition docketed as G.R. No. 181527 is an original Petition for Certiorari, Prohibition, andMandamus, which seeks to nullify the Environmental Compliance Certificate (ECC) issued by the Environmental Management Bureau (EMB) of the Department of Environment and Natural Resources (DENR), Region VII in connection with SC-46; to prohibit respondents from

implementing SC-46; and to compel public respondents to provide petitioners access to the pertinent documents involving the Tañon Strait Oil Exploration Project.4

ANTECEDENT FACTS AND PROCEEDINGS

Petitioners in G.R. No. 180771, collectively referred to as the "Resident Marine Mammals" in the petition, are the toothed whales, dolphins, porpoises, and other cetacean species, which inhabit the waters in and around the Tañon Strait. They are joined by Gloria Estenzo Ramos (Ramos) and Rose-Liza Eisma-Osorio (Eisma-Osorio) as their legal guardians and as friends (to be collectively known as "the Stewards") who allegedly empathize with, and seek the protection of, the aforementioned marine species. Also impleaded as an unwilling co-petitioner is former President Gloria Macapagal-Arroyo, for her express declaration and undertaking in the ASEAN Charter to protect the Tañon Strait, among others.5

Petitioners in G.R. No. 181527 are the Central Visayas Fisherfolk Development Center (FIDEC), a non-stock, non-profit, non-governmental organization, established for the welfare of the marginal fisherfolk in Region VII; and Cerilo D. Engarcial (Engarcial), Ramon Yanong (Yanong) and Francisco Labid (Labid), in their personal capacities and as representatives of the subsistence fisherfolk of the municipalities of Aloguinsan and Pinamungajan, Cebu.

Named as respondents in both petitions are the late Angelo T. Reyes, as then Secretary of the Department of Energy (DOE); Jose L. Atienza, as then Secretary of the DENR; Leonardo R. Sibbaluca, as then DENR-Regional Director for Region VII and Chairman of the Tañon Strait Protected Seascape Management Board; Japan Petroleum Exploration Co., Ltd. (JAPEX), a company organized and existing under the laws of Japan with a Philippine branch office; and Supply Oilfield Services, Inc. (SOS), as the alleged Philippine agent of JAPEX.

In G.R. No. 181527, the following were impleaded as additional public respondents: Alan C. Arranguez (Arranguez) and Antonio Labios (Labios), in their capacities as then Director of the EMB, Region VII and then Regional Director of the DOE, Region VII, respectively.6

On June 13, 2002, the Government of the Philippines, acting through the DOE, entered into a Geophysical Survey and Exploration Contract-102 (GSEC-102) with JAPEX. This contract involved geological and geophysical studies of the Tañon Strait. The studies included surface geology, sample analysis, and reprocessing of seismic and magnetic data. JAPEX, assisted by DOE, also conducted geophysical and satellite surveys, as well as oil and gas sampling in Tañon Strait.7

On December 21, 2004, DOE and JAPEX formally converted GSEC-102 into SC-46 for the exploration, development, and production of petroleum resources in a block covering approximately 2,850 square kilometers offshore the Tañon Strait.8

From May 9 to 18, 2005, JAPEX conducted seismic surveys in and around the Tañon Strait. A multi-channel sub-bottom profiling covering approximately 751 kilometers was also done to determine the area's underwater composition.9

JAPEX committed to drill one exploration well during the second sub-phase of the project. Since the well was to be drilled in the marine waters of Aloguinsan and Pinamungajan, where the Tañon

Strait was declared a protected seascape in 1988,10 JAPEX agreed to comply with the Environmental Impact Assessment requirements pursuant to Presidential Decree No. 1586, entitled "Establishing An Environmental Impact Statement System, Including Other Environmental Management Related Measures And For Other Purposes."11

On January 31, 2007, the Protected Area Management Board12 of the Tañon Strait (PAMB-Tañon Strait) issued Resolution No. 2007-001,13 wherein it adopted the Initial Environmental Examination (IEE) commissioned by JAPEX, and favorably recommended the approval of JAPEX's application for an ECC.

On March 6, 2007, the EMB of DENR Region VII granted an ECC to the DOE and JAPEX for the offshore oil and gas exploration project in Tañon Strait.14 Months later, on November 16, 2007, JAPEX began to drill an exploratory well, with a depth of 3,150 meters, near Pinamungajan town in the western Cebu Province.15 This drilling lasted until February 8, 2008.16

It was in view of the foregoing state of affairs that petitioners applied to this Court for redress, via two separate original petitions both dated December 17, 2007, wherein they commonly seek that respondents be enjoined from implementing SC-46 for, among others, violation of the 1987 Constitution.

On March 31, 2008, SOS filed a Motion to Strike17 its name as a respondent on the ground that it is not the Philippine agent of JAPEX. In support of its motion, it submitted the branch office application of JAPEX,18 wherein the latter's resident agent was clearly identified. SOS claimed that it had acted as a mere logistics contractor for JAPEX in its oil and gas exploration activities in the Philippines.

Petitioners Resident Marine Mammals and Stewards opposed SOS's motion on the ground that it was premature, it was pro-forma, and it was patently dilatory. They claimed that SOS admitted that "it is in law a (sic) privy to JAPEX" since it did the drilling and other exploration activities in Tañon Strait under the instructions of its principal, JAPEX. They argued that it would be premature to drop SOS as a party as JAPEX had not yet been joined in the case; and that it was "convenient" for SOS to ask the Court to simply drop its name from the parties when what it should have done was to either notify or ask JAPEX to join it in its motion to enable proper substitution. At this juncture, petitioners Resident Marine Mammals and Stewards also asked the Court to implead JAPEX Philippines as a corespondent or as a substitute for its parent company, JAPEX.19

On April 8, 2008, the Court resolved to consolidate G.R. No. 180771 and G.R. No. 181527.

On May 26, 2008, the FIDEC manifested20 that they were adopting in toto the Opposition to Strike with Motion to Implead filed by petitioners Resident Marine Mammals and Stewards in G.R. No. 180771.

On June 19, 2008, public respondents filed their Manifestation21 that they were not objecting to SOS's Motion to Strike as it was not JAPEX's resident agent. JAPEX during all this time, did not file any comment at all.

Thus, on February 7, 2012, this Court, in an effort to ensure that all the parties were given ample

chance and opportunity to answer the issues herein, issued a Resolution directing the Court's process servicing unit to again serve the parties with a copy of the September 23, 2008 Resolution of the Court, which gave due course to the petitions in G.R. Nos. 180771 and 181527, and which required the parties to submit their respective memoranda. The February 7, 2012 Resolution22 reads as follows:chanroblesvirtuallawlibraryG.R. No. 180771 (Resident Marine Mammals of the Protected Seascape Tañon Strait,e.g., Toothed Whales, Dolphins, Porpoises and Other Cetacean Species, et al. vs. Hon. Angelo Reyes, in his capacity as Secretary of the Department of Energy, et al.) and G.R. No. 181527 (Central Visayas Fisherfolk Development Center, et al. vs. Hon. Angelo Reyes, et al.). - The Court Resolved to direct the Process Servicing Unit to RE-SEND the resolution dated September 23, 2008 to the following parties and counsel, together with this resolution:chanroblesvirtuallawlibraryAtty. Aristeo O. Cariño

20th Floor Pearlbank Centre

Counsel for Respondent Supply

146 Valero Street

Oilfield Services, Inc.

Salcedo Village, Makati City

JAPEX Philippines Ltd.

20th Floor Pearlbank Centre

146 Valero Street Salcedo Village, Makati City JAPEX Philippines Ltd.

19th Floor Pearlbank Centre

c/o Atty. Maria Farah Z.G.

146 Valero Street

Nicolas-Suchianco Salcedo Village, Makati City Atty. Maria Farah Z.G.

Suite 2404 Discovery Centre

Nicolas-Suchianco 25 ADB AvenueResident Agent of JAPEX

Ortigas Center, Pasig City

Philippines Ltd. This Resolution was personally served to the above parties, at the above addresses on February 23, 2012. On March 20, 2012, JAPEX Philippines, Ltd. (JAPEX PH), by way of special appearance, filed a Motion to Admit23 its Motion for Clarification,24 wherein JAPEX PH requested to be clarified as to whether or not it should deem the February 7, 2012 Resolution as this Court's Order of its inclusion in the case, as it has not been impleaded. It also alleged that JAPEX PH had already stopped exploration activities in the Tañon Strait way back in 2008, rendering this case moot.

On March 22, 2012, JAPEX PH, also by special appearance, filed a Motion for Extension of Time25 to file its Memorandum. It stated that since it received the February 7, 2012 Resolution on February 23, 2012, it had until March 22, 2012 to file its Memorandum. JAPEX PH then asked for an additional thirty days, supposedly to give this Court some time to consider its Motion for Clarification.

On April 24, 2012, this Court issued a Resolution26 granting JAPEX PH's Motion to Admit its Motion for Clarification. This Court, addressing JAPEX PH's Motion for Clarification, held:chanroblesvirtuallawlibraryWith regard to its Motion for Clarification (By Special Appearance) dated March 19, 2012, this Court considers JAPEX Philippines. Ltd. as a real party-in-interest in these cases. Under Section 2, Rule 3 of the 1997 Rules of Court, a real party-in-interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. Contrary to JAPEX Philippines, Ltd.'s allegation that it is a completely distinct corporation, which should not be confused with JAPEX Company, Ltd., JAPEX Philippines, Ltd. is a mere branch office, established by JAPEX Company, Ltd. for the purpose of carrying out the latter's business transactions here in the Philippines. Thus, JAPEX Philippines, Ltd., has no separate personality from its mother foreign corporation, the party impleaded in this case.

Moreover, Section 128 of the Corporation Code provides for the responsibilities and duties of a resident agent of a foreign corporation:chanroblesvirtuallawlibrarySECTION 128. Resident agent; service of process. — The Securities and Exchange Commission shall require as a condition precedent to the issuance of the license to transact business in the Philippines by any foreign corporation that such corporation file with the Securities and Exchange Commission a written power of attorney designating some person who must be a resident of the Philippines, on whom any summons and other legal processes may be served in all actions or other legal proceedings against such corporation, and consenting that service upon such resident agent shall be admitted and held as valid as if served upon the duly authorized officers of the foreign corporation at its home office. Any such foreign corporation shall likewise execute and file with the Securities and Exchange Commission an agreement or stipulation, executed by the proper authorities of said corporation, in form and substance as follows:

"The (name of foreign corporation) does hereby stipulate and agree, in consideration of its being granted by the Securities and Exchange Commission a license to transact business in the Philippines, that if at any time said corporation shall cease to transact business in the Philippines, or shall be without any resident agent in the Philippines on whom any summons or other legal processes may be served, then in any action or proceeding arising out of any business or transaction which occurred in the Philippines, service of any summons or other legal process may be made upon the Securities and Exchange Commission and that such service shall have the same force and effect as if made upon the duly-authorized officers of the corporation at its home office."

Whenever such service of summons or other process shall be made upon the Securities and Exchange Commission, the Commission shall, within ten (10) days thereafter, transmit by mail a copy of such summons or other legal process to the corporation at its home or principal office. The sending of such copy by the Commission shall be a necessary part of and shall complete such service. All expenses incurred by the Commission for such service shall be paid in advance by the party at whose instance the service is made.

In case of a change of address of the resident agent, it shall be his or its duty to immediately notify in writing the Securities and Exchange Commission of the new address.It is clear from the foregoing provision that the function of a resident agent is to receive summons or legal processes that may be served in all actions or other legal proceedings against the foreign

corporation. These cases have been prosecuted in the name of JAPEX Company, Ltd., and JAPEX Philippines Ltd., as its branch office and resident agent, had been receiving the various resolutions from this Court, as evidenced by Registry Return Cards signed by its representatives.And in the interest of justice, this Court resolved to grant JAPEX PH's motion for extension of time to file its memorandum, and was given until April 21, 2012, as prayed for, within which to comply with the submission.27

Without filing its Memorandum, JAPEX PH, on May 14, 2012, filed a motion, asking this Court for an additional thirty days to file its Memorandum, to be counted from May 8, 2012. It justified its request by claiming that this Court's April 24, 2012 Resolution was issued past its requested deadline for filing, which was on April 21, 2012.28

On June 19, 2012, this Court denied JAPEX PH's second request for additional time to file its Memorandum and dispensed with such filing.

Since petitioners had already filed their respective memoranda,29 and public respondents had earlier filed a Manifestation30 that they were adopting their Comment dated March 31, 2008 as their memorandum, this Court submitted the case for decision.chanRoblesvirtualLawlibrary

Petitioners' Allegations

Protesting the adverse ecological impact of JAPEX's oil exploration activities in the Tañon Strait, petitioners Resident Marine Mammals and Stewards aver that a study made after the seismic survey showed that the fish catch was reduced drastically by 50 to 70 percent. They claim that before the seismic survey, the average harvest per day would be from 15 to 20 kilos; but after the activity, the fisherfolk could only catch an average of 1 to 2 kilos a day. They attribute this "reduced fish catch" to the destruction of the "payao" also known as the "fish aggregating device" or "artificial reef."31Petitioners Resident Marine Mammals and Stewards also impute the incidences of "fish kill"32 observed by some of the local fisherfolk to the seismic survey. And they further allege that the ECC obtained by private respondent JAPEX is invalid because public consultations and discussions with the affected stakeholders, a pre-requisite to the issuance of the ECC, were not held prior to the ECC's issuance.

In its separate petition, petitioner FIDEC confirms petitioners Resident Marine Mammals and Stewards' allegations of reduced fish catch and lack of public consultations or discussions with the fisherfolk and other stakeholders prior to the issuance of the ECC. Moreover, it alleges that during the seismic surveys and drilling, it was barred from entering and fishing within a 7-kilometer radius from the point where the oilrig was located, an area greater than the 1.5-kilometer radius "exclusion zone" stated in the IEE.33 It also agrees in the allegation that public respondents DENR and EMB abused their discretion when they issued an ECC to public respondent DOE and private respondent JAPEX without ensuring the strict compliance with the procedural and substantive requirements under the Environmental Impact Assessment system, the Fisheries Code, and their implementing rules and regulations.34 It further claims that despite several requests for copies of all the documents pertaining to the project in Taflon Strait, only copies of the PAMB-Tañon Strait Resolution and the ECC were given to the fisherfolk.35

Public Respondents' Counter-Allegations

Public respondents, through the Solicitor General, contend that petitioners Resident Marine Mammals and Stewards have no legal standing to file the present petition; that SC-46 does not violate the 1987 Constitution and the various laws cited in the petitions; that the ECC was issued in accordance with existing laws and regulations; that public respondents may not be compelled by mandamus to furnish petitioners copies of all documents relating to SC-46; and that all the petitioners failed to show that they are entitled to injunctive relief. They further contend that the issues raised in these petitions have been rendered moot and academic by the fact that SC-46 had been mutually terminated by the parties thereto effective June 21, 2008.36

ISSUES

The following are the issues posited by petitioners Resident Marine Mammals and Stewards in G.R. No. 180771:chanroblesvirtuallawlibrary

I. WHETHER OR NOT PETITIONERS HAVE LOCUS STANDI TO FILE THE INSTANT PETITION;

II. WHETHER OR NOT SERVICE CONTRACT NO. 46 IS VIOLAT[IVE] OF THE 1987 PHILIPPINE CONSTITUTION AND STATUTES;

III. WHETHER OR NOT THE ON-GOING EXPLORATION AND PROPOSED EXPLOITATION FOR OIL AND NATURAL GAS AT, AROUND, AND UNDERNEATH THE MARINE WATERS OF THE TANON STRAIT PROTECTED SEASCAPE IS INCONSISTENT WITH THE PHILIPPINE COMMITMENTS TO INTERNATIONAL ENVIRONMENTAL LAWS AND INSTRUMENTS; AND

IV. WHETHER OR NOT THE ISSUANCE OF THE ENVIRONMENTAL COMPLIANCE CERTIFICATE (ECC) IN ENVIRONMENTALLY CRITICAL AREAS AND HABITATS OF MARINE WILDLIFE AND ENDANGERED SPECIES IS LEGAL AND PROPER.37

Meanwhile, in G.R. No. 181527, petitioner FIDEC presented the following issues for our consideration:chanroblesvirtuallawlibrary

I. WHETHER OR NOT SERVICE CONTRACT NO. 46 EXECUTED BETWEEN RESPONDENTS DOE AND JAPEX SHOULD BE NULLIFIED AND SET ASIDE FOR BEING IN DIRECT VIOLATION OF SPECIFIC PROVISIONS OF THE 1987 PHILIPPINE CONSTITUTION AND APPLICABLE LAWS;

II. WHETHER OR NOT THE OFF-SHORE OIL EXPLORATION CONTEMPLATED UNDER SERVICE CONTRACT NO. 46 IS LEGALLY PERMISSIBLE WITHOUT A LAW BEING DULY PASSED EXPRESSLY FOR THE PURPOSE;

III. WHETHER OR NOT THE OIL EXPLORATION BEING CONDUCTED WITHIN THE TANON STRAIT PROTECTED SEASCAPE VIOLATES THE RIGHTS AND LEGAL PROTECTION GRANTED TO PETITIONERS UNDER THE CONSTITUTION AND APPLICABLE LAWS.

IV. WHETHER OR NOT THE ISSUANCE OF THE ENVIRONMENTAL COMPLIANCE CERTIFICATE (ECC) FOR SUCH AN ENVIRONMENTALLY CRITICAL PROJECT INSIDE AN ENVIRONMENTALLY CRITICAL AREA SUCH AS THE TANON STRAIT PROTECTED SEASCAPE CONFORMED TO LAW AND EXISTING RULES AND REGULATIONS ON THE MATTER.

V. WHETHER OR NOT THE RESPONDENTS MAY BE COMPELLED BY MANDAMUS TO FURNISH PETITIONERS WITH COPIES OF THE DOCUMENTS PERTAINING TO THE TANON STRAIT OIL EXPLORATION PROJECT.38

In these consolidated petitions, this Court has determined that the various issues raised by the petitioners may be condensed into two primary issues:

I. Procedural Issue: Locus Standi of the Resident Marine Mammals and Stewards, petitioners in G.R. No. 180771; and

II. Main Issue: Legality of Sendee Contract No. 46.

DISCUSSION

At the outset, this Court makes clear that the '"moot and academic principle' is not a magical formula that can automatically dissuade the courts in resolving a case." Courts have decided cases otherwise moot and academic under the following exceptions:

1) There is a grave violation of the Constitution;

2) The exceptional character of the situation and the paramount public interest is involved;

3) The constitutional issue raised requires formulation of controlling principles to guide the bench, the bar, and the public; and

4) The case is capable of repetition yet evading review.39

In this case, despite the termination of SC-46, this Court deems it necessary to resolve these consolidated petitions as almost all of the foregoing exceptions are present in this case. Both petitioners allege that SC-46 is violative of the Constitution, the environmental and livelihood issues raised undoubtedly affect the public's interest, and the respondents' contested actions are capable of repetition.chanRoblesvirtualLawlibrary

Procedural Issues

Locus Standi of Petitioners Resident Marine Mammals and Stewards

The Resident Marine Mammals, through the Stewards, "claim" that they have the legal standing to file this action since they stand to be benefited or injured by the judgment in this suit.40 Citing Oposa v. Factoran, Jr.,41 they also assert their right to sue for the faithful performance of international and municipal environmental laws created in their favor and for their benefit. In this regard, they propound that they have the right to demand that they be accorded the benefits granted to them in multilateral international instruments that the Philippine Government had signed, under the concept of stipulationpour autrui.42

For their part, the Stewards contend that there should be no question of their right to represent the Resident Marine Mammals as they have stakes in the case as forerunners of a campaign to

build awareness among the affected residents of Tañon Strait and as stewards of the environment since the primary steward, the Government, had failed in its duty to protect the environment pursuant to the public trust doctrine.43

Petitioners Resident Marine Mammals and Stewards also aver that this Court may lower the benchmark in locus standi as an exercise of epistolary jurisdiction.44

In opposition, public respondents argue that the Resident Marine Mammals have no standing because Section 1, Rule 3 of the Rules of Court requires parties to an action to be either natural or juridical persons, viz.:chanroblesvirtuallawlibrarySection 1. Who may be parties; plaintiff and defendant. - Only natural or juridical persons, or entities authorized by law may be parties in a civil action. The term "plaintiff may refer to the claiming party, the counter-claimant, the cross-claimant, or the third (fourth, etc.)-party plaintiff. The term "defendant" may refer to the original defending party, the defendant in a counterclaim, the cross-defendant, or the third (fourth, etc.)-party defendant.The public respondents also contest the applicability of Oposa, pointing out that the petitioners therein were all natural persons, albeit some of them were still unborn.45

As regards the Stewards, the public respondents likewise challenge their claim of legal standing on the ground that they are representing animals, which cannot be parties to an action. Moreover, the public respondents argue that the Stewards are not the real parties-in-interest for their failure to show how they stand to be benefited or injured by the decision in this case.46

Invoking the alter ego principle in political law, the public respondents claim that absent any proof that former President Arroyo had disapproved of their acts in entering into and implementing SC-46, such acts remain to be her own.47

The public respondents contend that since petitioners Resident Marine Mammals and Stewards' petition was not brought in the name of a real party-in-interest, it should be dismissed for failure to state a cause of action.48

The issue of whether or not animals or even inanimate objects should be given legal standing in actions before courts of law is not new in the field of animal rights and environmental law. Petitioners Resident Marine Mammals and Stewards cited the 1972 United States case Sierra Club v. Rogers C.B. Morton,49wherein Justice William O. Douglas, dissenting to the conventional thought on legal standing, opined:chanroblesvirtuallawlibraryThe critical question of "standing" would be simplified and also put neatly in focus if we fashioned a federal rule that allowed environmental issues to be litigated before federal agencies or federal courts in the name of the inanimate object about to be despoiled, defaced, or invaded by roads and bulldozers and where injury is the subject of public outrage, x x x.

Inanimate objects are sometimes parties in litigation. A ship has a legal personality, a fiction found useful for maritime purposes. The corporation sole - a creature of ecclesiastical law - is an acceptable adversary and large fortunes ride on its cases. The ordinary corporation is a "person" for purposes of the adjudicatory processes, whether it represents proprietary, spiritual, aesthetic, or charitable causes.

So it should be as respects valleys, alpine meadows, rivers, lakes, estuaries, beaches, ridges, groves of trees, swampland, or even air that feels the destructive pressures of modern technology and modem life. The river, for example, is the living symbol of all the life it sustains or nourishes—fish, aquatic insects, water ouzels, otter, fisher, deer, elk, bear, and all other animals, including man, who are dependent on it or who enjoy it for its sight, its sound, or its life. The river as plaintiff speaks for the ecological unit of life that is part of it. Those people who have a meaningful relation to that body of water—whether it be a fisherman, a canoeist, a zoologist, or a logger—must be able to speak for the values which the river represents and which are threatened with destruction.50 (Citations omitted.)The primary reason animal rights advocates and environmentalists seek to give animals and inanimate objects standing is due to the need to comply with the strict requirements in bringing a suit to court. Our own 1997 Rules of Court demand that parties to a suit be either natural or juridical persons, or entities authorized by law. It further necessitates the action to be brought in the name of the real party-in-interest, even if filed by a representative, viz.:chanroblesvirtuallawlibrary

Rule 3 Parties to Civil Actions

Section 1. Who may be parties; plaintiff and defendant. - Only natural or juridical persons, or entities authorized by law may be parties in a civil action. The term "plaintiff may refer to the claiming party, the counter-claimant, the cross-claimant, or the third (fourth, etc.)-party plaintiff. The term "defendant" may refer to the original defending party, the defendant in a counterclaim, the cross-defendant, or the third (fourth, etc.)-party defendant.

Sec. 2. Parties in interest. - A real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every action must be prosecuted or defended in the name of the real party in interest.

Sec. 3. Representatives as parties. - Where the action is allowed to be prosecuted or defended by a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title of the case and shall be deemed to be the real party in interest. A representative may be a trustee of an express trust, a guardian, an executor or administrator, or a party authorized by law or these Rules. An agent acting in his own name and for the benefit of an undisclosed principal may sue or be sued without joining the principal except when the contract involves things belonging to the principal.It had been suggested by animal rights advocates and environmentalists that not only natural and juridical persons should be given legal standing because of the difficulty for persons, who cannot show that they by themselves are real parties-in-interests, to bring actions in representation of these animals or inanimate objects. For this reason, many environmental cases have been dismissed for failure of the petitioner to show that he/she would be directly injured or affected by the outcome of the case. However, in our jurisdiction, locus standi in environmental cases has been given a more liberalized approach. While developments in Philippine legal theory and jurisprudence have not progressed as far as Justice Douglas's paradigm of legal standing for inanimate objects, the current trend moves towards simplification of procedures and facilitating court access in environmental cases.

Recently, the Court passed the landmark Rules of Procedure for Environmental Cases,51 which allow for a "citizen suit," and permit any Filipino citizen to file an action before our courts for violations of our environmental laws:chanroblesvirtuallawlibrarySEC. 5. Citizen suit. - Any Filipino citizen in representation of others, including minors or generations yet unborn, may file an action to enforce rights or obligations under environmental laws. Upon the filing of a citizen suit, the court shall issue an order which shall contain a brief description of the cause of action and the reliefs prayed for, requiring all interested parties to manifest their interest to intervene in the case within fifteen (15) days from notice thereof. The plaintiff may publish the order once in a newspaper of a general circulation in the Philippines or furnish all affected barangays copies of said order.

Citizen suits filed under R.A. No. 8749 and R.A. No. 9003 shall be governed by their respective provisions.52 (Emphasis ours.)Explaining the rationale for this rule, the Court, in the Annotations to the Rules of Procedure for Environmental Cases, commented:chanroblesvirtuallawlibraryCitizen suit. To further encourage the protection of the environment, the Rules enable litigants enforcing environmental rights to file their cases as citizen suits. This provision liberalizes standing for all cases filed enforcing environmental laws and collapses the traditional rule on personal and direct interest, on the principle that humans are stewards of nature. The terminology of the text reflects the doctrine first enunciated inOposa v. Factoran, insofar as it refers to minors and generations yet unborn.53 (Emphasis supplied, citation omitted.)Although this petition was filed in 2007, years before the effectivity of the Rules of Procedure for Environmental Cases, it has been consistently held that rules of procedure "may be retroactively applied to actions pending and undetermined at the time of their passage and will not violate any right of a person who may feel that he is adversely affected, inasmuch as there is no vested rights in rules of procedure."54

Elucidating on this doctrine, the Court, in Systems Factors Corporation v. National Labor Relations Commission55 held that:chanroblesvirtuallawlibraryRemedial statutes or statutes relating to remedies or modes of procedure, which do not create new or take away vested rights, but only operate in furtherance of the remedy or confirmation of rights already existing, do not come within the legal conception of a retroactive law, or the general rule against retroactive operation of statutes. Statutes regulating the procedure of the courts will be construed as applicable to actions pending and undetermined at the time of their passage. Procedural laws are retroactive in that sense and to that extent, x x x.Moreover, even before the Rules of Procedure for Environmental Cases became effective, this Court had already taken a permissive position on the issue of locus standi in environmental cases. In Oposa, we allowed the suit to be brought in the name of generations yet unborn "based on the concept of intergenerational responsibility insofar as the right to a balanced and healthful ecology is concerned."56Furthermore, we said that the right to a balanced and healthful ecology, a right that does not even need to be stated in our Constitution as it is assumed to exist from the inception of humankind, carries with it the correlative duty to refrain from impairing the environment.57

In light of the foregoing, the need to give the Resident Marine Mammals legal standing has been eliminated by our Rules, which allow any Filipino citizen, as a steward of nature, to bring a suit to enforce our environmental laws. It is worth noting here that the Stewards are joined as real parties

in the Petition and not just in representation of the named cetacean species. The Stewards, Ramos and Eisma-Osorio, having shown in their petition that there may be possible violations of laws concerning the habitat of the Resident Marine Mammals, are therefore declared to possess the legal standing to file this petition.chanRoblesvirtualLawlibrary

Impleading Former President Gloria Macapagal-Arroyo as an Unwilling Co-Petitioner

Petitioners Stewards in G.R. No. 180771 impleaded as an unwilling co-petitioner former President Gloria Macapagal-Arroyo for the following reasons, which we quote:chanroblesvirtuallawlibraryHer Excellency Gloria Macapagal-Arroyo, also of legal age, Filipino and resident of Malacañang Palace, Manila Philippines. Steward Gloria Macapagal-Arroyo happens to be the incumbent President of the Philippine Islands. She is personally impleaded in this suit as an unwilling co-petitioner by reason of her express declaration and undertaking under the recently signed ASEAN Charter to protect Your Petitioners' habitat, among others. She is meantime dominated as an unwilling co-petitioner due to lack of material time in seeking her signature and imprimatur hereof and due to possible legal complications that may hereafter arise by reason of her official relations with public respondents under the alter ego principle in political law.58cralawlawlibraryThis is incorrect.

Section 10, Rule 3 of the Rules of Court provides:chanroblesvirtuallawlibrarySec. 10. Unwilling co-plaintiff. - If the consent of any party who should be joined as plaintiff can not be obtained, he may be made a defendant and the reason therefor shall be stated in the complaint.Under the foregoing rule, when the consent of a party who should be joined as a plaintiff cannot be obtained, he or she may be made a party defendant to the case. This will put the unwilling party under the jurisdiction of the Court, which can properly implead him or her through its processes. The unwilling party's name cannot be simply included in a petition, without his or her knowledge and consent, as such would be a denial of due process.

Moreover, the reason cited by the petitioners Stewards for including former President Macapagal-Arroyo in their petition, is not sufficient to implead her as an unwilling co-petitioner. Impleading the former President as an unwilling co-petitioner, for an act she made in the performance of the functions of her office, is contrary to the public policy against embroiling the President in suits, "to assure the exercise of Presidential duties and functions free from any hindrance or distraction, considering that being the Chief Executive of the Government is a job that, aside from requiring all of the office holder's time, also demands undivided attention."59

Therefore, former President Macapagal-Arroyo cannot be impleaded as one of the petitioners in this suit. Thus, her name is stricken off the title of this case.chanRoblesvirtualLawlibrary

Main Issue: Legality of Service Contract No. 46

Service Contract No. 46 vis-a-vis Section 2, Article XII of the

1987 Constitution

Petitioners maintain that SC-46 transgresses the Jura Regalia Provision or paragraph 1, Section 2, Article XII of the 1987 Constitution because JAPEX is 100% Japanese-owned.60 Furthermore, the FIDEC asserts that SC-46 cannot be considered as a technical and financial assistance agreement validly executed under paragraph 4 of the same provision.61 The petitioners claim that La Bugal-B'laan Tribal Association, Inc. v. Ramos62 laid down the guidelines for a valid service contract, one of which is that there must exist a general law for oil exploration before a service contract may be entered into by the Government. The petitioners posit that the service contract in La Bugal is presumed to have complied with the requisites of (a) legislative enactment of a general law after the effectivity of the 1987 Constitution (such as Republic Act No. 7942, or the Philippine Mining Law of 1995, governing mining contracts) and (b) presidential notification. The petitioners thus allege that the ruling in La Bugal, which involved mining contracts under Republic Act No. 7942, does not apply in this case.63 The petitioners also argue that Presidential Decree No. 87 or the Oil Exploration and Development Act of 1972 cannot legally justify SC-46 as it is deemed to have been repealed by the 1987 Constitution and subsequent laws, which enunciate new policies concerning the environment.64 In addition, petitioners in G.R. No. 180771 claim that paragraphs 2 and 3 of Section 2, Article XII of the 1987 Constitution mandate the exclusive use and enjoyment by the Filipinos of our natural resources,65 and paragraph 4 does not speak of service contracts but of FTAAs or Financial Technical Assistance Agreements.66

The public respondents again controvert the petitioners' claims and asseverate that SC-46 does not violate Section 2, Article XII of the 1987 Constitution. They hold that SC-46 does not fall under the coverage of paragraph 1 but instead, under paragraph 4 of Section 2, Article XII of the 1987 Constitution on FTAAs. They also insist that paragraphs 2 and 3, which refer to the grant of exclusive fishing right to Filipinos, are not applicable to SC-46 as the contract does not grant exclusive fishing rights to JAPEX nor does it otherwise impinge on the FIDEC's right to preferential use of communal marine and fishing resources.67

Ruling of the CourtOn the legality of Service Contract No. 46

vis-a-vis Section 2, Article XII of the 1987 Constitution

The petitioners insist that SC-46 is null and void for having violated Section 2, Article XII of the 1987 Constitution, which reads as follows:chanroblesvirtuallawlibrarySection 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant.

The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.

The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming, with priority to subsistence fishermen and fishworkers in rivers, lakes, bays, and lagoons.

The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local scientific and technical resources.

The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution. (Emphases ours.)This Court has previously settled the issue of whether service contracts are still allowed under the 1987 Constitution. In La Bugal, we held that the deletion of the words "service contracts" in the 1987 Constitution did not amount to a ban on them per se. In fact, in that decision, we quoted in length, portions of the deliberations of the members of the Constitutional Commission (ConCom) to show that in deliberating on paragraph 4, Section 2, Article XII, they were actually referring to service contracts as understood in the 1973 Constitution, albeit with safety measures to eliminate or minimize the abuses prevalent during the martial law regime, to wit:chanroblesvirtuallawlibrarySummation of the ConCom Deliberations

At this point, we sum up the matters established, based on a careful reading of the ConCom deliberations, as follows:

In their deliberations on what was to become paragraph 4, the framers used the termservice contracts in referring to agreements x x x involving either technical or financial assistance.

They spoke of service contracts as the concept was understood in the 1973 Constitution.

It was obvious from their discussions that they were not about to ban or eradicate service contracts.

Instead, they were plainly crafting provisions to put in place safeguards that would eliminate or minimize the abuses prevalent during the marital law regime. In brief, they were going to permit service contracts with foreign corporations as contractors, but with safety measures to prevent abuses, as an exception to the general norm established in the first paragraph of Section 2 of Article XII. This provision reserves or limits to Filipino citizens and corporations at least 60 percent of which is owned by such citizens — the exploration, development and utilization of natural resources.

This provision was prompted by the perceived insufficiency of Filipino capital and the felt need for foreign investments in the EDU of minerals and petroleum resources.

The framers for the most part debated about the sort of safeguards that would be considered adequate and reasonable. But some of them, having more "radical" leanings, wanted to ban service contracts altogether; for them, the provision would permit aliens to exploit and benefit from the nation's natural resources, which they felt should be reserved only for Filipinos.

In the explanation of their votes, the individual commissioners were heard by the entire body. They sounded off their individual opinions, openly enunciated their philosophies, and supported or attacked the provisions with fervor. Everyone's viewpoint was heard.

In the final voting, the Article on the National Economy and Patrimony — including paragraph 4 allowing service contracts with foreign corporations as an exception to the general norm in paragraph 1 of Section 2 of the same article — was resoundingly approved by a vote of 32 to 7, with 2 abstentions.

Agreements Involving Technical Or Financial Assistance Are Service Contracts with Safeguards

From the foregoing, we are impelled to conclude that the phrase agreements involving either technical or financial assistance, referred to in paragraph 4, are in fact service contracts. But unlike those of the 1973 variety, the new ones are between foreign corporations acting as contractors on the one hand; and on the other, the government as principal or "owner" of the works. In the new service contracts, the foreign contractors provide capital, technology and technical know-how, and managerial expertise in the creation and operation of large-scale mining/extractive enterprises; and the government, through its agencies (DENR, MGB), actively exercises control and supervision over the entire operation.68cralawlawlibraryIn summarizing the matters discussed in the ConCom, we established that paragraph 4, with the safeguards in place, is the exception to paragraph 1, Section 2 of Article XII. The following are the safeguards this Court enumerated in La Bugal:chanroblesvirtuallawlibrarySuch service contracts may be entered into only with respect to minerals, petroleum and other mineral oils. The grant thereof is subject to several safeguards, among which are these requirements:

(1) The service contract shall be crafted in accordance with a general law that will set standard or uniform terms, conditions and requirements, presumably to attain a certain uniformity in provisions and avoid the possible insertion of terms disadvantageous to the country.

(2) The President shall be the signatory for the government because, supposedly before an agreement is presented to the President for signature, it will have been vetted several times over at different levels to ensure that it conforms to law and can withstand public scrutiny.

(3) Within thirty days of the executed agreement, the President shall report it to Congress to give that branch of government an opportunity to look over the agreement and interpose timely objections, if any.69cralawlawlibraryAdhering to the aforementioned guidelines, this Court finds that SC-46 is indeed null and void for noncompliance with the requirements of the 1987 Constitution.

1. The General Law on Oil Exploration

The disposition, exploration, development, exploitation, and utilization of indigenous petroleum in the Philippines are governed by Presidential Decree No. 87 or the Oil Exploration and Development Act of 1972. This was enacted by then President Ferdinand Marcos to promote the discovery and production of indigenous petroleum through the utilization of government and/or local or foreign private resources to yield the maximum benefit to the Filipino people and the revenues to the Philippine Government.70

Contrary to the petitioners' argument, Presidential Decree No. 87, although enacted in 1972, before the adoption of the 1987 Constitution, remains to be a valid law unless otherwise repealed, to wit:chanroblesvirtuallawlibrary

ARTICLE XVIII - TRANSITORY PROVISIONS

Section 3. All existing laws, decrees, executive orders, proclamations, letters of instructions, and other executive issuances not inconsistent with this Constitution shall remain operative until amended, repealed, or revoked.If there were any intention to repeal Presidential Decree No. 87, it would have been done expressly by Congress. For instance, Republic Act No. 7160, more popularly known as the Local Government Code of 1991, expressly repealed a number of laws, including a specific provision in Presidential Decree No. 87,viz.:chanroblesvirtuallawlibrarySECTION 534. Repealing Clause. — (a) Batas Pambansa Blg. 337, otherwise known as the "Local Government Code," Executive Order No. 112 (1987), and Executive Order No. 319 (1988) are hereby repealed.

(b) Presidential Decree Nos. 684, 1191, 1508 and such other decrees, orders, instructions, memoranda and issuances related to or concerning the barangay are hereby repealed.

(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding hospital fund; Section 3, a (3) and b (2) of Republic Act No. 5447 regarding the Special Education Fund; Presidential Decree No. 144 as amended by Presidential Decree Nos. 559 and 1741; Presidential Decree No. 231 as amended; Presidential Decree No. 436 as amended by Presidential Decree No. 558; and Presidential Decree Nos. 381, 436, 464, 477, 526, 632, 752, and 1136 are hereby repealed and rendered of no force and effect.

(d) Presidential Decree No. 1594 is hereby repealed insofar as it governs locally-funded projects.

(e) The following provisions are hereby repealed or amended insofar as they are inconsistent with the provisions of this Code: Sections 2, 16 and 29 of Presidential Decree No. 704; Section 12 of Presidential Decree No. 87, as amended; Sections 52, 53, 66, 67, 68, 69, 70, 71, 72, 73, and 74 of Presidential Decree No. 463, as amended; and Section 16 of Presidential Decree No. 972, as amended, and

(f) All general and special laws, acts, city charters, decrees, executive orders, proclamations and administrative regulations, or part or parts thereof which are inconsistent with any of the provisions of this Code are hereby repealed or modified accordingly. (Emphasis supplied.)This Court could not simply assume that while Presidential Decree No. 87 had not yet been expressly repealed, it had been impliedly repealed. As we held in Villareña v. The Commission on Audit,71 "[i]mplied repeals are not lightly presumed." It is a settled rule that when laws are in

conflict with one another, every effort must be exerted to reconcile them. In Republic of the Philippines v. Marcopper Mining Corporation,72 we said:chanroblesvirtuallawlibraryThe two laws must be absolutely incompatible, and a clear finding thereof must surface, before the inference of implied repeal may be drawn. The rule is expressed in the maxim,interpretare et concordare leqibus est optimus interpretendi, i.e., every statute must be so interpreted and brought into accord with other laws as to form a uniform system of jurisprudence. The fundament is that the legislature should be presumed to have known the existing laws on the subject and not have enacted conflicting statutes. Hence, all doubts must be resolved against any implied repeal, and all efforts should be exerted in order to harmonize and give effect to all laws on the subject. (Citation omitted.)Moreover, in cases where the statute seems to be in conflict with the Constitution, but a construction that it is in harmony with the Constitution is also possible, that construction should be preferred.73 This Court, in Pangandaman v. Commission on Elections74 expounding on this point, pronounced:chanroblesvirtuallawlibraryIt is a basic precept in statutory construction that a statute should be interpreted in harmony with the Constitution and that the spirit, rather than the letter of the law determines its construction; for that reason, a statute must be read according to its spirit and intent, x x x. (Citation omitted.)Consequently, we find no merit in petitioners' contention that SC-46 is prohibited on the ground that there is no general law prescribing the standard or uniform terms, conditions, and requirements for service contracts involving oil exploration and extraction.

But note must be made at this point that while Presidential Decree No. 87 may serve as the general law upon which a service contract for petroleum exploration and extraction may be authorized, as will be discussed below, the exploitation and utilization of this energy resource in the present case may be allowed only through a law passed by Congress, since the Tañon Strait is a NIPAS75 area.

2. President was not the signatory to SC-46 and the same was not submitted to Congress

While the Court finds that Presidential Decree No. 87 is sufficient to satisfy the requirement of a general law, the absence of the two other conditions, that the President be a signatory to SC-46, and that Congress be notified of such contract, renders it null and void.

As SC-46 was executed in 2004, its terms should have conformed not only to the provisions of Presidential Decree No. 87, but also to those of the 1987 Constitution. The Civil Code provides:chanroblesvirtuallawlibraryARTICLE 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. (Italics ours.)In Heirs of San Miguel v. Court of Appeals,76 this Court held that:chanroblesvirtuallawlibraryIt is basic that the law is deemed written into every contract. Although a contract is the law between the parties, the provisions of positive law which regulate contracts are deemed written therein and shall limit and govern the relations between the parties, x x x. (Citations omitted.)Paragraph 4, Section 2, Article XII of the 1987 Constitution requires that the President himself enter into any service contract for the exploration of petroleum. SC-46 appeared to have been entered into and signed only by the DOE through its then Secretary, Vicente S. Perez, Jr., contrary to the said constitutional requirement. Moreover, public respondents have neither shown nor

alleged that Congress was subsequently notified of the execution of such contract.

Public respondents' implied argument that based on the "alter ego principle," their acts are also that of then President Macapagal-Arroyo's, cannot apply in this case. In Joson v. Torres,77 we explained the concept of the alter ego principle or the doctrine of qualified political agency and its limit in this wise:chanroblesvirtuallawlibraryUnder this doctrine, which recognizes the establishment of a single executive, all executive and administrative organizations are adjuncts of the Executive Department, the heads of the various executive departments are assistants and agents of the Chief Executive, and, except in cases where the Chief Executive is required by the Constitution or law to act in person or the exigencies of the situation demand that he act personally, the multifarious executive and administrative functions of the Chief Executive are performed by and through the executive departments, and the acts of the Secretaries of such departments, performed and promulgated in the regular course of business, are, unless disapproved or reprobated by the Chief Executive presumptively the acts of the Chief Executive. (Emphasis ours, citation omitted.)While the requirements in executing service contracts in paragraph 4, Section 2 of Article XII of the 1987 Constitution seem like mere formalities, they, in reality, take on a much bigger role. As we have explained in La Bugal, they are the safeguards put in place by the framers of the Constitution to "eliminate or minimize the abuses prevalent during the martial law regime."78 Thus, they are not just mere formalities, which will only render a contract unenforceable but not void, if not complied with. They are requirements placed, not just in an ordinary statute, but in the fundamental law, the non-observance of which will nullify the contract. Elucidating on the concept of a "constitution," this Court, inManila Prince Hotel v. Government Service Insurance System,79 held:chanroblesvirtuallawlibraryA constitution is a system of fundamental laws for the governance and administration of a nation. It is supreme, imperious, absolute and unalterable except by the authority from which it emanates. It has been defined as the fundamental and paramount law of the nation. It prescribes the permanent framework of a system of government, assigns to the different departments their respective powers and duties, and establishes certain fixed principles on which government is founded. The fundamental conception in other words is that it is a supreme law to which all other laws must conform and in accordance with which all private rights must be determined and all public authority administered. Under the doctrine of constitutional supremacy, if a law or contract violates any norm of the constitution that law or contract whether promulgated by the legislative or by the executive branch or entered into by private persons for private purposes is null and void and without any force and effect. Thus, since the Constitution is the fundamental, paramount and supreme law of the nation, it is deemed written in every statute and contract. (Emphasis ours.)As this Court has held in La Bugal, our Constitution requires that the President himself be the signatory of service agreements with foreign-owned corporations involving the exploration, development, and utilization of our minerals, petroleum, and other mineral oils. This power cannot be taken lightly.

In this case, the public respondents have failed to show that the President had any participation in SC-46. Their argument that their acts are actually the acts of then President Macapagal-Arroyo, absent proof of her disapproval, must fail as the requirement that the President herself enter into these kinds of contracts is embodied not just in any ordinary statute, but in the Constitution itself. These service contracts involving the exploitation, development, and utilization of our natural

resources are of paramount interest to the present and future generations. Hence, safeguards were put in place to insure that the guidelines set by law are meticulously observed and likewise to eradicate the corruption that may easily penetrate departments and agencies by ensuring that the President has authorized or approved of these service contracts herself.

Even under the provisions of Presidential Decree No. 87, it is required that the Petroleum Board, now the DOE, obtain the President's approval for the execution of any contract under said statute, as shown in the following provision:chanroblesvirtuallawlibrarySECTION 5. Execution of contract authorized in this Act. - Every contract herein authorized shall, subject to the approval of the President, be executed by the Petroleum Board created in this Act, after due public notice pre-qualification and public bidding or concluded through negotiations. In case bids are requested or if requested no bid is submitted or the bids submitted are rejected by the Petroleum Board for being disadvantageous to the Government, the contract may be concluded through negotiation.

In opening contract areas and in selecting the best offer for petroleum operations, any of the following alternative procedures may be resorted to by the Petroleum Board, subject to prior approval of the President [.]Even if we were inclined to relax the requirement in La Bugal to harmonize the 1987 Constitution with the aforementioned provision of Presidential Decree No. 87, it must be shown that the government agency or subordinate official has been authorized by the President to enter into such service contract for the government. Otherwise, it should be at least shown that the President subsequently approved of such contract explicitly. None of these circumstances is evident in the case at bar.chanRoblesvirtualLawlibrary

Service Contract No. 46 vis-a-vis Other Laws

Petitioners in G.R. No. 180771 claim that SC-46 violates Section 27 of Republic Act. No. 9147 or the Wildlife Resources Conservation and Protection Act, which bans all marine exploration and exploitation of oil and gas deposits. They also aver that Section 14 of Republic Act No. 7586 or the National Integrated Protected Areas System Act of 1992 (NIPAS Act), which allows the exploration of protected areas for the purpose of information-gathering, has been repealed by Section 27 of Republic Act No. 9147. The said petitioners further claim that SC-46 is anathema to Republic Act No. 8550 or the Philippine Fisheries Code of 1998, which protects the rights of the fisherfolk in the preferential use of municipal waters, with the exception being limited only to research and survey activities.80

The FIDEC, for its part, argues that to avail of the exceptions under Section 14 of the NIPAS Act, the gathering of information must be in accordance with a DENR-approved program, and the exploitation and utilization of energy resources must be pursuant to a general law passed by Congress expressly for that purpose. Since there is neither a DENR-approved program nor a general law passed by Congress, the seismic surveys and oil drilling operations were all done illegally.81 The FIDEC likewise contends that SC-46 infringes on its right to the preferential use of the communal fishing waters as it is denied free access within the prohibited zone, in violation not only of the Fisheries Code but also of the 1987 Constitutional provisions on subsistence fisherfolk and social justice.82 Furthermore, the FIDEC believes that the provisions in Presidential Decree No. 87, which allow offshore drilling even in municipal waters, should be deemed to have been

rendered inoperative by the provisions of Republic Act No. 8550 and Republic Act No. 7160, which reiterate the social justice provisions of the Constitution.83

The public respondents invoke the rules on statutory construction and argue that Section 14 of the NIPAS Act is a more particular provision and cannot be deemed to have been repealed by the more general prohibition in Section 27 of Republic Act No. 9147. They aver that Section 14, under which SC-46 falls, should instead be regarded as an exemption to Section 27.84

Addressing the claim of petitioners in G.R. No. 180771 that there was a violation of Section 27 of Republic Act No. 9147, the public respondents assert that what the section prohibits is the exploration of minerals, which as defined in the Philippine Mining Act of 1995, exclude energy materials such as coal, petroleum, natural gas, radioactive materials and geothermal energy. Thus, since SC-46 involves oil and gas exploration, Section 27 does not apply.85

The public respondents defend the validity of SC-46 and insist that it does not grant exclusive fishing rights to JAPEX; hence, it does not violate the rule on preferential use of municipal waters. Moreover, they allege that JAPEX has not banned fishing in the project area, contrary to the FIDEC's claim. The public respondents also contest the attribution of the declining fish catch to the seismic surveys and aver that the allegation is unfounded. They claim that according to the Bureau of Fisheries and Aquatic Resources' fish catch data, the reduced fish catch started in the 1970s due to destructive fishing practices.86

Ruling of the CourtOn the legality of Service Contract No. 46 vis-a-vis Other Laws

Although we have already established above that SC-46 is null and void for being violative of the 1987 Constitution, it is our duty to still rule on the legality of SC-46 vis-a-vis other pertinent laws, to serve as a guide for the Government when executing service contracts involving not only the Tañon Strait, but also other similar areas. While the petitioners allege that SC-46 is in violation of several laws, including international ones, their arguments focus primarily on the protected status of the Tañon Strait, thus this Court will concentrate on those laws that pertain particularly to the Tañon Strait as a protected seascape.

The Tañon Strait is a narrow passage of water bounded by the islands of Cebu in the East and Negros in the West. It harbors a rich biodiversity of marine life, including endangered species of dolphins and whales. For this reason, former President Fidel V. Ramos declared the Tañon Strait as a protected seascape in 1998 by virtue of Proclamation No. 1234 - Declaring the Tañon Strait situated in the Provinces of Cebu, Negros Occidental and Negros Oriental as a Protected Area pursuant to the NIP AS Act and shall be known as Tañon Strait Protected Seascape. During former President Joseph E. Estrada's time, he also constituted the Tañon Strait Commission via Executive Order No. 76 to ensure the optimum and sustained use of the resources in that area without threatening its marine life. He followed this with Executive Order No. 177,87 wherein he included the mayor of Negros Occidental Municipality/City as a member of the Tañon Strait Commission, to represent the LGUs concerned. This Commission, however, was subsequently abolished in 2002 by then President Gloria Macapagal-Arroyo, via Executive Order No. 72.88

True to the constitutional policy that the "State shall protect and advance the right of the people

to a balanced and healthful ecology in accord with the rhythm and harmony of nature,"89 Congress enacted the NIPAS Act to secure the perpetual existence of all native plants and animals through the establishment of a comprehensive system of integrated protected areas. These areas possess common ecological values that were incorporated into a holistic plan representative of our natural heritage. The system encompasses outstandingly remarkable areas and biologically important public lands that are habitats of rare and endangered species of plants and animals, biogeographic zones and related ecosystems, whether terrestrial, wetland, or marine.90 It classifies and administers all the designated protected areas to maintain essential ecological processes and life-support systems, to preserve genetic diversity, to ensure sustainable use of resources found therein, and to maintain their natural conditions to the greatest extent possible.91 The following categories of protected areas were established under the NIPAS Act:chanroblesvirtuallawlibrary

a. Strict nature reserve;

b. Natural park;

c. Natural monument;

d. Wildlife sanctuary;

e. Protected landscapes and seascapes;

f. Resource reserve;

g. Natural biotic areas; and

h. Other categories established by law, conventions or international agreements which the Philippine Government is a signatory.92

Under Section 4 of the NIPAS Act, a protected area refers to portions of land and water, set aside due to their unique physical and biological significance, managed to enhance biological diversity and protected against human exploitation.

The Tañon Strait, pursuant to Proclamation No. 1234, was set aside and declared a protected area under the category of Protected Seascape. The NIPAS Act defines a Protected Seascape to be an area of national significance characterized by the harmonious interaction of man and land while providing opportunities for public enjoyment through recreation and tourism within the normal lifestyle and economic activity of this areas;93 thus a management plan for each area must be designed to protect and enhance the permanent preservation of its natural conditions.94 Consistent with this endeavor is the requirement that an Environmental Impact Assessment (EIA) be made prior to undertaking any activity outside the scope of the management plan. Unless an ECC under the EIA system is obtained, no activity inconsistent with the goals of the NIPAS Act shall be implemented.95

The Environmental Impact Statement System (EISS) was established in 1978 under Presidential Decree No. 1586. It prohibits any person, partnership or corporation from undertaking or operating any declared environmentally critical project or areas without first securing an ECC issued by the President or his duly authorized representative.96 Pursuant to the EISS, which called for the proper management of environmentally critical areas,97 Proclamation No. 214698 was

enacted, identifying the areas and types of projects to be considered as environmentally critical and within the scope of the EISS, while DENR Administrative Order No. 2003-30 provided for its Implementing Rules and Regulations (IRR).

DENR Administrative Order No. 2003-30 defines an environmentally critical area as "an area delineated as environmentally sensitive such that significant environmental impacts are expected if certain types of proposed projects or programs are located, developed, or implemented in it";99 thus, before a project, which is "any activity, regardless of scale or magnitude, which may have significant impact on the environment,"100 is undertaken in it, such project must undergo an EIA to evaluate and predict the likely impacts of all its stages on the environment.101 An EIA is described in detail as follows:chanroblesvirtuallawlibraryh. Environmental Impact Assessment (EIA) - process that involves evaluating and predicting the

likely impacts of a project (including cumulative impacts) on the environment during construction, commissioning, operation and abandonment. It also includes designing appropriate preventive, mitigating and enhancement measures addressing these consequences to protect the environment and the community's welfare. The process is undertaken by, among others, the project proponent and/or EIA Consultant, EMB, a Review Committee, affected communities and other stakeholders.102

Under Proclamation No. 2146, the Tañon Strait is an environmentally critical area, having been declared as a protected area in 1998; therefore, any activity outside the scope of its management plan may only be implemented pursuant to an ECC secured after undergoing an EIA to determine the effects of such activity on its ecological system.

The public respondents argue that they had complied with the procedures in obtaining an ECC103 and that SC-46 falls under the exceptions in Section 14 of the NIPAS Act, due to the following reasons:

1) The Tañon Strait is not a strict nature reserve or natural park;

2) Exploration is only for the purpose of gathering information on possible energy resources; and

3) Measures are undertaken to ensure that the exploration is being done with the least damage to surrounding areas.104

We do not agree with the arguments raised by the public respondents.

Sections 12 and 14 of the NIPAS Act read:chanroblesvirtuallawlibrarySECTION 12. Environmental Impact Assessment. - Proposals for activities which are outside the scope of the management plan for protected areas shall be subject to an environmental impact assessment as required by law before they are adopted, and the results thereof shall be taken into consideration in the decision-making process.

No actual implementation of such activities shall be allowed without the required Environmental Compliance Certificate (ECC) under the Philippine Environmental Impact Assessment (EIA) system. In instances where such activities are allowed to be undertaken, the proponent shall plan and carry them out in such manner as will minimize any adverse effects and take preventive and remedial action when appropriate. The proponent shall be liable for any damage due to lack of

caution or indiscretion.

SECTION 14. Survey for Energy Resources. - Consistent with the policies declared in Section 2 hereof, protected areas, except strict nature reserves and natural parks, may be subjected to exploration only for the purpose of gathering information on energy resources and only if such activity is carried out with the least damage to surrounding areas. Surveys shall be conducted only in accordance with a program approved by the DENR, and the result of such surveys shall be made available to the public and submitted to the President for recommendation to Congress. Any exploitation and utilization of energy resources found within NIPAS areas shall be allowed only through a law passed by Congress.It is true that the restrictions found under the NIPAS Act are not without exceptions. However, while an exploration done for the purpose of surveying for energy resources is allowed under Section 14 of the NIPAS Act, this does not mean that it is exempt from the requirement to undergo an EIA under Section 12. In Sotto v. Sotto,105 this Court explained why a statute should be construed as a whole:chanroblesvirtuallawlibraryA statute is passed as a whole and not in parts or sections and is animated by one general purpose and intent. Consequently each part or section should be construed in connection with every other part or section and so as to produce a harmonious whole. It is not proper to confine the attention to the one section to be construed. It is always an unsafe way of construing a statute or contract to divide it by a process of etymological dissection, into separate words, and then apply to each, thus separated from its context, some particular definition given by lexicographers, and then reconstruct the instrument upon the basis of these definitions. An instrument must always be construed as a whole, and the particular meaning to be attached to any word or phrase is usually to be ascertained from the context, the nature of the subject treated of and the purpose or intention of the parties who executed the contract, or of the body which enacted or framed the statute or constitution, x x x.Surveying for energy resources under Section 14 is not an exemption from complying with the EIA requirement in Section 12; instead, Section 14 provides for additional requisites before any exploration for energy resources may be done in protected areas.

The rationale for such additional requirements are incorporated in Section 2 of the NIPAS Act, to wit:chanroblesvirtuallawlibrarySECTION 2. Declaration of Policy - Cognizant of the profound impact of man's activities on all components of the natural environment particularly the effect of increasing population, resource exploitation and industrial advancement amd recognizing the critical importance of protecting and maintaining the natural biological and physical diversities of the environment notably on areas with biologically unique features to sustain human life and development, as well as plant and animal life, it is hereby declared the policy of the State to secure for the Filipino people of present and future generations the perpetual existence of all native plants and animals through the establishment of a comprehensive system of integrated protected areas within the classification of national park as provided for in the Constitution.

It is hereby recognized that these areas, although distinct in features, possess common ecological values that may be incorporated into a holistic plan representative of our natural heritage; that effective administration of this area is possible only through cooperation among national government, local government and concerned private organizations; that the use and enjoyment of these protected areas must be consistent with the principles of biological diversity and

sustainable development.

To this end, there is hereby established a National Integrated Protected Areas System (NIPAS), which shall encompass outstandingly remarkable areas and biologically important public lands that are habitats of rare and endangered species of plants and animals, biogeographic zones and related ecosystems, whether terrestrial, wetland or marine, all of which shall be designated as "protected areas."The public respondents themselves admitted that JAPEX only started to secure an ECC prior to the second sub-phase of SC-46, which required the drilling of an oil exploration well. This means that when the seismic surveys were done in the Tañon Strait, no such environmental impact evaluation was done. Unless seismic surveys are part of the management plan of the Tañon Strait, such surveys were dona in violation of Section 12 of the NIPAS Act and Section 4 of Presidential Decree No. 1586, which provides:chanroblesvirtuallawlibrarySection 4. Presidential Proclamation of Environmentally Critical Areas and Projects. - The President of the Philippines may, on his own initiative or upon recommendation of the National Environmental Protection Council, by proclamation declare certain projects, undertakings or areas in the country as environmentally critical. No person, partnership or corporation shall undertake or operate any such declared environmentally critical project or area without first securing an Environmental Compliance Certificate issued by the President or his duly authorized representative. For the proper management of said critical project or area, the President may by his proclamation reorganize such government offices, agencies, institutions, corporations or instrumentalities including the re-alignment of government personnel, and their specific functions and responsibilities.

For the same purpose as above, the Ministry of Human Settlements shall: (a) prepare the proper land or water use pattern for said critical project(s) or area(s); (b) establish ambient environmental quality standards; (c) develop a program of environmental enhancement or protective measures against calamitous factors such as earthquakes, floods, water erosion and others, and (d) perform such other functions as may be directed by the President from time to time.The respondents' subsequent compliance with the EISS for the second sub-phase of SC-46 cannot and will not cure this violation. The following penalties are provided for under Presidential Decree No. 1586 and the NIPAS Act.

Section 9 of Presidential Decree No. 1586 provides for the penalty involving violations of the ECC requirement:chanroblesvirtuallawlibrarySection 9. Penalty for Violation. - Any person, corporation or partnership found violating Section 4 of this Decree, or the terms and conditions in the issuance of the Environmental Compliance Certificate, or of the standards, rules and regulations issued by the National Environmental Protection Council pursuant to this Decree shall be punished by thesuspension or cancellation of his/its certificates and/or a fine in an amount not to exceed Fifty Thousand Pesos (P50,000.00) for every violation thereof, at the discretion of the National Environmental Protection Council. (Emphasis supplied.)Violations of the NIPAS Act entails the following fines and/or imprisonment under Section 21:chanroblesvirtuallawlibrarySECTION 21. Penalties. - Whoever violates this Act or any rules and regulations issued by the Department pursuant to this Act or whoever is found guilty by a competent court of justice of any of the offenses in the preceding section shall be fined in the amount of not less than Five

thousand pesos (P5,000) nor more than Five hundred thousand pesos (P500,000), exclusive of the value of the thing damaged or imprisonment for not less than one (1) year but not more than six (6) years, or both, as determined by the court: Provided, that, if the area requires rehabilitation or restoration as determined by the court, the offender shall be required to restore or compensate for the restoration to the damages: Provided, further, that court shall order the eviction of the offender from the land and the forfeiture in favor of the Government of all minerals, timber or any species collected or removed including all equipment, devices and firearms used in connection therewith, and any construction or improvement made thereon by the offender. If the offender is an association or corporation, the president or manager shall be directly responsible for the act of his employees and laborers: Provided, finally, that the DENR may impose administrative fines and penalties consistent with this Act. (Emphases supplied.)Moreover, SC-46 was not executed for the mere purpose of gathering information on the possible energy resources in the Tañon Strait as it also provides for the parties' rights and obligations relating to extraction and petroleum production should oil in commercial quantities be found to exist in the area.While Presidential Decree No. 87 may serve as the general law upon which a service contract for petroleum exploration and extraction may be authorized, the exploitation and utilization of this energy resource in the present case may be allowed only through a law passed by Congress, since the Tañon Strait is a NIPAS area.106Since there is no such law specifically allowing oil exploration and/or extraction in the Tañon Strait, no energy resource exploitation and utilization may be done in said protected seascape.

In view of the foregoing premises and conclusions, it is no longer necessary to discuss the other issues raised in these consolidated petitions.cralawred

WHEREFORE, the Petitions in G.R. Nos. 180771 and 181527 are GRANTED, Service Contract No. 46 is hereby declared NULL AND VOID for violating the 1987 Constitution, Republic Act No. 7586, and Presidential Decree No. 1586.

SO ORDERED.chanroblesvirtuallawlibrary

Sereno, C. J., Carpio, Velasco, Jr., Brion, Peralta, Bersamin, Del Castillo, Villarama, Jr., Perez, Mendoza, Reyes, and Perlas-Bernabe, JJ., concur.Leonen, J., see concurring opinion.Jardeleza, J., no part prior OSG action

EN BANC

G.R. No. 207257, February 03, 2015

HON. RAMON JESUS P. PAJE, IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES (DENR), Petitioner, v. HON. TEODORO A. CASIÑO, HON. RAYMOND V. PALATINO, HON. RAFAEL V. MARIANO, HON. EMERENCIANA A. DE JESUS,

CLEMENTE G. BAUTISTA, JR., HON. ROLEN C. PAULINO, HON. EDUARDO PIANO, HON. JAMES DE LOS REYES, HON. AQUILINO Y. CORTEZ, JR., HON. SARAH LUGERNA LIPUMANO-GARCIA,

NORAIDA VELARMINO, BIANCA CHRISTINE GAMBOA ESPINOS, CHARO SIMONS, GREGORIO LLORCA MAGDARAOG, RUBELH PERALTA, ALEX CORPUS HERMOSO, RODOLFO SAMBAJON, REV. FR. GERARDO GREGORIO P. JORGE, CARLITO A. BALOY, OFELIA D. PABLO, MARIO ESQUILLO, ELLE

LATINAZO, EVANGELINE Q. RODRIGUEZ, JOHN CARLO DELOS REYES,Respondents.

[G.R. NO. 207257]

REDONDO PENINSULA ENERGY, INC., Petitioner, v. HON. TEODORO A. CASIÑO, HON. RAYMOND V. PALATINO, HON. RAFAEL V. MARIANO, HON. EMERENCIANA A. DE JESUS, CLEMENTE G.

BAUTISTA, JR., HON. ROLEN C. PAULINO, HON. EDUARDO PIANO, HON. JAMES DE LOS REYES, HON. AQUILINO Y. CORTEZ, JR., HON. SARAH LUGERNA LIPUMANO-GARCIA, NORAIDA

VELARMINO, BIANCA CHRISTINE GAMBOA ESPINOS, CHARO SIMONS, GREGORIO LLORCA MAGDARAOG, RUBELH PERALTA, ALEX CORPUS HERMOSO, RODOLFO SAMBAJON, REV. FR.

GERARDO GREGORIO P. JORGE, CARLITO A. BALOY, OFELIA D. PABLO, MARIO ESQUILLO, ELLE LATINAZO, EVANGELINE Q. RODRIGUEZ, JOHN CARLO DELOS REYES, RAMON JESUS P. PAJE, IN

HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES AND SUBIC BAY METROPOLITAN AUTHORITY, Respondents.

[G.R. NO. 207276]

HON. TEODORO A. CASIÑO, HON. RAYMOND V. PALATINO, HON. EMERENCIANA A. DE JESUS, CLEMENTE G. BAUTISTA, JR., HON. RAFAEL V. MARIANO, HON. ROLEN C. PAULINO, HON.

EDUARDO PIANO, HON. JAMES DE LOS REYES, HON. AQUILINO Y. CORTEZ, JR., HON. SARAH LUGERNA LIPUMANO-GARCIA, NORAIDA VELARMINO, BIANCA CHRISTINE GAMBOA ESPINOS,

CHARO SIMONS, GREGORIO LLORCA MAGDARAOG, RUBELH PERALTA, ALEX CORPUS HERMOSA, RODOLFO SAMBAJON, ET AL., Petitioners,

[G.R. NO. 207282]

RAMON JESUS P. PAJE IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, SUBIC BAY METROPOLITAN AUTHORITY, AND REDONDO PENINSULA

ENERGY, INC., Respondents.

[G.R. NO. 207366]

SUBIC BAY METROPOLITAN AUTHORITY, Petitioner, v. HON. TEODORO A. CASIÑO, HON. RAYMOND V. PALATINO, HON. RAFAEL V. MARIANO, HON. EMERENCIANA A. DE JESUS,

CLEMENTE G. BAUTISTA, JR., HON. ROLEN C. PAULINO, HON EDUARDO PIANO, HON. JAMES DE LOS REYES, HON. AQUILINO Y. CORTEZ, JR., HON. SARAH LUGERNA LIPUMANO-GARCIA,

NORAIDA VELARMINO, BIANCA CHRISTINE GAMBOA, GREGORIO LLORCA MAGDARAOG, RUBELH PERALTA, ALEX CORPUS HERMOSO, RODOLFO SAMBAJON, REV. FR. GERARDO GREGORIO P.

JORGE, CARLITO A. BALOY, OFELIA D. PABLO, MARIO ESQUILLO, ELLE LATINAZO, EVANGELINE Q. RODRIGUEZ, JOHN CARLO DELOS REYES, HON. RAMON JESUS P. PAJE, IN HIS CAPACITY AS

SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES AND REDONDO PENINSULA ENERGY, INC., Respondents.

D E C I S I O N

DEL CASTILLO, J.:

Before this Court are consolidated Petitions for Review on Certiorari1 assailing the Decision2 dated January 30, 2013 and the Resolution3 dated May 22, 2013 of the Court of Appeals (CA) in CA-G.R. SP No. 00015, entitled “Hon. Teodoro A. Casiño, et al. v. Hon. Ramon Jesus P. Paje, et al.”

Factual Antecedents

In February 2006, Subic Bay Metropolitan Authority (SBMA), a government agency organized and established under Republic Act No. (RA) 7227,4 and Taiwan Cogeneration Corporation (TCC) entered into a Memorandum of Understanding (MOU) expressing their intention to build a power plant in Subic Bay which would supply reliable and affordable power to Subic Bay Industrial Park (SBIP).5chanRoblesvirtualLawlibrary

On July 28, 2006, SBMA and TCC entered into another MOU, whereby TCC undertook to build and operate a coal-fired power plant.6 In the said MOU, TCC identified 20 hectares of land at Sitio Naglatore, Mt. Redondo, Subic Bay Freeport Zone (SBFZ) as the suitable area for the project and another site of approximately 10 hectares to be used as an ash pond.7 TCC intends to lease the property from SBMA for a term of 50 years with rent fixed at $3.50 per square meter, payable in 10 equal 5-year installments.8chanRoblesvirtualLawlibrary

On April 4, 2007, the SBMA Ecology Center issued SBFZ Environmental Compliance Certificate (ECC) No. EC-SBFZ-ECC-69-21-500 in favor of Taiwan Cogeneration International Corporation (TCIC), a subsidiary of TCC,9 for the construction, installation, and operation of 2x150-MW Circulating Fluidized Bed (CFB) Coal-Fired Thermal Power Plant at Sitio Naglatore.10chanRoblesvirtualLawlibrary

On June 6, 2008, TCC assigned all its rights and interests under the MOU dated July 28, 2006 to Redondo Peninsula Energy, Inc. (RP Energy),11 a corporation duly organized and existing under the laws of the Philippines with the primary purpose of building, owning, and operating power plants in the Philippines, among others.12 Accordingly, an Addendum to the said MOU was executed by SBMA and RP Energy.13chanRoblesvirtualLawlibrary

RP Energy then contracted GHD Pty, Ltd. (GHD) to prepare an Environmental Impact Statement (EIS) for the proposed coal-fired power plant and to assist RP Energy in applying for the issuance of an ECC from the Department of Environment and Natural Resources (DENR).14chanRoblesvirtualLawlibrary

On August 27, 2008, the Sangguniang Panglungsod of Olongapo City issued Resolution No. 131, Series of 2008, expressing the city government’s objection to the coal-fired power plant as an energy source and urging the proponent to consider safer alternative sources of energy for Subic Bay.15chanRoblesvirtualLawlibrary

On December 22, 2008, the DENR, through former Secretary Jose L. Atienza, Jr., issued an ECC for the proposed 2x150-MW coal-fired power plant.16chanRoblesvirtualLawlibrary

Sometime thereafter, RP Energy decided to include additional components in its proposed coal-fired power plant. Due to the changes in the project design, which involved the inclusion of a barge wharf, seawater intake breakwater, subsea discharge pipeline, raw water collection system, drainage channel improvement, and a 230kV double-circuit transmission line,17 RP Energy requested the DENR Environmental Management Bureau (DENR-EMB) to amend its ECC.18 In support of its request, RP Energy submitted to the DENR-EMB an Environmental Performance Report and Management Plan (EPRMP), which was prepared by GHD.19chanRoblesvirtualLawlibrary

On June 8, 2010, RP Energy and SBMA entered into a Lease and Development Agreement (LDA) over a 380,004.456-square meter parcel of land to be used for building and operating the coal-fired power plant.20chanRoblesvirtualLawlibrary

On July 8, 2010, the DENR-EMB issued an amended ECC (first amendment) allowing the inclusion of additional components, among others.21chanRoblesvirtualLawlibrary

Several months later, RP Energy again requested the DENR-EMB to amend the ECC.22 Instead of constructing a 2x150-MW coal-fired power plant, as originally planned, it now sought to construct a 1x300-MW coal-fired power plant.23 In support of its request, RP Energy submitted a Project Description Report (PDR) to the DENR-EMB.24chanRoblesvirtualLawlibrary

On May 26, 2011, the DENR-EMB granted the request and further amended the ECC (second amendment).25chanRoblesvirtualLawlibrary

On August 1, 2011, the Sangguniang Panglalawigan of Zambales issued Resolution No. 2011-149, opposing the establishment of a coal-fired thermal power plant at Sitio Naglatore, Brgy. Cawag, Subic, Zambales.26chanRoblesvirtualLawlibrary

On August 11, 2011, the Liga ng mga Barangay of Olongapo City issued Resolution No. 12, Series of 2011, expressing its strong objection to the coal-fired power plant as an energy source.27chanRoblesvirtualLawlibrary

On July 20, 2012, Hon. Teodoro A. Casiño, Hon. Raymond V. Palatino, Hon. Rafael V. Mariano, Hon. Emerenciana A. De Jesus, Clemente G. Bautista, Jr., Hon. Rolen C. Paulino, Hon. Eduardo Piano, Hon. James de los Reyes, Hon. Aquilino Y. Cortez, Jr., Hon. Sarah Lugerna Lipumano-Garcia, Noraida Velarmino, Bianca Christine Gamboa Espinos, Charo Simons, Gregorio Llorca Magdaraog, Rubelh Peralta, Alex Corpus Hermoso, Rodolfo Sambajon, Rev. Fr. Gerardo Gregorio P. Jorge, Carlito A. Baloy, Ofelia D. Pablo, Mario Esquillo, Elle Latinazo, Evangeline Q. Rodriguez, and John Carlo delos Reyes (Casiño Group) filed before this Court a Petition for Writ of kalikasan against RP Energy, SBMA, and Hon. Ramon Jesus P. Paje, in his capacity as Secretary of the DENR.28chanRoblesvirtualLawlibrary

On July 31, 2012, this Court resolved, among others, to: (1) issue a Writ of kalikasan; and (2) refer the case to the CA for hearing and reception of evidence and rendition of judgment.29chanRoblesvirtualLawlibrary

While the case was pending, RP Energy applied for another amendment to its ECC (third amendment) and submitted another EPRMP to the DENR-EMB, proposing the construction and operation of a 2x300-MW coal-fired power plant.30chanRoblesvirtualLawlibrary

On September 11, 2012, the Petition for Writ of kalikasan was docketed as CA-G.R. SP No. 00015 and raffled to the Fifteenth Division of the CA.31 In the Petition, the Casiño Group alleged, among others, that the power plant project would cause grave environmental damage;32 that it would adversely affect the health of the residents of the municipalities of Subic, Zambales, Morong, Hermosa, and the City of Olongapo;33 that the ECC was issued and the LDA entered into without the prior approval of the concerned sanggunians as required under Sections 26 and 27 of the Local Government Code (LGC);34that the LDA was entered into without securing a prior certification from the National Commission on Indigenous Peoples (NCIP) as required under Section 59 of RA 8371 or the Indigenous Peoples’ Rights Act of 1997 (IPRA Law);35 that Section 8.3 of DENR Administrative Order No. 2003-30 (DAO 2003-30) which allows amendments of ECCs is ultra vires because the DENR has no authority to decide on requests for amendments of previously issued ECCs in the absence of a new EIS;36 and that due to the nullity of Section 8.3 of DAO 2003-30, all amendments to RP Energy’s ECC are null and void.37chanRoblesvirtualLawlibrary

On October 29, 2012, the CA conducted a preliminary conference wherein the parties, with their respective counsels, appeared except for Hon. Teodoro A. Casiño, Hon. Rafael V. Mariano, Hon. Emerencia A. De Jesus, Clemente G. Bautista, Mario Esquillo, Elle Latinazo, Evangeline Q. Rodriguez, and the SBMA.38 The matters taken up during the preliminary conference were embodied in the CA’s Resolution dated November 5, 2012, to wit:chanroblesvirtuallawlibrary

I. ISSUES

A. Petitioners (Casiño Group)

1. Whether x x x the DENR Environmental Compliance Certificate (‘ECC’ x x x) in favor of RP Energy for a 2x150 MW Coal-Fired Thermal Power Plant Project (‘Power Plant,’ x x x ) and its amendment to 1x300 MW Power Plant, and the Lease and Development Agreement between SBMA and RP Energy complied with the Certification Precondition as required under Section 59 of Republic Act No. 8371 or the Indigenous People’s Rights Act of 1997 (‘IPRA Law,’ x x x);

2. Whether x x x RP Energy can proceed with the construction and operation of the 1x300 MW Power Plant without prior consultation with and approval of the concerned local government units (‘LGUs,’ x x x ), pursuant to Sections 26 and 27 of Republic Act No. 7160 or the Local Government Code;

3. Whether x x x Section 8.3 of DENR Administrative Order No. 2003-30 (‘DAO No. 2003-30,’ x x x ) providing for the amendment of an ECC is null and void for beingultra vires; and

4. Whether x x x the amendment of RP Energy’s ECC under Section 8.3 of DAO No. 2003-30 is null and void.

B. Respondent RP Energy

1. Whether x x x Section 8.3 of DAO No. 2003-30 can be collaterally attacked;

1.1 Whether x x x the same is valid until annulled;

2. Whether x x x petitioners exhausted their administrative remedies with respect to the amended ECC for the 1x300 MW Power Plant;

2.1 Whether x x x the instant Petition is proper;

3. Whether x x x RP Energy complied with all the procedures/requirements for the issuance of the DENR ECC and its amendment;

3.1 Whether x x x a Certificate of Non-Overlap from the National Commission on Indigenous Peoples is applicable in the instant case;

4. Whether x x x the LGU’s approval under Sections 26 and 27 of the Local Government Code is necessary for the issuance of the DENR ECC and its amendments, and what constitutes LGU approval;

5. Whether x x x there is a threatened or actual violation of environmental laws to justify the Petition;

5.1 Whether x x x the approved 1x300 MW Power Plant complied with the accepted legal standards on thermal pollution of coastal waters, air pollution, water pollution, and acid deposits on aquatic and terrestrial ecosystems; and

6. Whether x x x the instant Petition should be dismissed for failure to comply with the requirements of proper verification and certification of non-forum shopping with respect to some petitioners.

C. Respondent DENR Secretary Paje

1. Whether x x x the issuance of the DENR ECC and its amendment in favor of RP Energy requires compliance with Section 59 of the IPRA Law, as well as Sections 26 and 27 of the Local Government Code;

2. Whether x x x Section 8.3 of DAO No. 2003-30 can be collaterally attacked in this proceeding; and

3. Whether x x x Section 8.3 of DAO No. 2003-30 is valid.

II. ADMISSIONS/DENIALS

Petitioners, through Atty. Ridon, admitted all the allegations in RP Energy’s Verified Return, except the following:ChanRoblesVirtualawlibrary1. paragraphs 1.4 to 1.7;2. paragraphs 1.29 to 1.32; and3. paragraphs 1.33 to 1.37.Petitioners made no specific denial with respect to the allegations of DENR Secretary Paje’s Verified Return. x x x

Respondent RP Energy proposed the following stipulations, which were all admitted by petitioners, through Atty. Ridon, viz:chanroblesvirtuallawlibrary

1. The 1x300 MW Power Plant is not yet operational;2. At present, there is no environmental damage;3. The 1x300 MW Power Plant project is situated within the Subic Special Economic Zone; and4. Apart from the instant case, petitioners have not challenged the validity of Section 8.3 of DAO No. 2003-30.Public respondent DENR Secretary Paje did not propose any matter for stipulation.39

Thereafter, trial ensued.

The Casiño Group presented three witnesses, namely: (1) Raymond V. Palatino, a two-term representative of the Kabataan Partylist in the House of Representatives;40 (2) Alex C. Hermoso, the convenor of the Zambales-Olongapo City Civil Society Network, a director of the PREDA41 Foundation, and a member of the Zambales Chapter of the Kaya Natin Movement and the Zambales Chapter of the People Power Volunteers for Reform;42 and (3) Ramon Lacbain, the Vice-Governor of the Province of Zambales.43chanRoblesvirtualLawlibrary

RP Energy presented five witnesses, namely: (1) Junisse P. Mercado (Ms. Mercado), an employee of GHD and the Project Director of ongoing projects for RP Energy regarding the proposed power plant project;44 (2) Juha Sarkki (Engr. Sarkki), a Master of Science degree holder in Chemical Engineering;45(3) Henry K. Wong, a degree holder of Bachelor of Science Major in Mechanical Engineering from Worcester Polytechnic Institute;46 (4) Dr. Ely Anthony R. Ouano (Dr. Ouano), a licensed Chemical Engineer, Sanitary Engineer, and Environmental Planner in the Philippines;47 and (5) David C. Evangelista (Mr. Evangelista), a Business Development Analyst working for RP Energy.48chanRoblesvirtualLawlibrary

SBMA, for its part, presented its Legal Department Manager, Atty. Von F. Rodriguez (Atty. Rodriguez).49chanRoblesvirtualLawlibrary

The DENR, however, presented no evidence.50chanRoblesvirtualLawlibrary

Meanwhile, on October 31, 2012, a Certificate of Non-Overlap (CNO) was issued in connection with RP Energy’s application for the 2x300-MW coal-fired power plant.51chanRoblesvirtualLawlibrary

On November 15, 2012, the DENR-EMB granted RP Energy’s application for the third amendment to its ECC, approving the construction and operation of a 2x300-MW coal-fired power plant,

among others.52chanRoblesvirtualLawlibrary

Ruling of the Court of Appeals

On January 30, 2013, the CA rendered a Decision denying the privilege of the writ of kalikasan and the application for an environment protection order due to the failure of the Casiño Group to prove that its constitutional right to a balanced and healthful ecology was violated or threatened.53 The CA likewise found no reason to nullify Section 8.3 of DAO No. 2003-30. It said that the provision was not ultra vires, as the express power of the Secretary of the DENR, the Director and Regional Directors of the EMB to issue an ECC impliedly includes the incidental power to amend the same.54 In any case, the CA ruled that the validity of the said section could not be collaterally attacked in a petition for a writ ofkalikasan.55chanRoblesvirtualLawlibrary

Nonetheless, the CA resolved to invalidate the ECC dated December 22, 2008 for non-compliance with Section 59 of the IPRA Law56 and Sections 26 and 27 of the LGC57 and for failure of Luis Miguel Aboitiz (Mr. Aboitiz), Director of RP Energy, to affix his signature in the Sworn Statement of Full Responsibility, which is an integral part of the ECC.58 Also declared invalid were the ECC first amendment dated July 8, 2010 and the ECC second amendment dated May 26, 2011 in view of the failure of RP Energy to comply with the restrictions set forth in the ECC, which specifically require that “any expansion of the project beyond the project description or any change in the activity x x x shall be subject to a new Environmental Impact Assessment.”59 However, as to the ECC third amendment dated November 15, 2012, the CA decided not to rule on its validity since it was not raised as an issue during the preliminary conference.60chanRoblesvirtualLawlibrary

The CA also invalidated the LDA entered into by SBMA and RP Energy as it was issued without the prior consultation and approval of all the sanggunians concerned as required under Sections 26 and 27 of the LGC,61 and in violation of Section 59, Chapter VIII of the IPRA Law, which enjoins all departments and other governmental agencies from granting any lease without a prior certification that the area affected does not overlap with any ancestral domain.62 The CA noted that no CNO was secured from the NCIP prior to the execution of the LDA,63 and that the CNO dated October 31, 2012 was secured during the pendency of the case and was issued in connection with RP Energy’s application for a 2x300-MW coal-fired power plant.64chanRoblesvirtualLawlibrary

Thus, the CA disposed of the case in this wise:chanroblesvirtuallawlibrary

WHEREFORE, premises considered, judgment is hereby rendered DENYING the privilege of the writ of kalikasan and the application for an environmental protection order. The prayer to declare the nullity of Section 8.3 of the DENR Administrative Order No. 2003-30 for being ultra vires is DENIED; and the following are all declared INVALID:

1. The Environmental Compliance Certificate (ECC Ref. Code: 0804-011-4021) dated 22 December 2008 issued in favor of respondent Redondo Peninsula Energy, Inc. by former Secretary Jose L. Atienza, Jr. of the Department of Environment and Natural Resources;

2. The ECC first amendment dated 08 July 2010 and ECC second amendment dated 26 May 2011, both issued in favor of respondent Redondo Peninsula Energy, Inc. by OIC Director Atty. Juan

Miguel T. Cuna of the Department of Environment and Natural Resources, Environmental Management Bureau; and

3. The Lease and Development Agreement dated 08 June 2010 entered into by respondents Subic Bay Metropolitan Authority and Redondo Peninsula Energy, Inc. involving a parcel of land consisting of 380,004.456 square meters.

SO ORDERED.65

The DENR and SBMA separately moved for reconsideration.66 RP Energy filed a Motion for Partial Reconsideration,67 attaching thereto a signed Statement of Accountability.68 The Casiño Group, on the other hand, filed Omnibus Motions for Clarification and Reconsideration.69chanRoblesvirtualLawlibrary

On May 22, 2013, the CA issued a Resolution70 denying the aforesaid motions for lack of merit. The CA opined that the reliefs it granted in its Decision are allowed under Section 15, Rule 7 of the Rules of Procedure for Environmental Cases as the reliefs enumerated therein are broad, comprehensive, and non-exclusive.71 In fact, paragraph (e) of the said provision allows the granting of “such other reliefs” in consonance with the objective, purpose, and intent of the Rules.72 SBMA’s contention that the stoppage of a project for non-compliance with Section 59 of the IPRA Law may only be done by the indigenous cultural communities or indigenous peoples was also brushed aside by the CA as the Casiño Group did not file a case under the IPRA Law but a Petition for a Writ of kalikasan, which is available to all natural or juridical persons whose constitutional right to a balanced and healthful ecology is violated, or threatened to be violated.73 As to RP Energy’s belated submission of a signed Statement of Accountability, the CA gave no weight and credence to it as the belated submission of such document, long after the presentation of evidence of the parties had been terminated, is not in accord with the rules of fair play.74 Neither was the CA swayed by the argument that the omitted signature of Luis Miguel Aboitiz is a mere formal defect, which does not affect the validity of the entire document.75 The dispositive portion of the ++Resolution reads:chanroblesvirtuallawlibrary

WHEREFORE, premises considered, respondents Subic Bay Metropolitan Authority’s Motion for Reconsideration dated 18 February 2013, Department of Environment and Natural Resources Secretary Ramon Jesus P. Paje’s Motion for Reconsideration dated 19 February 2013, and Redondo Peninsula Energy, Inc.’s Motion for Partial Reconsideration dated 22 February 2013, as well as petitioners’ Omnibus Motions for Clarification and Reconsideration dated 25 February 2013, are all DENIED for lack of merit.

SO ORDERED.76

Unsatisfied, the parties appealed to this Court.

The Casiño Group’s arguments

The Casiño Group, in essence, argues that it is entitled to a Writ of kalikasan as it was able to prove that the operation of the power plant would cause environmental damage and pollution, and that this would adversely affect the residents of the provinces of Bataan and Zambales,

particularly the municipalities of Subic, Morong, Hermosa, and the City of Olongapo. It cites as basis RP Energy’s EIS, which allegedly admits that acid rain may occur in the combustion of coal;77 that the incidence of asthma attacks among residents in the vicinity of the project site may increase due to exposure to suspended particles from plant operations;78 and that increased sulfur oxides (SOx) and nitrogen oxides (NOx) emissions may occur during plant operations.79 It also claims that when the SBMA conducted Social Acceptability Policy Consultations with different stakeholders on the proposed power plant, the results indicated that the overall persuasion of the participants was a clear aversion to the project due to environmental, health, economic and socio-cultural concerns.80 Finally, it contends that the ECC third amendment should also be nullified for failure to comply with the procedures and requirements for the issuance of the ECC.81chanRoblesvirtualLawlibrary

The DENR’s arguments

The DENR imputes error on the CA in invalidating the ECC and its amendments, arguing that the determination of the validity of the ECC as well as its amendments is beyond the scope of a Petition for a Writ of kalikasan.82 And even if it is within the scope, there is no reason to invalidate the ECC and its amendments as these were issued in accordance with DAO No. 2003-30.83 The DENR also insists that contrary to the view of the CA, a new EIS was no longer necessary since the first EIS was still within the validity period when the first amendment was requested, and that this is precisely the reason RP Energy was only required to submit an EPRMP in support of its application for the first amendment.84 As to the second amendment, the DENR-EMB only required RP Energy to submit documents to support the proposed revision considering that the change in configuration of the power plant project, from 2x150MW to 1x300MW, was not substantial.85 Furthermore, the DENR argues that no permits, licenses, and/or clearances from other government agencies are required in the processing and approval of the ECC.86 Thus, non-compliance with Sections 26 and 27 of the LGC as well as Section 59 of the IPRA Law is not a ground to invalidate the ECC and its amendments.87 The DENR further posits that the ECC is not a concession, permit, or license but is a document certifying that the proponent has complied with all the requirements of the EIS System and has committed to implement the approved Environmental Management Plan.88 The DENR invokes substantial justice so that the belatedly submitted certified true copy of the ECC containing the signature of Mr. Aboitiz on the Statement of Accountability may be accepted and accorded weight and credence.89chanRoblesvirtualLawlibrary

SBMA’s arguments

For its part, SBMA asserts that since the CA did not issue a Writ of kalikasan, it should not have invalidated the LDA and that in doing so, the CA acted beyond its powers.90 SBMA likewise puts in issue the legal capacity of the Casiño Group to impugn the validity of the LDA91 and its failure to exhaust administrative remedies.92 In any case, SBMA contends that there is no legal basis to invalidate the LDA as prior consultation under Sections 26 and 27 of the LGC is not required in this case considering that the area is within the SBFZ.93 Under RA 7227, it is the SBMA which has exclusive jurisdiction over projects and leases within the SBFZ and that in case of conflict between the LGC and RA 7227, it is the latter, a special law, which must prevail.94 Moreover, the lack of prior certification from the NCIP is also not a ground to invalidate a contract.95 If at all, the only effect of non-compliance with the said requirement under Section 59 of the IPRA Law is the stoppage or

suspension of the project.96 Besides, the subsequent issuance of a CNO has cured any legal defect found in the LDA.97chanRoblesvirtualLawlibrary

RP Energy’s arguments

RP Energy questions the propriety of the reliefs granted by the CA considering that it did not issue a writ of kalikasan in favor of the Casiño Group.98 RP Energy is of the view that unless a writ of kalikasan is issued, the CA has no power to grant the reliefs prayed for in the Petition.99 And even if it does, the reliefs are limited to those enumerated in Section 15, Rule 7 of the Rules of Procedure for Environmental Cases and that the phrase “such other reliefs” in paragraph (e) should be limited only to those of the same class or general nature as the four other reliefs enumerated.100 As to the validity of the LDA, the ECC and its amendments, the arguments of RP Energy are basically the same arguments interposed by SBMA and the DENR. RP Energy maintains that the ECC and its amendments were obtained in compliance with the DENR rules and regulations;101 that a CNO is not necessary in the execution of an LDA and in the issuance of the ECC and its amendments;102 and that prior approval of the local governments, which may be affected by the project, are not required because under RA 7227, the decision of the SBMA shall prevail in matters affecting the Subic Special Economic Zone (SSEZ), except in matters involving defense and security.103 RP Energy also raises the issue of non-exhaustion of administrative remedies on the part of the Casiño Group.104chanRoblesvirtualLawlibrary

Preliminaries

This case affords us an opportunity to expound on the nature and scope of the writ of kalikasan. It presents some interesting questions about law and justice in the context of environmental cases, which we will tackle in the main body of this Decision.

But we shall first address some preliminary matters, in view of the manner by which the appellate court disposed of this case.

The Rules on the Writ of kalikasan,105 which is Part III of the Rules of Procedure for Environmental Cases,106 was issued by the Court pursuant to its power to promulgate rules for the protection and enforcement of constitutional rights,107 in particular, the individual’s right to a balanced and healthful ecology.108 Section 1 of Rule 7 provides:chanroblesvirtuallawlibrary

Section 1. Nature of the writ. - The writ is a remedy available to a natural or juridical person, entity authorized by law, people’s organization, non-governmental organization, or any public interest group accredited by or registered with any government agency, on behalf of persons whose constitutional right to a balanced and healthful ecology is violated, or threatened with violation by an unlawful act or omission of a public official or employee, or private individual or entity, involving environmental damage of such magnitude as to prejudice the life, health or property of inhabitants in two or more cities or provinces.

The writ is categorized as a special civil action and was, thus, conceptualized as an extraordinary remedy, which aims to provide judicial relief from threatened or actual violation/s of the constitutional right to a balanced and healthful ecology of a magnitude or degree of damage that transcends political and territorial boundaries.109 It is intended “to provide a stronger defense for

environmental rights through judicial efforts where institutional arrangements of enforcement, implementation and legislation have fallen short”110 and seeks “to address the potentially exponential nature of large-scale ecological threats.”111chanRoblesvirtualLawlibrary

Under Section 1 of Rule 7, the following requisites must be present to avail of this extraordinary remedy: (1) there is an actual or threatened violation of the constitutional right to a balanced and healthful ecology; (2) the actual or threatened violation arises from an unlawful act or omission of a public official or employee, or private individual or entity; and (3) the actual or threatened violation involves or will lead to an environmental damage of such magnitude as to prejudice the life, health or property of inhabitants in two or more cities or provinces.

Expectedly, the Rules do not define the exact nature or degree of environmental damage but only that it must be sufficiently grave, in terms of the territorial scope of such damage, so as to call for the grant of this extraordinary remedy. The gravity of environmental damage sufficient to grant the writ is, thus, to be decided on a case-to-case basis.

If the petitioner successfully proves the foregoing requisites, the court shall render judgment granting the privilege of the writ of kalikasan. Otherwise, the petition shall be denied. If the petition is granted, the court may grant the reliefs provided for under Section 15 of Rule 7, to wit:chanroblesvirtuallawlibrary

Section 15. Judgment. - Within sixty (60) days from the time the petition is submitted for decision, the court shall render judgment granting or denying the privilege of the writ ofkalikasan.

The reliefs that may be granted under the writ are the following:

(a) Directing respondent to permanently cease and desist from committing acts or neglecting the performance of a duty in violation of environmental laws resulting in environmental destruction or damage;

(b) Directing the respondent public official, government agency, private person or entity to protect, preserve, rehabilitate or restore the environment;

(c) Directing the respondent public official, government agency, private person or entity to monitor strict compliance with the decision and orders of the court;

(d) Directing the respondent public official, government agency, or private person or entity to make periodic reports on the execution of the final judgment; and

(e) Such other reliefs which relate to the right of the people to a balanced and healthful ecology or to the protection, preservation, rehabilitation or restoration of the environment, except the award of damages to individual petitioners.

It must be noted, however, that the above enumerated reliefs are non-exhaustive. The reliefs that may be granted under the writ are broad, comprehensive and non-exclusive.112chanRoblesvirtualLawlibrary

Prescinding from the above, the DENR, SBMA and RP Energy are one in arguing that the reliefs granted by the appellate court, i.e. invalidating the ECC and its amendments, are improper because it had denied the Petition for Writ of kalikasan upon a finding that the Casiño Group failed to prove the alleged environmental damage, actual or threatened, contemplated under the Rules.

Ordinarily, no reliefs could and should be granted. But the question may be asked, could not the appellate court have granted the Petition for Writ of kalikasan on the ground of the invalidity of the ECC for failure to comply with certain laws and rules?

This question is the starting point for setting up the framework of analysis which should govern writ ofkalikasan cases.

In their Petition for Writ of kalikasan,113 the Casiño Group’s allegations, relative to the actual or threatened violation of the constitutional right to a balanced and healthful ecology, may be grouped into two.

The first set of allegations deals with the actual environmental damage that will occur if the power plant project is implemented. The Casiño Group claims that the construction and operation of the power plant will result in (1) thermal pollution of coastal waters, (2) air pollution due to dust and combustion gases, (3) water pollution from toxic coal combustion waste, and (4) acid deposition in aquatic and terrestrial ecosystems, which will adversely affect the residents of the Provinces of Bataan and Zambales, particularly the Municipalities of Subic, Morong and Hermosa, and the City of Olongapo.

The second set of allegations deals with the failure to comply with certain laws and rules governing or relating to the issuance of an ECC and amendments thereto. The Casiño Group claims that the ECC was issued in violation of (1) the DENR rules on the issuance and amendment of an ECC, particularly, DAO 2003-30 and the Revised Procedural Manual for DAO 2003-30 (Revised Manual), (2) Section 59 of the IPRA Law, and (3) Sections 26 and 27 of the LGC. In addition, it claims that the LDA entered into between SBMA and RP Energy violated Section 59 of the IPRA Law.

As to the first set of allegations, involving actual damage to the environment, it is not difficult to discern that, if they are proven, then the Petition for Writ of kalikasan could conceivably be granted.

However, as to the second set of allegations, a nuanced approach is warranted. The power of the courts to nullify an ECC existed even prior to the promulgation of the Rules on the Writ of kalikasan for judicial review of the acts of administrative agencies or bodies has long been recognized114 subject, of course, to the doctrine of exhaustion of administrative remedies.115chanRoblesvirtualLawlibrary

But the issue presented before us is not a simple case of reviewing the acts of an administrative agency, the DENR, which issued the ECC and its amendments. The challenge to the validity of the ECC was raised in the context of a writ of kalikasan case. The question then is, can the validity of an ECC be challenged via a writ of kalikasan?

We answer in the affirmative subject to certain qualifications.

As earlier noted, the writ of kalikasan is principally predicated on an actual or threatened violation of the constitutional right to a balanced and healthful ecology, which involves environmental damage of a magnitude that transcends political and territorial boundaries. A party, therefore, who invokes the writ based on alleged defects or irregularities in the issuance of an ECC must not only allege and prove such defects or irregularities, but must also provide a causal link or, at least, a reasonable connection between the defects or irregularities in the issuance of an ECC and the actual or threatened violation of the constitutional right to a balanced and healthful ecology of the magnitude contemplated under the Rules. Otherwise, the petition should be dismissed outright and the action re-filed before the proper forum with due regard to the doctrine of exhaustion of administrative remedies. This must be so if we are to preserve the noble and laudable purposes of the writ against those who seek to abuse it.

An example of a defect or an irregularity in the issuance of an ECC, which could conceivably warrant the granting of the extraordinary remedy of the writ of kalikasan, is a case where there are serious and substantial misrepresentations or fraud in the application for the ECC, which, if not immediately nullified, would cause actual negative environmental impacts of the magnitude contemplated under the Rules, because the government agencies and LGUs, with the final authority to implement the project, may subsequently rely on such substantially defective or fraudulent ECC in approving the implementation of the project.

To repeat, in cases of defects or irregularities in the issuance of an ECC, it is not sufficient to merely allege such defects or irregularities, but to show a causal link or reasonable connection with the environmental damage of the magnitude contemplated under the Rules. In the case at bar, no such causal link or reasonable connection was shown or even attempted relative to the aforesaid second set of allegations. It is a mere listing of the perceived defects or irregularities in the issuance of the ECC. This would have been sufficient reason to disallow the resolution of such issues in a writ of kalikasancase.

However, inasmuch as this is the first time that we lay down this principle, we have liberally examined the alleged defects or irregularities in the issuance of the ECC and find that there is only one group of allegations, relative to the ECC, that can be reasonably connected to an environmental damage of the magnitude contemplated under the Rules. This is with respect to the allegation that there was no environmental impact assessment relative to the first and second amendments to the subject ECC. If this were true, then the implementation of the project can conceivably actually violate or threaten to violate the right to a healthful and balanced ecology of the inhabitants near the vicinity of the power plant. Thus, the resolution of such an issue could conceivably be resolved in a writ of kalikasan case provided that the case does not violate, or is an exception to the doctrine of exhaustion of administrative remedies and primary jurisdiction.116chanRoblesvirtualLawlibrary

As to the claims that the issuance of the ECC violated the IPRA Law and LGC and that the LDA, likewise, violated the IPRA Law, we find the same not to be within the coverage of the writ of kalikasan because, assuming there was non-compliance therewith, no reasonable connection can be made to an actual or threatened violation of the right to a balanced and healthful ecology of the magnitude contemplated under the Rules.

To elaborate, the alleged lack of approval of the concerned sanggunians over the subject project would not lead to or is not reasonably connected with environmental damage but, rather, it is an affront to the local autonomy of LGUs. Similarly, the alleged lack of a certificate precondition that the project site does not overlap with an ancestral domain would not result in or is not reasonably connected with environmental damage but, rather, it is an impairment of the right of Indigenous Cultural Communities/Indigenous Peoples (ICCs/IPs) to their ancestral domains. These alleged violations could be the subject of appropriate remedies before the proper administrative bodies (like the NCIP) or a separate action to compel compliance before the courts, as the case may be. However, the writ ofkalikasan would not be the appropriate remedy to address and resolve such issues.

Be that as it may, we shall resolve both the issues proper in a writ of kalikasan case and those which are not, commingled as it were here, because of the exceptional character of this case. We take judicial notice of the looming power crisis that our nation faces. Thus, the resolution of all the issues in this case is of utmost urgency and necessity in order to finally determine the fate of the project center of this controversy. If we were to resolve only the issues proper in a writ of kalikasan case and dismiss those not proper therefor, that will leave such unresolved issues open to another round of protracted litigation. In any case, we find the records sufficient to resolve all the issues presented herein. We also rule that, due to the extreme urgency of the matter at hand, the present case is an exception to the doctrine of exhaustion of administrative remedies.117 As we have often ruled, in exceptional cases, we can suspend the rules of procedure in order to achieve substantial justice, and to address urgent and paramount State interests vital to the life of our nation.cralawred

Issues

In view of the foregoing, we shall resolve the following issues:

1. Whether the Casiño Group was able to prove that the construction and operation of the power plant will cause grave environmental damage.

1.1. The alleged thermal pollution of coastal waters, air pollution due to dust and combustion gases, water pollution from toxic coal combustion waste, and acid deposition to aquatic and terrestrial ecosystems that will be caused by the project.

1.2. The alleged negative environmental assessment of the project by experts in a report generated during the social acceptability consultations.

1.3. The alleged admissions of grave environmental damage in the EIS itself of the project.

2.

3. Whether the ECC is invalid for lack of signature of Mr. Luis Miguel Aboitiz, as representative of RP Energy, in the Statement of Accountability of the ECC.

4. Whether the first and second amendments to the ECC are invalid for failure to undergo a new environmental impact assessment (EIA) because of the utilization of inappropriate EIA documents.

5. Whether the Certificate of Non-Overlap, under Section 59 of the IPRA Law, is a precondition to the issuance of an ECC and the lack of its prior issuance rendered the ECC invalid.

6. Whether the Certificate of Non-Overlap, under Section 59 of the IPRA Law, is a precondition to the consummation of the Lease and Development Agreement (LDA) between SBMA and RP Energy and the lack of its prior issuance rendered the LDA invalid.

7. Whether compliance with Section 27, in relation to Section 26, of the LGC (i.e., approval of the concerned sanggunian requirement) is necessary prior to the implementation of the power plant project.

8. Whether the validity of the third amendment to the ECC can be resolved in this case.

Ruling

The parties to this case appealed from the decision of the appellate court pursuant to Section 16, Rule 7 of the Rules of Procedure for Environmental Cases, viz:chanroblesvirtuallawlibrary

Section 16. Appeal. - Within fifteen (15) days from the date of notice of the adverse judgment or denial of motion for reconsideration, any party may appeal to the Supreme Court under Rule 45 of the Rules of Court. The appeal may raise questions of fact.(Emphasis supplied)

It is worth noting that the Rules on the Writ of kalikasan allow the parties to raise, on appeal, questions of fact— and, thus, constitutes an exception to Rule 45 of the Rules of Court— because of the extraordinary nature of the circumstances surrounding the issuance of a writ of kalikasan. 118 Thus, we shall review both questions of law and fact in resolving the issues presented in this case.

We now rule on the above-mentioned issues in detail.cralawred

I.

Whether the Casiño Group was able to prove that the construction and operation of the power plant will cause grave environmental damage.

The alleged thermal pollution of coastal waters, air pollution due to dust and combustion gases, water pollution from toxic coal combustion waste, and acid deposition in aquatic and terrestrial ecosystems that will be caused by the project.

As previously noted, the Casiño Group alleged that the construction and operation of the power plant shall adversely affect the residents of the Provinces of Bataan and Zambales, particularly, the Municipalities of Subic, Morong and Hermosa, and the City of Olongapo, as well as the sensitive ecological balance of the area. Their claims of ecological damage may be summarized as follows:

1. Thermal pollution of coastal waters. Due to the discharge of heated water from the operation of the plant, they claim that the temperature of the affected bodies of water will rise significantly. This will have adverse effects on aquatic organisms. It will also cause the depletion of oxygen in the water. RP Energy claims that there will be no more than a 3°C increase in water temperature but the Casiño Group claims that a 1°C to 2°C rise can already affect the metabolism and other biological functions of aquatic organisms such as mortality rate and reproduction.

2. Air pollution due to dust and combustion gases. While the Casiño Group admits that Circulating Fluidized Bed (CFB) Coal technology, which will be used in the power plant, is a clean technology because it reduces the emission of toxic gases, it claims that volatile organic compounds, specifically, polycyclic aromatic hydrocarbons (PAHs) will also be emitted under the CFB. PAHs are categorized as pollutants with carcinogenic and mutagenic characteristics. Carbon monoxide, a poisonous gas, and nitrous oxide, a lethal global warming gas, will also be produced.

3. Water pollution from toxic coal combustion waste. The waste from coal combustion or the residues from burning pose serious environmental risk because they are toxic and may cause cancer and birth defects. Their release to nearby bodies of water will be a threat to the marine ecosystem of Subic Bay. The project is located in a flood-prone area and is near three prominent seismic faults as identified by Philippine Institute of Volcanology and Seismology. The construction of an ash pond in an area susceptible to flooding and earthquake also undermines SBMA’s duty to prioritize the preservation of the water quality in Subic Bay.

4. Acid deposition in aquatic and terrestrial ecosystems. The power plant will release 1,888 tons of nitrous oxides and 886 tons of sulfur dioxide per year. These oxides are responsible for acid deposition. Acid deposition directly impacts aquatic ecosystems. It is toxic to fish and other aquatic animals. It will also damage the forests near Subic Bay as well as the wildlife therein. This will threaten the stability of the biological diversity of the Subic Bay Freeport which was declared as one of the ten priority sites among the protected areas in the Philippines and the Subic Watershed and Forest Reserve. This will also have an adverse effect on tourism.119

In its January 30, 2013 Decision, the appellate court ruled that the Casiño Group failed to prove the above allegations.

We agree with the appellate court.

Indeed, the three witnesses presented by the Casiño Group are not experts on the CFB technology or on environmental matters. These witnesses even admitted on cross-examination that they are

not competent to testify on the environmental impact of the subject project. What is wanting in their testimonies is their technical knowledge of the project design/implementation or some other aspects of the project, even those not requiring expert knowledge, vis-à-vis the significant negative environmental impacts which the Casiño Group alleged will occur. Clearly, the Casiño Group failed to carry the onus of proving the alleged significant negative environmental impacts of the project. In comparison, RP Energy presented several experts to refute the allegations of the Casiño Group.

As aptly and extensively discussed by the appellate court:chanroblesvirtuallawlibrary

Petitioners120 presented three (3) witnesses, namely, Palatino, Hermoso, and Lacbain, all of whom are not experts on the CFB technology or even on environmental matters. Petitioners did not present any witness from Morong or Hermosa. Palatino, a former freelance writer and now a Congressman representing the Kabataan Partylist, with a degree of BS Education major in Social Studies, admitted that he is not a technical expert. Hermoso, a Director of the PREDA foundation which is allegedly involved on environmental concerns, and a member of Greenpeace, is not an expert on the matter subject of this case. He is a graduate of BS Sociology and a practicing business director involved in social development and social welfare services. Lacbain, incumbent Vice-Governor of the Province of Zambales, an accounting graduate with a Master in Public Administration, was a former Banco Filipino teller, entertainment manager, disco manager, marketing manager and college instructor, and is also not an expert on the CFB technology. Lacbain also admitted that he is neither a scientist nor an expert on matters of the environment.

Petitioners cited various scientific studies or articles and websites culled from the internet. However, the said scientific studies and articles including the alleged Key Observations and Recommendations on the EIS of the Proposed RPE Project by Rex Victor O. Cruz (Exhibit “DDDDD”) attached to the Petition, were not testified to by an expert witness, and are basically hearsay in nature and cannot be given probative weight. The article purportedly written by Rex Victor O. Cruz was not even signed by the said author, which fact was confirmed by Palatino.

Petitioners’ witness, Lacbain, admitted that he did not personally conduct any study on the environmental or health effects of a coal-fired power plant, but only attended seminars and conferences pertaining to climate change; and that the scientific studies mentioned in the penultimate whereas clause of Resolution No. 2011-149 (Exhibit “AAAAA”) of the Sangguniang Panlalawigan of Zambales is based on what he read on the internet, seminars he attended and what he heard from unnamed experts in the field of environmental protection.

In his Judicial Affidavit (Exhibit “HHHHH”), Palatino stated that he was furnished by the concerned residents the Key Observations and Recommendations on the EIS of Proposed RPE Project by Rex Victor O. Cruz, and that he merely received and read the five (5) scientific studies and articles which challenge the CFB technology. Palatino also testified that: he was only furnished by the petitioners copies of the studies mentioned in his Judicial Affidavit and he did not participate in the execution, formulation or preparation of any of the said documents; he does not personally know Rex Cruz or any of the authors of the studies included in his Judicial Affidavit; he did not read other materials about coal-fired power plants; he is not aware of the acceptable standards as far as the operation of a coal-fired power plant is concerned; petitioner Velarmino was the one who furnished him copies of the documents in reference to the MOU and some papers related to the case; petitioner Peralta was the one who e-mailed to him the soft copy of all the documents

[letters (a) to (o) of his Judicial Affidavit], except the LGU Resolutions; and he has never been at the actual Power Plant project site. It must be noted that petitioners Velarmino and Peralta were never presented as witnesses in this case. In addition, Palatino did not identify the said studies but simply confirmed that the said studies were attached to the Petition.

Indeed, under the rules of evidence, a witness can testify only to those facts which the witness knows of his or her personal knowledge, that is, which are derived from the witness’ own perception. Concomitantly, a witness may not testify on matters which he or she merely learned from others either because said witness was told or read or heard those matters. Such testimony is considered hearsay and may not be received as proof of the truth of what the witness has learned. This is known as the hearsay rule. Hearsay is not limited to oral testimony or statements; the general rule that excludes hearsay as evidence applies to written, as well as oral statements. There are several exceptions to the hearsay rule under the Rules of Court, among which are learned treatises under Section 46 of Rule 130, viz:ChanRoblesVirtualawlibrary“SEC. 46. Learned treatises. -A published treatise, periodical or pamphlet on a subject of history, law, science, or art is admissible as tending to prove the truth of a matter stated therein if the court takes judicial notice, or a witness expert in the subject testifies, that the writer of the statement in the treatise, periodical or pamphlet is recognized in his profession or calling as expert in the subject.”The alleged scientific studies mentioned in the Petition cannot be classified as learned treatises. We cannot take judicial notice of the same, and no witness expert in the subject matter of this case testified, that the writers of the said scientific studies are recognized in their profession or calling as experts in the subject.

In stark contrast, respondent RP Energy presented several witnesses on the CFB technology.

In his Judicial Affidavit, witness Wong stated that he obtained a Bachelor of Science, Major in Mechanical Engineering from Worcester Polytechnic Institute; he is a Consulting Engineer of Steam Generators of URS; he was formerly connected with Foster Wheeler where he held the positions of site commissioning engineer, testing engineer, instrumentation and controls engineer, mechanical equipment department manager, director of boiler performance and mechanical design engineering and pulverized coal product director. He explained that: CFB stands for Circulating Fluidized Bed; it is a process by which fuel is fed to the lower furnace where it is burned in an upward flow of combustion air; limestone, which is used as sulfur absorbent, is also fed to the lower furnace along with the fuel; the mixture of fuel, ash, and the boiler bed sorbent material is carried to the upper part of the furnace and into a cyclone separator; the heavier particles which generally consist of the remaining uncombusted fuel and absorbent material are separated in the cyclone separator and are recirculated to the lower furnace to complete the combustion of any unburned particles and to enhance SO2 capture by the sorbent; fly ash and flue gas exit the cyclone and the fly ash is collected in the electrostatic precipitator; furnace temperature is maintained in the range of 800° to 900° C by suitable heat absorbing surface; the fuel passes through a crusher that reduces the size to an appropriate size prior to the introduction into the lower furnace along with the limestone; the limestone is used as a SO2 sorbent which reacts with the sulfur oxides to form calcium sulfate, an inert and stable material; air fans at the bottom of the furnace create sufficient velocity within the steam generator to maintain a bed of fuel, ash, and limestone mixture; secondary air is also introduced above the bed to facilitate circulation and complete combustion of the mixture; the combustion process generates heat, which then heats

the boiler feedwater flowing through boiler tube bundles under pressure; the heat generated in the furnace circuit turns the water to saturated steam which is further heated to superheated steam; this superheated steam leaves the CFB boiler and expands through a steam turbine; the steam turbine is directly connected to a generator that turns and creates electricity; after making its way through the steam turbine, the low-pressure steam is exhausted downwards into a condenser; heat is removed from the steam, which cools and condenses into water (condensate); the condensate is then pumped back through a train of feedwater heaters to gradually increase its temperature before this water is introduced to the boiler to start the process all over again; and CFB technology has advantages over pulverized coal firing without backend cleanup systems, i.e., greater fuel flexibility, lower SO2 and NOx emissions. Moreover, Wong testified, inter alia, that: CFBs have a wider range of flexibility so they can environmentally handle a wider range of fuel constituents, mainly the constituent sulfur; and is capable of handling different types of coal within the range of the different fuel constituents; since CFB is the newer technology than the PC or stalker fire, it has better environmental production; 50 percent of the electric generation in the United States is still produced by coal combustion; and the CFB absorbs the sulfur dioxide before it is emitted; and there will be a lower percentage of emissions than any other technology for the coal.

In his Judicial Affidavit, Sarrki, stated that: he is the Chief Engineer for Process Concept in Foster Wheeler; he was a Manager of Process Technology for Foster Wheeler from 1995 to 2007; and he holds a Master of Science degree in Chemical Engineering. He explained that: CFB boilers will emit PAHs but only in minimal amounts, while BFB will produce higher PAH emissions; PAH is a natural product of any combustion process; even ordinary burning, such as cooking or driving automobiles, will have some emissions that are not considered harmful; it is only when emissions are of a significant level that damage may be caused; a CFB technology has minimal PAH emissions; the high combustion efficiency of CFB technology, due to long residence time of particles inside the boiler, leads to minimal emissions of PAH; other factors such as increase in the excess air ratio[,] decrease in Ca/S, as well as decrease in the sulfur and chlorine contents of coal will likewise minimize PAH production; and CFB does not cause emissions beyond scientifically acceptable levels. He testified, inter alia, that: the CFB technology is used worldwide; they have a 50% percent share of CFB market worldwide; and this will be the first CFB by Foster Wheeler in the Philippines; Foster Wheeler manufactures and supplies different type[s] of boilers including BFB, but CFB is always applied on burning coal, so they do not apply any BFB for coal firing; CFB has features which have much better combustion efficiency, much lower emissions and it is more effective as a boiler equipment; the longer the coal stays in the combustion chamber, the better it is burned; eight (8) seconds is already beyond adequate but it keeps a margin; in CFB technology, combustion technology is uniform throughout the combustion chamber; high velocity is used in CFB technology, that is vigorous mixing or turbulence; turbulence is needed to get contact between fuel and combustion air; and an important feature of CFB is air distribution.

In his Judicial Affidavit, Ouano stated that: he is a licensed Chemical Engineer, Sanitary Engineer and Environmental Planner in the Philippines; he is also a chartered Professional Engineer in Australia and a member of the colleges of environmental engineers and chemical engineers of the Institution of Engineers (Australia); he completed his Bachelor in Chemical Engineering in 1970, Master of Environmental Engineering in 1972 and Doctor of Environmental Engineering in 1974; he also graduated from the University of Sydney Law School with the degree of Master of Environmental Law in 2002 and PhD in Law from Macquarie University in 2007. He explained in his

Judicial Affidavit that: the impacts identified and analyzed in the EIA process are all potential or likely impacts; there are a larger number of EIA techniques for predicting the potential environmental impacts; it is important to note that all those methods and techniques are only for predicting the potential environmental impacts, not the real impacts; almost all environmental systems are non-linear and they are subject to chaotic behavior that even the most sophisticated computer could not predict accurately; and the actual or real environmental impact could only be established when the project is in actual operation. He testified, inter alia, that: the higher the temperature the higher the nitrous oxide emitted; in CFB technology, the lower the temperature, the lower is the nitrogen oxide; and it still has a nitrogen oxide but not as high as conventional coal; the CFB is the boiler; from the boiler itself, different pollution control facilities are going to be added; and for the overall plant with the pollution control facilities, the particulate matters, nitrogen oxide and sulfur dioxide are under control. (Citations omitted)121

We also note that RP Energy controverted in detail the afore-summarized allegations of the Casiño Group on the four areas of environmental damage that will allegedly occur upon the construction and operation of the power plant:

1. On thermal pollution of coastal waters.

As to the extent of the expected rise in water temperature once the power plant is operational, Ms. Mercado stated in her Judicial Affidavit thus:chanroblesvirtuallawlibrary

Q: What was the result of the Thermal Plume Modeling that was conducted for RP Energy?A: The thermal dispersion modeling results show that largest warming change (0.95°C above

ambient) is observed in the shallowest (5 m) discharge scenario. The warmest surface temperature change for the deepest (30 m) scenario is 0.18°C. All the simulated scenarios comply with the DAO 90-35 limit for temperature rise of 3°C within the defined 70 x 70 m mixing zone. The proposed power plant location is near the mouth of Subic Bay, thus the tidal currents influence the behavior of thermal discharge plume. Since the area is well-flushed, mixing and dilution of the thermal discharge is expected.

It also concluded that corals are less likely to be affected by the cooling water discharge as corals may persist in shallow marine waters with temperatures ranging from 18°C to 36°C. The predicted highest temperature of 30.75°C, from the 0.95°C increase in ambient in the shallowest (5 m) discharge scenario, is within this range.122

In the same vein, Dr. Ouano stated in his Judicial Affidavit:chanroblesvirtuallawlibrary

Q: In page 41, paragraph 99 of the Petition, it was alleged that: “x x x a temperature change of 1°C to 2°C can already affect the metabolism and other biological functions of aquatic organisms such as mortality rate and reproduction.” What is your expert opinion, if any, on this matter alleged by the Petitioners?

A: Living organisms have proven time and again that they are very adaptable to changes in the environment. Living organisms have been isolated in volcanic vents under the ocean living on the acidic nutrient soup of sulfur and other minerals emitted by the volcano to sub-freezing temperature in Antarctica. As a general rule, metabolism and reproductive activity [increase] with temperature until a maximum is reached after which [they decline]. For this reason, during winter, animals hibernate and plants become dormant after shedding their leaves. It is on the

onset of spring that animals breed and plants bloom when the air and water are warmer. At the middle of autumn when the temperature drops to single digit, whales, fish, birds and other living organisms, which are capable of migrating, move to the other end of the globe where spring is just starting. In the processes of migration, those migratory species have to cross the tropics where the temperature is not just one or two degrees warmer but 10 to 20 degrees warmer.

When discussing the impact of 1 to 2 degrees temperature change and its impact on the ecosystem, the most important factors to consider are – (1) Organism Type – specifically its tolerance to temperature change (mammals have higher tolerance); (2) Base Temperature – it is the temperature over the optimum temperature such that an increase will result in the decline in number of the organisms; (3) Mobility or Space for Migration (i.e., an aquarium with limited space or an open ocean that the organism can move to a space more suited to [a] specific need, such as the migratory birds); and (4) Ecosystem Complexity and Succession. The more complex the ecosystem the more stable it is as succession and adaptation [are] more robust.

Normally, the natural variation in water temperature between early morning to late afternoon could be several degrees (four to five degrees centigrade and up to ten degrees centigrade on seasonal basis). Therefore, the less than one degree centigrade change predicted by the GHD modeling would have minimal impact.123chanRoblesvirtualLawlibrary

On cross-examination, Dr. Ouano further explained—

ATTY. AZURA:x x x When you say Organism Type – you mentioned that mammals have a higher tolerance for temperature change?

DR. OUANO:Yes.

ATTY. AZURA:What about other types of organisms, Dr. Ouano? Fish for example?

DR. OUANO:Well, mammals have high tolerance because mammals are warm[-]blooded. Now, when it comes to cold[-]blooded animals the tolerance is much lower. But again when you are considering x x x fish [e]specially in open ocean you have to remember that nature by itself is x x x very brutal x x x where there is always the prey-predator relationship. Now, most of the fish that we have in open sea [have] already a very strong adaptability mechanism. And in fact, Kingman back in 1964 x x x studied the coal reef around the gulf of Oman where the temperature variation on day to day basis varied not by 1 degree to 2 degrees but by almost 12 degrees centigrade. Now, in the Subic Bay area which when you’re looking at it between daytime variation, early dawn when it is cold, the air is cold, the sea temperature, sea water is quite cold. Then by 3:00 o’clock in the afternoon it starts to warm up. So the variation [in the] Subic Bay area is around 2 to 4 degrees by natural variation from the sun as well as from the current that goes around it. So when you are talking about what the report has said of around 1 degree change, the total impact x x x on the fishes will be minimal. x x x

ATTY. AZURA:x x x So, you said, Dr. Ouano, that fish, while they have a much lower tolerance for temperature variation, are still very adaptable. What about other sea life, Dr. Ouano, for example, sea reptiles?

DR. OUANO:That’s what I said. The most sensitive part of the marine ecology is physically the corals because corals are non-migratory, they are fix[ed]. Second[ly] x x x corals are also highly dependent on sunlight penetration. If they are exposed out of the sea, they die; if they are so deep, they die. And that is why I cited Kingman in his studies of coral adaptability [in] the sea of Oman where there was a very high temperature variation, [they] survived.

ATTY. AZURA:Would you be aware, Dr. Ouano, if Kingman has done any studies in Subic Bay?

DR. OUANO:Not in Subic Bay but I have reviewed the temperature variation, natural temperature variation from the solar side, the days side as well as the seasonal variation. There are two types of variation since temperatures are very critical. One is the daily, which means from early morning to around 3:00 o’clock, and the other one is seasonal variation because summer, December, January, February are the cold months and then by April, May we are having warm temperature where the temperature goes around 32-33 degrees; Christmas time, it drops to around 18 to 20 degrees so it[']s a variation of around seasonal variation of 14 degrees although some of the fish might even migrate and that is why I was trying to put in corals because they are the ones that are really fix[ed]. They are not in a position to migrate in this season.

ATTY. AZURA:To clarify. You said that the most potentially sensitive part of the ecosystem would be the corals.

DR. OUANO:Or threatened part because they are the ones [that] are not in a position to migrate.

ATTY AZURA:In this case, Dr. Ouano, with respect to this project and the projected temperature change, will the corals in Subic Bay be affected?

DR. OUANO:As far as the outlet is concerned, they have established it outside the coral area. By the time it reaches the coral area the temperature variation, as per the GHD study is very small, it[’]s almost negligible.

ATTY AZURA:Specifically, Dr. Ouano, what does negligible mean, what level of variation are we talking about?

DR. OUANO:If you are talking about a thermometer, you might be talking about, normally about .1 degrees centigrade. That’s the one that you could more or less ascertain. x x x

ATTY. AZURA:Dr. Ouano, you mentioned in your answer to the same question, Question 51, that there is a normal variation in water temperature. In fact, you said there is a variation throughout the day, daily and also throughout the year, seasonal. Just to clarify, Dr. Ouano. When the power plant causes the projected temperature change of 1 degree to 2 degrees Celsius this will be in addition to existing variations? What I mean, Dr. Ouano, just so I can understand, how will that work? How will the temperature change caused by the power plant work with the existing variation?

DR. OUANO:There is something like what we call the zonal mixing. This is an area of approximately one or two hectares where the pipe goes out, the hot water goes out. So that x x x, we have to accept x x x that [throughout it] the zone will be a disturb[ed] zone. After that one or two hectares park the water temperature is well mixed [so] that the temperature above the normal existing variation now practically drops down to almost the normal level.124chanRoblesvirtualLawlibrary

On air pollution due to dust and combustion gases.

To establish that the emissions from the operation of the power plant would be compliant with the standards under the Clean Air Act,125 Ms. Mercado stated in her Judicial Affidavit thus:chanroblesvirtuallawlibrary

271. Q: What was the result of the Air Dispersion Modeling that was conducted for RP Energy?

A: The Air Dispersion Modeling predicted that the Power Plant Project will produce the following emissions, which [are] fully compliant with the standards set by DENR:

Predicted GLC126 for 1-hr averaging period

National Ambient Air Quality Guideline Values

SO2 45.79 µg/Nm3 340 µg/Nm3

NO2 100.8 µg/Nm3 260 µg/Nm3

CO 10 µg/Nm3 35 µg/Nm3

Predicted GLC for 8-hr averaging period National Ambient Air Quality Guideline Values

CO 0.19 mg/ncm 10 µg/Nm3

Predicted GLC for 24-hr averaging period National Ambient Air Quality Guideline Values

SO2 17.11 µg/Nm3 180 µg/Nm3

NO2 45.79 µg/Nm3 150 µg/Nm3

Predicted GLC for 1-yr averaging period National Ambient Air Quality Guideline Values

SO2 6.12 µg/Nm3 80 µg/Nm3

NO2 No standard ---CO No standard ---

272. Q: What other findings resulted from the Air Dispersion Modeling, if any?

A: It also established that the highest GLC to Clean Air Act Standards ratio among possible receptors was located 1.6 km North NorthEast (“NNE”) of the Power Plant Project. Further, this ratio was valued only at 0.434 or less than half of the upper limit set out in the Clean Air Act. This means that the highest air ambient quality disruption will happen only 1.6 km NNE of the Power Plant Project, and that such disruption would still be compliant with the standards imposed by the Clean Air Act.127

The Casiño Group argued, however, that, as stated in the EIS, during upset conditions, significant negative environmental impact will result from the emissions. This claim was refuted by RP Energy’s witness during cross-examination:chanroblesvirtuallawlibrary

ATTY. AZURA:

If I may refer you to another page of the same annex, Ms. Mercado, that’s page 202 of the same document, the August 2012. Fig. 2-78 appears to show, there’s a Table, Ms. Mercado, the first table, the one on top appears to show a comparison in normal and upset conditions. I noticed, Ms. Mercado, that the black bars are much higher than the bars in normal condition. Can you state what this means?

MS. MERCADO:

It means there are more emissions that could potentially be released when it is under upset condition.

ATTY. AZURA:

I also noticed, Ms. Mercado, at the bottom part of this chart there are Receptor IDs, R1, R2, R3 and so forth and on page 188 of this same document, Annex “9-Mercado,” there is a list identifying these receptors, for example, Receptor 6, Your Honor, appears to have been located in Olongapo City, Poblacion. Just so I can understand, Ms. Mercado, does that mean that if upset condition[s] were to occur, the Olongapo City Poblacion will be affected by the emissions?

MS. MERCADO:

All it means is that there will be higher emissions and a higher ground concentration. But you might want to also pay attention to the “y axis,” it says there GLC/CAA [Ground Level Concentration/Clean Air Act limit]. So it means that even under upset conditions… say for R6, the ground level concentration for upset condition is still around .1 or 10% percent only of the Clean Air Act limit. So it’s still much lower than the limit.

ATTY. AZURA:

But that would mean, would it not, Ms. Mercado, that in the event of upset conditions[,] emissions would increase in the Olongapo City Poblacion?

MS. MERCADO:

Not emissions will increase. The emissions will be the same but the ground level concentration, the GLC, will be higher if you compare normal versus upset. But even if it[’]s under upset conditions, it is still only around 10% percent of the Clean Air Act Limit.

x x x x

J. LEAGOGO:

So you are trying to impress upon this Court that even if the plant is in an upset condition, it will emit less than what the national standards dictate?

MS. MERCADO:

Yes, Your Honor.128chanRoblesvirtualLawlibrary

With respect to the claims that the power plant will release dangerous PAHs and CO, Engr. Sarrki stated in his Judicial Affidavit thus:ChanRoblesVirtualawlibraryQ: In page 42, paragraph 102 of the Petition, the Petitioners alleged that Volatile Organic

Compounds (“VOC”) specifically Polycyclic Aromatic Hydrocarbon (“PAH”) will be emitted even by CFB boilers. What can you say about this?

A: Actually, the study cited by the Petitioners does not apply to the present case because it does not refer to CFB technology. The study refers to a laboratory-scale tubular Bubbling Fluidized Bed (“BFB”) test rig and not a CFB. CFB boilers will emit PAHs but only in minimal amounts. Indeed, a BFB will produce higher PAH emissions.x x x x

Q: Why can the study cited by Petitioners not apply in the present case?A: The laboratory-scale BFB used in the study only has one (1) air injection point and does not

replicate the staged-air combustion process of the CFB that RP Energy will use. This staged-air process includes the secondary air. Injecting secondary air into the system will lead to more complete combustion and inhibits PAH production. There is a study entitled “Polycyclic Aromatic Hydrocarbon (PAH) Emissions from a Coal-Fired Pilot FBC System” by Kunlei Liu, Wenjun Han, Wei-Ping Pan, John T. Riley found in the Journal of Hazardous Materials B84 (2001) where the findings are discussed.

Also, the small-scale test rig utilized in the study does not simulate the process conditions (hydrodynamics, heat transfer characteristics, solid and gas mixing behavior, etc.) seen in a large scale utility boiler, like those which would be utilized by the Power Plant Project.

x x x xQ: Aside from residence time of particles and secondary air, what other factors, if any, reduce PAH

production?A: Increase in the excess air ratio will also minimize PAH production. Furthermore, decrease in

Calcium to Sulfur moral ratio (“Ca/S”), as well as decrease in the sulfur and chlorine contents of coal will likewise minimize PAH production. This is also based on the study entitled “Polycyclic Aromatic Hydrocarbon (PAH) Emissions from a Coal-Fired Pilot FBC System” by Kunlei Liu, Wenjun Han, Wei-Ping Pan, John T. Riley.

In RP Energy’s Power Plant Project, the projected coal to be utilized has low sulfur and chlorine contents minimizing PAH production. Also, due to optimum conditions for the in-furnace SO2 capture, the Ca/S will be relatively low, decreasing PAH production.

Q: In paragraph 104 of the Petition, it was alleged that “Carbon monoxide (CO), a poisonous, colorless and odorless gas is also produced when there is partial oxidation or when there is not enough oxygen (O2) to form carbon dioxide (CO2).” What can you say about this?

A: CFB technology reduces the CO emissions of the Power Plant Project to safe amounts. In fact, I understand that the projected emissions level of the Power Plant Project compl[ies] with the International Finance Corporation (“IFC”) standards. Furthermore, characteristics of CFB technology such as long residence time, uniform temperature and high turbulence provide an effective combustion environment which results [in] lower and safer CO emissions.

Q: I have no further questions for you at the moment. Is there anything you wish to add to the foregoing?

A: Yes. PAH is a natural product of ANY combustion process. Even ordinary burning, such as cooking or driving automobiles, will have some emissions that are not considered harmful. It is only when emissions are of a significant level that damage may be caused.

Given that the Power Plant Project will utilize CFB technology, it will have minimal PAH emissions. The high combustion efficiency of CFB technology, due to the long residence time of particles inside the boiler, leads to the minimal emissions of PAH. Furthermore, other factors such as increase in the excess air ratio, decrease in Ca/S, as well as decrease in the sulfur and chlorine contents of coal will likewise minimize PAH production. CFB does not cause emissions beyond scientifically acceptable levels, and we are confident it will not result in the damage speculated by the Petitioners.129

3. On water pollution from toxic coal combustion waste.

With regard to the claim that coal combustion waste produced by the plant will endanger the health of the inhabitants nearby, Dr. Ouano stated in his Judicial Affidavit thus:chanroblesvirtuallawlibrary

Q: In page 43, paragraph 110 of the Petition, it was alleged that: “[s]olid coal combustion waste is highly toxic and is said to cause birth defects and cancer risks among others x x x.” What is your expert opinion, if any, on this matter alleged by the Petitioners?

A: Coal is geologically compressed remains of living organisms that roamed the earth several million years ago. In the process of compression, some of the minerals in the soil, rocks or mud, the geologic media for compression, are also imparted into the compressed remains. If the

compressing media of mud, sediments and rocks contain high concentration of mercury, uranium, and other toxic substances, the coal formed will likewise contain high concentration of those substances. If the compressing materials have low concentration of those substances, then the coal formed will likewise have low concentration of those substances. If the coal does not contain excessive quantities of toxic substances, the solid residues are even used in agriculture to supply micronutrients and improve the potency of fertilizers. It is used freely as a fill material in roads and other construction activities requiring large volume of fill and as additive in cement manufacture. After all, diamonds that people love to hang around their necks and keep close to the chest are nothing more than the result of special geologic action, as those in volcanic pipes on coal.130

RP Energy further argued, a matter which the Casiño Group did not rebut or refute, that the waste generated by the plant will be properly handled, to wit:chanroblesvirtuallawlibrary

4.1.49 When coal is burned in the boiler furnace, two by-products are generated - bottom and fly ash. Bottom ash consists of large and fused particles that fall to the bottom of the furnace and mix with the bed media. Fly ash includes fine-grained and powdery particles that are carried away by flue gas into the electrostatic precipitator, which is then sifted and collected. These by-products are non-hazardous materials. In fact, a coal power plant’s Fly Ash, Bottom Ash and Boiler Slag have consequent beneficial uses which “generate significant environmental, economic, and performance benefits.” Thus, fly ash generated during the process will be sold and transported to cement manufacturing facilities or other local and international industries.

4.1.50 RP Energy shall also install safety measures to insure that waste from burning of coal shall be properly handled and stored.

4.1.51 Bottom ash will be continuously collected from the furnace and transferred through a series of screw and chain conveyors and bucket elevator to the bottom ash silo. The collection and handling system is enclosed to prevent dust generation. Discharge chutes will be installed at the base of the bottom ash silo for unloading. Open trucks will be used to collect ash through the discharge chutes. Bottom ash will be sold, and unsold ash will be stored in ash cells. A portion of the bottom ash will be reused as bed material through the installation of a bed media regeneration system (or ash recycle). Recycled bottom ash will be sieved using a vibrating screen and transported to a bed material surge bin for re-injection into the boiler.

4.1.52 Fly ash from the electrostatic precipitator is pneumatically removed from the collection hopper using compressed air and transported in dry state to the fly ash silo. Two discharge chutes will be installed at the base of the fly ash silo. Fly ash can either be dry-transferred through a loading spout into an enclosed lorry or truck for selling, re-cycling, or wet-transferred through a wet unloader into open dump trucks and transported to ash cells. Fly ash discharge will operate in timed cycles, with an override function to achieve continuous discharge if required. Fly ash isolation valves in each branch line will prevent leakage and backflow into non-operating lines.

4.1.53 Approximately 120,000m² will be required for the construction of the ash cell. Ash will be stacked along the sloping hill, within a grid of excavations (i.e. cells) with a 5m embankment. Excavated soils will be used for embankment construction and backfill. To prevent infiltration [of] ash deposits into the groundwater, a clay layer with minimum depth of 400mm will be laid at the

base of each cell. For every 1-m depth of ash deposit, a 10-cm soil backfill will be applied to immobilize ash and prevent migration via wind. Ash cell walls will be lined with high-density polyethylene to prevent seepage. This procedure and treatment method is in fact suitable for disposal of toxic and hazardous wastesalthough fly ash is not classified as toxic and hazardous materials.131

Anent the claims that the plant is susceptible to earthquake and landslides, Dr. Ouano testified thus:chanroblesvirtuallawlibrary

J. LEAGOGO:

In terms of fault lines, did you study whether this project site is in any fault line?

DR. OUANO:

There are some fault lines and in fact, in the Philippines it is very difficult to find an area except Palawan where there is no fault line within 20 to 30 [kilometers]. But then fault lines as well as earthquakes really [depend] upon your engineering design. I mean, Sto. Tomas University has withstood all the potential earthquakes we had in Manila[,] even sometimes it[’]s intensity 8 or so because the design for it back in 1600 they are already using what we call floating foundation. So if the engineering side for it[,] technology is there to withstand the expected fault line [movement].

J. LEAGOGO:

What is the engineering side of the project? You said UST is floating.

DR. OUANO:

The foundation, that means to say you don’t break…

J. LEAGOGO:

Floating foundation. What about this, what kind of foundation?

DR. OUANO:

It will now depend on their engineering design, the type of equipment…

J. LEAGOGO:

No, but did you read it in their report?

DR. OUANO:

It[’]s not there in their report because it will depend on the supplier, the equipment supplier.

J. LEAGOGO:

So it[’]s not yet there?

DR. OUANO:

It[’]s not yet there in the site but it is also covered in our Building Code what are the intensities of earthquakes expected of the different areas in the Philippines.

J. LEAGOGO:

Have you checked our geo-hazard maps in the Philippines to check on this project site?

DR. OUANO:

Yes. It is included there in the EIA Report.

J. LEAGOGO:

It[’]s there?

DR. OUANO:

It[’]s there.132

4. On acid deposition in aquatic and terrestrial ecosystems.

Relative to the threat of acid rain, Dr. Ouano stated in his Judicial Affidavit, thus:chanroblesvirtuallawlibrary

Q: In page 44, paragraph 114 of the Petition, it was alleged that “the coal-fired power plant will release 1,888 tons of nitrous oxides (NOx) per year and 886 tons of sulfur dioxide (SO2) per year. These oxides are the precursors to the formation of sulfuric acid and nitric acid which are responsible for acid deposition.” What is your expert opinion on this matter alleged by the Petitioners?

A: NO2 is found in the air, water and soil from natural processes such as lightning, bacterial activities and geologic activities as well as from human activities such as power plants and fertilizer usage in agriculture. SO2 is also found in air, water and soil from bacterial, geologic and human activities.

NO2 and SO2 in the air are part of the natural nitrogen and sulfur cycle to widely redistribute and recycle those essential chemicals for use by plants. Without the NO2 and SO2 in the air, plant and animal life would be limited to small areas of this planet where nitrogen and sulfur are found in abundance. With intensive agricultural practices, nitrogen and sulfur are added in the soil as fertilizers.

Acid rain takes place when the NO2 and SO2 concentration are excessive or beyond those values

set in the air quality standards. NO2 and SO2 in the air in concentrations lower than those set in the standards have beneficial effect to the environment and agriculture and are commonly known as micronutrients.133

On clarificatory questions from the appellate court, the matter was further dissected thus:chanroblesvirtuallawlibrary

J. LEAGOGO:x x x The project will release 1,888 tons of nitrous oxide per year. And he said, yes; that witness answered, yes, it will produce 886 tons of sulfur dioxide per year. And he also answered yes, that these oxides are the precursors to the formation of sulfuric acid and nitric acid. Now my clarificatory question is, with this kind of releases there will be acid rain?

DR. OUANO:No.

J. LEAGOGO:Why?

DR. OUANO:Because it[’]s so dilute[d].

J. LEAGOGO:It will?

DR. OUANO:Because the acid concentration is so dilute[d] so that it is not going to cause acid rain.

J. LEAGOGO:The acid concentration is so diluted that it will not cause acid rain?

DR. OUANO:Yes.

J. LEAGOGO:What do you mean it[’]s so diluted? How will it be diluted?

DR. OUANO:Because it[’]s going to be mixed with the air in the atmosphere; diluted in the air in the atmosphere. And besides this 886 tons, this is not released in one go, it is released almost throughout the year.

J. LEAGOGO:You also answered in Question No. 61, “acid rain takes place when the NO2 AND SO2 concentration are excessive.” So when do you consider it as excessive?

DR. OUANO:

That is something when you are talking about acid…

J. LEAGOGO:In terms of tons of nitrous oxide and tons of sulfur oxide, when do you consider it as excessive?

DR. OUANO:It is in concentration not on tons weight, Your Honor.

J. LEAGOGO:In concentration?

DR. OUANO:In milligrams per cubic meter, milligrams per standard cubic meter.

J. LEAGOGO:So being an expert, what will be the concentration of this kind of 1,888 tons of nitrous oxide? What will be the concentration in terms of your…?

DR. OUANO:If the concentration is in excess of something like 8,000 micrograms per standard cubic meters, then there is already potential for acid rain.

J. LEAGOGO:I am asking you, Dr. Ouano, you said it will release 1,888 tons of nitrous oxide?

DR. OUANO:Yes.

J. LEAGOGO:In terms of concentration, what will that be?

DR. OUANO:In terms of the GHD study that will result [in] 19 milligrams per standard cubic meters and the time when acid rain will start [is when the concentration gets] around 8,000 milligrams per standard cubic meters. So we have 19 compared to 8,000. So we are very, very safe.

J. LEAGOGO:What about SO2?

DR. OUANO:SO2, we are talking about ... you won’t mind if I go to my codigo. For sulfur dioxide this acid rain most likely will start at around 7,000 milligrams per standard cubic meter but then … sorry, it[’]s around 3,400 micrograms per cubic meter. That is the concentration for sulfur dioxide, and in our plant it will be around 45 micrograms per standard cubic meter. So the acid rain will start at 3,400 and the emission is estimated here to result to concentration of 45.7 micrograms.

J. LEAGOGO:

That is what GHD said in their report.

DR. OUANO:Yes. So that is the factor of x x x safety that we have.134

Apart from the foregoing evidence, we also note that the above and other environmental concerns are extensively addressed in RP Energy’s Environmental Management Plan or Program (EMP). The EMP is “a section in the EIS that details the prevention, mitigation, compensation, contingency and monitoring measures to enhance positive impacts and minimize negative impacts and risks of a proposed project or undertaking.”135 One of the conditions of the ECC is that RP Energy shall strictly comply with and implement its approved EMP. The Casiño Group failed to contest, with proof, the adequacy of the mitigating measures stated in the aforesaid EMP.

In upholding the evidence and arguments of RP Energy, relative to the lack of proof as to the alleged significant environmental damage that will be caused by the project, the appellate court relied mainly on the testimonies of experts, which we find to be in accord with judicial precedents. Thus, we ruled in one case:chanroblesvirtuallawlibrary

Although courts are not ordinarily bound by testimonies of experts, they may place whatever weight they choose upon such testimonies in accordance with the facts of the case. The relative weight and sufficiency of expert testimony is peculiarly within the province of the trial court to decide, considering the ability and character of the witness, his actions upon the witness stand, the weight and process of the reasoning by which he has supported his opinion, his possible bias in favor of the side for whom he testifies, the fact that he is a paid witness, the relative opportunities for study and observation of the matters about which he testifies, and any other matters which serve to illuminate his statements. The opinion of the expert may not be arbitrarily rejected; it is to be considered by the court in view of all the facts and circumstances in the case and when common knowledge utterly fails, the expert opinion may be given controlling effects (20 Am. Jur., 1056-1058). The problem of the credibility of the expert witness and the evaluation of his testimony is left to the discretion of the trial court whose ruling thereupon is not reviewable in the absence of an abuse of that discretion.136

Hence, we sustain the appellate court’s findings that the Casiño Group failed to establish the alleged grave environmental damage which will be caused by the construction and operation of the power plant.

In another vein, we, likewise, agree with the observations of the appellate court that the type of coal which shall be used in the power plant has important implications as to the possible significant negative environmental impacts of the subject project.137 However, there is no coal supply agreement, as of yet, entered into by RP Energy with a third-party supplier. In accordance with the terms and conditions of the ECC and in compliance with existing environmental laws and standards, RP Energy is obligated to make use of the proper coal type that will not cause significant negative environmental impacts.

The alleged negative environmental assessment of the project by experts in a report generated during the social

acceptability consultations

The Casiño Group also relies heavily on a report on the social acceptability process of the power plant project to bolster its claim that the project will cause grave environmental damage. We purposely discuss this matter in this separate subsection for reasons which will be made clear shortly.

But first we shall present the pertinent contents of this report.

According to the Casiño Group, from December 7 to 9, 2011, the SBMA conducted social acceptability policy consultations with different stakeholders on RP Energy’s proposed 600 MW coal plant project at the Subic Bay Exhibition and Convention Center. The results thereof are contained in a document prepared by SBMA entitled “Final Report: Social Acceptability Process for RP Energy, Inc.’s 600-MW Coal Plant Project” (Final Report). We note that SBMA adopted the Final Report as a common exhibit with the Casiño Group in the course of the proceedings before the appellate court.

The Final Report stated that there was a clear aversion to the concept of a coal-fired power plant from the participants. Their concerns included environmental, health, economic and socio-cultural factors. Pertinent to this case is the alleged assessment, contained in the Final Report, of the potential effects of the project by three experts: (1) Dr. Rex Cruz (Dr. Cruz), Chancellor of the University of the Philippines, Los Baños and a forest ecology expert, (2) Dr. Visitacion Antonio, a toxicologist, who related information as to public health; and (3) Andre Jon Uychiaco, a marine biologist.

The Final Report stated these experts’ alleged views on the project, thus:chanroblesvirtuallawlibrary

IV. Experts’ Opinionx x x x

The specialists shared the judgment that the conditions were not present to merit the operation of a coal-fired power plant, and to pursue and carry out the project with confidence and assurance that the natural assets and ecosystems within the Freeport area would not be unduly compromised, or that irreversible damage would not occur and that the threats to the flora and fauna within the immediate community and its surroundings would be adequately addressed.

The three experts were also of the same opinion that the proposed coal plant project would pose a wide range of negative impacts on the environment, the ecosystems and human population within the impact zone.

The specialists likewise deemed the Environment Impact Assessment (EIA) conducted by RPEI to be incomplete and limited in scope based on the following observations:

i. The assessment failed to include areas 10km. to 50km. from the operation site, although according to the panel, sulfur emissions could extend as far as 40-50 km.

ii. The EIA neglected to include other forests in the Freeport in its scope and that there were no specific details on the protection of the endangered flora and endemic fauna in the area. Soil, grassland, brush land, beach forests and home gardens were also apparently not included in the study.

iii. The sampling methods used in the study were limited and insufficient for effective long-term monitoring of surface water, erosion control and terrestrial flora and fauna.

The specialists also discussed the potential effects of an operational coal-fired power plant [on] its environs and the community therein. Primary among these were the following:

i. Formation of acid rain, which would adversely affect the trees and vegetation in the area which, in turn, would diminish forest cover. The acid rain would apparently worsen the acidity of the soil in the Freeport.

ii. Warming and acidification of the seawater in the bay, resulting in the bio-accumulation of contaminants and toxic materials which would eventually lead to the overall reduction of marine productivity.

iii. Discharge of pollutants such as Nitrous Oxide, Sodium Oxide, Ozone and other heavy metals such as mercury and lead to the surrounding region, which would adversely affect the health of the populace in the vicinity.

V. FindingsBased on their analyses of the subject matter, the specialists recommended that the SBMA re-scrutinize the coal-fired power plant project with the following goals in mind:

i. To ensure its coherence and compatibility to [the] SBMA mandate, vision, mission and development plans, including its Protected Area Management Plan;

ii. To properly determine actual and potential costs and benefits;

iii. To effectively determine the impacts on environment and health; and

iv. To ensure a complete and comprehensive impacts zone study.

The specialists also urged the SBMA to conduct a Comprehensive Cost And Benefit Analysis Of The Proposed Coal Plant Project Relative To Each Stakeholder Which Should Include The Environment As Provider Of Numerous Environmental Goods And Services.

They also recommended an Integrated/Programmatic Environmental Impact Assessment to accurately determine the environmental status of the Freeport ecosystem as basis and reference in evaluating future similar projects. The need for a more Comprehensive Monitoring System for the Environment and Natural Resources was also reiterated by the panel.138

Of particular interest are the alleged key observations of Dr. Cruz on the EIS prepared by RP Energy relative to the project:chanroblesvirtuallawlibrary

Key Observations and Recommendations on the EIS of Proposed RPE ProjectRex Victor O. Cruz

Based on SBMA SAP on December 7-9, 2011

1. The baseline vegetation analysis was limited only within the project site and its immediate vicinity. No vegetation analysis was done in the brushland areas in the peninsula which is likely to be affected in the event acid rain forms due to emissions from the power plant.

2. The forest in the remaining forests in the Freeport was not considered as impact zone as indicated by the lack of description of these forests and the potential impacts the project might have on these forests. This appears to be a key omission in the EIS considering that these forests are well within 40 to 50 km away from the site and that there are studies showing that the impacts of sulphur emissions can extend as far as 40 to 50 km away from the source.

3. There are 39 endemic fauna and 1 endangered plant species (Molave) in the proposed project site. There will be a need to make sure that these species are protected from being damaged permanently in wholesale. Appropriate measures such as ex situconservation and translocation if feasible must be implemented.

4. The Project site is largely in grassland interspersed with some trees. These plants if affected by acid rain or by sulphur emissions may disappear and have consequences on the soil properties and hydrological processes in the area. Accelerated soil erosion and increased surface runoff and reduced infiltration of rainwater into the soil.

5. The rest of the peninsula is covered with brushland but were never included as part of the impact zone.

6. There are home gardens along the coastal areas of the site planted to ornamental and agricultural crops which are likely to be affected by acid rain.

7. There is also a beach forest dominated by aroma, talisai and agoho which will likely be affected also by acid rain.

8. There are no Environmentally Critical Areas within the 1 km radius from the project site. However, the Olongapo Watershed Forest Reserve, a protected area is approximately 10 km southwest of the project site. Considering the prevailing wind movement in the area, this forest reserve is likely to be affected by acid rain if it occurs from the emission of the power plant. This forest reserve is however not included as part of the potential impact area.

9. Soil in the project site and the peninsula is thin and highly acidic and deficient in NPK with moderate to severe erosion potential. The sparse vegetation cover in the vicinity of the project site is likely a result of the highly acidic soil and the nutrient deficiency. Additional acidity may result from acid rain that may form in the area which could further make it harder for the plants to grow in the area that in turn could exacerbate the already severe erosion in the area.

10. There is a need to review the proposal to ensure that the proposed project is consistent with the vision for the Freeport as enunciated in the SBMA Master Plan and the Protected Area

Management Plan. This will reinforce the validity and legitimacy of these plans as a legitimate framework for screening potential locators in the Freeport. It will also reinforce the trust and confidence of the stakeholders on the competence and authority of the SBMA that would translate in stronger popular support to the programs implemented in the Freeport.

11. The EGF and Trust Fund (Table 5.13) should be made clear that the amounts are the minimum amount and that adequate funds will be provided by the proponent as necessary beyond the minimum amounts. Furthermore the basis for the amounts allocated for the items (public liability and rehabilitation) in Trust Fund and in EGF (tree planting and landscaping, artificial reef establishment) must be clarified. The specific damages and impacts that will be covered by the TF and EGF must also be presented clearly at the outset to avoid protracted negotiations in the event of actual impacts occurring in the future.

12. The monitoring plan for terrestrial flora and fauna is not clear on the frequency of measurement. More importantly, the proposed method of measurement (sampling transect) while adequate for estimating the diversity of indices for benchmarking is not sufficient for long[-]term monitoring. Instead, long[-]term monitoring plots (at least 1 hectare in size) should be established to monitor the long[-]term impacts of the project on terrestrial flora and fauna.

13. Since the proposed monitoring of terrestrial flora and fauna is limited to the vicinity of the project site, it will be useful not only for mitigating and avoiding unnecessary adverse impacts of the project but also for improving management decisions if long[-]term monitoring plots for the remaining natural forests in the Freeport are established. These plots will also be useful for the study of the dynamic interactions of terrestrial flora and fauna with climate change, farming and other human activities and the resulting influences on soil, water, biodiversity, and other vital ecosystem services in the Freeport.139

We agree with the appellate court that the alleged statements by these experts cannot be given weight because they are hearsay evidence. None of these alleged experts testified before the appellate court to confirm the pertinent contents of the Final Report. No reason appears in the records of this case as to why the Casiño Group failed to present these expert witnesses.

We note, however, that these statements, on their face, especially the observations of Dr. Cruz, raise serious objections to the environmental soundness of the project, specifically, the EIS thereof. It brings to fore the question of whether the Court can, on its own, compel the testimonies of these alleged experts in order to shed light on these matters in view of the right at stake— not just damage to the environment but the health, well-being and, ultimately, the lives of those who may be affected by the project.

The Rules of Procedure for Environmental Cases liberally provide the courts with means and methods to obtain sufficient information in order to adequately protect or safeguard the right to a healthful and balanced ecology. In Section 6 (l)140 of Rule 3 (Pre-Trial), when there is a failure to settle, the judge shall, among others, determine the necessity of engaging the services of a qualified expert as a friend of the court (amicus curiae). While, in Section 12141 of Rule 7 (Writ of kalikasan), a party may avail of discovery measures: (1) ocular inspection and (2) production or inspection of documents or things. The liberality of the Rules in gathering and even compelling

information, specifically with regard to the Writ of kalikasan, is explained in this wise:chanroblesvirtuallawlibrary

[T]he writ of kalikasan was refashioned as a tool to bridge the gap between allegation and proof by providing a remedy for would-be environmental litigants to compel the production of information within the custody of the government. The writ would effectively serve as a remedy for the enforcement of the right to information about the environment. The scope of the fact-finding power could be: (1) anything related to the issuance, grant of a government permit issued or information controlled by the government or private entity and (2) [i]nformation contained in documents such as environmental compliance certificate (ECC) and other government records. In addition, the [w]rit may also be employed to compel the production of information, subject to constitutional limitations. This function is analogous to a discovery measure, and may be availed of upon application for the writ.142

Clearly, in environmental cases, the power to appoint friends of the court in order to shed light on matters requiring special technical expertise as well as the power to order ocular inspections and production of documents or things evince the main thrust of, and the spirit behind, the Rules to allow the court sufficient leeway in acquiring the necessary information to rule on the issues presented for its resolution, to the end that the right to a healthful and balanced ecology may be adequately protected. To draw a parallel, in the protection of the constitutional rights of an accused, when life or liberty is at stake, the testimonies of witnesses may be compelled as an attribute of the Due Process Clause. Here, where the right to a healthful and balanced ecology of a substantial magnitude is at stake, should we not tread the path of caution and prudence by compelling the testimonies of these alleged experts?

After due consideration, we find that, based on the statements in the Final Report, there is no sufficiently compelling reason to compel the testimonies of these alleged expert witnesses for the following reasons.

First, the statements are not sufficiently specific to point to us a flaw (or flaws) in the study or design/implementation (or some other aspect) of the project which provides a causal link or, at least, a reasonable connection between the construction and operation of the project vis-à-vis potential grave environmental damage. In particular, they do not explain why the Environmental Management Plan (EMP) contained in the EIS of the project will not adequately address these concerns.

Second, some of the concerns raised in the alleged statements, like acid rain, warming and acidification of the seawater, and discharge of pollutants were, as previously discussed, addressed by the evidence presented by RP Energy before the appellate court. Again, these alleged statements do not explain why such concerns are not adequately covered by the EMP of RP Energy.

Third, the key observations of Dr. Cruz, while concededly assailing certain aspects of the EIS, do not clearly and specifically establish how these omissions have led to the issuance of an ECC that will pose significant negative environmental impacts once the project is constructed and becomes operational. The recommendations stated therein would seem to suggest points for improvement in the operation and monitoring of the project, but they do not clearly show why such

recommendations are indispensable for the project to comply with existing environmental laws and standards, or how non-compliance with such recommendations will lead to an environmental damage of the magnitude contemplated under the writ of kalikasan. Again, these statements do not state with sufficient particularity how the EMP in the EIS failed to adequately address these concerns.

Fourth, because the reason for the non-presentation of the alleged expert witnesses does not appear on record, we cannot assume that their testimonies are being unduly suppressed.

By ruling that we do not find a sufficiently compelling reason to compel the taking of the testimonies of these alleged expert witnesses in relation to their serious objections to the power plant project, we do not foreclose the possibility that their testimonies could later on be presented, in a proper case, to more directly, specifically and sufficiently assail the environmental soundness of the project and establish the requisite magnitude of actual or threatened environmental damage, if indeed present. After all, their sense of civic duty may well prevail upon them to voluntarily testify, if there are truly sufficient reasons to stop the project, above and beyond their inadequate claims in the Final Report that the project should not be pursued. As things now stand, however, we have insufficient bases to compel their testimonies for the reasons already proffered.

The alleged admissions of grave environmental damage in the EISof the project.

In their Omnibus Motions for Clarification and Reconsideration before the appellate court and Petition for Review before this Court, the Casiño Group belatedly claims that the statements in the EIS prepared by RP Energy established the significant negative environmental impacts of the project. They argue in this manner:chanroblesvirtuallawlibrary

Acid Rain

35. According to RP Energy’s Environmental Impact Statement for its proposed 2 x 150 MW Coal-Fired Thermal Power Plant Project, acid rain may occur in the combustion of coal, to wit –x x x x

During the operation phase, combustion of coal will result in emissions of particulates SOx and NOx. This may contribute to the occurrence of acid rain due to elevated SO2 levels in the atmosphere. High levels of NO2 emissions may give rise to health problems for residents within the impact area.

x x x xAsthma Attacks

36. The same EPRMP143 mentioned the incidence of asthma attacks [as a] result of power plant operations, to wit –x x x x

The incidence of asthma attacks among residents in the vicinity of the project site may increase due to exposure to suspended particulates from plant operations.144

RP Energy, however, counters that the above portions of the EIS were quoted out of context. As to the subject of acid rain, the EIS states in full:chanroblesvirtuallawlibrary

Operation

During the operation phase, combustion of coal will result in emissions of particulates, SOx and NOx. This may contribute to the occurrence of acid rain due to elevated SO2 levels in the atmosphere. High levels of NO2 emissions may give rise to health problems for residents within the impact area. Emissions may also have an effect on vegetation (Section 4.1.4.2). However, the use of CFBC technology is a built-in measure that results in reduced emission concentrations. SOx emissions will be minimised by the inclusion of a desulfurisation process, whilst NOx emissions will be reduced as the coal is burned at a temperature lower than that required to oxidise nitrogen.145 (Emphasis supplied)

As to the subject of asthma attacks, the EIS states in full:chanroblesvirtuallawlibrary

The incidence of asthma attacks among residents in the vicinity of the project site may increase due to exposure to suspended particulates from plant operations. Coal and ash particulates may also become suspended and dispersed into the air during unloading and transport, depending on wind speed and direction. However, effect on air quality due to windblown coal particulates will be insignificant as the coal handling system will have enclosures (i.e. enclosed conveyors and coal dome) to eliminate the exposure of coal to open air, and therefore greatly reduce the potential for particulates from being carried away by wind (coal handling systems, Section 3.4.3.3). In addition, the proposed process will include an electrostatic precipitator that will remove fly ash from the flue gas prior to its release through the stacks, and so particulates emissions will be minimal.146 (Emphasis supplied)

We agree with RP Energy that, while the EIS discusses the subjects of acid rain and asthma attacks, it goes on to state that there are mitigating measures that will be put in place to prevent these ill effects. Quite clearly, the Casiño Group quoted piecemeal the EIS in such a way as to mislead this Court as to its true and full contents.

We deplore the way the Casiño Group has argued this point and we take this time to remind it that litigants should not trifle with court processes. Along the same lines, we note how the Casiño Group has made serious allegations in its Petition for Writ of kalikasan but failed to substantiate the same in the course of the proceedings before the appellate court. In particular, during the preliminary conference of this case, the Casiño Group expressly abandoned its factual claims on the alleged grave environmental damage that will be caused by the power plant (i.e., air, water and land pollution) and, instead, limited itself to legal issues regarding the alleged non-compliance of RP Energy with certain laws and rules in the procurement of the ECC.147 We also note how the Casiño Group failed to comment on the subject Petitions before this Court, which led this Court to eventually dispense with its comment.148 We must express our disapproval over the way it has prosecuted its claims, bordering as it does on trifling with court processes. We deem it proper, therefore, to admonish it to be more circumspect in how it prosecutes its claims.

In sum, we agree with the appellate court that the Casiño Group failed to substantiate its claims that the construction and operation of the power plant will cause environmental damage of the magnitude contemplated under the writ of kalikasan. The evidence it presented is inadequate to establish the factual bases of its claims.cralawred

II.

Whether the ECC is invalid for lack of signature of Mr. Luis Miguel Aboitiz (Mr. Aboitiz), as representative of RP Energy, in the Statement of Accountability of the ECC.

The appellate court ruled that the ECC is invalid because Mr. Aboitiz failed to sign the Statement of Accountability portion of the ECC.

We shall discuss the correctness of this ruling on both procedural and substantive grounds.

Procedurally, we cannot fault the DENR for protesting the manner by which the appellate court resolved the issue of the aforesaid lack of signature. We agree with the DENR that this issue was not among those raised by the Casiño Group in its Petition for Writ of kalikasan.149 What is more, this was not one of the triable issues specifically set during the preliminary conference of this case.150chanRoblesvirtualLawlibrary

How then did the issue of lack of signature arise?

A review of the voluminous records indicates that the matter of the lack of signature was discussed, developed or surfaced only in the course of the hearings, specifically, on clarificatory questions from the appellate court, to wit:chanroblesvirtuallawlibrary

J. LEAGOGO:I would also show to you your ECC, that’s page 622 of the rollo. I am showing to you this Environmental Compliance Certificate dated December 22, 2008 issued by Sec. Jose L. Atienza, Jr. of the DENR. This is your “Exhibit “18.” Would you like to go over this? Are you familiar with this document?

MS. MERCADO:Yes, it[’]s my Annex “3,” Your Honor.

J. LEAGOGO:I would like to refer you to page 3 of the ECC dated December 22, 2008. Page 2 refers to the Environmental Compliance Certificate, ECC Ref. No. 0804-011-4021. That’s page 2 of the letter dated December 22, 2008. And on page 3, Dr. Julian Amador recommended approval and it was approved by Sec. Atienza. You see that on page 3?

MS. MERCADO:Yes, Your Honor.

J. LEAGOGO:

Okay. On the same page, page 3, there’s a Statement of Accountability.

MS. MERCADO:Yes, Your Honor.

J. LEAGOGO:Luis, who is Luis Miguel Aboitiz?

MS. MERCADO:During that time he was the authorized representative of RP Energy, Your Honor.

J. LEAGOGO:Now, who is the authorized representative of RP Energy?

MS. MERCADO:It would be Mr. Aaron Domingo, I believe.

J. LEAGOGO:Please tell the Court why this was not signed by Mr. Luis Miguel Aboitiz, the Statement of Accountability?

Because the Statement of Accountability says, “Mr. Luis Miguel Aboitiz, Director, representing Redondo Peninsula Energy with office address located at 110 Legaspi Street, Legaspi Village, Makati City, takes full responsibility in complying with all conditions in this Environmental Compliance Certificate [ECC][.]” Will you tell this Court why this was not signed?

MS. MERCADO:It was signed, Your Honor, but this copy wasn’t signed. My apologies, I was the one who provided this, I believe, to the lawyers. This copy was not signed because during….

J. LEAGOGO:But this is your exhibit, this is your Exhibit “18” and this is not signed. Do you agree with me that your Exhibit “18” is not signed by Mr. Aboitiz?

MS. MERCADO:That’s correct, Your Honor.151

We find this line of questioning inadequate to apprise the parties that the lack of signature would be a key issue in this case; as in fact it became decisive in the eventual invalidation of the ECC by the appellate court.

Concededly, a court has the power to suspend its rules of procedure in order to attain substantial justice so that it has the discretion, in exceptional cases, to take into consideration matters not originally within the scope of the issues raised in the pleadings or set during the preliminary conference, in order to prevent a miscarriage of justice. In the case at bar, the importance of the signature cannot be seriously doubted because it goes into the consent and commitment of the project proponent to comply with the conditions of the ECC, which is vital to the protection of the

right to a balanced and healthful ecology of those who may be affected by the project.

Nonetheless, the power of a court to suspend its rules of procedure in exceptional cases does not license it to foist a surprise on the parties in a given case. To illustrate, in oral arguments before this Court, involving sufficiently important public interest cases, we note that individual members of the Court, from time to time, point out matters that may not have been specifically covered by the advisory (the advisory delineates the issues to be argued and decided). However, a directive is given to the concerned parties to discuss the aforesaid matters in their memoranda. Such a procedure ensures that, at the very least, the parties are apprised that the Court has taken an interest in such matters and may adjudicate the case on the basis thereof. Thus, the parties are given an opportunity to adequately argue the issue or meet the issue head-on. We, therefore, find that the appellate court should have, at the very least, directed RP Energy and the DENR to discuss and elaborate on the issue of lack of signature in the presentation of their evidence and memoranda, before making a definitive ruling that the lack thereof invalidated the ECC. This is in keeping with the basic tenets of due process.

At any rate, we shall disregard the procedural defect and rule directly on whether the lack of signature invalidated the ECC in the interest of substantial justice.

The laws governing the ECC, i.e., Presidential Decree No. (PD) 1151 and PD 1586, do not specifically state that the lack of signature in the Statement of Accountability has the effect of invalidating the ECC. Unlike in wills or donations, where failure to comply with the specific form prescribed by law leads to its nullity,152 the applicable laws here are silent with respect to the necessity of a signature in the Statement of Accountability and the effect of the lack thereof. This is, of course, understandable because the Statement of Accountability is a mere off-shoot of the rule-making powers of the DENR relative to the implementation of PD 1151 and PD 1586. To determine, therefore, the effect of the lack of signature, we must look at the significance thereof under the Environmental Impact Assessment (EIA) Rules of the DENR and the surrounding circumstances of this case.

To place this issue in its proper context, a helpful overview of the stages of the EIA process, taken from the Revised Manual, is reproduced below:

Figure 1-3 Overview of Stages of the Philippine EIA Process153

1.0 SCREENING

Screening determines if a project is covered or not covered by the PEISS.154 If a project is covered, screening further determines what document type the project should prepare to secure the needed approval, and what the rest of the requirements are in terms of EMB

2.0 SCOPING

EIA STUDY and3.0 REPORT

PREPARATION

office of application, endorsing and decision authorities, duration of processing.Scoping is a Proponent-driven multi-sectoral formal process of determining the focused Terms of Reference of the EIA Study. Scoping identifies the most significant issues/impacts of a proposed project, and then, delimits the extent of baseline information to those necessary to evaluate and mitigate the impacts. The need for and scope of an Environmental Risk Assessment (ERA) is also done during the scoping session. Scoping is done with the local community through Public Scoping and with a third party EIA Review Committee (EIARC) through Technical Scoping, both with the participation of the DENR-EMB. The process results in a signed Formal Scoping Checklist by the review team, with final approval by the EMB Chief.The EIA Study involves a description of the proposed project and its alternatives, characterization of the project environment, impact identification and prediction, evaluation of impact significance, impact mitigation, formulation of Environmental Management and Monitoring Plan, with corresponding cost estimates and institutional support commitment. The study results are presented in an EIA Report for which an outline is prescribed by EMB for every major document type.Review of EIA Reports normally entails an EMB procedural screening for compliance with minimum requirements specified during Scoping, followed by a substantive review of either composed third party

EIA REPORT4.0 REPORT and

EVALUATION

5.0 DECISIONMAKING

experts commissioned by EMB as the EIA Review Committee for PEIS/EIS-based applications, or DENR/EMB internal specialists, the Technical Committee, for IEE-based applications. EMB evaluates the EIARC recommendations and the public’s inputs during public consultations/hearings in the process of recommending a decision on the application. The EIARC Chair signs EIARC recommendations including issues outside the mandate of the EMB. The entire EIA review and evaluation process is summarized in the Review Process Report (RPR) of the EMB, which includes a draft decision document.Decision Making involves evaluation of EIA recommendations and the draft decision document, resulting to the issuance of an ECC, CNC or Denial Letter. When approved, a covered project is issued its certificate of Environmental Compliance Commitment (ECC) while an application of a non-covered project is issued a Certificate of Non-Coverage (CNC). Endorsing and deciding authorities are designated by AO 42, and further detailed in this Manual for every report type.Moreover, the Proponent signs a sworn statement of full responsibility on implementation of its commitments prior to the release of the ECC. The ECC is then transmitted to concerned LGUs and other GAs for integration into their decision-making process. The regulated part of EIA Review is limited to the processes within EMB control. The timelines for the issuance of decision documents provided for in AO 42 and DAO 2003-30 are applicable only from the time

MONITORING.6.0 VALIDATION, and

EVALUATION/AUDIT

the EIA Report is accepted for substantive review to the time a decision is issued on the application.Monitoring, Validation and Evaluation/Audit stage assesses performance of the Proponent against the ECC and its commitments in the Environmental Management and Monitoring Plans to ensure actual impacts of the project are adequately prevented or mitigated.

The signing of the Statement of Accountability takes place at the Decision-Making Stage. After a favorable review of its ECC application, the project proponent, through its authorized representative, is made to sign a sworn statement of full responsibility on the implementation of its commitments prior to the official release of the ECC.

The definition of the ECC in the Revised Manual highlights the importance of the signing of the Statement of Accountability:chanroblesvirtuallawlibrary

Environmental Compliance Certificate (ECC) - a certificate of Environmental Compliance Commitment to which the Proponent conforms with, after DENR-EMB explains the ECC conditions, by signing the sworn undertaking of full responsibility over implementation of specified measures which are necessary to comply with existing environmental regulations or to operate within best environmental practices that are not currently covered by existing laws. It is a document issued by the DENR/EMB after a positive review of an ECC application, certifying that the Proponent has complied with all the requirements of the EIS System and has committed to implement its approved Environmental Management Plan. The ECC also provides guidance to other agencies and to LGUs on EIA findings and recommendations, which need to be considered in their respective decision-making process.157 (Emphasis supplied)

As can be seen, the signing of the Statement of Accountability is an integral and significant component of the EIA process and the ECC itself. The evident intention is to bind the project proponent to the ECC conditions, which will ensure that the project will not cause significant negative environmental impacts by the “implementation of specified measures which are necessary to comply with existing environmental regulations or to operate within best environmental practices that are not currently covered by existing laws.” Indeed, the EIA process would be a meaningless exercise if the project proponent shall not be strictly bound to faithfully comply with the conditions necessary to adequately protect the right of the people to a healthful and balanced ecology.

Contrary to RP Energy’s position, we, thus, find that the signature of the project proponent’s representative in the Statement of Accountability is necessary for the validity of the ECC. It is not,

as RP Energy would have it, a mere formality and its absence a mere formal defect.

The question then is, was the absence of the signature of Mr. Aboitiz, as representative of RP Energy, in the Statement of Accountability sufficient ground to invalidate the ECC?

Viewed within the particular circumstances of this case, we answer in the negative.

While it is clear that the signing of the Statement of Accountability is necessary for the validity of the ECC, we cannot close our eyes to the particular circumstances of this case. So often have we ruled that this Court is not merely a court of law but a court of justice. We find that there are several circumstances present in this case which militate against the invalidation of the ECC on this ground.

We explain.

First, the reason for the lack of signature was not adequately taken into consideration by the appellate court. To reiterate, the matter surfaced during the hearing of this case on clarificatory questions by the appellate court, viz:chanroblesvirtuallawlibrary

J. LEAGOGO:Please tell the Court why this was not signed by Mr. Luis Miguel Aboitiz, the Statement of Accountability?

Because the Statement of Accountability says, “Mr. Luis Miguel Aboitiz, Director, representing Redondo Peninsula Energy with office address located at 110 Legaspi Street, Legaspi Village, Makati City, takes full responsibility in complying with all conditions in this Environmental Compliance Certificate [ECC][.]” Will you tell this Court why this was not signed?

MS. MERCADO:It was signed, Your Honor, but this copy wasn’t signed. My apologies, I was the one who provided this, I believe, to the lawyers. This copy was not signed because during…

J. LEAGOGO:But this is your exhibit, this is your Exhibit “18” and this is not signed. Do you agree with me that your Exhibit “18” is not signed by Mr. Aboitiz?

MS. MERCADO:That’s correct, Your Honor.158 (Emphasis supplied)

Due to the inadequacy of the transcript and the apparent lack of opportunity for the witness to explain the lack of signature, we find that the witness’ testimony does not, by itself, indicate that there was a deliberate or malicious intent not to sign the Statement of Accountability.

Second, as previously discussed, the concerned parties to this case, specifically, the DENR and RP Energy, were not properly apprised that the issue relative to the lack of signature would be decisive in the determination of the validity of the ECC. Consequently, the DENR and RP Energy cannot be faulted for not presenting proof during the course of the hearings to squarely tackle the

issue of lack of signature.

Third, after the appellate court ruled in its January 30, 2013 Decision that the lack of signature invalidated the ECC, RP Energy attached, to its Motion for Partial Reconsideration, a certified true copy of the ECC, issued by the DENR-EMB, which bore the signature of Mr. Aboitiz. The certified true copy of the ECC showed that the Statement of Accountability was signed by Mr. Aboitiz on December 24, 2008.159chanRoblesvirtualLawlibrary

The authenticity and veracity of this certified true copy of the ECC was not controverted by the Casiño Group in its comment on RP Energy’s motion for partial reconsideration before the appellate court nor in their petition before this Court. Thus, in accordance with the presumption of regularity in the performance of official duties, it remains uncontroverted that the ECC on file with the DENR contains the requisite signature of Mr. Aboitiz in the Statement of Accountability portion.

As previously noted, the DENR and RP Energy were not properly apprised that the issue relative to the lack of signature would be decisive in the determination of the validity of the ECC. As a result, we cannot fault RP Energy for submitting the certified true copy of the ECC only after it learned that the appellate court had invalidated the ECC on the ground of lack of signature in its January 30, 2013 Decision.

We note, however, that, as previously discussed, the certified true copy of the Statement of Accountability was signed by Mr. Aboitiz on December 24, 2008 or two days after the ECC’s official release on December 22, 2008. The afore-discussed rules under the Revised Manual, however, state that the proponent shall sign the sworn statement of full responsibility on implementation of its commitments prior to the release of the ECC. It would seem that the ECC was first issued, then it was signed by Mr. Aboitiz, and thereafter, returned to the DENR to serve as its file copy. Admittedly, there is lack of strict compliance with the rules although the signature is present. Be that as it may, we find nothing in the records to indicate that this was done with bad faith or inexcusable negligence because of the inadequacy of the evidence and arguments presented, relative to the issue of lack of signature, in view of the manner this issue arose in this case, as previously discussed. Absent such proof, we are not prepared to rule that the procedure adopted by the DENR was done with bad faith or inexcusable negligence but we remind the DENR to be more circumspect in following the rules it provided in the Revised Manual. Thus, we rule that the signature requirement was substantially complied with pro hac vice.

Fourth, we partly agree with the DENR that the subsequent letter-requests for amendments to the ECC, signed by Mr. Aboitiz on behalf of RP Energy, indicate its implied conformity to the ECC conditions. In practical terms, if future litigation should occur due to violations of the ECC conditions, RP Energy would be estopped from denying its consent and commitment to the ECC conditions even if there was no signature in the Statement of Accountability. However, we note that the Statement of Accountability precisely serves to obviate any doubt as to the consent and commitment of the project proponent to the ECC conditions. At any rate, the aforesaid letter-requests do additionally indicate RP Energy’s conformity to the ECC conditions and, thus, negate a pattern to maliciously evade accountability for the ECC conditions or to intentionally create a “loophole” in the ECC to be exploited in a possible future litigation over non-compliance with the ECC conditions.

In sum, we rule that the appellate court erred when it invalidated the ECC on the ground of lack of signature of Mr. Aboitiz in the ECC’s Statement of Accountability relative to the copy of the ECC submitted by RP Energy to the appellate court. While the signature is necessary for the validity of the ECC, the particular circumstances of this case show that the DENR and RP Energy were not properly apprised of the issue of lack of signature in order for them to present controverting evidence and arguments on this point, as the matter only developed during the course of the proceedings upon clarificatory questions from the appellate court. Consequently, RP Energy cannot be faulted for submitting the certified true copy of the ECC only after it learned that the ECC had been invalidated on the ground of lack of signature in the January 30, 2013 Decision of the appellate court.

The certified true copy of the ECC, bearing the signature of Mr. Aboitiz in the Statement of Accountability portion, was issued by the DENR-EMB and remains uncontroverted. It showed that the Statement of Accountability was signed by Mr. Aboitiz on December 24, 2008. Although the signing was done two days after the official release of the ECC on December 22, 2008, absent sufficient proof, we are not prepared to rule that the procedure adopted by the DENR was done with bad faith or inexcusable negligence. Thus, we rule that the signature requirement was substantially complied with pro hac vice.cralawred

III.

Whether the first and second amendments to the ECC are invalid for failure to undergo a new environmental impact assessment (EIA) because of the utilization of inappropriate EIA documents.

Upholding the arguments of the Casiño Group, the appellate court ruled that the first and second amendments to the ECC were invalid because the ECC contained an express restriction that any expansion of the project beyond the project description shall be the subject of a new EIA. It found that both amendments failed to comply with the appropriate EIA documentary requirements under DAO 2003-30 and the Revised Manual. In particular, it found that the Environmental Performance Report and Management Plan (EPRMP) and Project Description Report (PDR), which RP Energy submitted to the DENR, relative to the application for the first and second amendments, respectively, were not the proper EIA document type. Hence, the appellate court ruled that the aforesaid amendments were invalid.

Preliminarily, we must state that executive actions carry presumptive validity so that the burden of proof is on the Casiño Group to show that the procedure adopted by the DENR in granting the amendments to the ECC were done with grave abuse of discretion. More so here because the administration of the EIA process involves special technical skill or knowledge which the law has specifically vested in the DENR.

After our own examination of DAO 2003-30 and the Revised Manual as well as the voluminous EIA documents of RP Energy appearing in the records of this case, we find that the appellate court made an erroneous interpretation and application of the pertinent rules.

We explain.

As a backgrounder, PD 1151 set the Philippine Environment Policy. Notably, this law recognized the right of the people to a healthful environment.160 Pursuant thereto, in every action, project or undertaking, which significantly affects the quality of the environment, all agencies and instrumentalities of the national government, including government-owned or -controlled corporations, as well as private corporations, firms, and entities were required to prepare, file and include a statement (i.e.,Environmental Impact Statement or EIS) containing:

(a) the environmental impact of the proposed action, project or undertaking;

(b) any adverse environmental effect which cannot be avoided should the proposal be implemented;

(c) alternative to the proposed action;

(d) a determination that the short-term uses of the resources of the environment are consistent with the maintenance and enhancement of the long-term productivity of the same; and

(e) whenever a proposal involves the use of depletable or non-renewable resources, a finding must be made that such use and commitment are warranted.161chanRoblesvirtualLawlibrary

To further strengthen and develop the EIS, PD 1586 was promulgated, which established the Philippine Environmental Impact Statement System (PEISS). The PEISS is “a systems-oriented and integrated approach to the EIS system to ensure a rational balance between socio-economic development and environmental protection for the benefit of present and future generations.”162 The ECC requirement is mandated under Section 4 thereof:chanroblesvirtuallawlibrary

SECTION 4. Presidential Proclamation of Environmentally Critical Areas and Projects. The President of the Philippines may, on his own initiative or upon recommendation of the National Environmental Protection Council, by proclamation declare certain projects, undertakings or areas in the country as environmentally critical. No person, partnership or corporation shall undertake or operate any such declared environmentally critical project or area without first securing an Environmental Compliance Certificate issued by the President or his duly authorized representative. x x x (Emphasis supplied)

The PEISS consists of the Environmental Impact Assessment (EIA) process, which is mandatory for private or public projects that may significantly affect the quality of the environment. It involves evaluating and predicting the likely impacts of the project on the environment, designing appropriate preventive, mitigating and enhancement measures addressing these consequences to protect the environment and the community’s welfare.163chanRoblesvirtualLawlibrary

PD 1586 was implemented by DAO 2003-30 which, in turn, set up a system or procedure to determine when a project is required to secure an ECC and when it is not. When an ECC is not required, the project proponent procures a Certificate of Non-Coverage (CNC).164 As part of the EIA process, the project proponent is required to submit certain studies or reports (i.e., EIA document type) to the DENR-EMB, which will be used in the review process in assessing the environmental impact of the project and the adequacy of the corresponding environmental management plan or

program to address such environmental impact. This will then be part of the bases to grant or deny the application for an ECC or CNC, as the case may be.

Table 1-4 of the Revised Manual summarizes the required EIA document type for each project category. It classifies a project as belonging to group I, II, III, IV or V, where:

I- Environmentally Critical Projects (ECPs) in either Environmentally Critical Area (ECA) or Non-Environmentally Critical Area (NECA),

II- Non-Environmentally Critical Projects (NECPs) in ECA,

III- NECPs in NECA,

IV- Co-located Projects, and

V- Unclassified Projects.

The aforesaid table then further classifies a project, as pertinent to this case, as belonging to category A, B or C, where:ChanRoblesVirtualawlibraryA- new;

B- existing projects for modification or re-start up; and

C- operating projects without an ECC.

Finally, the aforesaid table considers whether the project is single or co-located.165 After which, it states the appropriate EIA document type needed for the application for an ECC or CNC, as the case may be.

The appropriate EIA document type vis-à-vis a particular project depends on the potential significant environmental impact of the project. At the highest level would be an ECP, such as the subject project. The hierarchy of EIA document type, based on comprehensiveness and detail of the study or report contained therein, insofar as single projects are concerned, is as follows:

1. Environmental Impact Statement166 (EIS),

2. Initial Environmental Examination167 (IEE) Report,

3. Initial Environmental Examination168 (IEE) Checklist Report,

4. Environmental Performance Report and Management Plan169 (EPRMP), and

5. Project Description170 (PD) or Project Description Report (PDR).

Thus, in the course of RP Energy’s application for an ECC, it was required by the DENR-EMB to submit an EIS because the subject project is: an ECP, new and a single project.

The present controversy, however, revolves around, not an application for an ECC, but amendments thereto.

RP Energy requested the subject first amendment to its ECC due to its desire to modify the project design through the inclusion of a barge wharf, seawater intake breakwater, subsea discharge pipeline, raw water collection system, drainage channel improvement and a 230-kV double transmission line. The DENR-EMB determined that this was a major amendment and, thus, required RP Energy to submit an EPRMP.

The Casiño Group argued, and the appellate court sustained, that an EPRMP is not the correct EIA document type based on the definition of an EPRMP in DAO 2003-30 and the Revised Manual.

In DAO 2003-30, an EPRMP is defined as:chanroblesvirtuallawlibrary

Environmental Performance Report and Management Plan (EPRMP) — documentation of the actual cumulative environmental impacts and effectiveness of current measures for single projects that are already operating but without ECC's, i.e., Category A-3. For Category B-3 projects, a checklist form of the EPRMP would suffice;171 (Emphasis supplied)

Further, the table in Section 5 of DAO 2003-30 states that an EPRMP is required for “A-2: Existing and to be expanded (including undertakings that have stopped operations for more than 5 years and plan to re-start with or without expansion) and A-3: Operating without ECC.”

On the other hand, the Revised Manual delineates when an EPRMP is the proper EIA document type, thus:chanroblesvirtuallawlibrary

For operating projects with previous ECCs but planning or applying for clearance to modify/expand or re-start operations, or for projects operating without an ECCbut applying to secure one to comply with PD 1586 regulations, the appropriate document is not an EIS but an EIA Report incorporating the project’s environmental performance and its current Environmental Management Plan. This report is x x x an x x xEnvironmental Performance Report and Management Plan (EPRMP) for single project applications x x x172 (Emphasis supplied)

In its “Glossary,” the Revised Manual defines an EPRMP as:chanroblesvirtuallawlibrary

Environmental Performance Report and Management Plan (EPRMP) - documentation of the actual cumulative environmental impacts and effectiveness of current measures for single projects that are already operating but without ECCs.173 (Emphasis supplied)

Finally, Table 1-4, in the Revised Manual, states that an EPRMP is required for “Item I-B: Existing Projects for Modification or Re-start up (subject to conditions in Annex 2-1c) and I-C: Operating without ECC.”

From these definitions and tables, an EPRMP is, thus, the required EIA document type for an ECP-single project which is:chanroblesvirtuallawlibrary

1. Existing and to be expanded (including undertakings that have stopped operations for more than 5 years and plan to re-start with or without expansion);

2. Operating but without ECCs;

3. Operating projects with previous ECCs but planning or applying for clearance to modify/expand or re-start operations; and

4. Existing projects for modification or re-start up.

It may be observed that, based from the above, DAO 2003-30 and the Revised Manual appear to use the terms “operating” and “existing” interchangeably. In the case at bar, the subject project has not yet been constructed although there have been horizontal clearing operations at the project site.

On its face, therefore, the theory of the Casiño Group, as sustained by the appellate court — that the EPRMP is not the appropriate EIA document type— seems plausible because the subject project is not: (1) operating/existing with a previous ECC but planning or applying for modification or expansion, or (2) operating but without an ECC. Instead, the subject project is an unimplemented or a non-implemented, hence, non-operating project with a previous ECC but planning for modification or expansion.

The error in the above theory lies in the failure to consider or trace the applicable provisions of DAO 2003-30 and the Revised Manual on amendments to an ECC.

The proper starting point in determining the validity of the subject first amendment, specifically, the propriety of the EIA document type (i.e., EPRMP) which RP Energy submitted in relation to its application for the aforesaid amendment, must of necessity be the rules on amendments to an ECC.174 This is principally found in Section 8.3, Article II of DAO 2003-03, viz:chanroblesvirtuallawlibrary

8.3 Amending an ECC

Requirements for processing ECC amendments shall depend on the nature of the request but shall be focused on the information necessary to assess the environmental impact of such changes.

8.3.1. Requests for minor changes to ECCs such as extension of deadlines for submission of post-ECC requirements shall be decided upon by the endorsing authority.

8.3.2. Requests for major changes to ECCs shall be decided upon by the deciding authority.

8.3.3. For ECCs issued pursuant to an IEE or IEE checklist, the processing of the amendment application shall not exceed thirty (30) working days; and for ECCs issued pursuant to an EIS, the processing shall not exceed sixty (60) working days. Provisions on automatic approval related to prescribed timeframes under AO 42 shall also apply for the processing of applications to amend ECCs. (Emphasis supplied)

Implementing the afore-quoted section, the Revised Manual pertinently states in Section 2.2, paragraph 16:chanroblesvirtuallawlibrary

16) Application Process for ECC Amendments

Figure 2-4 presents how Proponents may request for minor or major changes in their ECCs. Annex 2-1c provides a decision chart for the determination of requirements for project modifications, particularly for delineating which application scenarios will require EPRMP (which will be subject to Figure 2-1 process) or other support documentations (which will be subject to Figure 2-4 process).

Figure 2-4, in turn, provides:chanroblesvirtuallawlibrary

Figure 2-4. Flowchart on Request for ECC Amendments175chanRoblesvirtualLawlibrary

Scenario 1: Request for Minor Amendments

1. Typographical error2. Extension of deadlines for

submission of post-ECC requirement/s

3. Extension of ECC validity

4. Change in company name/ownership

5. Decrease in land/project area or production capacity

6. Other amendments deemed “minor” at the discretion of the EMB CO/RO Director

1 [Start]

Within three (3) years from ECC issuance (for projects not started)OR at any time during project implementation, the Proponent prepares and submits to the

Scenario 2: Request for Major Amendments

1. Expansion of project area w/in catchment described in EIA

2. Increase in production capacity or auxiliary component of the original project

3. Change/s in process flow or technology

4. Addition of new product

5. Integration of ECCs for similar or dissimilar but contiguous projects (NOTE: ITEM#5 IS PROPONENT’S OPTION, NOT EMB’S)

6. Revision/Reformatting of ECC Conditions

7. Other amendments deemed “major” at the discretion of the EMB CO/RO Director

1[Start]

Within three (3) years from ECC issuance (for projects not started) OR at any time during project implementation, the Proponent prepares and submits to the ECC-endorsing DENR-EMB office aLETTER-

ECC-endorsing DENR-EMB office aLETTER-REQUEST for ECC amendment, including data/information, reports or documents to substantiate the requested revisions.

?

2

The ECC-endorsing EMB office assigns a Case Handler to evaluate the request

3 ?

ECC-endorsing Authority decides on the Letter-Request, based on CH recommendation Maximum Processing Time to Issuance of

DecisionEMB CO 7 workdaysEMB RO 7 workdays

REQUEST for ECC amendments, including data/information, reports or documents to substantiate the requested revisions.2For projects that have started implementation, EMB evaluates request based on Annex 2-1c for various scenarios of project modification. Documentary requirements may range from a Letter-Request to an EPRMP to the EMB CO/RO while for those with Programmatic ECC, a PEPRMP may need to be submitted to the EMB CO to support the request. It is important to note that for operating projects, the appropriate document is not an EIS but an EIA Report incorporating the project’s historical environmental performance and its current EMP, subject to specific documentary requirements detailed in Annex 2-1c for every modification scenario.

3 ?

For EPRMP/PEPRMP-based requests, EMB forms a Technical/Review Committee to evaluate the request. For other requests, a Case Handler may solely undertake the evaluation. EMB CO and RO will process P/EPRMP for PECC/ECC under Groups I and II respectively. (Go to Figure 2-1)

4 ?

ECC-endorsing/issuing Authority (per Table 1-4) decides on Letter Requests/EPRMP/PEPRMP/Other documents based on EMB CH and/or Tech/Review Committee recommendations.

Max Processing Time to Issuance of DecisionCO PEPRMP CO EPRMP RO PEPRMP RO EPRMP

120 workdays

90 workdays 60 workdays 30 workdays

Other document applications: max 30 workdays (EMB CO and RO)

Noteworthy in the above, which is pertinent to the issue at hand, is that the amendment process squarely applies to projects not started, such as the subject project, based on the phrase “[w]ithin three (3) years from ECC issuance (for projects not started) x x x”.

Annex 2-1c, in turn, provides a “Decision Chart for Determination of Requirements For Project Modification.” We reproduce below the first three columns of Annex 2-1c, as are pertinent to the issue at hand:ChanRoblesVirtualawlibrary

ANNEX 2-1c

DECISION CHART FOR DETERMINATION OF REQUIREMENTSFOR PROJECT MODIFICATION178chanRoblesvirtualLawlibrary

Proposed Modifications to the Current Project

Analysis of Proposed Modifications

Resulting Decision Document/Type of EIA

Report Required

Operational projects, or those which have stopped

for ? 5 years and plan to re-start

For Groups I and II EIS-based Projects with an

ECC applying for modification

1. Expansion of land/project area w/in catchment or environment described in the original EIA Report

Since the modification will be in an area already described and evaluated in the original EIA Report, incremental impacts from additional land development will have been addressed in the approved EMP

ECC Amendment /Letter Request with brief description of activities in the additional area

2. Expansion of land/project area OUTSIDE catchment or environment described in the original EIA Report

It is assumed the modification proposal may have significant potential impacts due to absence of prior assessment as to how the project may affect the proposed expansion area

ECC Amendment /Environmental Performance Report and Management Plan (EPRMP)

3. Increase in capacity or auxiliary component of the original project which will either not entail exceedance of PDR (non-covered project) thresholds orEMP & ERA

Non-exceedance of PDR (non covered project) threshold is assumed that impacts are not significant;

Modification scenario and decision process are applicable to both non-

ECC Amendment /Letter Request with brief description of additional capacity or component

can still address impacts & risks arising from modification

implemented and operating projects issued ECCs

4. Increase in capacity or auxiliary component of the original project which will either exceed PDR (non-covered project) thresholds, or EMP & ERA cannot address impacts and risks arising from modification

Exceedance of PDR (non-covered) threshold is assumed that impacts may be potentially significant, particularly if modification will result to a next higher level of threshold range

Modification scenario and decision process are applicable to both non-implemented and operating projects with or without issued ECCs

ECC Amendment /Environmental Performance Report and Management Plan (EPRMP)

5. Change/s in process flow or technology

EMP and ERA can still address impacts & risks arising from modification

ECC Amendment /Letter Request with brief process description

EMP and ERA cannot address impacts & risks arising from modification

ECC Amendment /Environmental Performance Report and Management Plan (EPRMP)

6. Additional component or products which will enhance the environment (e.g. due to compliance to new stringent requirements) or lessen impacts on the environment (e.g. thru utilization of waste into new products)

Activity is directly lessening or mitigating the project’s impacts on the environment. However, to ensure there is no component in the modification which fall under covered project types, EMB will require disclosure of the description of the components and process with which the new product will be developed.

ECC Amendment /Letter Request with consolidated Project Description Report of new project component and integrated EMP

7. Downgrade project size or area or other units of measure of thresholds limits

No incremental adverse impacts; may result to lower project threshold or may result to non-coverage

From ECC Amendment to Relief of ECC Commitments (Conversion to CNC): /Letter-Request only

8. Conversion to new project Considered new application New ECC

type (e.g. bunker-fired plant to gas-fired)

but with lesser data requirements since most facilities are established; environmental performance in the past will serve as baseline; However, for operating projects, there may be need to request for Relief from ECC Commitment prior to applying for new project type to ensure no balance of environmental accountabilities from the current project

/EIS

9. Integration of ECCs for similar or contiguous projects

(Note: Integration of ECCs is at the option of the Proponent to request/apply)

No physical change in project size/area; no change in process/technology but improved management of continuous projects by having an integrated planning document in the form or an integrated ECC (ECC conditions will be harmonized across projects; conditions relating to requirements within other agencies’ mandates will be deleted)

ECC Amendment /Letter Request with consolidated Project Description Report and integrated EMP

10. Revision/

Reformatting of ECC Conditions

No physical change on the project but ECC conditions relating to requirements within other agencies’ mandates will be deleted

ECC Amendment /Letter Request only

We now apply these provisions to the case at bar.

To reiterate, the first amendment to the ECC was requested by RP Energy due to its planned change of project design involving the inclusion of a barge wharf, seawater intake breakwater, subsea discharge pipeline, raw water collection system, drainage channel improvement and a 230-kV double transmission line. The DENR-EMB determined179 that the proposed modifications involved a major amendment because it will result in an increase in capacity or auxiliary component, as per Scenario 2, Item #2 of Figure 2-4:

Scenario 2: Request for MajorAmendments

1. Expansion of project area w/in catchment described in EIA2. Increase in production capacity or auxiliary cmponent of the original project 180

3. Change/s in process flow or technology

4. Addition of new product

5. Integration of ECCs for similar or dissimilar but contiguous projects (NOTE: ITEM#5 IS PROPONENT’S OPTION, NOT EMB’S)

6. Revision/Reformatting of ECC Conditions

7. Other amendments deemed “major at the discretion of the EMB CO/RO Director

The Casiño Group does not controvert this finding by the DENR-EMB and we find the same reasonably supported by the evidence on record considering that, among others, the construction of a 230-kV double transmission line would result in major activities outside the project site which could have significant environmental impacts.

Consequently, the amendment was considered as falling under Item#4 of Annex 2-1c, and, thus, the appropriate EIA document type is an EPRMP, viz:chanroblesvirtuallawlibrary

4. Increase in capacity or auxiliary component of the original project which will either exceed PDR (non-covered project) thresholds, or EMP & ERA cannot address impacts and risks arising from modification

Exceedance of PDR (non-covered) thresholds is assumed that impacts may be potentially significant, particularly if modification will result to a next higher level of threshold range

Modification scenario and decision process are applicable to both non-implemented and operating projects with or without issued ECCs

ECC Amendment / Environmental Performance Report and Management Plan (EPRMP)182

Note that the Chart expressly states that, “[m]odification scenario and decision process are applicable to both non-implemented and operating projects with or without ECCs.”183 To recall, the subject project has not been constructed and is not yet operational, although horizontal clearing activities have already been undertaken at the project site. Thus, the subject project may be reasonably classified as a non-implemented project with an issued ECC, which falls under Item#4 and, hence, an EPRMP is the appropriate EIA document type.

This lengthy explanation brings us to a simple conclusion. The definitions in DAO 2003-30 and the Revised Manual, stating that the EPRMP is applicable to (1) operating/existing projects with a

previous ECC but planning or applying for modification or expansion, or (2) operating projects but without an ECC, were not an exclusive list.

The afore-discussed provisions of Figure 2-4, in relation to Annex 2-1c, plainly show that the EPRMP can, likewise, be used as an appropriate EIA document type for a single, non-implemented project applying for a major amendment to its ECC, involving an increase in capacity or auxiliary component, which will exceed PDR (non-covered project) thresholds, or result in the inability of the EMP and ERA to address the impacts and risks arising from the modification, such as the subject project.

That the proposed modifications in the subject project fall under this class or type of amendment was a determination made by the DENR-EMB and, absent a showing of grave abuse of discretion, the DENR-EMB’s findings are entitled to great respect because it is the administrative agency with the special competence or expertise to administer or implement the EIS System.

The apparent confusion of the Casiño Group and the appellate court is understandable. They had approached the issue with a legal training mindset or background. As a general proposition, the definition of terms in a statute or rule is controlling as to its nature and scope within the context of legal or judicial proceedings. Thus, since the procedure adopted by the DENR-EMB seemed to contradict or go beyond the definition of terms in the relevant issuances, the Casiño Group and the appellate court concluded that the procedure was infirm.

However, a holistic reading of DAO 2003-30 and the Revised Manual will show that such a legalistic approach in its interpretation and application is unwarranted. This is primarily because the EIA process is a system, not a set of rigid rules and definitions. In the EIA process, there is much room for flexibility in the determination and use of the appropriate EIA document type as the foregoing discussion has shown.184 To our mind, what should be controlling is the guiding principle set in DAO 2003-30 in the evaluation of applications for amendments to ECCs, as stated in Section 8.3 thereof: “[r]equirements for processing ECC amendments shall depend on the nature of the request but shall be focused on theinformation necessary to assess the environmental impact of such changes.”185chanRoblesvirtualLawlibrary

This brings us to the next logical question, did the EPRMP provide the necessary information in order for the DENR-EMB to assess the environmental impact of RP Energy’s request relative to the first amendment?

We answer in the affirmative.

In the first place, the Casiño Group never attempted to prove that the subject EPRMP, submitted by RP Energy to the DENR-EMB, was insufficient for purposes of evaluating the environmental impact of the proposed modifications to the original project design. There is no claim that the data submitted were falsified or misrepresented. Neither was there an attempt to subpoena the review process documents of the DENR to establish that the grant of the amendment to the ECC was done with grave abuse of discretion or to the grave prejudice of the right to a healthful environment of those who will be affected by the project. Instead, the Casiño Group relied solely on the definition of terms in DAO 2003-30 and the Revised Manual, which approach, as previously discussed, was erroneous.

At any rate, we have examined the contents of the voluminous EPRMP submitted by RP Energy and we find therein substantial sections explaining the proposed changes as well as the adjustments that will be made in the environmental management plan in order to address the potential environmental impacts of the proposed modifications to the original project design. These are summarized in the “Project Fact Sheet”186 of the EPRMP and extensively discussed in Section 4187 thereof. Absent any claim or proof to the contrary, we have no bases to conclude that these data were insufficient to assess the environmental impact of the proposed modifications. In accordance with the presumption of regularity in the performance of official duties, the DENR-EMB must be deemed to have adequately assessed the environmental impact of the proposed changes, before granting the request under the first amendment to the subject ECC.

In sum, the Revised Manual permits the use of an EPRMP, as the appropriate EIA document type, for major amendments to an ECC, even for an unimplemented or non-implemented project with a previous ECC, such as the subject project. Consequently, we find that the procedure adopted by the DENR, in requiring RP Energy to submit an EPRMP in order to undertake the environmental impact assessment of the planned modifications to the original project design, relative to the first amendment to the ECC, suffers from no infirmity.

We apply the same framework of analysis in determining the propriety of a PDR, as the appropriate EIA document type, relative to the second amendment to the subject ECC.

Again, the Casiño Group, as sustained by the appellate court, relied on the definitions of a PDR in DAO 2003-30 and the Revised Manual:chanroblesvirtuallawlibrary

Project Description (PD) — document, which may also be a chapter in an EIS, that describes the nature, configuration, use of raw materials and natural resources, production system, waste or pollution generation and control and the activities of a proposed project. It includes a description of the use of human resources as well as activity timelines, during the pre-construction, construction, operation and abandonment phases. It is to be used for reviewing co-located and single projects under Category C, as well as for Category D projects.188chanRoblesvirtualLawlibrary

x x x x

a) For new projects: x x x For non-covered projects in Groups II and III, a x x x Project Description Report (PDR) is the appropriate document to secure a decision from DENR/EMB. The PDR is a “must” requirement for environmental enhancement and mitigation projects in both ECAs (Group II) and NECAs (Group III) to allow EMB to confirm the benign nature of proposed operations for eventual issuance of a Certificate of Non-Coverage (CNC). All other Group III (non-covered) projects do not need to submit PDRs – application is at the option of the Proponent should it need a CNC for its own purposes, e.g. financing pre-requisite. For Group V projects, a PDR is required to ensure new processes/technologies or any new unlisted project does not pose harm to the environment. The Group V PDR is a basis for either issuance of a CNC or classification of the project into its proper project group.

b) For operating projects with previous ECCs but planning or applying for clearance to modify/expand or re-start operations, or for projects operating without an ECC but applying to

secure one to comply with PD 1586 regulations, the appropriate document is not an EIS but an EIA Report incorporating the project’s environmental performance and its current Environmental Management Plan. This report is either an (6) Environmental Performance Report and Management Plan (EPRMP) for single project applications or a(7) Programmatic EPRMP (PEPRMP) for co-located project applications. However, for small project modifications, an updating of the project description or the Environmental Management Plan with the use of the proponent’s historical performance and monitoring records may suffice. 189chanRoblesvirtualLawlibrary

x x x x

Project Description (PD) - document, which may also be a chapter in an EIS, that describes the nature, configuration, use of raw materials and natural resources, production system, waste or pollution generation and control and the activities of a proposed project. It includes a description of the use of human resources as well as activity timelines, during the pre-construction, construction, operation and abandonment phases.190

We will no longer delve into the details of these definitions. Suffice it to state, similar to the discussion on the EPRMP, that if we go by the strict limits of these definitions, the PDR relative to the subject second amendment would not fall squarely under any of the above.

However, again, these are not the only provisions governing the PDR in the Revised Manual.

After the favorable grant of the first amendment, RP Energy applied for another amendment to its ECC, this time in consideration of its plan to change the configuration of the project from 2 x 150 MW to 1 x 300 MW. In practical terms, this meant that the subject project will still produce 300 MW of electricity but will now make use of only one boiler (instead of two) to achieve greater efficiency in the operations of the plant. The DENR-EMB determined191 this amendment to be minor, under Scenario 1, Item#6 of Figure 2-4:

Scenario 1: Request for MinorAmendments

1. Typographical error2. Extension of deadlines for submission of post-ECC requirement/s

3. Extension of ECC validity

4. Change in company name/ownership

5. Decrease in land/project area or production capacity

6. Other amendments deemed “minor” at the discretion of the EMB CO/RO Director 192

— because (1) there is no increase in capacity; (2) it does not constitute any significant impact; and (3) its EMP and ERA as specified in the submitted EPRMP remain the same.193 Relative to Annex 2-1c, the requested amendment was, in turn, determined to fall under Item#3:chanroblesvirtuallawlibrary

3. Increase in capacity or auxiliary component of the original project which will either not entail exceedance of PDR (non-covered project) thresholds or EMP & ERA can still address impacts & risks arising from modification

Non-exceedance of PDR (non covered project) thresholds is assumed that impacts are not significant;

Modification scenario and decision process are applicable to both non-implemented and operating projects issued ECCs

ECC Amendment / Letter Request with brief description of additional capacity or component

We make the same observation, as before, that the above applies to an unimplemented or non-implemented project with a previous ECC, like the subject project. Although it may be noted that the proposed modification does not squarely fall under Item#3, considering that, as previously mentioned, there will be no increase in capacity relative to the second amendment, still, we find nothing objectionable to this classification by the DENR-EMB, for it seems plain enough that this classification was used because the modification was deemed too minor to require a detailed project study like an EIS or EPRMP. Since this is the classification most relevant and closely related to the intended amendment, following the basic precept that the greater includes the lesser, the DENR-EMB reasonably exercised its discretion in merely requiring a letter request with a brief description of the modification.

As earlier noted, the PDR is the EIA document type with the least detail, and, thus, applicable to such minor modifications. Thus, the DENR-EMB cannot be faulted for requiring RP Energy to submit a PDR relative to its application for the second amendment. Consequently, as before, we find that the Revised Manual supports the procedure adopted by the DENR-EMB in requiring RP Energy to submit a PDR in order to assess the environmental impact of the planned modifications relative to the second amendment.

In their Petition before this Court, the Casiño Group boldly asserts that “[t]here is nothing in the Project Description Report that provides an environmental impact assessment of the effects of constructing and operating a single 300-MW generating unit.”196 However, to our dismay, as in their other serious allegations in their Petition for Writ of kalikasan, the same is, likewise, baseless. Apart from such a sweeping claim, the Casiño Group has provided no evidence or argument to back up the same.

An examination of the PDR readily reveals that it contains the details of the proposed modifications197and an express finding that no significant environmental impact will be generated by such modifications, as in fact it is expected that the operation of the power plant will become more efficient as a result of the change from 2 x 150 MW to 1 x 300 MW configuration.198 Consequently, the PDR merely reiterates the same mitigating measures that will presumably address the minor modifications to the project design. Again, no evidence was presented to show substantial errors or misrepresentations in these data or their inadequacy for providing the bases for the DENR-EMB to assess the environmental impact of the proposed modifications under the second amendment.

In fine, absent proof to the contrary, bearing in mind that allegations are not proof, we sustain the procedure adopted by the DENR-EMB in requiring RP Energy to submit a PDR and, on the basis thereof, approving the request for the second amendment.

In another vein, we note that the appellate court proceeded from the erroneous premise that the EIA is a document, when it repeatedly stated that the amendments to the ECC require a new EIA, and not merely an EPRMP or PDR. The appellate court relied on the proviso in the ECC, which stated that “[a]ny expansion of the project beyond the project description or any change in the activity or transfer of location shall be subject to a new Environmental Impact Assessment.”199chanRoblesvirtualLawlibrary

However, as correctly pointed out by the DENR and RP Energy, the EIA is not a document but a process:chanroblesvirtuallawlibrary

Environmental Impact Assessment (EIA) — process that involves evaluating and predicting the likely impacts of a project (including cumulative impacts) on the environment during construction, commissioning, operation and abandonment. It also includes designing appropriate preventive, mitigating and enhancement measures addressing these consequences to protect the environment and the community's welfare. The process is undertaken by, among others, the project proponent and/or EIA Consultant, EMB, a Review Committee, affected communities and other stakeholders.200(Emphasis supplied)

When the proviso in the ECC, therefore, states that a new EIA shall be conducted, this simply means that the project proponent shall be required to submit such study or report, as warranted by the DENR Rules and circumstances, which will sufficiently aid the DENR in making a new EIA and, thus, determine whether to grant the proposed amendment (or project modification). As we have seen, consistent with DAO 2003-30 and the Revised Manual, the DENR required RP Energy to submit an EPRMP and a PDR relative to the latter’s request involving the first and second amendments, respectively, which led to the new EIA of the project in compliance with the proviso of the ECC.

Verily, the various EIA documents, such as the EPRMP and PDR, are mere tools used by the DENR to assess the environmental impact of a particular project. These documents are flexibly used by the DENR, as the circumstances warrant, in order to adequately assess the impacts of a new project or modifications thereto. Being the administrative agency entrusted with the determination of which EIA document type applies to a particular application for an amendment to an ECC, falling as it does within its particular technical expertise, we must accord great respect to its determination, absent a showing of grave abuse of discretion or patent illegality.

In sum, we find that the appellate court erred when it ruled that the first and second amendments to the subject ECC were invalid for failure to comply with a new EIA and for violating DAO 2003-30 and the Revised Manual. The appellate court failed to properly consider the applicable provisions in DAO 2003-30 and the Revised Manual on amendments to ECCs. Our examination of the provisions on amendments to ECCs, as well as the EPRMP and PDR themselves, shows that the DENR reasonably exercised its discretion in requiring an EPRMP and a PDR for the first and second amendments, respectively. Through these documents, which the DENR reviewed, a new EIA was

conducted relative to the proposed project modifications. Hence, absent sufficient showing of grave abuse of discretion or patent illegality, relative to both the procedure and substance of the amendment process, we uphold the validity of these amendments.cralawred

IV.

Whether the Certificate of Non-Overlap (CNO), under Section 59 of the IPRA Law, is a precondition to the issuance of an ECC and the lack of its prior issuance rendered the ECC invalid.

The appellate court ruled that the ECC issued in favor of RP Energy on December 22, 2008 is invalid because the CNO covering the subject project was issued only on October 31, 2012 or almost four years from the time of issuance of the ECC. Thus, the ECC was issued in violation of Section 59 of the IPRA Law and its implementing rules which require that a CNO be obtained prior to the issuance of a government agency of, among others, a license or permit. In so ruling, the appellate court implicitly upheld the Casiño Group’s argument that the ECC is a form of government license or permit pursuant to Section 4 of PD 1586 which requires all entities to secure an ECC before (1) engaging in an environmentally critical project or (2) implementing a project within an environmentally critical area.

The DENR and RP Energy, however, argue that an ECC is not the license or permit contemplated under Section 59 of the IPRA Law and its implementing rules as may be deduced from the definition, nature and scope of an ECC under DAO 2003-03 and the Revised Manual. The DENR explains that the issuance of an ECC does not exempt the project proponent from securing other permits and clearances as required under existing laws, including the CNO, and that the final decision on whether a project will be implemented lies with the concerned local government unit/s or the lead government agency which has sectoral mandate to promote the government program where the project belongs.

We agree with the DENR and RP Energy.

Section 59, Chapter VIII of the IPRA Law provides:chanroblesvirtuallawlibrary

SEC. 59. Certification Precondition. All departments and other governmental agencies shall henceforth be strictly enjoined from issuing, renewing, or granting any concession, license or lease, or entering into any production-sharing agreement, without prior certification from the NCIP that the area affected does not overlap with any ancestral domain. Such certification shall only be issued after a field-based investigation is conducted by the Ancestral Domains Office of the area concerned: Provided, That no certification shall be issued by the NCIP without the free and prior informed and written consent of ICCs/IPs concerned: Provided, further, That no department, government agency or government-owned or -controlled corporation may issue new concession, license, lease, or production sharing agreement while there is a pending application for a CADT: Provided, finally, That the ICCs/IPs shall have the right to stop or suspend, in accordance with this Act, any project that has not satisfied the requirement of this consultation process. (Emphasis supplied)

While Section 9, Part II, Rule VIII of National Commission on Indigenous Peoples (NCIP) Administrative Order No. 01-98201 states:chanroblesvirtuallawlibrary

SECTION 9. Certification Precondition Prior to Issuance of any Permits or Licenses. —

a. Need for Certification. No department of government or other agencies shall issue, renew or grant any concession, license, lease, permit, or enter into any production sharing agreement without a prior certification from the NCIP that the area affected does not overlap any ancestral domain.

b. Procedure for Issuance of Certification by NCIP.

1) The certification, above mentioned, shall be issued by the Ancestral Domain Office, only after a field based investigation that such areas are not within any certified or claimed ancestral domains.

2) The certification shall be issued only upon the free, prior, informed and written consent of the ICCs/IPs who will be affected by the operation of such concessions, licenses or leases or production-sharing agreements. A written consent for the issuance of such certification shall be signed by at least a majority of the representatives of all the households comprising the concerned ICCs/IPs. (Emphasis supplied)

As may be deduced from its subtitle, Section 59 requires as a precondition, relative to the issuance of any concession, license, lease or agreement over natural resources, a certification issued by the NCIP that the area subject thereof does not lie within any ancestral domain.202 This is in keeping with the State policy to protect the rights of Indigenous Cultural Communities/Indigenous Peoples (ICCs/IPs) to their ancestral domains in order to ensure their economic, social and cultural well-being as well as to recognize the applicability of customary laws governing property rights or relations in determining the ownership and extent of such ancestral domain.203chanRoblesvirtualLawlibrary

The IPRA Law and its implementing rules do not define the terms “license” and “permit” so that resort to their plain or ordinary meaning in relation to the intendment of the law is appropriate.

A “license” has been defined as “a governmental permission to perform a particular act (such as getting married), conduct a particular business or occupation, operate machinery or vehicles after proving capacity and ability to do so safely, or use property for a certain purpose”204 while a “permit” has been defined as “a license or other document given by an authorized public official or agency (building inspector, department of motor vehicles) to allow a person or business to perform certain acts.”205chanRoblesvirtualLawlibrary

The evident intention of Section 59, in requiring the CNO prior to the issuance of a license or permit, is to prevent the implementation of a project that may impair the right of ICCs/IPs to their ancestral domains. The law seeks to ensure that a project will not overlap with any ancestral domain prior to its implementation and thereby pre-empt any potential encroachment of, and/or damage to the ancestral domains of ICCs/IPs without their prior and informed consent.

With these considerations in mind, we now look at the definition, nature and scope of an ECC in order to determine if it falls within the ambit of a “license” or “permit” to which the CNO requirement, under Section 59 of the IPRA Law and its implementing rules, finds application.

Section 4 of PD 1586 provides, in part:chanroblesvirtuallawlibrary

SECTION 4. Presidential Proclamation of Environmentally Critical Areas and Projects. — The President of the Philippines may, on his own initiative or upon recommendation of the National Environmental Protection Council, by proclamation declare certain projects, undertakings or areas in the country as environmentally critical. No person, partnership or corporation shall undertake or operate any such declared environmentally critical project or area without first securing an Environmental Compliance Certificate issued by the President or his duly authorized representative. For the proper management of said critical project or area, the President may by his proclamation reorganize such government offices, agencies, institutions, corporations or instrumentalities including the re-alignment of government personnel, and their specific functions and responsibilities. (Emphasis supplied)

While the above statutory provision reveals that the ECC is an indispensable requirement before (1) the conduct of an environmentally critical project or (2) the implementation of a project in an environmentally critical area, it does not follow that the ECC is the “license” or “permit” contemplated under Section 59 of the IPRA Law and its implementing rules.

Section 3(d), Article I of DAO 2003-03 defines an ECC in this wise:chanroblesvirtuallawlibrary

SECTION 3. Definition of Terms. —

For the purpose of this Order, the following definitions shall be applied:

x x x x

d. Environmental Compliance Certificate (ECC) — document issued by the DENR/EMB after a positive review of an ECC application, certifying that based on the representations of the proponent, the proposed project or undertaking will not cause significant negative environmental impact. The ECC also certifies that the proponent has complied with all the requirements of the EIS System and has committed to implement its approved Environmental Management Plan. The ECC contains specific measures and conditions that the project proponent has to undertake before and during the operation of a project, and in some cases, during the project's abandonment phase to mitigate identified environmental impacts.

In turn, Section 1.0, paragraphs 3 and 6 of the Revised Manual provide, in part:chanroblesvirtuallawlibrary

3) Purpose of the EIA Process

As a basic principle, EIA is used to enhance planning and guide decision-making. In this Manual, EIA is primarily presented in the context of a requirement to integrate environmental concerns in the planning process of projects at the feasibility stage. Through the EIA Process, adverse environmental impacts of proposed actions are considerably reduced through a reiterative review process of project siting, design and other alternatives, and the subsequent formulation of environmental management and monitoring plans. A positive determination by the DENR-EMB

results to the issuance of an Environmental Compliance Commitment (ECC) document, to be conformed to by the Proponent and represents the project’s Environmental Compliance Certificate. The release of the ECC allows the project to proceed to the next stage of project planning, which is the acquisition of approvals from other government agencies and LGUs, after which the project can start implementation.

x x x x

6) The EIA Process in Relation to Other Agencies’ Requirements

It is inherent upon the EIA Process to undertake a comprehensive and integrated approach in the review and evaluation of environment-related concerns of government agencies (GAs), local government units (LGUs) and the general public. The subsequent EIA findings shall provide guidance and recommendations to these entities as a basis for their decision making process.

a) An Inter-agency MOA on EIS Streamlining was entered into in 1992 by 29 government agencies wherein ECC of covered projects was agreed to be a pre-requisite of all other subsequent government approvals;

b) DENR Memo Circular No. 2007-08 issued on 13 July 2007 reiterates in effect the intent of the MOA and reinforces the role of the ECC/CNC as a guidance document to other agencies and LGUs, as follows:i) “No permits and/or clearances issued by other National Government Agencies and

Local Government Units shall be required in the processing of ECC or CNC applications.

ii) The findings and recommendations of the EIA shall be transmitted to relevant government agencies for them to integrate in their decision making prior to the issuance of clearances, permits and licenses under their mandates.

iii) The issuance of an ECC or CNC for a project under the EIS System does not exempt the Proponent from securing other government permits and clearances as required by other laws. The current practice of requiring various permits, clearances and licenses only constrains the EIA evaluation process and negates the purpose and function of the EIA.”

iv) Henceforth, all related previous instructions and other issuances shall be made consistent with the Circular.

c) “Permits, licenses and clearances” are inclusive of other national and local government approvals such as endorsements, resolutions, certifications, plans and programs, which have to be cleared/approved or other government documents required within the respective mandates and jurisdiction of these agencies/LGUs.

x x x xf) The final decision whether a project will be implemented or not lies either with the

LGUs who have spatial jurisdiction over the project or with the lead government agency who has sectoral mandate to promote the government program where the project belongs, e.g. DOE for energy projects; DENR-MGB for mining projects. (Emphasis supplied)

As can be seen, the issuance of the ECC does not, by and of itself, authorize the implementation of

the project. Although it is indispensable before the covered project can be commenced, as per Section 4 of PD 1586, the issuance of the ECC does not, as of yet, result in the implementation of the project. Rather, the ECC is intended to, among others, provide guidance or act as a decision-making tool to other government agencies and LGUs which have the final authority to grant licenses or permits, such as building permits or licenses to operate, that will ultimately result in, or authorize the implementation of the project or the conduct of specific activities.

As a consequence, we find that the CNO requirement under Section 59 of the IPRA Law is not required to be obtained prior to the issuance of an ECC. As previously discussed, Section 59 aims to forestall the implementation of a project that may impair the right of ICCs/IPs to their ancestral domains, by ensuring or verifying that a project will not overlap with any ancestral domain prior to its implementation. However, because the issuance of an ECC does not result in the implementation of the project, there is no necessity to secure a CNO prior to an ECC’s issuance as the goal or purpose, which Section 59 seeks to achieve, is, at the time of the issuance of an ECC, not yet applicable.

In sum, we find that the ECC is not the license or permit contemplated under Section 59 of the IPRA Law and its implementing rules. Hence, there is no necessity to secure the CNO under Section 59 before an ECC may be issued and the issuance of the subject ECC without first securing the aforesaid certification does not render it invalid.cralawred

V.

Whether the Certificate of Non-Overlap (CNO), under Section 59 of the IPRA Law, is a precondition to the consummation of the Lease and Development Agreement (LDA) between SBMA and RP Energy and the lack of its prior issuance rendered the LDA invalid.

We now turn to the applicability of Section 59 of the IPRA Law to the LDA entered into between the SBMA and RP Energy on June 8, 2010. Similar to the ECC, the LDA was entered into prior to the issuance of the CNO on October 31, 2012.

Before this Court, SBMA and RP Energy reiterate their arguments on why the CNO is no longer necessary in the instant case, to wit:

1. Prior to entering into the LDA with RP Energy, SBMA entered into a lease agreement with HHIC206-Philippines, Inc. and a CNO was already issued therefor which, for all intents and purposes, is applicable to the area leased by RP Energy being part of contiguous lots in Redondo Peninsula.

2. The site of the power plant project is very distant from the boundaries of the lone area at the Subic Bay Freeport Zone covered by an Aeta Community’s Certificate of Ancestral Domain Title (CADT).

3. There was no indigenous community within the vicinity of the project area as stated in RP Energy’s EIS.

4. The land where the project is located was subsequently classified as industrial by the SBMA.

5. The scoping/procedural screening checklist classified as “not relevant” the issue of indigenous people.

6. Ms. Mercado, who was part of the team which prepared the EIS, testified that she visited the project site ten or more times and did not see any Aeta communities there.

7. Mr. Evangelista testified that the project site used to be a firing range of the U.S. Armed Forces which would make it impossible to be a settlement area of indigenous communities.

8. Atty. Rodriguez stated that the project site is not covered by a CADT and that from the start of negotiations on the LDA, the SBMA Ecology Center verified with the NCIP that there was no application for said area to be covered by a CADT.

RP Energy further argues that, in any case, as a matter of prudence, it secured a CNO from the NCIP. On October 31, 2012, the NCIP issued the subject CNO over the project site, which should erase any doubt as to whether it overlaps with an ancestral domain.

Upholding the arguments of the Casiño Group, the appellate court ruled that SBMA failed to comply with the CNO requirement and, thus, the LDA entered into between SBMA and RP Energy is invalid. It rejected the reasons given by SBMA and RP Energy, to wit:

1. RP Energy’s reliance on its own field investigation that no indigenous community was found within the vicinity is unavailing because it was not the field investigation by the NCIP required by the IPRA Law.

2. RP Energy acknowledged that Aetas were among the earliest settlers in the municipality where the project will be built. Hence, it was not clearly shown that in 2008, at the time the LDA was entered into, there were no indigenous communities in the project site.

3. SBMA’s representation that the project site is industrial relies on a letter dated March 5, 2008 and the scoping checklist, which are hearsay evidence.

4. The statements of Atty. Rodriguez have no probative value because he is not an officer of SBMA Ecology Center or an officer of NCIP.

5. At the time the CNO was issued on October 31, 2012, and the field investigation relative thereto was conducted by the NCIP, the project site no longer reflected the actual condition on December 22, 2008 when the LDA was entered into because the households which occupied the site had already been relocated by then.

6. SBMA, prior to entering into a lease agreement with HHIC, secured a CNO, but oddly did not do the same with respect to the lease agreement with RP Energy, considering that both leases cover lands located within the same peninsula. RP Energy appears to have been accorded a different treatment.

7. The CNO issued in favor of HHIC cannot justify the lack of a CNO for the power plant project because the two projects are situated in different locations: the HHIC project is located in Sitio Agusuhin, while the power plant project is located in Sitio Naglatore.

While we agree with the appellate court that a CNO should have been secured prior to the consummation of the LDA between SBMA and RP Energy, and not after, as was done here, we find that, under the particular circumstances of this case, the subsequent and belated compliance with the CNO requirement does not invalidate the LDA.

For convenience, and as starting point of our analysis, we reproduce Section 59 of the IPRA Law below:chanroblesvirtuallawlibrary

SEC. 59. Certification Precondition. All departments and other governmental agencies shall henceforth be strictly enjoined from issuing, renewing, or granting any concession, license or lease, or entering into any production-sharing agreement, without prior certification from the NCIP that the area affected does not overlap with any ancestral domain. Such certification shall only be issued after a field-based investigation is conducted by the Ancestral Domains Office of the area concerned: Provided, That no certification shall be issued by the NCIP without the free and prior informed and written consent of ICCs/IPs concerned: Provided, further, That no department, government agency or government-owned or -controlled corporation may issue new concession, license, lease, or production sharing agreement while there is a pending application for a CADT: Provided, finally, That the ICCs/IPs shall have the right to stop or suspend, in accordance with this Act, any project that has not satisfied the requirement of this consultation process. (Emphasis supplied)

The law is clear but its actual operation or application should not be interpreted beyond the bounds of reason or practicality.

We explain.

Indeed, a CNO is required prior to the grant of a lease by all government agencies, including the SBMA. Again, the evident intention is to prevent the impairment of the right of ICCs/IPs to their ancestral domains. A lease, such as the LDA under consideration, would result in, among others, granting RP Energy the right to the use and enjoyment of the project site to the exclusion of third parties.207 As such, the lease could conceivably encroach on an ancestral domain if the CNO is not first obtained.

However, implicit in the operation of Section 59 is the practical reality that the concerned government agency must make a preliminary determination on whether or not to obtain the required certification in the first place. To expound, a government agency, which wishes to lease part of its property located near Padre Faura Street, Manila City could not, and should not be reasonably expected to obtain the CNO, as it is obviously inapplicable to its planned lease. In contrast, a government agency, which intends to lease a property in a valley or mountainous region, where indigenous communities are known to reside, conduct hunting activities, perform rituals, or carry out some other activities, should be reasonably expected to secure the CNO prior to consummating the planned lease with third persons.

Even if the indigenous community does not actually reside on the proposed lease site, the government agency would still be required to obtain the CNO precisely to rule out the possibility that the proposed lease site encroaches upon an ancestral domain. The reason for this is that an

ancestral domain does not only cover the lands actually occupied by an indigenous community, but all areas where they have a claim of ownership, through time immemorial use, such as hunting, burial or worship grounds and to which they have traditional access for their subsistence and other traditional activities.208chanRoblesvirtualLawlibrary

The wording of the law itself seems to presuppose that if the concession, lease, license or production-sharing agreement is over natural resources, then the CNO should be first obtained. This is because the last term, “production-sharing agreement,” normally refers to natural resources. But the problem arises as to what should be considered “natural resources”; for a vacant lot, near Padre Faura Street, or a forest land, in Mt. Banahaw, could both be considered as “natural resources,” depending on the restrictive or expansive understanding of that term.

After due consideration, we find that the proper rule of action, for purposes of application of Section 59, is that all government offices should undertake proper and reasonable diligence in making a preliminary determination on whether to secure the CNO, bearing in mind the primordial State interest in protecting the rights of ICCs/IPs to their ancestral domains. They should consider the nature and location of the areas involved; the historical background of the aforesaid areas relative to the occupation, use or claim of ownership by ICCs/IPs; the present and actual condition of the aforesaid areas like the existence of ICCs/IPs within the area itself or within nearby territories; and such other considerations that would help determine whether a CNO should be first obtained prior to granting a concession, lease, license or permit, or entering into a production-sharing agreement.

If there are circumstances that indicate that a claim of ownership by ICCs/IPs may be present or a claim of ownership may be asserted in the future, no matter how remote, the proper and prudent course of action is to obtain the CNO. In case of doubt, the doubt should be resolved in favor of securing the CNO and, thus, the government agency is under obligation to secure the aforesaid certification in order to protect the interests and rights of ICCs/IPs to their ancestral domains. This must be so if we are to accord the proper respect due to, and adequately safeguard the interests and rights of, our brothers and sisters belonging to ICCs/IPs in consonance with the constitutional policy209 to promote and protect the rights of ICCS/IPs as fleshed out in the IPRA Law and its implementing rules.

In the case at bar, we find, applying this rule of action, that the SBMA should have first secured a CNO before entering into the LDA with RP Energy for the following reasons.

First, the Subic area is historically known to be the home of our brothers and sisters belonging to the Aeta communities. In particular, the EIS210 itself of RP Energy noted that Aeta communities originally occupied the proposed project site of the power plant. Thus, even if we assume that, at the time of the ocular inspection of the proposed project site in 2008, there were no Aeta communities seen thereat, as claimed by RP Energy, the exercise of reasonable prudence should have moved SBMA and RP Energy to secure a CNO in order to rule out the possibility that the project site may overlap with an ancestral domain. This is especially so, in view of the observation previously made, that lack of actual occupation by an indigenous community of the area does not necessarily mean that it is not a part of an ancestral domain because the latter encompasses areas that are not actually occupied by indigenous communities but are used for other purposes like hunting, worship or burial grounds.

Second, SBMA and RP Energy claim that the SBMA Ecology Center verified with the NCIP that the project site does not overlap with an ancestral domain. However, the person, who allegedly did the verification, and the officer from the NCIP, who was contacted in this alleged verification, were not presented in court. Assuming that this verification did take place and that the SBMA Ecology Center determined that there is no pending application for a CADT covering the project site and that the presently recognized CADT of Aeta communities is too far away from the project site, it still does not follow that the CNO under Section 59 should have been dispensed with.

The acts of individual members of a government agency, who allegedly checked with the NCIP that the project site does not overlap with an ancestral domain, cannot substitute for the CNO required by law. The reason is obvious. Such posture would circumvent the noble and laudable purposes of the law in providing the CNO as the appropriate mechanism in order to validly and officially determine whether a particular project site does not overlap with an ancestral domain. It would open the doors to abuse because a government agency can easily claim that it checked with the NCIP regarding any application for an ancestral domain over a proposed project site while stopping short of securing a CNO. To reiterate, the legally mandated manner to verify if a project site overlaps with an ancestral domain is the CNO, and not through personal verification by members of a government agency with the NCIP.

Third, that the project site was formerly used as the firing range of the U.S. Armed Forces does not preclude the possibility that a present or future claim of ancestral domain may be made over the aforesaid site. The concept of an ancestral domain indicates that, even if the use of an area was interrupted by the occupation of foreign forces, it may still be validly claimed to be an ancestral domain.211chanRoblesvirtualLawlibrary

Fourth, that the project site was subsequently classified by the SBMA as forming part of an industrial zone does not exempt it from the CNO requirement. The change in the classification of the land is not an exception to the CNO requirement under the IPRA Law. Otherwise, government agencies can easily defeat the rights of ICCs/IPs through the conversion of land use.

Fifth, SBMA argues that the CNO issued to HHIC should, for all intents and purposes, be applicable to RP Energy. However, as correctly ruled by the appellate court, the CNO issued to HHIC’s shipyard cannot be extended to RP Energy’s project site because they involve two different locations although found within the same land mass. The CNO issued in favor of HHIC clearly states that the findings in the CNO are applicable only to the shipyard location of HHIC.

Last, the steps taken by SBMA, in securing a CNO prior to its lease agreement with HHIC, was the proper and prudent course of action that should have been applied to the LDA with RP Energy. It does not matter that HHIC itself asked for the CNO prior to entering into a lease agreement with SBMA, as claimed by SBMA, while RP Energy did not make such a request because, as we have discussed, SBMA had the obligation, given the surrounding circumstances, to secure a CNO in order to rule out the possibility that the project site overlapped with an ancestral domain.

All in all, we find, applying the foregoing rule of action, that SBMA should have secured a CNO before entering into the LDA with RP Energy. Considering that Section 59 is a prohibitory statutory provision, a violation thereof would ordinarily result in the nullification of the

contract.212 However, we rule that the harsh consequences of such a ruling should not be applied to the case at bar.

The reason is that this is the first time that we lay down the foregoing rule of action so much so that it would be inequitable to retroactively apply its effects with respect to the LDA entered into between SBMA and RP Energy. We also note that, under the particular circumstances of this case, there is no showing that SBMA and RP Energy had a deliberate or ill intent to escape, defeat or circumvent the mandate of Section 59 of the IPRA Law. On the contrary, they appear to have believed in good faith,albeit erroneously, that a CNO was no longer needed because of the afore-discussed defenses they raised herein. When the matter of lack of a CNO relative to the LDA was brought to their attention, through the subject Petition for Writ of kalikasan filed by the Casiño Group, RP Energy, with the endorsement of SBMA, promptly undertook to secure the CNO, which was issued on October 31, 2012 and stated that the project site does not overlap with any ancestral domain.213chanRoblesvirtualLawlibrary

Thus, absent proof to the contrary, we are not prepared to rule that SBMA and RP Energy acted in bad faith or with inexcusable negligence, considering that the foregoing rule of action has not heretofore been laid down by this Court. As a result, we hold that the LDA should not be invalidated due to equitable considerations present here.

By so ruling, we clarify that we reject RP Energy’s claim that the belated submission of the CNO is an “over compliance” on its part. Quite the contrary, as we have discussed, the CNO should have been first secured given the surrounding circumstances of this case.

In the same vein, we reject SBMA’s argument that the belated application for, and submission of the CNO cured whatever defect the LDA had. We have purposely avoided a ruling to the effect that a CNO secured subsequent to the concession, lease, license, permit or production-sharing agreement will cure the defect. Such a ruling would lead to abuse of the CNO requirement since the defect can be cured anyway by a subsequent and belated application for a CNO. Government agencies and third parties, either through deliberate intent or negligence, may view it as an excuse not to timely and promptly secure the CNO, even when the circumstances warrant the application for a CNO under the afore-discussed rule of action, to the damage and prejudice of ICCs/IPs. Verily, once the concession, lease, license or permit is issued, or the agreement is entered into without the requisite CNO, consequent damages will have already occurred if it later turns out that the site overlaps with an ancestral domain. This is so even if the ICCs/IPs can have the project stopped upon discovery that it overlapped with their ancestral domain under the last proviso214 of Section 59. To prevent this evil, compliance with the CNO requirement should be followed through the afore-discussed rule of action.

In sum, we rule that a CNO should have been secured prior to the consummation of the LDA between SBMA and RP Energy. However, considering that this is the first time we lay down the rule of action appropriate to the application of Section 59, we refrain from invalidating the LDA due to equitable considerations.cralawred

VI.

Whether compliance with Section 27, in relation to Section 26, of the LGC ( i.e. , approval of the

concerned sanggunian requirement) is necessary prior to the implementation of the power plant project.

Sustaining the arguments of the Casiño Group, the appellate court ruled that the subject project cannot be constructed and operated until after the prior approval of the concerned sanggunian requirement, under Section 27 of the LGC, is complied with. Hence, the ECC and LDA could not be validly granted and entered into without first complying with the aforesaid provision. It held that all the requisites for the application of the aforesaid provision are present. As to the pertinent provisions of RA 7227 or “The Bases Conversion and Development Act of 1992,” which grants broad powers of administration to the SBMA over the Subic Special Economic Zone (SSEZ), the appellate court ruled that RA 7227 contains a provision recognizing the basic autonomy of the LGUs which joined the SSEZ. Thus, the LGC and RA 7227 should be harmonized whereby the concerned sanggunian’s power to approve under Section 27 must be respected.

The DENR impliedly agrees with the Casiño Group that compliance with Section 27 is still required but without clearly elaborating its reasons therefor.

The SBMA and RP Energy, however, argue that the prior approval of the concerned sanggunianrequirement, under Section 27, is inapplicable to the subject project because it is located within the SSEZ. The LGC and RA 7227 cannot be harmonized because of the clear mandate of the SBMA to govern and administer all investments and businesses within the SSEZ. Hence, RA 7227 should be deemed as carving out an exception to the prior approval of the concerned sanggunian requirement insofar as the SSEZ is concerned.

We agree with the SBMA and RP Energy.

Preliminarily, we note that Sections 26 and 27 of the LGC contemplate two requirements: (1) prior consultations and (2) prior approval of the concerned sanggunian, viz:chanroblesvirtuallawlibrary

SECTION 26. Duty of National Government Agencies in the Maintenance of Ecological Balance. — It shall be the duty of every national agency or government-owned or -controlled corporation authorizing or involved in the planning and implementation of any project or program that may cause pollution, climatic change, depletion of non-renewable resources, loss of cropland, rangeland, or forest cover, and extinction of animal or plant species, to consult with the local government units, nongovernmental organizations, and other sectors concerned and explain the goals and objectives of the project or program, its impact upon the people and the community in terms of environmental or ecological balance, and the measures that will be undertaken to prevent or minimize the adverse effects thereof. (Emphasis supplied)

SECTION 27. Prior Consultations Required. — No project or program shall be implemented by government authorities unless the consultations mentioned in Sections 2 (c) and 26 hereof are complied with, and prior approval of the sanggunian concerned is obtained: Provided, That occupants in areas where such projects are to be implemented shall not be evicted unless appropriate relocation sites have been provided, in accordance with the provisions of the Constitution. (Emphasis supplied)

In the case at bar, the Casiño Group only questions the alleged lack of the prior approval of the

concerned sanggunians under Section 27 of the LGC. Thus, we shall limit our discussion to the resolution of this issue. (Parenthetically, we note that prior consultations, as required by Section 26 of the LGC, appear to have been complied with. This may be gleaned from the EIS of RP Energy which contains the documentation of the extensive public consultations held, under the supervision of the DENR-EMB, relative to the subject project, as required by the EIA process,215as well as the social acceptability policy consultations conducted by the SBMA, which generated the document entitled “Final Report: Social Acceptability Process for RP Energy, Inc.’s 600-MW Coal Plant Project,” as noted and discussed in an earlier subsection.216)

We also note that the Casiño Group argues that the approval of the concerned sanggunian requirement was necessary prior to the issuance of the ECC and the consummation of the LDA; the absence of which invalidated the ECC and LDA.

We shall no longer discuss at length whether the approval of the concerned sanggunian requirement must be complied with prior to the issuance of an ECC. As discussed in an earlier subsection, the issuance of an ECC does not, by itself, result in the implementation of the project. Hence, the purpose or goal of Sections 26 and 27 of the LGC, like Section 59 of the IPRA Law, does not yet obtain and, thus, the ECC may be issued even without prior compliance with Sections 26 and 27 of the LGC.

We, thus, limit the discussion as to whether the approval of the concerned sanggunian requirement should have been complied with prior to the consummation of the LDA, considering that the LDA is part of the implementation of the subject project and already vests in RP Energy the right to the use and enjoyment of the project site, as in fact horizontal clearing activities were already undertaken by RP Energy at the project site by virtue of the LDA.

The prior approval of the concerned sanggunian requirement is an attribute and implementation of the local autonomy granted to, and enjoyed by LGUs under the Constitution.217 The LGU has the duty to protect its constituents and interests in the implementation of the project. Hence, the approval of the concerned sanggunian is required by law to ensure that local communities partake in the fruits of their own backyard.218chanRoblesvirtualLawlibrary

For Section 27, in relation to Section 26, to apply, the following requisites must concur: (1) the planning and implementation of the project or program is vested in a national agency or government-owned and-controlled corporation, i.e., national programs and/or projects which are to be implemented in a particular local community; and (2) the project or program may cause pollution, climatic change, depletion of non-renewable resources, loss of cropland, rangeland, or forest cover, extinction of animal or plant species, or call for the eviction of a particular group of people residing in the locality where the project will be implemented.219chanRoblesvirtualLawlibrary

In the case at bar, the two requisites are evidently present: (1) the planning and implementation of the subject project involves the Department of Energy, DENR, and SBMA; and (2) the subject project may cause pollution, climatic change, depletion of non-renewable resources, loss of cropland, rangeland, or forest cover, and extinction of animal or plant species, or call for the eviction of a particular group of people residing in the locality where the project will be

implemented. Hence, Section 27 of the LGC should ordinarily apply.

It is not disputed that no approval was sought from the concerned sanggunians relative to the subject project. What is more, the affected LGUs have expressed their strong oppositions to the project through various sanggunian resolutions.220 However, it is also undisputed that the subject project is located within the SSEZ and, thus, under the territorial jurisdiction of the SBMA pursuant to RA 7227.

Thus, we are tasked to determine the applicability of the prior approval of the concerned sanggunianrequirement, under Section 27 of the LGC, relative to a project within the territorial jurisdiction of the SBMA under RA 7227.

RA 7227 was passed on March 13, 1992 in the aftermath of the Mount Pinatubo eruption and the closure of the Subic Naval Base of the U.S. Armed Forces. It sought to revive the affected areas by creating and developing the SSEZ into a “self-sustaining industrial, commercial, financial and investment center to generate employment opportunities in and around the zone and to attract and promote productive foreign investments.”221 The SSEZ covered the City of Olangapo and Municipality of Subic in the Province of Zambales and the lands and its contiguous extensions occupied by the former U.S. Naval Base, which traversed the territories of the Municipalities of Hermosa and Morong in the Province of Bataan. Under Section 12 of RA 7227, the creation of the SSEZ was made subject to the concurrence by resolution of the respective sanggunians of the City of Olongapo and the Municipalities of Subic, Morong and Hermosa, viz:chanroblesvirtuallawlibrary

SECTION 12. Subic Special Economic Zone. — Subject to the concurrence by resolution of the sangguniang panlungsod of the City of Olongapo and the sangguniang bayan of the Municipalities of Subic, Morong and Hermosa, there is hereby created a Special Economic and Free-port Zone consisting of the City of Olongapo and the Municipality of Subic, Province of Zambales, the lands occupied by the Subic Naval Base and its contiguous extensions as embraced, covered, and defined by the 1947 Military Bases Agreement between the Philippines and the United States of America as amended, and within the territorial jurisdiction of the Municipalities of Morong and Hermosa, Province of Bataan, hereinafter referred to as the Subic Special Economic Zone whose metes and bounds shall be delineated in a proclamation to be issued by the President of the Philippines. Within thirty (30) days after the approval of this Act, each local government unit shall submit its resolution of concurrence to join the Subic Special Economic Zone to the office of the President. Thereafter, the President of the Philippines shall issue a proclamation defining the metes and bounds of the Zone as provided herein.

Subsequently, the aforesaid sanggunians submitted their respective resolutions of concurrence and the President issued Presidential Proclamation No. 532, Series of 1995, defining the metes and bounds of the SSEZ.

In Executive Secretary v. Southwing Heavy Industries, Inc.,222 we described the concept of SSEZ as a Freeport:chanroblesvirtuallawlibrary

The Freeport was designed to ensure free flow or movement of goods and capital within a portion of the Philippine territory in order to attract investors to invest their capital in a business climate

with the least governmental intervention. The concept of this zone was explained by Senator Guingona in this wise:chanroblesvirtuallawlibrary

Senator Guingona. Mr. President, the special economic zone is successful in many places, particularly Hong Kong, which is a free port. The difference between a special economic zone and an industrial estate is simply expansive in the sense that the commercial activities, including the establishment of banks, services, financial institutions, agro-industrial activities, maybe agriculture to a certain extent.

This delineates the activities that would have the least of government intervention, and the running of the affairs of the special economic zone would be run principally by the investors themselves, similar to a housing subdivision, where the subdivision owners elect their representatives to run the affairs of the subdivision, to set the policies, to set the guidelines.

We would like to see Subic area converted into a little Hong Kong, Mr. President, where there is a hub of free port and free entry, free duties and activities to a maximum spur generation of investment and jobs.

While the investor is reluctant to come in the Philippines, as a rule, because of red tape and perceived delays, we envision this special economic zone to be an area where there will be minimum government interference.

The initial outlay may not only come from the Government or the Authority as envisioned here, but from them themselves, because they would be encouraged to invest not only for the land but also for the buildings and factories. As long as they are convinced that in such an area they can do business and reap reasonable profits, then many from other parts, both local and foreign, would invest, Mr. President.223 (Emphasis in the original)

To achieve the above-mentioned purposes, the law created SBMA to administer the SSEZ. In the process, SBMA was granted broad and enormous powers as provided for under Section 13(b) of RA 7227:chanroblesvirtuallawlibrary

Sec. 13. The Subic Bay Metropolitan Authority. –

x x x x

(b) Powers and functions of the Subic Bay Metropolitan Authority - The Subic Bay Metropolitan Authority, otherwise known as the Subic Authority, shall have the following powers and function:

(1) To operate, administer, manage and develop the ship repair and ship building facility, container port, oil storage and refueling facility and Cubi Air Base within the Subic Special Economic and Free-port Zone as a free market in accordance with the policies set forth in Section 12 of this Act;

(2) To accept any local or foreign investment, business or enterprise, subject only to such rules and regulations to be promulgated by the Subic Authority in conformity with the policies of the Conversion Authority without prejudice to the nationalization requirements provided for in the Constitution;

(3) To undertake and regulate the establishment, operation and maintenance of utilities, other services and infrastructure in the Subic Special Economic Zoneincluding shipping and related business, stevedoring and port terminal services or concessions, incidental thereto and airport operations in coordination with the Civil Aeronautics Board, and to fix just and reasonable rates, fares charges and other prices therefor;

(4) To construct, acquire, own, lease, operate and maintain on its own or through contract, franchise, license permits bulk purchase from the private sector and build-operate transfer scheme or joint-venture the required utilities and infrastructure in coordination with local government units and appropriate government agencies concerned and in conformity with existing applicable laws therefor;

(5) To adopt, alter and use a corporate seal; to contract, lease, sell, dispose, acquire and own properties; to sue and be sued in order to carry out its duties and functions as provided for in this Act and to exercise the power of eminent domain for public use and public purpose;

(6) Within the limitation provided by law, to raise and/or borrow the necessary funds from local and international financial institutions and to issue bonds, promissory notes and other securities for that purpose and to secure the same by guarantee, pledge, mortgage deed of trust, or assignment of its properties held by the Subic Authority for the purpose of financing its projects and programs within the framework and limitation of this Act;

(7) To operate directly or indirectly or license tourism related activities subject to priorities and standards set by the Subic Authority including games and amusements, except horse racing, dog racing and casino gambling which shall continue to be licensed by the Philippine Amusement and Gaming Corporation (PAGCOR) upon recommendation of the Conversion Authority; to maintain and preserve the forested areas as a national park;

(8) To authorize the establishment of appropriate educational and medical institutions;

(9) To protect, maintain and develop the virgin forests within the baselands, which will be proclaimed as a national park and subject to a permanent total log ban, and for this purpose, the rules and regulations of the Department of Environment and Natural Resources and other government agencies directly involved in the above functions shall be implemented by the Subic Authority;

(10) To adopt and implement measures and standards for environmental pollution control of all areas within its territory, including but not limited to all bodies of water and to enforce the same. For which purpose the Subic Authority shall create an Ecology Center; and

(11) To exercise such powers as may be essential, necessary or incidental to the powers granted to it hereunder as well as to carry out the policies and objectives of this Act. (Emphasis supplied)

The Implementing Rules of RA 7227 further provide:chanroblesvirtuallawlibrary

Sec. 11. Responsibilities of the SBMA. Other than the powers and functions prescribed in Section 10 of these Rules, the SBMA shall have the following responsibilities:

(a) The SBMA shall exercise authority and jurisdiction over all economic activity within the SBF224chanRoblesvirtualLawlibrary

x x x x

(f) Consistent with the Constitution, the SBMA shall have the following powers to enforce the law and these Rules in the SBF:

x x x x

(8) to issue, alter, modify, suspend or revoke for cause, any permit, certificate, license, visa or privilege allowed under the Act or these Rules;

x x x x

(11) to promulgate such other rules, regulations and circulars as may be necessary, proper or incidental to carry out the policies and objectives of the Act, these Rules, as well as the powers and duties of the SBMA thereunder.225

As can be seen, the SBMA was given broad administrative powers over the SSEZ and these necessarily include the power to approve or disapprove the subject project, which is within its territorial jurisdiction. But, as previously discussed, the LGC grants the concerned sanggunians the power to approve and disapprove this same project. The SBMA asserts that its approval of the project prevails over the apparent disapproval of the concerned sanggunians. There is, therefore, a real clash between the powers granted under these two laws.

Which shall prevail?

Section 12 of RA 7227 provides:ChanRoblesVirtualawlibrarySec. 12. Subic Special Economic Zone. x x x

The abovementioned zone shall be subjected to the following policies:

(a) Within the framework and subject to the mandate and limitations of the Constitution and the pertinent provisions of the Local Government Code, the Subic Special Economic Zone shall be developed into a self-sustaining, industrial, commercial, financial and investment center to generate employment opportunities in and around the zone and to attract and promote productive foreign investments;

x x x x

(i) Except as herein provided, the local government units comprising the Subic Special Economic Zone shall retain their basic autonomy and identity. The cities shall be governed by their

respective charters and the municipalities shall operate and function in accordance with Republic Act No. 7160, otherwise known as the Local Government Code of 1991. (Emphasis supplied)

This section sets out the basic policies underlying the creation of the SSEZ. Indeed, as noted by the appellate court, Section 12(i) expressly recognizes the basic autonomy and identity of the LGUs comprising the SSEZ. However, the clause “[e]xcept as herein provided” unambiguously provides that the LGUs do not retain their basic autonomy and identity when it comes to matters specified by the law as falling under the powers, functions and prerogatives of the SBMA.

In the case at bar, we find that the power to approve or disapprove projects within the SSEZ is one such power over which the SBMA’s authority prevails over the LGU’s autonomy. Hence, there is no need for the SBMA to secure the approval of the concerned sanggunians prior to the implementation of the subject project.

This interpretation is based on the broad grant of powers to the SBMA over all administrative matters relating to the SSEZ under Section 13 of RA 7227, as afore-discussed. Equally important, under Section 14, other than those involving defense and security, the SBMA’s decision prevails in case of conflict between the SBMA and the LGUs in all matters concerning the SSEZ, viz.:chanroblesvirtuallawlibrary

Sec. 14. Relationship with the Conversion Authority and the Local Government Units.

(a) The provisions of existing laws, rules and regulations to the contrary notwithstanding, the Subic Authority shall exercise administrative powers, rule-making and disbursement of funds over the Subic Special Economic Zone in conformity with the oversight function of the Conversion Authority.

(b) In case of conflict between the Subic Authority and the local government units concerned on matters affecting the Subic Special Economic Zone other than defense and security, the decision of the Subic Authority shall prevail. (Emphasis supplied)

Clearly, the subject project does not involve defense or security, but rather business and investment to further the development of the SSEZ. Such is in line with the objective of RA 7227 to develop the SSEZ into a self-sustaining industrial, commercial, financial and investment center. Hence, the decision of the SBMA would prevail over the apparent objections of the concerned sanggunians of the LGUs.

Significantly, the legislative deliberations on RA 7227, likewise, support and confirm the foregoing interpretation. As earlier noted, Section 13 b(4) of RA 7227 provides:chanroblesvirtuallawlibrary

Sec. 13. The Subic Bay Metropolitan Authority. –

x x x x

(b) Powers and functions of the Subic Bay Metropolitan Authority - The Subic Bay Metropolitan Authority, otherwise known as the Subic Authority, shall have the following powers and function:

x x x x

(4) To construct, acquire, own, lease, operate and maintain on its own or through contract, franchise, license permits bulk purchase from the private sector and build-operate transfer scheme or joint-venture the required utilities and infrastructure in coordination with local government units and appropriate government agencies concerned and in conformity with existing applicable laws therefor;

In the Senate, during the period of amendments, when the provision which would eventually become the afore-quoted Section 13 b(4) of RA 7227 was under consideration, the following exchanges took place:chanroblesvirtuallawlibrary

Senator Laurel. Mr. President.

The President. Senator Laurel is recognized.

Senator Laurel. Relative to line 27 up to line 31 of page 16, regarding the provision to the effect that the Authority will have the following functions: “to construct, acquire, own, etcetera,” that is all right.

My motion is that we amend this particular line, starting from the word “structures”, by deleting the words that follow on line 31, which states: “in coordination with local government units and”, and substitute the following in place of those words: “SUBJECT TO THE APPROVAL OF THE SANGGUNIAN OF THE AFFECTED LOCAL GOVERNMENT UNITS AND IN COORDINATION WITH.”

So, this paragraph will read, as follows: “to construct, own, lease, operate, and maintain on its own or through contract, franchise, license permits, bulk purchase from the private sector and build-operate-transfer scheme or joint venture the required utilities and infrastructure SUBJECT TO THE APPROVAL OF THE SANGGUNIAN OF THE AFFECTED LOCAL GOVERNMENT UNITS AND IN coordination with appropriate government agencies concerned and in conformity with existing applicable laws therefor.”

The President. What does the Sponsor say?

Senator Shahani. I believe this would cripple the Authority. I would like to remind our Colleagues that in the Board of Directors, the representatives of the local government units that agree to join with the Subic Special Economic Zone will be members of the Board so that they will have a say, Mr. President. But if we say “subject,” that is a very strong word. It really means that they will be the ones to determine the policy.

So, I am afraid that I cannot accept this amendment, Mr. President.

Senator Laurel. May I respond or react, Mr. President.

The President. Yes.

Senator Laurel. The Constitution is there, very categorical in the promotion and encouragement of

local autonomy, and mandating Congress to enact the necessary Local Government Code with emphasis on local autonomy.

We have now Section 27 of the new Local Government Code which actually provides that for every project in any local government territory, the conformity or concurrence of the Sanggunian of every such local government unit shall be secured in the form of resolution—the consent of the Sanggunian.

The President. Well, both sides have already been heard. There is the Laurel amendment that would make the power of the Subic Bay Metropolitan Authority to construct, acquire, own, lease, operate and maintain on its own or through contract, franchise, license, permits, bulk purchases from private sector, build-operate-and-transfer scheme, or joint venture, the required utilities and infrastructure, subject to approval by the appropriate Sanggunian of the local government concerned.

This amendment to the amendment has been rejected by the Sponsor. So, we are voting now on this amendment.

As many as are in favor of the Laurel amendment, say Aye. (Few Senators: Aye.)

Those who are against the said amendment, say Nay. (Several Senators: Nay.)

Senator Laurel. Mr. President, may I ask for a nominal voting.

The President. A nominal voting should be upon the request of one-fifth of the Members of the House, but we can accommodate the Gentleman by asking for a division of the House.

Therefore, those in favor of the Laurel amendment, please raise their right hands. (Few Senators raised their right hands.)

Senator Laurel. I was asking, Mr. President, for a nominal voting.

The President. A nominal voting can be had only upon motion of one-fifth of the Members of the Body.

Senator Laurel. That is correct, Mr. President. But this is such an important issue being presented to us, because this question is related to the other important issue, which is: May an elected public official of a particular government unit, such as a town or municipality, participate as a member of the Board of Directors of this particular zone.

The President. The ruling of the Chair stands. The division of the House is hereby directed.

As many as are in favor of the Laurel amendment, please raised (sic) their right hands. (Few Senators raised their right hands.)

As many as are against the said amendment, please do likewise. (Several Senators raised their right hands.)

The amendment is lost.226 (Emphasis supplied)

Indubitably, the legislature rejected the attempts to engraft Section 27’s prior approval of the concernedsanggunian requirement under the LGC into RA 7227. Hence, the clear intent was to do away with the approval requirement of the concerned sanggunians relative to the power of the SBMA to approve or disapprove a project within the SSEZ.

The power to create the SSEZ is expressly recognized in Section 117 of the LGC, viz.:chanroblesvirtuallawlibrary

TITLE VIII.Autonomous Special Economic Zones

SECTION 117. Establishment of Autonomous Special Economic Zones. — The establishment by law of autonomous special economic zones in selected areas of the country shall be subject to concurrence by the local government units included therein.

When the concerned sanggunians opted to join the SSEZ, they were, thus, fully aware that this would lead to some diminution of their local autonomy in order to gain the benefits and privileges of being a part of the SSEZ.

Further, the point of Senator Shahani that the representation of the concerned LGUs in the Board of Directors will compensate for the diminution of their local autonomy and allow them to be represented in the decision-making of the SBMA is not lost on us. This is expressly provided for in Section 13(c) of RA 7227, viz:chanroblesvirtuallawlibrary

SECTION 13. The Subic Bay Metropolitan Authority. —

x x x x

(c) Board of Directors. — The powers of the Subic Authority shall be vested in and exercised by a Board of Directors, hereinafter referred to as the Board, which shall be composed of fifteen (15) members, to wit:

(1) Representatives of the local government units that concur to join the Subic Special Economic Zone;

(2) Two (2) representatives from the National Government;

(3) Five (5) representatives from the private sector coming from the present naval stations, public works center, ship repair facility, naval supply depot and naval air station; and

(4) The remaining balance to complete the Board shall be composed of representatives from the business and investment sectors. (Emphasis supplied)

SBMA’s undisputed claim is that, during the board meeting when the subject project was approved, except for one, all the representatives of the concerned LGUs were present and voted to approve the subject project.227 Verily, the wisdom of the law creating the SSEZ; the wisdom of the choice of the concerned LGUs to join the SSEZ; and the wisdom of the mechanism of representation of the concerned LGUs in the decision-making process of the SBMA are matters outside the scope of the power of judicial review. We can only interpret and apply the law as we find it.

In sum, we find that the implementation of the project is not subject to the prior approval of the concerned sanggunians, under Section 27 of the LGC, and the SBMA’s decision to approve the project prevails over the apparent objections of the concerned sanggunians of the LGUs, by virtue of the clear provisions of RA 7227. Thus, there was no infirmity when the LDA was entered into between SBMA and RP Energy despite the lack of approval of the concerned sanggunians.cralawred

VII.

Whether the validity of the third amendment to the ECC can be resolved by the Court.

The Casiño Group argues that the validity of the third amendment should have been resolved by the appellate court because it is covered by the broad issues set during the preliminary conference.

RP Energy counters that this issue cannot be resolved because it was expressly excluded during the preliminary conference.

The appellate court sustained the position of RP Energy and ruled that this issue was not included in the preliminary conference so that it cannot be resolved without violating the right to due process of RP Energy.

We agree with the appellate court.

Indeed, the issue of the validity of the third amendment to the ECC was not part of the issues set during the preliminary conference, as it appears at that time that the application for the third amendment was still ongoing. The following clarificatory questions during the aforesaid conference confirm this, viz.:chanroblesvirtuallawlibrary

J. LEAGOGO:So what are you questioning in your Petition?

ATTY. RIDON:We are questioning the validity of the amendment, Your Honor.

J. LEAGOGO:Which amendment?

ATTY. RIDON:

From 2 x 150 to 1 x 300, Your Honor.

J. LEAGOGO:Your Petition does not involve the 2 x 300 which is still pending with the DENR. Because you still have remedies there, you can make your noise there, you can question it to your heart[’]s content because it is still pending

x x x x

J. LEAGOGO:Atty. Ridon, I go back to my question. We’re not yet talking of the legal points here. I’m just talking of what are you questioning. You are questioning the 1 x 300?

ATTY. RIDON:Yes, Your Honor.

J. LEAGOGO:Because it was 2 x 150 and then 1 x 300?

ATTY. RIDON:Yes, Your Honor.

J. LEAGOGO:Up to that point?

ATTY. RIDON:Yes, Your Honor.

J. LEAGOGO:Because there is no amended ECC yet for the 2 x 300 or 600. That’s clear enough for all of us.

ATTY. RIDON:Yes, Your Honor.228

Given the invocation of the right to due process by RP Energy, we must sustain the appellate court’s finding that the issue as to the validity of the third amendment cannot be adjudicated in this case.

Refutation of the Partial Dissent.

Justice Leonen partially dissents from the foregoing disposition on the following grounds:

(a) Environmental cases, such as a petition for a writ of kalikasan, should not, in general, be litigated viaa representative, citizen or class suit because of the danger of misrepresenting the interests— and thus, barring future action due to res judicata— of those not actually present in the prosecution of the case, either because they do not yet exist, like the unborn generations, or because the parties bringing suit do not accurately represent the interests of the group they

represent or the class to which they belong. As an exception, such representative, citizen or class suit may be allowed subject to certain conditions; and

(b) The amendments to the ECC, granted by the DENR in favor of RP Energy, are void for failure to submit a new EIS in support of the applications for these amendments to the subject ECC, and a petition for writ of kalikasan is not the proper remedy to raise a defect in the ECC.

We disagree.cralawred

A.

Justice Leonen’s proposition that environmental cases should not, in general, be litigated via a representative, citizen or class suit is both novel and ground-breaking. However, it is inappropriate to resolve such an important issue in this case, in view of the requisites for the exercise of our power of judicial review, because the matter was not raised by the parties so that the issue was not squarely tackled and fully ventilated. The proposition will entail, as Justice Leonen explains, an abandonment or, at least, a modification of our ruling in the landmark case of Oposa v. Factoran.229 It will also require an amendment or a modification of Section 5 (on citizen suits), Rule 2 of the Rules of Procedure for Environmental Cases. Hence, it is more appropriate to await a case where such issues and arguments are properly raised by the parties for the consideration of the Court.cralawred

B.

Justice Leonen reasons that the amendments to the subject ECC are void because the applications therefor were unsupported by an EIS, as required by PD 1151 and PD 1586. The claim is made that an EIS is required by law, even if the amendment to the ECC is minor, because an EIS is necessary to determine the environmental impact of the proposed modifications to the original project design. The DENR rules, therefore, which permit the modification of the original project design without the requisite EIS, are void for violating PD 1151 and PD 1586.

We disagree.

Indeed, Section 4 of PD 1151 sets out the basic policy of requiring an EIS in every action, project or undertaking that significantly affects the quality of the environment, viz:chanroblesvirtuallawlibrary

SECTION 4. Environmental Impact Statements. — Pursuant to the above enunciated policies and goals, all agencies and instrumentalities of the national government, including government-owned or -controlled corporations, as well as private corporations, firms and entities shall prepare, file and include in every action, project or undertaking which significantly affects the quality of the environment a detailed statement on —

(a) the environmental impact of the proposed action, project or undertaking;(b) any adverse environmental effect which cannot be avoided should the proposal be implemented;(c) alternative to the proposed action;

(d) a determination that the short-term uses of the resources of the environment are consistent with the maintenance and enhancement of the long-term productivity of the same; and(e) whenever a proposal involves the use of depletable or non-renewable resources, a finding must be made that such use and commitment are warranted.

Before an environmental impact statement is issued by a lead agency, all agencies having jurisdiction over, or special expertise on, the subject matter involved shall comment on the draft environmental impact statement made by the lead agency within thirty (30) days from receipt of the same. (Emphasis supplied)

As earlier stated, the EIS was subsequently developed and strengthened through PD 1586 which established the Philippine Environmental Impact Statement System. Sections 4 and 5 of PD 1586 provide:chanroblesvirtuallawlibrary

SECTION 4. Presidential Proclamation of Environmentally Critical Areas and Projects. The President of the Philippines may, on his own initiative or upon recommendation of the National Environmental Protection Council, by proclamation declare certain projects, undertakings or areas in the country as environmentally critical. No person, partnership or corporation shall undertake or operate any such declared environmentally critical project or area without first securing an Environmental Compliance Certificate issued by the President or his duly authorized representative. For the proper management of said critical project or area, the President may by his proclamation reorganize such government offices, agencies, institutions, corporations or instrumentalities including the re-alignment of government personnel, and their specific functions and responsibilities.

For the same purpose as above, the Ministry of Human Settlements shall: (a) prepare the proper land or water use pattern for said critical project(s) or area(s); (b) establish ambient environmental quality standards; (c) develop a program of environmental enhancement or protective measures against calamituous factors such as earthquake, floods, water erosion and others, and (d) perform such other functions as may be directed by the President from time to time.

SECTION 5. Environmentally Non-Critical Projects. — All other projects, undertakings and areas not declared by the President as environmentally critical shall be considered as non-critical and shall not be required to submit an environmental impact statement. The National Environmental Protection Council, thru the Ministry of Human Settlements may however require non-critical projects and undertakings to provide additional environmental safeguards as it may deem necessary. (Emphasis supplied)

These laws were, in turn, implemented by DAO 2003-30 and the Revised Manual.

As correctly noted by Justice Leonen, Presidential Proclamation No. 2146 was subsequently issued which, among others, classified fossil-fueled power plants as environmentally critical projects.

In conformity with the above-quoted laws and their implementing issuances, the subject project, a coal power plant, was classified by the DENR as an environmentally critical project, new and single. Hence, RP Energy was required to submit an EIS in support of its application for an ECC. RP Energy thereafter complied with the EIS requirement and the DENR, after review, evaluation and

compliance with the other steps provided in its rules, issued an ECC in favor of RP Energy. As can be seen, the EIS requirement was duly complied with.

Anent Justice Leonen’s argument that the subsequent amendments to the ECC were void for failure to prepare and submit a new EIS relative to these amendments, it is important to note that PD 1586 does not state the procedure to be followed when there is an application for an amendment to a previously issued ECC. There is nothing in PD 1586 which expressly requires an EIS for an amendment to an ECC.

In footnote 174 of the ponencia, it is stated:chanroblesvirtuallawlibrary

Parenthetically, we must mention that the validity of the rules providing for amendments to the ECC was challenged by the Casiño Group on the ground that it is ultra vires before the appellate court. It argued that the laws governing the ECC do not expressly permit the amendment of an ECC. However, the appellate court correctly ruled that the validity of the rules cannot be collaterally attacked. Besides, the power of the DENR to issue rules on amendments of an ECC is sanctioned under the doctrine of necessary implication. Considering that the greater power to deny or grant an ECC is vested by law in the President or his authorized representative, the DENR, there is no obstacle to the exercise of the lesser or implied power to amend the ECC for justifiable reasons. This issue was no longer raised before this Court and, thus, we no longer tackle the same here.

Because PD 1586 did not expressly provide the procedure to be followed in case of an application for an amendment to a previously issued ECC, the DENR exercised its discretion, pursuant to its delegated authority to implement this law, in issuing DAO 2003-30 and the Revised Manual.

Justice Leonen’s argument effectively challenges the validity of the provisions in DAO 2003-30 and the Revised Manual relative to amendments to an ECC for being contrary to PD 1151 and 1586.

We disagree.

First, to repeat, there is nothing in PD 1586 which expressly requires an EIS for an amendment to an ECC.

Second, as earlier noted, the proposition would constitute a collateral attack on the validity of DAO 2003-30 and the Revised Manual, which is not allowed under the premises. The Casiño Group itself has abandoned this claim before this Court so that the issue is not properly before this Court for its resolution.

Third, assuming that a collateral attack on the validity of DAO 2003-30 and the Revised Manual can be allowed in this case, the rules on amendments appear to be reasonable, absent a showing of grave abuse of discretion or patent illegality.

Essentially, the rules take into consideration the nature of the amendment in determining the proper Environmental Impact Assessment (EIA) document type that the project proponent will submit in support of its application for an amendment to its previously issued ECC. A minor amendment will require a less detailed EIA document type, like a Project Description Report (PDR),

while a major amendment will require a more detailed EIA document type, like an Environmental Performance Report and Management Plan (EPRMP) or even an EIS.230chanRoblesvirtualLawlibrary

The rules appear to be based on the premise that it would be unduly burdensome or impractical to require a project proponent to submit a detailed EIA document type, like an EIS, for amendments that, upon preliminary evaluation by the DENR, will not cause significant environmental impact. In particular, as applied to the subject project, the DENR effectively determined that it is impractical to require RP Energy to, in a manner of speaking, start from scratch by submitting a new EIS in support of its application for the first amendment to its previously issued ECC, considering that the existing EIS may be supplemented by an EPRMP to adequately evaluate the environmental impact of the proposed modifications under the first amendment. The same reasoning may be applied to the PDR relative to the second amendment.

As previously discussed, the Casiño Group failed to prove that the EPRMP and PDR were inadequate to assess the environmental impact of the planned modifications under the first and second amendments, respectively. On the contrary, the EPRMP and PDR appeared to contain the details of the planned modifications and the corresponding adjustments to be made in the environmental management plan or mitigating measures in order to address the potential impacts of these planned modifications. Hence, absent sufficient proof, there is no basis to conclude that the procedure adopted by the DENR was done with grave abuse of discretion.

Justice Leonen’s proposition would effectively impose a stringent requirement of an EIS for each and every proposed amendment to an ECC, no matter how minor the amendment may be. While this requirement would seem ideal, in order to ensure that the environmental impact of the proposed amendment is fully taken into consideration, the pertinent laws do not, however, expressly require that such a procedure be followed. As already discussed, the DENR appear to have reasonably issued DAO 2003-30 and the Revised Manual relative to the amendment process of an ECC, by balancing practicality vis-à-vis the need for sufficient information in determining the environmental impact of the proposed amendment to an ECC. In fine, the Court cannot invalidate the rules which appear to be reasonable, absent a showing of grave abuse of discretion or patent illegality.

We next tackle Justice Leonen’s argument that a petition for certiorari, and not a writ of kalikasan, is the proper remedy to question a defect in an ECC.

In general, the proper procedure to question a defect in an ECC is to follow the appeal process provided in DAO 2003-30 and the Revised Manual. After complying with the proper administrative appeal process, recourse may be made to the courts in accordance with the doctrine of exhaustion of administrative remedies. However, as earlier discussed, in exceptional cases, a writ of kalikasan may be availed of to challenge defects in the ECC provided that (1) the defects are causally linked or reasonably connected to an environmental damage of the nature and magnitude contemplated under the Rules on Writ ofkalikasan, and (2) the case does not violate, or falls under an exception to, the doctrine of exhaustion of administrative remedies and/or primary jurisdiction.

As previously discussed, in the case at bar, only the allegation with respect to the lack of an EIA relative to the first and second amendments to the subject ECC may be reasonably connected to such an environmental damage. Further, given the extreme urgency of resolving the issue due to

the looming power crisis, this case may be considered as falling under an exception to the doctrine of exhaustion of administrative remedies. Thus, the aforesaid issue may be conceivably resolved in a writ of kalikasancase.

More importantly, we have expressly ruled that this case is an exceptional case due to the looming power crisis, so that the rules of procedure may be suspended in order to address issues which, ordinarily, the Court would not consider proper in a writ of kalikasan case. Hence, all issues, including those not proper in a writ of kalikasan case, were resolved here in order to forestall another round of protracted litigation relative to the implementation of the subject project.

Conclusion

We now summarize our findings:

1. The appellate court correctly ruled that the Casiño Group failed to substantiate its claims that the construction and operation of the power plant will cause environmental damage of the magnitude contemplated under the writ of kalikasan. On the other hand, RP Energy presented evidence to establish that the subject project will not cause grave environmental damage, through its Environmental Management Plan, which will ensure that the project will operate within the limits of existing environmental laws and standards;

2. The appellate court erred when it invalidated the ECC on the ground of lack of signature of Mr. Aboitiz in the ECC’s Statement of Accountability relative to the copy of the ECC submitted by RP Energy to the appellate court. While the signature is necessary for the validity of the ECC, the particular circumstances of this case show that the DENR and RP Energy were not properly apprised of the issue of lack of signature in order for them to present controverting evidence and arguments on this point, as the issue only arose during the course of the proceedings upon clarificatory questions from the appellate court. Consequently, RP Energy cannot be faulted for submitting the certified true copy of the ECC only after it learned that the ECC had been invalidated on the ground of lack of signature in the January 30, 2013 Decision of the appellate court. The certified true copy of the ECC, bearing the signature of Mr. Aboitiz in the Statement of Accountability portion, was issued by the DENR-EMB, and remains uncontroverted. It showed that the Statement of Accountability was signed by Mr. Aboitiz on December 24, 2008. Because the signing was done after the official release of the ECC on December 22, 2008, we note that the DENR did not strictly follow its rules, which require that the signing of the Statement of Accountability should be done before the official release of the ECC. However, considering that the issue was not adequately argued nor was evidence presented before the appellate court on the circumstances at the time of signing, there is insufficient basis to conclude that the procedure adopted by the DENR was tainted with bad faith or inexcusable negligence. We remind the DENR, however, to be more circumspect in following its rules. Thus, we rule that the signature requirement was substantially complied with pro hac vice.

3. The appellate court erred when it ruled that the first and second amendments to the ECC were invalid for failure to comply with a new EIA and for violating DAO 2003-30 and the Revised Manual. It failed to properly consider the applicable provisions in DAO 2003-30 and the Revised Manual for amendment to ECCs. Our own examination of the provisions on amendments to ECCs in DAO 2003-30 and the Revised Manual, as well as the EPRMP and PDR themselves, shows that

the DENR reasonably exercised its discretion in requiring an EPRMP and a PDR for the first and second amendments, respectively. Through these documents, which the DENR reviewed, a new EIA was conducted relative to the proposed project modifications. Hence, absent sufficient showing of grave abuse of discretion or patent illegality, relative to both the procedure and substance of the amendment process, we uphold the validity of these amendments;

4. The appellate court erred when it invalidated the ECC for failure to comply with Section 59 of the IPRA Law. The ECC is not the license or permit contemplated under Section 59 of the IPRA Law and its implementing rules. Hence, there is no necessity to secure the CNO under Section 59 before an ECC may be issued, and the issuance of the subject ECC without first securing the aforesaid certification does not render it invalid;

5. The appellate court erred when it invalidated the LDA between SBMA and RP Energy for failure to comply with Section 59 of the IPRA Law. While we find that a CNO should have been secured prior to the consummation of the LDA between SBMA and RP Energy, considering that this is the first time we lay down the rule of action appropriate to the application of Section 59, we refrain from invalidating the LDA for reasons of equity;

6. The appellate court erred when it ruled that compliance with Section 27, in relation to Section 26, of the LGC (i.e., approval of the concerned sanggunian requirement) is necessary prior to issuance of the subject ECC. The issuance of an ECC does not, by itself, result in the implementation of the project. Hence, there is no necessity to secure prior compliance with the approval of the concerned sanggunianrequirement, and the issuance of the subject ECC without first complying with the aforesaid requirement does not render it invalid. The appellate court also erred when it ruled that compliance with the aforesaid requirement is necessary prior to the consummation of the LDA. By virtue of the clear provisions of RA 7227, the project is not subject to the aforesaid requirement and the SBMA’s decision to approve the project prevails over the apparent objections of the concerned sanggunians. Thus, the LDA entered into between SBMA and RP Energy suffers from no infirmity despite the lack of approval of the concerned sanggunians; and

7. The appellate court correctly ruled that the issue as to the validity of the third amendment to the ECC cannot be resolved in this case because it was not one of the issues set during the preliminary conference, and would, thus, violate RP Energy’s right to due process.chanrobleslaw

WHEREFORE, the Court resolves to:

1. DENY the Petition in G.R. No. 207282; and

2. GRANT the Petitions in G.R. Nos. 207257, 207366 and 207276:

2.1. The January 30, 2013 Decision and May 22, 2013 Resolution of the Court of Appeals in CA-G.R. SP No. 00015 are reversed and set aside;

2.2. The Petition for Writ of kalikasan, docketed as CA-G.R. SP No. 00015, is denied for insufficiency of evidence;

2.3. The validity of the December 22, 2008 Environmental Compliance Certificate, as well as the July 8, 2010 first amendment and the May 26, 2011 second amendment thereto, issued by the Department of Environment and Natural Resources in favor of

Redondo Peninsula Energy, Inc., are upheld; and2.4. The validity of the June 8, 2010 Lease and Development Agreement between Subic Bay

Metropolitan Authority and Redondo Peninsula Energy, Inc. is upheld.

SO ORDERED.

Sereno, C.J., Carpio, Leonardo-De Castro, Peralta, Bersamin, Villarama, Jr., Perez, Mendoza, and Reyes, JJ., concur.Velasco, Jr., J., please see concurring opinion.Brion, J., on leave.Perlas-Bernabe, J., I concur with the ponencia in denying the petition for writ of kalikasan but asleft J. Leonen's view on the manner by which as ECC should be assailed.Leonen, J., see saparate concurring and dissenting opinion.Jardeleza, J., no part.

EN BANC

G.R. No. 206510, September 16, 2014

MOST REV. PEDRO D. ARIGO, Vicar Apostolic of Puerto Princesa D.D.; MOST REV. DEOGRACIAS S. INIGUEZ, JR., Bishop-Emeritus ofCaloocan, FRANCES Q. QUIMPO, CLEMENTE G. BAUTISTA, JR.,

Kalikasan-PNE, MARIA CAROLINA P. ARAULLO, RENATO M. REYES, JR., BagongAlyansang Makabayan, HON. NERI JAVIER COLMENARES, BayanMuna Party-list, ROLAND G. SIMBULAN,

PH.D., Junk VFAMovement, TERESITA R. PEREZ, PH.D., HON. RAYMOND V. PALATINO, Kabataan Party-list, PETER SJ. GONZALES, Pamalakaya, GIOVANNI A. TAPANG, PH. D., Agham, ELMER C.

LABOG, Kilusang Mayo Uno, JOAN MAY E. SALVADOR, Gabriela, JOSE ENRIQUE A. AFRICA, THERESA A. CONCEPCION, MARY JOAN A. GUAN, NESTOR T. BAGUINON, PH.D., A. EDSEL F.

TUPAZ, Petitioners, v. SCOTT H. SWIFT in his capacity as Commander of the U.S. 7th Fleet, MARK A. RICE in his capacity as Commanding Officer of the USS Guardian, PRESIDENT BENIGNO S.

AQUINO III in his capacity as Commander-in-Chief of the Armed Forces of the Philippines, HON. ALBERT F. DEL ROSARIO, Secretary, Department of Foreign Affairs, HON. PAQUITO OCHOA,

JR., Executive Secretary, Office of the President, HON. VOLTAIRE T. GAZMIN, Secretary, Department of National Defense, HON. RAMON JESUS P. PAJE, Secretary, Department of

Environment and Natural Resources, VICE ADMIRAL JOSE LUIS M. ALANO, Philippine Navy Flag Officer in Command, Armed Forces of the Philippines,ADMIRAL RODOLFO D. ISORENA,

Commandant, Philippine Coast Guard, COMMODORE ENRICO EFREN EVANGELISTA, Philippine Coast Guard Palawan, MAJOR GEN. VIRGILIO O. DOMINGO,Commandant of Armed Forces of the

Philippines Commandand LT. GEN. TERRY G. ROBLING, US Marine Corps Forces, Pacific and Balikatan 2013 Exercise Co-Director, Respondents.

D E C I S I O N

VILLARAMA, JR., J.:

Before us is a petition for the issuance of a Writ of Kalikasan with prayer for the issuance of a Temporary Environmental Protection Order (TEPO) under Rule 7 of A.M. No. 09-6-8-SC, otherwise known as theRules of Procedure for Environmental Cases (Rules), involving violations of environmental laws and regulations in relation to the grounding of the US military ship USS Guardian over the Tubbataha Reefs.

Factual Background

The name “Tubbataha” came from the Samal (seafaring people of southern Philippines) language which means “long reef exposed at low tide.” Tubbataha is composed of two huge coral atolls – the north atoll and the south atoll – and the Jessie Beazley Reef, a smaller coral structure about 20 kilometers north of the atolls. The reefs of Tubbataha and Jessie Beazley are considered part of Cagayancillo, a remote island municipality of Palawan.1cralawlawlibrary

In 1988, Tubbataha was declared a National Marine Park by virtue of Proclamation No. 306 issued by President Corazon C. Aquino on August 11, 1988. Located in the middle of Central Sulu Sea, 150 kilometers southeast of Puerto Princesa City, Tubbataha lies at the heart of the Coral Triangle, the global center of marine biodiversity.

In 1993, Tubbataha was inscribed by the United Nations Educational Scientific and Cultural

Organization (UNESCO) as a World Heritage Site. It was recognized as one of the Philippines’ oldest ecosystems, containing excellent examples of pristine reefs and a high diversity of marine life. The 97,030-hectare protected marine park is also an important habitat for internationally threatened and endangered marine species. UNESCO cited Tubbataha’s outstanding universal value as an important and significant natural habitat for in situ conservation of biological diversity; an example representing significant on-going ecological and biological processes; and an area of exceptional natural beauty and aesthetic importance.2cralawlawlibrary

On April 6, 2010, Congress passed Republic Act (R.A.) No. 10067,3 otherwise known as the “Tubbataha Reefs Natural Park (TRNP) Act of 2009” “to ensure the protection and conservation of the globally significant economic, biological, sociocultural, educational and scientific values of the Tubbataha Reefs into perpetuity for the enjoyment of present and future generations.” Under the “no-take” policy, entry into the waters of TRNP is strictly regulated and many human activities are prohibited and penalized or fined, including fishing, gathering, destroying and disturbing the resources within the TRNP. The law likewise created the Tubbataha Protected Area Management Board (TPAMB) which shall be the sole policy-making and permit-granting body of the TRNP.

The USS Guardian is an Avenger-class mine countermeasures ship of the US Navy. In December 2012, the US Embassy in the Philippines requested diplomatic clearance for the said vessel “to enter and exit the territorial waters of the Philippines and to arrive at the port of Subic Bay for the purpose of routine ship replenishment, maintenance, and crew liberty.”4 On January 6, 2013, the ship left Sasebo, Japan for Subic Bay, arriving on January 13, 2013 after a brief stop for fuel in Okinawa, Japan.

On January 15, 2013, the USS Guardian departed Subic Bay for its next port of call in Makassar, Indonesia. On January 17, 2013 at 2:20 a.m. while transiting the Sulu Sea, the ship ran aground on the northwest side of South Shoal of the Tubbataha Reefs, about 80 miles east-southeast of Palawan. No one was injured in the incident, and there have been no reports of leaking fuel or oil.

On January 20, 2013, U.S. 7th Fleet Commander, Vice Admiral Scott Swift, expressed regret for the incident in a press statement.5 Likewise, US Ambassador to the Philippines Harry K. Thomas, Jr., in a meeting at the Department of Foreign Affairs (DFA) on February 4, “reiterated his regrets over the grounding incident and assured Foreign Affairs Secretary Albert F. del Rosario that the United States will provide appropriate compensation for damage to the reef caused by the ship.”6 By March 30, 2013, the US Navy-led salvage team had finished removing the last piece of the grounded ship from the coral reef.

On April 17, 2013, the above-named petitioners on their behalf and in representation of their respective sector/organization and others, including minors or generations yet unborn, filed the present petition against Scott H. Swift in his capacity as Commander of the US 7th Fleet, Mark A. Rice in his capacity as Commanding Officer of the USS Guardian and Lt. Gen. Terry G. Robling, US Marine Corps Forces, Pacific and Balikatan 2013 Exercises Co-Director (“US respondents”); President Benigno S. Aquino III in his capacity as Commander-in-Chief of the Armed Forces of the Philippines (AFP), DFA Secretary Albert F. Del Rosario, Executive Secretary Paquito Ochoa, Jr., Secretary Voltaire T. Gazmin (Department of National Defense), Secretary Jesus P. Paje (Department of Environment and Natural Resources), Vice-Admiral Jose Luis M. Alano (Philippine Navy Flag Officer in Command, AFP), Admiral Rodolfo D. Isorena (Philippine Coast Guard

Commandant), Commodore Enrico Efren Evangelista (Philippine Coast Guard-Palawan), and Major General Virgilio O. Domingo (AFP Commandant), collectively the “Philippine respondents.”

The Petition

Petitioners claim that the grounding, salvaging and post-salvaging operations of the USS Guardian cause and continue to cause environmental damage of such magnitude as to affect the provinces of Palawan, Antique, Aklan, Guimaras, Iloilo, Negros Occidental, Negros Oriental, Zamboanga del Norte, Basilan, Sulu, and Tawi-Tawi, which events violate their constitutional rights to a balanced and healthful ecology. They also seek a directive from this Court for the institution of civil, administrative and criminal suits for acts committed in violation of environmental laws and regulations in connection with the grounding incident.

Specifically, petitioners cite the following violations committed by US respondents under R.A. No. 10067: unauthorized entry (Section 19); non-payment of conservation fees (Section 21); obstruction of law enforcement officer (Section 30); damages to the reef (Section 20); and destroying and disturbing resources (Section 26[g]). Furthermore, petitioners assail certain provisions of the Visiting Forces Agreement (VFA) which they want this Court to nullify for being unconstitutional.

The numerous reliefs sought in this case are set forth in the final prayer of the petition, to wit:chanRoblesvirtualLawlibrary

1. WHEREFORE, in view of the foregoing, Petitioners respectfully pray that the Honorable Court:chanRoblesvirtualLawlibrary

2. Immediately issue upon the filing of this petition a Temporary Environmental Protection Order (TEPO) and/or a Writ of Kalikasan, which shall, in particular,

a. Order Respondents and any person acting on their behalf, to cease and desist all operations over the Guardian grounding incident;

b. Initially demarcating the metes and bounds of the damaged area as well as an additional buffer zone;

c. Order Respondents to stop all port calls and war games under ‘ Balikatan ’ because of the absence of clear guidelines, duties, and liability schemes for breaches of those duties, and require Respondents to assume responsibility for prior and future environmental damage in general, and environmental damage under the Visiting Forces Agreement in particular.

d. Temporarily define and describe allowable activities of ecotourism, diving, recreation, and limited commercial activities by fisherfolk and indigenous communities near or around the TRNP but away from the damaged site and an additional buffer zone;

3. After summary hearing, issue a Resolution extending the TEPO until further orders of the Court;

4. After due proceedings, render a Decision which shall include, without limitation:chanRoblesvirtualLawlibrary

a. Order Respondents Secretary of Foreign Affairs , following the dispositive portion of Nicolas v. Romulo, “to forthwith negotiate with the United States representatives for the appropriate agreement on [environmental guidelines and environmental accountability] under Philippine authorities as provided in Art. V[ ] of the VFA…”

b. Direct Respondents and appropriate agencies to commence administrative, civil, and criminal proceedings against erring officers and individuals to the full extent of the law, and to make such proceedings public;

c. Declare that Philippine authorities may exercise primary and exclusive criminal jurisdiction over erring U.S. personnel under the circumstances of this case;

d. Require Respondents to pay just and reasonable compensation in the settlement of all meritorious claims for damages caused to the Tubbataha Reef on terms and conditions no less severe than those applicable to other States, and damages for personal injury or death, if such had been the case;

e. Direct Respondents to cooperate in providing for the attendance of witnesses and in the collection and production of evidence, including seizure and delivery of objects connected with the offenses related to the grounding of the Guardian;

f. Require the authorities of the Philippines and the United States to notify each other of the disposition of all cases, wherever heard, related to the grounding of the Guardian;

g. Restrain Respondents from proceeding with any purported restoration, repair, salvage or post salvage plan or plans, including cleanup plans covering the damaged area of the Tubbataha Reef absent a just settlement approved by the Honorable Court;

h. Require Respondents to engage in stakeholder and LGU consultations in accordance with the Local Government Code and R.A. 10067;

i. Require Respondent US officials and their representatives to place a deposit to the TRNP Trust Fund defined under Section 17 of RA 10067 as a bona fide gesture towards full reparations;

j. Direct Respondents to undertake measures to rehabilitate the areas affected by the grounding of the Guardian in light of Respondents’ experience in the Port Royale grounding in 2009, among other similar grounding incidents;

k. Require Respondents to regularly publish on a quarterly basis and in the name of transparency and accountability such environmental damage assessment, valuation, and valuation methods, in all stages of negotiation;

l. Convene a multisectoral technical working group to provide scientific and technical support to the TPAMB;

m. Order the Department of Foreign Affairs, Department of National Defense, and the Department of Environment and Natural Resources to review the Visiting Forces Agreement and the Mutual Defense Treaty to consider whether their provisions allow for the exercise of erga omnes rights to a balanced and healthful ecology and for damages which follow from any violation of those rights;

n. Narrowly tailor the provisions of the Visiting Forces Agreement for purposes of protecting the damaged areas of TRNP;

o. Declare the grant of immunity found in Article V (“Criminal Jurisdiction”) and Article VI of the Visiting Forces Agreement unconstitutional for violating equal protection and/or for violating the preemptory norm of nondiscrimination incorporated as part of the law of the land under Section 2, Article II, of the Philippine Constitution;

p. Allow for continuing discovery measures;

q. Supervise marine wildlife rehabilitation in the Tubbataha Reefs in all other respects; and

5. Provide just and equitable environmental rehabilitation measures and such other reliefs as are just and equitable under the premises.7 (Underscoring supplied.)

Since only the Philippine respondents filed their comment8 to the petition, petitioners also filed a motion for early resolution and motion to proceed ex parte against the US respondents.9cralawlawlibrary

Respondents’ Consolidated Comment

In their consolidated comment with opposition to the application for a TEPO and ocular inspection and production orders, respondents assert that: (1) the grounds relied upon for the issuance of a TEPO or writ of Kalikasan have become fait accompli as the salvage operations on the USS Guardian were already completed; (2) the petition is defective in form and substance; (3) the petition improperly raises issues involving the VFA between the Republic of the Philippines and the United States of America; and (4) the determination of the extent of responsibility of the US Government as regards the damage to the Tubbataha Reefs rests exclusively with the executive branch.

The Court’s Ruling

As a preliminary matter, there is no dispute on the legal standing of petitioners to file the present petition.

Locus standi is “a right of appearance in a court of justice on a given question.”10 Specifically, it is

“a party’s personal and substantial interest in a case where he has sustained or will sustain direct injury as a result” of the act being challenged, and “calls for more than just a generalized grievance.”11 However, the rule on standing is a procedural matter which this Court has relaxed for non-traditional plaintiffs like ordinary citizens, taxpayers and legislators when the public interest so requires, such as when the subject matter of the controversy is of transcendental importance, of overreaching significance to society, or of paramount public interest.12cralawlawlibrary

In the landmark case of Oposa v. Factoran, Jr.,13 we recognized the “public right” of citizens to “a balanced and healthful ecology which, for the first time in our constitutional history, is solemnly incorporated in the fundamental law.” We declared that the right to a balanced and healthful ecology need not be written in the Constitution for it is assumed, like other civil and political rights guaranteed in the Bill of Rights, to exist from the inception of mankind and it is an issue of transcendental importance with intergenerational implications. Such right carries with it the correlative duty to refrain from impairing the environment.14cralawlawlibrary

On the novel element in the class suit filed by the petitioners minors in Oposa, this Court ruled that not only do ordinary citizens have legal standing to sue for the enforcement of environmental rights, they can do so in representation of their own and future generations. Thus:chanRoblesvirtualLawlibrary

Petitioners minors assert that they represent their generation as well as generations yet unborn. We find no difficulty in ruling that they can, for themselves, for others of their generation and for the succeeding generations, file a class suit. Their personality to sue in behalf of the succeeding generations can only be based on the concept of intergenerational responsibility insofar as the right to a balanced and healthful ecology is concerned. Such a right, as hereinafter expounded, considers the “rhythm and harmony of nature.”Nature means the created world in its entirety. Such rhythm and harmony indispensably include, inter alia, the judicious disposition, utilization, management, renewal and conservation of the country’s forest, mineral, land, waters, fisheries, wildlife, off-shore areas and other natural resources to the end that their exploration, development and utilization be equitably accessible to the present as well as future generations. Needless to say, every generation has a responsibility to the next to preserve that rhythm and harmony for the full enjoyment of a balanced and healthful ecology. Put a little differently, the minors’ assertion of their right to a sound environment constitutes, at the same time, the performance of their obligation to ensure the protection of that right for the generations to come.15 (Emphasis supplied.)

The liberalization of standing first enunciated in Oposa, insofar as it refers to minors and generations yet unborn, is now enshrined in the Rules which allows the filing of a citizen suit in environmental cases. The provision on citizen suits in the Rules “collapses the traditional rule on personal and direct interest, on the principle that humans are stewards of nature.”16cralawlawlibrary

Having settled the issue of locus standi, we shall address the more fundamental question of whether this Court has jurisdiction over the US respondents who did not submit any pleading or manifestation in this case.

The immunity of the State from suit, known also as the doctrine of sovereign immunity or non-

suability of the State,17 is expressly provided in Article XVI of the 1987 Constitution which states:chanRoblesvirtualLawlibrary

Section 3. The State may not be sued without its consent.In United States of America v. Judge Guinto,18 we discussed the principle of state immunity from suit, as follows:chanRoblesvirtualLawlibrary

The rule that a state may not be sued without its consent, now expressed in Article XVI, Section 3, of the 1987 Constitution, is one of the generally accepted principles of international law that we have adopted as part of the law of our land under Article II, Section 2. x x x.

Even without such affirmation, we would still be bound by the generally accepted principles of international law under the doctrine of incorporation. Under this doctrine, as accepted by the majority of states, such principles are deemed incorporated in the law of every civilized state as a condition and consequence of its membership in the society of nations. Upon its admission to such society, the state is automatically obligated to comply with these principles in its relations with other states.

As applied to the local state, the doctrine of state immunity is based on the justification given by Justice Holmes that “there can be no legal right against the authority which makes the law on which the right depends.”[Kawanakoa v. Polybank, 205 U.S. 349] There are other practical reasons for the enforcement of the doctrine. In the case of the foreign state sought to be impleaded in the local jurisdiction, the added inhibition is expressed in the maxim par in parem, non habet imperium. All states are sovereign equals and cannot assert jurisdiction over one another. A contrary disposition would, in the language of a celebrated case, “unduly vex the peace of nations.” [De Haber v. Queen of Portugal, 17 Q. B. 171]

While the doctrine appears to prohibit only suits against the state without its consent, it isalso applicable to complaints filed against officials of the state for acts allegedly performed by them in the discharge of their duties. The rule is that if the judgment against such officials will require the state itself to perform an affirmative act to satisfy the same, such as the appropriation of the amount needed to pay the damages awarded against them, the suit must be regarded as against the state itself although it has not been formally impleaded. [Garcia v. Chief of Staff, 16 SCRA 120] In such a situation, the state may move to dismiss the complaint on the ground that it has been filed without its consent.19 (Emphasis supplied.)

Under the American Constitution, the doctrine is expressed in the Eleventh Amendment which reads:chanRoblesvirtualLawlibrary

The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.In the case of Minucher v. Court of Appeals,20 we further expounded on the immunity of foreign states from the jurisdiction of local courts, as follows:chanRoblesvirtualLawlibrary

The precept that a State cannot be sued in the courts of a foreign state is a long-standing rule of customary international law then closely identified with the personal immunity of a foreign

sovereign from suit and, with the emergence of democratic states, made to attach not just to the person of the head of state, or his representative, but also distinctly to the state itself in its sovereign capacity. If the acts giving rise to a suit are those of a foreign government done by its foreign agent, although not necessarily a diplomatic personage, but acting in his official capacity, the complaint could be barred by the immunity of the foreign sovereign from suit without its consent.Suing a representative of a state is believed to be, in effect, suing the state itself. The proscription is not accorded for the benefit of an individual but for the State, in whose service he is, under the maxim - par in parem, non habet imperium - thatall states are sovereign equals and cannot assert jurisdiction over one another. The implication, in broad terms, is that if the judgment against an official would require the state itself to perform an affirmative act to satisfy the award, such as the appropriation of the amount needed to pay the damages decreed against him, the suit must be regarded as being against the state itself, although it has not been formally impleaded.21 (Emphasis supplied.)

In the same case we also mentioned that in the case of diplomatic immunity, the privilege is not an immunity from the observance of the law of the territorial sovereign or from ensuing legal liability; it is, rather, an immunity from the exercise of territorial jurisdiction.22cralawlawlibrary

In United States of America v. Judge Guinto,23 one of the consolidated cases therein involved a Filipino employed at Clark Air Base who was arrested following a buy-bust operation conducted by two officers of the US Air Force, and was eventually dismissed from his employment when he was charged in court for violation of R.A. No. 6425. In a complaint for damages filed by the said employee against the military officers, the latter moved to dismiss the case on the ground that the suit was against the US Government which had not given its consent. The RTC denied the motion but on a petition for certiorariand prohibition filed before this Court, we reversed the RTC and dismissed the complaint. We held that petitioners US military officers were acting in the exercise of their official functions when they conducted the buy-bust operation against the complainant and thereafter testified against him at his trial. It follows that for discharging their duties as agents of the United States, they cannot be directly impleaded for acts imputable to their principal, which has not given its consent to be sued.

This traditional rule of State immunity which exempts a State from being sued in the courts of another State without the former’s consent or waiver has evolved into a restrictive doctrine which distinguishes sovereign and governmental acts (jure imperii) from private, commercial and proprietary acts (jure gestionis). Under the restrictive rule of State immunity, State immunity extends only to acts jure imperii. The restrictive application of State immunity is proper only when the proceedings arise out of commercial transactions of the foreign sovereign, its commercial activities or economic affairs.24cralawlawlibrary

In Shauf v. Court of Appeals,25 we discussed the limitations of the State immunity principle, thus:chanRoblesvirtualLawlibrary

It is a different matter where the public official is made to account in his capacity as such for acts contrary to law and injurious to the rights of plaintiff.As was clearly set forth by Justice Zaldivar in Director of the Bureau of Telecommunications, et al. vs. Aligaen, etc., et al.: “Inasmuch as the State authorizes only legal acts by its officers, unauthorized acts of government officials or officers are not acts of the State, and an action against the officials or officers by one whose rights have

been invaded or violated by such acts, for the protection of his rights, is not a suit against the State within the rule of immunity of the State from suit. In the same tenor, it has been said that an action at law or suit in equity against a State officer or the director of a State department on the ground that, while claiming to act for the State, he violates or invades the personal and property rights of the plaintiff, under an unconstitutional act or under an assumption of authority which he does not have, is not a suit against the State within the constitutional provision that the State may not be sued without its consent.” The rationale for this ruling is that the doctrine of state immunity cannot be used as an instrument for perpetrating an injustice.

x x x x

The aforecited authorities are clear on the matter. They state that the doctrine of immunity from suit will not apply and may not be invoked where the public official is being sued in his private and personal capacity as an ordinary citizen. The cloak of protection afforded the officers and agents of the government is removed the moment they are sued in their individual capacity. This situation usually arises where the public official acts without authority or in excess of the powers vested in him. It is a well-settled principle of law that a public official may be liable in his personal private capacity for whatever damage he may have caused by his act done with malice and in bad faith, or beyond the scope of his authority or jurisdiction.26 (Emphasis supplied.)

In this case, the US respondents were sued in their official capacity as commanding officers of the US Navy who had control and supervision over the USS Guardian and its crew. The alleged act or omission resulting in the unfortunate grounding of the USS Guardian on the TRNP was committed while they were performing official military duties. Considering that the satisfaction of a judgment against said officials will require remedial actions and appropriation of funds by the US government, the suit is deemed to be one against the US itself. The principle of State immunity therefore bars the exercise of jurisdiction by this Court over the persons of respondents Swift, Rice and Robling.

During the deliberations, Senior Associate Justice Antonio T. Carpio took the position that the conduct of the US in this case, when its warship entered a restricted area in violation of R.A. No. 10067 and caused damage to the TRNP reef system, brings the matter within the ambit of Article 31 of the United Nations Convention on the Law of the Sea (UNCLOS). He explained that while historically, warships enjoy sovereign immunity from suit as extensions of their flag State, Art. 31 of the UNCLOS creates an exception to this rule in cases where they fail to comply with the rules and regulations of the coastal State regarding passage through the latter’s internal waters and the territorial sea.

According to Justice Carpio, although the US to date has not ratified the UNCLOS, as a matter of long-standing policy the US considers itself bound by customary international rules on the “traditional uses of the oceans” as codified in UNCLOS, as can be gleaned from previous declarations by former Presidents Reagan and Clinton, and the US judiciary in the case of United States v. Royal Caribbean Cruise Lines, Ltd.27cralawlawlibrary

The international law of the sea is generally defined as “a body of treaty rules and customary norms governing the uses of the sea, the exploitation of its resources, and the exercise of jurisdiction over maritime regimes. It is a branch of public international law, regulating the

relations of states with respect to the uses of the oceans.”28 The UNCLOS is a multilateral treaty which was opened for signature on December 10, 1982 at Montego Bay, Jamaica. It was ratified by the Philippines in 1984 but came into force on November 16, 1994 upon the submission of the 60th ratification.

The UNCLOS is a product of international negotiation that seeks to balance State sovereignty (mare clausum) and the principle of freedom of the high seas (mare liberum).29 The freedom to use the world’s marine waters is one of the oldest customary principles of international law.30 The UNCLOS gives to the coastal State sovereign rights in varying degrees over the different zones of the sea which are: 1) internal waters, 2) territorial sea, 3) contiguous zone, 4) exclusive economic zone, and 5) the high seas. It also gives coastal States more or less jurisdiction over foreign vessels depending on where the vessel is located.31cralawlawlibrary

Insofar as the internal waters and territorial sea is concerned, the Coastal State exercises sovereignty, subject to the UNCLOS and other rules of international law. Such sovereignty extends to the air space over the territorial sea as well as to its bed and subsoil.32cralawlawlibrary

In the case of warships,33 as pointed out by Justice Carpio, they continue to enjoy sovereign immunity subject to the following exceptions:chanRoblesvirtualLawlibrary

Article 30Non-compliance by warships with the laws and regulations

of the coastal State

If any warship does not comply with the laws and regulations of the coastal State concerning passage through the territorial sea and disregards any request for compliance therewith which is made to it, the coastal State may require it to leave the territorial sea immediately.

Article 31Responsibility of the flag State for damage caused by a warship

or other government ship operated for non-commercial purposes

The flag State shall bear international responsibility for any loss or damage to the coastal State resulting from the non-compliance by a warship or other government ship operated for non-commercial purposes with the laws and regulations of the coastal State concerning passage through the territorial sea or with the provisions of this Convention or other rules of international law.

Article 32Immunities of warships and other government ships

operated for non-commercial purposes

With such exceptions as are contained in subsection A and in articles 30 and 31, nothing in this Convention affects the immunities of warships and other government ships operated for non-commercial purposes. (Emphasis supplied.)

A foreign warship’s unauthorized entry into our internal waters with resulting damage to marine

resources is one situation in which the above provisions may apply.But what if the offending warship is a non-party to the UNCLOS, as in this case, the US?

An overwhelming majority – over 80% -- of nation states are now members of UNCLOS, but despite this the US, the world’s leading maritime power, has not ratified it.

While the Reagan administration was instrumental in UNCLOS' negotiation and drafting, the U.S. delegation ultimately voted against and refrained from signing it due to concerns over deep seabed mining technology transfer provisions contained in Part XI. In a remarkable, multilateral effort to induce U.S. membership, the bulk of UNCLOS member states cooperated over the succeeding decade to revise the objectionable provisions. The revisions satisfied the Clinton administration, which signed the revised Part XI implementing agreement in 1994. In the fall of 1994, President Clinton transmitted UNCLOS and the Part XI implementing agreement to the Senate requesting its advice and consent. Despite consistent support from President Clinton, each of his successors, and an ideologically diverse array of stakeholders, the Senate has since withheld the consent required for the President to internationally bind the United States to UNCLOS.

While UNCLOS cleared the Senate Foreign Relations Committee (SFRC) during the 108th and 110th Congresses, its progress continues to be hamstrung by significant pockets of political ambivalence over U.S. participation in international institutions. Most recently, 111th Congress SFRC Chairman Senator John Kerry included “voting out” UNCLOS for full Senate consideration among his highest priorities. This did not occur, and no Senate action has been taken on UNCLOS by the 112th Congress.34chanrobleslaw

Justice Carpio invited our attention to the policy statement given by President Reagan on March 10, 1983 that the US will “recognize the rights of the other states in the waters off their coasts, as reflected in the convention [UNCLOS], so long as the rights and freedom of the United States and others under international law are recognized by such coastal states”, and President Clinton’s reiteration of the US policy “to act in a manner consistent with its [UNCLOS] provisions relating to traditional uses of the oceans and to encourage other countries to do likewise.” Since Article 31 relates to the “traditional uses of the oceans,” and “if under its policy, the US ‘recognize[s] the rights of the other states in the watersoff their coasts,’” Justice Carpio postulates that “there is more reason to expect it to recognize the rights of other states in their internal waters, such as the Sulu Sea in this case.”

As to the non-ratification by the US, Justice Carpio emphasizes that “the US’ refusal to join the UNCLOS was centered on its disagreement with UNCLOS’ regime of deep seabed mining (Part XI) which considers the oceans and deep seabed commonly owned by mankind,” pointing out that such “has nothing to do with its [the US’] acceptance of customary international rules on navigation.”

It may be mentioned that even the US Navy Judge Advocate General’s Corps publicly endorses the ratification of the UNCLOS, as shown by the following statement posted on its official website:chanRoblesvirtualLawlibrary

The Convention is in the national interest of the United States because it establishes stable maritime zones, including a maximum outer limit for territorial seas; codifies innocent passage,

transit passage, and archipelagic sea lanes passage rights; works against “jurisdictional creep” by preventing coastal nations from expanding their own maritime zones; and reaffirms sovereign immunity of warships, auxiliaries and government aircraft.

x x x x

Economically, accession to the Convention would support our national interests by enhancing the ability of the US to assert its sovereign rights over the resources of one of the largest continental shelves in the world. Further, it is the Law of the Sea Convention that first established the concept of a maritime Exclusive Economic Zone out to 200 nautical miles, and recognized the rights of coastal states to conserve and manage the natural resources in this Zone.35chanrobleslaw

We fully concur with Justice Carpio’s view that non-membership in the UNCLOS does not mean that the US will disregard the rights of the Philippines as a Coastal State over its internal waters and territorial sea. We thus expect the US to bear “international responsibility” under Art. 31 in connection with theUSS Guardian grounding which adversely affected the Tubbataha reefs. Indeed, it is difficult to imagine that our long-time ally and trading partner, which has been actively supporting the country’s efforts to preserve our vital marine resources, would shirk from its obligation to compensate the damage caused by its warship while transiting our internal waters. Much less can we comprehend a Government exercising leadership in international affairs, unwilling to comply with the UNCLOS directive for all nations to cooperate in the global task to protect and preserve the marine environment as provided in Article 197, viz:chanRoblesvirtualLawlibrary

Article 197Cooperation on a global or regional basis

States shall cooperate on a global basis and, as appropriate, on a regional basis, directly or through competent international organizations, in formulating and elaborating international rules, standards and recommended practices and procedures consistent with this Convention, for the protection and preservation of the marine environment, taking into account characteristic regional features.

In fine, the relevance of UNCLOS provisions to the present controversy is beyond dispute. Although the said treaty upholds the immunity of warships from the jurisdiction of Coastal States while navigating the latter’s territorial sea, the flag States shall be required to leave the territorial sea immediately if they flout the laws and regulations of the Coastal State, and they will be liable for damages caused by their warships or any other government vessel operated for non-commercial purposes under Article 31.

Petitioners argue that there is a waiver of immunity from suit found in the VFA. Likewise, they invoke federal statutes in the US under which agencies of the US have statutorily waived their immunity to any action. Even under the common law tort claims, petitioners asseverate that the US respondents are liable for negligence, trespass and nuisance.

We are not persuaded.

The VFA is an agreement which defines the treatment of United States troops and personnel visiting the Philippines to promote “common security interests” between the US and the Philippines in the region. It provides for the guidelines to govern such visits of military personnel, and further defines the rights of the United States and the Philippine government in the matter of criminal jurisdiction, movement of vessel and aircraft, importation and exportation of equipment, materials and supplies.36 The invocation of US federal tort laws and even common law is thus improper considering that it is the VFA which governs disputes involving US military ships and crew navigating Philippine waters in pursuance of the objectives of the agreement.

As it is, the waiver of State immunity under the VFA pertains only to criminal jurisdiction and not to special civil actions such as the present petition for issuance of a writ of Kalikasan. In fact, it can be inferred from Section 17, Rule 7 of the Rules that a criminal case against a person charged with a violation of an environmental law is to be filed separately:chanRoblesvirtualLawlibrary

Sec. 17. Institution of separate actions.—The filing of a petition for the issuance of the writ of kalikasan shall not preclude the filing of separate civil, criminal or administrative actions.

In any case, it is our considered view thata ruling on the application or non-application of criminal jurisdiction provisions of the VFA to US personnel who may be found responsible for the grounding of theUSS Guardian, would be premature and beyond the province of a petition for a writ of Kalikasan. We also find it unnecessary at this point to determine whether such waiver of State immunity is indeed absolute. In the same vein, we cannot grant damages which have resulted from the violation of environmental laws. The Rules allows the recovery of damages, including the collection of administrative fines under R.A. No. 10067, in a separate civil suit or that deemed instituted with the criminal action charging the same violation of an environmental law.37cralawlawlibrary

Section 15, Rule 7 enumerates the reliefs which may be granted in a petition for issuance of a writ ofKalikasan, to wit:chanRoblesvirtualLawlibrary

Sec. 15. Judgment.—Within sixty (60) days from the time the petition is submitted for decision, the court shall render judgment granting or denying the privilege of the writ ofkalikasan.

The reliefs that may be granted under the writ are the following:chanRoblesvirtualLawlibrary

(a) Directing respondent to permanently cease and desist from committing acts or neglecting the performance of a duty in violation of environmental laws resulting in environmental destruction or damage;

(b) Directing the respondent public official, government agency, private person or entity to protect, preserve,rehabilitate or restore the environment;

(c) Directing the respondent public official, government agency, private person or entity to monitor strict compliance with the decision and orders of the court;

(d) Directing the respondent public official, government agency, or private person or entity to make periodic reports on the execution of the final judgment; and

(e) Such other reliefs which relate to the right of the people to a balanced and healthful ecology or to the protection,preservation, rehabilitation or restoration of the environment,except the award of damages to individual petitioners. (Emphasis supplied.)

We agree with respondents (Philippine officials) in asserting that this petition has become moot in the sense that the salvage operation sought to be enjoined or restrained had already been accomplished when petitioners sought recourse from this Court. But insofar as the directives to Philippine respondents to protect and rehabilitate the coral reef structure and marine habitat adversely affected by the grounding incident are concerned, petitioners are entitled to these reliefs notwithstanding the completion of the removal of the USS Guardian from the coral reef.

However, we are mindful of the fact that the US and Philippine governments both expressed readiness to negotiate and discuss the matter of compensation for the damage caused by the USS Guardian. The US Embassy has also declared it is closely coordinating with local scientists and experts in assessing the extent of the damage and appropriate methods of rehabilitation.

Exploring avenues for settlement of environmental cases is not proscribed by the Rules. As can be gleaned from the following provisions, mediation and settlement are available for the consideration of the parties, and which dispute resolution methods are encouraged by the court, to wit:chanRoblesvirtualLawlibrary

RULE 3

x x x x

Sec. 3. Referral to mediation.–At the start of the pre-trial conference, the court shall inquire from the parties if they have settled the dispute; otherwise, the court shall immediately refer the parties or their counsel, if authorized by their clients, to the Philippine Mediation Center (PMC) unit for purposes of mediation. If not available, the court shall refer the case to the clerk of court or legal researcher for mediation.

Mediation must be conducted within a non-extendible period of thirty (30) days from receipt of notice of referral to mediation.

The mediation report must be submitted within ten (10) days from the expiration of the 30-day period.

Sec. 4. Preliminary conference.–If mediation fails, the court will schedule the continuance of the pre-trial. Before the scheduled date of continuance, the court may refer the case to the branch clerk of court for a preliminary conference for the following purposes:chanRoblesvirtualLawlibrary

(a) To assist the parties in reaching a settlement;

x x x x

Sec. 5. Pre-trial conference; consent decree.–The judge shall put the parties and their counsels

under oath, and they shall remain under oath in all pre-trial conferences.

The judge shall exert best efforts to persuade the parties to arrive at a settlement of the dispute. The judge may issue a consent decree approving the agreement between the parties in accordance with law, morals, public order and public policy to protect the right of the people to a balanced and healthful ecology.

x x x x

Sec. 10. Efforts to settle.–The court shall endeavor to make the parties to agree to compromise or settle in accordance with law at any stage of the proceedings before rendition of judgment. (Underscoring supplied.)

The Court takes judicial notice of a similar incident in 2009 when a guided-missile cruiser, the USS Port Royal, ran aground about half a mile off the Honolulu Airport Reef Runway and remained stuck for four days. After spending $6.5 million restoring the coral reef, the US government was reported to have paid the State of Hawaii $8.5 million in settlement over coral reef damage caused by the grounding.38cralawlawlibrary

To underscore that the US government is prepared to pay appropriate compensation for the damage caused by the USS Guardian grounding, the US Embassy in the Philippines has announced the formation of a US interdisciplinary scientific team which will “initiate discussions with the Government of the Philippines to review coral reef rehabilitation options in Tubbataha, based on assessments by Philippine-based marine scientists.” The US team intends to “help assess damage and remediation options, in coordination with the Tubbataha Management Office, appropriate Philippine government entities, non-governmental organizations, and scientific experts from Philippine universities.”39cralawlawlibrary

A rehabilitation or restoration program to be implemented at the cost of the violator is also a major relief that may be obtained under a judgment rendered in a citizens’ suit under the Rules, viz:chanRoblesvirtualLawlibrary

RULE 5

Section 1. Reliefs in a citizen suit.–If warranted, the court may grant to the plaintiff proper reliefs which shall include the protection, preservation or rehabilitation of the environment and the payment of attorney’s fees, costs of suit and other litigation expenses. It may also require the violator to submit a program of rehabilitation or restoration of the environment, the costs of which shall be borne by the violator, or to contribute to a special trust fund for that purpose subject to the control of the court.

In the light of the foregoing, the Court defers to the Executive Branch on the matter of compensation and rehabilitation measures through diplomatic channels. Resolution of these issues impinges on our relations with another State in the context of common security interests under the VFA. It is settled that “[t]he conduct of the foreign relations of our government is committed by the Constitution to the executive and legislative—“the political”--departments of the government, and the propriety of what may be done in the exercise of this political power is

not subject to judicial inquiry or decision.”40cralawlawlibrary

On the other hand, we cannot grant the additional reliefs prayed for in the petition to order a review of the VFA and to nullify certain immunity provisions thereof.

As held in BAYAN (Bagong Alyansang Makabayan) v. Exec. Sec. Zamora,41 the VFA was duly concurred in by the Philippine Senate and has been recognized as a treaty by the United States as attested and certified by the duly authorized representative of the United States government. The VFA being a valid and binding agreement, the parties are required as a matter of international law to abide by its terms and provisions.42 The present petition under the Rules is not the proper remedy to assail the constitutionality of its provisions.

WHEREFORE, the petition for the issuance of the privilege of the Writ of Kalikasan is hereby DENIED.

No pronouncement as to costs.

SO ORDERED.cralawred

Carpio, Velasco, Jr., Leonardo-De Castro, Brion, Peralta, Bersamin, Del Castillo, Perez, Reyes, andPerlas-Bernabe, JJ., concur.Sereno, C.J., see concurring opinion.Mendoza, J., on official leave.Leonen, J., see separate concurring opinion. Jardeleza, J., no part.

EN BANC

G.R. No. 199199, August 27, 2013

MARICRIS D. DOLOT, CHAIRMAN OF THE BAGONG ALYANSANG MAKABAYAN-SORSOGON, Petitioner, v. HON. RAMON PAJE, IN HIS CAPACITY AS THE SECRETARY OF THE

DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, REYNULFO A. JUAN, REGIONAL DIRECTOR, MINES AND GEOSCIENCES BUREAU, DENR, HON. RAUL R. LEE, GOVERNOR, PROVINCE

OF SORSOGON, ANTONIO C. OCAMPO, JR., VICTORIA A. AJERO, ALFREDO M. AGUILAR, AND

JUAN M. AGUILAR, ANTONES ENTERPRISES, GLOBAL SUMMIT MINES DEV'T CORP., AND TR ORE, Respondents.

DECISION

REYES, J.:

This is a petition for review on certiorari1 under Rule 45 of the Rules of Court assailing the Order2 dated September 16, 2011 and Resolution3 dated October 18, 2011 issued by the Regional Trial Court (RTC) of Sorsogon, Branch 53. The assailed issuances dismissed Civil Case No. 2011-8338 for Continuing Mandamus, Damages and Attorney’s Fees with Prayer for the Issuance of a Temporary Environment Protection Order.

Antecedent Facts

On September 15, 2011, petitioner Maricris D. Dolot (Dolot), together with the parish priest of the Holy Infant Jesus Parish and the officers of Alyansa Laban sa Mina sa Matnog (petitioners), filed a petition for continuing mandamus, damages and attorney’s fees with the RTC of Sorsogon, docketed as Civil Case No. 2011-8338.4 The petition contained the following pertinent allegations: (1) sometime in 2009, they protested the iron ore mining operations being conducted by Antones Enterprises, Global Summit Mines Development Corporation and TR Ore in Barangays Balocawe and Bon-ot Daco, located in the Municipality of Matnog, to no avail; (2) Matnog is located in the southern tip of Luzon and there is a need to protect, preserve and maintain the geological foundation of the municipality; (3) Matnog is susceptible to flooding and landslides, and confronted with the environmental dangers of flood hazard, liquefaction, ground settlement, ground subsidence and landslide hazard; (4) after investigation, they learned that the mining operators did not have the required permit to operate; (5) Sorsogon Governor Raul Lee and his predecessor Sally Lee issued to the operators a small-scale mining permit, which they did not have authority to issue; (6) the representatives of the Presidential Management Staff and the Department of Environment and Natural Resources (DENR), despite knowledge, did not do anything to protect the interest of the people of Matnog;5 and (7) the respondents violated Republic Act (R.A.) No. 7076 or the People’s Small-Scale Mining Act of 1991, R.A. No. 7942 or the Philippine Mining Act of 1995, and the Local Government Code.6 Thus, they prayed for the following reliefs: (1) the issuance of a writ commanding the respondents to immediately stop the mining operations in the Municipality of Matnog; (2) the issuance of a temporary environment protection order or TEPO; (3) the creation of an inter-agency group to undertake the rehabilitation of the mining site; (4) award of damages; and (5) return of the iron ore, among others.7cralaw virtualaw library

The case was referred by the Executive Judge to the RTC of Sorsogon, Branch 53 being the designated environmental court.8 In the Order9 dated September 16, 2011, the case was summarily dismissed for lack of jurisdiction.

The petitioners filed a motion for reconsideration but it was denied in the Resolution10 dated October 18, 2011. Aside from sustaining the dismissal of the case for lack of jurisdiction, the

RTC11 further ruled that: (1) there was no final court decree, order or decision yet that the public officials allegedly failed to act on, which is a condition for the issuance of the writ of continuing mandamus; (2) the case was prematurely filed as the petitioners therein failed to exhaust their administrative remedies; and (3) they also failed to attach judicial affidavits and furnish a copy of the complaint to the government or appropriate agency, as required by the rules.12cralaw virtualaw library

Petitioner Dolot went straight to this Court on pure questions of law.

Issues

The main issue in this case is whether the RTC-Branch 53 has jurisdiction to resolve Civil Case No. 2011-8338. The other issue is whether the petition is dismissible on the grounds that: (1) there is no final court decree, order or decision that the public officials allegedly failed to act on; (2) the case was prematurely filed for failure to exhaust administrative remedies; and (3) the petitioners failed to attach judicial affidavits and furnish a copy of the complaint to the government or appropriate agency.

Ruling of the Court

Jurisdiction and Venue

In dismissing the petition for lack of jurisdiction, the RTC, in its Order dated September 16, 2011, apparently relied on SC Administrative Order (A.O.) No. 7 defining the territorial areas of the Regional Trial Courts in Regions 1 to 12, and Administrative Circular (Admin. Circular) No. 23-2008,13 designating the environmental courts “to try and decide violations of environmental laws x x x committed within their respective territorial jurisdictions.”14 Thus, it ruled that its territorial jurisdiction was limited within the boundaries of Sorsogon City and the neighboring municipalities of Donsol, Pilar, Castilla, Casiguran and Juban and that it was “bereft of jurisdiction to entertain, hear and decide [the] case, as such authority rests before another co-equal court.”15cralaw virtualaw library

Such reasoning is plainly erroneous. The RTC cannot solely rely on SC A.O. No. 7 and Admin. Circular No. 23-2008 and confine itself within its four corners in determining whether it had jurisdiction over the action filed by the petitioners.

None is more well-settled than the rule that jurisdiction, which is the power and authority of the court to hear, try and decide a case, is conferred by law.16 It may either be over the nature of the action, over the subject matter, over the person of the defendants or over the issues framed in the pleadings.17 By virtue of Batas Pambansa (B.P.) Blg. 129 or the Judiciary Reorganization Act of 1980, jurisdiction over special civil actions for certiorari, prohibition and mandamus is vested in the RTC. Particularly, Section 21(1) thereof provides that the RTCs shall exercise original jurisdiction –in the issuance of writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction which may be enforced in any part of their respective regions. (Emphasis ours)

A.O. No. 7 and Admin. Circular No. 23-2008 was issued pursuant to Section 18 of B.P. Blg. 129, which gave the Court authority to define the territory over which a branch of the RTC shall exercise its authority. These administrative orders and circulars issued by the Court merely provide for the venue where an action may be filed. The Court does not have the power to confer jurisdiction on any court or tribunal as the allocation of jurisdiction is lodged solely in Congress.18 It also cannot be delegated to another office or agency of the Government.19Section 18 of B.P. Blg. 129, in fact, explicitly states that the territory thus defined shall be deemed to be the territorial area of the branch concerned for purposes of determining the venue of all suits, proceedings or actions. It was also clarified in Office of the Court Administrator v. Judge Matas20 that –Administrative Order No. 3 [defining the territorial jurisdiction of the Regional Trial Courts in the National Capital Judicial Region] and, in like manner, Circular Nos. 13 and 19, did notper se confer jurisdiction on the covered regional trial courts or its branches, such that non-observance thereof would nullify their judicial acts. The administrative order merely defines the limits of the administrative area within which a branch of the court may exercise its authority pursuant to the jurisdiction conferred by Batas Pambansa Blg. 129.21cralaw virtualaw libraryThe RTC need not be reminded that venue relates only to the place of trial or the geographical location in which an action or proceeding should be brought and does not equate to the jurisdiction of the court. It is intended to accord convenience to the parties, as it relates to the place of trial, and does not restrict their access to the courts.22 Consequently, the RTC’smotu proprio dismissal of Civil Case No. 2011-8338 on the ground of lack of jurisdiction is patently incorrect.

At most, the error committed by the petitioners in filing the case with the RTC of Sorsogon was that of improper venue. A.M. No. 09-6-8-SC or the Rules of Procedure for Environmental Cases (Rules) specifically states that a special civil action for continuing mandamus shall be filed with the “[RTC] exercising jurisdiction over the territory where the actionable neglect or omission occurred x x x.”23 In this case, it appears that the alleged actionable neglect or omission occurred in the Municipality of Matnog and as such, the petition should have been filed in the RTC of Irosin.24 But even then, it does not warrant the outright dismissal of the petition by the RTC as venue may be waived.25 Moreover, the action filed by the petitioners is not criminal in nature where venue is an essential element of jurisdiction.26 In Gomez-Castillo v. Commission on Elections,27 the Court even expressed that what the RTC should have done under the circumstances was to transfer the case (an election protest) to the proper branch. Similarly, it would serve the higher interest of justice28 if the Court orders the transfer of Civil Case No. 2011 8338 to the RTC of Irosin for proper and speedy resolution, with the RTC applying the Rules in its disposition of the case.

At this juncture, the Court affirms the continuing applicability of Admin. Circular No. 23-2008 constituting the different “green courts” in the country and setting the administrative guidelines in the raffle and disposition of environmental cases. While the designation and guidelines were made in 2008, the same should operate in conjunction with the Rules.

A.M. No. 09-6-8-SC: Rules of Procedure for Environmental Cases

In its Resolution dated October 18, 2011, which resolved the petitioners’ motion for reconsideration of the order of dismissal, the RTC further ruled that the petition was dismissible

on the following grounds: (1) there is no final court decree, order or decision yet that the public officials allegedly failed to act on; (2) the case was prematurely filed for failure to exhaust administrative remedies; and (3) there was failure to attach judicial affidavits and furnish a copy of the complaint to the government or appropriate agency.29 The respondents, and even the Office of the Solicitor General, in behalf of the public respondents, all concur with the view of the RTC.

The concept of continuing mandamus was first introduced in Metropolitan Manila Development Authority v. Concerned Residents of Manila Bay.30 Now cast in stone under Rule 8 of the Rules, the writ of continuing mandamus enjoys a distinct procedure than that of ordinary civil actions for the enforcement/violation of environmental laws, which are covered by Part II (Civil Procedure). Similar to the procedure under Rule 65 of the Rules of Court for special civil actions for certiorari, prohibition and mandamus, Section 4, Rule 8 of the Rules requires that the petition filed should be sufficient in form and substance before a court may take further action; otherwise, the court may dismiss the petition outright. Courts must be cautioned, however, that the determination to give due course to the petition or dismiss it outright is an exercise of discretion that must be applied in a reasonable manner in consonance with the spirit of the law and always with the view in mind of seeing to it that justice is served.31cralaw virtualaw library

Sufficiency in form and substance refers to the contents of the petition filed under Rule 8, Section 1:When any agency or instrumentality of the government or officer thereof unlawfully neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust or station in connection with the enforcement or violation of an environmental law rule or regulation or a right therein, or unlawfully excludes another from the use or enjoyment of such right and there is no other plain, speedy and adequate remedy in the ordinary course of law, the person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty, attaching thereto supporting evidence, specifying that the petition concerns an environmental law, rule or regulation, and praying that judgment be rendered commanding the respondent to do an act or series of acts until the judgment is fully satisfied, and to pay damages sustained by the petitioner by reason of the malicious neglect to perform the duties of the respondent, under the law, rules or regulations. The petition shall also contain a sworn certification of non-forum shopping.On matters of form, the petition must be verified and must contain supporting evidence as well as a sworn certification of non-forum shopping. It is also necessary that the petitioner must be one who is aggrieved by an act or omission of the government agency, instrumentality or its officer concerned. Sufficiency of substance, on the other hand, necessitates that the petition must contain substantive allegations specifically constituting an actionable neglect or omission and must establish, at the very least, a prima facie basis for the issuance of the writ, viz: (1) an agency or instrumentality of government or its officer unlawfully neglects the performance of an act or unlawfully excludes another from the use or enjoyment of a right; (2) the act to be performed by the government agency, instrumentality or its officer is specifically enjoined by law as a duty; (3) such duty results from an office, trust or station in connection with the enforcement or violation of an environmental law, rule or regulation or a right therein; and (4) there is no other plain, speedy and adequate remedy in the course of law.32cralaw virtualaw library

The writ of continuing mandamus is a special civil action that may be availed of “to compel the

performance of an act specifically enjoined by law.”33The petition should mainly involve an environmental and other related law, rule or regulation or a right therein. The RTC’s mistaken notion on the need for a final judgment, decree or order is apparently based on the definition of the writ of continuing mandamus under Section 4, Rule 1 of the Rules, to wit:(c) Continuing mandamus is a writ issued by a court in an environmental case directing any agency or instrumentality of the government or officer thereof to perform an act or series of acts decreed by final judgment which shall remain effective until judgment is fully satisfied. (Emphasis ours)The final court decree, order or decision erroneously alluded to by the RTC actually pertains to the judgment or decree that a court would eventually render in an environmental case for continuing mandamus and which judgment or decree shall subsequently become final.

Under the Rules, after the court has rendered a judgment in conformity with Rule 8, Section 7 and such judgment has become final, the issuing court still retains jurisdiction over the case to ensure that the government agency concerned is performing its tasks as mandated by law and to monitor the effective performance of said tasks. It is only upon full satisfaction of the final judgment, order or decision that a final return of the writ shall be made to the court and if the court finds that the judgment has been fully implemented, the satisfaction of judgment shall be entered in the court docket.34 A writ of continuing mandamus is, in essence, a command of continuing compliance with a final judgment as it “permits the court to retain jurisdiction after judgment in order to ensure the successful implementation of the reliefs mandated under the court’s decision.”35cralaw virtualaw library

The Court, likewise, cannot sustain the argument that the petitioners should have first filed a case with the Panel of Arbitrators (Panel), which has jurisdiction over mining disputes under R.A. No. 7942.

Indeed, as pointed out by the respondents, the Panel has jurisdiction over mining disputes.36 But the petition filed below does not involve a mining dispute. What was being protested are the alleged negative environmental impact of the small-scale mining operation being conducted by Antones Enterprises, Global Summit Mines Development Corporation and TR Ore in the Municipality of Matnog; the authority of the Governor of Sorsogon to issue mining permits in favor of these entities; and the perceived indifference of the DENR and local government officials over the issue. Resolution of these matters does not entail the technical knowledge and expertise of the members of the Panel but requires an exercise of judicial function. Thus, inOlympic Mines and Development Corp. v. Platinum Group Metals Corporation,37 the Court stated –Arbitration before the Panel of Arbitrators is proper only when there is a disagreement between the parties as to some provisions of the contract between them, which needs the interpretation and the application of that particular knowledge and expertise possessed by members of that Panel. It is not proper when one of the parties repudiates the existence or validity of such contract or agreement on the ground of fraud or oppression as in this case. The validity of the contract cannot be subject of arbitration proceedings. Allegations of fraud and duress in the execution of a contract are matters within the jurisdiction of the ordinary courts of law. These questions are legal in nature and require the application and interpretation of laws and jurisprudence which is necessarily a judicial function.38 (Emphasis supplied in the former and ours in the latter)Consequently, resort to the Panel would be completely useless and unnecessary.

The Court also finds that the RTC erred in ruling that the petition is infirm for failure to attach judicial affidavits. As previously stated, Rule 8 requires that the petition should be verified, contain supporting evidence and must be accompanied by a sworn certification of non-forum shopping. There is nothing in Rule 8 that compels the inclusion of judicial affidavits, albeit not prohibited. It is only if the evidence of the petitioner would consist of testimony of witnesses that it would be the time that judicial affidavits (affidavits of witnesses in the question and answer form) must be attached to the petition/complaint.39cralaw virtualaw library

Finally, failure to furnish a copy of the petition to the respondents is not a fatal defect such that the case should be dismissed. The RTC could have just required the petitioners to furnish a copy of the petition to the respondents. It should be remembered that “courts are not enslaved by technicalities, and they have the prerogative to relax compliance with procedural rules of even the most mandatory character, mindful of the duty to reconcile both the need to speedily put an end to litigation and the parties’ right to an opportunity to be heard.”40cralaw virtualaw library

WHEREFORE, the petition is GRANTED. The Order dated September 16, 2011 and Resolution dated October 18, 2011 issued by the Regional Trial Court of Sorsogon, Branch 53, dismissing Civil Case No. 2011-8338 are NULLIFIED AND SET ASIDE. The Executive Judge of the Regional Trial Court of Sorsogon is DIRECTED to transfer the case to the Regional Trial Court of Irosin, Branch 55, for further proceedings with dispatch. Petitioner Maricris D. Dolot is also ORDERED to furnish the respondents with a copy of the petition and its annexes within ten (10) days from receipt of this Decision and to submit its Compliance with the RTC of Irosin.

SO ORDERED.

Sereno, C.J., Carpio, Velasco, Jr., Leonardo-De Castro, Peralta, Bersamin, Castillo, Abad, Perez, Mendoza, Perlas-Bernabe, and Leonen, JJ., concur.Brion, J., on leave.Villarama, Jr., on official leave.

SECOND DIVISION

G.R. No. 149638, December 10, 2014

MONCAYO INTEGRATED SMALL-SCALE MINERS ASSOCIATION, INC. [MISSMA], Petitioner, v.SOUTHEAST MINDANAO GOLD MINING CORP., JB. MGT. MINING CORP., PICOP RESOURCES, INC., MT. DIWATA UPPER ULIP MANDAYA TRIBAL COUNCIL, INC. AND BALITE

INTEGRATED SMALL-SCALE MINING CORP., (BISSMICO), Respondents.

[G.R. NO. 149916]

HON. ANTONIO H. CERILLES, IN HIS CAPACITY AS SECRETARY OF DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, Petitioner, v. SOUTHEAST MINDANAO GOLD MINING

CORPORATION (SMGMC) AND BALITE INTEGRATED SMALL-SCALE MINING CORP., (BISSMICO), Respondents.

D E C I S I O N

LEONEN, J.:

These two consolidated cases involve the “Diwalwal Gold Rush Area” in Mt. Diwata, Mindanao that has been embroiled in controversies since the mid-1980’s.1 The instant controversy focuses on the 729-hectare portion excluded from respondent Southeast Mindanao Gold Mining Corporation’s Mineral Production Sharing Agreement application, and declared as People’s Small Scale Mining Area. Due to supervening events, we declare the petitions moot and academic.

Before us are two petitions for review2 assailing the Court of Appeals’ August 27, 2001 amended decision3 that annulled and set aside the Department of Environment and Natural Resources (DENR) Secretary’s September 20, 1999 decision4 for having been issued with grave abuse of discretion in excess of his discretion.

Moncayo Integrated Small-Scale Miners Association, Inc. (MISSMA) filed the first petition5 docketed as G.R. No. 149638. Then DENR Secretary Antonio H. Cerilles filed the second petition docketed as G.R. No. 149916.6chanRoblesvirtualLawlibrary

The facts as summarized by the Court of Appeals follow:7chanRoblesvirtualLawlibrary

On July 1, 1985, the Bureau of Forest Development issued to Marcopper Mining Corporation (Marcopper) a prospecting permit (Permit to Prospect No. 755-123185) covering 4,941 hectares within the Agusan-Davao-Surigao Forest Reserve. This forest reserve was instituted by Proclamation No. 369 issued by then Governor General Dwight F. Davis on February 27, 1931.

On March 10, 1986, the Bureau of Mines and Geo-Sciences issued to Marcopper a permit to explore (EP 133) covering the same area.

On February 16, 1994, Marcopper assigned EP 133 to Southeast Mindanao Gold Mining Corporation (SMGMC).

On December 19, 1995, the Mines and Geo-Sciences Bureau director ordered the publication of SMGMC’s application for Mineral Production Sharing Agreement (MPSA No. 128) for the 4,941 hectares covered by EP 133.

JB Management Mining Corporation, Davao United Miners Cooperative, Balite Integrated Small Scale Miners Cooperative, MISSMA, PICOP, Rosendo Villaflor, et al., Antonio G. Dacudao, Puting Bato Gold Miners Cooperative, and Romeo Altamera, et al. filed adverse claims against MPSA No.

128.8chanRoblesvirtualLawlibrary

The adverse claims were anchored on DENR Administrative Order No. 669 (DAO No. 66) issued on December 27, 1991, declaring 729 hectares of the Agusan-Davao-Surigao Forest Reserve as forest land open for small-scale mining purposes, subject to existing and valid private rights.

The DENR constituted a panel of arbitrators pursuant to Section 77 of the Philippine Mining Act of 1995 tasked to resolve the adverse claims against MPSA No. 128.

The panel of arbitrators, in its decision dated June 13, 1997, reiterated the validity of EP 133 and dismissed all adverse claims against MPSA No. 128. The adverse claimants appealed to the Mines Adjudication Board.

The Mines Adjudication Board (MAB), in its decision10 dated January 6, 1998, vacated the decision of the panel of arbitrators:chanroblesvirtuallawlibrary

WHEREFORE, PREMISES CONSIDERED, the decision of the Panel of Arbitrators dated 13 June 1997 is hereby VACATED and a new one entered in the records of the case as follows:

1. SEM’s MPSA application is hereby given due course subject to the full and strict compliance of the provisions of the Mining Act and its Implementing Rules and Regulations.

2. The area covered by DAO 66, series of 1991, actually occupied and actively mined by the small-scale miners on or before August 1, 1987 as determined by the Provincial Mining Regulatory Board (“PMRB”), is hereby excluded from the area applied for by SEM; (Emphasis supplied)

3. A moratorium on all mining and mining-related activities, is hereby imposed until such time that all necessary procedures, licenses, permits and other requisites as provided for by RA 7076, the Mining Act and its Implementing Rules and Regulations and all other pertinent laws, rules and regulations are complied with, and the appropriate environmental protection measures and safeguards have been effectively put in place.

4. Consistent with the spirit of RA 7076, the Board encourages SEM and all small-scale miners to continue to negotiate in good faith and arrive at an agreement beneficial to all. In the event of SEM’s strict and full compliance with all the requirements of the Mining Act and its Implementing Rules and Regulations, and the concurrence of the small-scale miners actually occupying and actively mining the area, SEM may apply for the inclusion of portions of the areas segregated under paragraph 2 hereof, to its MPSA application. In this light, subject to the preceding paragraph, the contract between JB and SEM is hereby recognized.

SO ORDERED.11

Both SMGMC and the adverse claimants questioned the Mines Adjudication Board’s decision before this court. These petitions were remanded to the Court of Appeals as CA-G.R. SP Nos. 61215-16, later elevated to this court as G.R. No. 152613, G.R. No. 152628, G.R. Nos 152619-20, and G.R. Nos. 152870-71.12chanRoblesvirtualLawlibrary

Meanwhile, independent of the MAB decision and the appeals to the Court of Appeals and this court, the Provincial Mining Regulatory Board of Davao proposed to declare a People’s Small Scale Mining Area in accordance with the MAB decision.13chanRoblesvirtualLawlibrary

On February 24, 1992, the notice for the proposed declaration was approved and issued for publication to notify any and all oppositors or protestors.14 Those who filed oppositions included SMGMC, Picop Resources Incorporated, Mt. Diwata-Upper Ulip Mandaya Tribal Council, and JB Management Mining Corporation.15chanRoblesvirtualLawlibrary

The Provincial Mining Regulatory Board (PMRB), in its decision16 dated March 30, 1999, dismissed the oppositions for lack of merit, then segregated and declared the 729-hectare gold rush area as People's Small Scale Mining Area:chanroblesvirtuallawlibrary

WHEREFORE, in view of the foregoing premises, the instant protest/opposition of herein Oppositors are hereby DISMISSED for lack of merit. This Board hereby segregates and declares the 729-hectare gold rush area in Mt. Diwalwal actually occupied and actively mined on or before August 1, 1987 as People’s Small-Scale Mining Area. Thereafter, the concerned local government unit through the recommendation of this Board shall issue/execute the necessary small-scale mining contract to qualified applicants upon compliance of the requisites for small scale mining under R.A. 7076 and its implementing rules and regulations.

SO ORDERED.17

Then DENR Secretary Antonio H. Cerilles, in his decision dated September 20, 1999, affirmed with modification the Provincial Mining and Regulatory Board decision:18chanRoblesvirtualLawlibrary

WHEREFORE, premises considered, the Decision of the PMRB of Compostela Valley dated March 30, 1999 is hereby AFFIRMED, subject to the following modifications:

1. For effective management and equitable utilization of resources, the two main areas of operations as described above of the 729 hectares shall be delineated and embodied in a Memorandum of Agreement (MOA) among the stakeholders concerned to ensure recognition of delineated boundaries and rational operation of the concerned areas.

2. These two areas are divided as follows: a) Block I [Balete-Nang Area], composed ofSub-Block A and Sub-Block B, intended for Blucor and Helica Group of Tunnels, representing MISSMA, and for various qualified Small-Scale Miners who are actually occupying and actively mining in the area and b) Block II [Buenas-Tinago Area], intended for JB Management, and other qualified Small-Scale Miners who are actually occupying and actively mining in the area.

3. Qualified Small-Scale Miners in each area, as maybe determined by the PMRB, shall apply for Small Scale Mining Contracts with option thereafter to apply for an MPSA.

4. Consistent with the provisions of DENR Memorandum Order No. 99-02, mineral processing plants in the Diwalwal area shall be relocated to processing zones duly designated by the DENR where appropriate tailings disposal systems have been put in place.

5. The Natural Resources Development Corporation (NRDC), the corporate arm of the DENR, shall extend the necessary technical expertise and supervision over all mining and milling operations in the area, environmental clean-up and rehabilitation activities, and the identification of alternative livelihood activities for the families of small-scale miners and other residents in the area.

SO ORDERED.19 (Emphasis and underscoring in the original)

The DENR Secretary denied reconsideration on February 2, 2000. SMGMC filed a petition under Rule 43 before the Court of Appeals.

The Court of Appeals, in its decision20 dated July 31, 2000, denied the petition.

The Court of Appeals discussed that since “there being no injunction from the Supreme Court which would prevent the enforcement of the MAB decision, respondent DENR Secretary acted with propriety in issuing the assailed decision which affirmed the PMRB’s declaration of a People’s Small Scale Mining Area.”21 It also denied the petition based on litis pendencia, considering that the pending case before this court assailing the MAB decision involved a prejudicial question.22chanRoblesvirtualLawlibrary

SMGMC and Balite Integrated Small-Scale Mining Corp. (BISSMICO) filed separate motions for reconsideration.

The Court of Appeals, in its amended decision23 dated August 27, 2001, granted the motions for reconsideration and, consequently, set aside and annulled the DENR Secretary's decision for having been issued with grave abuse of discretion in excess of his jurisdiction.24chanRoblesvirtualLawlibrary

The Court of Appeals limited its discussion on the propriety of the DENR Secretary’s decision.

It cited at length a memorandum dated March 27, 1998 by then DENR Undersecretary, Antonio La Viña, to support its finding that SMGMC “may apply and be entitled to a particular area within the 729 hectares potential coverage of the People’s Small-Scale Mining Area, subject to the fulfilment of several conditions.”25chanRoblesvirtualLawlibrary

The Court of Appeals found that the “DENR Secretary’s outright delineation of the subject area in favor of certain entities contravenes the mandate of the MAB Decision and the purpose of RA 7076 (People’s Small-Scale Mining Act of 1991), inasmuch as it disenfranchises the petitioner and other small-scale miners who may apply for and be awarded small-scale mining contracts by the local government units upon recommendation of the PMRB after the fulfilment of necessary conditions set forth in the law.”26chanRoblesvirtualLawlibrary

Hence, these two petitions for review were filed assailing the Court of Appeals' amended decision.

Petitioner MISSMA27 argues that the Court of Appeals should not have amended its decision considering it already found SMGMC guilty of forum shopping and litis pendencia.28chanRoblesvirtualLawlibrary

Petitioner MISSMA contends that the petition docketed as G.R. No. 132475 assailing the portion of the MAB’s decision that excluded the 729-hectare area covered by DAO No. 66 from SMGMC’s Mines Production Sharing Agreement application29 involves the same issues as the present cases. MISSMA submits that “the ultimate objective of the two cases is [SMGMC] to solely obtain all mining rights over the subject 729 hectare gold rush area, to the exclusion of MISSMA and other claimants thereon.”30chanRoblesvirtualLawlibrary

Petitioner MISSMA also argues that “[i]n carrying out the function of declaring and segregating gold rush areas for small-scale mining purposes [pursuant to Republic Act No. 7076], both the PMRB, and upon review, the DENR Secretary, may well act independently of the MAB, which, on the other hand is a quasi-judicial body tasked to settle mining conflicts, disputes or claims[.]”31 Moreover, the DENR Secretary’s decision only delineated and identified areas available for small-scale mining contract applications. The decision did not make actual awards.32chanRoblesvirtualLawlibrary

Petitioner Hon. Antonio H. Cerilles, in his capacity as then DENR Secretary,33 similarly argues that the Court of Appeals should have maintained its earlier decision dismissing the case due to forum shopping and litis pendencia.34chanRoblesvirtualLawlibrary

In any event, petitioner DENR Secretary argues that he acted within authority in modifying the PMRB’s decision, citing Sections 24 and 26 of Republic Act No. 7076 on the DENR Secretary’s power of “direct supervision and control.”35chanRoblesvirtualLawlibrary

Petitioner DENR Secretary adds that “[t]he division into two areas of the segregated portion of 729-hectares small-scale mining area does not contravene the mandate of the MAB decision and the purpose of R.A. No. 7076, since there is no award yet of any license or permit made to any qualified small-scale miner.”36chanRoblesvirtualLawlibrary

Lastly, petitioner DENR Secretary contends that these petitions have been mooted by (1) then President Macapagal-Arroyo’s issuance of Proclamation No. 297 excluding an area from Proclamation No. 369 and declaring this as a mineral reservation and as an environmentally critical area, and (2) this court’s decision dated June 23, 2006 in G.R. Nos. 152613, 152628, 152619-20, 152870-71 declaring DAO No. 66 as void, declaring EP 133 as expired, and underscoring the Executive’s power of supervision and control over the exploration, development, and utilization of the country’s mineral resources.37chanRoblesvirtualLawlibrary

Respondent SMGMC counters that no forum shopping or litis pendencia exists as the present petitions “emanated from the decision of the PMRB declaring the 729 hectares of timberland as People’s Small-Scale Mining Area, while G.R. No. 132475 emanated from the decision of the MAB on the MPSA Application of [SMGMC].”38 Records also show that the case docketed as G.R. No. 132475 was made known to this court.39chanRoblesvirtualLawlibrary

Respondent SMGMC quoted at length DENR Undersecretary La Viña’s memorandum on the scope of the MAB decision.40chanRoblesvirtualLawlibrary

Respondent SMGMC submits that the DENR Secretary’s decision “practically abandoned the MAB decision and fashioned his own formula for disaster,” such as mentioning the Blucor and Helica

groups which were never parties before the PMRB.41chanRoblesvirtualLawlibrary

Respondent BISSMICO admits and adopts respondent SMGMC’s memorandum.42chanRoblesvirtualLawlibrary

Respondent PICOP discusses the difference between “forest reserves” and “forest reservations” under Presidential Decree No. 705,43 and pursuant to Republic Act No. 309244 enacted on June 17, 1961, stating that “a law should now be passed by Congress in order to reclassify areas in forest reserve to another use.”45chanRoblesvirtualLawlibrary

Even Executive Order No. 318 issued on June 9, 2004 on guiding principles in Promoting Sustainable Forest Management in the Philippines provides that “[c]onversions of forestlands into non-forestry uses shall be allowed only through an act of Congress and upon the recommendation of concerned government agencies.”46 Consequently, the PMRB has no authority to declare the 729 hectares within the forest reserve as a People’s Small-Scale Mining Area.47chanRoblesvirtualLawlibrary

Respondent PICOP also argues that Proclamation No. 297 by then President Macapagal-Arroyo was without congressional concurrence as required by Republic Act No. 3092, thus, revocable.48 Its memorandum also includes arguments on how Proclamation No. 297 was the first step in a series of constitutional violations such as an agreement with ZTE –NBN involving the gold rush area.49chanRoblesvirtualLawlibrary

By resolution50 dated March 4, 2013, the parties were required to file manifestations on “subsequent developments that may help this court in the immediate disposition of these cases, or that may render the cases moot and academic.”51chanRoblesvirtualLawlibrary

Petitioner DENR Secretary, through its counsel Office of the Solicitor General, filed its compliance on May 16, 2013.52chanRoblesvirtualLawlibrary

Petitioner DENR Secretary submitted a copy of the letter53 dated April 24, 2013 of the Philippine Mining Development Corporation (PMDC), the government office in charge of the Diwalwal area, containing details of the latest development in the area. The letter54 provides a brief background, followed by an enumeration of developments:chanroblesvirtuallawlibrary

I. PMDC 729 Area in the Diwalwal Mineral Reservation

. . . The Terms of Reference (TOR) for the 729 Bidding [partner of PMDC in the exploration and development of the project area] was approved by the Board on 3 March 2010.

On October 25, 2011, PMDC received an order from the Regional Trial Court . . . enjoining [it] from bidding the Victory Tunnel and the 729-Area. PMDC filed a Motion for Reconsideration [which] is still pending . . .

II. Tribal Mining Area (TRIMA) in the Diwalwal Mineral Reservation

On 26 June 2009, an Operating Agreement was entered into by PMDC and the Indigenous Cultural

Community (ICC) belonging to the Mandaya, Manobo, Manguangan and Dibabawon tribes covering 2 parcels in the Diwalwal Mineral Reservation having a total land area of 950 hectares.

. . . .

PMDC requested NCIP to settle the issues of the tribal leadership and representation with finality in order to guide PMDC and its operators/partners, as well as other parties interested in assisting the tribe.

PMDC is still awaiting the final decision of NCIP. FF Cruz & Co., Inc. is still actively pursuing its aforesaid Agreement with the ICC.

III. Other Areas in the Diwalwal Mineral Reservation

A. Upper Ulip Property

. . . area of One Thousand Six Hundred Twenty hectares (1,620 has.) has been awarded, after a public bidding, to Paraiso Consolidated Mining Corporation (PACOMINCO) on June 2009.

On 1 March 2012, the PMDC Board approved the extension of the period for exploration activities for the Upper Ulip-Paraiso Parcel.

B. Letter V

. . . area of One Thousand Two Hundred Ninety Six hectares (1,296 has.) has been awarded, after public bidding, to Black Stone Mineral Resources Inc. (Blackstone) on March 2010.

Blackstone is currently in the process of securing the Free and Prior-Informed Consent of the ICC in the Area with the assistance of NCIP. On 5 March 2013, Blackstone entered into a Memorandum of Agreement with the Mandaya tribe for the development of the Letter V parcel within the [sic] their ancestral domain.

C. Higanteng Bato

. . . area of One Thousand Three Hundred Fifty Nine hectares (1,359 has.) has been awarded, after a public bidding, to Carrascal Nickel Corporation (CNC) on March 2010.

On 19 July 2012, the PMDC Board approved the assignment of the Rights and Obligations of CNC in the Joint Operating Agreement to Giant Stone Corporation.

IV. NRDC Area (729 Area, 600m asl)

[PMDC has] received reports that NRDC has awarded approximately 400 hectares of the area under their administration to JBMMC. However, despite several requests for information relative to the aforementioned reports, the NRDC has yet to provide PMDC of any official documents . . .55

Respondent SMGMC filed an explanation, manifestation, and compliance discussing that on June

23, 2006, this court’s First Division rendered a decision in the consolidated petitions of Apex (G.R. Nos. 152613 and 152628), Balite Communal Portal Cooperative (G.R. Nos. 152619-20), and MAB (G.R. Nos. 152870-71) ruling that EP 133 has expired by its non-renewal, that its transfer to SMGMC was void, and that DAO No. 66 was illegal for having been issued in excess of the DENR Secretary’s authority.56 On November 20, 2009, this court En Banc denied reconsideration, and this decision became final and executory.57chanRoblesvirtualLawlibrary

Respondent SMGMC also manifested that (a) the above decision and resolution, (b) the issuance of Proclamation No. 297 dated November 25, 2002, excluding 8,100 hectares in Moncayo, Compostela Valley and proclaiming this area as a mineral reservation and as an environmentally critical area, and (c) DAO No. 2002-18, are supervening developments that rendered moot and academic the issues raised in the present petitions.58chanRoblesvirtualLawlibrary

Counsel for respondent MISSMA filed a manifestation stating that he has exerted diligent efforts to communicate with MISSMA in relation to the March 4, 2013 resolution but this proved futile. Counsel is not in a position to manifest to this court on subsequent developments, but he will continue his attempt to communicate with MISSMA, and will submit the required manifestation should he succeed.59chanRoblesvirtualLawlibrary

Counsel for respondent PICOP filed a similar explanation/compliance.60chanRoblesvirtualLawlibrary

The issues for resolution may be summarized as follows:chanroblesvirtuallawlibrary

I. Whether the Court of Appeals can set aside the issue of forum shopping and litis pendencia (SMGMC's petition in G.R. No. 132475), and dwell on the merits;

II. Whether the DENR Secretary’s decision went beyond the PMRB’s decision, otherwise, whether the DENR Secretary can modify the PMRB’s decision; and

III. Whether the DENR Secretary’s modification to divide the 729 hectares into two areas contravened the mandate of the MAB decision and the purpose of Republic Act No. 7076.

Subsequent developments

Developments after these petitions had been filed in 2001 mooted this case. The parties recognized these developments in their recent submissions.

Petitioner DENR Secretary raised that the petitions were mooted by (a) then President Macapagal-Arroyo’s issuance of Proclamation No. 297, excluding an area from Proclamation No. 369 and declaring this area as a mineral reservation and as an environmentally critical area, and (b) this court’s decision dated June 23, 2006 in G.R. Nos. 152613, 152628, 152619-20, and 152870-71 declaring DAO No. 66 as void, declaring EP 133 as expired, and underscoring the Executive’s power of supervision and control over the exploration, development, and utilization of the country’s mineral resources.61chanRoblesvirtualLawlibrary

Respondent SMGMC similarly manifested that Proclamation No. 297 dated November 25, 2002 and this court’s 2006 decision and 2009 resolution in G.R. Nos. 152613 and 152628, G.R. Nos. 152619-20 and G.R. Nos. 152870-71 mooted the present cases.62chanRoblesvirtualLawlibrary

Proclamation No. 297 dated November 25, 2002 excluded an area of 8,100 hectares in Moncayo, Compostela Valley as a mineral reservation and as an environmentally critical area:chanroblesvirtuallawlibrary

PROCLAMATION NO. 297

EXCLUDING A CERTAIN AREA FROM THE OPERATION OF PROCLAMATION NO. 369 DATED FEBRUARY 27, 1931, AND DECLARING THE SAME AS MINERAL RESERVATION AND AS ENVIRONMENTALLY CRITICAL AREA

WHEREAS, Article XII, Section 2 of the Constitution provides that the exploration, development, and utilization of natural resources shall be under the full control and supervision of the State;

WHEREAS, by virtue of Proclamation No. 369, series of 1931, certain tracts of public land situated in the then provinces of Davao, Agusan and Surigao, with an area of approximately 1,927,400 hectares, were withdrawn from settlement and disposition, excluding, however, those portions which had been certified and/or shall be classified and certified as non-forest lands;

WHEREAS, gold deposits have been found within the area covered by Proclamation No. 369, in the Municipality of Monkayo, Compostela Valley Province, and unregulated small to medium-scale mining operations have, since 1983, been undertaken therein, causing in the process serious environmental, health, and peace and order problems in the area;

WHEREAS, it is in the national interest to prevent the further degradation of the environment and to resolve the health and peace and order spawned by the unregulated mining operations in the said area;

WHEREAS, these problems may be effectively addressed by rationalizing mining operations in the area through the establishment of a mineral reservation;

WHEREAS, after giving due notice, the Director of Mines and Geosciences conducted public hearings on September 6, 9 and 11, 2002 to allow the concerned sectors and communities to air their views regarding the establishment of a mineral reservation in the place in question;

WHEREAS, pursuant to the Philippine Mining Act of 1995 (RA 7942), the President may, upon the recommendation of the Director of Mines and Geosciences, through the Secretary of Environment and Natural Resources, and when the national interest so requires, establish mineral reservations where mining operations shall be undertaken by the Department directly or thru a contractor;

WHEREAS, as a measure to attain and maintain a rational and orderly balance between socio-economic growth and environmental protection, the President may, pursuant to Presidential Decree No. 1586, as amended, proclaim and declare certain areas in the country as environmentally critical;

NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President of the Philippines, upon recommendation of the Department of Environment and Natural Resources (DENR), and by virtue of the powers vested in me by law, do hereby exclude certain parcel of land located in Monkayo, Compostela Valley, and proclaim the same as mineral reservation and as environmentally critical area, with metes and bound as defined by the following geographical coordinates; . . . .

. . . .

with an area of Eight Thousand One Hundred (8,100) hectares, more or less.

Mining operations in the area may be undertaken either by the DENR directly, subject to payment of just compensation that may be due to legitimate and existing claimants, or thru a qualified contractor, subject to existing rights, if any.

The DENR shall formulate and issue the appropriate guidelines, including the establishment of an environmental and social fund, to implement the intent and provisions of this Proclamation.

Subsequently, DENR Administrative Order No. 2002-18 declared an emergency situation on the Diwalwal gold rush area and ordered the stoppage of all mining operations in the area.

Then President Macapagal-Arroyo issued Executive Order No. 217 dated June 17, 2003, creating the National Task Force Diwalwal to address the situation in the Diwalwal gold rush area.

On June 23, 2006, this court promulgated Apex Mining v. SMGMC,63 ruling on the petitions for review by Apex, Balite, and the MAB. This court declared that EP 133 expired on July 7, 1994, and that its subsequent transfer to SMGMC on February 16, 1994 was void.64 This court also affirmed the Court of Appeals’ decision declaring DAO No. 66 as illegal for having been issued in excess of the DENR Secretary’s authority.65chanRoblesvirtualLawlibrary

On November 20, 2009, this court En Banc denied reconsideration in Apex Mining v. SMGMC for lack of merit.66 This court reiterated that Marcopper’s assignment of EP 133 to SMGMC violated Section 97 of Presidential Decree No. 463 and the terms and conditions in the permit.67chanRoblesvirtualLawlibrary

This court also clarified that its June 23, 2006 decision did not overturn its July 16, 1991 decision inApex Mining v. Garcia68 for the following reasons:69chanRoblesvirtualLawlibrary

First, the 1991 case of Apex Mining v. Garcia involved conflicting mining claims between Apex and Marcopper over the 4,941 hectares disputed area in Moncayo, Mindanao.70chanRoblesvirtualLawlibrary

This court in Apex Mining v. Garcia ruled that the disputed areas, “being clearly within a forest reserve, are not open to mining location,”71 citing Sections 8 and 13 of Presidential Decree No. 463, as amended by Presidential Decree No. 1385.72 This court found that “procedural requisites were complied with and undertaken by MARCOPPER after it had ascertained that its mining claims were found to be within the Agusan-Davao-Surigao Forest Reserve. On the other hand, the mining

claims and SSMPs of Apex being located within said forest reserve are in violation of the law and therefore result in a failure to validly acquire mining rights.”73chanRoblesvirtualLawlibrary

Second, the 1991 Apex Mining v. Garcia case “was decided on facts and issues that were not attendant in [Apex Mining v. SMGMC], such as the expiration of EP 133, the violation of the condition embodied in EP 133 prohibiting its assignment, and the unauthorized and invalid assignment of EP 133 by [Marcopper] to [SMGMC], since this assignment was effected without the approval of the Secretary of DENR.”74chanRoblesvirtualLawlibrary

This court also mentioned that in the November 26, 1992 resolution in Apex Mining v. Garcia, this court clarified that its ruling was “conclusive only between the parties with respect to the particular issue herein raised and under the set of circumstances herein prevailing[.]” 75chanRoblesvirtualLawlibrary

Forum shopping and litis pendencia

Litis pendencia exists when the following elements are present: “(a) the identity of parties, or at least such as representing the same interests in both actions; (b) the identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity of the two cases such that judgment in one, regardless of which party is successful, would amount to res judicata in the other.”76chanRoblesvirtualLawlibrary

The existence of litis pendencia also means that the rule against forum shopping was violated.77chanRoblesvirtualLawlibrary

The Court of Appeals’ July 31, 2000 decision denied SMGMC’s petition on the ground of litis pendenciaand forum shopping considering the then pending case docketed as G.R. No. 132475 assailing the January 6, 1998 MAB decision recognizing DAO No. 66 by excluding the 729-hectare area.78chanRoblesvirtualLawlibrary

The Court of Appeals’ August 27, 2001 amended decision “maintain that matters pertaining to the petitioner’s rights over the subject 729-hectare gold rush area have been decided by the Mines Adjudication Board (MAB), which decision is now with the Supreme Court for review[,]”79 but it nevertheless annulled the DENR Secretary’s decision “for having been issued with grave abuse of discretion in excess of his jurisdiction.”80chanRoblesvirtualLawlibrary

Respondent SMGMC argued in its memorandum that no forum shopping or litis pendencia exists,81 but later conceded in its explanation, manifestation, and compliance dated September 1, 2014 that supervening developments, such as this court’s 2006 decision and 2009 resolution in Apex Mining v. SMGMC, mooted these cases.82chanRoblesvirtualLawlibrary

We do not need to decide on whether there was forum shopping or litis pendencia. Apex Mining v. SMGMC mooted these petitions.

Moot and academic

Apex Mining v. SMGMC consists of two consolidated cases.83 SMGMC filed the petition docketed

as G.R. No. 132475 assailing the January 6, 1998 MAB decision excluding the 729-hectares area and questioning the validity of DAO No. 66. MISSMA and other mining claimants filed the other petition docketed as G.R. No. 132528.84chanRoblesvirtualLawlibrary

These petitions were remanded to the Court of Appeals, consolidated as G.R. SP Nos. 61215 and 61216.85 The Court of Appeals declared the MAB decision as null and void.86chanRoblesvirtualLawlibrary

Consequently, Apex filed a petition docketed as G.R. Nos. 152613 and 152628; Balite Communal Portal Mining Cooperative, Inc. filed a petition docketed as G.R. Nos. 152619-20; and the MAB and its members filed a petition docketed as G.R. Nos. 152870-71.87chanRoblesvirtualLawlibrary

All these petitions were consolidated, and this court rendered its decision entitled Apex Mining v. SMGMCon June 23, 2006, and resolution on November 20, 2009. The 2006 decision held:chanroblesvirtuallawlibrary

WHEREFORE, premises considered, the Petitions of Apex, Balite and the MAB are PARTIALLY GRANTED, thus:

1. We hereby REVERSE and SET ASIDE the Decision of the Court of Appeals, dated 13 March 2002, and hereby declare that EP 133 of MMC has EXPIRED on 7 July 1994 and that its subsequent transfer to SEM on 16 February 1994 is VOID.

2. We AFFIRM the finding of the Court of Appeals in the same Decision declaring DAO No. 66 illegal for having been issued in excess of the DENR Secretary’s authority.

Consequently, the State, should it so desire, may now award mining operations in the disputed area to any qualified entity it may determine. No costs.

SO ORDERED.88

This court denied the motions for reconsiderations, among others, in its 2009 resolution.89chanRoblesvirtualLawlibrary

Since this court declared that EP 133 expired and its transfer to SMGMC is void, respondent SMGMC has no more basis to claim any right over the disputed 729 hectares in the Diwalwal gold rush area excluded from its MPSA.

Furthermore, since this court has declared that the DENR Secretary had no authority to issue DAO No. 66 declaring 729 hectares of the Agusan-Davao-Surigao Forest Reserve as forest land open for small-scale mining purposes subject to existing and valid private rights, both the PMRB decision, and the DENR Secretary’s decision affirming it with modification, are consequently overturned for lack of basis in delineating the 729 hectares from the MPSA.

The 2009 resolution in Apex Mining v. SMGMC also ruled that “the State, through the Executive Department, should it so desire, may now award mining operations in the disputed area to any qualified entities it may determine [and] [t]he Mines and Geosciences Bureau may process

exploration permits pending before it, taking into consideration the applicable mining laws, rules and regulations relative thereto.”90chanRoblesvirtualLawlibrary

Indeed, then President Macapagal-Arroyo issued Proclamation No. 297 excluding an area in Moncayo, Compostela Valley, declaring this as a mineral reservation and as an environmentally critical area. DENR Administrative Order No. 2002-18 followed, declaring an emergency situation in this gold rush area and ordering the stoppage of all mining operations. Executive Order No. 217 thereafter created the National Task Force Diwalwal.

Authority and functionsin mining activities

In any case, we discuss the powers of the different agencies in relation to mining activities as laid down by the relevant laws.

Mines Adjudication Board

Chapter XIII (Settlement of Conflicts) of Republic Act No. 7942 known as the Mining Act of 1995 provides for the powers of the panel of arbitrators and the Mines Adjudication Board (MAB). Section 77 states that “the panel shall have exclusive and original jurisdiction to hear and decide on the following:chanroblesvirtuallawlibrary

a. Disputes involving rights to mining areas;b. Disputes involving mineral agreements or permits;

c. Disputes involving surface owners, occupants and claimholders/ concessionaires; and

d. Disputes pending before the Bureau and the Department at the date of the effectivity of this Act.”91

Section 78 provides for the MAB’s appellate jurisdiction over the decision or order of the panel of arbitrators.92 Section 79 enumerates the MAB’s powers and functions, including the power “to conduct hearings on all matters within its jurisdiction.”93chanRoblesvirtualLawlibrary

Provincial Mining Regulatory Board

While the MAB’s jurisdiction covers the settlement of conflicts over mining claims, the Provincial Mining Regulatory Board (PMRB) — created under Republic Act No. 7076 known as the People’s Small-Scale Mining Act of 1991 — granted powers that include functions more executive in nature such as declaring and segregating areas for small-scale mining.94chanRoblesvirtualLawlibrary

Section 24 of Republic Act No. 7076 provides for the PMRB’s power to “declare and segregate existing gold-rich areas for small-scale mining” but “under the direct supervision and control of the Secretary”:chanroblesvirtuallawlibrary

Section 24. Provincial/ City Mining Regulatory Board. There is hereby created under the direct supervision and control of the Secretary a provincial/city mining regulatory board, herein called

the Board, which shall be the implementing agency of the Department, and shall exercise the following powers and functions, subject to review by the Secretary:

(a) Declare and segregate existing gold-rich areas for small-scale mining;(b) Reserve future gold and other mining areas for small-scale mining;(c) Award contracts to small-scale miners;(d) Formulate and implement rules and regulations related to small-scale mining;(e) Settle disputes, conflicts or litigations over conflicting claims within a people’s small-scale

mining area, an area that is declared a small mining area; and(f) Perform such other functions as may be necessary to achieve the goals and objectives of this

Act.95

Section 22 of DAO No. 34–92, the implementing rules and regulations of Republic Act No. 7076, similarly states that the “Provincial/City Mining Regulatory Board created under RA 7076 shall exercise the following powers and functions, subject to review by the Secretary[.]”96chanRoblesvirtualLawlibrary

Section 6 of DAO No. 34–92 also provides that “[t]he Board created under RA 7076 shall have the authority to declare and set aside People’s Small-Scale Mining Areas in sites onshore suitable for small-scale mining operations subject to review by the DENR Secretary thru the Director[.]”97chanRoblesvirtualLawlibrary

DENR Secretary

Section 26 of Republic Act No. 7076 reiterates the DENR Secretary’s power of control over “the program and the activities of the small-scale miners within the people’s small-scale mining area”:chanroblesvirtuallawlibrary

Section 26. Administrative Supervision over the People’s Small-scale Mining Program. The Secretary through his representative shall exercise direct supervision and control over the program and activities of the small-scale miners within the people’s small-scale mining area.

The Secretary shall within ninety (90) days from the effectivity of this Act promulgate rules and regulations to effectively implement the provisions of the same. Priority shall be given to such rules and regulations that will ensure the least disruption in the operations of the small-scale miners.98

Section 21.1 of DAO No. 34–92, the implementing rules and regulations of Republic Act No. 7076, states that the DENR Secretary has “direct supervision and control over the program and the activities of the small-scale miners within the people’s small-scale mining area.”99chanRoblesvirtualLawlibrary

This court has distinguished the power of control and the power of supervision as follows:chanroblesvirtuallawlibrary

. . . In administrative law, supervision means overseeing or the power or authority of an officer to see that subordinate officers perform their duties. If the latter fail or neglect to fulfill them, the

former may take such action or step as prescribed by law to make them perform their duties. Control, on the other hand, means the power of an officer to alter or modify or nullify or set aside what a subordinate officer ha[s] done in the performance of his duties and to substitute the judgment of the former for that of the latter.100 (Emphasis supplied)

League of Provinces v. DENR101 discussed that “the Local Government Code did not fully devolve the enforcement of the small-scale mining law to the provincial government, as its enforcement is subject to the supervision, control and review of the DENR, which is in charge, subject to law and higher authority, of carrying out the State’s constitutional mandate to control and supervise the exploration, development, utilization of the country’s natural resources.”102chanRoblesvirtualLawlibrary

Since the DENR Secretary has power of control as opposed to power of supervision, he had the power to affirm with modification the PMRB’s decision.

Executive Department

The Constitution provides that “[t]he State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens[.]”103chanRoblesvirtualLawlibrary

Moreover, “[t]he President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country[.]”104chanRoblesvirtualLawlibrary

Chapter II, Section 4 of Republic Act No. 7942 known as the Philippine Mining Act of 1995 also provides as follows:chanroblesvirtuallawlibrary

SEC. 4. Ownership of Mineral Resources. – Mineral resources are owned by the State and the exploration, development, utilization, and processing thereof shall be under its full control and supervision. The state may directly undertake such activities or it may enter into mineral agreements with contractors.

The State shall recognize and protect the rights of the indigenous cultural communities to their ancestral lands as provided for by the Constitution.105

Section 5 of Republic Act No. 7942 on mineral reservations provides that “[m]ining operations in existing mineral reservations and such other reservations as may thereafter be established, shall be undertaken by the Department or through a contractor[.]”106chanRoblesvirtualLawlibrary

Apex Mining v. SMGMC discussed that "Section 5 of Republic Act No. 7942 is a special provision, as it specifically treats of the establishment of mineral reservations only. Said provision grants the President the power to proclaim a mineral land as a mineral reservation, regardless of whether such land is also an existing forest reservation.”107chanRoblesvirtualLawlibrary

In the 2002 case of Southeast Mindanao Gold Mining Corporation v. Balite Portal Mining Cooperative108involving the same Diwalwal gold rush area, this court discussed that “the State may not be precluded from considering a direct takeover of the mines, if it is the only plausible remedy in sight to the gnawing complexities generated by the gold rush.”109chanRoblesvirtualLawlibrary

Incidentally, we acknowledge that PICOP raised the validity of Proclamation No. 297 in its memorandum.110 It argues that Proclamation No. 297 by then President Macapagal-Arroyo was without congressional concurrence as required by Republic Act No. 3092, thus, revocable.111 The validity of Proclamation No. 297, however, is not an issue in these cases. This subsequent development was not litigated, and this is not the proper case to assail its validity.chanrobleslaw

WHEREFORE, in view of the foregoing, the petitions are DENIED for being moot and academic.

WE CONCUR:

Carpio, (Chairperson), Del Castillo, Villarama, Jr.,* and Mendoza, JJ., concur.

FIRST DIVISION

[G.R. No. 180882, February 27, 2013]

THE BAGUIO REGREENING MOVEMENT, INC., REPRESENTED BY ATTY. ERDOLFO V. BALAJADIA; CITY ENVIRONMENT AND PARKS MANAGEMENT OFFICE, REPRESENTED BY ITS OFFICER-IN-CHARGE, CORDELIA C. LACSAMANA; AND THE BUSOL FOREST RESERVATION TASK FORCE,

REPRESENTED BY ITS TEAM LEADER, VICTOR DICTAG, Petitioners, v. ATTY. BRAIN MASWENG, IN

HIS CAPACITY AS REGIONAL HEARING OFFICER, NCIP-CAR; ELIZABETH MAT-AN, FOR HERSELF AND AS REPRESENTATIVE OF THE HEIRS OF RAFAEL; JUDITH MARANES, FOR HERSELF AND AS

REPRESENTATIVE OF THE HEIRS OF MOLINTAS; HELEN LUBOS, FOR HERSELF AND AS REPRESENTATIVE OF THE HEIRS OF KALOMIS; MAGDALENA GUMANGAN QUE, FOR HERSELF AND

AS REPRESENTATIVE OF THE HEIRS OF GUMANGAN; SPOUSES ALEXANDER AMPAGUEY AND LUCIA AMPAGUEY; AND SPOUSES CARMEN PANAYO AND MELANIO PANAYO, Respondents.

D E C I S I O N

LEONARDO-DE CASTRO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Revised Rule on Civil Procedure assailing the Decision1 of the Court of Appeals dated April 30, 2007 in CA-G.R. SP No. 78570 insofar as it affirmed the issuances of National Commission on Indigenous Peoples (NCIP) Hearing Officer Brain Masweng, and the Resolution of the same court dated December 11, 2007 denying petitioners’ Motion for Partial Reconsideration.

Herein private respondents Elizabeth Mat-an, Judith Maranes, Helen Lubos, Magdalena Gumangan Que, spouses Alexander and Lucia Ampaguey, and spouses Melanio and Carmen Panayo, claiming that their parents inherited from their ancestors several parcels of land in what is now known as the Busol Watershed Reservation, filed before the NCIP a Petition for Injunction, with an application for a Temporary Restraining Order (TRO), and thereafter a Writ of Preliminary Injunction seeking to enjoin the Baguio District Engineer’s Office, the Office of the City Architect and Parks Superintendent, and petitioners The Baguio Regreening Movement, Inc. and the Busol Task Force from fencing the Busol Watershed Reservation.

In their Petition before the NCIP, private respondents claim that they are members of the Ibaloi and Kankanaey tribes of Baguio City. Their ancestors’ ownership of the properties now known as the Busol Watershed Reservation was allegedly expressly recognized in Proclamation No. 15 issued by Governor General Leonard Wood. As owners of said properties, their ancestors paid the realty taxes thereon. The fencing project of petitioners would allegedly impede their access to and from their residences, farmlands and water sources, and dispossess them of their yard where tribal rituals and ceremonies are usually held.

On October 21, 2002, NCIP Regional Hearing Officer Brain S. Masweng issued a TRO, the dispositive portion of which reads:

WHEREFORE, finding the petition in order and that grave injustice may result should the acts complained of be not immediately restrained, a Temporary Restraining Order is hereby issued pursuant to Section 69 (d) of R.A. 8371, ordering the respondents namely, the Baguio District Engineer’s Office, represented by Engineer Nestor M. Nicolas, the Project Contractor, Mr. Pel-ey, the Baguio Regreening Movement Inc., represented by Atty. Erdolfo V. Balajadia, the Busol Task Force, represented by its Team Leader, Moises G. Anipew, the Baguio City Architect and Parks Superintendent Office, represented by Arch. Ignacio Estipona, and all persons acting for and their behalf (sic) of the respondents[,] their agents and/or persons whomever acting for and their behalf (sic), to refrain, stop, cease and desist from fencing and/or constructing fences around and between the areas and premises of petitioners, ancestral land claims, specifically identified in

Proclamation No. 15 as Lot “A” with an area of 143,190 square meters, included within the boundary lines, Lot “B” 77,855 square meters, included within the boundary lines, Lot “C” 121,115 square meters, included within the boundary lines, Lot “D” 33,839 square meters, included within the boundary lines, Lot “E” 87,903 square meters, included within the boundary lines, Lot “F” 39,487 square meters, included within the boundary lines, Lot “G” 11,620 square meters, included within the boundary lines, Lot “H” 17,453 square meters, included within the boundary lines, Lot “J” 40,000 square meters, included within the boundary lines, all described and embraced under Proclamation No. 15, the land embraced and described under the approved plan No. 12064 of the then Director of Lands, containing an area of 186, square meters surveyed for Gumangan, the land covered by LRC PSD 52910, containing an area of 77,849 square meters as surveyed for Emily Kalomis, that land covered by survey plan 11935 Amd, containing an area of 263153 square meters as surveyed for Molintas, and that land covered by AP-7489, containing an area of 155084 as surveyed for the heirs of Rafael.

This Restraining Order shall be effective for a period of twenty (20) days from receipt hereof.

Meantime, the respondents are further ordered to show cause on November 5, 2002 (Tuesday) at 2:00 o’clock in the afternoon, why petitioners’ prayer for the issuance of a writ of preliminary injunction should not be granted.2

On November 6, 2002, Atty. Masweng denied petitioners’ motion to dissolve the TRO, explaining that a TRO may be issued motu proprio where the matter is of extreme urgency and the applicant will suffer grave injustice and irreparable injury. He further stated that petitioners failed to comply with the procedure laid down in Section 6, Rule 58 of the Rules of Court.

On November 12, 2002, Atty. Masweng issued an Order, the dispositive portion of which states:

WHEREFORE, a writ of preliminary injunction is hereby issued against the respondents, their agents, or persons acting for and in their behalves (sic), ordering them to refrain, cease and desist from implementing their fencing project during the pendancy (sic) of the above-entitled case in any portion of petitioners’ ancestral land claims within the Busol Watershed Reservation. The lands being identified under Proclamation No. 15 as lot[s] ‘A’, ‘B’, ‘C’, ‘D’, ‘E’, ‘F’, ‘G’, ‘H’, and ‘J’, including the lands covered by Petitioners’ approved survey plans as follows: that land identified and plotted under Survey Plan No. B.L. FILE No. II-11836, September, 1916 surveyed for Gumangan; that land covered by PSD-52910, May, 1921, surveyed for Emily Kalomis; that land covered by survey plan II-11935 Amd, 1916, surveyed for Molintas; and that land covered by Survey Plan No. AP 7489, March 1916, surveyed for the heirs of Rafael.

The writ of preliminary injunction shall be effective and shall be enforced only upon petitioners’ compliance with the required injunctive bond of Twenty Thousand Pesos (P20,000.00) each in compliance with Section 3, R.A. 8975.3

Atty. Masweng ruled that the NCIP has jurisdiction over all claims and disputes involving rights of Indigenous Cultural Communities (ICCs) and Indigenous Peoples (IPs) and, in the exercise of its jurisdiction, may issue injunctive writs. According to Atty. Masweng, the allegations in the verified petition show that private respondents invoked the provisions of Republic Act No. 8371, otherwise known as the Indigenous Peoples Rights Act of 1997 (IPRA), when they sought to enjoin petitioners

from fencing their ancestral lands within the Busol Watershed Reservation. Petitioners’ fencing project violated Section 58 of the IPRA, which requires the prior written consent of the affected ICCs/IPs. The NCIP therefore has authority to hear the petition filed by private respondents and to issue the injunctive writ. As regards petitioners’ contention that the issuance of the TRO violated Presidential Decree No. 1818, Atty. Masweng applied the Decision of this Court in Malaga v. Penachos, Jr.,4 and held that:

[R]espondent’s project of fencing the Busol Watershed is not in the exercise of administrative discretion involving a very technical matter. This is so since the implementation of the fencing project would traverse along lands occupied by people who claim that they have a legal right over their lands. The fence would actually cut across, divide, or segregate lands occupied by people. The effect of it would fence in and fence out property claims. In this case, petitioners invoke their constitutional rights to be protected against deprivation of property without due process of law and of taking private property without just compensation. Such situations involve pure question of law.5

As regards the invocation of res judicata by petitioners, Atty. Masweng held that they failed to present copies of the Decisions supposedly rendered by the Regional Trial Court and the Supreme Court.

On November 29, 2002, petitioners filed a Motion for Reconsideration of the above Order. On June 20, 2003, Atty. Masweng denied said Motion on the ground that the same was filed out of time.

Petitioners filed before the Court of Appeals a Petition for Certiorari, alleging grave abuse of discretion on the part of Atty. Masweng in issuing the TRO and the writ of preliminary injunction.

On April 30, 2007, the Court of Appeals rendered its Decision dismissing petitioners’ Petition forCertiorari. The dispositive portion of the Decision is as follows:

WHEREFORE, premises considered, the instant petition is DISMISSED and the assailed orders of public respondent AFFIRMED. Nevertheless, private respondents are hereby enjoined from (i) introducing constructions at the Busol Watershed and Forest Reservation and (ii) engaging in activities that degrade the resources therein until viable measures or programs for the maintenance, preservation and development of said reservation are adopted pursuant to Sec. 58 of Rep. Act No. 8371.6

The Court of Appeals ruled that since the petition before the NCIP involves the protection of private respondents’ rights to their ancestral domains in accordance with Section 7(b), (c) and (g)7 of the IPRA, the NCIP clearly has jurisdiction over the dispute pursuant to Section 66. The Court of Appeals also upheld the conclusion of Atty. Masweng that the NCIP can issue injunctive writs as a principal relief against acts adversely affecting or infringing on the rights of ICCs or IPs, because “(t)o rule otherwise would render NCIP inutile in preventing acts committed in violation of the IPRA.”8

As regards petitioners’ allegations that government reservations such as the subject Busol Watershed cannot be the subject of ancestral domain claims, the Court of Appeals pointed out

that Section 589 of the IPRA in fact mandates the full participation of ICCs/IPs in the maintenance, management, and development of ancestral domains or portions thereof that are necessary for critical watersheds. The IPRA, thus, gives the ICCs/IPs responsibility to maintain, develop, protect, and conserve such areas with the full and effective assistance of government agencies.10

Despite ruling in favor of private respondents, the Court of Appeals nevertheless found merit in petitioners’ own application for injunction and observed that certain activities by private respondents without regard for environmental considerations could result in irreparable damage to the watershed and the ecosystem. Thus, the Court of Appeals enjoined private respondents from introducing constructions at the Busol Watershed and from engaging in activities that degrade its resources, until viable measures or programs for the maintenance, preservation and development of said reservation are adopted pursuant to the aforementioned Section 58 of the IPRA.

Hence, the present Petition for Review wherein petitioners assert the following grounds:

1. THE COURT OF APPEALS GRAVELY AND PATENTLY ERRED IN SUSTAINING THE NCIP’S ISSUANCE OF A TEMPORARY RESTRAINING ORDER AND WRIT OF PRELIMINARY INJUNCTION DESPITE CLEAR AND PATENT VIOLATION OF P.D. 1818, SUPREME COURT CIRCULAR NO. 68-94 AND SUPREME COURT ADMINISTRATIVE CIRCULAR NO. 11-2000;

2. THE COURT OF APPEALS GRAVELY AND PATENTLY ERRED IN AFFIRMING THE ACT OF THE NCIP IN ISSUING A 20-DAYS TEMPORARY RESTRAINING ORDER EX PARTE SANS THE MANDATORY NOTICE AND HEARING FOR THE ISSUANCE THEREOF;

3. THE COURT OF APPEALS GRAVELY AND PATENTLY ERRED IN SUSTAINING THE NCIP’S ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION DESPITE ABSOLUTE ABSENCE OF CLEAR, UNMISTAKABLE AND POSIT[I]VE LEGAL RIGHTS ON THE PART OF THE APPLICANTS;

4. THE COURT OF APPEALS GRAVELY AND PATENTLY ERRED IN HOLDING THAT THE NCIP HEARING OFFICER HAS JURISDICTION OVER A CASE OF INJUNCTION INVOLVING A GOVERNMENT INFRASTRUCTURE PROJECT;

5. THE COURT OF APPEALS PATENTLY AND GRAVELY ERRED IN BRUSHING ASIDESECTION 78, A SPECIAL PROVISION OF REPUBLIC ACT 8371 WHICH EXCLUDES THE CITY OF BAGUIO FROM THE COVERAGE OF ANCESTRAL LAND CLAIMS APPLICATIONS;

6. THE COURT OF APPEALS GRAVELY AND PATENTLY ERRED IN UPHOLDING RULE XIII OF THE IMPLEMENTING RULES OF REPUBLIC ACT 8371, EVEN IF THE PROVISIONS OF SAID RULE XIII CLEARLY OVERSTEPPED AND EXCEEDED SECTION 78 OF R.A. 8371.11

TRO and Preliminary Injunction againstGovernment Infrastructure Projects

The governing law as regards the prohibition to issue restraining orders and injunctions against government infrastructure projects is Republic Act No. 8975,12 which modified Presidential Decree

No. 1818, the law cited by the parties, upon its effectivity on November 26, 2000.13 Section 9 of Republic Act No. 8975 provides:

Section 9. Repealing Clause. — All laws, decrees, including Presidential Decree Nos. 605, 1818 and Republic Act No. 7160, as amended, orders, rules and regulations or parts thereof inconsistent with this Act are hereby repealed or amended accordingly.

Thus, in GV Diversified International, Incorporated v. Court of Appeals,14 we ruled that Presidential Decree No. 1818 have been effectively superseded by Republic Act No. 8975. The prohibition is thus now delineated in Section 3 of said latter law, which provides:

Section 3. Prohibition on the Issuance of Temporary Restraining Orders, Preliminary Injunctions and Preliminary Mandatory Injunctions. – No court, except the Supreme Court, shall issue any temporary restraining order, preliminary injunction or preliminary mandatory injunction against the government, or any of its subdivisions, officials or any person or entity, whether public or private, acting under the government’s direction, to restrain, prohibit or compel the following acts:

(a) Acquisition, clearance and development of the right-of-way and/or site or location of any national government project;

(b) Bidding or awarding of contract/project of the national government as defined under Section 2 hereof;

(c) Commencement, prosecution, execution, implementation, operation of any such contract or project;

(d) Termination or rescission of any such contract/project; and

(e) The undertaking or authorization of any other lawful activity necessary for such contract/project.

This prohibition shall apply to all cases, disputes or controversies instituted by a private party, including but not limited to cases filed by bidders or those claiming to have rights through such bidders involving such contract/project. This prohibition shall not apply when the matter is of extreme urgency involving a constitutional issue, such that unless a temporary restraining order is issued, grave injustice and irreparable injury will arise. The applicant shall file a bond, in an amount to be fixed by the court, which bond shall accrue in favor of the government if the court should finally decide that the applicant was not entitled to the relief sought.

If after due hearing the court finds that the award of the contract is null and void, the court may, if appropriate under the circumstances, award the contract to the qualified and winning bidder or order a rebidding of the same, without prejudice to any liability that the guilty party may incur under the existing laws. (Emphasis supplied.)

Should a judge violate the preceding section, Republic Act No. 8975 provides the following penalty:

Section 6. Penal Sanction. — In addition to any civil and criminal liabilities he or she may incur under existing laws, any judge who shall issue a temporary restraining order, preliminary injunction or preliminary mandatory injunction in violation of Section 3 hereof, shall suffer the penalty of suspension of at least sixty (60) days without pay. (Emphasis added.)

It is clear from the foregoing provisions that the prohibition covers only judges, and does not apply to the NCIP or its hearing officers. In this respect, Republic Act No. 8975 conforms to the coverage of Presidential Decree No. 60515 and Presidential Decree No. 1818,16 both of which enjoin only the courts. Accordingly, we cannot nullify the assailed Orders on the ground of violation of said laws.

The Court’s Previous Decision inG.R. No. 180206

On February 4, 2009, this Court promulgated its Decision in G.R. No. 180206, a suit which involved several of the parties in the case at bar. In G.R. No. 180206, the City Mayor of Baguio City issued three Demolition Orders with respect to allegedly illegal structures constructed by private respondents therein on a portion of the Busol Forest Reservation. Private respondents filed a Petition for Injunction with the NCIP. Atty. Masweng issued two temporary restraining orders directing the City Government of Baguio to refrain from enforcing said Demolition Orders and subsequently granted private respondents’ application for a preliminary injunction. The Court of Appeals, acting on petitioners’ Petition forCertiorari, affirmed the temporary restraining orders and the writ of preliminary injunction.

This Court then upheld the jurisdiction of the NCIP on the basis of the allegations in private respondents’ Petition for Injunction. It was similarly claimed in said Petition for Injunction that private respondents were descendants of Molintas and Gumangan whose claims over the portions of the Busol Watershed Reservation had been recognized by Proclamation No. 15. This Court thus ruled in G.R. No. 180206 that the nature of the action clearly qualify it as a dispute or controversy over ancestral lands/domains of the ICCs/IPs.17 On the basis of Section 69(d)18 of the IPRA and Section 82, Rule XV19 of NCIP Administrative Circular No. 1-03, 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.20

On petitioners’ argument that the City of Baguio is exempt from the provisions of the IPRA and, consequently, the jurisdiction of the NCIP, this Court ruled in G.R. No. 180206 that said exemption cannot ipso facto be deduced from Section 7821 of the IPRA because the law concedes the validity of prior land rights recognized or acquired through any process before its effectivity.22

Lastly, however, this Court ruled that although the NCIP has the authority to issue temporary restraining orders and writs of injunction, it was not convinced that private respondents were entitled to the relief granted by the Commission.23 Proclamation No. 15 does not appear to be a definitive recognition of private respondents’ ancestral land claim, as it merely identifies the Molintas and Gumangan families asclaimants of a portion of the Busol Forest Reservation, but does not acknowledge vested rights over the same.24 Since it is required before the issuance of a writ of preliminary injunction that claimants show the existence of a right to be protected, this Court, in G.R. No. 180206, ultimately granted the petition of the City Government of Baguio and set aside the writ of preliminary injunction issued therein.

In the case at bar, petitioners and private respondents present the very same arguments and counter-arguments with respect to the writ of injunction against the fencing of the Busol Watershed Reservation. The same legal issues are thus being litigated in G.R. No. 180206 and in the case at bar, except that different writs of injunction are being assailed. In both cases, petitioners claim (1) that Atty. Masweng is prohibited from issuing temporary restraining orders and writs of preliminary injunction against government infrastructure projects; (2) that Baguio City is beyond the ambit of the IPRA; and (3) that private respondents have not shown a clear right to be protected. Private respondents, on the other hand, presented the same allegations in their Petition for Injunction, particularly the alleged recognition made under Proclamation No. 15 in favor of their ancestors. While res judicata does not apply on account of the different subject matters of the case at bar and G.R. No. 180206 (they assail different writs of injunction, albeit issued by the same hearing officer), we are constrained by the principle of stare decisis to grant the instant petition. The Court explained the principle of stare decisis25 in Ting v. Velez-Ting26:

The principle of stare decisis enjoins adherence by lower courts to doctrinal rules established by this Court in its final decisions. It is based on the principle that once a question of law has been examined and decided, it should be deemed settled and closed to further argument. Basically, it is a bar to any attempt to relitigate the same issues, necessary for two simple reasons: economy and stability. In our jurisdiction, the principle is entrenched in Article 8 of the Civil Code. (Citations omitted.)

We have also previously held that “[u]nder the doctrine of stare decisis, once a court has laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases where the facts are substantially the same.”27

However, even though the principal action in the case at bar is denominated as a petition for injunction, the relief prayed for and granted by the NCIP partakes of the nature of a preliminary injunction in the sense that its effectivity would cease the moment the NCIP issues its decision in an appropriate action. The conclusions of this Court in both the case at bar and that in G.R. No. 180206 as regards private respondents’ ancestral land claim should therefore be considered provisional, as they are based merely on the allegations in the complaint or petition and not on evidence adduced in a full-blown proceeding on the merits by the proper tribunal. Private respondents are therefore not barred from proving their alleged ancestral domain claim in the appropriate proceeding, despite the denial of the temporary injunctive relief prayed for.

WHEREFORE, the present Petition for Review on Certiorari is hereby GRANTED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 78570 dated April 30, 2007 and December 11, 2007, respectively, are REVERSED and SET ASIDE.

SO ORDERED.

Sereno, C.J., (Chairperson), Bersamin, Villarama, Jr., and Reyes, JJ., concur.

SECOND DIVISION

G.R. No. 179669, June 04, 2014

SR METALS, INC., SAN R MINING AND CONSTRUCTION CORP. AND GALEO EQUIPMENT AND MINING COMPANY, INC., Petitioner, v. THE HONORABLE ANGELO T. REYES, IN HIS CAPACITY AS SECRETARY OF DEPARTMENT ENVIRONMENT AND NATURAL RESOURCES (DENR),Respondent.

D E C I S I O N

DEL CASTILLO, J.:

In this Petition for Review on Certiorari, SR Metals, Inc., SAN R Mining and Construction Corp., and Galeo Equipment and Mining Co., Inc. (hereinafter referred to as 'mini corporations') assail the Decision1and Resolution2 dated July 4, 2007 and September 14 respectively, of the Court of Appeals (CA), in CA-G.R SP No. 97127. The mining corporations fault the CA for (a) upholding the validity of the provision of Presidential Decree (PD) No. 18993 which limits the annual production/extraction of mineral ore in small-scale mining to 50,000 metric tons (MT) despite its being violative of the equal protection clause, and (b) adopting the Mines and Geosciences Bureau's (MGB) definition of 'ore,' which led the said court to conclude that the mining corporation had exceeded the aforesaid 50,000-MT limit.

Factual Antecedents

On March 9, 2006, each of the petitioners was awarded a 2-year Small-Scale Mining Permit4 (SSMP) by the Provincial Mining Regulatory Board of Agusan del Norte; they were allowed to extract Nickel and Cobalt (Ni-Co) in a 20-hectare mining site in Sitio Bugnang, Brgy. La Fraternidad, Tubay, Agusan del Norte. These permits were granted after the Environmental Management Bureau (EMB), Region XIII of the Department of Environment and Natural Resources (DENR) issued on March 2, 2006 Environmental Compliance Certificates5 with a validity period of one year.

The mining corporations’ ECCs contain a restriction that the amount of Ni-Co ore they are allowed to extract annually should not exceed 50,000 MTs pursuant to Section 1 of PD 1899 which provides:ChanRoblesVirtualawlibrary

Section 1. Small-scale mining refers to any single unit mining operation having an annual production of not more than 50,000 metric tons of ore x x x.

Subsequently, however, Agusan del Norte Governor, Erlpe John M. Amante (Governor Amante), questioned the quantity of ore that had been mined and shipped by the mining corporations. In reply, the mining corporations denied having exceeded the extraction limit of 50,000 MTs.6 They explained that an extracted mass contains only a limited amount/percentage of Ni-Co as the latter is lumped with gangue, i.e., the unwanted rocks and minerals. And it is only after the Ni-Co is separated from the gangue by means of a scientific process should amount of the Ni-Co be measured and considered as ‘ore.’ Excluding the gangue, the mining corporations pegged the volume of Ni-Co ore they had extracted from the time they start shipping the same in August 2006 until they filed their Petition before the CA in December 2006 at 1,699.66 MTs of Ni-Co ore only.7cralawred

Having reservations with the mining corporations’ interpretation of the 50,000-MT restriction,

Governor Amante sought the opinion of the Department of Justice (DOJ) on the matter.

Meanwhile, the EMB sent the mining corporations a Notice of Violation8 informing them that they had exceeded the allowed annual volume of 150,000 MTs combined production as their stockpile inventory of Nickeliferous ore had already total 177,297 dry metric tons (DMT). This was based on the August 10, 2006 Inspection Report9 of the MGB Monitoring Team which conducted an inspection after the DENR received complaints of violations of small-scale mining laws and policies by the mining corporations. A technical conference was thereafter held to hear the side of the mining corporations anent their alleged over-extraction.

On November 26, 2004, DENR Secretary Angelo T. Reyes issued a Cease and Desist Order10 (CDO) against the mining corporations suspending their operations for their operations for the following reasons:ChanRoblesVirtualawlibrary

1. The excess in 1) annual production of SR Metals, Inc., 2) maximum capitalization, and, 3) labor cost to equipment utilization of 1:1 is, by itself, a violation of existing laws.

2. The ECCs issued in favor of San R Construction Corporation and Galeo Equipment Corporation have no legal basis and [are] therefore considered null and void from the beginning. Similarly, the small scale mining permits that were issued by reason of such ECCs are likewise null and void.11

A few days later or on November 30, 2006, DOJ Secretary Raul M. Gonzalez replied to Governor Amante citing DOJ Opinion No. 74, Series of 2006.12 By comparing PD 1899 to Republic Act (RA) No. 7076,13 a subsequent law that likewise defines small-scale mining, the DOJ opined that Section 1 of PD 1899 is deemed to have been impliedly repealed by RA 7076 as nothing from the provisions of the latter law mentions anything pertaining to an annual production quota for small-scale mining. It explained:ChanRoblesVirtualawlibrary

The definition of “small scale mining” under R.A. No. 7076 is clear and categorical. Any mining activity that relies heavily on manual labor without use of explosives or heavy mining equipment falls under said definition. It does not mention any annual production quota or limitation. On the contrary, Section 12 thereof is explicit that the contractor, or, specifically, in this case, permit holders or permitees, are entitled not only to the right to [mine], but also to "extract and dispose of mineral ores (found therein) for commercial purposes” without specific limitation as to the nature of the mineral extracted or the quantity thereof.

Moreover, while Section 13 of the law imposes certain duties and obligations upon the contractor or permitee, nothing therein refers directly or otherwise to production quota limitation. Additionally, even Section 10 thereof, which provides for the extent [of] the mining area, does not limit production but only the mining area and depth of the tunnel or adit which, as stated in the law shall “not (exceed) that recommended by the (EMB) director taking into account the “quantity of mineral deposits”, among others. It is, however, silent on the extent of the mining’s annual quota production. Thus, anything that is not in the law cannot be interpreted as included in the law x x x14

Even assuming that the 50,000-MT ore limit in PD 1899 is still in force, the DOJ categorically concluded that the term ‘ore’ should be confined only to Ni-Co, that is, excluding soil and other

materials that are of no economic value to the mining corporations. This is considering that their ECCs explicitly specified ‘50,000 MTs of Ni-Co ore.’

The mining corporations then filed before the CA a Petition for Certiorari with prayer for Temporary Restraining Order and/or Preliminary Injunction, imputing grave abuse of discretion on the part of DENR in issuing the CDO. Relying on the rationalizations on the rationalization made by the DOJ in its November 30, 2006 Opinion, they vehemently denied having over-extracted Ni-Co.

The Office of the Solicitor General (OSG), for its part, claimed that the CDO was issued for ecological and health reasons and is a preventive measure against disaster arising from multiple acts of over-extraction such as landslides, mudslides and flooding. Also to be respected is the DENR’s finding of the mining corporations’ over-extraction because being the agency mandated to implement the laws affecting the country’s natural resources, the DENR possesses the necessary expertise to come up with such determination. For the same reason, the DENR's definition of small-scale mining particularly that under Mines Administrative Order (MAO) No. MRD-41 series of 1984,15 must also be sustained.

Furthermore, the OSG averred that the mining corporations’ concept of how to measure NI-CO ore is flawed as this contradicts Section 2 of MAO No. MRD-41 which confines the 50,000-MT limit to run-of-mine ore, viz.:ChanRoblesVirtualawlibrary

SECTION 2 - Who May Qualify for the Issuance of a Small Scale Mining Permit - Any qualified person as defined in Sec. 1 of these Regulations, preferably claim owners and applicants for or holders of quarry permits and/or licenses may be issued a small scale mining permit provided that their mining operations, whether newly-opened, existing or rehabilitated, involve:

(a) a single mining unit having an annual production not exceeding 50,0000 metric tons of run-of-mine ore, either an open cast mine working or a subsurface mine working which is driven to such distance as safety conditions and pracatices will allow;

x x x x

The OSG emphasized that in measuring an extraction, the only deduction allowed from an extracted mass of ore is the weight of water, not the soil. It quoted a letter16 Horacio C. Ramos of the MGB Central Office dated April 30, 2007 addressed to the OSG, which explained the definition of the phrase “50,000-metric ton extraction limit," to wit:ChanRoblesVirtualawlibrary

50,000 metric tons of run-of-mine per year; the run[-]of[-]mine can either be wet or dry;

traditionally, the production rate for nickel is based on dry since the water or moisture content has no value; and

thus, if the ore is wet, the weight of water is deducted from the total weight of ores in the determination of the production rate, or for shipment purposes.17

Ruling of the Court of Appeals

The CA denied the mining corporations’ Petition, not only because the ECCs have been mooted by their expiration, but also due to its recognition of the power of the DENR to issue the CDO as the agency reposed with the duty of managing and conserving the country's resources under Executive Order 192.18 Anent the issue of whether the imposed limit under PD 1899 should be upheld and whether there was over extraction, the CA had this to say:ChanRoblesVirtualawlibrary

We agree with the OSG’s argument that the 50,000[-]metric ton limit pertains to the mined ore in its unprocessed form, including the soil and dirt. The OSG argued that the DOJ Opinion is not binding upon the court and that the agency which is tasked to implement the mining laws is the DENR. Citing the MGB letter-reply, the OSG contended that the limit provided in RA 1899 subsists and RA 7076 did not impliedly repeal the latter. The provisions in both laws are not inconsistent with each other, both recognizing the DENR’s authority to promulgate rules and regulations for the implementation of mining laws.19

Furthermore, the said court gave credence to the MGB’s April 30, 2007 opinion on the definition of the 50,000-MT limit. Rejecting the claims of the mining corporations, it said:ChanRoblesVirtualawlibrary

x x x Thus, the MAO not only buttresses the OSG’s arguments as to what the extraction limit pertains to, x x x it also contravenes [the mining corporations’] assertion that the extraction limit no longer exists and that, even if the limit subsists, they [had] not exceeded the same because they [had] only extracted around 1,600 metric tons. Indeed, for purposes of determining whether the extraction is still within the allowable limits, only the weight of water is deducted from the run-of-mine ore.20

The mining corporations moved for partial reconsideration where they again relied heavily on the DOJ Opinion.21 They also attacked the validity of Section 1(1) of PD 1899 that sets the annual production limit of 50,000-MT on small-scale mining by arguing that it violates the equal protection clause of the Constitution and that it is already repealed by RA 7076. Even granting that the said limit is still in force, the mining corporations asserted the gangue should not be included in measuring the extraction, since their ECCs clearly provide that 50,000 MTs of Ni-Co ore, not 50,000 MTs of ore, can be extracted.

Ignoring their arguments, the CA stressed that the DENR is the primary government agency responsible for the conservation, management, development, and proper use of the country's mineral resources. It reiterated:ChanRoblesVirtualawlibrary

This Court likewise declared that the MAO adopted the definition of small scale mining in PD 1899, including the requirement of observing the extraction limit. Together with the MGB's interpretation of the term “run-of-mine ore”, the MAO supports the arguments of the OSG as to the extraction limit and controverts [the mining corporations’] assertion that no extraction limit exists and, if the same subsists, they [had] not exceeded it.22

Hence, this Petition.

Issues

Two questions are posed before us. The first deals with the constitutionality of Section 1, PD 1899 which, according to the mining corporations violates the equal protection clause. They argue that there is no substantial distinction between the miners covered under RA 7076, who can extract as much ore as they can, and those covered under PD 1899 who were imposed an extraction limit.

Another issue concerns the correct interpretation of the 50,000-MT limit. The mining corporation insist on their version of how to compute the extraction.

To them, the computation of Ni-Co ore should be confined strictly to Ni-Co component from which they derive economic value.

Our Ruling

Petitioners are governed by the annualproduction limit under PD 1899.

Two different laws governing small-scale mining co-exist: PD 1899 and RA 7076.23 The controversy lies in the apparent conflicting provisions on the definition of small-scale mining under the two laws. Section 1 of PD 1899 defines small-scale mining in this wise:ChanRoblesVirtualawlibrary

Small-scale mining refers to any single unit mining operation having an annual production of not more than 50,000 metric tons of ore and satisfying the following requisites:

1. The working is artisanal, whether open cast or shallow underground mining, without the use of sophisticated mining equipment;

2. Minimal investment on infrastructures and processing plant;

3. Heavy reliance on manual labor; and

4. Owned, managed or controlled by an individual or entity qualified under existing mining laws, rules and regulations.

On the other hand, under Section 3(b) of RA 7076, small-scale mining refers to 'mining activities which rely heavily on manual labor using simple implements and methods and do not use explosives or heavy mining equipment.’ Significantly, this definition does not provide for annual extraction limit unlike in PD 1899.

DOJ Opinion No. 74, Series of 2006 concluded that as nothing from RA 7076 speaks of an annual production limit, Section 1 of PD 1899 should be considered impliedly repealed by RA 7076, the later law. However, while these two laws tackle the definition of what small-scale mining is, both have different objects upon which the laws shall be applied to. PD 1899 applies to individuals, partnerships and corporations while RA 7076 applies to cooperatives.24 There are other differences between the two laws, but we cannot hastily conclude that there is an implied repeal because of the omission. Both laws may stand.

Petitioners then construe the omission of the annual production limit in the later law in the that sense that small-scale miners granted mining contracts under RA 7076 can now conduct mineral extraction as much as they can while the benefit of unlimited extraction is denied to those granted permits under PD 1899. According to them, such situation creates an invalid classification of small-scale miners under the two laws, hence the attack on Section 1 of PD 1899 as being violative of the equal protection clause.

We do not, however, subscribe to the mining corporations’ averment that the 50,000-MTs production limit does not apply to small-scale miners under RA 7076. Recognizing the DENR’s mandate to regulate the country’s natural resources under EO 192,25 both PD 1899 and RA 7076 delegated to the DENR, thru its Secretary, the power to promulgate the necessary IRRs to give effect to the said laws.26cralawred

Significantly, the DENR in the exercise of such power had just recently resolved the question on the production limit in small-scale mining. On July 5, 2007, it issued DMC 2007-07 or “Clarificatory Guidelines in the Implementation of the Small-Scale Mining Laws”. By imposing the annual production limit of 50,000 DMT to both SSMPs issued under PD 1899 and Small-Scale Mining Contracts (SSMCs) under RA 7076, the DENR harmonized the two laws, viz:ChanRoblesVirtualawlibrary

V. Maximum Annual Production

For metallic minerals, the maximum annual production under an SSMP/SSMC shall be 50,000 dry metric tons (DMT[s]) of ore, while for nonmetallic minerals, the maximum annual production shall be 50,000 DMT[s] of the material itself, e.g., 50,000 DMT[s] of limestone, 50,000 DMT[s] of silica, or 50,000 DMT[s] of perlite.

The maximum annual production above shall include low-grade and/or marginal ore, and/or minerals or rocks that are intended for sampling and/or metallurgical testing purpose/s."

With the 50,000-MT limit likewise imposed on small-scale miners under RA 7076, the issue raised on the violation of the equal protection clause is moot. The fact is, the DENR treats all small-scale miners equally as the production limit applies to all of them. There is therefore no more reason for the mining corporations to not recognize and comply with the said limitation. It must be stressed that the DENR is the government agency tasked with the duty of managing and conserving the country’s resources; it is also the agency vested with the authority to promulgate rules and regulations for the implementation of mining laws.

The DENR, being the agency mandatedto protect the environment and the country's natural resources, is authoritative oninterpreting the 50,000- MT limit.

MAO No. MRD-41 specifies measuring the ‘run-of-mine ore,’ meaning the ore as it emerges from the mine, i.e., before treatment.27 As explained by the DENR-MGB Director, the ore is weighed only in DMT, excluding the water or moisture content. Simply stated, included in the measurement are other materials lumped with the sought-after mineral.

This definition is congruent with RA 7942 or The Philippine Mining Act of 1995. Said law defines “ore” as “naturally occurring substance or material from which a mineral or element can be mined and/or processed for profit.”28 Clearly, the law refers to ore in its unprocessed form, i.e., before the valuable mineral is separate from the ore itself.

Also in Section V of the earlier mentioned DMC-2007-07, the DENR clarified the 50,000-MT limit by differentiating the measurement of metallic minerals from nonmetallic ones. Noticeably, the metallic minerals are conservatively measured compared to nonmetallic or industrial minerals for a reason. Compared to metallic minerals, nonmetals are easily available when mined in their raw/natural state, like limestone. As nonmetallics are produced from natural aggregates, the production limit of 50,000 DMTs will be easily met. On the other hand, metallic minerals, like Ni-Co are not easily available in their pure form since they are sourced from ores which are mined. To extract these metals of economic value, the gangue lumped with them have to be removed by metallurgy. And in order to produce a ton of a metallic mineral sought for, big volumes of gangue will have to be removed. As indicated by the mining corporations' Summary of Shipments,29 it took 151,612 DMTs of ore to extract only 1,699. DMTs of Ni-Co. Thus, 149,912.34 DMTs of ore are considered waste. This means that if we are to subscribe to the mining corporations’ interpretation of how to measure mined ore by measuring only the Ni-Co and excluding the gangue, small-scale miners are virtually given the license to continuously collect large volumes of ore until the 50,000 DMTs of Ni-Co limit is met. It must be emphasized that mining, whether small or large-scale, raises environmental concerns. To allow such a scenario will further cause damage to the environment such as erosion and sedimentation, landslides, deforestation, acid rock drainage, etc.30 As correctly argued by the Solicitor General, extracting millions of DMTs of run-of-mine ore will mean irreversible degradation of the natural resources and possible landslides and flashfloods.

It may be significant to state at this point that while the annual production limit by measuring only the material itself may apply in small-scale nonmetallic mining, the same cannot be true to metal mining for the reasons above stated. Hence, the DENR saw it proper to conservatively measure the production of metallic minerals apparently bearing in mind the more intense of such kind of mining to the environment.

Anent the mining corporations’ contention that their ECCs specified that they were allowed to extract 50,000 MTs of Ni-Co, such should not be taken literally in the sense that the measurement should only be based on the Ni-Co in their purest form. Their that they are to mine Ni-Co and not any other minerals. This construction likewise applies to the respective SSMPs given them.

WHEREFORE, premises considered, the Petition is DENIED. The July 4, 2007 Decision and September 14, 2007 Resolution of the Court of Appeals in CA-G.R. SP No. 97127 are hereby AFFIRMED in toto.

SO ORDERED.

Carpio, (Chairperson), Brion, and Perlas-Bernabe, JJ. concur.