JULY 3, 2018 facets, the administrative and the fiscal.
Fiscal autonomy means that local
G.R. No. 199802
CONGRESSMAN HERMILANDO I. MANDANAS; MAYOR EFREN B.
DIONA; MAYOR ANTONINO A. AURELIO; KAGA WAD
MARIOILAGAN;BARANGAY CHAIR PERLITO MANALO; BARANGA Y
CHAIR MEDEL MEDRANO;BARANGAY KAGA WAD CRIS RAMOS;
BARANGA Y KAGA WAD ELISA D. BALBAGO, and ATTY. JOSE MALVAR
VILLEGAS, Petitioners  the Local Government Code (LGC), in order to guarantee the fiscal autonomy
vs.
EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR.; SECRETARY CESAR
PURISIMA, Department of Finance; SECRETARY FLORENCIO H. ABAD,
Department of Budget and Management; COMMISSIONER KIM JACINTO-
HENARES, Bureau of Internal Revenue; and NATIONAL TREASURER
ROBERTO TAN, Bureau of the Treasury, Respondents
G.R. No. 208488
HONORABLE ENRIQUE T. GARCIA, JR., in his personal and official
capacity as Representative of the 2ndDistrict of the Province of
Bataan, Petitioner  Provided, That in the event that the National Government incurs an
vs.
HONORABLE [PAQUITO) N. OCHOA, JR., Executive Secretary;
HONORABLE CESAR V. PURISIMA, Secretary, Department of Finance;
HONORABLE FLORENCIO H. ABAD, Secretary, Department of Budget
and Management; HONORABLE KIM S. JACINTO-HENARES,
Commissioner, Bureau of Internal Revenue; and HONORABLE ROZZANO
RUFINO B. BIAZON, Commissioner, Bureau of Customs, Respondents
DECISION
BERSAMIN, J.:
The petitioners hereby challenge the manner in which the just share in the
national taxes of the local government units (LGUs) has been computed.
Antecedents
One of the key features of the 1987 Constitution is its push towards
decentralization of government and local autonomy. Local autonomy has two
governments have the power to create their own sources of revenue in
addition to their equitable share in the national taxes released by the National
Government, as well as the power to allocate their resources in accordance
with their own priorities.  Such autonomy is as indispensable to the viability of
1
the policy of decentralization as the other.
Implementing the constitutional mandate for decentralization and local
autonomy, Congress enacted Republic Act No. 7160, otherwise known as
of the LGUs by specifically providing that:
SECTION 284. Allotment of Internal Revenue Taxes. - Local government units
shall have a share in the national internal revenue taxes based on the
collection of the third fiscal year preceding the current fiscal year as follows:
(a) On the first year of the effectivity of this Code, thirty percent (30%); (b) On
the second year, thirty-five percent (35%); and
(c) On the third year and thereafter, forty percent (40%).
unmanageable public sector deficit, the President of the Philippines is hereby
authorized, upon the recommendation of Secretary of Finance, Secretary of
Interior and Local Government, and Secretary of Budget and Management,
and subject to consultation with the presiding officers of both Houses of
Congress and the presidents of the "liga", to make the necessary adjustments
in the internal revenue allotment of local government units but in no case shall
the allotment be less than thirty percent (30%) of the collection of national
internal revenue taxes of the third fiscal year preceding the current fiscal year:
Provided, further, That in the first year of the effectivity of this Code, the local
government units shall, in addition to the thirty percent (30%) internal revenue
allotment which shall include the cost of devolved functions for essential public
services, be entitled to receive the amount equivalent to the cost of devolved
personal services.
The share of the LGUs, heretofore known as the Internal Revenue Allotment
(IRA), has been regularly released to the LGUs. According to the implementing
rules and regulations of the LGC, the IRA is determined on the basis of the
actual collections of the National Internal Revenue Taxes (NIRTs) as certified
by the Bureau of Internal Revenue (BIR). 2
G.R. No. 199802 (Mandanas, et al.) is a special civil action
for certiorari, prohibition and mandamus assailing the manner the General
Appropriations Act (GAA) for FY 2012 computed the IRA for the LGUs.
Mandanas, et al. allege herein that certain collections of NIR Ts by the Bureau
of Customs (BOC) - specifically: excise taxes, value added taxes (VATs) and
documentary stamp taxes (DSTs) - have not been included in the base
amounts for the computation of the IRA; that such taxes, albeit collected by the
BOC, should form part of the base from which the IRA should be computed
because they constituted NIRTs; that, consequently, the release of the
additional amount of ₱60,750,000,000.00 to the LGUs as their IRA for FY 2012
should be ordered; and that for the same reason the LGUs should also be
released their unpaid IRA for FY 1992 to FY 2011, inclusive, totaling
₱438,103,906,675.73.
In G.R. No. 208488, Congressman Enrique Garcia, Jr., the lone petitioner,
seeks the writ of mandamus to compel the respondents thereat to compute
the just share of the LGUs on the basis of all national taxes. His petition insists
on a literal reading of Section 6, Article X of the 1987 Constitution. He avers
that the insertion by Congress of the words internal revenue in the
phrase national taxes found in Section 284 of the LGC caused the diminution
of the base for determining the just share of the LGUs, and should be declared
unconstitutional; that, moreover, the exclusion of certain taxes and accounts
pursuant to or in accordance with special laws was similarly constitutionally
untenable; that the VA Ts and excise taxes collected by the BOC should be
included in the computation of the IRA; and that the respondents should
compute the IRA on the basis of all national tax collections, and thereafter
distribute any shortfall to the LGUs.
It is noted that named as common respondents were the then incumbent
Executive Secretary, Secretary of Finance, the Secretary of the Department of
Budget and Management (DBM), and the Commissioner of Internal Revenue.
In addition, Mandanas, et al. impleaded the National Treasurer, while Garcia
added the Commissioner of Customs.
The cases were consolidated on October 22, 2013.   In the meanwhile,
3
Congressman Garcia, Jr. passed away. Jose Enrique Garcia III, who was
subsequently elected to the same congressional post, was substituted for
Congressman Garcia, Jr. as the petitioner in G.R. No. 208488 under the
resolution promulgated on August 23, 2016. 4
In response to the petitions, the several respondents, represented by the
Office of the Solicitor General (OSG), urged the dismissal of the petitions upon
procedural and substantive considerations.
Anent the procedural considerations, the OSG argues that the petitions are
procedurally defective because, firstly, mandamus does not lie in order to
achieve the reliefs sought because Congress may not be compelled to
appropriate the sums allegedly illegally withheld for to do so will violate the
doctrine of separation of powers; and, secondly, mandamus does not also lie
to compel the DBM to release the amounts to the LGUs because such
disbursements will be contrary to the purposes specified in the GAA; that
Garcia has no clear legal right to sustain his suit for mandamus; that the filing
of Garcia's suit violates the doctrine of hierarchy of courts; and that Garcia's
petition seeks declaratory relief but the Court cannot grant such relief in the
exercise of its original jurisdiction.
On the substantive considerations, the OSG avers that Article 284 of the LGC
is consistent with the mandate of Section 6, Article X of the 1987 Constitution
to the effect that the LGUs shall have a just share in the national taxes; that
the determination of the just share is within the discretion of Congress; that the
limitation under the LGC of the basis for the just share in the NIRTs was within
the powers granted to Congress by the 1987 Constitution; that the LGUs have
been receiving their just share in the national taxes based on the correct base
amount; that Congress has the authority to exclude certain taxes from the
base amount in computing the IRA; that there is a distinction between the VA
Ts, excise taxes and DSTs collected by the BIR, on one hand, and the VA Ts,
excise taxes and DSTs collected by the BOC, on the other, thereby warranting
their different treatment; and that Development Budget Coordination
Committee (DBCC) Resolution No. 2003-02 dated September 4, 2003 has
limited the base amount for the computation of the IRA to the "cash collections
based on the BIR data as reconciled with the Bureau of Treasury;" and that the
collection of such national taxes by the BOC should be excluded.
Issues
The issues for resolution are limited to the following, namely:
I.
Whether or not Mandamus is the proper vehicle to assail the constitutionality of
the relevant provisions of the GAA and the LGC;
 II.
Whether or not Section 284 of the LGC is unconstitutional for being repugnant
to Section 6, Article X of the 1987 Constitution;
III.
Whether or not the existing shares given to the LGUs by virtue of the GAA is
consistent with the constitutional mandate to give LGUs a 'just share" to
national taxes following Article X, Section 6 of the 1987 Constitution;
IV.
Whether or not the petitioners are entitled to the reliefs prayed for.
Simply stated, the petitioners raise the novel question of whether or not the
exclusion of certain national taxes from the base amount for the computation
of the just share of the LGUs in the national taxes is constitutional.
Ruling of the Court
The petitions are partly meritorious.
I we do not dismiss it. Garcia has attributed the non-release of some portions of
Mandamus is an improper remedy
Mandanas, et al. seek the writs of certiorari, prohibition and mandamus, while
Garcia prays for the writ of mandamus. Both groups of petitioners impugn the
validity of Section 284 of the LGC.
The remedy of mandamus is defined in Section 3, Rule 65 of the Rules of
Court, which provides:
Section 3. Petition for mandamus. - When any tribunal, corporation, board,
officer or person unlawfully neglects the performance of an act which the law
specifically enjoins as a duty resulting from an office, trust, or station, or
unlawfully excludes another from the use and enjoyment of a right or office to
which such other is entitled, 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 and praying
that judgment be rendered commanding the respondent, immediately or at
some other time to be specified by the court, to do the act required to be done
to protect the rights of the petitioner, and to pay the damages sustained by the
petitioner by reason of the wrongful acts of the respondent.
The petition shall also contain a sworn certification of non-forum shopping as
provided in the third paragraph of section 3, Rule 46.
For the writ of mandamus to issue, the petitioner must show that the act
sought to be performed or compelled is ministerial on the part of the
respondent. An act is ministerial when it does not require the exercise of
judgment and the act is performed pursuant to a legal mandate. The burden of
proof is on the mandamus petitioner to show that he is entitled to the
performance of a legal right, and that the respondent has a corresponding duty
to perform the act. The writ of mandamus may not issue to compel an official
to do anything that is not his duty to do, or that is his duty not to do, or to
obtain for the petitioner anything to which he is not entitled by law. 
5
Considering that its determination of what constitutes the just share of the
LGUs in the national taxes under the 1987 Constitution is an entirely
discretionary power, Congress cannot be compelled by writ of mandamus to
act either way. The discretion of Congress thereon, being exclusive, is not
subject to external direction; otherwise, the delicate balance underlying our
system of government may be unduly disturbed. This conclusion should at
once then demand the dismissal of the Garcia petition in G.R. No. 208488, but
their IRA balances to an alleged congressional indiscretion - the diminution of
the base amount for computing the LGU's just share. He has asserted that
Congress altered the constitutional base not only by limiting the base to the
NIRTs instead of including therein all national taxes, but also by excluding
some national taxes and revenues that only benefitted a few LGUs to the
detriment of the rest of the LGUs.
Garcia's petition, while dubbed as a petition for mandamus, is also a petition
for certiorari because it alleges that Congress thereby committed grave abuse
of discretion amounting to lack or excess of jurisdiction. It is worth reminding
that the actual nature of every action is determined by the allegations in the
body of the pleading or the complaint itself, not by the nomenclature used to
designate the same.   Moreover, neither should the prayer for relief be
6
controlling; hence, the courts may still grant the proper relief as the facts
alleged in the pleadings and the evidence introduced may warrant even
without a prayer for specific remedy.7
In this regard, Garcia's allegation of the unconstitutionality of the insertion by
Congress of the words internal revenue in the phrase national taxes justifies
treating his petition as one for certiorari. It becomes our duty, then, to assume
jurisdiction over his petition. In Araullo v. Aquino III,  the Court has
8
emphatically opined that the Court's certiorari jurisdiction under the expanded
judicial power as stated in the second paragraph of Section 1, Article VIII of the
Constitution can be asserted:
xxxx to set right and undo any act of grave abuse of discretion amounting to
lack or excess of jurisdiction by any branch or instrumentality of the
Government, the Court is not at all precluded from making the inquiry provided
the challenge was properly brought by interested or affected parties. The Court
has been thereby entrusted expressly or by necessary implication with both
the duty and the obligation of determining, in appropriate cases, the validity of
any assailed legislative or executive action. This entrustment is consistent with
the republican system of checks and balances.  9
Further, observing that one of the reliefs being sought by Garcia is identical to
the main relief sought by Mandanas, et al., the Court should rightly dwell on
the substantive arguments posited by Garcia to the extent that they are
relevant to the ultimate resolution of these consolidated suits.
II.
Municipal corporations and their relationship with Congress
The correct resolution and fair disposition of the issues interposed for our
consideration require a review of the basic principles underlying our system of
local governments, and of the extent of the autonomy granted to the LGUs by
the 1987 Constitution.
Municipal corporations are now commonly known as local governments. They
are the bodies politic established by law partly as agencies of the State to
assist in the civil governance of the country. Their chief purpose has been to
regulate and administer the local and internal affairs of the cities, municipalities
or districts. They are legal institutions formed by charters from the sovereign
power, whereby the populations within communities living within prescribed
areas have formed themselves into bodies politic and corporate, and assumed
their corporate names with the right of continuous succession and for the
purposes and with the authority of subordinate self-government and
improvement and the local administration of the affairs of the State.  10
Municipal corporations, being the mere creatures of the State, are subject to
the will of Congress, their creator. Their continued existence and the grant of
their powers are dependent on the discretion of Congress. On this matter,
Judge John F. Dillon of the State of Iowa in the United States of America
enunciated in Merriam v. Moody's Executors  the rule of statutory construction
11
that came to be oft-mentioned as Dillon's Rule, to wit:
[A] municipal corporation possesses and can exercise the following powers
and no others: First, those granted in express words; second, those
necessarily implied or necessarily incident to the powers expressly granted;
third, those absolutely essential to the declared objects and purposes of the
corporation-not simply convenient but indispensible; fourth, any fair doubt as to
the existence of a power is resolved by the courts against the corporation-
against the existence of the powers.  12
The formulation of Dillon's Rule has since undergone slight modifications.
Judge Dillon himself introduced some of the modifications through his post-
Merriam writings with the objective of alleviating the original formulation's
harshness. The word fairly was added to the second proviso; the
word absolutely was deleted from the third proviso; and the
words reasonable and substantial were added to the fourth proviso, thusly:
x x x second, those necessarily or fairly implied in or incident to the powers
expressly granted; third, those essential to x x x. Any fair, reasonable, doubt. 
13
The modified Dillon's Rule has been followed in this jurisdiction, and has
remained despite both the 1973 Constitution and the 1987 Constitution
mandating autonomy for local governments. This has been made evident in
several rulings of the Court, one of which was that handed down in Magtajas
v. Pryce Properties Corporation, lnc.: 14
In light of all the above considerations, we see no way of arriving at the
conclusion urged on us by the petitioners that the ordinances in question are
valid. On the contrary, we find that the ordinances violate P.D. 1869, which has
the character and force of a statute, as well as the public policy expressed in
the decree allowing the playing of certain games of chance despite the
prohibition of gambling in general.
The rationale of the requirement that the ordinances should not contravene a
statute is obvious. Municipal governments are only agents of the national
government. Local councils exercise only delegated legislative powers
conferred on them by Congress as the national lawmaking body. The
delegate cannot be superior to the principal or exercise powers higher
than those of the latter. It is a heresy to suggest that the local
government units can undo the acts of Congress, from which they have
derived their power in the first place, and negate by mere ordinance the
mandate of the statute.
Municipal corporations owe their origin to, and derive their powers and
rights wholly from the legislature. It breathes into them the breath of life,
without which they cannot exist. As it creates, so it may destroy. As it
may destroy, it may abridge and control. Unless there is some
constitutional limitation on the right, the legislature might, by a single
act, and if we can suppose it capable of so great a folly and so great a
wrong, sweep from existence all of the municipal corporations in the
State, and the corporation could not prevent it. We know of no limitation
on the right so far as to the corporation themselves are concerned. They
are, so to phrase it, the mere tenants at will of the legislature.
This basic relationship between the national legislature and the local
government units has not been enfeebled by the new provisions in the
Constitution strengthening the policy of local autonomy. Without
meaning to detract from that policy, we here confirm that Congress
retains control of the local government units although in significantly
reduced degree now than under our previous Constitutions. The power
to create still includes the power to destroy. The power to grant still
includes the power to withhold or recall.
True, there are certain notable innovations in the Constitution, like the
direct conferment on the local government units of the power to tax,
which cannot now be withdrawn by mere statute. By and large, however,
the national legislature is still the principal of the local government units,
which cannot defy its will or modify or violate it. [Bold underscoring
supplied for emphasis]
Also, in the earlier ruling in Ganzon v. Court of Appeals,   the Court has
15
pointed out that the 1987 Constitution, in mandating autonomy for the LGUs,
did not intend to deprive Congress of its authority and prerogatives over the
LGUs.
Nonetheless, the LGC has tempered the application of Dillon's Rule in the
Philippines by providing a norm of interpretation in favor of the LGUs in its
Section 5(a), to wit:
xxxx
(a) Any provision on a power of a local government unit shall be liberally
interpreted in its favor, and in case of doubt, any question thereon shall be
resolved in favor of devolution of powers and of the local government unit. Any
fair and reasonable doubt as to the existence of the power shall be
interpreted in favor of the local government unit concerned; [Bold
underscoring supplied for emphasis]
xxxx
III.
The extent of local autonomy in the Philippines
Regardless, there remains no question that Congress possesses and wields
plenary power to control and direct the destiny of the LGUs, subject only to the
Constitution itself, for Congress, just like any branch of the Government,
should bow down to the majesty of the Constitution, which is always supreme.
The 1987 Constitution limits Congress' control over the LGUs by ordaining in
Section 25 of its Article II that: "The State shall ensure the autonomy of local
governments." The autonomy of the LGUs as thereby ensured does not
contemplate the fragmentation of the Philippines into a collection of mini-
states,   or the creation of imperium in imperio.   The grant of autonomy simply
16 17
means that Congress will allow the LGUs to perform certain functions and
exercise certain powers in order not for them to be overly dependent on the
National Government subject to the limitations that the 1987 Constitution or
Congress may impose.   Local autonomy recognizes the wholeness of the
18
Philippine society in its ethnolinguistic, cultural, and even religious diversities.
19
The constitutional mandate to ensure local autonomy refers to
decentralization.  In its broad or general sense, decentralization has two forms
20
in the Philippine setting, namely: the decentralization of power and the
decentralization of administration. The decentralization of power involves the
abdication of political power in favor of the autonomous LGUs as to grant them
the freedom to chart their own destinies and to shape their futures with
minimum intervention from the central government. This amounts to self-
immolation because the autonomous LGUs thereby become accountable not
to the central authorities but to their constituencies. On the other hand, the
decentralization of administration occurs when the central government
delegates administrative powers to the LGUs as the means of broadening the
base of governmental powers and of making the LGUs more responsive and
accountable in the process, and thereby ensure their fullest development as
self-reliant communities and more effective partners in the pursuit of the goals
of national development and social progress. This form of decentralization
further relieves the central government of the burden of managing local affairs
so that it can concentrate on national concerns. 21
Two groups of LGUs enjoy decentralization in distinct ways. The
decentralization of power has been given to the regional units (namely, the
Autonomous Region for Muslim Mindanao [ARMM] and the constitutionally-
mandated Cordillera Autonomous Region [CAR]). The other group of
LGUs (i.e., provinces, cities, municipalities and barangays) enjoy the
decentralization of administration.  The distinction can be reasonably
22
understood. The provinces, cities, municipalities and barangays are given
decentralized administration to make governance at the local levels more
directly responsive and effective. In turn, the economic, political and social
developments of the smaller political units are expected to propel social and
economic growth and development.   In contrast, the regional autonomy of the
23
ARMM and the CAR aims to permit determinate groups with common
traditions and shared social-cultural characteristics to freely develop their ways
of life and heritage, to exercise their rights, and to be in charge of their own
affairs through the establishment of a special governance regime for certain
member communities who choose their own authorities from within
themselves, and exercise the jurisdictional authority legally accorded to them
to decide their internal community affairs.  24
It is to be underscored, however, that the decentralization of power in favor of
the regional units is not unlimited but involves only the powers enumerated by
Section 20, Article X of the 1987 Constitution and by the acts of Congress. For,
with various powers being devolved to the regional units, the grant and
exercise of such powers should always be consistent with and limited by the
1987 Constitution and the national laws.   In other words, the powers are
25
guardedly, not absolutely, abdicated by the National Government.
Illustrative of the limitation is what transpired in Serna v. Commission on
Elections,  where the Court struck down Section 19, Article VI of Republic Act
26
No. 9054 (An Act to Strengthen and Expand the Organic Act for the
Autonomous Region in Muslim Mindanao, Amending for the Purpose Republic
Act No. 6734, entitled "An Act Providing for the Autonomous Region in Muslim
Mindanao," as Amended) insofar as the provision granted to the ARMM the
power to create provinces and cities, and consequently declared as void
Muslim Mindanao Autonomy Act No. 201 creating the Province of Shariff
Kabunsuan for being contrary to Section 5, Article VI and Section 20, Article X
of the 1987 Constitution, as well as Section 3 of the Ordinance appended to
the 1987 Constitution. The Court clarified therein that only Congress could
create provinces and cities. This was because the creation of provinces and
cities necessarily entailed the creation of legislative districts, a power that only
Congress could exercise pursuant to Section 5, Article VI of the 1987
Constitution and Section 3 of the Ordinance appended to the Constitution; as
such, the ARMM would be thereby usurping the power of Congress to create
legislative districts and national offices.27
The 1987 Constitution has surely encouraged decentralization by mandating
that a system of decentralization be instituted through the LGC in order to
enable a more responsive and accountable local government structure.  It has28
also delegated the power to tax to the LGUs by authorizing them to create their
own sources of income that would make them self-reliant.  It further ensures
29
that each and every LGU will have a just share in national taxes as well in the
development of the national wealth. 30
The LGC has further delineated in its Section 3 the different operative
principles of decentralization to be adhered to consistently with the
constitutional policy on local autonomy, viz.:
Sec. 3. Operative Principles of Decentralization-
The formulation and implementation of policies and measures on local
autonomy shall be guided by the following operative principles:
(a) There shall be an effective allocation among the different local
government units of their respective powers, functions, responsibilities,
and resources;
(b) There shall be established in every local government unit an
accountable, efficient, and dynamic organizational structure and
operating mechanism that will meet the priority needs and service
requirements of its communities;
(c) Subject to civil service law, rules and regulations, local officials and
employees paid wholly or mainly from local funds shall be appointed or
removed, according to merit and fitness, by the appropriate appointing
authority;
(d) The vesting of duty, responsibility, and accountability in local
government units shall be accompanied with provision for reasonably
adequate resources to discharge their powers and effectively carry out
their functions: hence, they shall have the power to create and broaden
their own sources of revenue and the right to a just share in national
taxes and an equitable share in the proceeds of the utilization and
development of the national wealth within their respective areas;
(e) 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;
(f) Local government units may group themselves, consolidate or
coordinate their efforts, services, and resources commonly beneficial
to them;
(g) The capabilities of local government units, especially the
municipalities and barangays, shall be enhanced by providing them
with opportunities to participate actively in the implementation of
national programs and projects;
(h) There shall be a continuing mechanism to enhance local autonomy
not only by legislative enabling acts but also by administrative and
organizational reforms;
(i) Local government units shall share with the national government the
responsibility in the management and maintenance of ecological
balance within their territorial jurisdiction, subject to the provisions of
this Code and national policies;
(j) Effective mechanisms for ensuring the accountability of local
government units to their respective constituents shall be strengthened
in order to upgrade continually the quality of local leadership;
(k) The realization of local autonomy shall be facilitated through
improved coordination of national government policies and programs
an extension of adequate technical and material assistance to less
developed and deserving local government units;
(l) The participation of the private sector in local governance,
particularly in the delivery of basic services, shall be encouraged to
ensure the viability of local autonomy as an alternative strategy for
sustainable development; and
(m) The national government shall ensure that decentralization
contributes to the continuing improvement of the performance of local
government units and the quality of community life.
Based on the foregoing delineation, decentralization can be considered as the
decision by the central government to empower its subordinates, whether
geographically or functionally constituted, to exercise authority in certain areas.
It involves decision-making by subnational units, and is typically a delegated
power, whereby a larger government chooses to delegate authority to more
local governments.  It is also a process, being the set of policies, electoral or
31
constitutional reforms that transfer responsibilities, resources or authority from
the higher to the lower levels of government.  It is often viewed as a shift of
32
authority towards local governments and away from the central government,
with total government authority over society and economy imagined as fixed. 33
As a system of transferring authority and power from the National Government
to the LGUs, decentralization in the Philippines may be categorized into four,
namely: (1) political decentralization or devolution; (2) administrative
decentralization or deconcentration; (3) fiscal decentralization; and (4) policy or
decision-making decentralization.
Political decentralization or devolution occurs when there is a transfer of
powers, responsibilities, and resources from the central government to the
LOU s for the performance of certain functions. It is a more liberal form of
decentralization because there is an actual transfer of powers and
responsibilities. It aims to grant greater autonomy to the LGUs in cognizance
of their right to self-government, to make them self-reliant, and to improve their
administrative and technical capabilities.  It is an act by which the National
34
Government confers power and authority upon the various LGUs to perform
specific functions and responsibilities.  It encompasses reforms to open sub-
35
national representation and policies to "devolve political authority or electoral
capacities to sub-national actors. "  Section 16 to Section 19 of the LGC
36
characterize political decentralization in the LGC as different LGUs
empowered to address the different needs of their constituents. In contrast,
devolution in favor of the regional units is more expansive because they are
given the authority to regulate a wider array of subjects, including personal,
family and property relations.
Administrative decentralization or deconcentration involves the transfer of
functions or the delegation of authority and responsibility from the national
office to the regional and local offices.   Consistent with this concept, the LGC
37
Lastly, policy- or decision-making decentralization exists if at least one sub-
national tier of government has exclusive authority to make decisions on at
least one policy issue.47

has created the Local School Boards,  the Local Health Boards  and the Local
38 39

Development Councils,  and has transferred some of the authority from the
40
agencies of the National Government, like the Department of Education and
the Department of Health, to such bodies to better cope up with the needs of
particular localities.
In fine, certain limitations are and can be imposed by Congress in all the forms
of decentralization, for local autonomy, whether as to power or as to
administration, is not absolute. The LGUs remain to be the tenants of the will
of Congress subject to the guarantees that the Constitution itself imposes.

Fiscal decentralization means that the LGUs have the power to create their IV.
own sources of revenue in addition to their just share in the national taxes Section 284 of the LGC deviates from the plain language
released by the National Government. It includes the power to allocate their of Section 6 of Article X of the 1987 Constitution
resources in accordance with their own priorities. It thus extends to the
preparation of their budgets, so that the local officials have to work within the Section 6, Article X the 1987 Constitution textually commands the allocation to
constraints of their budgets. The budgets are not formulated at the national the LGUs of a just share in the national taxes, viz.:
level and imposed on local governments, without regard as to whether or not
they are relevant to local needs and resources. Hence, the necessity of a
Section 6. Local government units shall have a just share, as determined by
balancing of viewpoints and the harmonization of proposals from both local
law, in the national taxes which shall be automatically released to them.
and national officials, who in any case are partners in the attainment of
national goals, is recognized and addressed. 41

Section 6, when parsed, embodies three mandates, namely: (1) the LGUs
shall have a just share in the national taxes; (2) the just share shall
Fiscal decentralization emanates from a specific constitutional mandate that is
be determined by law; and (3) the just share shall be automatically released to
expressed in several provisions of Article X (Local Government) of the 1987
the LGUs. 48

Constitution, specifically: Section 5;  Section 6;  and Section 7.

42 43 44

Congress has sought to carry out the second mandate of Section 6 by

The constitutional authority extended to each and every LGU to create its own
enacting Section 284, Title III (Shares of Local Government Units in the
sources of income and revenue has been formalized from Section 128 to
Proceeds of National Taxes), of the LGC, which is again quoted for ready
Section 133 of the LGC. To implement the LGUs' entitlement to the just share
reference:
in the national taxes, Congress has enacted Section 284 to Section 288 of the
LGC. Congress has further enacted Section 289 to Section 294 of the LGC to
define the share of the LGUs in the national wealth. Indeed, the requirement Section 284. Allotment of Internal Revenue Taxes. - Local government units
for the automatic release to the LGUs of their just share in the national taxes is shall have a share in the national internal revenue taxes based on the
but the consequence of the constitutional mandate for fiscal decentralization.  45 collection of the third fiscal year preceding the current fiscal year as follows:

For sure, fiscal decentralization does not signify the absolute freedom of the (a) On the first year of the effectivity of this Code, thirty percent (30%);
LGUs to create their own sources of revenue and to spend their revenues
unrestrictedly or upon their individual whims and caprices. Congress has (b) On the second year, thirty-five percent (35%); and
subjected the LGUs' power to tax to the guidelines set in Section 130 of the
LGC and to the limitations stated in Section 133 of the LGC. The concept of (c) On the third year and thereafter, forty percent (40%).
local fiscal autonomy does not exclude any manner of intervention by the
National Government in the form of supervision if only to ensure that the local Provided, That in the event that the national government incurs an
programs, fiscal and otherwise, are consistent with the national goals. 46
unmanageable public sector deficit, the President of the Philippines is hereby
authorized, upon the recommendation of Secretary of Finance, Secretary of
Interior and Local Government and Secretary of Budget and Management, and
subject to consultation with the presiding officers of both Houses of Congress
and the presidents of the "liga", to make the necessary adjustments in the
internal. revenue allotment of local government units but in no case shall the
allotment be less than thirty percent (30%) of the collection of national internal
revenue taxes of the third fiscal year preceding the current fiscal year:
Provided, further, That in the first year of the effectivity of this Code, the local
government units shall, in addition to the thirty percent (30%) internal revenue
allotment which shall include the cost of devolved functions for essential public
services, be entitled to receive the amount equivalent to the cost of devolved
personal services.
There is no issue as to what constitutes the LGUs' just share expressed in
percentages of the national taxes (i.e.,30%, 35% and 40% stipulated in
subparagraphs (a), (b), and (c) of Section 284 ). Yet, Section
6, supra, mentions national taxes as the source of the just share of the LGUs
while Section 284 ordains that the share of the LG Us be taken from national
internal revenue taxes instead.
Has not Congress thereby infringed the constitutional provision?
Garcia contends that Congress has exceeded its constitutional boundary by
limiting to the NIRTs the base from which to compute the just share of the
LGUs.
We agree with Garcia's contention.
Although the power of Congress to make laws is plenary in nature,
congressional lawmaking remains subject to the limitations stated in the 1987
Constitution.  The phrase national internal revenue taxes engrafted in Section
49
284 is undoubtedly more restrictive than the term national taxes written in
Section 6. As such, Congress has actually departed from the letter of the 1987
Constitution stating that national taxes should be the base from which the just
share of the LGU comes. Such departure is impermissible. Verba legis non est
recedendum (from the words of a statute there should be no
departure).   Equally impermissible is that Congress has also thereby curtailed
50
the guarantee of fiscal autonomy in favor of the LGUs under the 1987
Constitution.
Taxes are the enforced proportional contributions exacted by the State from
persons and properties pursuant to its sovereignty in order to support the
Gove1nment and to defray all the public needs. Every tax has three elements,
namely: (a) it is an enforced proportional contribution from persons and
properties; (b) it is imposed by the State by virtue of its sovereignty; and (c) it
is levied for the support of the Government.  Taxes are classified into national
51
and local. National taxes are those levied by the National Government, while
local taxes are those levied by the LGUs. 52
What the phrase national internal revenue taxes as used in Section 284
included are all the taxes enumerated in Section 21 of the National Internal
Revenue Code (NIRC), as amended by R.A. No. 8424, viz.:
Section 21. Sources of Revenue. - The following taxes, fees and charges are
deemed to be national internal revenue taxes:
(a) Income tax;
(b) Estate and donor's taxes;
(c) Value-added tax;
(d) Other percentage taxes;
(e) Excise taxes;
(f) Documentary stan1p taxes; and
(g) Such other taxes as arc or hereafter may be imposed and collected
by the Bureau of Internal Revenue.
In view of the foregoing enumeration of what are the national internal revenue
taxes, Section 284 has effectively deprived the LGUs from deriving their just
share from other national taxes, like the customs duties.
Strictly speaking, customs duties are also taxes because they are exactions
whose proceeds become public funds. According to Garcia v. Executive
Secretary,  customs duties is the nomenclature given to taxes imposed on the
53
importation and exportation of commodities and merchandise to or from a
foreign country. Although customs duties have either or both the generation of
revenue and the regulation of economic or social activity as their moving
purposes, it is often difficult to say which of the two is the principal objective in
a particular instance, for, verily, customs duties, much like internal revenue
taxes, are rarely designed to achieve only one policy objective.  We further
54
note that Section 102(00) of R.A. No. 10863 (Customs Modernization and
Tariff Act) expressly includes all fees and charges imposed under the Act
under the blanket term of taxes.
It is clear from the foregoing clarification that the exclusion of other national
taxes like customs duties from the base for determining the just share of the
LG Us contravened the express constitutional edict in Section 6, Article X the
1987 Constitution.
Still, the OSG posits that Congress can manipulate, by law, the base of the
allocation of the just share in the national taxes of the LGUs.
The position of the OSG cannot be sustained. Although it has the primary
discretion to determine and fix the just share of the LGUs in the national
taxes (e.g., Section 284 of the LGC), Congress cannot disobey the express
mandate of Section 6, Article X of the 1987 Constitution for the just share of
the LGUs to be derived from the national taxes. The phrase as determined by
law in Section 6 follows and qualifies the phrase just share, and cannot be
construed as qualifying the succeeding phrase in the national taxes. The intent
of the people in respect of Section 6 is really that the base for reckoning the
just share of the LGUs should includes all national taxes. To read Section 6
differently as requiring that the just share of LGUs in the national taxes shall
be determined by law is tantamount to the unauthorized revision of the 1987
Constitution.
V.
Congress can validly exclude taxes that will constitute the base amount
for
the computation of the IRA only if a Constitutional provision allows such
exclusion
Garcia submits that even assuming that the present version of Section 284 of
the LGC is constitutionally valid, the implementation thereof has been
erroneous because Section 284 does not authorize any exclusion or deduction
from the collections of the NIRTs for purposes of the computation of the
allocations to the LGUs. He further submits that the exclusion of certain NIRTs
diminishes the fiscal autonomy granted to the LGUs. He claims that the
following NIRTs have been illegally excluded from the base for determining the
fair share of the LGUs in the IRA, to wit:
(1) NIRTs collected by the cities and provinces and divided exclusively
among the LGUs of the Autonomous Region for Muslim Mindanao
(ARMM), the regional government and the central government,
pursuant to Section 15  in relation to Section 9,  Article IX of R.A. No.
55 56
9054 (An Act to Strengthen and Expand the Organic Act for the
Autonomous Region in Muslim Mindanao, amending for the purpose
Republic Act No. 6734, entitled An Act providing for an Organic Act for
the Autonomous Region in Muslim Mindanao);
(2) The shares in the excise taxes on mineral products of the different
LG Us, as provided in Section 287 of the NIRC  in relation to Section
57
290 of the LGC; 58
(3) The shares of the relevant LGUs in the franchise taxes paid by
Manila Jockey Club, Inc.  and Philippine Racing Club, Inc.;
59 60
(4) The shares of various municipalities in VAT collections under R.A.
No. 7643 (An Act to Empower the Commissioner of Internal Revenue
to Require the Payment of the Value Added Tax Every Month and to
Allow Local Government Units to Share in VAT Revenue, Amending
for this Purpose Certain Sections of the National Internal Revenue
Code) as embodied in Section 283 of the NIRC; 61
(5) The shares of relevant LGUs in the proceeds of the sale and
conversion of former military bases in accordance with R.A. No.
7227 (Bases Conversion and Development Act of 1992); 62
(6) The shares of different LGUs in the excise taxes imposed on locally
manufactured Virginia tobacco products as provided in Section 3 of
R.A. No. 7171 (An Act to Promote the Development of the Farmers in
the Virginia Tobacco Producing Provinces), and as now provided in
Section 289 of the NIRC; 63
(7) The shares of different LGUs in the incremental revenues from
Burley and native tobacco products under Section 8 of R.A. No.
8240 (An Act Amending Sections 138, 140 and 142 of the National
Internal Revenue Code as Amended and for Other Purposes) and as
now provided in Section 288 of the NIRC;  and
64
(8) The share of the Commission of Audit (COA) in the NIRTs as
provided in Section 24p) of P.D. No. 1445 (Government Auditing Code
of the Philippines)   in relation to Section 284 of the NIRC.
65 66
Garcia insists that the foregoing taxes and revenues should have been
included by Congress and, by extension, the BIR in the base for computing the
IRA on the strength of the cited provisions; that the LGC did not authorize such
exclusion; and that the continued exclusion has undermined the fiscal
autonomy guaranteed by the 1987 Constitution.
The insistence of Garcia is valid to an extent.
An examination of the above-enumerated laws confirms that the following have
been excluded from the base for reckoning the just share of the LGUs as
required by Section 6, Article X of the 1987 Constitution, namely:
(a) The share of the affected LGUs in the proceeds of the sale and conversion
of former military bases in accordance with R.A. No. 7227;
(b) The share of the different LGUs in the excise taxes imposed on locally
manufactured Virginia tobacco products as provided for in Section 3, R.A. No.
7171, and as now provided in Section 289 of the NIRC;
(c) The share of the different LGU s in incremental revenues from Burley and
native tobacco products under Section 8 of R.A. No. 8240, and as now
provided for in Section 288 of the NIRC;
(d) The share of the COA in the NIRTs as provided in Section 24(3) of P.D.
No. 1445  in relation to Section 284 of the NIRC;
67
(e) The shares of the different LGUs in the excise taxes on mineral products,
as provided in Section 287 of the NIRC in relation to Section 290 of the LGC;
(f) The NIRTs collected by the cities and provinces and divided exclusively
among the LGUs of the ARMM, the regional government and the central
government, pursuant to Section 15  in relation to Section 9,  Article IX of R.
68 69
A. No. 9054; and
(g) The shares of the relevant LG Us in the franchise taxes paid by Manila
Jockey Club, Inc., and the Philippine Racing Club, Inc.
Anent the share of the affected LG Us in the proceeds of the sale and
conversion of the former military bases pursuant to R.A. No. 7227, the
exclusion is warranted for the reason that such proceeds do not come from a
tax, fee or exaction imposed on the sale and conversion.
As to the share of the affected LGUs in the excise taxes imposed on locally
manufactured Virginia tobacco products under R.A. No. 7171 (now Section
289 of the NIRC); the share of the affected LGUs in incremental revenues from
Burley and native tobacco products under Section 8, R.A. No. 8240 (now
Section 288 of the NIRC); the share of the COA in the NIRTs pursuant to
Section 24(3) of P.D. No. 1445 in relation to Section 284 of the NIRC; and the
share of the host LGUs in the franchise taxes paid by the Manila Jockey Club,
Inc., and Philippine Racing Club, Inc., under Section 6 of R.A. No. 6631 and
Section 8 of R:A. No. 6632, respectively, the exclusion is also justified.
Although such shares involved national taxes as defined under the NIRC,
Congress had the authority to exclude them by virtue of their being taxes
imposed for special purposes. A reading of Section 288 and Section 289 of the
NIRC and Section 24(3) of P.D. No. 1445 in relation to Section 284 of the
NIRC reveals that all such taxes are levied and collected for a special
purpose.   The same is true for the franchise taxes paid under Section 6 of
70
R.A. No. 6631 and Section 8 of R.A. No. 6632, inasmuch as certain
percentages of the franchise taxes go to different beneficiaries. The exclusion
conforms to Section 29(3), Article VI of the 1987 Constitution, which states:
Section 29. x x x
xxxx
(3) All money collected on any tax levied for a special purpose shall be
treated as a special fund and paid out for such purpose only. If the
purpose for which a special fund was created has been fulfilled or abandoned,
the balance, if any, shall be transferred to the general funds of the
Government. [Bold emphasis supplied]
The exclusion of the share of the different LGUs in the excise taxes imposed
on mineral products pursuant to Section 287 of the NIRC in relation to Section
290 of the LGC is premised on a different constitutional provision. Section 7,
Article X of the 1987 Constitution allows affected LGUs to have an equitable
share in the proceeds of the utilization of the nation's national wealth "within
their respective areas," to wit:
Section 7. Local governments shall be entitled to an equitable share in the
proceeds of the utilization and development of the national wealth within their
respective areas, in the manner provided by law, including sharing the same
with the inhabitants by way of direct benefits.
This constitutional provision is implemented by Section 287 of the NIRC and
Section 290 of the LGC thusly:
SEC. 287. Shares of Local Government Units in the Proceeds from the
Development and Utilization of the National Wealth. - Local Government units
shall have an equitable share in the proceeds derived from the utilization and
development of the national wealth, within their respective areas, including
sharing the same with the inhabitants by way of direct benefits.
(A) Amount of Share of Local Government Units. - Local government units
shall, in addition to the internal revenue allotment, have a share of forty
percent (40'Yo) of the gross collection derived by the national government from
the preceding fiscal year from excise taxes on mineral products, royalties, and
such other taxes, fees or charges, including related surcharges, interests or
fines, and from its share in any co-production, joint venture or production
sharing agreement in the utilization and development of the national wealth
within their territorial jurisdiction.
(B) Share of the Local Governments from Any Government Agency or
Government-owned or - Controlled Corporation. - Local Government Units
shall have a share, based on the preceding fiscal year, from the proceeds
derived by any government agency or government-owned or controlled
corporation engaged in the utilization and development of the national wealth
based on the following formula, whichever will produce a higher share for the
local government unit:
(1) One percent (l %) of the gross sales or receipts of the preceding calendar
year, or
(2) Forty percent (40%) of the excise taxes on mineral products, royalties, and
such other taxes, fees or charges, including related surcharges, interests or
fines the government agency or government-owned or -controlled corporations
would have paid if it were not otherwise exempt. [Bold emphasis supplied]
SEC. 290. Amount of Share of Local Government Units. - Local government
units shall, in addition to the internal revenue allotment, have a share of forty
percent ( 40%) of the gross collection derived by the national government from
the preceding fiscal year from mining taxes, royalties, forestry and fishery
charges, and such other taxes, fees, or charges, including related surcharges,
interests, or fines, and from its share in any co-production, joint venture or
production sharing agreement in the utilization and development of the
national wealth within their territorial jurisdiction. [Bold emphasis supplied]
Lastly, the NIRTs collected by the provinces and cities within the ARMM
whose portions are distributed to the ARMM's provincial, city and regional
governments are also properly excluded for such taxes are intended to truly
enable a sustainable and feasible autonomous region as guaranteed by the
1987 Constitution. The mandate under Section 15 to Section 21, Article X of
the 1987 Constitution is to allow the separate development of peoples with
distinctive cultures and traditions in the autonomous areas.  The grant of
71
autonomy to the autonomous regions includes the right of self-determination-
which in turn ensures the right of the peoples residing therein to the necessary
level of autonomy that will guarantee the support of their own cultural
identities, the establishment of priorities by their respective communities'
internal decision-making processes and the management of collective matters
by themselves.  As such, the NIRTs collected by the provinces and cities
72
within the ARMM will ensure local autonomy and their very existence with a
continuous supply of funding sourced from their very own areas. The ARMM
will become self-reliant and dynamic consistent with the dictates of the 1987
Constitution.
The shares of the municipalities in the VATs collected pursuant to R.A. No.
7643 should be included in determining the base for computing the just
share because such VATs are national taxes, and nothing can validly justify
their exclusion.
In recapitulation, the national taxes to be included in the base for computing
the just share the LGUs shall henceforth be, but shall not be limited to, the
following:
1. The NIRTs enumerated in Section 21 of the NIRC, as amended, to be
inclusive of the VA Ts, excise taxes, and DSTs collected by the BIR and the
BOC, and their deputized agents;
2. Tariff and customs duties collected by the BOC;
3. 50% of the VATs collected in the ARMM, and 30% of all other national taxes
collected in the ARMM; the remaining 50% of the VA Ts and 70% of the
collections of the other national taxes in the ARMM shall be the exclusive
share of the ARMM pursuant to Section 9 and Section 15 of R.A. No. 9054;
4. 60% of the national taxes collected from the exploitation and development of
the national wealth; the remaining 40% will exclusively accrue to the host
LGUs pursuant to Section 290 of the LGC;
5. 85% of the excise taxes collected from locally manufactured Virginia and
other tobacco products; the remaining 15% shall accrue to the special purpose
funds pursuant created in R.A. No. 7171 and R.A. No. 7227;
6. The entire 50% of the national taxes collected under Section 106, Section
108 and Section 116 of the NIRC in excess of the increase in collections for
the immediately preceding year; and
7. 5% of the franchise taxes in favor of the national government paid by
franchise holders in accordance with Section 6 of R.A. No. 6631 and Section 8
of R.A. No. 6632.
VI.
Entitlement to the reliefs sought
The petitioners' prayer for the payment of the arrears of the LGUs' just
share on the theory that the computation of the base amount had been
unconstitutional all along cannot be granted.
It is true that with our declaration today that the IRA is not in accordance with
the constitutional determination of the just share of the LGUs in the national
taxes, logic demands that the LGUs should receive the difference between
the just share they should have received had the LGC properly reckoned such
just share from all national taxes, on the one hand, and the share -
represented by the IRA- the LGUs have actually received since the effectivity
of the IRA under the LGC, on the other. This puts the National Government in
arrears as to the just share of the LGUs. A legislative or executive act declared
void for being unconstitutional cannot give rise to any right or obligation. 
73
Yet, the Court has conceded in Arau/lo v. Aquino III that:
74
x x x the generality of the rule makes us ponder whether rigidly applying
the rule may at times be impracticable or wasteful. Should we not
recognize the need to except from the rigid application of the rule the
instances in which the void law or executive act produced an almost
irreversible result?
The need is answered by the doctrine of operative fact. The doctrine, definitely
not a novel one, has been exhaustively explained in De Agbayani v. Philippine
National Bank:
The decision now on appeal reflects the orthodox view that an unconstitutional
act, for that matter an executive order or a municipal ordinance likewise
suffering from that infirmity, cannot be the source of any legal rights or duties.
Nor can it justify any official act taken under it. Its repugnancy to the
fundamental law once judicially declared results in its being to all intents and
purposes a mere scrap of paper. As the new Civil Code puts it: 'When the
courts declare a law to be inconsistent with the Constitution, the former shall
be void and the latter shall govern.' Administrative or executive acts, orders
and regulations shall be valid only when they are not contrary to the laws of
the Constitution. It is understandable why it should be so, the Constitution
being supreme and paramount. Any legislative or executive act contrary to its
terms cannot survive.
Such a view has support in logic and possesses the merit of simplicity. It
may not however be sufficiently realistic. It does not admit of doubt that
prior to the declaration of nullity such challenged legislative or executive
act must have been in force and had to be complied with. This is so as
until after the judiciary, in an appropriate case, declares its invalidity, it is
entitled to obedience and respect. Parties may have acted under it and
may have changed their positions. What could be more fitting than that
in a subsequent litigation regard be had to what has been done while
such legislative or executive act was in operation and presumed to be
valid in all respects. It is now accepted as a doctrine that prior to its
being nullified, its existence as a fact must be reckoned with. This is
merely to reflect awareness that precisely because the judiciary is the
governmental organ which has the final say on whether or not a
legislative or executive measure is valid, a period of time may have
elapsed before it can exercise the power of judicial review that may lead
to a declaration of nullity. It would be to deprive the law of its quality of
fairness and justice then, if there be no recognition of what had
transpired prior to such adjudication.
In the language of an American Supreme Court decision: ‘The actual existence
of a statute, prior to such a determination [of unconstitutionality], is an
operative fact and may have consequences which cannot justly be ignored.
The past cannot always be erased by a new judicial declaration. The effect of
the subsequent ruling as to invalidity may have to be considered in various
aspects, with respect to particular relations, individual and corporate, and
particular conduct, private and official.'
The doctrine of operative fact recognizes the existence of the law or executive
act prior to the determination of its unconstitutionality as an operative fact that
produced consequences that cannot always be erased, ignored or
disregarded. In short, it nullifies the void law or executive act but sustains its
effects. It provides an exception to the general rule that a void or
unconstitutional law produces no effect.  But its use must be subjected to
75
great scrutiny and circumspection, and it cannot be invoked to validate an
unconstitutional law or executive act, but is resorted to only as a matter of
equity and fair play.   It applies only to cases where extraordinary
76
circumstances exist, and only when the extraordinary circumstances have met
the stringent conditions that will permit its application.
Conformably with the foregoing pronouncements in Araullo v. Aquino III, the
effect of our declaration through this decision of the unconstitutionality of
Section 284 of the LGC and its related laws as far as they limited the source of
the just share of the LGUs to the NIRTs is prospective. It cannot be otherwise.
VII.
Automatic release of the LGUs' just share in the National Taxes
Section 6, Article X of the 1987 Constitution commands that the just share of
the LGUs in national taxes shall be automatically released to them. The
term automatic connotes something mechanical, spontaneous and
perfunctory; and, in the context of this case, the LGUs are not required to
perform any act or thing in order to receive their just share in the national
taxes.77
Before anything, we must highlight that the 1987 Constitution includes several
provisions that actually deal with and authorize the automatic release of funds
by the National Government.
To begin with, Section 3 of Article VIII favors the Judiciary with the automatic
and regular release of its appropriations:
Section 3. The Judiciary shall enjoy fiscal autonomy. Appropriations for the
Judiciary may not be reduced by the legislature below the amount
appropriated for the previous year and, after approval, shall be automatically
and regularly released.
Then there is Section 5 of Article IX(A), which contains the common provision
in favor of the Constitutional Commissions:
Section 5. The Commission shall enjoy fiscal autonomy. Their approved
annual appropriations shall be automatically and regularly released.
Section 14 of Article XI extends to the Office of the Ombudsman a similar
privilege:
Section 14. The Office of the Ombudsman shall enjoy fiscal autonomy. Its
approved annual appropriations shall be automatically and regularly released.
Section 17(4) of Article XIII replicates the privilege in favour of the Commission
on Human Rights:
Section 17(4) The approved annual appropriations of the Commission shall be
automatically and regularly released.
The foregoing constitutional provisions share two aspects. The first relates to
the grant of fiscal autonomy, and the second concerns the automatic release
of funds.   The common denominator of the provisions is that the automatic
78
release of the appropriated amounts is predicated on the approval of the
annual appropriations of the offices or agencies concerned.
Directly contrasting with the foregoing provisions is Section 6, Article X of the
1987 Constitution because the latter provision forthrightly ordains that the
"(l)ocal government units shall have a just share, as determined by law, in the
national taxes which shall be automatically released to them." Section 6
does not mention of appropriation as a condition for the automatic release of
the just share to the LGUs. This is because Congress not only already
determined the just share through the LGC's fixing the percentage of the
collections of the NIRTs to constitute such fair share subject to the power of
the President to adjust the same in order to manage public sector deficits
subject to limitations on the adjustments, but also explicitly authorized such
just share to be "automatically released" to the LGUs in the proportions and
regularity set under Section 285  of the LGC without need of annual
79
appropriation. To operationalize the automatic release without need of
appropriation, Section 286 of the LGC clearly provides that the automatic
release of the just share directly to the provincial, city, municipal or barangay
treasurer, as the case may be, shall be "without need of any further action,"
viz.:
Section 286. Automatic Release of Shares. - (a) The share of each local
government unit shall be released, without need of any further action;
directly to the provincial, city, municipal or barangay treasurer, as the
case may be, on a quarterly basis within five (5) days after the end of
each quarter, and which shall not be subject to any lien or holdback that
may be imposed by the National Government for whatever purpose. x x x
(Bold emphasis supplied)
The 1987 Constitution is forthright and unequivocal in ordering that the just
share of the LGUs in the national taxes shall be automatically released to
them. With Congress having established the just share through the LGC, it
seems to be beyond debate that the inclusion of the just share of the LGUs in
the annual GAAs is unnecessary, if not superfluous. Hence, the just share of
the LGUs in the national taxes shall be released to them without need of yearly
appropriation.
functions for essential public services, be entitled to receive the amount
equivalent to the cost of devolved personal services.
The phrase "internal revenue" is likewise hereby DELETED from the related
sections of Republic Act No. 7160 (Local Government Code), specifically
Section 285, Section 287, and Section 290, which provisions shall henceforth
read as follows:
Section 285. Allocation to Local Government Units. - The share of local
government units in the allotment shall be collected in the following manner:
(a) Provinces - Twenty-three percent (23%);

1. DECLARES the phrase "internal revenue" appearing in Section 284 of (b) Cities - Twenty-three percent (23%);
Republic Act No. 7160 (Local Government Code) UNCONSTITUTIONAL,
and DELETES the phrase from Section 284.
(c) Municipalities - Thirty-four percent (34%); and
Section 284, as hereby modified, shall henceforth read as follows:
(d) Barangays - Twenty percent (20%)
Section 284. Allotment of Taxes. - Local government units shall have a share
Provided, however, That the share of each province, city, and municipality
in the national taxes based on the collection of the third fiscal year preceding
shall be determined on the basis of the following formula:
the current fiscal year as follows:
(a) Population -- Fifty percent (50%);
(a) On the first year of the effectivity of this Code, thirty percent (30%);
(b) Land Area-· Twenty-five percent (25%); and
(b) On the second year, thirty-five percent (35%); and
(c) Equal sharing--Twenty-five percent (25%)
(c) On the third year and thereafter, forty percent (40%).
Provided, further. That the share of each barangay with a population of not
Provided, That in the event that the national government incurs an
less than one hundred (100) inhabitants shall not be less than Eighty thousand
unmanageable public sector deficit, the President of the Philippines is hereby
(₱80,000.00) per annum chargeable against the twenty percent (20%) share of
authorized, upon the recommendation of Secretary of Finance, Secretary of
the barangay from the allotment, and the balance to be allocated on the basis
Interior and Local Government and Secretary of Budget and Management, and
of the following formula:
subject to consultation with the presiding officers of both Houses of Congress
and the presidents of the "liga", to make the necessary adjustments in the
allotment of local government units but in no case shall the allotment be less (a) On the first year of the effoctivity of this Code:
than thirty percent (30%) of the collection of national taxes of the third fiscal
year preceding the current fiscal year; Provided, further, That in the first year of (1) Population - Forty percent (40%); and
the effectivity of this Code, the local government units shall, in addition to the
thirty percent (30%) allotment which shall include the cost of devolved (2) Equal sharing - Sixty percent (50%)
 (b) On the second year:
(1) Population - Fifty percent (50%); and
(2) Equal sharing - Fifty percent (50%)
(c) On the third year and thereafter.
(1) Population - Sixty percent (60%); and
(2) Equal sharing - Forty percent (40%).
Provided, finally, That the financial requirements of barangays created by local
government units after the effectivity of this Code shall be the responsibility of
the local government unit concerned.
xxxx
Sectfon 287. Local Development Projects. - Each local government unit shall
appropriate in its annual budget no less than twenty percent (20%) of its
annual allotment for development projects. Copies of the development plans of
local government units shall be furnished the Department of Interior and Local
Government.
xxxx
Section 290. Amount of Share of Local Government Units. - Local government
units shall, in addition to the allotment, have a share of forty percent (40%) of
the gross collection derived by the national government from the preceding
fiscal year from mining taxes, royalties, forestry and fishery charges, and such
other taxes, fees, or charges, including related surcharges, interests, or fines,
and from its share in any co-production, joint venture or production sharing
agreement in the utilization and development of the national wealth within their
territorial jurisdiction.
Article 378, Article 379, Article 380, Article 382, Article 409, Article 461, and
related provisions of the Implementing Rules and Regulations of R.A. No. 7160
are hereby MODIFIED to reflect the deletion of the phrase "internal revenue"
as directed herein.
Henceforth, any mention of "Internal Revenue Allotment" or "IRA" in Republic
Act No. 7160 (Local Government Code) and its Implementing Rules and
Regulations shall be understood as pertaining to the allotment of the Local
Government Units derived from the national taxes;
2. ORDERS the SECRETARY OF THE DEPARTMENT OF FINANCE; the
SECRETARY OF THE DEPARTMENT OF BUDGET AND MANAGEMENT;
the COMMISSIONER OF INTERNAL REVENUE; the COMMISSIONER OF
CUSTOMS; and the NATIONAL TREASURER to include ALL
COLLECTIONS OF NATIONAL TAXES in the computation of the base of the
just share of the Local Government Units according to the ratio provided in the
now-modified Section 284 of Republic Act No. 7160 (Local Government
Code) except those accruing to special purpose funds and special allotments
for the utilization and development of the national wealth.
For this purpose, the collections of national taxes for inclusion in the base of
the just share the Local Government Units shall include, but shall not be
limited to, the following:
(a) The national internal revenue taxes enumerated in Section 21 of
the National Internal Revenue Code, as amended, collected by the
Bureau of Internal Revenue and the Bureau of Customs;
(b) Tariff and customs duties collected by the Bureau of Customs;
(c) 50% of the value-added taxes collected in the Autonomous Region
in Muslim Mindanao, and 30% of all other national tax collected in the
Autonomous Region in Muslim Mindanao.
The remaining 50% of the collections of value-added taxes and 70% of
the collections of the other national taxes in the Autonomous Region in
Muslim Mindanao shall be the exclusive share of the Autonomous
Region in Muslim Mindanao pursuant to Section 9 and Section 15 of
Republic Act No. 9054.
(d) 60% of the national taxes collected from the exploitation and
development of the national wealth.
The remaining 401% of the national taxes collected from the
exploitation and development of the national wealth shall exclusively
 accrue to the host Local Government Units pursuant to Section 290 of
Republic Act No. 7160 (Local Government Code);
(e) 85% of the excise taxes collected from locally manufactured
Virginia and other tobacco products.
The remaining 15% shall accrue to the special purpose funds created
by Republic Act No. 7171 and Republic Act No. 7227;
(f) The entire 50% of the national taxes collected under Sections 106,
108 and 116 of the NIRC as provided under Section 283 of the NIRC;
and
(g) 5% of the 25% franchise taxes given to the National Government
under Section 6 of Republic Act No. 6631 and Section 8 of Republic
Act No. 6632.
4. DIRECTS the Bureau of Internal Revenue and the Bureau of Customs and
their deputized collecting agents to certify all national tax collections, pursuant
to Article 3 78 of the Implementing Rules and Regulations of R.A. No. 7160;
5. DISMISSES the claims of the Local Government Units for the settlement by
the National Government of arrears in the just share on the ground that this
decision shall have PROSPECTIVE APPLICATION; and
6. COMMANDS the AUTOMATIC RELEASE WITHOUT NEED OF FURTHER
ACTION of the just shares of the Local Government Units in the national
taxes, through their respective provincial, city, municipal, or barangay
treasurers, as the case may be, on a quarterly basis but not beyond five (5)
days from the end of each quarter, as directed in Section 6, Article X of the
1987 Constitution and Section 286 of Republic Act No. 7160 (Local
Government Code), and operationalized by Article 383 of the Implementing
Rules and Regulations of RA 7160.

3. DECLARES that: Let a copy of this decision be furnished to the President of the Republic of the
Philippines, the President of the Senate, and the Speaker of the House of
Representatives for their information and guidance.
(a) The apportionment of the 25% of the franchise taxes collected from
the Manila Jockey Club and Philippine Racing Club, Inc. - that is, five
percent (5%) to the National Government; five percent (5%) to the host SO ORDERED.
municipality or city; seven percent (7%) to the Philippine Charity
Sweepstakes Office; six percent (6%) to the Anti-Tuberculosis Society;
and two percent (2%) to the White Cross pursuant to Section 6 of
Republic Act No. 6631 and Section 8 of Republic Act No. 6632 -
is VALID;

(b) Section 8 and Section 12 of Republic Act No. 7227

are VALID; and, ACCORDINGLY, the proceeds from the sale of the
former military bases converted to alienable lands thereunder
are EXCLUDED from the computation of the national tax allocations of
the Local Government Units; and

(c) Section 24(3) of Presidential Decree No. 1445, in relation to Section

284 of the National Internal Revenue Code, apportioning one-half of
one percent (1/2of1%) of national tax collections as the auditing fee of
the Commission on Audit is VALID;

G.R. No. 180050               May 12, 2010
RODOLFO G. NAVARRO, VICTOR F. BERNAL, and RENE O.
MEDINA, Petitioners, 
vs.
EXECUTIVE SECRETARY EDUARDO ERMITA, representing the President
of the Philippines; SENATE OF THE PHILIPPI.
NES, represented by the SENATE PRESIDENT; HOUSE OF
REPRESENTATIVES, represented by the HOUSE SPEAKER; GOVERNOR
ROBERT ACE S. BARBERS, representing the Mother Province of Surigao
del Norte; GOVERNOR GERALDINE ECLEO VILLAROMAN, representing
the new Province of Dinagat Islands, Respondents.
RESOLUTION
PERALTA, J.:
Before us are two Motions for Reconsideration of the Decision dated February
10, 2010 − one filed by the Office of the Solicitor General (OSG) in behalf of
public respondents, and the other filed by respondent Governor Geraldine
Ecleo Villaroman, representing the Province of Dinagat Islands. The
dispositive portion of the Decision reads:
WHEREFORE, the petition is GRANTED. Republic Act No. 9355, otherwise
known as An Act Creating the Province of Dinagat Islands, is hereby declared
unconstitutional. The proclamation of the Province of Dinagat Islands and the
election of the officials thereof are declared NULL and VOID. The provision in
Article 9 (2) of the Rules and Regulations Implementing the Local Government
Code of 1991 stating, "The land area requirement shall not apply where the
proposed province is composed of one (1) or more islands," is declared NULL
and VOID.
The arguments of the movants are similar. The grounds for reconsideration of
Governor Villaroman can be subsumed under the grounds for reconsideration
of the OSG, which are as follows:
I.
The Province of Dinagat Islands was created in accordance with the provisions
of the 1987 Constitution and the Local Government Code of 1991. Article 9 of
the Implementing Rules and Regulations is merely interpretative of Section
461 of the Local Government Code.
II.
The power to create a local government unit is vested with the Legislature. The
acts of the Legislature and Executive in enacting into law RA 9355 should be
respected as petitioners failed to overcome the presumption of validity or
constitutionality.
III.
Recent and prevailing jurisprudence considers the operative fact doctrine as a
reason for upholding the validity and constitutionality of laws involving the
creation of a new local government unit as in the instant case.
As regards the first ground, the movants reiterate the same arguments in their
respective Comments that aside from the undisputed compliance with the
income requirement, Republic Act (R.A.) No. 9355, creating the Province of
Dinagat Islands, has also complied with the population and land area
requirements.
The arguments are unmeritorious and have already been passed upon by the
Court in its Decision, ruling that R.A. No. 9355 is unconstitutional, since it
failed to comply with either the territorial or population requirement contained
in Section 461 of R.A. No. 7160, otherwise known as the Local Government
Code of 1991.
When the Dinagat Islands was proclaimed a new province on December 3,
2006, it had an official population of only 106,951 based on the 2000 Census
of Population conducted by the National Statistics Office (NSO), which
population is short of the statutory requirement of 250,000 inhabitants.
Although the Provincial Government of Surigao del Norte conducted a special
census of population in Dinagat Islands in 2003, which yielded a population
count of 371,000, the result was not certified by the NSO as required by the
Local Government Code.1 Moreover, respondents failed to prove that with the
population count of 371,000, the population of the original unit (mother
Province of Surigao del Norte) would not be reduced to
less than the minimum requirement prescribed by law at the time of the
creation of the new province.2
Less than a year after the proclamation of the new province, the NSO
conducted the 2007 Census of Population. The NSO certified that as of August
1, 2007, Dinagat Islands had a total population of only 120,813,3 which was still
below the minimum requirement of 250,000 inhabitants.
Based on the foregoing, R.A. No. 9355 failed to comply with the population
requirement of 250,000 inhabitants as certified by the NSO.
Moreover, the land area of the province failed to comply with the statutory
requirement of 2,000 square kilometers. R.A. No. 9355 specifically states that
the Province of Dinagat Islands contains an approximate land area of 802.12
square kilometers. This was not disputed by the respondent Governor of the
Province of Dinagat Islands in her Comment. She and the other respondents
instead asserted that the province, which is composed of more than one
island, is exempted from the land area requirement based on the provision in
the Rules and Regulations Implementing the Local Government Code of 1991
(IRR), specifically paragraph 2 of Article 9 which states that "[t]he land area
requirement shall not apply where the proposed province is composed of one
(1) or more islands." The certificate of compliance issued by the Lands
Management Bureau was also based on the exemption under paragraph 2,
Article 9 of the IRR.
However, the Court held that paragraph 2 of Article 9 of the IRR is null and
void, because the exemption is not found in Section 461 of the Local
Government Code.4 There is no dispute that in case of discrepancy between
the basic law and the rules and regulations implementing the said law, the
basic law prevails, because the rules and regulations cannot go beyond the
terms and provisions of the basic law.5
The movants now argue that the correct interpretation of Section 461 of the
Local Government Code is the one stated in the Dissenting Opinion of
Associate Justice Antonio Eduardo B. Nachura.
In his Dissenting Opinion, Justice Nachura agrees that R.A. No. 9355 failed to
comply with the population requirement. However, he contends that the
Province of Dinagat Islands did not fail to comply with the territorial
requirement because it is composed of a group of islands; hence, it is exempt
from compliance not only with the territorial contiguity requirement, but also
with the 2,000-square-kilometer land area criterion in Section 461 of the Local
Government Code, which is reproduced for easy reference:
SEC. 461. Requisites for Creation. -- (a) A province may be created if it has an
average annual income, as certified by the Department of Finance, of not less
than Twenty million pesos (₱20,000,000.00) based on 1991 constant prices
and either of the following requisites:
(i) a contiguous territory of at least two thousand (2,000)
square kilometers, as certified by the Lands Management
Bureau; or
(ii) a population of not less than two hundred fifty thousand
(250,000) inhabitants as certified by the National Statistics
Office:
Provided, That, the creation thereof shall not reduce the land area,
population, and income of the original unit or units at the time of said
creation to less than the minimum requirements prescribed herein.
(b) The territory need not be contiguous if it comprises two (2) or more
islands or is separated by a chartered city or cities which do not
contribute to the income of the province.
(c) The average annual income shall include the income accruing to
the general fund, exclusive of special funds, trust funds, transfers, and
non-recurring income.6
Justice Nachura contends that the stipulation in paragraph (b) qualifies not
merely the word "contiguous" in paragraph (a) (i) in the same provision, but
rather the entirety of paragraph (a) (i) that reads:
(i) a contiguous territory of at least two thousand (2,000) square kilometers, as
certified by the Lands Management Bureau[.]7
He argues that the whole paragraph on contiguity and land area in paragraph
(a) (i) above is the one being referred to in the exemption from the territorial
requirement in paragraph (b). Thus, he contends that if the province to be
created is composed of islands, like the one in this case, then, its territory need
not be contiguous and need not have an area of at least 2,000 square
kilometers. He asserts that this is because as the law is worded, contiguity and
land area are not two distinct and separate requirements, but they qualify each
other. An exemption from one of the two component requirements in
paragraph (a) (i) allegedly necessitates an exemption from the other
component requirement, because the non-attendance of one results in the
absence of a reason for the other component requirement to effect a
qualification.
Similarly, the OSG contends that when paragraph (b) of Section 461 of the
Local Government Code provides that the "territory need not be contiguous if it
comprises two (2) or more islands," it necessarily dispenses the 2,000-sq.-km.
land area requirement, lest such exemption would not make sense. The OSG
argues that in stating that a "territory need not be contiguous if it comprises
two (2) or more islands," the law could not have meant to define the obvious.
The land mass of two or more islands will never be contiguous as it is covered
by bodies of water. It is then but logical that the territory of a proposed
province that is composed of one or more islands need not be contiguous or
be at least 2,000 sq. kms.
The Court is not persuaded.
Section 7, Chapter 2 (entitled General Powers and Attributes of Local
Government Units) of the Local Government Code provides:
SEC. 7. Creation and Conversion. — As a general rule, the creation of a local
government unit or its conversion from one level to another level shall be
based on verifiable indicators  of viability and projected capacity to provide
services, to wit:
(a) Income. — It must be sufficient, based on acceptable standards, to
provide for all essential government facilities and services and special
functions commensurate with the size of its population, as expected of
the local government unit concerned;
(b) Population. — It shall be determined as the total number of
inhabitants within the territorial jurisdiction of the local government unit
concerned; and
(c) Land area. — It must be contiguous, unless it comprises two (2) or
more islands, or is separated by a local government unit independent
of the others; properly identified by metes and bounds with technical
descriptions; and sufficient to provide for such basic services and
facilities to meet the requirements of its populace.
Compliance with the foregoing indicators shall be attested to by the
Department of Finance (DOF), the National Statistics Office (NSO), and the
Lands Management Bureau (LMB) of the Department of Environment and
Natural Resources (DENR).8
It must be emphasized that Section 7 above, which provides for the general
rule in the creation of a local government unit, states in paragraph (c) thereof
that the land area must be contiguous and sufficient to provide for such basic
services and facilities to meet the requirements of its populace.
Therefore, there are two requirements for land area: (1) the land area must be
contiguous; and (2) the land area must be sufficient to provide for such basic
services and facilities to meet the requirements of its populace. A sufficient
land area in the creation of a province is at least 2,000 square kilometers, as
provided by Section 461 of the Local Government Code .
Thus, Section 461 of the Local Government Code, providing the requisites for
the creation of a province, specifically states the requirement of
"a contiguous territory of at least two thousand (2,000) square kilometers."
Hence, contrary to the arguments of both movants, the requirement of a
contiguous territory and the requirement of a land area of at least 2,000 square
kilometers are distinct and separate requirements for land
area under paragraph (a) (i) of Section 461 and Section 7 (c) of the Local
Government Code.
However, paragraph (b) of Section 461 provides two instances of exemption
from the requirement of territorial contiguity, thus:
(b) The territory need not be contiguous if it comprises two (2) or more islands,
or is separated by a chartered city or cities which do not contribute to the
income of the province.9
Contrary to the contention of the movants, the exemption above pertains only
to the requirement of territorial contiguity. It clearly states that the requirement
of territorial contiguity may be dispensed with in the case of a province
comprising two or more islands, or is separated by a chartered city or cities
which do not contribute to the income of the province.
Nowhere in paragraph (b) is it expressly stated or may it be implied that when
a province is composed of two or more islands, or when the territory of a
province is separated by a chartered city or cities, such province need not
comply with the land area requirement of at least 2,000 square kilometers or
the requirement in paragraph (a) (i) of Section 461of the Local Government
Code.
Where the law is free from ambiguity, the court may not introduce exceptions
or conditions where none is provided from considerations of convenience,
public welfare, or for any laudable purpose;10 neither may it engraft into the law
qualifications not contemplated,11 nor construe its provisions by taking into
account questions of expediency, good faith, practical utility and other similar
reasons so as to relax non-compliance therewith.12 Where the law speaks in
clear and categorical language, there is no room for interpretation, but only for
application.13
Moreover, the OSG contends that since the power to create a local
government unit is vested with the Legislature, the acts of the Legislature and
the Executive branch in enacting into law R.A. No. 9355 should be respected
as petitioners failed to overcome the presumption of validity or constitutionality.
The contention lacks merit.
Section 10, Article X of the Constitution states:
SEC. 10. No province, city, municipality, or barangay may be created, divided,
merged, abolished, or its boundary substantially altered, except in accordance
with the criteria established in the local government code and subject to
approval by a majority of the votes cast in a plebiscite in the political units
directly affected."14
As the law-making branch of the government, indeed, it was the Legislature
that imposed the criteria for the creation of a province as contained in Section
461 of the Local Government Code. No law has yet been passed amending
Section 461 of the Local Government Code, so only the criteria stated therein
are the bases for the creation of a province. The Constitution clearly mandates
that the criteria in the Local Government Code must be followed in the creation
of a province; hence, any derogation of or deviation from the criteria prescribed
in the Local Government Code violates Section 10, Article X of the
Constitution.
Contrary to the contention of the movants, the evidence on record proved that
R.A. No. 9355 failed to comply with either the population or territorial
requirement prescribed in Section 461 of the Local Government Code for the
creation of the Province of Dinagat Islands; hence, the Court declared R.A. No.
9355 unconstitutional.
In Fariñas v. The Executive Secretary,15 the Court held:
Every statute is presumed valid. The presumption is that the legislature
intended to enact a valid, sensible and just law and one which operates no
further than may be necessary to effectuate the specific purpose of the law.
It is equally well-established, however, that the courts, as guardians of the
Constitution, have the inherent authority to determine whether a statute
enacted by the legislature transcends the limit imposed by the fundamental
law. And where the acts of the other branches of government run afoul of the
Constitution, it is the judiciary’s solemn and sacred duty to nullify the same.
Citing League of Cities of the Philippines v. Commission on Elections,16 the
movants further contend that under the operative fact doctrine, the
constitutionality of R.A No. 9355, creating the Province of Dinagat Islands,
should be upheld.
The Court is not persuaded.
In League of Cities of the Philippines v. Commission on Elections, the Court
held that the 16 cityhood laws, whose validity were questioned therein, were
constitutional mainly because it found that the said cityhood laws merely
carried out the intent of R.A. No. 9009, now Section 450 of the Local
Government Code, to exempt therein respondents local government units
(LGUs) from the ₱100 million income requirement, since the said LGUs had
pending cityhood bills long before the enactment of R.A. No. 9009. Each one
of the 16 cityhood laws contained a provision exempting the municipality
covered from the ₱100 million income requirement.
In this case, R.A. No. 9355 was declared unconstitutional because there was
utter failure to comply with either the population or territorial requirement for
the creation of a province under Section 461 of the Local Government Code.
The Court, while respecting the doctrine of separation of powers, cannot
renege on its duty to determine whether the other branches of the government
have kept themselves within the limits of the Constitution, and determine
whether illegality attached to the creation of the province in question. To
abandon this duty only because the Province of Dinagat Islands has began its
existence is to consent to the passage of a law that is violative of the
provisions of the Constitution and the Local Government Code, rendering the
law and the province created null and void. The Court cannot tolerate such
nullity to be in existence. Where the acts of other branches of the government
go beyond the limit imposed by the Constitution, it is the sacred duty of the
judiciary to nullify the same.17
Tan v. Comelec18 held:
x x x [T]he fact that such plebiscite had been held and a new province
proclaimed and its officials appointed, the case before Us cannot truly be
viewed as already moot and academic. Continuation of the existence of this
newly proclaimed province, which petitioners strongly profess to have been
illegally born, deserves to be inquired into by this Tribunal so that, if indeed,
illegality attaches to its creation, the commission of that error should not
provide the very excuse for perpetuation of such wrong. For this court to yield
to the respondents’ urging that, as there has been fait accompli then this Court
should passively accept and accede to the prevailing situation, is an
unacceptable suggestion. Dismissal of the instant petition, as respondents so
propose, is a proposition fraught with mischief. Respondents’ submission will
create a dangerous precedent. Should this Court decline now to perform its
duty of interpreting and indicating what the law is and should be, this might
tempt again those who strut about in the corridors of power to recklessly and
with ulterior motives, create, merge, divide and/or alter the boundaries of
political subdivisions, either brazenly or stealthily, confident that this Court will
abstain from entertaining future challenges to their acts if they manage to bring
about a fait accompli.
WHEREFORE, in view of the foregoing, the Motions for Reconsideration of the
Decision dated February 10, 2010 are hereby DENIED for lack of merit.
SO ORDERED.
1avvphi1
G.R. No. 180050 : May 12, 2010
RODOLFO G. NAVARRO, VICTOR F. BERNAL, and RENE O.
MEDINA, Petitioners, v.EXECUTIVE SECRETARY EDUARDO ERMITA,
representing the President of the Philippines; SENATE OF THE
PHILIPPINES, represented by the SENATE PRESIDENT; HOUSE OF
REPRESENTATIVES, represented by the HOUSE SPEAKER; GOVERNOR
ROBERT ACE S. BARBERS, representing the Mother Province of Surigao
del Norte; GOVERNOR GERALDINE ECLEO VILLAROMAN, representing
the new Province of Dinagat Islands,Respondents.
DISSENTING OPINION
PEREZ, J.:
Every statute has in its favor the presumption of constitutionality. This
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. The theory is that every law, being the joint act of the
Legislature and the Executive, has passed careful scrutiny to ensure that it is in
accord with the fundamental law. This Court, however, may declare a law, or
portions thereof, unconstitutional, where a petitioner has shown a clear and
unequivocal breach of the Constitution, not merely a doubtful or argumentative
one. In other words, the grounds for nullity must be beyond reasonable doubt,
for to doubt is to sustain.
The spirit of the foregoing pronouncements enunciated in Cawaling, Jr. v.
Executive Secretary1 animates this dissent to the denial of the motion for
cralaw
reconsideration of the February 10, 2010 En Banc Decision handed down in the
case at bench, declaring as unconstitutional Republic Act No. 9355, as well the
provision in Article 9(b) of the Rules and Regulations Implementing the Local
Government Code of 1991 which states that, "The land area requirement shall
not apply where the proposed province is composed of one (1) or more islands."
The factual and procedural antecedents are not in dispute.
A group of islands composed of the municipalities of Basilisa, Cagdianao,
Dinagat, Libjo, Loreto, San Jose and Tubajon with an aggregate land area of
802.12 square kilometers, the Dinagat Islands form part of the province of
Surigao Del Norte alongside the Mainland, Surigao City, Siargao Island and
Bucas Grande. In support of the house bill for the creation of the Dinagat
Islands as a separate province, it appears that a special census conducted by
the province of Surigao Del Norte and the National Statistics Office (NSO)
District Census Coordinator in July 2003 yielded a population count of 371,576
inhabitants. With the certification from the Bureau of Local Government Finance
that the proposed province had an average annual income of P82,696,433.23,
the house bill for the creation of the Province of Dinagat Islands was passed by
the Senate and House of Representatives on August 14, 2006 and August 28,
2006, respectively.
On October 2, 2006, President Gloria Macapagal-Arroyo approved and enacted
said house bill into law as Republic Act No. 9355, entitled, "An Act Creating the
Province of Dinagat Islands." The plebiscite conducted by the Commission on
Elections (COMELEC) on December 3, 2006 in the local government units
directly affected by the creation of the new province yielded 69,943 affirmative
votes and 63,502 negative votes. Subsequent to the proclamation of said vote
by the Plebiscite Provincial Board of Canvassers on December 3, 2006, the
President appointed a new set of provincial officials who took their oath of office
on January 26, 2007. In the May 14, 2007 synchronized National and Local
Elections, the constituents of the new province elected a new set of provincial
officers who eventually assumed office on July 1, 2007.
Petitioners initially assailed the constitutionality of Republic Act No. 9355 in the
petition for certiorari and prohibition docketed before the Court as G.R. No.
175158. Undaunted by the dismissal of said petition on technical grounds and
the denial of their motion for reconsideration thereof, petitioners filed the
petition for certiorari to which the case at bench traces its provenance.
Reiterating the arguments in their previous petition, petitioners maintained that
the law failed to comply with either the land area and population requirements
prescribed under the Local Government Code of 1991. In addition to the
invalidation of the law as unconstitutional, petitioners prayed for the nullification
of the appointment and election of the provincial officers of Dinagat Islands as
well as the return of its municipalities and districts to the province of Surigao
Del Norte.
On February 10, 2010, a decision was rendered declaring Republic Act No. 9355
unconstitutional for failure to comply with the land area and population
requirements under the Local Government Code, and giving short shrift to
respondents reliance on Article 9(b) of the Rules and Regulations Implementing
the Local Government Code of 1991 (IRR) to the effect that the requirement of
a contiguous territory of at least 2,000 square kilometers does not apply when
the proposed province is composed of one or more islands. The decision invoked
the case of Tan v. COMELEC2 which declared that the term "territory" only refers
cralaw
to the mass of land area and excludes the waters over which the local
government unit exercises control. Likewise brushing aside the result of the
special census for lack of certification from the NSO, the decision also ruled that
the population requirement was not complied with, based on the NSO 2000
Census of Population which pegged the official population of Dinagat Islands at
106,951.
After a circumspect consideration of the arguments for and against the validity
of the creation of the Province of Dinagat Islands, I am convinced, with all due
respect, that a reconsideration of the decision is in order.
The creation of local government units is governed by Section 10, Article X of
the Constitution which provides that, "(n)o province, city, municipality, or
barangay may be created, divided, merged, abolished or its boundary
substantially altered except in accordance with the criteria established in the
local government code and subject to approval by a majority of the votes cast in
a plebiscite in the political units directly affected." Correlatively, Section 461 of
the Local Government Code prescribes the criteria for the creation of a province
in the following wise:
SEC. 461. Requisites for Creation. (a) A province may be created if it has an
average annual income, as certified by the Department of Finance, of not less
than Twenty million pesos (P20,000,000.00) based on 1991 constant prices
and either of the following requisites:
(i) a contiguous territory of at least two thousand (2,000) square kilometers as
certified by the Lands Management Bureau; or
(ii) a population of not less than two hundred fifty thousand (250,000)
inhabitants as certified by the National Statistics Office:
Provided, That, the creation thereof shall not reduce the land area, population,
and income of the original unit or units at the time of said creation to less than
the minimum requirements prescribed herein.
(b) The territory need not be contiguous if it comprises two (2) or more islands
or is separated by a chartered city or cities which do not contribute to the
income of the province.
(c) The average annual income shall include the income accruing to the general
fund, exclusive of special funds, trust funds, transfers, and non-recurring
income.
Considered the most important factor insofar as the creation of a new province
is concerned, the income requirement under the Local Government Code has
been more than four-fold complied with, as may be gleaned from the Bureau of
Local Government Finance Certification that, based on the 1991 constant prices,
the average annual income of the Province of Dinagat Islands
is P82,696,433.23. Despite its aggregate land area of 802.12 square kilometers
only, the new province has also measured up to the territorial requirement
since, being comprised of two or more islands, it is exempted from the
contiguous 2,000 square-kilometer land mass prescribed under Section 461 (a)
[i]. Although the exemption in paragraph (b) appears to extend only to the
requirement of contiguity, I am convinced by Mr. Justice Antonio Eduardo B.
Nachuras opinion that, from the tenor of the same provision, the contiguity and
land area requirements cannot be considered separate and distinct from each
other. As eloquently stated in his dissent:
By rough analogy, the two components are like dicephalic conjoined twins two
heads are attached to a single body. If one head is separated from the other,
then the twins die. In the same manner, the law, by providing in paragraph (b)
of Section 461 that the territory need not be contiguous if the same is
comprised of islands, must be interpreted as intended to exempt such territory
from the land area component of 2,000 sq. km. Because the two component
requirements are inseparable, the elimination of contiguity from the territorial
criterion has the effect of a co-existent eradication of the land area component.
The territory of the province of Dinagat Islands, therefore, comprising the major
islands of Dinagat and Hibuson, and approximately 47 islets, need not be
contiguous and need not have an area of at least 2,000 sq. km following Section
461 of the LGC.
It will result in superfluity, if not absurdity, if paragraph (b) of the provision is
interpreted as referring only to the component requirement of contiguity and
not to both component requirements of contiguity and land area. This is
because contiguity does not always mean contact by land. Thus, insofar as
islands are concerned, they are deemed contiguous although separated by wide
spans of navigable deep waters, with the exception of the high seas, because all
lands separated by water touch one another, in a sense, beneath the water. The
provision, then, as worded, only means that the exemption in paragraph (b)
refers to both the components of territory, that is, contiguity and land area, and
not merely the first, standing alone. For, indeed, why will the law still exempt
the islands from the requirement of contiguity when they are already legally
contiguous?
Compliance with the land area requirement by the Province of Dinagat Islands is
cast in even relief when gauged from the clear and unambiguous language of
the IRR which was formulated in accordance with Section 533 of the Local
Government Code, by the Oversight Committee chaired by the Executive
Secretary and composed of representatives from the Senate,3  the House of
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Representatives,4  the Cabinet5  and the leagues of local government
cralaw cralaw
units.6  Partaking the nature of executive construction and, for said reason,
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deserving of great weight and respect,7  Article 9 of the IRR distinctly provides
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as follows:
ART. 9. Provinces. (a) Requisites for creation. A province shall not be created
unless the following requisites on income and either population or land area are
present:
(1) Income An average annual income of not less than Twenty Million Pesos
(P20,000,000.00) for the immediately preceding two (2) consecutive years
based on 1991 constant prices, as certified by DOF. The average annual income
shall include the income accruing to the general fund, exclusive of special funds,
special accounts, transfers, and nonrecurring income; and
(2) Population or land area Population which shall not be less than two hundred
fifty thousand (250,000) inhabitants, as certified by NSO; or land area which
must be contiguous with an area of at least two thousand (2,000) square
kilometers, as certified by LMB. The territory need not be contiguous if it
comprises two (2) or more islands or is separated by a chartered city or cities
which do not contribute to the income of the province. The land area
requirement shall not apply where the proposed province is composed of one
(1) or more islands. The territorial jurisdiction of a province sought to be
created shall be properly identified by metes and bounds.
The creation of a new province shall not reduce the land area, population, and
income of the original LGU or LGUs at the time of said creation to less than the
prescribed minimum requirements. All expenses incidental to the creation shall
be borne by the petitioners.
Alongside declaring Republic Act No. 9355 as unconstitutional for non-
compliance with the land area requirement, however, the ponencia also declared
the underscored portion of the foregoing IRR provision null and void for going
beyond the criteria prescribed by Section 461 of the Local Government. Citing
the Courts November 18, 2008 ruling in League of Cities of the Philippines v.
COMELEC,8  it held that "(t)he Constitution requires that the criteria for the
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creation of a province, including any exemption from such criteria, must all be
written in the Local Government Code." In case of discrepancy between the
basic law and the rules and regulations implementing the same, the ponencia
went on to state that, "the basic law prevails, because the rules and regulations
cannot go beyond the terms and provisions of the basic law."
The League of Cities case concerned the constitutionality of sixteen cityhood
laws, each converting the municipalities covered into a city, for non-compliance
with Republic Act. No. 9009 which amended Section 450 of the Local
Government Code by increasing the income requirement from P20,000,000.00
to P100,000,000.00 for a municipality to be converted into a component city.
Initially declared unconstitutional in the aforesaid November 18, 2008 Decision,
the constitutionality of the subject cityhood laws were eventually upheld in the
December 21, 2009 Decision subsequently rendered in the case on the ground,
among others, that the Local Government Code, despite its being the ideal
repository for the same, need not be the only vessel of all the criteria for the
creation of local government units. Taking into consideration the circumstances
under which Republic Act No. 9009 and said cityhood laws were enacted, the
Court ruled as follows:
Legislative intent is part and parcel of the law, the controlling factor in
interpreting a statute. In construing a statute, the proper course is to start out
and follow the true intent of the Legislature and to adopt the sense that best
harmonizes with the context and promotes in the fullest manner the policy and
objects of the legislature. In fact, any interpretation that runs counter to the
legislative intent is unacceptable and invalid. Torres v. Limjap could not have
been more precise:
requirement of a contiguous territory of 2,000 square kilometers or a population
of not less than 250,000. Already quoted in Justice Nachuras dissent to the
ponencia, the following transcript of the congressional deliberations on the
house bill from which the present Local Government Code originated is
particularly enlightening regarding the legislative intent for said new
requirements, viz.:
HON. ALFELOR: Income is mandatory. We can even have this doubled because
we thought
CHAIRMAN CUENCO: In other words, the primordial considerations here is the
economic viability of the new local government unit, the new province?
xxxx
HON. LAGUADA: The reason why we are willing to increase the income, double
than the House version, because we also believe that economic viability is really
a minimum. Land area and population are functions really of the viability of the
area, because where you have an income level which would be the trigger point
for economic development, population will naturally increase because there will
be an immigration. However, if you disallow the particular area from being
converted into a province because of population problems in the beginning, it
will never be able to reach the point where it could become a province simply
because it will never have the economic take off for it to trigger off that
economic development.

The intent of a Statute is the Law. If a statute is valid, it is to have effect

Now, we are saying that maybe Fourteen Million Pesos is a floor area where it
according to the purpose and intent of the lawmaker. The intent is x x x the
could pay for overhead, and provide a minimum of basic services to the
essence of the law and the primary rule of construction is to ascertain and give
population. Over and above that, the provincial officials should be able to trigger
effect to that intent. The intention of the legislature in enacting a law is the law
off economic development which will attract new investments from the private
itself, and must be enforced when ascertained, although it may not be
sector. This is now the concern of their local officials. But if we are going to tie
consistent with the strict letter of the statute. Courts will not follow the letter of
the hands of the proponents, simply by telling them, Sorry, you are now at 150
a statute when it leads away from the true intent and purpose of the legislature
thousand or 200,000 thousand, you will never be able to become a province
and to conclusions inconsistent with the general purpose of the act. Intent is the
because nobody wants to go to that place. Why? Because you never have any
spirit which gives life to a legislative enactment. In construing statutes the
reason for economic viability.
proper course is to start out and follow the true intent of the legislature.

xxxx
When viewed in the light of the legislative intent underlying Section 461 of the
Local Government Code, I respectfully submit that Article 9 of the IRR is not in
conflict with the criteria for the creation of provinces ensconced in said provision CHAIRMAN PIMENTEL: Okay, what about land area?
of the basic law. Unlike Section 1979  of Batas Pambansa Blg. 337, its
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counterpart provision in the predecessor of the present Local Government Code, HON. LUMAUIG: 1,500 square kilometers.
Section 461 does not give equal premium to the income, land area and
population requirements for the creation of new provinces. This is readily HON. ANGARA: Walang problema yon, thats not very critical, yong land area
evident from the fact that, after prescribing the P20,000,000.00 income because
requirement, Section 461 simply mandates compliance with either the
CHAIRMAN PIMENTEL: Okay, ya, our, the Senate version is 3.5, 3,500 square
meters, ah, square kilometers.
HON. LAGUADA: Ne, Ne. A province is constituted for the purpose of
administrative efficiency and delivery of basic services.
CHAIRMAN PIMENTEL: Right.
HON. LAGUADA: Actually, when you come down to it, when government was
instituted, there is only one central government and then everybody falls under
that. But it was later on subdivided into provinces for purposes of administrative
efficiency.
CHAIRMAN PIMENTEL: Okay.
HON. LAGUADA: Now, what were seeing now is that the administrative
efficiency is no longer there because the land areas that we are giving to our
governors is so wide that no one man could possibly administer all of the
complex machineries that are needed.
Secondly, when you say delivery of basic services, as pointed out by Cong.
Alfelor, there are sections of the province which have never been visited by
public officials precisely because they dont have the time nor the energy
anymore because it is so wide. Now, by compressing the land area and by
reducing the population requirement, we are, in effect, trying to follow the basic
policy of why we are creating provinces, which is to deliver basic services and to
make it more efficient in administration.
CHAIRMAN PIMENTEL: Yeah, thats correct, but on the assumption that the
province is able to do it without being a burden to the national government.
Thats the assumption.
HON. LAGUADA: Thats why were going into the minimum income level. As we
said, if we go on a minimum income level, then we say, this is the trigger point
at which this administration can take place."
In exempting provinces composed of one or more islands from both the
contiguity and land area requirements, Article 9 of the IRR cannot be considered
inconsistent with the criteria under Section 461 of the Local Government Code.
Far from being absolute regarding application of the requirement of "a
contiguous territory of at least 2,000 square kilometers as certified by the Land
Management Bureau," Section 461 allows for said exemption by providing,
under paragraph (b) thereof, that "(t)he territory need not be contiguous if (the
new province) comprises two or more islands or is separated by a chartered city
or cities which do not contribute to the income of the province." For as long as
there is compliance with the income requirement, the legislative intent is, after
all, to the effect that the land area and population requirements may be
overridden by the established economic viability of the proposed province.
In the aforesaid December 21, 2009 Decision in the League of Cities case, the
Court sagely ruled that "(t)he legislative intent is not at all times accurately
reflected in the manner in which the resulting law is couched. Thus, applying a
verba legis or strictly literal interpretation of a statute may render it
meaningless and lead to inconvenience, an absurd situation or injustice. To
obviate this aberration, and bearing in mind the principle that the intent or the
spirit of the law is the law itself, resort should be to the rule that the spirit of
the law controls its letter." Indeed, the forum for examining the wisdom of the
law, and enacting remedial measures, is not this Court but the
Legislature.10  Consequently, courts will not follow the letter of the statute when
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to do so would depart from the true intent of the legislature or would otherwise
yield conclusions inconsistent with the general purpose of the act.11 cralaw
Without taking into consideration the aforesaid legislative intent, the ponencia
clearly resorted to a strict verba legis interpretation in invalidating the portion of
Article 9 of the IRR which states that, "The land area requirement shall not
apply where the proposed province is composed of one (1) or more islands." In
determining that the Province of Dinagat Islands failed to comply with the land
area requirement, it also relied heavily on the Courts pronouncements in Tan v.
COMELEC12  where the principal issue was, however, the invalidity of the
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creation of the province of Negros Del Norte on account of the fact that the
plebiscite therefor conducted did not include the parent province of Negros
Oriental. Although the collateral issue of compliance with the land area
requirement was resolved pursuant to Section 197 of Batas Pambansa Blg. 337
and not Section 461 of the present Local Government Code, the ponencia
further ruled that the requirements under both laws are similar and that there is
no reason for a change in the definitions, usage or meaning of the terms
"territory" and "contiguous" in said laws.
As hereinbefore observed, however, Section 197 of Batas Pambansa Blg. 337,
unlike Section 461 of the Local Government Code of 1991, gave equal premium
to the income, land area and population requirements for the creation of new
provinces. Even prescinding from the current decrease in population and land
area requirement as well as the increase in the income requirement, it cannot,
therefore, be validly argued that the requisites for the creation of a province
under both laws are similar. Given the lesser importance accorded the land area
and population under Section 461 of the present Local Government Code, I find
that the propriety of applying the restrictive interpretation of the land area
requirement in Tan v. COMELEC to the creation of the Province of Dinagat
Islands is not as cut and dried as the ponencia considered it to be. More so,
when it is borne in mind that, unlike the one conducted for the proposed
province of Negros Del Norte, the plebiscite conducted for said new province
unquestionably complied with the Constitutional requirement of inclusion of "the
political units directly affected."

In ordaining the enactment of a local government code, Section 3, Article X of

the Constitution envisioned one "which shall provide for a more responsive and
accountable local government structure instituted through a system of
decentralization." Paying attention to this principle, Section 2(a) of the Local
Government Code of 1991 provides as follows:

Sec. 2 Declaration of Policy (a) It is hereby declared the policy of the State that
the territorial and political subdivisions of the State shall enjoy genuine and
meaningful local autonomy to enable them to attain their fullest development as
self-reliant communities and make them more effective partners in the
attainment of national goals. Towards this end, the State shall provide for a
more responsive and accountable local government structure instituted through
a system of decentralization whereby local government units shall be given
more powers, authority, responsibilities, and resources. The process of
decentralization shall proceed from the National Government to the local
government units.

To my mind, it was undoubtedly in the service of the foregoing principles and

policies that the house bill creating the Province of Dinagat Islands was passed
by Congress and enacted into law by the President. As an organic law, Republic
Act No. 9355 also garnered the majority of the votes cast in the plebiscite
conducted not only in the municipalities constituting the newly created province
but also the parent province of Surigao Del Norte. During the May 14, 2007
synchronized National and Local Elections, the constituents of the Province of
Dinagat Islands have, in fact, already elected their provincial officers who are
about to complete their first term of office. The foregoing considerations were
unduly brushed aside by the ponencia in one fell swoop when it invalidated
Republic Act No. 9355 and the exception embodied in Article 9 of the IRR with a
strict and narrow interpretation of Section 461 of the Local Government Code.

JOSE PORTUGAL PEREZ

 On July 11, 2011, the Sangguniang Panglungsod of Cabanatuan City passed
Resolution No. 183-2011, requesting the President to declare the conversion
of Cabanatuan City from a component city of the province of Nueva Ecija into
a highly urbanized city (HUC). Acceding to the request, the President issued
Presidential Proclamation No. 418, Series of 2012, proclaiming the City of
Cabanatuan as an HUC subject to "ratification in a plebiscite by the qualified
voters therein, as provided for in Section 453 of the Local Government Code of
1991."

Respondent COMELEC, acting on the proclamation, issued the assailed

Minute Resolution No. 12-0797 which reads:

WHEREFORE, the Commission RESOLVED, as it hereby RESOLVES, that

G.R. No. 203974               April 22, 2014 for purposes of the plebiscite for the conversion of Cabanatuan City from
component city to highly-urbanized city, only those registered residents of
AURELIO M. UMALI, Petitioner,  Cabanatuan City should participate in the said plebiscite.
vs.
COMMISSION ON ELECTIONS, JULIUS CESAR V. VERGARA, and THE The COMELEC based this resolution on Sec. 453 of the Local Government
CITY GOVERNMENT OF CABANATUAN, Respondents. Code of 1991 (LGC), citing conversion cases involving Puerto Princesa City in
Palawan, Tacloban City in Southern Leyte, and Lapu-Lapu City in Cebu, where
x-----------------------x only the residents of the city proposed to be converted were allowed to vote in
the corresponding plebiscite.
G.R. No. 204371
In due time, petitioner Aurelio M. Umali, Governor of Nueva Ecija, filed a
J.V. BAUTISTA, Petitioner,  Verified Motion for Reconsideration, maintaining that the proposed conversion
vs. in question will necessarily and directly affect the mother province of Nueva
COMMISSION ON ELECTIONS, Respondent. Ecija. His main argument is that Section 453 of the LGC should be interpreted
in conjunction with Sec. 10, Art. X of the Constitution. He argues that while the
DECISION conversion in question does not involve the creation of a new or the dissolution
of an existing city, the spirit of the Constitutional provision calls for the people
VELASCO, JR., J.: of the local government unit (LGU) directly affected to vote in a plebiscite
whenever there is a material change in their rights and responsibilities. The
Before the Court is the consolidated case for Petition for Certiorari and phrase "qualified voters therein" used in Sec. 453 of the LGC should then be
Prohibition with prayer for injunctive relief, docket as G.R. No. 203974, interpreted to refer to the qualified voters of the units directly affected by the
assailing Minute Resolution No. 12-0797  and Minute Resolution No. 12-
1
conversion and not just those in the component city proposed to be upgraded.
0925  dated September 11, 2012 and October 16, 2012, respectively, both
2
Petitioner Umali justified his position by enumerating the various adverse
promulgated by public respondent Commission on Elections (COMELEC), and effects of the Cabanatuan City’s conversion and how it will cause material
Petition for Mandamus, docketed G.R. No. 204371, seeking to compel public change not only in the political and economic rights of the city and its residents
respondent to implement the same. but also of the province as a whole.

The Facts To the Verified Motion for Reconsideration, private respondent Julius Cesar
Vergara, city mayor of Cabanatuan, interposed an opposition on the ground
that Sec. 10, Art. X does not apply to conversions, which is the meat of the
matter. He likewise argues that a specific provision of the LGC, Sec. 453, as
couched, allows only the qualified voters of Cabanatuan City to vote in the
plebiscite. Lastly, private respondent pointed out that when Santiago City was
converted in 1994 from a municipality to an independent component city
pursuant to Republic Act No. (RA) 7720, the plebiscite held was limited to the
registered voters of the then municipality of Santiago.
Following a hearing conducted on October 4, 2012,  the COMELEC En Banc
3
on October 16, 2012, in E.M No. 12-045 (PLEB), by a vote of 5-2  ruled in4
favor of respondent Vergara through the assailed Minute Resolution 12-0925.
The dispositive portion reads:
The Commission, taking into consideration the arguments of counsels
including the Reply-memorandum of Oppositor, after due deliberation,
RESOLVED, as it hereby RESOLVES, as follows:
1) To DENY the Motion for Reconsideration of oppositor Governor
Aurelio M. Umali; and
2) To SCHEDULE the conduct of Plebiscite for the conversion of
Cabanatuan City from component city into highly-urbanized city with
registered residents only of Cabanatuan City to participate in said
plebiscite.
Let the Deputy Executive Director for Operations implement this resolution.
SO ORDERED.
Hence, the Petition for Certiorari with prayer for injunctive relief, docketed as
G.R. No. 203974, on substantially the same arguments earlier taken by
petitioner Umali before the poll body. On the other hand, public respondent
COMELEC, through the Office of the Solicitor General, maintained in its
Comment that Cabanatuan City is merely being converted from a component
city into an HUC and that the political unit directly affected by the conversion
will only be the city itself. It argues that in this instance, no political unit will be
created, merged with another, or will be removed from another LGU, and that
no boundaries will be altered. The conversion would merely reinforce the
powers and prerogatives already being exercised by the city, with the political
unit’s probable elevation to that of an HUC as demanded by its compliance
with the criteria established under the LGC. Thus, the participation of the
voters of the entire province in the plebiscite will not be necessary.
Private respondent will later manifest that it is adopting the Comment of the
COMELEC.
Meanwhile, on October 25, 2012, respondent COMELEC promulgated
Resolution No. 9543, which adopted a calendar of activities and periods of
prohibited acts in connection with the conversion of Cabanatuan City into an
HUC. The Resolution set the conduct of the plebiscite on December 1, 2012.
Thereafter, a certain Dr. Rodolfo B. Punzalan filed a Petition for Declaratory
Relief which was raffled to the Regional Trial Court (RTC), Branch 40 in
Palayan City. In the said case, Punzalan prayed that Minute Resolution No.
12-0797 be declared unconstitutional, that the trial court decree that all
qualified voters of the province of Nueva Ecija be included in the plebiscite,
and that a Temporary Restraining Order (TRO) be issued enjoining public
respondent from implementing the questioned resolution. On October 19,
2012, the RTC granted the prayer for a TRO.
On November 6, 2012, public respondent through Minute Resolution No. 12-
0989 suspended the preparations for the event in view of the TRO issued by
the RTC. On November 27, 2012, the plebiscite was once again rescheduled
to give way to the May 13, 2013 national, local and ARMM regional elections
as per Resolution No. 9563.
After this development, petitioner J.V. Bautista, on December 3, 2012, filed a
case before this Court for Mandamus, docketed as G.R. No. 204371, praying
that public respondent be ordered to schedule the plebiscite either on
December 15 or 22, 2012. Petitioner Bautista argued that since the TRO
issued by the RTC has already expired, the duty of the public respondent to
hold the plebiscite has become mandatory and ministerial. Petitioner Bautista
also alleged that the delay in holding the plebiscite is inexcusable given the
requirement that it should be held within a period of 120 days form the date of
the President’s declaration.
In its Comment to the Bautista petition, public respondent justified its position
by arguing that mandamus will not issue to enforce a right which is in
substantial dispute. With all the legal conflicts surrounding the case, it cannot
be said that there is a clear showing of petitioner Bautista’s entitlement to the
relief sought. Respondent COMELEC likewise relied on Sec. 5 of the Omnibus
Election Code to justify the postponements, citing incidents of violence that
ensued in the locality during the plebiscite period.
After the conclusion of the 2013 elections, public respondent issued Resolution
No. 1353 scheduling the plebiscite to January 25, 2014. However, a TRO was
issued by this Court on January 15, 2014 in G.R. No. 203974 to suspend the
conduct of the plebiscite for Cabanatuan City’s conversion. Given the
intertwining factual milieu of the two petitions before the Court, both cases
were consolidated on March 18, 2014.
The Issue
The bone of contention in the present controversy boils down to whether the
qualified registered voters of the entire province of Nueva Ecija or only those in
Cabanatuan City can participate in the plebiscite called for the conversion of
Cabanatuan City from a component city into an HUC.
Resolving the Petition for Certiorari either way will necessarily render the
Petition for Mandamus moot and academic for ultimately, the public
respondent will be ordered to hold the plebiscite. The only variation will be as
regards its participants.
The Court’s Ruling
The Petition for Certiorari is meritorious.
Sec. 453 of the LGC should be interpreted in accordance with Sec. 10, Art. X
of the Constitution
Petitioner Umali asseverates that Sec. 10, Art. X of the Constitution should be
the basis for determining the qualified voters who will participate in the
plebiscite to resolve the issue. Sec. 10, Art. X reads:
Section 10, Article X. – No province, city, municipality, or barangay may be
created, divided, merged, abolished, or its boundary substantially altered,
except in accordance with the criteria established in the local government code
and subject to approval by a majority of the votes cast in a plebiscite in the
political units directly affected. (emphasis supplied)
Petitioner Umali elucidates that the phrase "political units directly affected"
necessarily encompasses not only Cabanatuan City but the entire province of
Nueva Ecija. Hence, all the registered voters in the province are qualified to
cast their votes in resolving the proposed conversion of Cabanatuan City.
On the other hand, respondents invoke Sec. 453 of the LGC to support their
claim that only the City of Cabanatuan should be allowed to take part in the
voting. Sec. 453 states:
Section 453. Duty to Declare Highly Urbanized Status. – It shall be the duty of
the President to declare a city as highly urbanized within thirty (30) days after it
shall have met the minimum requirements prescribed in the immediately
preceding Section, upon proper application therefor and ratification in a
plebiscite by the qualified voters therein. (emphasis supplied)
Respondents take the phrase "registered voters therein" in Sec. 453 as
referring only to the registered voters in the city being converted, excluding in
the process the voters in the remaining towns and cities of Nueva Ecija.
Before proceeding to unravel the seeming conflict between the two provisions,
it is but proper that we ascertain first the relationship between Sec. 10, Art. X
of the Constitution and Sec. 453 of the LGC.
First of all, we have to restate the general principle that legislative power
cannot be delegated. Nonetheless, the general rule barring delegation is
subject to certain exceptions allowed in the Constitution, namely:
(1) Delegation by Congress to the President of the power to fix "tariff
rates, import and export quotas, tonnage and wharfage dues, and
other duties or imposts within the framework of the national
development program of the Government" under Section 28(2) of
Article VI of the Constitution; and
(2) Delegation of emergency powers by Congress to the President "to
exercise powers necessary and proper to carry out a declared national
policy" in times of war and other national emergency under Section
23(2) of Article VI of the Constitution.
The power to create, divide, merge, abolish or substantially alter boundaries of
provinces, cities, municipalities or barangays, which is pertinent in the case at
bar, is essentially legislative in nature.  The framers of the Constitution have,
5
however, allowed for the delegation of such power in Sec. 10, Art. X of the
Constitution as long as (1) the criteria prescribed in the LGC is met and (2) the
creation, division, merger, abolition or the substantial alteration of the
boundaries is subject to the approval by a majority vote in a plebiscite.
True enough, Congress delegated such power to the Sangguniang
Panlalawigan or Sangguniang Panlungsod to create barangays pursuant to
Sec. 6 of the LGC, which provides:
Section 6. Authority to Create Local Government Units. - A local government
unit may be created, divided, merged, abolished, or its boundaries
substantially altered either by law enacted by Congress in the case of a
province, city, municipality, or any other political subdivision, or by ordinance
passed by the sangguniang panlalawigan or sangguniang panlungsod
concerned in the case of a barangay located within its territorial jurisdiction,
subject to such limitations and requirements prescribed in this Code."
(emphasis supplied)
The guidelines for the exercise of this authority have sufficiently been outlined
by the various LGC provisions detailing the requirements for the creation of
barangays , municipalities , cities , and provinces . Moreover, compliance with
6 7 8 9
the plebiscite requirement under the Constitution has also been directed by the
LGC under its Sec. 10, which reads:
Section 10. Plebiscite Requirement. – No creation, division, merger, abolition,
or substantial alteration of boundaries of local government units shall take
effect unless approved by a majority of the votes cast in a plebiscite called for
the purpose in the political unit or units directly affected." (emphasis supplied)
With the twin criteria of standard and plebiscite satisfied, the delegation to
LGUs of the power to create, divide, merge, abolish or substantially alter
boundaries has become a recognized exception to the doctrine of non-
delegation of legislative powers.
Likewise, legislative power was delegated to the President under Sec. 453 of
the LGC quoted earlier, which states:
Section 453. Duty to Declare Highly Urbanized Status. – It shall be the duty of
the President to declare a city as highly urbanized within thirty (30) days after it
shall have met the minimum requirements prescribed in the immediately
preceding Section, upon proper application therefor and ratification in a
plebiscite by the qualified voters therein.
In this case, the provision merely authorized the President to make a
determination on whether or not the requirements under Sec. 452  of the LGC
10
are complied with. The provision makes it ministerial for the President, upon
proper application, to declare a component city as highly urbanized once the
minimum requirements, which are based on certifiable and measurable indices
under Sec. 452, are satisfied. The mandatory language "shall" used in the
provision leaves the President with no room for discretion.
In so doing, Sec. 453, in effect, automatically calls for the conduct of a
plebiscite for purposes of conversions once the requirements are met. No
further legislation is necessary before the city proposed to be converted
becomes eligible to become an HUC through ratification, as the basis for the
delegation of the legislative authority is the very LGC.
In view of the foregoing considerations, the Court concludes that the source of
the delegation of power to the LGUs under Sec. 6 of the LGC and to the
President under Sec. 453 of the same code is none other than Sec. 10, Art. X
of the Constitution.
Respondents, however, posit that Sec. 453 of the LGC is actually outside the
ambit of Sec. 10, Art. X of the Constitution, considering that the conversion of
a component city to an HUC is not "creation, division, merge, abolition or
substantial alternation of boundaries" encompassed by the said constitutional
provision.
This proposition is bereft of merit.
First, the Court’s pronouncement in Miranda vs. Aguirre  is apropos and may
11
be applied by analogy. While Miranda involves the downgrading, instead of
upgrading, as here, of an independent component city into a component city,
its application to the case at bar is nonetheless material in ascertaining the
proper treatment of conversions. In that seminal case, the Court held that the
downgrading of an independent component city into a component city comes
within the purview of Sec. 10, Art. X of the Constitution.
In Miranda, the rationale behind the afore-quoted constitutional provision and
its application to cases of conversion were discussed thusly:
A close analysis of the said constitutional provision will reveal that the creation,
division, merger, abolition or substantial alteration of boundaries of local
government units involve a common denominator - - - material change in the
political and economic rights of the local government units directly affected as
well as the people therein. It is precisely for this reason that the Constitution
requires the approval of the people "in the political units directly affected." It is
not difficult to appreciate the rationale of this constitutional requirement. The
1987 Constitution, more than any of our previous Constitutions, gave more
reality to the sovereignty of our people for it was borne out of the people power
in the 1986 EDSA revolution. Its Section 10, Article X addressed the
undesirable practice in the past whereby local government units were created,
abolished, merged or divided on the basis of the vagaries of politics and not of
the welfare of the people. Thus, the consent of the people of the local
government unit directly affected was required to serve as a checking
mechanism to any exercise of legislative power creating, dividing, abolishing,
merging or altering the boundaries of local government units. It is one instance
where the people in their sovereign capacity decide on a matter that affects
them - - - direct democracy of the people as opposed to democracy thru
people’s representatives. This plebiscite requirement is also in accord with the
philosophy of the Constitution granting more autonomy to local government
units.
12
It was determined in the case that the changes that will result from the
conversion are too substantial that there is a necessity for the plurality of those
that will be affected to approve it. Similar to the enumerated acts in the
constitutional provision, conversions were found to result in material changes
in the economic and political rights of the people and LGUs affected. Given the
far-reaching ramifications of converting the status of a city, we held that the
plebiscite requirement under the constitutional provision should equally apply
to conversions as well. Thus, RA 8528  was declared unconstitutional in
13
Miranda on the ground that the law downgraded Santiago City in Isabela
without submitting it for ratification in a plebiscite, in contravention of Sec. 10,
Art. X of the Constitution.
Second, while conversion to an HUC is not explicitly provided in Sec. 10, Art. X
of the Constitution we nevertheless observe that the conversion of a
component city into an HUC is substantial alteration of boundaries.
As the phrase implies, "substantial alteration of boundaries" involves and
necessarily entails a change in the geographical configuration of a local
government unit or units. However, the phrase "boundaries" should not be
limited to the mere physical one, referring to the metes and bounds of the
LGU, but also to its political boundaries. It also connotes a modification of the
demarcation lines between political subdivisions, where the LGU’s exercise of
corporate power ends and that of the other begins. And as a qualifier, the
alteration must be "substantial" for it to be within the ambit of the constitutional
provision.
Pertinent is Art. 12(c) of the LGC’s Implementing Rules and Regulations,
which reads:
Art. 12. Conversion of a Component City into a Highly Urbanized City. –
xxxx
(c) Effect of Conversion – The conversion of a component city into a highly-
urbanized city shall make it independent of the province where it is
geographically located. (emphasis added)
Verily, the upward conversion of a component city, in this case Cabanatuan
City, into an HUC will come at a steep price. It can be gleaned from the above-
cited rule that the province will inevitably suffer a corresponding decrease in
territory brought about by Cabanatuan City’s gain of independence. With the
city’s newfound autonomy, it will be free from the oversight powers of the
province, which, in effect, reduces the territorial jurisdiction of the latter. What
once formed part of Nueva Ecija will no longer be subject to supervision by the
province. In more concrete terms, Nueva Ecija stands to lose 282.75 sq. km. of
its territorial jurisdiction with Cabanatuan City’s severance from its mother
province. This is equivalent to carving out almost 5% of Nueva Ecija’s 5,751.3
sq. km. area. This sufficiently satisfies the requirement that the alteration be
"substantial."
Needless to stress, the alteration of boundaries would necessarily follow
Cabanatuan City’s conversion in the same way that creations, divisions,
mergers, and abolitions generally cannot take place without entailing the
alteration. The enumerated acts, after all, are not mutually exclusive, and more
often than not, a combination of these acts attends the reconfiguration of
LGUs.
In light of the foregoing disquisitions, the Court rules that conversion to an
HUC is substantial alternation of boundaries governed by Sec. 10, Art. X and
resultantly, said provision applies, governs and prevails over Sec. 453 of the
LGC.
Moreover, the rules of statutory construction dictate that a particular provision
should be interpreted with the other relevant provisions in the law The Court
finds that it is actually Sec. 10 of the LGC which is undeniably the applicable
provision on the conduct of plebiscites. The title of the provision itself,
"Plebiscite Requirement", makes this obvious. It requires a majority of the
votes cast in a plebiscite called for the purpose in the political unit or units
directly affected. On the other hand, Sec. 453 of the LGC, entitled "Duty to
Declare Highly Urbanized Status", is only on the duty to declare a city as highly
urbanized. It mandates the Office of the President to make the declaration
after the city has met the requirements under Sec. 452, and upon proper
application and ratification in a plebiscite. The conduct of a plebiscite is then a
requirement before a declaration can be made. Thus, the Court finds that Sec.
10 of the LGC prevails over Sec. 453 of the LGC on the plebiscite requirement.
We now take the bull by the horns and resolve the issue whether Sec. 453 of
the LGC trenches on Sec. 10, Art. X of the Constitution.
Hornbook doctrine is that neither the legislative, the executive, nor the judiciary
has the power to act beyond the Constitution’s mandate. The Constitution is
supreme; any exercise of power beyond what is circumscribed by the
Constitution is ultra vires and a nullity. As elucidated by former Chief Justice
Enrique Fernando in Fernandez v. Cuerva: 14
Where the assailed legislative or executive act is found by the judiciary to be
contrary to the Constitution, it is null and void. As the new Civil Code puts it:
"When the courts declare a law to be inconsistent with the Constitution, the
former shall be void and the latter shall govern." Administrative or executive
acts, orders and regulations shall be valid only when they are not contrary to
the laws or the Constitution. The above provision of the civil Code reflects the
orthodox view that an unconstitutional act, whether legislative or executive, is
not a law, confers no rights, imposes no duties, and affords no protection. x x x
Applying this orthodox view, a law should be construed in harmony with and
not in violation of the Constitution.  In a long line of cases, the cardinal
15
principle of construction established is that a statute should be interpreted to
assure its being in consonance with, rather than repugnant to, any
constitutional command or prescription.  If there is doubt or uncertainty as to
16
the meaning of the legislative, if the words or provisions are obscure or if the
enactment is fairly susceptible of two or more constitution, that interpretation
which will avoid the effect of unconstitutionality will be adopted, even though it
may be necessary, for this purpose, to disregard the more usual or apparent
import of the language used. 17
Pursuant to established jurisprudence, the phrase "by the qualified voters
therein" in Sec. 453 should be construed in a manner that will avoid conflict
with the Constitution. If one takes the plain meaning of the phrase in relation to
the declaration by the President that a city is an HUC, then, Sec. 453 of the
LGC will clash with the explicit provision under Sec. 10, Art. X that the voters in
the "political units directly affected" shall participate in the plebiscite. Such
construction should be avoided in view of the supremacy of the Constitution.
Thus, the Court treats the phrase "by the qualified voters therein" in Sec. 453
to mean the qualified voters not only in the city proposed to be converted to an
HUC but also the voters of the political units directly affected by such
conversion in order to harmonize Sec. 453 with Sec. 10, Art. X of the
Constitution.
The Court finds that respondents are mistaken in construing Sec. 453 in a
vacuum. Their interpretation of Sec. 453 of the LGC runs afoul of Sec. 10, Art.
X of the Constitution which explicitly requires that all residents in the "political
units directly affected" should be made to vote.
Respondents make much of the plebiscites conducted in connection with the
conversion of Puerto Princesa City, Tacloban City and Lapu-Lapu City where
the ratification was made by the registered voters in said cities alone. It is
clear, however, that the issue of who are entitled to vote in said plebiscites was
not properly raised or brought up in an actual controversy. The issue on who
will vote in a plebiscite involving a conversion into an HUC is a novel issue,
and this is the first time that the Court is asked to resolve the question. As
such, the past plebiscites in the aforementioned cities have no materiality or
relevance to the instant petition. Suffice it to say that conversion of said cities
prior to this judicial declaration will not be affected or prejudiced in any manner
following the operative fact doctrine―that “the actual existence of a statute
prior to such a determination is an operative fact and may have consequences
which cannot always be erased by a new judicial declaration.” 18
The entire province of Nueva Ecija will be directly
affected by Cabanatuan City’s conversion
After the Court has resolved the seeming irreconcilability of Sec. 10, Art. X of
the Constitution and Sec. 453 of the LGC, it is now time to elucidate the
meaning of the phrase "political units directly affected" under Sec. 10, Art. X.
a. "Political units directly affected" defined
In identifying the LGU or LGUs that should be allowed to take part in the
plebiscite, what should primarily be determined is whether or not the unit or
units that desire to participate will be "directly affected" by the change. To
interpret the phrase, Tan v. COMELEC  and Padilla v. COMELEC  are worth
19 20
revisiting.
We have ruled in Tan, involving the division of Negros Occidental for the
creation of the new province of Negros del Norte, that the LGUs whose
boundaries are to be altered and whose economy would be affected are
entitled to participate in the plebiscite. As held:
It can be plainly seen that the aforecited constitutional provision makes it
imperative that there be first obtained "the approval of a majority of votes in the
plebiscite in the unit or units affected" whenever a province is created, divided
or merged and there is substantial alteration of the boundaries. It is thus
inescapable to conclude that the boundaries of the existing province of Negros
Occidental would necessarily be substantially altered by the division of its
existing boundaries in order that there can be created the proposed new
province of Negros del Norte. Plain and simple logic will demonstrate than that
two political units would be affected.
The first would be the parent province of Negros Occidental because its
boundaries would be substantially altered. The other affected entity would be
composed of those in the area subtracted from the mother province to
constitute the proposed province of Negros del Norte. 21
xxxx
To form the new province of Negros del Norte no less than three cities and
eight municipalities will be subtracted from the parent province of Negros
Occidental. This will result in the removal of approximately 2,768.4 square
kilometers from the land area of an existing province whose boundaries will be
consequently substantially altered. It becomes easy to realize that the
consequent effects of the division of the parent province necessarily will affect
all the people living in the separate areas of Negros Occidental and the
proposed province of Negros del Norte. The economy of the parent province
as well as that of the new province will be inevitably affected, either for the
better or for the worse. Whatever be the case, either or both of these political
groups will be affected and they are, therefore, the unit or units referred to in
Section 3 of Article XI of the Constitution which must be included in the
plebiscite contemplated therein.  (emphasis added)
22
Sec. 3, Art. XI of the 1973 Constitution, as invoked in Tan, states:
SEC. 3. No province, city, municipality or barrio may be created, divided,
merged abolished, or its boundary substantially altered, except in accordance
with the criteria established in the local government code, and subject to the
approval by a majority of the votes in a plebiscite in the unit or units affected.
(emphasis added)
Despite the change in phraseology compared to what is now Sec. 10, Art. X,
we affirmed our ruling in Tan in the latter case of Padilla. As held, the removal
of the phrase "unit or" only served to sustain the earlier finding that what is
contemplated by the phase "political units directly affected" is the plurality of
political units which would participate in the plebiscite. As reflected in the
journal of the Constitutional Commission: 23
Mr. Maambong: While we have already approved the deletion of "unit or," I
would like to inform the Committee that under the formulation in the present
Local Government Code, the words used are actually "political unit or units."
However, I do not know the implication of the use of these words. Maybe there
will be no substantial difference, but I just want to inform the Committee about
this.
Mr. Nolledo: Can we not adhere to the original "unit or units"? Will there be no
objection on the part of the two Gentlemen from the floor?
Mr. Davide: I would object. I precisely asked for the deletion of the words "unit
or" because in the plebiscite to be conducted, it must involve all the units
affected. If it is the creation of a barangay plebiscite because it is affected. It
would mean a loss of a territory. (emphasis added)
The same sentiment was shared by the Senate during its deliberations on
Senate Bill No. 155––the predecessor of the LGC––thus:
Senator Guingona. Can we make that clearer by example? Let us assume that
a province has municipalities and there is a merger of two municipalities.
Would this therefore mean that the plebiscite will be conducted within the two
merged municipalities and not in the eight other municipalities?
Senator Pimentel. The whole province, Mr. President, will be affected, and that
is the reason we probably have to involve the entire province.
Senator Guingona. So the plebiscite will not be held only in the two
municipalities which are being merged, but the entire province will now have to
undergo.
Senator Pimentel. I suppose that was the ruling in the Negros del Norte case.
Senator Guingona. Supposing it refers to barangays, will the entire
municipality have to vote? There are two barangays being merged, say, out of
100 barangays. Would the entire municipality have to participate in the
plebiscite?
Senator Pimentel. Yes, Mr. President, because the municipality is affected
directly by the merger of two of its barangay.
Senator Guingona. And, if, out of 100 barangay, 51 are being merged,
abolished, whatever, would the rest of the municipality not participate in the
plebiscite?
Senator Pimentel. Do all the 51 barangay that the Gentleman mentioned, Mr.
President, belong to one municipality?
Senator Guingona. Yes.
Senator Pimentel. Then it will only involve the municipality where the 51
barangays belong.
Senator Guingona. Yes. So, the entire municipality will now have to undergo a
plebiscite.
Senator Pimentel. That is correct, Mr. President.
Senator Guingona. In the earlier example, if it is only a merger of two
municipalities, let us say, in a province with 10 municipalities – the entire
province – will the other municipalities although not affected also have to
participate in the plebiscite?
Senator Pimentel. Yes. The reason is that the municipalities are within the
territorial boundaries of the province itself, it will have to be altered as a result
of the two municipalities that the Gentleman mentioned. 24
In the more recent case of Miranda, the interpretation in Tan and Padilla was
modified to include not only changes in economic but also political rights in the
criteria for determining whether or not an LGU shall be considered "directly
affected." Nevertheless, the requirement that the plebiscite be participated in
by the plurality of political units directly affected remained.
b. Impact on Economic Rights
To recall, it was held in Miranda that the changes that will result in the
downgrading of an LGU from an independent component city to a component
city cannot be categorized as insubstantial, thereby necessitating the conduct
of a plebiscite for its ratification. In a similar fashion, herein petitioner Umali
itemized the adverse effects of Cabanatuan City’s conversion to the province
of Nueva Ecija to justify the province’s participation in the plebiscite to be
conducted.
Often raised is that Cabanatuan City’s conversion into an HUC and its
severance from Nueva Ecija will result in the reduction of the Internal Revenue
Allotment (IRA) to the province based on Sec. 285 of the LGC. The law states:
Section 285. Allocation to Local Government Units. - The share of local
government units in the internal revenue allotment shall be collected in the
following manner:
(a) Provinces - Twenty-three percent (23%);
(b) Cities - Twenty-three percent (23%);
(c) Municipalities - Thirty-four percent (34%); and
(d) Barangays - Twenty percent (20%)
Provided, however, That the share of each province, city, and municipality
shall be determined on the basis of the following formula:
(a) Population - Fifty percent (50%);
(b) Land Area - Twenty-five percent (25%); and
(c) Equal sharing - Twenty-five percent (25%)
In our earlier disquisitions, we have explained that the conversion into an HUC
carries the accessory of substantial alteration of boundaries and that the
province of Nueva Ecija will, without a doubt, suffer a reduction in territory
because of the severance of Cabanatuan City. The residents of the city will
cease to be political constituencies of the province, effectively reducing the
latter’s population. Taking this decrease in territory and population in
connection with the above formula, it is conceded that Nueva Ecija will indeed
suffer a reduction in IRA given the decrease of its multipliers’ values. As
assessed by the Regional Director of the Department of Budget and Once converted, the taxes imposed by the HUC will accrue to itself. Prior to
Management (DBM) for Region III: 25
this, the province enjoys the prerogative to impose and collect taxes such as
those on sand, gravel and other quarry resources,  professional taxes,  and
26 27

amusement taxes  over the component city. While, it may be argued that this
28

Basis for IRA Province of Cabanatuan Province of

is not a derogation of the province’s taxing power because it is in no way
Computation Nueva Ecija City Nueva Ecija Net
deprived of its right to collect the mentioned taxes from the rest of its territory,
of Cabanatuan
the conversion will still reduce the province’s taxing jurisdiction, and corollary
City
to this, it will experience a corresponding decrease in shares in local tax
No. of Population 1,843,853 259,267 259,267 collections. This reduction in both taxing jurisdiction and shares poses a
CY 2007 Census material and substantial change to the province’s economic rights, warranting
its participation in the plebiscite.
Land Area 5,751.33 282.75 5,468.58
(sq. km.)
To further exemplify the impact of these changes, a perusal of Secs. 452(a)
and 461(a) of the LGC is in order, viz:
IRA Share of Actual IRA Estimated IRA Reduction
Nueva Ecija Share share excluding Section 452. Highly Urbanized Cities.
Cabanatuan
City (a) Cities with a minimum population of two hundred thousand
(200,000) inhabitants as certified by the National Statistics Office, and
Based on ₱800,772,618.45 ₱688,174,751.66 ₱112,597,866.79 within the latest annual income of at least Fifty Million Pesos
Population (₱50,000,000.00) based on 1991 constant prices, as certified by the
Based on Land ₱263,470,472.62 ₱250,517,594.56 P 12,952,878.06 city treasurer, shall be classified as highly urbanized cities.
Area
Section 461. Requisites for Creation.
Total ₱125,550,744.85
(a) A province may be created if it has an average annual income, as certified
Clear as crystal is that the province of Nueva Ecija will suffer a substantial by the Department of Finance, of not less than Twenty million pesos
reduction of its share in IRA once Cabanatuan City attains autonomy. In view (₱20,000,000.00) based on 1991 constant prices and either of the following
of the economic impact of Cabanatuan City’s conversion, petitioner Umali’s requisites:
contention, that its effect on the province is not only direct but also adverse,
deserves merit. (i) a contiguous territory of at least two thousand (2,000) square
kilometers, as certified by the Lands Management Bureau; or
Moreover, his claim that the province will lose shares in provincial taxes
imposed in Cabanatuan City is well-founded. This is based on Sec. 151 of the (ii) a population of not less than two hundred fifty thousand (250,000)
LGC, which states: inhabitants as certified by the National Statistics Office:

SECTION 151. Scope of Taxing Powers. – Except as otherwise provided in Provided, That, the creation thereof shall not reduce the land area, population,
this Code, the city, may levy the taxes, fees, and charges which the province and income of the original unit or units at the time of said creation to less than
or municipality may impose: Provided, however, That the taxes, fees and the minimum requirements prescribed herein.
charges levied and collected by highly urbanized and independent component
cities shall accrue to them and distributed in accordance with the provisions of
this Code. (emphasis added)
A component city’s conversion into an HUC and its resultant autonomy from
the province is a threat to the latter’s economic viability. Noteworthy is that the
income criterion for a component city to be converted into an HUC is higher
than the income requirement for the creation of a province. The ensuing
reduction in income upon separation would clearly leave a crippling effect on
the province’s operations as there would be less funding to finance
infrastructure projects and to defray overhead costs. Moreover, the quality of
services being offered by the province may suffer because of looming austerity
measures. These are but a few of the social costs of the decline in the
province’s economic performance, which Nueva Ecija is bound to experience
once its most progressive city of Cabanatuan attains independence.
c. Impact on Political Rights
Aside from the alteration of economic rights, the political rights of Nueva Ecija
and those of its residents will also be affected by Cabanatuan’s conversion into
an HUC. Notably, the administrative supervision of the province over the city
will effectively be revoked upon conversion. Secs. 4 and 12, Art. X of the
Constitution read:
Sec. 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.
Sec 12. Cities that are highly urbanized, as determined by law, and component
cities whose charters prohibit their voters from voting for provincial elective
officials, shall be independent of the province. The voters of component cities
within a province, whose charters contain no such prohibition, shall not be
deprived of their right to vote for elective provincial officials.
Duties, privileges and obligations appertaining to HUCs will attach to
Cabanatuan City if it is converted into an HUC. This includes the right to be
outside the general supervision of the province and be under the direct
supervision of the President. An HUC is not subject to provincial oversight
because the complex and varied problems in an HUC due to a bigger
population and greater economic activity require greater autonomy.  The
29
provincial government stands to lose the power to ensure that the local
government officials of Cabanatuan City act within the scope of its prescribed
powers and functions,  to review executive orders issued by the city mayor,
30
and to approve resolutions and ordinances enacted by the city council.  The31
province will also be divested of jurisdiction over disciplinary cases concerning
the elected city officials of the new HUC, and the appeal process for
administrative case decisions against barangay officials of the city will also be
modified accordingly.  Likewise, the registered voters of the city will no longer
32
be entitled to vote for and be voted upon as provincial officials.
33
In cutting the umbilical cord between Cabanatuan City and the province of
Nueva Ecija, the city will be separated from the territorial jurisdiction of the
province, as earlier explained. The provincial government will no longer be
responsible for delivering basic services for the city residents’ benefit.
Ordinances and resolutions passed by the provincial council will no longer
cover the city. Projects queued by the provincial government to be executed in
the city will also be suspended if not scrapped to prevent the LGU from
performing functions outside the bounds of its territorial jurisdiction, and from
expending its limited resources for ventures that do not cater to its
constituents.1âwphi1
In view of these changes in the economic and political rights of the province of
Nueva Ecija and its residents, the entire province certainly stands to be directly
affected by the conversion of Cabanatuan City into an HUC. Following the
doctrines in Tan and Padilla, all the qualified registered voters of Nueva Ecija
should then be allowed to participate in the plebiscite called for that purpose.
Respondents’ apprehension that requiring the entire province to participate in
the plebiscite will set a dangerous precedent leading to the failure of cities to
convert is unfounded. Their fear that provinces will always be expected to
oppose the conversion in order to retain the city’s dependence is speculative
at best. In any event, any vote of disapproval cast by those directly affected by
the conversion is a valid exercise of their right to suffrage, and our democratic
processes are designed to uphold the decision of the majority, regardless of
the motive behind the vote. It is unfathomable how the province can be
deprived of the opportunity to exercise the right of suffrage in a matter that is
potentially deleterious to its economic viability and could diminish the rights of
its constituents. To limit the plebiscite to only the voters of the areas to be
partitioned and seceded from the province is as absurd and illogical as
allowing only the secessionists to vote for the secession that they demanded
against the wishes of the majority and to nullify the basic principle of majority
rule.
34
WHEREFORE, premises considered, the Petition for Certiorari, docketed as
G.R. No. 203974, is hereby GRANTED. COMELEC Minute Resolution No. 12-
0797 dated September 11, 2012 and Minute Resolution No. 12-0925 dated
October 16, 2012 are hereby declared NULL and VOID. Public respondent
COMELEC is hereby enjoined from implementing the said Resolutions.
Additionally, COMELEC is hereby ordered to conduct a plebiscite for the
purpose of converting Cabanatuan City into a Highly Urbanized City to be
participated in by the qualified registered voters of Nueva Ecij a within 120
days from the finality of this Decision. The Petition for Mandamus, docketed as
G.R. No. 204371, is hereby DISMISSED.
G.R. No. 207257               February 3, 2015
HON. RAMON JESUS P. PAJE, in his capacity as SECRETARY OF THE
DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES
(DENR), Petitioner,  PIANO, HON. JAMES DE LOS REYES, HON. AQUILINO Y. CORTEZ, JR.,
vs.
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.
x-----------------------x
G.R. No. 207276
REDONDO PENINSULA ENERGY, INC., Petitioner, 
vs.
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.
x-----------------------x
G.R. No. 207282
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
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, 
vs.
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.
x-----------------------x
G.R. No. 207366
SUBIC BAY METROPOLITAN AUTHORITY, Petitioner, 
vs.
HON. TEODORO A. CASIÑO, HON. RAYMOND V. PALATINO, HON.
RAFAEL V. MARIANO, HON. EMERENCIANA A. DE JESUS, HON. ROLEN
C. PAULINO, HON EDUARDO PIANO, HON. JAMES DE LOS REYES, HON.
AQUILINO Y. CORTEZ, JR., HON. SARAH LUGERNA LIPUMANOGARCIA,
NORAIDA VELARMINO, BIANCA CHRISTINE GAMBOA, GREGORIO
LLORCA MAGDARAOG, RUBELHPERALTA, ALEX CORPUS HERMOSO,
RODOLFO SAMBAJON, REV. FR. GERARDO GREGORIO P. JORGE,
CARLITO A. BALOY, OFELIA D. PABLO, MARIO ESQUILLO,
ELLE·LATINAZO, EV ANGELINE 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.
DECISION
DEL CASTILLO, J.:
Before this Court are consolidated Petitions for Review on Certiorari  assailing
1
the Decision  dated January 30, 2013 and the Resolution  dated May 22, 2013
2 3
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,  and 4
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).5
On July 28, 2006, SBMA and TCC entered into another MOU, whereby TCC
undertook to build and operatea coal-fired power plant.  In the said MOU, TCC
6 Development Agreement (LDA) over a 380,004.456-square meter parcel of
identified 20 hectares of land at SitioNaglatore, Mt. Redondo, Subic Bay
Freeport Zone (SBFZ) as the suitable area for the project and another site of
approximately 10 hectares tobe used as an ash pond.  TCC intends to lease
7 On July 8, 2010, the DENR-EMBissued an amended ECC (first amendment)
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. 8
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,  for the construction, installation,and operation of 2x150-MW Circulating
9 Report (PDR) to the DENR-EMB.
Fluidized Bed (CFB) Coal-Fired Thermal Power Plant at Sitio Naglatore. 10
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),  a 11
corporation duly organized and existing under the laws of the Philippines with
the primary purpose of building, owning, and operating powerplants in the
Philippines, among others. Accordingly, an Addendum to the said MOU was
12
executed by SBMA and RP Energy. 13
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 ofan ECC from the Department of
Environment and Natural Resources (DENR).  On August 27, 2008, the
14
Sangguniang Panglungsodof 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 ofenergy for Subic Bay. 15
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. 16
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,  RP Energy
17
requested the DENR Environmental Management Bureau(DENR-EMB) to
amend its ECC.  In support of its request, RP Energy submitted to the DENR-
18
EMBan Environmental Performance Report and Management Plan (EPRMP),
which was prepared by GHD. 19
On June 8, 2010, RP Energy and SBMA entered into a Lease and
land to be used for building and operating the coal-fired power plant.
20
allowing the inclusion ofadditional components, among others. 21
Several months later, RP Energy again requested the DENR-EMB to amend
the ECC.  Instead of constructing a 2x150-MW coal-fired power plant, as
22
originally planned, it now sought toconstruct a 1x300-MWcoal-fired power
plant.  In support of its request, RP Energy submitted a Project Description
23
24
On May 26, 2011, the DENR-EMB granted the request and further amended 2003-30) which allowsamendments of ECCs is ultra viresbecause the DENR
the ECC (second amendment). 25
has no authority to decide on requests for amendments of previously issued
ECCs in the absence of a new EIS;  and that due to the nullity of Section 8.3
36

On August 1, 2011, the Sangguniang Panglalawiganof Zambales issued of DAO 2003-30, all amendments to RP Energy’s ECC are null and void. 37

Resolution No. 2011-149, opposing the establishment of a coal-fired thermal

power plant at SitioNaglatore, Brgy. Cawag, Subic, Zambales. 26
On August 11, 2011, the Liga ng mga Barangayof Olongapo City issued
Resolution No. 12, Series of 2011, expressing its strong objection to the coal-
fired power plant as an energy source. 27
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.  The matters taken up during the preliminary conference were
38

embodied in the CA’s Resolution dated November 5, 2012, to wit:

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., I. ISSUES
Hon. Rolen C. Paulino,Hon. Eduardo Piano, Hon. James de los Reyes, Hon.
Aquilino Y. Cortez, Jr., Hon. Sarah Lugerna Lipumano-Garcia, Noraida A. Petitioners (Casiño Group)
Velarmino, Bianca Christine Gamboa Espinos, Charo Simons, Gregorio Llorca
Magdaraog, Rubelh Peralta, Alex Corpus Hermoso,Rodolfo Sambajon, Rev. 1. Whether x x x the DENR Environmental Compliance Certificate
Fr. Gerardo Gregorio P. Jorge, Carlito A. Baloy, Ofelia D. Pablo, Mario (‘ECC’ x x x) in favor of RP Energy for a 2x150 MW Coal-Fired
Esquillo, Elle Latinazo, Evangeline Q. Rodriguez, and John Carlo delos Reyes Thermal Power Plant Project (‘Power Plant,’ x x x ) and its amendment
(Casiño Group) filed before this Court a Petition for Writ of Kalikasan against to 1x300 MW Power Plant, and the Lease and Development
RP Energy, SBMA, and Hon. Ramon Jesus P. Paje, in his capacity as Agreement between SBMA and RP Energy complied with the
Secretary of the DENR. 28
Certification Precondition as required under Section 59 of Republic Act
No. 8371 or the Indigenous People’s Rights Act of 1997 (‘IPRA Law,’ x
On July 31, 2012, this Court resolved, among others, to: (1) issue a Writ of x x);
Kalikasan; and (2) refer the case to the CA for hearing and reception of
evidence and rendition of judgment.  While the case was pending, RP Energy
29
2. Whether x x x RP Energy can proceed with the construction and
applied for another amendment to its ECC (third amendment) and submitted operation of the 1x300 MW Power Plant without prior consultation with
another EPRMP to the DENR-EMB, proposing the construction and operation and approval of the concerned local government units (‘LGUs,’ x x x ),
of a 2x300-MW coal-fired power plant. 30
pursuant to Sections 26 and 27 of Republic Act No. 7160 or the Local
Government Code;
On September 11, 2012, the Petition for Writ of Kalikasanwas docketed as CA-
G.R. SP No. 00015 and raffled to the Fifteenth Division of the CA.  In the
31
3. Whether x x x Section 8.3 of DENRAdministrative Order No. 2003-
Petition, the Casiño Group alleged, among others, that the power plant project 30 (‘DAO No. 2003-30,’ x x x ) providing for the amendment of an ECC
would cause grave environmental damage;  that it would adversely affect the
32
is null and void for being ultra vires; and
health of the residents of the municipalities of Subic,Zambales, Morong,
Hermosa, and the City of Olongapo;  that the ECC was issued and the LDA
33
4. Whether x x x the amendment of RPEnergy’s ECC under Section
entered into without the prior approval of the concerned sanggunians as 8.3 of DAO No. 2003-30 is null and void.
required under Sections 26 and 27 of the Local Government Code (LGC);  that34

the LDA was entered into without securing a prior certification from the
B. Respondent RP Energy
National Commission on Indigenous Peoples (NCIP) as required under
Section 59 of RA8371 or the Indigenous Peoples’ Rights Act of 1997 (IPRA
Law);  that Section 8.3 of DENR Administrative Order No. 2003-30 (DAO
35
 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 Energycomplied 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 necessaryfor 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 properverification and certification of
nonforum 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, admittedall the allegations in RP Energy’s
Verified Return, except the following:
1. paragraphs 1.4 to 1.7;
2. paragraphs 1.29 to 1.32; and
3. paragraphs 1.33 to 1.37.
Petitioners made no specific denial withrespect 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:
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; and
4. 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 representativeof the KabataanPartylist in the House of
Representatives;  (2) Alex C. Hermoso, the convenor of the Zambales-
40
Olongapo City Civil Society Network,a director of the PREDA  Foundation, and
41
a member of the Zambales Chapter of the Kaya NatinMovement and the
Zambales Chapter of the People Power Volunteers for Reform;  and (3) 42
Ramon Lacbain, the ViceGovernor of the Province of Zambales.
RP Energy presented five witnesses,namely: (1) JunisseP. Mercado (Ms.
Mercado), an employee of GHD and the Project Directorof ongoing projects for
RP Energy regarding the proposed power plant project;  (2) Juha Sarkki (Engr.
44
Sarkki), a Master of Science degree holder inChemical Engineering;  (3)
Henry K. Wong, a degree holder of Bachelor of Science Major in Mechanical
Engineering from Worcester Polytechnic Institute;  (4) Dr. Ely Anthony R.
46
Ouano (Dr. Ouano), a licensed Chemical Engineer, Sanitary Engineer, and
Environmental Planner in the Philippines;  and (5) David C. Evangelista (Mr.
47
Evangelista), a Business Development Analyst working for RP Energy.
SBMA, for its part, presented its Legal Department Manager, Atty. Von F.
Rodriguez (Atty. Rodriguez). 49
The DENR, however, presented no evidence. 50
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. 51
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. 52
Ruling of the Court of Appeals
On January 30, 2013, the CA rendereda Decision denying the privilege of the
writ of kalikasanand 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.  The CA likewise
53
found no reason to nullify Section 8.3 ofDAO 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.  In any case, the
54
CA ruled that the validity of the said section could not becollaterally attacked in
a petition for a writ of kalikasan.55
Nonetheless, the CA resolved to invalidate the ECC dated December 22, 2008
for non-compliance with Section 59 of the IPRA Law  and Sections 26 and 27
56
of the LGC  and for failure of Luis Miguel Aboitiz (Mr. Aboitiz), Director of RP
57
43
Energy, to affix his signature in the Sworn Statement of Full Responsibility,
which is an integral part of the ECC.  Also declared invalid were the ECC first
58
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
45 beyond the project description or any change in the activity x x x shall be
subject to a new Environmental Impact Assessment."  However, as to the
59
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. 60
48
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,  and in violation
61
of Section 59, Chapter VIII ofthe 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.  The CA noted that no CNO was secured from the NCIP prior to the
62
execution of the LDA,  and that the CNO dated October 31, 2012 was secured
63
during the pendency of the case and was issued in connection with RP
Energy’s application for a 2x300-MW coalfired power plant. 64
Thus, the CA disposed of the case in this wise:
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 ofrespondent
Redondo Peninsula Energy, Inc. by OIC Director Atty. Juan Miguel T.
 Cunaof 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.  RP Energy filed
66
a Motion for Partial Reconsideration,  attaching thereto a signed Statement of
67
Accountability.  The Casiño Group, on the other hand, filed Omnibus Motions
68
for Clarification and Reconsideration. 69
On May 22, 2013, the CAissued a Resolution  denying the aforesaid motions
70
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
nonexclusive.  In fact, paragraph (e) of the saidprovision allows the granting of
71
"such other reliefs" in consonance with the objective, purpose, and intent of the
Rules.  SBMA’s contention that the stoppage of a project for non-compliance
72
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.  As to RP Energy’s belated submission of a signed
73
Statement of Accountability, the CA gaveno weight and credenceto 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.  Neither was the CA swayed by the argument that the omitted signature
74
of Luis Miguel Aboitiz is a mere formal defect, which does not affect the validity
of the entire document.  The dispositive portion of the Resolution reads:
75
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’ OmnibusMotions 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 thiswould 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;  that the incidence of asthma attacks among residents in
77
the vicinity of the project site may increasedue to exposure to suspended
particles from plant operations;  and that increased sulfur oxides (SOx) and
78
nitrogen oxides (NOx) emissions may occur during plant operations.  It also
79
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.  Finally, it contends that the ECC third amendment should
80
also be nullified for failure to comply with the procedures and requirements for
the issuance of the ECC. 81
The DENR’s arguments
The DENR imputes error on the CAin 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.  And even if it is within the scope, there is no reason to invalidate
82
the ECC and its amendments as these were issued in accordance with DAO
No. 2003-30.  The DENR also insists that contrary to the view of the CA, a
83
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.  As to the second amendment, the DENR-
84
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.  Furthermore, the DENR
85
argues that no permits, licenses, and/or clearances from other government
agencies are required in the processing and approval of the ECC.  Thus, non-
86
compliance with Sections 26 and 27 of the LGC as well as Section 59 ofthe
IPRA Law is not a ground to invalidate the ECC and its amendments.  The 87
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
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.  RP Energy also raises the issue of non-exhaustion of
103

approved Environmental Management Plan.  The DENR invokes substantial

88
administrative remedies on the part of the Casiño Group.  Preliminaries
104

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 This case affords us an opportunity to expound on the nature and scope of the
accepted and accorded weight and credence. 89
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
SBMA’s arguments this Decision.

For its part, SBMA asserts that since the CA did not issue a Writ of Kalikasan, But we shall first address some preliminary matters, in view of the manner by
it should not have invalidated the LDA and that in doing so, the CA acted which the appellate court disposed of this case.
beyond its powers.  SBMA likewise puts in issue the legal capacity of the
90

Casiño Group to impugn the validity of the LDA  and its failure to exhaust
91
The Rules on the Writ of Kalikasan,  which is Part III of the Rules of
105

administrative remedies.  In any case, SBMA contends that there is no legal
92
Procedure for Environmental Cases,  was issued by the Court pursuant to its
106

basis to invalidate the LDA as prior consultation under Sections 26 and 27 of power to promulgate rules for the protection and enforcement of constitutional
the LGC is not required in this case considering that the area is within the rights,  in particular, the individual’s rightto a balanced and healthful
107

SBFZ.  Under RA 7227, it is the SBMA which has exclusive jurisdiction over
93
ecology.  Section 1 of Rule 7 provides:
108

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 Section 1. Nature of the writ.- The writ is a remedy available to a natural or
prevail.  Moreover, the lack of prior certification from the NCIP is alsonot a
94
juridical person, entity authorized by law, people’s organization,
ground to invalidate a contract.  If at all, the only effect of non-compliance with
95
nongovernmental organization, or any public interest group accredited by or
the said requirement under Section 59 of the IPRA Law is the stoppage or registered with any government agency, on behalf of persons whose
suspension of the project.  Besides, the subsequent issuance of a CNO has
96
constitutional right to a balanced and healthful ecology is violated, or
cured any legal defect found in the LDA. 97
threatened with violation by an unlawful act or omission of a public official or
employee, or private individual or entity, involving environmental damage of
RP Energy’s arguments such magnitude as to prejudice the life, health or property of inhabitants in two
or more cities or provinces.
RP Energy questions the proprietyof the reliefs granted by the CA considering
that it did not issue a writ of kalikasanin favor of the Casiño Group.  RP Energy
98
The writ is categorized as a special civil action and was, thus, conceptualized
is of the view that unless a writ of kalikasanis issued, the CA has no power to as an extraordinary remedy,which aims to provide judicial relief from
grant the reliefs prayed for in the Petition.  And even if it does, the reliefs are
99
threatened or actual violation/s of the constitutional right to a balanced and
limited to those enumerated in Section 15, Rule 7 of the Rules of Procedure for healthful ecology of a magnitude or degree of damage that transcends political
Environmental Cases and that the phrase "such other reliefs" in paragraph (e) and territorial boundaries.  It is intended "to provide a strongerdefense for
109

should be limited only to those of the same class or general nature as the four
other reliefs enumerated.  As to the validity of the LDA, the ECC and its
100
environmental rights through judicial efforts where institutional arrangements of
enforcement, implementation and legislation have fallen short"  and seeks "to
110

amendments, the arguments of RP Energy are basically the same arguments address the potentially exponential nature of large-scale ecological threats."111

interposed by SBMA and the DENR. RP Energy maintains that the ECC and
its amendments were obtained in compliance with the DENR rules and Under Section 1 of Rule 7, the following requisites must be present to avail of
regulations;  that a CNO is not necessary in the execution of anLDA and in
101
this extraordinary remedy: (1) there is an actual or threatened violation of the
the issuance of the ECC and its amendments;  and that prior approval of the
102
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 ofinhabitants in two or more cities or
provinces.
Expectedly, the Rules do not definethe exact nature or degree of
environmental damage but only that it must be sufficientlygrave, in terms of the
territorial scope of such damage, so as tocall for the grant ofthis extraordinary
remedy. The gravity ofenvironmental 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 15of Rule 7, to wit: Section 15. Judgment.-
Within sixty (60) daysfrom the time the petition is submitted for decision, the
court shall render judgment granting or denying the privilege of the writ of
kalikasan.
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. 112
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 deniedthe Petition for Writ of
Kalikasanupon 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
Kalikasanon 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 of kalikasan cases.
In their Petition for Writ of Kalikasan,  the Casiño Group’s allegations, relative
113
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 withthe actual environmental damage that will
occur if the power plant project isimplemented. 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 failureto comply with certain laws
and rules governing or relating to the issuance ofan 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 Kalikasanfor judicial review of the acts
of administrative agencies or bodies has long been recognized  subject, of
114
course, to the doctrine of exhaustion of administrative remedies. 115
But the issue presented before us is nota simple case of reviewing the acts of
an administrative agency, the DENR, which issued the ECC and its
amendments. The challenge to the validity ofthe ECC was raised in the context
of a writ of kalikasancase. The question then is, can the validity of an ECC be
challenged viaa writ of kalikasan?
We answer in the affirmative subject to certain qualifications.
As earlier noted, the writ of kalikasanis 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 mustalso 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 ifwe 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
agenciesand 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 havebeen sufficient
reason to disallow the resolution of such issues in a writ of kalikasan case.
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 anenvironmental damageof the
magnitude contemplated under the Rules. This is withrespect 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 anexception to the doctrine of exhaustion of administrative
remedies and primary jurisdiction. 116
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 kalikasanbecause, 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 lackof approval of the concerned sanggunians over
the subject project would not lead toor 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 inor 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 violationscould
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 of kalikasan 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 kalikasancase 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.  As we have often ruled, in exceptional cases, we can suspend the
117
rules of procedure in order to achieve substantial justice, and to address
urgent and paramount State interests vital to the life of our nation.
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 becaused 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. Whether the ECC is invalid for lackof signature of Mr. Luis Miguel
Aboitiz, as representative of RP Energy, in the Statement of
Accountability of the ECC.
3. 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.
4. Whether the Certificate of Non-Overlap, under Section 59 of the
IPRA Law, is a precondition to the issuanceof an ECC and the lack of
its prior issuance rendered the ECC invalid.
5. 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 RPEnergy and
the lack of its prior issuance rendered the LDA invalid.
6. Whether compliance with Section 27, in relation to Section 26, of the
LGC (i.e., approval of the concerned sanggunianrequirement) is
necessary prior to the implementation of the power plant project.
7. 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, Rule7 of the Rules of Procedure for Environmental
Cases, viz:
Section 16. Appeal.- Within fifteen (15) days from the date of notice of the
adverse judgment or denialof motion for reconsideration, any party may appeal
to the Supreme Court under Rule45 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 ofthe extraordinary nature of the
circumstances surrounding the issuance of a writ of kalikasan.  Thus, we shall
118
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.
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 willbe 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 beno 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 asmortality 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 threatto
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 theyare not competent to testify on the
environmental impact of the subject project. What is wanting in their
testimonies is their technical knowledgeof the project design/implementation or
some other aspects of the project, even those not requiring expertknowledge,
vis-à-vis the significant negative environmental impacts which the Casiño
Group alleged will occur. Clearly, the Casiño Group failed to carry the onusof
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:
Petitioners  presented three (3) witnesses, namely, Palatino, Hermoso, and
120
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 ViceGovernor of the Province of Zambales, anaccounting
graduate with a Master in Public Administration, was a former BancoFilipino
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 studiesand 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-
firedpower 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 Panlalawiganof 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 ofall the
documents [letters (a) to (o) of his Judicial Affidavit], except the LGU
Resolutions; and he has never been at the actual Power Plant projectsite. 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
simplyconfirmed 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 orher 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 notlimited
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:
"SEC. 46. Learned treatises. -A published treatise, periodical or pamphlet on a
subjectof 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 subjectmatter 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 offuel, 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 beforethis water is introduced to the boiler
to start the process all over again; and CFB technology has advantagesover
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
fuelconstituents; since CFB is the newer technology than the PC or stalker fire,
it has better environmental production; 50 percent ofthe 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 FosterWheeler; 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
scientificallyacceptable 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 inthe 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 inAustralia 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 JudicialAffidavit thus:
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 waterswith 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:
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 canalready 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. Asa 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 increasewill 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.123
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 reefaround 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. Sothe 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 theyare so deep, they die. And that is why I cited
Kingman in his studies of coral adaptability [in] the sea ofOman 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 reviewedthe 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[']sa 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 respectto 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: NO2 100.8 µg/Nm3 260 µg/Nm3

If you are talking about a thermometer, you might be talking about, normally CO 10 µg/Nm3 35 µg/Nm3
about .1 degrees centigrade. That’sthe one that you could more or less
ascertain. x x x
  Predicted GLC for 8-hr National Ambient Air Quality
averaging period Guideline Values
ATTY. AZURA:
CO 0.19 mg/ncm 10 µg/Nm3
Dr. Ouano, you mentioned in youranswer 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.   Predicted GLC for 24-hr National Ambient Air Quality
Just to clarify, Dr. Ouano. When the power plant causes the projected averaging period Guideline Values
temperature change of 1 degree to 2 degrees Celsius this will be in addition to SO2 17.11 µg/Nm3 180 µg/Nm3
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 NO2 45.79 µg/Nm3 150 µg/Nm3
with the existing variation? DR. OUANO:
Predicted GLC for 1-yr averaging National Ambient Air Quality
There is something like what we call the zonal mixing. This is an area of
period Guideline Values
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 SO2 6.12 µg/Nm3 80 µg/Nm3
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 NO2 No standard ---
variation now practically drops down to almost the normal level. 124
CO No standard ---

2. On air pollution due todust 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,  Ms. Mercado stated in
125
her Judicial Affidavit thus:
271. Q: What was the result of the Air Dispersion Modeling that was conducted
for RP Energy?
272. Q: What other findings resulted from the Air Dispersion Modeling, if any?
A: It also established that the highest GLC to CleanAir 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

A: The Air Dispersion Modeling predicted that the Power Plant Project will
produce the following emissions,which [are] fully compliant with the standards
The Casiño Group argued, however, that, as stated inthe EIS, during upset
set by DENR:
conditions, significant negative environmental impact will result from the
emissions. This claim was refuted by RP Energy’s witness during cross-
  Predicted GLC  for 1-hr
126
National Ambient Air Quality examination:
averaging period Guideline Values
ATTY. AZURA:
SO2 45.79 µg/Nm3 340 µg/Nm3
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 alsopay 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[,] emissionswould 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.
xxxx
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. 128
With respect to the claims that the powerplant will release dangerous PAHs
and CO, Engr. Sarrki stated in his Judicial Affidavit thus:
Q: 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.
xxxx
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. Thisstaged-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" byKunlei
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.
xxxx
Q: 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 minimizePAH 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 SO2capture, 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 youat 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:
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:
4.1.49 When coal is burned in the boiler furnace, two by-products are
generated - bottom and fly ash. Bottom ash consists oflarge and fused
particles that fall to the bottom of the furnace and mix with the bed
media.Fly ash includes finegrained and powdery particles that are prevent migration via wind. Ash cell walls will be lined with high-density
carried away by flue gas into the electrostatic precipitator, which is polyethylene to prevent seepage. This procedure and treatment
then sifted and collected. These by-products are non-hazardous method is in fact suitable for disposal of toxic and hazardous wastes
materials. In fact, a coal power plant’s Fly Ash, Bottom Ash and Boiler although fly ash is not classified as toxic and hazardous materials. 131

Slag have consequent beneficial uses which "generate significant

environmental, economic, and performance benefits." Thus, fly ash Anent the claims that the plant is susceptible to earthquake and landslides, Dr.
generated during the process will be sold and transported to cement Ouano testified thus:
manufacturing facilities or other local and international industries.
J. LEAGOGO:
4.1.50 RP Energy shall also install safety measures to insure that
waste from burning of coal shall be properly handled and stored. In terms of fault lines, did you study whether this project site is in any fault
line?
4.1.51 Bottom ash will be continuously collected from the furnace and
transferred through a series of screw and chain conveyors and bucket DR. OUANO:
elevator to the bottom ash silo. The collection and handling system is
enclosed to prevent dust generation. Discharge chutes will be installed
There are some fault linesand in fact, in the Philippines it is very difficult to find
at the base of the bottom ash silo for unloading. Open trucks will be
an area except Palawan where there is no fault line within 20 to 30
used to collect ash through the discharge chutes. Bottom ash will be
[kilometers]. But then fault lines as well as earthquakes really [depend] upon
sold, and unsold ash will be stored in ash cells. A portion of the bottom
your engineering design. I mean, Sto. Tomas University has withstood all the
ash will be reused as bed materialthrough the installation of a bed
potential earthquakes we had in Manila[,] even sometimes it[’]s intensity 8 or
media regeneration system (or ash recycle). Recycled bottom ash will
so because the design for it back in 1600 they are already using what we call
be sieved using a vibrating screen and transported to a bed material
floating foundation. So if the engineering side for it[,] technology is there to
surge bin for re-injection into the boiler.
withstand the expected fault line [movement]. J. LEAGOGO:
4.1.52 Fly ash from the electrostatic precipitator is pneumatically
What is the engineering side of the project? You said UST is floating.
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- DR. OUANO:
transferred through a loading spout into an enclosed lorry or truck for
selling, re-cycling, or wet-transferred through a wet unloader into open The foundation, that means to say you don’t break…
dump trucks and transported to ash cells. Fly ash discharge will
operate in timed cycles, with an override function to achievecontinuous J. LEAGOGO:
discharge if required. Fly ash isolation valves in each branch line will
prevent leakage and backflow into non-operating lines. Floating foundation. What about this, what kind of foundation?

4.1.53 Approximately 120,000m² will be required for the construction of DR. OUANO:
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 It will now depend on their engineering design, the type of equipment…
used for embankment construction and backfill. To prevent infiltration
[of] ash deposits into the groundwater, a clay layer with minimum depth J. LEAGOGO:
of400mm 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
No, but did you read it in their report?
DR. OUANO: It[’]s not there in their report because it will depend on the A: NO2 is found in the air, water and soil from natural processes such as
supplier, the equipment supplier. lightning, bacterial activities and geologic activities as well as from human
activities such as power plants and fertilizer usage in agriculture. SO2 is also
J. LEAGOGO: 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
So it[’]s not yet there? 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
DR. OUANO:
intensive agricultural practices, nitrogen and sulfur are added in the soil as
fertilizers.
It[’]s not yet there in the site but it is also covered inour Building Code what are
the intensities of earthquakes expected of the different areas in the Philippines.
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
J. LEAGOGO: concentrations lower than those set in the standards have beneficial effect to
the environment and agriculture and are commonly known as micronutrients. 133

Have you checked our geo-hazard maps in the Philippines to check on this
project site? On clarificatory questions from the appellate court, the matter was further
dissected thus:
DR. OUANO:
J. LEAGOGO:
Yes. It is included there in the EIA Report.
x x x The project will release 1,888 tons of nitrous oxide per year. And he said,
J. LEAGOGO: yes; that witness answered, yes, itwill produce 886 tons of sulfur dioxide per
year. And he also answered yes, that these oxides are the precursors to the
It[’]s there? formation of sulfuric acid and nitric acid. Now my clarificatory question is, with
this kind of releases there will be acid rain?
DR. OUANO:
DR. OUANO:
It[’]s there. 132

No.
4. On acid deposition in aquatic and terrestrial ecosystems.
J. LEAGOGO:
Relative to the threat of acid rain, Dr. Ouano stated in his Judicial Affidavit,
thus: Why?

Q: In page 44, paragraph 114 of the Petition, it was alleged that "the coalfired DR. OUANO:
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 Because it[’]s so dilute[d].
formation of sulfuric acid and nitric acid which are responsible for acid
deposition." Whatis your expert opinion on this matter alleged by the J. LEAGOGO:
Petitioners?
It will? DR. OUANO:

DR. OUANO: It is in concentration not on tons weight, Your Honor.

Because the acid concentration is so dilute[d] so that it is not going to cause J. LEAGOGO:
acid rain.
In concentration?
J. LEAGOGO:
DR. OUANO:
The acid concentration is so diluted that it will not cause acid rain?
In milligrams per cubic meter, milligrams per standard cubic meter.
DR. OUANO:
J. LEAGOGO:
Yes .
So being an expert, whatwill be the concentration of this kind of 1,888 tons of
J. LEAGOGO: nitrous oxide? What will be the concentration in terms of your…?

What do you mean it[’]s so diluted? How will it be diluted? DR. OUANO:

DR. OUANO: If the concentration is in excess ofsomething like 8,000 micrograms per
standard cubic meters, then there isalready potential for acid rain.
Because it[’]s going to be mixed withthe air in the atmosphere; diluted in the air
in the atmosphere. And besides this 886 tons, this is not released in one go, it J. LEAGOGO:
is released almost throughout the year.
I am asking you, Dr. Ouano, you said it will release 1,888 tons of nitrous
J. LEAGOGO: oxide?

You also answered in Question No. 61, "acid raintakes place when the NO2 DR. OUANO:
AND SO2 concentration are excessive." So whendo you consider it as
excessive? Yes .

DR. OUANO: J. LEAGOGO:

That is something when you are talking about acid… In terms of concentration, what will that be?

J. LEAGOGO: DR. OUANO:

In terms of tons of nitrous oxide and tons of sulfur oxide, when do you consider In terms of the GHD study that will result [in] 19 milligrams per standard cubic
it as excessive? 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 weare very, very safe.
J. LEAGOGO:
What about SO2?
DR. OUANO:
SO2, we are talking about ... youwon’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, wealso 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."  One of the
135
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 withjudicial precedents. Thus, we ruled in one
case:
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 isto 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 inthe 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 observationsof 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.  However, there is no coal supply agreement, as of yet,
137
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 itsclaim 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 acceptabilitypolicy 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
notethat 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:
IV. EXPERTS’ OPINION
xxxx
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 tothe 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 inthe 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 coalfired
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-accumulationof 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 suchas mercury and lead to the
surrounding region, which would adversely affect the health of the
populace in the vicinity.
V. FINDINGS
Based 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
Assessmentto 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 Resourceswas 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:
Key Observations and Recommendations on the EIS of Proposed RPE Project
Rex 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 inthe Freeport was not
considered as impact zone as indicated by the lack ofdescription 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 affectedalso by acid rain.
8. There are no Environmentally Critical Areas within the 1 km radius
from the project site. However, the OlongapoWatershed Forest
Reserve, a protected area is approximately 10 kmsouthwest of the
projectsite. 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 partof 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 projectsite 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 proposalto 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. Itwill 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 monitoringplots (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 ofthe 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 rightat
stake— not just damage to the environment but the health, well-being
and,ultimately, the livesof 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 orsafeguard the right to a healthful and balanced ecology. In Section 6
(l)  of Rule 3 (Pre-Trial), when there is a failure to settle, the judge shall,
140
among others, determine the necessity of engaging the services of a qualified
expert as a friend of the court (amicus curiae). While, in Section 12  of Rule 7
141
(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: [T]he writ of
kalikasanwas 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 toappoint 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 toa 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 isat 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 statementsare not sufficiently specificto 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 ofthe 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 notadequately address
these concerns.
Second, some of the concerns raisedin 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 contemplatedunder 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 sufficientlyassail the environmental
soundness of the project and establish the requisite magnitude of actualor
threatened environmental damage, if indeed present. After all, their sense
ofcivic duty may well prevail upon them to voluntarily testify, if there are truly
sufficient reasons tostop 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 EIS of the
project.
In their Omnibus Motions for Clarification and Reconsideration before the
appellate court and Petition for Review before thisCourt, the Casiño Group
belatedly claims that the statements in the EIS prepared by RPEnergy
established the significant negative environmental impacts of the project. They
argue in this manner:
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.
xxxx
Asthma Attacks
36. The same EPRMP  mentioned the incidence of asthma attacks [as a]
143
result of power plant operations, to wit –
xxxx
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:
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 onvegetation (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 beminimised 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. (Emphasis supplied)
145
As to the subject of asthma attacks, the EIS states in full:
The incidence of asthma attacks among residents in the vicinity of the project
site may increase due to exposureto 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 (coalhandling systems, Section 3.4.3.3). In
addition, the proposed process will include an electrostaticprecipitator that will
remove fly ash from the flue gas prior to its release through the stacks, and so
particulates emissions will be minimal.  (Emphasis supplied)
146
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 sucha 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 withcourt processes. Along the
same lines, we note how the Casiño Group has made serious allegations in its
Petition for Writ of Kalikasanbut 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.  We also note how the Casiño
147
Group failed to comment on the subject Petitions before this Court, which led
this Court to eventually dispense with its comment.  We must express our
148
disapproval over the way it has prosecuted itsclaims, bordering as it does on
trifling with court processes. We deem itproper, therefore, to admonishit to be
more circumspect in how it prosecutesits claims.
In sum, we agree with the appellate court that the Casiño Group failed to
substantiate its claims thatthe 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.
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 ofthis 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.  What is more,
149
this was not one of the triable issues specificallyset during the preliminary
conference of this case. 150
How then did the issue oflack of signature arise?
A review of the voluminous records indicates that the matterof the lack of
signature was discussed, developed or surfaced only inthe course of the
hearings, specifically, on clarificatory questions from the appellate court, to wit:
J. LEAGOGO:
I would also show to you your ECC, that’s page 622 of the rollo. I am showing Now, who is the authorized representative of RP Energy?
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." MS. MERCADO:
Would you like to go over this? Are you familiar with this document?
It would be Mr. Aaron Domingo, I believe.
MS. MERCADO:
J. LEAGOGO:
Yes, it[’]s my Annex "3," Your Honor.
Please tell the Court why this was not signed by Mr. Luis Miguel Aboitiz, the
J. LEAGOGO: Statement of Accountability?

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?
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 thisEnvironmental Compliance Certificate
[ECC][.]" Will you tell this Court why this was not signed?

MS. MERCADO: MS. MERCADO:

Yes, Your Honor. 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
J. LEAGOGO: because during….

Okay. On the same page, page 3, there’s a Statement of Accountability. J. LEAGOGO:

MS. MERCADO: But this is your exhibit, this is yourExhibit "18" and this is not signed. Do you
agree with me that your Exhibit "18" is not signed by Mr. Aboitiz?
Yes, Your Honor.
MS. MERCADO:
J. LEAGOGO:
That’s correct, Your Honor. 151

Luis, who is Luis Miguel Aboitiz?

We find this line of questioning inadequate to apprise the parties that the lack
MS. MERCADO: 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.
During that time he was the authorized representative of RP Energy,
Concededly, a court has the power to suspend its rules of procedure in order
Your Honor. 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
J. LEAGOGO:
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
tosuspend 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, beforemaking 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., PresidentialDecree 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 withthe specific form prescribed by law
leads to its nullity,  the applicable laws here are silentwith respect to the
152
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 tothe implementation of PD 1151 and PD 1586. To determine,
therefore, the effect of the lack of signature, we must look atthe 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 Process 153
1.0 Screeningdetermines if a project is covered or not covered
SCREENING by the PEISS. If a project is covered, screening further
154
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 office of application,
endorsing and decision authorities, duration of processing.
2.0 SCOPING Scopingis 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.
EIA STUDY The EIA Studyinvolves a description of the proposed
and project and its alternatives, characterization of the project
3.0 REPORT environment, impact identification and prediction,
PREPARATION evaluation of impact significance, impact mitigation,
formulation of Environmental Management and Monitoring
Plan, withcorresponding cost estimates and institutional
support commitment. The study results are presented in an
EIA Reportfor which an outline is prescribed by EMB for
every major document type
EIA REPORT Review of EIA Reportsnormally entails an EMB procedural
4.0 REPORT screening for compliance with minimum requirements
and specified during Scoping, followed by a substantive review
EVALUATION of either composed third party 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.
5.0 DECISION Decision Making involves evaluation of EIA
MAKING 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 155 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. 156 The ECC is then transmitted to concerned
LGUs and other GAs for integration into their
decisionmaking 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 the EIA Report is accepted for substantive review to
the time a decision is issued on the application.
MONITORING. Monitoring, Validation and Evaluation/Audit stage assesses
6.0 performance of the Proponent against the ECC and
VALIDATION, itscommitments in the Environmental Management and
and Monitoring Plans to ensure actual impacts of the project
EVALUATION/ are adequately prevented or mitigated.
AUDIT
The signing of the Statement of Accountability takes placeat 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 ofits 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:
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.  (Emphasis
157
supplied)
As can be seen, the signing of the Statement of Accountabilityis an integral
and significant component of the EIA process and the ECC itself. The evident
intention is to bind the project proponentto 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 tooperate 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 withthe conditions
necessary toadequately 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 ofthe ECC, we cannot close oureyes 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:
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 yourExhibit "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.  (Emphasis supplied)
158
Due to the inadequacy of the transcriptand 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, werenot properly apprised that the
issue relative to the lack of signature would be decisive inthe determination of
the validity of the ECC. Consequently, the DENR and RPEnergy cannot be
faulted for not presenting proof during the course ofthe 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
DENREMB, 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. 159
The authenticity and veracity of this certified true copy of the ECC was not
controverted by the Casiño Group in itscomment 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 RPEnergy were not properly apprised that
the issue relative to the lack ofsignature 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 ofsignature 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
aforediscussed rules under the Revised Manual, however, state that the
proponent shall sign the sworn statement of full responsibility on
implementation of its commitments priorto the release of the ECC. Itwould
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 ispresent. Be
thatas 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 faithor 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 DENRthat 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 futurelitigation 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 ofsignature 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. Itshowed 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 adoptedby the
DENR was done with bad faith or inexcusable negligence. Thus, werule that
the signature requirement was substantially complied with pro hac vice.
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 tothe 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
tothe 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 bythe 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 ofthe people to a healthful
environment.  Pursuant thereto, in every action, project or undertaking, which
160
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 longterm 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. 161
To further strengthen and develop the EIS, PD1586 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."  The ECC requirement ismandated under Section 4 thereof:
162
SECTION 4. Presidential Proclamation ofEnvironmentally 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 dulyauthorized representative. x x x (Emphasis supplied)
The PEISS consists of the Environmental Impact Assessment (EIA) process,
which is mandatory for private orpublic projects thatmay 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. 163
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).  As part of the EIA process, the project
164
proponent is required to submit certain studies or reports (i.e., EIA document
type) to the DENR-EMB, which willbe 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:
A- 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.  After which, it states the appropriateEIA document typeneeded for
165
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 Statement  (EIS),
166
 2. Initial Environmental Examination  (IEE) Report,
167
3. Initial Environmental Examination  (IEE) Checklist Report,
168
4. Environmental Performance Report and Management
Plan  (EPRMP), and
169
5. Project Description  (PD) or Project Description Report (PDR).
170
Thus, in the course of RP Energy’s application for anECC, 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:
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; (Emphasis supplied)
171
Further, the table in Section 5 of DAO 2003-30 states that an EPRMP is
required for "A-2: Existing and to beexpanded (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:
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 isx x x anx x x Environmental Performance
Report and Management Plan (EPRMP) for single project applications x x
x  (Emphasis supplied)
172
In its "Glossary," the Revised Manual defines an EPRMP as:
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.  (Emphasis supplied)
173
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:
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 orre-start operations; and
4. Existing projects for modification or re-start up.
It may be observed that, based from the above, DAO2003-30 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
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:
Figure 2-4. Flowchart on Request for ECC Amendments 175

amendments to an ECC.
Scenario 1: Request for Minor Scenario 2: Request for Major
The proper starting point in determining the validity of the subject first
Amendments Amendments
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.  This 174 1. Typographical error 1. Expansion of project area w/in
is principally found in Section 8.3,Article II of DAO 2003-03, viz: catchment described in EIA
2. Extension of deadlines for
8.3 Amending an ECC submission of post-ECC 2. Increase in production capacity or
requirement/s auxiliary component of the original project
Requirements for processing ECC amendments shall depend on the nature of
the request but shall be focused on the information necessary to assess the 3. Extension of ECC validity 3. Change/s in process flow or technology
environmental impact of such changes.
4. Change in company 4. Addition of new product
8.3.1. Requests for minor changes to ECCs such as extension name/ownership
of deadlines for submission of post-ECC requirements shall be 5. Integration of ECCs for similar or
decided upon by the endorsing authority. 5. Decrease in land/project area dissimilar but contiguous projects (NOTE:
or production capacity ITEM#5 IS PROPONENT’S OPTION, NOT
8.3.2. Requests for major changes to ECCs shall be decided EMB’S)
upon by the deciding authority. 6. Other amendments deemed
6. Revision/Reformatting of ECC
8.3.3. For ECCs issued pursuant to an IEE or IEE checklist, the "minor" at the discretion of the Conditions
processing of the amendment application shall not exceed EMB CO/RO Director
thirty (30) working days; and for ECCs issued pursuant to an 7. Other amendments deemed "major" at
EIS, the processing shall not exceed sixty (60) working days. the discretion of the EMB CO/RO Director
Provisions on automatic approval related to prescribed 1 [Start] 1[Start]
timeframes under AO 42 shall also apply for the processing of
applications to amend ECCs. (Emphasis supplied) Within three (3) years from ECC Within three (3) years from ECC issuance
issuance (for projects not (for projects not started)  OR at any time
177

Implementing the afore-quoted section, the Revised Manual pertinently states started)  OR at any time during
176
during project implementation, the
in Section 2.2, paragraph 16: project implementation, the Proponent prepares and submits to the
Proponent prepares and
submits to the ECC-endorsing
DENR-EMB office a LETTER-
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 4
ECC-endorsing DENR-EMB office a ECC-endorsing Authority ECC-endorsing/issuing Authority (per
LETTER-REQUESTfor ECC amendments, decides on the Letter-Request, Table 1-4) decides on Letter
including data/information, reports or based on CH recommendation Requests/EPRMP/PEPRMP/Other
documents to substantiate the requested documents based on EMB CH and/or
revisions. Tech/Review Committee
recommendations.
2
Maximum Processing Time to Max Processing Time to Issuance of
For projects that have started Issuance of Decision Decision
implementation, EMB evaluates request
based on Annex 2-1cfor various scenarios EMB CO 7 workdays CO CO RO RO
of project modification. Documentary PEPRMP EPRMP PEPRMP EPRMP
requirements may range from a Letter-
Request to an EPRMP to the EMB CO/RO EMB RO 7 workdays 120 90 60 30
while for those with Programmatic ECC, a
PEPRMP may need to be submitted to the workdays workdays workday workdays
EMB CO to support the request. It is s
important to note that for operating   Other document applications: max 30
projects, the appropriate document is not workdays (EMB CO and RO)
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 2-1cfor every
modification scenario.
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
3
issuance (for projects not started) x x x".
Annex 2-1c, in turn, provides a "Decision Chart for Determination of
For EPRMP/PEPRMP-based requests, Requirements For Project Modification." We reproduce below the first three
EMB forms a Technical/Review Committee columns of Annex 2-1c, as are pertinent to the issue at hand:
to evaluate the request. For other
requests, a Case Handler may solely
ANNEX 2-1c
undertake the evaluation. EMB CO and
RO will process P/EPRMP for PECC/ECC
under Groups I and II respectively. (Go to DECISION CHART FOR DETERMINATION OF REQUIREMENTS FOR
Figure 2-1) PROJECT MODIFICATION 178
        Proposed         Analysis of Resulting Decision
Modifications to the Proposed Modifications Document/Type of EIA
Current Project     Report Required
 Operational projects, or 4. Increase in Exceedance of PDR ECC Amendment
those which have capacity or auxiliary (non-covered) threshold /Environmental
stopped for ≤5 years component of the is assumed that impacts Performance Report
and plan to re-start original project may be potentially and Management Plan
which will either significant, particularly if (EPRMP)
For Groups I and II exceed PDR modification will result to
EISbased Projects with (noncovered a next higher level of
an ECC applying for project) thresholds, threshold range
modification or EMP & ERA
1. Expansion of Since the modification ECC Amendment /Letter cannot address Modification scenario
land/project area will be in an area Request with brief impacts and risks and decision process
w/in catchment or already described and description of activities arising from are applicable to both
environment evaluated in the original in the additional area modification nonimplemented and
described in the EIA Report, incremental operating projects with
original EIA Report impacts from additional or without issued ECCs
land development will
5. Change/s in EMP and ERA can still ECC Amendment /Letter
have been addressed in
process flow or address impacts & risks Request with brief
the approved EMP
technology arising from modification process description
2. Expansion of It is assumed the ECC Amendment
EMP and ERA cannot ECC Amendment
land/project area modification proposal /Environmental
address impacts & risks /Environmental
OUTSIDE may have significant Performance Report
arising from modification Performance Report
catchment or potential impacts due to and Management Plan
and Management Plan
environment absence of prior (EPRMP)
(EPRMP)
described in the assessment as to how
original EIA Report the project may affect 6. Additional Activity is directly ECC Amendment /Letter
the proposed expansion component or lessening or mitigating Request with
area products which will the project’s impacts on consolidated Project
enhance the the environment. Description Report of
3. Increase in Non-exceedance of ECC Amendment /Letter
environment (e.g. However, to ensure new project component
capacity or auxiliary PDR (non covered Request with brief
due to compliance there is no component and integrated EMP
component of the project) threshold is description of additional
to new stringent in the modification which
original project assumed that impacts capacity or component
requirements) or fall under covered
which will eithernot are not significant;
lessen impacts on project types, EMB will
entail exceedance
the environment require disclosure of the
of PDR (non- Modification scenario (e.g. thru utilization description of the
covered project) and decision process of waste into new components and
thresholds or EMP are applicable to both products) process with which the
& ERA can still nonimplemented and new product will be
address impacts & operating projects developed.
risks arising from issued ECCs
modification 7. Downgrade project No incremental adverse From ECC Amendment
 size or area or impacts; may result to
other units of lower project threshold
measure of or may result to non-
thresholds limits coverage
8. Conversion to new Considered new
project type (e.g. application but with
bunker-fired plant lesser data
to gas-fired) 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
9. Integration of ECCs No physical change in
for similar or project size/area; no
contiguous projects change in
process/technology but
(Note: Integration improved management
of ECCs is at the of continuous projects
option of the by having an integrated
Proponent to planning document in
request/apply) the form or an
integrated ECC (ECC
conditions will be
harmonized across
projects; conditions
relating to requirements
within other agencies’
mandates will be
deleted)
to Relief of ECC 10. Revision/ No physical change on ECC Amendment /Letter
Commitments Reformatting of the project but ECC Request only
(Conversion to CNC): ECC Conditions conditions relating to
/Letter-Request only requirements within
other agencies’
New ECC /EIS mandates will be
deleted
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, subseadischarge pipeline, raw water collection
system, drainage channel improvement and a 230-kV double transmission
line. The DENR-EMB determined  that the proposed modifications involved a
179
major amendment because it will result in anincrease in capacity or auxiliary
component, as per Scenario 2,Item #2 of Figure 2-4:
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
ECC Amendment /Letter original project180
Request with
consolidated Project 3. Change/s in process flow or technology
Description Report and
integrated EMP 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-kVdouble transmission line
would result in major activities outside the project site which could have its ECC, involving an increase in capacity or auxiliary component, which will
significant environmental impacts. 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,
Consequently, the amendment was considered asfalling under Item#4 of such as the subject project.
Annex 2-1c, and, thus, the appropriate EIA document typeis an EPRMP, viz:
That the proposed modifications in the subject project fall under this class or
type of amendment was a determination made by the DENR-EMBand, absent
4 Increase in capacity Exceedance of PDR ECC Amendment
a showing of grave abuse of discretion, the DENR-EMB’s findings are entitled
. or auxiliary (non-covered) /Environmental
to great respect because it is the administrative agency with the special
component of the thresholds is assumed Performance Report
competence or expertise to administer or implement the EIS System. The
original project which that impacts may be and Management Plan
apparent confusion of the Casiño Group and the appellate court is
will either exceed potentially significant, (EPRMP)182

understandable. They had approached the issue with a legal training mindset
PDR (non-covered particularly if
or background. As a general proposition, the definition of terms in a statute or
project) thresholds, modification will result to
rule is controlling as to its nature and scope within the context of legal or
or EMP & ERA a next higher level of
judicial proceedings. Thus, since the procedure adopted by the DENR-EMB
cannot address threshold range
seemed to contradict or go beyond the definition of terms in the relevant
impacts and risks
issuances, the Casiño Group and the appellate court concluded that the
arising from Modification scenario procedure was infirm.
modification and decision process
are applicable to both
However, a holistic reading of DAO2003-30 and the Revised Manual will show
nonimplemented and
that such a legalistic approach inits interpretation and application is
operating projects with
unwarranted. This is primarily because the EIA process is a system, not a set
or without issued
of rigid rules and definitions. In the EIA process, there is much room for
ECCs 181

flexibility in the determination and use ofthe appropriate EIA document type as
the foregoing discussion has shown.  To our mind, whatshould be controlling
184

Note that the Chart expressly states that, "[m]odification scenario and decision
process are applicable to both non-implementedand operating projects withor
without ECCs."  To recall, the subject project has not been constructed and is
183
not yet operational, although horizontal clearing activities have already been
undertaken at the project site. Thus, the subject project may be reasonably
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 requestbut
shall be focused on theinformation necessary to assess the environmental
impact of such changes." 185

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 toa simple conclusion. The definitions in
DAO 2003-30 and the Revised Manual, stating that the EPRMP is applicable
to (1) operating/existing projectswith 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
This brings us to the next logicalquestion, 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 thatthe 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
beaffected 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 wefind 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"  of the EPRMP and
186
extensively discussed in Section 4  thereof. Absent any claim or proof to the
187
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-implementedproject with a previous ECC, such as the
subject project. Consequently, we find that the procedure adopted by the
DENR, in requiring RP Energy to submitan 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:
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 tobe used for reviewing
co-located and single projects under Category C, aswell as for Category D
projects.188
xxxx
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 ofNon-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 oneto 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. 189
xxxx
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 intothe 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 which will either not are not significant;
fall squarely under any of the above. entail exceedance
of PDR (non- Modification scenario
However, again, these are not the only provisions governing the PDR in the covered project) and decision process
Revised Manual. thresholds or EMP are applicable to both
& ERA can still non-implemented and
After the favorable grant of the first amendment, RP Energy applied for address impacts & operating projects
another amendment to its ECC, this time inconsideration of its plan to change risks arising from issued ECCs 194

the configuration of the project from 2 x 150 MWto 1 x 300 MW. In practical modification
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
We make the same observation, as before, that the above applies to an
efficiency in the operations of the plant. The DENR-EMB determined  this191

unimplemented or non-implemented project with a previous ECC, like the

amendment to be minor, under Scenario 1, Item#6 of Figure 2-4:
subject project. Although it may be noted thatthe proposed modification does
not squarely fall under Item#3, considering that, as previously mentioned,there
Scenario 1: Request for Minor 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
Amendments 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.
1. Typographical error Since this is the classification most relevant and closely related to the intended
amendment, following the basic precept that the greater includes the lesser,
2. Extension of deadlines for submission of post-ECC requirement/s the DENR-EMB reasonably exercised its discretion in merely requiring a letter
request with a brief description of the modification.
3. Extension of ECC validity
As earlier noted, the PDR is the EIA document type with the least detail, and,
4. Change in company name/ownership thus, applicable to such minor modifications. Thus, the DENR-EMB cannot be
faulted for requiring RPEnergy to submit a PDR relative to its application for
the second amendment. Consequently, as before, we findthat the Revised
5. Decrease in land/project area or production capacity
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
6. Other amendments deemed "minor" at the discretion of the EMB planned modifications relative to the second amendment.
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.  Relative to Annex 2-1c, the requested amendment
193
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."  However, to our dismay, as in their other serious
196

was, in turn, determinedto fall under Item#3: allegations in their Petition for Writ ofKalikasan, the same is, likewise,
baseless. Apart from such a sweeping claim, the Casiño Group has provided
3. Increase in capacity Non-exceedance of ECC Amendment /Letter no evidence or argument to back up the same.
or auxiliary PDR (non covered Request with brief
component of the project) thresholds is description of additional An examination of the PDR readily reveals that it contains the details of the
original project assumed that impacts capacity or component 195
proposed modifications  and an express finding that no significant
197

environmental impact will be generated bysuch 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.  Consequently, the PDR merely reiterates the same mitigating
198
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 adoptedby 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 provisoin 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 besubject to a new Environmental
Impact Assessment." 199
However, as correctly pointed out by the DENR and RP Energy, the EIA is not
a document but a process:
Environmental Impact Assessment (EIA) — processthat 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/orEIA Consultant, EMB, a Review
Committee, affected communities and other stakeholders.  (Emphasis
200
supplied)
When the provisoin the ECC, therefore, states that a new EIA shall
beconducted, 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). Aswe 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
provisoof 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, wemust 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 wereinvalid 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.
IV.
Whether the Certificate of Non-Overlap (CNO), under Section 59 of the IPRA
Law, is a precondition to the issuance of anECC 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 fouryears from the timeof
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 securean 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 programwhere the
project belongs.
We agree with the DENR and RP Energy.
Section 59, Chapter VIII of the IPRA Law provides:
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. 01-98  states:
201
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 anyconcession, 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 ofCertification 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.  This is in keeping with the
202
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. 203
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"  while a "permit" has been
204
defined as "a license or other document given by an authorized public official
or agency (building inspector, department ofmotor vehicles) to allow a person
or business to perform certain acts."
205
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 willnot 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 considerationsin mind, we now look atthe 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:
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 suchdeclared environmentally critical project or area without
first securing an Environmental Compliance Certificate issued by the President
orhis 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
functionsand 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 inan 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:
SECTION 3. Definition of Terms. —
For the purpose of this Order, the following definitions shall be applied:
xxxx
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 beforeand 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:
3) Purpose of the EIA Process
As a basic principle, EIA is used to enhance planning and guide
decisionmaking. 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.
xxxx
6) The EIA Process inRelation 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 prerequisite 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 ofthe 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,
clearancesand 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.
xxxx
f) 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, asper Section 4 of PD 1586,the
issuanceof the ECC does not, as of yet, result inthe 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 totheir 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 orpurpose, 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.
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 ofthe 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 withRP Energy, SBMA entered into a
lease agreement with HHIC  -Philippines, Inc. and a CNO was already
206
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 indigenouscommunities 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 oran 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 SBMAand RP Energy, and not
after, as was done here, we find that, under the particular circumstances of this
case, the subsequent and belated compliance withthe CNO requirement does
not invalidate the LDA.
For convenience, and as starting point of ouranalysis, we reproduce Section
59 of the IPRA Law below:
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
productionsharing 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.  As such, the lease could conceivably encroach on an ancestral
207
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 determinationon
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 actuallyreside on the proposed
lease site, the government agency would still be required to obtain the CNO
preciselyto 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.
208
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 lastterm, "production-
sharing agreement," normally refers to natural resources. But the problem
arises as to what should be considered "natural resources"; for a vacant lot,
nearPadre Faura Street, or a forest land, in Mt. Banahaw, could both
beconsidered 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
likethe 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 ofaction 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 tosecure 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 policy  to
209
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 historicallyknown to be the home of our brothers and
sisters belonging to the Aeta communities. In particular, the EIS  itself of RP
210
Energy noted that Aeta communities originally occupiedthe 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 ofthe area
does not necessarily mean that it is not a part of anancestral domain because
the latter encompasses areas that are not actually occupied by
indigenouscommunities 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 pendingapplication 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 ofa 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 formerlyused as the firing range of the U.S.
Armed Forces does not preclude the possibility that a present orfuture claim of
ancestral domain may be made over the aforesaid site. The concept of an
ancestral domain indicates that, even if the use ofan area was interrupted by
the occupation of foreign forces, it may still be validly claimed to be an
ancestral domain. 211
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, ascorrectly 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 notmatter 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.  However, we rule that the
212
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 RPEnergy. 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, albeiterroneously, 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 ofKalikasan 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. 213
Thus, absent proof to the contrary, weare not prepared to rule that SBMA and
RP Energy acted inbad faith or with inexcusable negligence, considering that
the foregoing rule of action has not heretofore been laiddown by this Court. As
a result, we hold that the LDA should notbe 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 thatthe 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 aforediscussed rule of action, tothe 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 anancestral
domain. This is so even if the ICCs/IPs can have the project stopped upon
discovery thatit overlapped with their ancestral domain under the last
proviso  of Section 59. To prevent this evil, compliance with the CNO
214
requirement should be followed through the aforediscussed 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.
VI.
Whether compliance with Section 27, inrelation to Section 26, of the LGC (i.e.,
approval of the concerned sanggunianrequirement) is necessary prior to the
implementation of the power plant project.
Sustaining the arguments ofthe Casiño Group, the appellate court ruled that
the subject project cannot beconstructed and operated until after the prior
approval of the concerned sanggunianrequirement, 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 "TheBases 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 ofthe LGUs
which joined the SSEZ. Thus, the LGC and RA 7227should be harmonized
whereby the concerned sanggunian’spower 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 sanggunianrequirement 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:
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, non governmental organizations,
and other sectors concerned and explain the goals and objectives of the
project or program, its impact upon the peopleand 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 begleaned from the
EIS of RPEnergy 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,  as well as the
215
socialacceptability 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 evenwithout 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, asin 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.  The LGU has the duty to protect its constituents and
217
interests in the implementation of the project. Hence, the approval of the
concerned sanggunian is required by law to ensure thatlocal communities
partake in the fruits of their own backyard.218
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. 219
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
sangguniansrelative to the subject project. Whatis more, the affected LGUs
1a\^/phi1
have expressed their strong oppositions to the project through various
sanggunian resolutions.  However, it is also undisputed that the subject
220
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 sanggunian requirement, 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 ofthe U.S. Armed
Forces. It sought to revivethe 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."  The SSEZ covered the
221
City of Olangapo and Municipality of Subic in the Province ofZambales 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:
SECTION 12. Subic Special Economic Zone. — Subject to the concurrence by
resolution of the sangguniang panlungsod of the City of Olongapo and the
sangguniang bayanof 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.,  we described the
222
concept of SSEZ as a Freeport:
The Freeport was designed to ensurefree 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 ofthis zone was explained by Senator Guingona in
this wise:
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 toa housing subdivision,
where the subdivision owners elect their representatives to run the affairs of
the subdivision, toset 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, thenmany from other parts, both local
and foreign, would invest, Mr. President.  (Emphasis in the original)
223
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:
Sec. 13. The Subic Bay Metropolitan Authority. –
xxxx
(b) Powers and functions of the Subic Bay Metropolitan Authority - The
Subic Bay Metropolitan Authority, otherwise knownas 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 Zone including 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
infrastructurein coordination with local government units and
appropriate government agencies concerned and inconformity
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 ofappropriate 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:
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 SBF224
xxxx
(f) Consistent with the Constitution, the SBMA shall have the following powers
to enforce the law and these Rules in the SBF:
xxxx
(8) to issue, alter, modify, suspend or revoke for cause, any permit, certificate,
license, visa or privilege allowed under the Act or these Rules;
xxxx
(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 sangguniansthe 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:
Sec. 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 bedeveloped 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;
xxxx
(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 LGUscomprising the SSEZ. However, the
clause "[e]xcept as herein provided" unambiguously provides that the LGUs do
not retain their basic autonomy and identitywhen 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 isno need for the SBMA to secure the
approval of the concerned sangguniansprior 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.:
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 Zonein 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
SubicAuthority 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:
Sec. 13. The Subic Bay Metropolitan Authority. –
xxxx
(b) Powers and functions of the Subic Bay Metropolitan Authority - The Subic
Bay Metropolitan Authority, otherwise knownas 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:
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 Authoritywill 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 unitsand", 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 inthe 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 projectin 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, buildoperate-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 beupon 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 ofone-fifth of the
Members of the Body. Senator Laurel. That is correct, Mr. President. But this
issuch 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 infavor 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.  (Emphasis supplied)
226
Indubitably, the legislature rejected the attempts to engraft Section 27’s prior
approval of the concerned sanggunian requirement under the LGC into RA
7227. Hence, the clear intent was to do awaywith the approval requirement of
the concerned sangguniansrelative to the power ofthe 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.:
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:
SECTION 13. The Subic Bay Metropolitan Authority. —
xxxx
(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, exceptfor one, all the representatives of the concerned
LGUs were present and voted to approve the subject project.  Verily, the
227
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 todue 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.:
J. LEAGOGO:
So what are you questioning in your Petition?

wisdom of the law creating the SSEZ; the wisdom of the choice of the ATTY. RIDON:
concerned LGUs to join the SSEZ; and the wisdom ofthe mechanism of
representation of the concerned LGUs in the decision-making process of the We are questioning the validity of the amendment, Your Honor.
SBMA are matters outside the scope of the power of judicial review. We can
only interpret and apply the law as we find it.
J. LEAGOGO:
In sum, we find that the implementation of the project is not subject to the prior
Which amendment?
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 sangguniansof the LGUs, by virtue ofthe clear provisions of ATTY. RIDON:
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 From 2 x 150 to 1 x 300, Your Honor.
sanggunians. VII.
J. LEAGOGO:
Whether the validity of the third amendment to the ECC can be resolved by the
Court. 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,
The Casiño Group argues that the validity of the third amendment should have you can question it to your heart[’]s content because it is still pending
been resolved by the appellate court because it is covered by the broad issues
set during the preliminary conference. xxxx

RP Energy counters that this issue cannot be resolved because it was J. LEAGOGO:
expressly excluded during the preliminary conference.
Atty. Ridon, I go back to my question. We’re not yet talking of the legal points Justice Leonen partially dissents from the foregoing disposition on the
here. I’m just talking of what are you questioning. You are questioning the 1 x following grounds:
300?
(a) Environmental cases, such asa petition for a writ of kalikasan,
ATTY. RIDON: should not, in general,be litigated viaa representative, citizen or class
suit because of the danger of misrepresenting the interests— and thus,
Yes, Your Honor. 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
J. LEAGOGO: the unborn generations, or because the parties bringing suit do not
accurately represent the interests ofthe group they represent or the
class to which they belong. As an exception, such representative,
Because it was 2 x 150 and then 1 x 300?
citizen or class suit may be allowed subject to certain conditions; and
ATTY. RIDON:
(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
Yes, Your Honor. applications for these amendments to the subject ECC, and a petition
for writ of kalikasanis not the proper remedy to raise a defect inthe
J. LEAGOGO: ECC.

Up to that point? We disagree.

ATTY. RIDON: A.

Yes, Your Honor. 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-
J. LEAGOGO: breaking. However, it isinappropriate to resolve such an important issue in this
case, in view of the requisites for the exercise of our power of judicial review,
Because there is no amended ECC yet for the 2 x 300 or 600. That’s clear because the matter was not raised by the parties so that the issue was not
enough for all of us. squarely tackled and fully ventilated. The proposition will entail, as Justice
Leonen explains, an abandonment or, at least, a modification of our ruling in
ATTY. RIDON: the landmark case of Oposa v. Factoran.  It will also require an amendment or
229

a modification of Section 5 (on citizen suits), Rule 2 ofthe Rules of Procedure

Yes, Your Honor. 228
for Environmental Cases. Hence, it is more appropriate to await a case where
such issues and arguments are properly raisedby the parties for the
consideration of the Court.
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. B.

Refutation of the Partial Dissent. Justice Leonen reasons that the amendments to the subject ECC are void
because the applications therefor were unsupported by anEIS, 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:
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, projector undertaking which significantly affects the quality of
the environmenta 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
nonrenewable 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:
SECTION 4. Presidential Proclamation of Environmentally Critical Areas and
Projects.  The President of the Philippines may, on his own initiative or upon
1avvphi1
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 thatthe 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 thatPD 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:
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 todeny 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 longertackle the same here.
Because PD 1586 did not expressly provide the procedure to be followed in
case of an application for an amendment toa 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. 230
The rules appear to be based on the premise that it would be unduly burden
some 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 requireRP 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 provethat 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 bemade in the environmental
management plan or mitigating measures inorder 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
Manualrelative 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 defectin 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
providedthat (1) the defects are causally linked or reasonably connected to an
environmental damage of the nature and magnitudecontemplated under the
Rules on Writ of Kalikasan, 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 kalikasan case.
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 thatthe 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
evidenceto establish that the subject project will not cause grave
environmental damage, through its Environmental Management Plan,
which will ensure thatthe 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
invalidatedon 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, wenote 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 norwas evidence presented before the appellate court on the
circumstances at the time of signing, there is insufficient basis to
conclude that the procedure adoptedby 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 wellas 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
1âwphi1
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 withSection 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 subjectECC. The issuance of an ECC does not, by itself, result
inthe implementation of the project. Hence, there is no necessity to
secure prior compliance with the approval of the concerned
sanggunian requirement, 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 thatthe 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.
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; and
2.4. 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.
G.R. No. 198860               July 23, 2012

ABRAHAM RIMANDO, Petitioner, 
vs.
NAGUILIAN EMISSION TESTING CENTER, INC., represented by its
President, ROSEMARIE LLARENAS and HON. COURT OF
APPEALS, Respondents.

RESOLUTION

REYES, J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of

1 

Court seeking to annul and set aside Decision dated March 30, 2011 of the
2 

Court of Appeals (CA) in CA-G.R. SP NO. 112152.

The Facts

The present controversy stemmed from a petition for mandamus and damages
filed before Branch 67 of the Regional Trial Court (RTC) of Bauang, La Union,
by Naguilian Emission Testing Center, Inc., represented by its President,
Rosemarie Llarenas (respondent) against Abraham P. Rimando (petitioner),
who, at the time material to the case, was the sitting mayor of the Municipality
of Naguilian, La Union.

The petition prayed for the issuance of a writ of mandamus to compel the
petitioner to issue a business permit in favor of the respondent.

In support of its plea, the respondent claimed that its business is being
conducted on a parcel of land which formerly belonged to the national
government but later on certified by the Department of Environment and
Natural Resources (DENR) as an alienable and disposable land of the public
domain. The respondent had operated its business of emission testing on the
land from 2005 to 2007. On January 18, 2008, the respondent filed an
application for the renewal of its business permit and paid the corresponding
fees therefor.
The petitioner, however, refused to issue a business permit unless and until
the respondent executes a contract of lease with the Municipality of Naguilian.
The respondent was amenable to signing such contract subject to some
proposed revisions, which, however, were not acceptable to the petitioner. The
parties did not reach a common ground hence, the petition for mandamus.
The Ruling of the RTC
On May 26, 2009, the RTC denied the petition for lack of merit based on the
3  disposed of the appeal in this wise:
ratiocinations that: (a) the Municipality of Naguilian is the declared owner of the
subject parcel of land by virtue of Tax Declaration No. 002-01197; (b) under
Section 6A.01 of the Revenue Code of the Municipality of Naguilian, the
municipality has the right to require the petitioner to sign a contract of lease
because its business operation is being conducted on a real property owned
by the municipality; and (c) a mayor’s duty to issue business permits is
discretionary in nature which may not be enforced by a mandamus writ. The
decretal portion of the decision reads:
WHEREFORE, premises considered, the petition is DENIED for lack of merit.
SO ORDERED. 4
The Ruling of the CA
Unwaivering, the respondent appealed to the CA. In its Decision dated March
5 
30, 2011, the CA held that the appeal was dismissible on the ground of
mootness considering that the period for which the business period was being
sought had already lapsed. As such, any ruling on the matter would bring no
practical relief. Nonetheless, the CA proceeded to resolve the issues involved
in the appeal for academic purposes.
The CA disagreed with the RTC and found that the factual milieu of the case
justifies the issuance of a writ of mandamus. The CA reasoned that the tax
declaration in the name of the municipality was insufficient basis to require the
execution of a contract of lease as a condition sine qua non for the renewal of
a business permit. The CA further observed that Sangguniang Bayan
Resolution No. 2007-81, upon which the municipality anchored its imposition of
rental fees, was void because it failed to comply with the requirements of the
Local Government Code and its Implementing Rules and Regulations.
The CA held that the petitioner may not be held liable for damages since his
action or inaction, for that matter, was done in the performance of official
duties that are legally protected by the presumption of good faith. The CA
likewise stressed that the civil action filed against the petitioner had already
become moot and academic upon the expiration of his term as the mayor of
Naguilian, La Union.
Despite its incessant declarations on the mootness of the case, the CA
WHEREFORE, the Decision dated 26 May 2009 of the Regional Trial Court,
First Judicial Region, Bauang, La Union, Branch 67, in Special Civil Action
Case No. 72-BG, is hereby REVERSED and SET ASIDE.
SO ORDERED. 6
The petitioner moved for reconsideration questioning the pronouncement of
7 
the CA that Sangguniang Bayan Resolution No. 2007-81 was void and arguing
that a petition for mandamus is not the proper vehicle to determine the issue
on the ownership of the subject land. The motion was denied in the CA
Resolution dated September 30, 2011.
8 
The petitioner is now before this Court reiterating the arguments raised in his
motion for reconsideration.
Our Ruling
We agree with the CA that the petition for mandamus has already become
moot and academic owing to the expiration of the period intended to be
covered by the business permit.
An issue or a case becomes moot and academic when it ceases to present a
justiciable controversy so that a determination thereof would be without
practical use and value or in the nature of things, cannot be enforced. In such
9  10 
cases, there is no actual substantial relief to which the applicant would be
entitled to and which would be negated by the dismissal of the petition. As a
11 
rule, courts decline jurisdiction over such case, or dismiss it on ground of
mootness. 12
The objective of the petition for mandamus to compel the petitioner to grant a
business permit in favor of respondent corporation for the period 2008 to 2009
has already been superseded by the passage of time and the expiration of the
petitioner’s term as mayor. Verily then, the issue as to whether or not the
petitioner, in his capacity as mayor, may be compelled by a writ of mandamus
to release the respondent’s business permit ceased to present a justiciable
controversy such that any ruling thereon would serve no practical value.
Should the writ be issued, the petitioner can no longer abide thereby; also, the
effectivity date of the business permit no longer subsists.
While the CA is not precluded from proceeding to resolve the otherwise moot
appeal of the respondent, we find that the decretal portion of its decision was
erroneously couched.
The CA’s conclusions on the issue of ownership over the subject land and the
invalidity of Sangguniang Bayan Resolution No. 2007-81, aside from being
unsubstantiated by convincing evidence, can no longer be practically utilized in
favor of the petitioner. Thus, the overriding and decisive factor in the final
disposition of the appeal was its mootness and the CA should have dismissed
the same along with the petition for mandamus that spawned it.
More importantly, a mayor cannot be compelled by mandamus to issue a
business permit since the exercise of the same is a delegated police power
hence, discretionary in nature. This was the pronouncement of this Court in
Roble Arrastre, Inc. v. Hon. Villaflor where a determination was made on the
13 
nature of the power of a mayor to grant business permits under the Local
Government Code, viz:
14 
Central to the resolution of the case at bar is a reading of Section 444(b)(3)(iv)
of the Local Government Code of 1991, which provides, thus:
SEC. 444. The Chief Executive: Powers, Duties, Functions and Compensation.
(b) For efficient, effective and economical governance the purpose of
which is the general welfare of the municipality and its inhabitants
pursuant to Section 16 of this Code, the municipal mayor shall:
xxxx
3) Initiate and maximize the generation of resources and revenues,
and apply the same to the implementation of development plans,
program objectives and priorities as provided for under Section 18 of
this Code, particularly those resources and revenues programmed for
agro-industrial development and country-wide growth and progress,
and relative thereto, shall:
xxxx
(iv) Issue licenses and permits and suspend or revoke the same for
any violation of the conditions upon which said licenses or permits had
been issued, pursuant to law or ordinance.
As Section 444(b)(3)(iv) so states, the power of the municipal mayor to issue
licenses is pursuant to Section 16 of the Local Government Code of 1991,
which declares:
SEC. 16. General Welfare. – Every local government unit shall exercise the
powers expressly granted, those necessarily implied therefrom, as well as
powers necessary, appropriate, or incidental for its efficient and effective
governance, and those which are essential to the promotion of the general
welfare. Within their respective territorial jurisdictions, local government units
shall ensure and support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance the right of the
people to a balanced ecology, encourage and support the development of
appropriate and self-reliant scientific and technological capabilities, improve
public morals, enhance economic prosperity and social justice, promote full
employment among their residents, maintain peace and order, and preserve
the comfort and convenience of their inhabitants.
Section 16, known as the general welfare clause, encapsulates the delegated
police power to local governments. Local government units exercise police
1âwphi1
power through their respective legislative bodies. Evidently, the Local
Government Code of 1991 is unequivocal that the municipal mayor has the
power to issue licenses and permits and suspend or revoke the same for any
violation of the conditions upon which said licenses or permits had been
issued, pursuant to law or ordinance. x x x
xxxx
Section 444(b)(3)(iv) of the Local Government Code of 1991, whereby the
power of the respondent mayor to issue license and permits is circumscribed,
is a manifestation of the delegated police power of a municipal corporation.
Necessarily, the exercise thereof cannot be deemed ministerial. As to the
question of whether the power is validly exercised, the matter is within the
province of a writ of certiorari, but certainly, not of mandamus. (Citations
15 

omitted)

Indeed, as correctly ruled by the RTC, the petition for mandamus filed by the
respondent is incompetent to compel the exercise of a mayor’s discretionary
duty to issue business permits.
[G.R. No. 131481, March 16 : 2011] 
WHEREFORE, premises considered, the Decision dated March 30, 2011 of
BUKLOD NANG MAGBUBUKID SA LUPAING RAMOS, INC., PETITIONER, VS. E.
the Court of Appeals in CA-G.R. SP No. 112152 is hereby SET ASIDE. The
M. RAMOS AND SONS, INC., RESPONDENT. 
Decision dated May 26, 2009 of the Regional Trial Court of Bauang, La Union
is REINSTATED. [G.R. No. 131624]

SO ORDERED. DEPARTMENT OF AGRARIAN REFORM, PETITIONER, VS. E. M. RAMOS AND

SONS, INC., RESPONDENT.

D E C I S I O N 

LEONARDO-DE CASTRO,  J.:

Before the Court are consolidated Petitions for Review on Certiorari, under Rule 45 of
the 1997 Rules of Civil Procedure, filed by the Buklod ng Maqbubukid Sa Lupaing
Ramos, Inc. (Buklod) and the Department of Agrarian Regorm (DAR), assailing the
Decision[1] dated March 26, 1997 and the Resolution[2] dated November 24, 1997 of
the Court of Appeals in CA G.R. SP No. 40950.

The Court of Appeals declared the parcels of land owned by E.M. Ramos and Sons,
Inc. (EMRASON), located in Barangay Langkaan, Dasmariñas, Cavite (subject
property), exempt from the coverage of the Comprehensive Agrarian Reform
Program (CARP), thus, nullifying and setting aside the Decision[3] dated February 7,
1996 and Resolution[4] dated May 14, 1996 of the Office of hte President (OP) in O.P.
Case No. 5461.

Quoted hereunder are the facts of the case as found by the Court of Appeals:

At the core of the controversy are several parcels of unirrigated land (303.38545
hectares) which from part of a larger expanse with an area of 372 hectares situated
at Barangay Langkaan, Dasmariñas, Cavite.  Originally owned by the MAnila Golf
and Country Club, he property was aquired by the [herein repondent EMRASON] in
1965 for the purpose of developing the same into a residential subdivision known as
"Traveller's Life Homes".

Sometime in 1971, the Municipal Council of Dasmariñas, Cavite, acting pursuant to

Republic Act (R.A.) No. 2264, otherwise known as the "Loval Autonomy Act",
enacteed Municipal Ordinance No. 1, hereinafter referred to as Ordinance No. 1,
enitled "An Ordinance Providing Subdivision Regulation and Providing Penalties for
Violation Thereof."
In May, 1972, [respondent] E.M. Ramos and Sons, Inc., applied for an authority to
convert and development its aforementioned 372-hectare property into a residential
subdivision, ataching to the apllication detailed development plans and development
proposals from Bancom Development Corporation and San Miguel Corporation.  batches of notices of acquisition, each of which drew protest from [EMRASON]. All
Acting thereon the Municipal Council of Dasmariñas, Cavite passed on July 9, 1972
Municipal Ordinance No. 29-A (Ordinance "No. 29-A, for brevity), approving
[EMRASON's] application. Ordinance No. 29-A pertinently reads:
"Resolved, as it is hereby resolved, to approve the application for subdivision
containing an area of Three Hundred Seventy-Two (372) Hectares situated in Barrios
Bocal and Langkaan, named as Traveller's Life Homes.
Resolved that the Municipal Ordinance regarding subdivision regulations existing in
this municipality shall be strictly followed by the subdivision  ".
Subsequently, [EMRASON] paid the fees, dues and licenses needed to proceed with
property development.
It appears, however, that the actual implementation of the subdivision project
suffered delay owing to the confluence of events. Among these was the fact that the
property in question was then mortgaged to, and the titles thereto were in the
possession of, the Overseas Bank of Manila, which during the period material was
under liquidation.
On June 15. 1988, Republic Act No. 6657, otherwise known as the Comprehensive
Agrarian Reform Law or CARL, took effect, ushering in a new process of land
classification, acquisition and distribution.
On September 23, 1988, the Municipal Mayor of Dasmariñas, Cavite addressed a
letter to [EMRASON], stating in part, as follows:
"In reply to your letter of June 2, 1988, we wish to clarify that the Municipality
of Dasmariñas, Cavite, has approved the development of your property situated in
Barrios Bukal and Langkaan, Dasmariñas, Cavite, with a total area of 3 72
hectares, more or less, into residential, industrial, commercial and golf course
project.
This conversion conforms with the approved Development Plan of the Municipality
of Dasmariñas  Cavite ".
Then came the Aquino government's plan to convert the tenanted neighboring
property of the National Development Company (NDC) into an industrial estate to be
managed through a joint venture scheme by NDC and the Marubeni Corporation.
Part of the overall conversion package called for providing the tenant-farmers, opting
to remain at the NDC property, with three (3) hectares each. However, the size of
the NDC property turned out to be insufficient for both the demands of the proposed
industrial project as well as the government's commitment to the tenant-farmers. To
address this commitment, the Department of Agrarian Reform (DAR) was thus
tasked with acquiring additional lands from the nearby areas. The DAR earmarked
for this purpose the subject property of [EMRASON].
On August 29, 1990, then OAR Secretary Benjamin Leong sent out the first of four
told, these notices covered 303.38545 hectares of land situated at Barangay
Langkaan, Dasmariñas, Cavite owned by [EMRASON].
In the meantime, [EMRASON] filed with the Department of Agrarian Reform
Adjudication Board (DARAB), Region IV, Pasig, Metro Manila, separate petitions to
nullify the first three sets of the above notices. Collectively docketed as DARAB Case
No. IV-Ca-0084-92, these petitions were subsequently referred to the Office of the
Regional Director, Region IV, which had jurisdiction thereon. In his referral action,
the Provincial Agrarian Adjudicator directed the DAR Region IV, through its
Operations Division, to conduct a hearing and/or investigation lo determine whether
or not the subject property is covered by the Comprehensive Agrarian Reform
Program (CARP) and, if not, to cancel the notices of acquisition.
Forthwith, the DAR regional office conducted an on-site inspection of the subject
property.
In the course of the hearing, during which [EMRASON] offered Exhibits :'A" to "UU-
2" as documentary evidence, [EMRASON] received another set of notices of
acquisition. As lo be expected, [EMRASON] again protested.
On August 28, 1992, the Legal Division of DAR, Region IV, through Hearing Officer
Victor Baguilat, rendered a decision declaring as null and void all the notices of
acquisitions, observing that the property covered thereby is, pursuant to Department
of Justice (DOJ) Opinion No. 44, series of 1990, exempt from CARP. The dispositive
portion of the decision reads, as follows;
''WHEREFORE, in the light of the foregoing x x x, considering that the notices of
acquisition dated August 29, 1990 relative to the 39 hectares partly covered by
Transfer Certificate of Title No. T-19298; notices of acquisition all dated April 3, 1991
relative to the 131.41975 hectares partly covered by Transfer Certificates of Title
Nos. x x x; notices of acquisition all dated August 28, 1991 relative lo the 56.9201
hectares covered by Transfer Certificates of Title Nos. x x x; and notices of
acquisition all dated May 15, 1992 relative to the 76.0456 covered by Transfer
Certificates of Title Nos. xx, all located at Barangay Langkaan, Dasmariñas, Cavite
and owned by petitioner EM RAMOS and SONS, INC. are null and void on the ground
that the subject properties are exempted from CARP coverage pursuant to DOJ
Opinion No. 44, Series of 1990,  therefore, the aforesaid notices of acquisition be
cancelled and revoked. "
The DOJ Opinion adverted to, rendered by then Justice Secretary Franklin Drilon,
clarified that lands already converted to non-agricultural uses before June 15, 1988
were no longer covered by CARP.
On September 3, 1992, the Region IV DAR Regional Director motu propio elevated
the case to the Office of the Agrarian Reform Secretary, it being his view that
Hearing Officer Baguilat's decision ran contrary to the department's official position
"to pursue the coverage of the same properties and its eventual distribution to
qualified beneficiaries particularly the Langkaan farmers in fulfillment of the
commitment of the government to deliver to them the balance of thirty-nine
hectares x x x".
On January 6, 1993, the herein respondent DAR Secretary Ernesto Garilao [(DAR
Secretary Garilao)] issued an order, the decretal portion of which partly reads:
"WHEREFORE, in the interest of law and justice, an order is hereby rendered:
1.  Affirming the Notices of Acquisition dated August 29, 1990, April 3, 1991, August
28, 1991 and May 15, 1992 covering 303.38545 hectares of the property owned by
the E.M. RAMOS & SONS, INC, located at Barangay Langkaan, Dasmarinas, Cavite x
x x;
xxxx
3. Directing the OAR field officials concerned to pursue (he coverage under RA 6657
of the properties of E.M.  Ramos & Sons,  Inc. for which subject Notices of
Acquisition had been issued.
SO ORDERED".
Its motion for reconsideration of the aforesaid order having been denied by the [DAR
Secretary Garilao] in his subsequent order of January 6, 1993, [EMRASON] appealed
to the Office of the President where the recourse was docketed as O.P. Case No.
5461.
On February 7, 1996, the Office of the President, through herein
respondent Deputy Executive Secretary Renato C. Corona [(Deputy Executive
Secretary Corona)], rendered the herein assailed decision x x x, dismissing
[EMRASON's] appeal on the strength of the following observation:
"To recapitulate, this Office holds that [EMRASON's] property has remained
AGRICULTURAL in classification and therefore falls within the coverage of the CARP,
on the basis of the following:br>
1. [EMRASON] failed to comply with the mandatory
requirements and conditions of Municipal Ordinance Nos. 1
and 29-A, specifically, among others, the need for approval
of the National   Planning   Commission through the
Highway District Engineer, and the Bureau of Lands before
final submission to the Municipal Council and Municipal
Mayor;
2. [EMRASON] failed to comply with Administrative Order No.
152, dated December 16, 1968, and
3. The  certification  of the  Human Settlements Regulatory
Commission (HSRC)  in  1981  and the Housing and Land
Use Regulatory Board (HLRB) in 1992 that the property of
[EMRASON] is agricultural".
Undaunted, [EMRASON] interposed a motion for reconsideration, followed later by
another motion whereunder it invited attention to legal doctrines involving land
conversion recently enunciated by no less than the Office of the President itself.
On May 14, 1996, the [Deputy Executive Secretary Corona] came out with his
second challenged issuance denying [EMRASON's] aforementioned motion for
reconsideration x x x.[5]
From the denial of its Motion for Reconsideration by the OP, EMRASON filed a
Petition for Review with the Court of Appeals, which was docketed as CA-G.R. SP No.
40950.
On July 3, 1996, the Court of Appeals issued a Temporary Restraining Order (TRO),
[6]
 which enjoined then DAR Secretary Ernesto Garilao and Deputy Executive
Secretary Renato C. Corona  from implementing the OP Decision of February 7, 1996
and Resolution of May 14, 1996 until further orders from the court. On September
17, 1996, the appellate court issued a Resolution[8] granting the prayer of EMRASON
for the issuance of a writ of preliminary injunction.  The writ of preliminary
injunction[9] was actually issued on September 30, 1996 after EMRASON posted the
required bond of P500,000,00.
The DAR Secretary filed a Motion for Reconsideration of the Resolution dated
September 17, 1996 of the Court of Appeals, with the prayer that the writ of
preliminary injunction already issued be lifted, recalled and/or dissolved.
At this juncture, the DAR had already prepared Certificates of Land Ownership Award
(CLOAs) to distribute the subject property to farmer-beneficiaries.  However, the writ
of preliminary injunction issued by the Court of Appeals enjoined the release of the
CLOAs. Buklod, on behalf of the alleged 300 farmer-beneficiaries of the subject
property, filed a Manifestation and Omnibus Motion, wherein it moved that it be
allowed to intervene as an indispensable party in CA-G.R. SP No. 40950; that the
writ of preliminary injunction be immediately dissolved, having been issued in
violation of Section 55 of the CARL; and that the Petition for Review of EMRASON be
dismissed since the appropriate remedy should have been a petition
for certiorari before the Supreme Court.
On March 26, 1997, the Court of Appeals promulgated its assailed Decision.
The Court of Appeals allowed the intervention of Buklod because -the latter's
participation was "not being in any way prejudicial to the interest of the original
parties, nor will such intervention change the factual legal complexion of the case."
The appellate court, however, affirmed the propriety of the remedy availed by
EMRASON given that under Section 5 of Supreme Court Revised Administrative
Circular No. 1-95 dated May 16, 1995, appeals from judgments or final orders of the
OP or the DAR under the CARL shall be taken to the Court of Appeals, through a
verified petition for review; and that under Section 3 of the same Administrative
Circular, such a petition for review may raise questions of facts, law, or mixed
questions of facts and law.
Ultimately, the Court of Appeals ruled in favor of EMRASON because the subject
property was already converted/classified as residential by the Municipality of
Dasmariñas prior to the effectivity of the CARL. The appellate court reasoned:
For one, whether or not the Municipality of Dasmariñas, Cavite had in place in the
early seventies a general subdivision plan is to us of no moment. The absence of
such general plan at that time cannot be taken, for the nonce, against the [herein
respondent EMRASON]. To our mind, the more weighty consideration is the
accomplished fact that the municipality, conformably with its statutory-conferred
local autonomy, had passed a subdivision measure, I.e., Ordinance No. 1, and had
approved in line thereto, through the medium of Ordinance No. 29-A, [EMRASON's]
application for subdivision, or with like effect approved the conversion/classification
of the lands in dispute as residential. Significantly, the Municipal Mayor of
Dasmariñas, Cavite, in his letter of September 23, 1988 to [EMRASON], clarified
that such conversion conforms with the approved development plan of the
municipality.
For another, the requirement prescribed by the cited Section 16[a] of Ordinance No.
1 relates to the approval in the first instance by the National Planning Commission of
the final plat of the scheme of the subdivision, not the conversion from agricultural
to residential itself. As [EMRASON] aptly puts it:
"x x x the final plat or final plan, map or chart of the subdivision  is not a condition
sine qua non  for the conversion x x x as the conversion was already done by the
Municipal Council of Dasmariñas, Cavite. Municipal Ordinance NO. 29-A merely
required that the final plat, or final plan x x x of the subdivision be done in
conformity with Municipal Ordinance No. 1, the same to be followed by (he
subdivision itself. [EMRASON] therefore did not have to undertake the immediate
actual development of the subject parcel of lands as the same had already been
converted and declared residential by law. x x x " (Petition, pp. 17 and 18).
[EMRASON's] pose has the merit of logic. As may be noted, Ordinance No. 29-A
contained two (2) resolutory portions, each interrelated to, but nonetheless
independent of, the other. The first resolution, reading -
"Resolved, as it is hereby resolved, to approve the application for subdivision
containing an area of Three Hundred Seventy-Two (372) Hectares situated in Barrios
Bocal and Langkaan, named as Travellers Life Homes "
approved the application for subdivision or the conversion of the 372-hectare area
into residential, while the second, reading -
"Resolved that the Municipal Ordinance regarding subdivision regulations existing in
this municipality shall be strictly followed by the subdivision "
provides that the subdivision owner/developer shall follow subdivision regulations, it
will be noted further that the second resolution already referred to the [EMRASON's]
property as "'subdivision", suggesting that the Municipal Council already considered
as of that moment [EMRASON's] area to be for residential use.
Another requirement which [EMRASON] allegedly failed to comply with is found in
Administrative Order (A.O.) No. 152, series of 1968, which pertinently provides -
"1. All Municipal Boards or City Councils, and all Municipal Councils in cities and
municipalities in which a subdivision ordinance is in force, shall submit three copies
of every proposed subdivision plan for which approval is sought together with the
subdivision ordinance, to the National Planning Commission for comment and
recommendation ".
This Court is at a loss to understand how [EMRASON] could be expected to heed a
directive addressed to local government legislative bodies. From a perusal of the title
of A.O. No. 152, it is at once obvious from whom it exacts compliance with its
command, thus: "REQUIRING THE MUNICIPAL BOARDS OR CITY COUNCILS AND
MUNICIPAL COUNCILS TO SUBMIT PROPOSED ORDINANCES AND SUBDIVISION
PLANS TO THE NATIONAL PLANNING COMMISSION FOR COMMENT AND
RECOMMENDATION, BEFORE TAKING ACTION ON THE SAME, AND TO FORWARD A
COPY OF THEIR APPROVED SUBDIVISION ORDINANCES TO THE SAID
COMMISSION".
To be sure, [EMRASON] cannot be made to bear the consequences for the non-
compliance, if this be the case, by the Municipal Council of Dasmarinas, Cavite with
what A.O. 152 required. A converse proposition would be antithetical to the sporting
idea of fair play.[11]
As for the other requirements which EMRASON purportedly failed to comply with, the
Court of Appeals held that these became obligatory only after the subject property
was already converted to non-agricultural, to wit:
Foregoing considered, this Court holds that everything needed to validly effect the
conversion of the disputed area to residential had been accomplished. The only
conceivable step yet to be taken relates to the obtention of a conversion order from
the DAR, or its predecessor, the Ministry of Agrarian Reform (MAR.) under its rather
intricate procedure established under Memorandum Circular No. 11-79. But then,
this omission can hardly prejudice the [herein respondent EMRASON] for the
DAR7MAR guidelines were promulgated only in 1979, at which time the conversion of
[EMRASON's] property was already a fait accompli.
Like the conversion procedure set up under Memorandum Circular No. 11-79, the
revised methodology under the CARL cannot also be made to apply retroactively to
lands duly converted/classified as residential under the aegis of the Local Autonomy
Act. For, as a rule, a statute is not intended to affect transactions which occurred
before it becomes operational (Tolentino, COMMENTARIES AND JURISPRUDENCE
ON THE CIVIL CODE, Vol. I, 1983 ed.; p. 23). And as the landmark case
of Natalia Realty, Inc. vs. Department of Agrarian Reform, 225 SCRA 278,
teaches:
"Indeed, lands not devoted to agricultural activity are outside the coverage of CARL.
These include lands previously converted to non-agricultural uses prior to the
effectively of CARL by government agencies other than respondent DAR x x x.
xxxx
Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is
hound by such conversion.  It was therefore error to  include the underdeveloped
portions x x x within the  coverage  of CARL".
It may be so, as the assailed decision stated, that in Natalia the lands therein
involved received a locational clearance from the Housing and Land Use Regulatory
Board (HLRB, formerly the Human Settlement Regulatory Commission [HSRC], as
residential or commercial, a factor [EMRASON] cannot assert in its favor. This
dissimilarity, however, hardly provides a compelling justification not to apply the
lessons of Natalia. This is because the property involved in this case, unlike that
in Natalia, underwent classification/conversion before the creation on May 13, 1976
of the HSRC, then known as the Human Settlements Regulatory Commission (P.D.
No. 933). Furthermore, what is recognized as the HSRC's authority to classify and to
approve subdivisions and comprehensive land use development plans of local
governments devolved on that agency only upon its reorganization on February 7,
1981, with the issuance of Executive Order No. 648 known as the Charter of the
Human Settlements Regulatory Commission. Section 5 of the same executive
order invested the HSRC with the above classifying and approving authority. In fine,
the property of [EMRASON] went into the process of conversion at the time when the
intervention thereon of the HSRC, which was even then non-existent, was
unnecessary. Shortly before the creation of the HSRC, it would appear that to
provincial, city, or municipal councils/boards, as the case may be, belong the
prerogative, albeit perhaps not exclusive, to classify private lands within their
respective territorial jurisdiction and approve their conversion from agricultural to
residential or other non-agricultural uses. To paraphrase the holding in Patalinghug
vs. Court of Appeals, 229 SCRA 554, once a local government has, pursuant to its
police power, reclassified an area as residential, that determination ought to prevail
and must be respected.[12]
The Court of Appeals further observed that the subject property has never been
devoted to any agricultural activity and is, in fact, more suitable for non-agricultural
purposes, thus:
It is worthy to note that the CARL defines "agricultural lands" as "lands devqtedto
agricultural activity x x x and not classified as mineral, forest, residential,
commercial or industrial lands" (Sec. 3[c]). Guided by this definition, it is clear that
[herein respondent EMRASON's] area does not fall under the category of agricultural
lands.  For, let alone the reality that the property is not devoted to some agricultural
activity, being in fact unirrigated, and, as implied in the decision of the DAR Hearing
Officer Victor Baguilat, without duly instituted tenants, the same had been effectively
classified as residential.  The bare circumstance of its not being actually developed
as subdivision or that it is underdeveloped would not alter the conclusion. For,
according to Natalia, what actually determines the applicability of the CARL to a
given piece of land is its previous classification and not its current use or stages of
development as non-agricultural property.
As a pragmatic consideration, the disputed area, in terms of its location in relation to
existing commercial/industrial sites and its major economic use, is more suitable for
purposes other than agriculture. In this connection, this Court notes that the
property is situated at the heart of the CALABARZON, and, as Annex "C" of the
petition demonstrates, lies adjacent to huge industrial/commercial complexes. The
San Miguel-Monterey meat plant, the NDC-Marubeni complex and the Reynolds
Aluminum plant may be mentioned. For sure, the Sangguniang Panlalawigan of
Cavite, obviously cognizant of the economic potential of certain areas in the
Municipality of Dasmariñas has, by Resolution No. 105, series of 1988. declared
defined tracts of lands in the Municipality of Dasmariñas as "industrial-residential-
institutional mix."[13]
As a last point, the Court of Appeals justified its issuance of a writ of preliminary
injunction enjoining the implementation of the OP Decision dated February 7, 1996
and Resolution dated May 14, 1996, viz:
As a final consideration, we will address the [herein petitioners] OAR Secretary's and
Buklod's joint concern regarding the propriety of the preliminary injunction issued in
this case. They alleged that the issuance is violative of Section 55 of the CARL which
reads:
"SEC. 55. No Restraining Order or Preliminary
Injunction. - No Court in the Philippines shall have jurisdiction to issue any
restraining order or writ of preliminary injunction against the PARC or any of its duly
authorized or designated agencies in any case, dispute, controversy arising from,
necessary to, or in connection with the application, implementation, enforcement, or
interpretation of this Act and other pertinent laws on agrarian reform". (Underscoring
added.)
As will be noted, the aforequoted section specifically mentions the Presidential
Agrarian Reform Council (PARC) of which the DAR Secretary is the Vice Chairman, or
any of its duly designated agencies as protected from an injunctive action of any
court. These agencies include the PARC Executive Committee, the PARC Secretariat,
which the DAR Secretary heads, and. on the local level, the different Agrarian
Reform Action Committees (Sees. 41 to 45, R.A. No. 6657).
From the records, there is no indication that the [petitioner] Agrarian Reform
Secretaryacted vis-a-vis the present controversy for, or as an agency of, the PARC.
Hence, he cannot rightfully invoke Section 55 of the CARL and avail himself of the
protective mantle afforded by that provision.  The PARC, it bears to stress, is a
policy-formulating and coordinating body (Sec. 18. E.O. 229, July 22, 1987) without
express adjudicatory mandate, unlike the DAR Secretary who, as department head,
is "vested with primary jurisdiction to determine and adjudicate agrarian reform
matters and shall have exclusive jurisdiction over all matters involving the
implementation of agrarian reform" (Sec. 50. R.A. 6657). Thus, it is easy lo accept
the proposition that the [petitioner] Agrarian Reform Secretary issued his
challenged orders in the exercise of his quasi-judicial power as department head.[14]
In the end, the Court of Appeals decreed:
WHEREFORE, the instant petition for review is hereby GRANTED. Accordingly, the
challenged decision dated February 7, 1996 and the resolution of May 14, 1996 of
the Office of the President in O.P. Case No. 5461 are hereby NULLIFIED,
VACATED and SET ASIDE, and the notices of acquisition issued by the Department
of Agrarian Reform covering the 372-hectare property of the [herein respondent
EMRASON] at Barangay Langkaan, Dasmariñas, Cavite declared VOID.
The writ of preliminary injunction issued by this Court on September 30, 1996 is
hereby made permanent.[15]
Buklod and DAR. filed their respective Motions for Reconsideration of the foregoing
Decision but both Motions were denied by the Court of Appeals in a Resolution dated
November 24, 1997.
Aggrieved, Buklod and DAR filed the instant Petitions, which were consolidated by
this Court in a Resolution[16] dated August 19, 1998.
In G.R. No. 131481, Buklod raises the following arguments:
1] THE MUNICIPAL ORDINANCE INVOKED BY [EMRASON] AS CONVERSION OF THE
PROPERTY IN QUESTION ENACTED ON JULY 9, 1972 BY THE MUNICIPAL COUNCIL
OF DASMARIÑAS, CAVITE IS IMPOTENT BECAUSE THE MUNICIPAL ORDINANCE
IMPOSED CONDITIONS WHICH [EMRASON] NEVER COMPLIED. NO COMPLIANCE NO
CONVERSION.
2] AT THE TIME THE ALLEGED ORDINANCE WAS ENACTED, A LAND REFORM LAW
WAS ALREADY IN EFFECT GRANTING SECURITY OF TENURE TO THE FARMERS SO
THAT A LANDOWNER CANNOT ARBITRARILY CONVERT AN AGRICULTURAL LAND
INTO A DIFFERENT CLASSIFICATION WITHOUT COMPLYING WITH LEGAL
REQUIREMENTS (R.A. 3844).
3] A MERE MUNICIPAL ORDINANCE CANNOT NEGATE LAND REFORM RIGHTS
GRANTED TO THE FARMERS BY LEGISLATIVE ENACTMENT UNDER R.A. 3844 AND
SUBSEQUENT LAWS. LAND REFORM LAW BEING A SOCIAL LEGISLATION IS
PARAMOUNT.
4] LAND REFORM IS A CONSTITUTIONAL MANDATE FOR THE BENEFIT OF THE
LANDLESS FARMERS SO THAT THE LAND REFORM LAW SHOULD BE CONSTRUED
AND APPLIED IN ORDER TO ATTAIN THE LEGISLATIVE INTENT OF RELIEVING THE
FARMERS FROM THEIR POVERTY AND BONDAGE.  THE COURT OF APPEALS IGNORED
THIS CONSTITUTIONAL MANDATE TO FAVOR THE LANDLORD [EMRASON].
5] THE COURT OF APPEALS ISSUED A RESTRAINING ORDER/INJUNCTION AGAINST
THE CLEAR PROHIBITION IN THE CARL (SEC. 55 RA 6657) AND SO FAR DEPARTED
FROM THE USUAL COURSE OF BY REFUSING TO GRANT THE PETITIONER FARMERS
A HEARING INSPITE OF THE PROCEDURE PRESCRIBED BY RA 7902 (SEC. ]).[17]
In G.R. No. 131624, the DAR ascribes the following errors on the part of the Court
of Appeals:
I.
THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT THE
MUNICIPALITY OF DASMARIÑAS, CAVITE, WAS AUTHORIZED, UNDER THE LOCAL
AUTONOMY ACT, TO CLASSIFY AND/OR RECLASSIFY LANDS CONSIDERING THAT
WHAT WAS CONFERRED THEREUNDER WAS ONLY ZONING AUTHORITY, THUS,
RENDER THE EXERCISE THEREOF BY THE MUNICIPAL COUNCIL OF DASMARIÑAS,
CAVITE, ULTRA VIRES;
II.
EVEN ASSUMING, IN GRATIA ARGUMENTI, THAT THE AUTHORITY TO CLASSIFY AND
RECLASSIFY LANDS IS POSSESSED BY MUNICIPAL CORPORATIONS, STILL THE
HONORABLE COURT OF APPEALS ERRED WHEN IT CONSIDERED THE ALLEGED
PASSAGE OF ORDINANCE NO. 29-A OF THE MUNICIPAL COUNCIL OF DASMARIÑAS,
CAVITE, AS A VALID MEASURE RECLASSIFYING SUBJECT AGRICULTURAL LAND TO
NON-AGRICULTURAL USE CONSIDERING THAT THE SAID APPROVAL OF THE
SUBDIVISION, PER LETTER OF THE MUNICIPAL MAYOR, FAILED TO COMPLY WITH
EXISTING RULES AND REGULATIONS ON THE MATTER AND, THEREFORE,
NONCOMPLYING AND INEFFECTUAL; AND
III.
THE HONORABLE COURT OF APPEALS ERRED WHEN IT APPLIED THE RULING OF THE
HONORABLE COURT IN THE NATALIA REALTY CASE DUE TO SUBSTANTIAL
DISSIMILARITY IN FACTUAL SETTING AND MILIEU.[18]
At the crux of the present controversy is the question of whether the subject
property could be placed under the CARP.
DAR asserts that the subject property could be compulsorily acquired by the State
from EMRASON and distributed to qualified farmer-beneficiaries under the CARP
since it was still agricultural land when the CARL became effective on June 15, 1988.
Ordinance Nos. 1 and 29-A, approved by the Municipality of Dasmariñas on July
13, 1971 and July 9, 1972, respectively, did not reclassify the subject property from
agricultural to non-agricultural. The power to reclassify lands is an inherent power of
the National Legislature under Section 9 of Commonwealth Act No. 141, otherwise
known as the Public Land Act, as amended, which, absent a specific delegation,
could not be exercised by any local government unit (LGU). The Local Autonomy Act
of 1959 - in effect when the Municipality of Dasmariñas approved Ordinance Nos. 1
and 29-A - merely delegated to cities and municipalities zoning authority, to be
understood as the regulation of the uses of property in accordance with the existing
character of the land and structures.  It was only Section 20 of Republic Act No.
7160, otherwise known as the Local Government Code of 1991, which extended to
cities and municipalities limited authority to reclassity agricultural lands.
DAR also argues that even conceding that cities and municipalities were already
authorized in 1972 to issue an ordinance reclassifying lands from agricultural to non-
agricultural, Ordinance No. 29-A of the Municipality of Dasmariñas was not valid
since it failed to comply with Section 3 of the Local Autonomy Act of 1959, Section
16(a) of Ordinance No. 1 of the Municipality of Dasmarinas, and Administrative Order
No. 152 dated December 16, 1968, which all required review and approval of such
an ordinance by the National Planning Commission (NPC). Subsequent developments
further necessitated review and approval of Ordinance No. 29-A by the Human
Settlements Regulatory Commission (HSRC), which later became the Housing and
Land Use Regulatory Board (HLURB).
DAR further avers that the reliance by the Court of Appeals -on Natalia Realty, Inc.
v. Department of Agrarian Reform[19] (Natalia Realty case) is misplaced because the
lands involved therein were converted from agricultural to residential use by
Presidential Proclamation No. 1637, issued pursuant to the authority delegated to
the President under Section 71, et seq., of the Public Land Act.[20]
Buklod adopts the foregoing arguments of DAR. In addition, it submits that prior to
Ordinance Nos. 1 and 29-A, there were already laws implementing agrarian reform,
particularly: (1) Republic Act No. 3844, otherwise known as the Agricultural Land
Reform Code, in effect since August 8, 1963, and subsequently amended by Republic
Act No. 6389 on September 1.0, 1971, after which it became known as the Code of
Agrarian Reforms; and (2) Presidential Decree No. 27, otherwise known as the
Tenants Emancipation Decree, which took effect on November 19, 1972. Agricultural
land could not be converted for the purpose of evading land reform for there were
already laws granting farmer-tenants security of tenure, protection from ejectment
without just cause, and vested rights to the land they work on.
Buklod contends that EMRASON failed to comply with Section 36 of the Code of
Agrarian Reforms, which provided that the conversion of land should be implemented
within one year, otherwise, the conversion is deemed in bad faith. Given the failure
of EMRASON to comply with many other requirements for a valid conversion, the
subject property has remained agricultural. Simply put, no compliance means no
conversion.  In fact, Buklod points out, the subject property is still declared as
"agricultural" for real estate tax purposes. Consequently, EMRASON is now estopped
from insisting that the subject property is actually "residential."
Furthermore, Buklod posits that land reform is a constitutional mandate which should
be given paramount consideration. Pursuant to said constitutional mandate, the
Legislature enacted the CARL. It is a basic legal principle that a legislative statute
prevails over a mere municipal ordinance.
Finally, Buklod questions the issuance by the Court of Appeals of a writ of
preliminary injunction enjoining the distribution of the subject property to the
farmer-beneficiaries in violation of Section 55 of the CARL; as well as the refusal of
the appellate court to hold a hearing despite Section 1 of Republic Act No. 7902,
[21]
 prescribing the procedure for reception of evidence before the Court of Appeals.
At such a hearing, Buklod intended to present evidence that the subject property is
actually agricultural and that Buklod members have been working on said property
for decades, qualifying them as farmer-beneficiaries.
EMRASON, on the other hand, echoes the ruling of the Court of Appeals that the
subject property is exempt from CARP because it had already been reclassified as
residential with the approval of Ordinance No. 29-A by the Municipality of
Dasmariñas on July 9, 1972. EMRASON cites Ortigas & Co., Ltd. Partnership v.
Feati Bank and Trust Co.[22] (Ortigas case) where this Court ruled that a municipal
council is empowered to adopt zoning and subdivision ordinances or regulations
under Section 3 of the Local Autonomy Act of 1959.
Still relying on the  Ortigas case, EMRASON avows that the Municipality of
Dasmariñas, taking into account the conditions prevailing in the area, could validly
zone and reclassify the subject property in the exercise of its police power in order to
safeguard the health, safety, peace, good order, and general welfare of the people in
the locality. EMRASON describes the whole area surrounding the subject property as
residential subdivisions (i.e., Don Gregorio, Metro Gate, Vine Village, and Cityland
Greenbreeze 1 and 2 Subdivisions) and industrial estates (i.e., Reynolds Aluminum
Philippines, Inc. factory; NDC-Marubeni industrial complex, San Miguel Corporation-
Monterey cattle and piggery farm and slaughterhouse), traversed by national
highways (i.e., Emilio Aguinaldo National Highway, Trece Martirez, Puerto Azul Road,
and Governor's Drive). EMRASON mentions that on March 25, 1988,
the Sangguniang Panlalawiganof the Province of Cavite passed Resolution No. 105
which declared the area where subject  property  is located as "industrial-residential-
institutional mix."
EMRASON further maintains that Ordinance No. 29-A of the Municipality of
Dasmariñas is valid. Ordinance No. 29-A is complete in itself, and there is no more
need to comply with the alleged requisites which DAR and Buklod are insisting upon.
EMRASON quotes from Patalinghug v. Court of Appeals[23](Patalinghug case) that
"once a local government has reclassified an area as commercial, that determination
for zoning purposes must prevail."
EMRASON points out that Ordinance No. 29-A, reclassifying the subject property,
was approved by the Municipality of Dasmariñas on July 9, 1972. Executive Order
No. 648, otherwise known as the Charter of the Human Settlements Regulatory
Commission (HSRC Charter) - which conferred upon the HSRC the power and duty to
review, evaluate, and approve or disapprove comprehensive land use and
development plans and zoning ordinances of LGUs - was issued only on February 7,
1981. The exercise by HSRC of such power could not be applied retroactively to this
case without impairing vested rights of EMRASON. EMRASON disputes as well the
absolute necessity of submitting Ordinance No. 29-A to the NPC for approval. Based
on the language of Section 3 of the Local Autonomy Act of 1959, which used the
word "may," review by the NPC of the local planning and zoning ordinances was
merely permissive. EMRASON additionally posits that Ordinance No. 1 of the
Municipality of Dasmariñas simply required approval by the NPC of the final plat or
plan, map, or chart of the subdivision, and not of the rcclassification and/or
conversion by the Municipality of the subject property from agricultural to
residential.  As for Administrative Order No. 152 dated December 16, 1968, it was
directed to and should have been complied with by the city and municipal boards and
councils. Thus, EMRASON should not be made to suffer for the non-compliance by
the Municipal Council of Dasmarinas with said administrative order.
EMRASON likewise reasons that since the subject property was already reclassified
as residential with the mere approval of Ordinance No. 29-A by the Municipality of
Dasmarinas, then EMRASON did not have to immediately undertake actual
development of the subject property. Reclassification and/or conversion of a parcel
of land are different from the implementation of the conversion.
EMRASOK is resolute in its stance that the Court of Appeals correctly applied
the Natalia Realty case to the present case since both have similar facts; the only
difference being that the former involves a presidential fiat while the latter concerns
a legislative fiat.
EMRASON denies that the Buklod members are farmer-tenants of the subject
property. The subject property has no farmer-tenants because, as the Court of
Appeals observed, the property is unirrigated and not devoted to any agricultural
activity. The subject property was placed under the CARP only to accommodate the
farmer-tenants of the NDC property who were displaced by the NDC-Marubeni
Industrial Project. Moreover, the Buklod members are still undergoing a screening
process before the DAR-Region IV, and are yet to be declared as qualified farmer-
beneficiaries of the subject property. Hence, Buklod members tailed to establish they
already have vested right over the subject property.
EMRASON urges the Court not to consider issues belatedly raised by Buklod, It may
be recalled that Buklod intervened in CA-G.R. SP No. 40950 just before the Court of
Appeals rendered judgment in said case. When the appellate court promulgated its
Decision on March 26, 1997 favoring EMRASON, Buklod filed a Motion for
Reconsideration of said judgment, to which EMRASON, in turn, filed a Comment and
Opposition. In its Reply to the aforementioned Comment and Opposition of
EMRASON, Buklod raised new factual matters, specifically, that: (1) EMRASON has
not even subdivided the title to the subject property 27 years after its purported
reclassification/conversion; (2) EMRASON never obtained a development permit nor
mayor's permit to operate a business in Dasmarinas; and (3) the farmer-tenants
represented by Buklod have continuously cultivated the subject property. There was
no cogent or valid reason for the Court oi' Appeals to allow Buklod to present
evidence to substantiate the foregoing allegations. The DAR Region IV Hearing
Officer already conducted extensive hearings during which the farmers were duly
represented. Likewise, Buklod raises for the first time in its Petition before this Court
the argument that the Tenants Emancipation Decree prescribes a procedure for
conversion which EMRASON failed to comply with.
Lastly, EMRASON defends the issuance by the Court of Appeals of a writ of
preliminary injunction in CA-G.R. SP No. 40950. Section 55 of the CARL is
inapplicable to the case at bar because said provision only prohibits the issuance by
a court of a TRO or writ of preliminary injunction "against the PARC or any ol^ its
duly authorized or designated agencies." As the Court of Appeals declared, the PARC
is a policy-formulating and coordinating body. There is no indication whatsoever that
the DAR Secretary was acting herein as an agent of the PARC. The DAR Secretary
issued the orders of acquisition for the subject property in the exercise of his quasi-
judicial powers as department head.
The Court, after consideration of the issues and arguments in the Petitions at bar,
affirms the Court of Appeals and rules in favor of EMRASON.
CARP  coverage limited to agricultural land
Section 4, Chapter II of the CARL, as amended,24 particularly defines the coverage
of the CARP, to wit:
SEC. 4. Scope. - The Comprehensive Agrarian Reform Law of 1988 shall cover,
regardless of tenurial arrangement and commodity produced, all public and
private agricultural lands as provided in Proclamation No. 131 and Executive
Order No. 229, including other lands of the public domain suitable for
agriculture: Provided, That landholdings of landowners with a total area of five (5)
hectares and below shall not be covered for acquisition and distribution to qualified
beneficiaries.
More specifically, the following lands are covered by the CARP:
(a) All alienable and disposable lands of the public domain devoted to or suitable for
agriculture. No reclassification of forest or mineral lands to agricultural lands shall be
undertaken after the approval of this Act until Congress, taking into account
ecological, developmental and equity considerations, shall have determined by  law,
the specific limits of the public domain;
(b) All lands of the public domain in excess of the specific limits as determined by
Congress in the preceding paragraph;
(c) All other lands owned by the Government devoted to or suitable for agriculture;
and
(d) All private lands devoted to or suitable for agriculture regardless of the
agricultural products raised or that can be raised thereon.
A comprehensive inventory system in consonance with the national land use plan
shall be instituted by the Department of Agrarian Reform (DAR), in accordance with
the Local Government Code, for the purpose of properly identifying and classifying
farmlands within one (1) year from effectivity of this /Vet. without prejudice to the
implementation of the land acquisition and distribution." (Emphases supplied.)
Section 3(c), Chapter I of the CARL further narrows down the definition
of agricultural land that is subject to CARP to "land devoted to agricultural activity as
defined in this Act and not classified as mineral, forest, residential, commercial or
industrial land."
The CARL took effect on June 15, 1988. To be exempt from the CARP, the subject
property should have already been reclassified as residential prior to said date.
The Local Autonomy Act of 1959
The Local Autonomy Act of 1959, precursor of the Local Government Code of 1991,
provided;
SEC. 3. Additional powers of provincial boards, municipal boards or city councils and
municipal and regularly organized municipal district councils. - x x x
xxxx
Power to adopt zoning and planning ordinances. — Any provision of law to the
contrary notwithstanding, Municipal Boards or City Councils in cities, and Municipal
Councils in municipalities are hereby authorized to adopt zoning and subdivision
ordinances or regulations for their respective cities and municipalities subject to
the approval of the City Mayor or Municipal Mayor, as the case may be. Cities and
municipalities may, however, consult the National Planning Commission on
matters pertaining to planning and zoning. (Emphases supplied.)
Pursuant to the foregoing provision, the Municipal Council of Dasmariñas
approved Ordinance No. 1 on July 13, 1971, which laid down the general
subdivision regulations for the municipality; and Resolution No. 29-A on July 9,
1972, which approved the application for subdivision of the subject property.
The Court observes that the OP, the Court of Appeals, and even the parties
themselves referred to Resolution No. 29-A as an ordinance. Although it may not be
its official designation, calling Resolution No. 29-A as Ordinance No. 29-A is not
completely inaccurate. In the Ortigas & Co. case, the Court found it immaterial that
the then Municipal Council of Mandaluyong declared certain lots as part of the
commercial and industrial zone through a resolution, rather than an ordinance,
because:
Section 3 of R.A. No. 2264, otherwise known as the Local Autonomy Act, empowers
a Municipal Council "to adopt zoning and subdivision ordinances or regulations" for
the municipality. Clearly, the law docs not restrict the exercise of the power
through an ordinance. Therefore, granting that Resolution No. 27 is not an
ordinance, it certainly is a regulatory measure within the intendment or ambit
of the word "regulation" under the provision. As a matter oi' fact the same section
declares that the power exists "(A)ny provision of law to the contrary
notwithstanding x x x."[25] (Emphases supplied.)
Zoning and reclassification
Section 3(c), Chapter I of the CARL provides that a parcel oi^ land reclassified for
non-agricultural uses prior to June 15, 1988 shall no longer be considered
agricultural land subject to CARP. The Court is now faced with the question of
whether Resolution No. 29-A of the Municipality of Dasmariñas dated July 9,
1972, which approved the subdivision of the subject property for residential
purposes, had also reclassified the same from agricultural to residential.
Zoning classification is an exercise by the local government of police power, not the
power of eminent domain. A zoning ordinance is defined as a local city or municipal
legislation which logically arranges, prescribes, defines, and apportions a given
political subdivision into specific land uses as present and future projection of needs.
[26]
The Court gave a more extensive explanation of zoning in Pampanga Bus Company,
Inc. v. Municipality of Tarlac,[27] thus:
The appellant argues that Ordinance No. 1 is a zoning ordinance which the Municipal
Council is authorized to adopt. McQuillin in his treaties on Municipal Corporations
(Volume 8, 3rd ed.) says:
Zoning is governmental regulation of the uses of land and buildings according to
districts or zones. It is comprehensive where it is governed by a single plan for the
entire municipality and prevails throughout the municipality in accordance with that
plan. It is partial or limited where it is applicable only to a certain part of the
municipality or to certain uses. Fire limits, height districts and building regulations
are forms of partial or limited zoning or use regulation that are antecedents of
modern comprehensive zoning, (pp. 11-12.)
The term "zoning," ordinarily used with the connotation of comprehensive or general
zoning, refers to governmental regulation of the uses of land and buildings according
to districts or zones. This regulation must and does utilize classification of uses
within districts as well as classification of districts, inasmuch as it manifestly is
impossible to deal specifically with each of the innumerable uses made of land and
buildings.  Accordingly, (zoning has been defined as the confining of certain classes
of buildings and uses to certain localities, areas, districts or zones.) It has been
stated that zoning is the regulation by districts of building development and uses of
property, and that the term "zoning" is not only capable of this definition but has
acquired a technical and artificial meaning in accordance therewith. (Zoning is the
separation of the municipality into districts and the regulation of buildings and
structures within the districts so created, in accordance with their construction, and
nature and extent of their use. It is a dedication of districts delimited to particular
uses designed to subserve the general welfare.) Numerous other definitions of
zoning more or less in accordance with these have been given in the cases, (pp. 27-
28.)[28]
According to Section 1(b) of Ordinance No. 1, "[s]ubdivision means the division of a
tract or parcel of land into two or more lots, sites or other divisions for the purpose,
whether immediate or future, o[f| a sale or building development. It includes
resubdivision, and when appropriate to the context, relates to the process of
subdividing as to the land of territory subdivided." Subdivision ordinances or
regulations such as Resolution No. 29-A, in relation to Ordinance No. 1,
constitute partial or limited zoning, for they are applicable to a specific property in
the city or municipality to be devoted for a certain use.
Section 9 of the Public Land Act - cited by the DAR and Buklod as the purported
delegation by the National Legislature of the power to reclassify - is immaterial to
the instant cases.  Said provision reads:
SEC. 9. For the purpose of their administration and disposition, the lands of the
public domain alienable or open to disposition shall be classified, according to the
use or purposes to which such lands are destined, as follows:
(a)    Agricultural;
(b)    Residential,  commercial,  industrial,  or  for  similar productive purposes;
(c)    Educational, charitable, or other similar purposes; and
(d)    Reservations for townsites and for public and quasi-public uses.
The President, upon recommendation by the Secretary of Agriculture and Natural
Resources, shall from time to time make the classifications provided for in this
section, and may, at any time and in a similar manner, transfer lands from one class
to another. (Emphasis supplied.)
The power delegated to the President under the aforequoted provision of the Public
Land Act is limited to the classification of lands of the public domain that are
alienable or open to disposition. It finds no application in the present cases for
the simple reason that the subject property involved herein is no longer part of the
public domain. The subject property is already privately owned and accordingly
covered by certificates of title.
The concept that concerns this Court in the instant cases is the reclassification of
agricultural lands. In Alarcon v. Court of Appeals,[29] the Court had the occasion to
define and distinguish reclassification from conversion as follows:
Conversion is the act of changing the current use of a piece of agricultural land into
some other use as approved by the Department of Agrarian Reform. Reclassification,
on the other hand, is the act of specifying how agricultural lands shall be utilized for
non-agricultural uses such as residential, industrial, commercial, as embodied in the
land use plan, subject to the requirements and procedure for land use conversion, x
x x. (Italics supplied.)
Reclassification also includes the reversion  of non-agricultural  lands to agricultural
use.[31]
Under the present Local Government Code, it is clear that the authority to reclassify
agricultural lands primarily resides in the sanggunian of the city or municipality. 
Said provision reads in full:
Sec. 20. Reclassification of Lands. - (a) A city or municipality may, through an
ordinance passed by the sanggunian after conducting public hearing for the
purpose, authorize the reclassification of agricultural lands and provide for the
manner of their utilization or disposition in the following cases: (X) when the land
ceases to be economically feasible and sound for agricultural purposes as determined
by the Department of Agriculture or (2) where the land shall have substantially
greater economic value for residential, commercial, or industrial purposes, as
determined by the sanggunian concerned: Provided, That such reclassification shall
be limited to the following percentage of the total agricultural land area at the time
of the passage of the ordinance:
(1)    For highly urbanized and independent component cities, fifteen percent (15%);
(2)    For component cities  and first to the third  class municipalities, ten percent
(10%); and
(3)    For fourth to sixth class municipalities, five percent (5%): Provided, further, 
That  agricultural lands  distributed  to agrarian  reform  beneficiaries pursuant  to 
Republic  Act Numbered Sixty-six hundred fifty-seven (R.A. No. 6657), otherwise
known as "The Comprehensive Agrarian Reform Law", shall not be affected by the
said reclassification and the conversion of such lands into other purposes shall be
governed by Section 65 of said Act.
(b)    The President may, when public interest so requires and upon recommendation
of  the National Economic and Development Authority, authorize a city or
municipality to reclassify lands in excess of the limits set in the next preceding
paragraph.
(c)    The local government units shall, in conformity with existing laws, continue
to prepare their respective comprehensive land use plans enacted through
zoning ordinances which  shall be  the primary and dominant bases for the future
use of land resources: Provided, That  the requirements for food production, human
settlements, and industrial expansion shall be taken into consideration in the
preparation of such plans.
(d)    When  approval by a national agency is required for reclassification, such
approval shall not be unreasonably withheld. Failure to act on a proper and complete
application for reclassification within three (3) months from receipt of the same shall
be deemed as approval thereof.
(e)    Nothing in this Section shall be construed as repealing, amending, or modifying
in any manner the provisions of R.A. No. 6657. (Emphases supplied.)
Prior to the Local Government Code of 1991, the Local Autonomy Act of 1959 was
silent on the authority to reclassify agricultural lands. What the earlier statute
expressly granted to city and municipal boards and councils, under Section 3 thereof,
was the power to adopt zoning and subdivision ordinances and regulations.
DAR and Buklod insist that zoning is merely the regulation of land use based on
the existing characterof the property and the structures thereon; and that zoning
is a lesser power compared to reclassification so that the delegation of the former to
the local government should not be deemed to include the latter.
Such arguments are easily refuted by reference to the definitions of zoning and
reclassification earlier presented herein, which support a more extensive concept of
zoning than that which DAR and BUKLOD assert.
By virtue of a zoning ordinance, the local legislature may arrange, prescribe, define,
and apportion the land within its political jurisdiction into specific uses based not only
on the present, but also on the future projection of needs. To limit zoning to the
existing character of the property and the structures thereon would completely
negate the power of the local legislature to plan land use in its city or municipality.
Under such circumstance, zoning would involve no planning at all, only the rubber-
stamping by the local legislature of the current use of the land.
Moreover, according to the definition of reclassification, the specified non-agricultural
use of the land must be embodied in a land use plan, and the land use plan is
enacted through a zoning ordinance. Thus, zoning and planning  ordinances  take  purpose is securing the general welfare, comfort and convenience of the people.
precedence  over reclassification.  The reclassification of land use is dependent on
the zoning and land use plan, not the other way around.
It may, therefore, be reasonably presumed that when city and municipal boards and
councils approved an ordinance delineating an area or district in their cities or
municipalities as residential, commercial, or industrial zone, pursuant to the power
granted to them under Section 3 of the Local Autonomy Act of 1959, they were, at
the same time, reclassifying any agricultural lands within the zone for non-agri
cultural use; hence, ensuring the implementation of and compliance with their zoning
ordinances.  The logic and practicality behind such a presumption is more evident
when considering the approval by local legislative bodies of subdivision ordinances
and regulations. The approval by city and municipal boards and councils of an
application for subdivision through an ordinance should already be understood to
include approval of the reclassification of the land, covered by said application, from
agricultural to the intended non-agricultural use. Otherwise, the approval of the
subdivision application would serve no practical effect; for as long as the property
covered by the application remains classified as agricultural, it could not be
subdivided and developed for non-agricultural use.
A liberal interpretation of the zoning power of city and municipal boards and councils,
as to include the power to accordingly reclassify the lands within the zones, would be
in accord with the avowed legislative intent behind the Local Autonomy Act of 1959,
which was to increase the autonomy of local governments. Section 12 of the Local
Autonomy Act of 1959 itself laid down rules for interpretation of the said statute:
SEC. 12.  Rules for the interpretation of the Local Autonomy Act. -
1.    Implied power of a province, a city or municipality shall be liberally construed
in its favor. Any fair and reasonable doubt as to the existence of the power should be
interpreted in favor of the local government and it shall be presumed to exist.
2.   The general welfare clause shall be liberally interpreted in case of doubt so
as to give more power to local governments in promoting the economic condition,
social welfare and material progress of the people in the community.
3.   Vested rights existing at the time of the promulgation of this law arising out of a
contract between a province, city or municipality on one hand and a third party on
the other, should be governed by the original terms and provisions of the same, and
in no case would this act infringe existing rights.
Moreover, the regulation by local legislatures of land use in their respective territorial
jurisdiction through zoning and reclassification is an exercise of police power.
In Binay v. Domingo,32] the Court recognized that police power need not always be
expressly delegated, it may also be inferred:
The police power is a governmental function, an inherent attribute of sovereignty,
which was born with civilized government. It is founded largely on the maxims, "Sic
utere tuo et alienum non laedas" and "Salus populi est suprema lex" Its fundamental
Police power is inherent in the state but not in municipal corporations (Balacuit v.
CFI of Agusan del Norte, 163 SCRA 182). Before a municipal corporation may
exercise such power, there must be a valid delegation of such power by the
legislature which is the repository of the inherent powers of the State. A valid
delegation of police power may arise from express delegation, or be
inferred from the mere fact of the creation of the municipal corporation; and
as a general rule, municipal corporations may exercise police powers within
the fair intent and purpose of their creation which are reasonably proper to
give effect to the powers expressly granted, and statutes conferring powers
on public corporations have been construed as empowering them to do the
things essential to the enjoyment of life and desirable for the safety of the
people. (62 C.J.S., p. 277). The so-called inferred police powers of such
corporations are as much delegated powers as arc those conferred in express terms,
the inference of their delegation growing out of the fact of the creation of the
municipal corporation and the additional fact that the corporation can only fully
accomplish the objects of its creation by exercising such powers. (Crawfordsville vs.
Braden, 28 N.E. 849). Furthermore, municipal corporations, as governmental
agencies, must have such measures of the power as are necessary to enable
them to perform their governmental functions. The power is a continuing one,
founded on public necessity. (62 C.J.S. p. 273) Thus, not only does the State
effectuate its purposes through the exercise of the police power but the municipality
does also. (U.S. v. Salaveria, 39 Phil. 102).
Municipal governments exercise this power under the general welfare clause:
pursuant thereto they are clothed with authority to "enact such ordinances and issue
such regulations as may be necessary to carry out and discharge the responsibilities
conferred upon it by law, and such as shall be necessary and proper to provide for
the health, safety, comfort and convenience, maintain peace and order, improve
public morals, promote the prosperity and general welfare of the municipality and
the inhabitants thereof, and insure the protection of property therein." (Sections 91,
149, 177 and 208, BP 337). And under Section 7 of BP 337, "every local government
unit shall exercise the powers expressly granted, those necessarily implied
therefrom, as well as powers necessary and proper for governance such as to
promote health and safety, enhance prosperity, improve morals, and maintain peace
and order in the local government unit, and preserve the comfort and convenience of
the inhabitants therein."
Police power is the power to prescribe regulations to promote the health, morals,
peace, education, good order or safety and general welfare of the people. It is the
most essential, insistent, and illimitable of powers. In a sense it is the greatest and
most powerful attribute of the government. It is elastic and must be responsive to
various social conditions. (Sangalang, el al. vs. IAC, 176 SCRA 719). On it depends
the security of social order, the life and health of the citizen, the comfort of an
existence in a thickly populated community, the enjoyment of private and social life,
and the beneficial use of property, and it has been said to be the very foundation on
which our social system rests. (16 C.J.S., p. 896) However, it is not confined within
narrow circumstances of precedents resting on past conditions; it must follow the
legal progress of a democratic way of life. (Sangalang, el al. vs. IAC, supra).
xxxx
In the case of Sangalang vs. IAC, supra, We ruled that police power is not capable of
an exact definition but has been, purposely, veiled in general terms to underscore its
all-comprehensiveness. Its scope, over-expanding to meet the exigencies of the
times, even to anticipate the future where it could be done, provides enough room
for an efficient and flexible response to conditions and circumstances thus assuring
the greatest benefits.
The police power of a municipal corporation is broad, and has been said to be
commensurate with, but not to exceed, the duty to provide for the real needs of the
people in their health, safely, comfort, and convenience as consistently as may be
with private rights. It extends to all the great public needs, and, in a broad sense
includes all legislation and almost every function of the municipal government. It
covers a wide scope of subjects, and, while it is especially occupied with whatever
affects the peace, security, health, morals, and general welfare of the community, it
is not limited thereto, but is broadened to deal with conditions which exists so as to
bring out of them the greatest welfare of the people by promoting public
convenience or general prosperity, and to everything worthwhile for the preservation
of comfort of the inhabitants of the corporation (62 C.J.S. Sec. 128). Thus, it is
deemed inadvisable to attempt to frame any definition which shall absolutely indicate
the limits of police power.[33] (Emphases supplied.)
Based on the preceding discussion, it cannot be said that the power to reclassify
agricultural land was first delegated to the city and municipal legislative bodies under
Section 26 of the Local Government Code of 1991. Said provision only articulates a
power of local legislatures, which, previously, had only been implied or inferred.
Compliance with other requirements or conditions   
Resolution No. 29-A is a valid ordinance, which, upon its approval on July 9, 1972,
immediately effected the zoning and reclassifying of the subject property for
residential use. It need not comply with any of the requirements or conditions which
DAR and Buklod are insisting upon.
DAR and Buklod aver that Resolution No. 29-A was not reviewed and approved by
the NPC, in violation of the line in Section 3 of the Local Autonomy Act of 1959,
stating that "[c]ities and municipalities may, however, consult the National Planning
Commission on matters pertaining to planning and zoning." Consideration must be
given, however, to the use of the word "may" in the said sentence. Where the
provision reads "may," this word shows that it is not mandatory but discretionary. It
is an auxiliary verb indicating liberty, opportunity, permission and possibility.[34] The
use of the word "may" in a statute denotes that it is directory in nature and generally
permissive only. The "plain meaning rule" or verba legis in statutory construction is
thus applicable in this case. Where the words of a statute are clear, plain, and free
from ambiguity, it must be given its literal meaning and applied without attempted
interpretation.[35] Since consultation with the NPC was merely discretionary, then
there were only two mandatory requirements for a valid zoning or subdivision
ordinance or regulation under Section 3 of the Local Autonomy Act of 1959, namely,
that (1) the ordinance or regulation be adopted by the city or municipal board or
council; and (2) it be approved by the city or municipal mayor, both of which were
complied with byl Resolution No. 29-A.
Section 16(a) of Ordinance No. 1 of the Municipality of Dasmariñas likewise
mentions the NPC, to wit:
a. Final plat of subdivision - As essential requirements before a subdivision is
accepted for verification by the Bureau of Lands, the final plat of the scheme of the
subdivision must comply with the provision of this ordinance. Application for plat
approval shall be submitted to the Municipal Mayor and shall be forwarded
to the National Planning Commission thru the Highway District Engineer for
comment and/or recommendations, before action is taken by the Municipal
Council. The final approval of the plat shall be made by the Municipal Mayor upon
recommendation of the Municipal Council by means of a resolution. (Emphasis
supplied.)
The aforementioned provision of Ordinance No. 1 refers to the final plat of the
subdivision. The term plat includes "plat, plan, plot or replot."[36] It must be
distinguished from the application for subdivision.
The Court concurs with the analysis of the Court of Appeals that Resolution No. 29-A
actually contains two resolutions. The first reads:
Resolved, As it is hereby Resolved to approve the application for
subdivision containing an area of Three Hundred Seventy-Two Hectares (372)
situated in barrio Bocal and Langkaan, named as Travellers Life Homes.[37] 
(Efriphasis supplied.)

It is manifest, even from just a plain reading of said resolution, that the application
for subdivision covering the subject property was categorically and unconditionally
approved by the Municipality of Dasmarinas.  As a consequence of such approval, the
subject property is immediately deemed zoned and reclassified as residential.
Meanwhile, the second resolution in Resolution No. 29-A states:
Resolved, that this municipal ordinance regarding subdivision
regulations existing in this municipality shall be strictly followed by
the subdivision.[38]  (Emphases supplied.)
Significantly, this second resolution already refers to a "subdivision," supporting the
immediately executory nature of the First resolution.  The municipal ordinance which
the subdivision must follow is Ordinance No. 1, the general subdivision regulations of
the Municipality of Dasmarinas. Most provisions of Ordinance No. 1 laid down the
minimum standards for the streets, roadways, sidewalks, intersections, lots and
blocks, and other improvements in the subdivision, with which the final plat must
comply or conform. Irrefragably, the review of the final plat of the subdivision calls
for a certain level of technical expertise; hence, the directive to the Municipal Mayor
to refer the final plat to the NPC, through the Highway District Engineer, for
comments and recommendation, before the same is approved by the Municipal
Council, then the Mayor.
In relation to the preceding paragraph, Administrative Order No. 152 dated
December 16, 1968 required city and municipal boards and councils to submit
proposed subdivision ordinances and plans or forward approved subdivision
ordinances to the NPC. The OP imposed such a requirement because "it has come to
the attention of [the] Office that the minimum standards of such ordinances
regarding design, servicing and streets, and open spaces for parks and other
recreational purposes are not being complied with[.]"[39] Review by the NPC of the
proposed subdivision plan was for the purpose of determining "if it conforms with the
subdivision ordinance."[40]
It is apparent that Section 16(a) of Ordinance No. 1 and Administrative Ordinance
No. 152 contained the same directive: that the final plat of the subdivision be
reviewed by the NPC to determine its conformity with the minimum standards set in
the subdivision ordinance of the municipality. A closer scrutiny will reveal that
Section 16(a) of Ordinance No. 1 and Administrative Order No. 152 related to the
duties and responsibilities of local government and NPC officials as regards the final
plat of the subdivision. There is no evidence to establish that the concerned public
officers herein did not follow the review process for the final plat as provided in
Section 16(a) of Ordinance No. 1 and Administrative Order No. 152 before approving
the same. Under Section 3(m), Rule 131 of the Rules of Court, there is a
presumption that official duty has been regularly performed. Thus, in the absence of
evidence to the contrary, there is a presumption that public officers performed their
official duties regularly and legally and in compliance with applicable laws, in good
faith, and in the exercise of sound judgment.[41]  And - just as the Court of Appeals
observed - even if it is established that the accountable public officials failed to
comply with their duties and responsibilities under Section 16(a) of Ordinance No. 1
and Administrative Order No. 152, it would be contrary to the fundamental precepts
of fair play to make EMRASON bear the consequences of such non-compliance.
Although the two resolutions in Resolution No. 29-A may be related to the same
subdivision, they are independent and separate. Non-compliance with the second
resolution may result in the delay or discontinuance of subdivision development, or
even the imposition of the. penalties[42] provided in Ordinance No. 1, but not the
annulment or reversal of the first resolution and its consequences.
The Court again agrees with the Court of Appeals that Resolution No. 29-A need not
be subjected to review and approval by the HSRC/HLURB. Resolution No. 29-A was
approved by the Municipality of Dasmarinas on July 9, 1972, at which time, there
was even no HSRC/HLURB to speak of.
The earliest predecessor of the HSRC, the Task Force on Human Settlements, was
created through Executive Order No. 419 more than a year later on September 19,
1973. And even then, the Task Force had no power to review and approve zoning
and subdivision ordinances and regulations.
It was only on August 9, 1978, with the issuance of Letter of Instructions No. 729,
that local governments were required to submit their existing land use plans, zoning
ordinances, enforcement systems, and procedures to the Ministry of Human
Settlements for review and ratification.
The HSRC was eventually established on February 7, 1981. Section 5(b) of the
HSRC Charter43 contained the explicit mandate for the HSRC to:
b. Review, evaluate and approve or disapprove comprehensive land use
development plans and zoning ordinances of local government; and the
zoning component of civil works and infrastructure projects of national, regional and
local governments; subdivisions, condominiums or estate development projects
including industrial estates, of both the public and private sectors and urban renewal
plans, programs and projects: Provided, that the land use Development Plans and
Zoning Ordinances of Local Governments herein subject to review, evaluation and
approval of the commission shall respect the classification of public lands for forest
purposes as certified by the Ministry of Natural Resources: Provided, further, that the
classification of specific alienable and disposable lands by the Bureau of Lands shall
be in accordance with the relevant zoning ordinance of: Local government where it
exists; and provided, finally, that in cities and municipalities where there are as yet
no zoning ordinances, the Bureau of Lands may dispose of specific alienable and
disposable lands in accordance with its own classification scheme subject to the
condition that the classification of these lands may be subsequently change by the
local governments in accordance with their particular zoning ordinances which may
be promulgated later. (Emphases supplied.)
Neither the Ministry of Human Settlements nor the HSRC, however, could have
exercised its power of review retroactively absent an express provision to that effect
in Letter of Instructions No.  729 or the HSRC Charter, respectively.  A sound cannon
of statutory construction is that a statute operates prospectively only and never
retroactively, unless the legislative intent to the contrary is made manifest either by
the express terms oi' the statute or by necessary implication. Article 4 of the Civil
Code provides that: "Laws shall have no retroactive effect, unless the contrary is
provided." Hence, in order that a law may have retroactive effect, it is necessary that
an express provision to this effect be made in the law, otherwise nothing should be
understood which is not embodied in the law. Furthermore, it must be borne in mind
that a law is a rule established to guide our actions without no binding effect until it
is enacted, wherefore, it has no application to past times but only to future time, and
that is why it is said that the law looks to the future only and has no retroactive
effect unless the legislator may have formally given that effect to some legal
provisions.[44]
Subsequent zoning ordinances
Still by the authority vested upon it by Section 3 of the Local Autonomy Act,
the Sangguniang Bayan of Dasmariñas subsequently enacted a Comprehensive
Zoning Ordinance, ratified by the HLURB under Board Resolution No. 42-A-3
dated February 11, 1981 (1981 Comprehensive Zoning Ordinance of Dasmarinas).
Upon the request of the DAR, Engr. Alfredo Gil M. Tan, HLURB Regional Technical
Coordinator, issued a certification[45] dated September 10, 1992 stating that per the
1981 Comprehensive Zoning Ordinance of Dasmarinas, the subject property was
within the agricultural zone. Does this mean that the subject property reverted
from residential to agricultural classification?
The Court answers in the negative. While the subject property may be physically
located within an agricultural zone under the 1981 Comprehensive Zoning Ordinance
of Dasmarinas, said property retained its residential classification.
According to Section 17, the Repealing Clause, of the 1981 Comprehensive Zoning
Ordinance of Dasmarinas: "AH other ordinances, rules or regulations in conflict with
the provision of this Ordinance are hereby repealed: Provided, that rights that have
vested before the cffectivity of this Ordinance shall not be impaired."
In Ayog v. Cusi, Jr.,[46] the Court expounded on vested right and its protection:
That vested right has to be respected. It could not be abrogated by the new
Constitution. Section 2, Article XIII of the 1935 Constitution allows private
corporations to purchase public agricultural lands not exceeding one thousand and
twenty-four hectares. Petitioners' prohibition action is barred by the doctrine of
vested rights in constitutional law.  and Parts of Dasmariflas, Carmona, Gen. Mariano Alvarez, Gen. Trias, Silang, Tanza,
"All right is vested when the right to enjoyment has become the property of some
particular person or persons as a present interest" (16 C.J.S. 1173). It is "the
privilege to enjoy property legally vested, to enforce contracts, and enjoy the rights
of property conferred by the existing law" (12 C.J.S. 955, Note 46, No. 6) or "some
right or interest in property which has become fixed and established and is no longer
open to doubt or controversy" (Downs vs. Blount, 170 Fed. 15, 20, cited in Balboa
vs. Farrales, 51 Phil. 498, 502).
The due process clause prohibits the annihilation of vested rights. "A state may not
impair vested rights by legislative enactment, by the enactment or by the
subsequent repeal of a municipal ordinance, or by a change in the
constitution of the State, except in a legitimate exercise of the police
power" (16 C.J.S. 1177-78).
It has been observed that, generally, the term "vested right" expresses the concept
of present fixed interest, which in right reason and natural justice should be
protected against arbitrary State action, or an innately just and imperative right
which an enlightened free society, sensitive to inherent and irrefragable individual
rights, cannot deny (16 C.J.S. 1174, Note 71, No. 5, citing Pennsylvania Greyhound
Lines, Inc. vs. Rosenthal, 192 Atl. 2nd 587).47 (Emphasis supplied.)
It is true that protection of vested rights is not absolute and must yield to the
exercise of police power:
A law enacted in the exercise of police power to regulate or govern certain activities
or transactions could be given retroactive effect and may reasonably impair vested
rights or contracts. Police power legislation is applicable not only to future contracts,
but equally to Ihose already in existence. Non-impairment of contracts or vested
rights clauses will have to yield to the superior and legitimate exercise by the State
of police power to promote the health, morals, peace, education, good order, safety,
and general welfare of the people, x x x.[48]
Nonetheless, the Sangguniang Bayan of Dasmariñas in this case, in its exercise of
police power through the enactment of the 1981 Comprehensive Zoning Ordinance,
itself abided by the general rule and included in the very same ordinance an express
commitment to honor rights that had already vested under previous ordinances,
rules, and regulations. EMRASON acquired the vested right to use and develop the
subject property as a residential subdivision on July 9, 1972 with the approval of
Resolution No. 29-A by the Municipality of Dasmarinas. Such right cannot be
impaired by the subsequent enactment of the 1981 Comprehensive Zoning
Ordinance of Dasmarinas, in which the subject property was included in an
agricultural zone. Hence, the Municipal Mayor of Dasmariflas had been continuously
and consistently recognizing the subject property as a residential subdivision.[49]
Incidentally, EMRASON mentions Resolution No. 105, Defining and Declaring the
Boundaries of Industrial and Residential Land Use Plan in the Municipalities of Imus
Naic, Rosario, and Trece Martires City, Province o[ Cavite, approved by
the Sangguniang Panlalawigan of Cavite on March 25, 1988. The Sangguniang
Panlalawigan  determined that "the lands extending from the said designated
industrial areas would have greater economic value for residential and institutional
uses, and would serve the interest and welfare for the greatest good of the greatest
number of people."50 Resolution No. 105, approved by the HLURB in 1990, partly
reads:
Tracts of land in the Municipality of Carmona from the People's Technology Complex
to parts of the Municipality of Silang, parts of the Municipalities of Dasmariñas,
General Trias, Trece Martires City, Municipalities of Tanza and Naic forming the strip
of land traversed by the Puerto Azul Road extending two kilometers more or less
from each side of the road which are hereby declared as industrial-residential-
institutional mix. (Emphases supplied.)
There is no question that the subject property is located within the afore-described
area.  And even though Resolution No. 105 has no direct bearing on the classification
of the subject property prior to the CARL - it taking effect only in 1990 after being
approved by the HLURB - it is a confirmation that at present, the subject property
and its surrounding areas are deemed by the Province of Cavite better suited and
prioritized for industrial and residential development, than agricultural purposes.
CARP exemption
The Court reiterates that since July 9, 1972, upon approval of Resolution No. 29-A by
the Municipality of Dasmarinas, the subject property had been reclassified from
agricultural to residential. The tax declarations covering the subject property,
classifying the same as agricultural, cannot prevail over Resolution No. 29-A. The
following pronouncements of the Court in the Patalinghug case are of particular
relevance herein:
The reversal by the Court of Appeals of the trial court's decision was based on
Tepoot's building being declared for taxation purposes as residential. It is our
considered view, however, that a tax declaration is not conclusive of (he nature
of the property for zoning purposes.  A property may have been declared by its
owner as residential for real estate taxation purposes but it may well be within a
commercial zone. A discrepancy may thus exist in the determination of the nature of
property for real estate taxation purposes vis-a-vis the determination of a property
for zoning purposes.
xxxx
The trial court's determination that Mr. Tepoot's building is commercial and,
therefore, Sec. 8 is inapplicable, is strengthened by the fact that the Sangguniang
Panlungsod has declared the questioned area as commercial or C-2. Consequently,
even if Tepoot's building was declared for taxation purposes as residential, once a
local government has reclassified an area as commercial, that determination
for zoning purposes must prevail. While the commercial character of the
questioned vicinity has been declared thru the ordinance, private respondents have
failed to present convincing arguments to substantiate their claim that Cabaguio
Avenue, where the funeral parlor was constructed, was still a residential zone.
Unquestionably, the operation of a funeral parlor constitutes a "commercial
purpose," as gleaned from Ordinance No. 363.[52] (Emphases supplied.)
Since the subject property had been reclassified as residential land by virtue of
Resolution No. 29-A dated July 9, 1972, it is no longer agricultural land by the time
the CARL took effect on June 15, 1988 and is, therefore, exempt from the CARP.
This is not the first time that the Court made such a ruling.
In the Natalia Realty case, Presidential Proclamation No. 1637 dated April 18,
1979 set aside land in the Municipalities of Antipolo, San Mateo, and Montalban,
Province of Rizal, as townsite areas. The properties owned by Natalia Realty, Inc.
(Natalia properties) were situated within the areas proclaimed as townsite
reservation.  The developer of the Natalia properties was granted the necessary
clearances and permits by the PJSRC for the development of a subdivision in the
area.  Thus, the Natalia properties later became the Antipolo Hills Subdivision. 
Following the effectivity of the CARL on June 15, 1988, the DAR placed the
undeveloped portions of the Antipolo Hills Subdivision under the CARP. For having
done so, the Court found that the DAR committed grave abuse of discretion, thus:
Section 4 of R.A. 6657 provides that the CARL shall "cover, regardless of tenurial
arrangement and commodity produced, all public and private agricultural lands." As
to what constitutes "agricultural land," it is referred to as "land devoted to
agricultural activity as defined in this Act and not classified as mineral, forest,
residential, commercial or industrial land." The deliberations of the Constitutional
Commission confirm this limitation. "Agricultural lands" arc only those lands which
are "arable and suitable agricultural lands" and "do not include commercial,
industrial and residential lands."
Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills
Subdivision cannot in any language be considered as "agricultural lands." These lots
were intended for residential use. They ceased to be agricultural lands upon
approval of their inclusion in the Lungsod Silangan Reservation. Even today,
the areas in question continue to be developed as a low-cost housing subdivision,
albeit at a snail's pace, x x x The enormity of the resources needed for
developing a subdivision may have delayed its completion but this does not
detract from the fact that these lands are still residential lands and outside
the ambit of the CARL.
Indeed, lands not devoted to agricultural activity are outside the coverage of CARL.
These include lands previously converted to non-agricultural uses prior to the
eifectivity of CARL by government agencies other than respondent OAR. In its
Revised Rules and Regulations Governing Conversion of Private Agricultural Lands to
Non-Agricultural Uses, DAR itself defined ''agricultural land" thus -
"x x x Agricultural land refers to those devoted to agricultural activity as defined in
R.A. 6657 and not classified as mineral or forest by the Department of Environment
and Natural Resources (DENR) and its predecessor agencies, and not classified in
town plans and zoning ordinances as approved by the Housing and Land Use
Regulatory Board (BLURB) and its preceding competent authorities prior to 15 June
1988 for residential, commercial or industrial use."
Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is
bound by such conversion. It was therefore error to include the undeveloped portions
of the Antipolo Hills Subdivision within the coverage of CARL.

Be that as it may, the Secretary of Justice, responding to a query by the Secretary of
Agrarian Reform, noted in an Opinion that lands covered by Presidential Proclamation
No. 1637, inter alia, of which the NATALIA lands are part, having been reserved for
townsite purposes "to be developed as human settlements by the proper land and
housing agency," are "not deemed 'agricultural lands' within the meaning and intent
of Section 3 (c) of R.A. No. 6657." Not being deemed "agricultural lands," they are
outside the coverage of CARL.[53]  (Emphases supplied.)
That the land in the Natalia Realty case was reclassified as residential by a
presidential proclamation, while the subject property herein was reclassified as
residential by a local ordinance, will not preclude the application of the ruling of this
Court in the former to the latter. The operative fact that places a parcel of land
beyond the ambit of the CARL is its valid reclassification from agricultural to non-
agricultural prior to the effectivity of the CARL on June 15, 1988, not by how or
whose authority it was reclassified.
In Pasong Bayabas Farmers Association, Inc. v. Court of Appeals[54] (Pasong Bayabas
case), the Court made the following findings:
Under Section 3(c) of Rep. Acl No. 6657. agricultural lands refer to lands devoted to
agriculture as conferred in the said law and not classified as industrial land.
Agricultural lands are only those lands which are arable or suitable lands that do not
include commercial, industrial and residential lands. Section 4(e) of the law provides
that it covers all private lands devoted to or suitable for agriculture regardless of the
agricultural products raised or that can be raised thereon. Rep. Act No. 6657 took
effect only on June 15, 1988. But long before the law took effect, the property
subject of the suit had already been reclassified and converted from
agricultural to non-agricultural or residential land by the following
administrative agencies: (a) the Bureau of Lands, when it approved the
subdivision plan of the property consisting of 728 subdivision lots; (b) the National
Planning Commission which approved the subdivision plan subdivided by the
LDC/CAI for the development of the property into a low-cost housing project; (c)
the Municipal Council of Carmona, Cavite, when it approved Kapasiyahang
Blg. 30 on May 30, 1976; (d) Agrarian Reform Minister Conrado F. Estrella, on July
3, 1979, when he granted the application of the respondent for the development of
the Hakone Housing Project with an area of 35.80 hectares upon the
recommendation of the Agrarian Reform Team, Regional Director of Region IV, which
found, after verification and investigation, that the property was not covered by P.D.
No. 27, it being untenanted and not devoted to the production of palay/or corn and
that the property was suitable for conversion to residential subdivision: (e) by the
Ministry of Local Government and Community Development; (f) the Human
Settlements Regulatory Commission which issued a location clearance, development
permit, Certificate of Inspection and License to Sell to the LDC/private respondent:
and, (g) the Housing and Land Use Regulatory Board which also issued to the
respondent CAI/LDC a license to sell the subdivision lots." (Emphases supplied.)
Noticeably, there were several government agencies which reclassified and
converted the property from agricultural to non-agricultural in the Pasong Bayabas
case.  The CARL though does not specify which specific government agency should
have done the reclassification.  To be exempt from CARP, all that is needed is one
valid reclassification of the land from agricultural to non-agricultural by a duly
authorized government agency before June 15, 1988, when the CARL took effect.  All
similar actions as regards the land subsequently rendered by other government
agencies shall merely serve as confirmation of the reclassification. The Court actually
recognized in the Pasong Bayabas  case the power of the local government to convert
or reclassify lands through a zoning ordinance:
Section 3 of Rep. Act No. 2264, amending the Local Government Code,
specifically empowers municipal and/or city councils to adopt zoning and
subdivision ordinances or regulations in consultation with the National
Planning Commission. A zoning ordinance prescribes, defines, and apportions a
given political subdivision into specific land uses as present and future projection of
needs. The power of the local government to convert or reclassify lands to
residential lands to non-agricultural lands rcclassificd is not subject to the
approval of the Department of Agrarian Reform. Section 65 of Rep. Act No.
6657 relied upon by the petitioner applies only to applications by the landlord or the
beneficiary for the conversion of lands previously placed under the agrarian reform
law after the lapse of five years from its award. It docs not apply to agricultural
lands already converted as residential lands prior to the passage of Rep. Act No.
6657.[56] (Emphases supplied.)
At the very beginning of Junto v. Garilao,[57] the  Court already declared that:
Lands already classified and identified as commercial, industrial or residential before
June 15, 1988 - the date of effectivity of the Comprehensive Agrarian Reform Law
(CARL) - are outside the coverage of this law. Therefore, they no longer need any
conversion clearance from the Department of Agrarian Reform (DAR).[58]
The Court then proceeded to uphold the authority of the City Council of Bacolod to
reclassify as residential a parcel of land through Resolution No. 5153-A, series of
1976. The reclassification was later affirmed by the HSRC. Resultantly, the Court
sustained the DAR Order dated September 13, 1994, exempting the same parcel of
land from CARP Coverage.
The writ of preliminary injunction
Any objection of Buklod against the issuance by the Court of Appeals of a writ of
preliminary injunction, enjoining then DAR Secretary Garilao and Deputy Executive
Secretary Corona from implementing the OP Decision of February 7, 1996 and
Resolution of May 14, 1996 during the pendency of CA-G.R. SP No. 40950, had been
rendered moot and academic when the appellate court already promulgated its
Decision in said case on March 26, 1997 which made the injunction permanent. As
the Court held in Kho v. Court of Appeals[59]:
We cannot likewise overlook the decision of the trial court in the case for final
injunction and damages. The dispositive portion of said decision held that the
petitioner does not have trademark rights on the name and container of the beauty
cream product. The said decision on the merits of the trial court rendered the
issuance of the writ of a preliminary injunction moot and academic notwithstanding
the fact that the same has been appealed in the Court of Appeals. This is supported
by our ruling in La Vista Association, Inc. v. Court of Appeals, to wit:
Considering that preliminary injunction is a provisional remedy which may be
granted at any time after the commencement of the action and before judgment
when it is established that the plaintiff is entitled to the relief demanded and only
when his complaint shows facts entitling such reliefs xxx and it appearing that the
trial court had already granted the issuance of a final injunction in favor of petitioner
in its decision rendered after trial on the merits xxx the Court resolved to Dismiss
the instant petition having been rendered moot and academic. An injunction issued
by the trial court after it has already made a clear pronouncement as to the plaintiffs
right thereto, that is, after the same issue has been decided on the merits, the trial
court having appreciated the evidence presented, is proper, notwithstanding the fact
that the decision rendered is not yet final xxx. Being an ancillary remedy, the
proceedings for preliminary injunction cannot stand separately or proceed
independently of the decision rendered on the merit of the main case for injunction.
The merit of the main case having been already determined in favor of the applicant,
the preliminary determination of its non-existence ceases to have any force and
effect, (italics supplied)
La Vista categorically pronounced that the issuance of a final injunction renders any
question on the preliminary injunctive order moot and academic despite the fact that
the decision granting a final injunction is pending appeal. Conversely, a decision
denying the applicant-plaintiffs right to a final injunction, although appealed, renders
moot and academic any objection to the prior dissolution of a writ of preliminary
injunction.[60]
Issues belatedly raised
Buklod sought to intervene in CA-G.R. SP No. 40950, then pending before the Court
of Appeals, by filing a Manifestation and Omnibus Motion in which it argued only two
points: (1) the writ of preliminary injunction be immediately dissolved for having
been issued in violation of Section 55 of the CARL; and (2) that the Petition for
Review of EMRASON be dismissed for being the wrong remedy.
It was only after the Court of Appeals rendered its Decision dated March 26, 1997
unfavorable to both DAR and Buklod did Buklod raise in its Motion for
Reconsideration several other issues, both factual and legal,[61] directly assailing the
exemption of the subject property from the CARP.  The Court of Appeals refused to
consider said issues because they were raised by Buklod for the first time in its
Motion for Reconsideration.
Buklod persistently raises the same issues before this Court, and the Court, once
more, refuses to take cognizance of the same.
As a rule, no issue may be raised on appeal unless it has been brought before the
lower tribunal for its consideration. Higher courts are precluded from entertaining
matters neither alleged in the pleadings nor raised during the proceedings below, but
ventilated for the first time only in a motion for reconsideration or on appeal.[62]  The
issues were first raised only in the Motion for Reconsideration of the Decision of the
Court of Appeals, thus, it is as if they were never duly raised in that court at all.
"Hence, this Court cannot now, for the first time on appeal, entertain these issues,
for to do so would plainly violate the basic rule of fair play, justice and due process.
The Court reiterates and emphasizes the well-settled rule that an issue raised for the
first time on appeal and not raised timely in the proceedings in the lower court is
barred by estoppel.[63]
Indeed, there are exceptions to the aforecited rule that no question may be raised
for the first time on appeal. Though not raised below, the issue of lack of jurisdiction
over the subject matter may be considered by the reviewing court, as it may be
raised at any stage. The said court may also consider an issue not properly raised
during trial when there is plain error.  Likewise, it may entertain such arguments
when there are jurisprudential developments affecting the issues, or when the issues
raised present a matter of public policy.[64] Buklod, however, did not allege, much
less argue, that its case falls under any of these exceptions.
Nonetheless, even when duly considered by this Court, the issues belatedly raised by
Buklod are without merit.
Contrary to the contention of Buklod, there is no necessity to carry out the
conversion of the subject property to a subdivision within one year, at the risk of
said property reverting to agricultural classification.
Section 36(1) of the Agricultural Land Reform Code, in effect since August 8, 1963,
provided:
SEC. 36. Possession of Landholding; Exceptions.— Notwithstanding any agreement
as to the period or future surrender, of the land, an agricultural lessee shall continue
in the enjoyment and possession of his landholding except when his dispossession
has been authorized by the Court in a judgment that is final and executory if after
due hearing it is shown that:
(1) The agricultural lessor-owner or a member of his immediate family will personally
cultivate the landholding or will convert the landholding, if suitably located, into
residential, factory, hospital or school site or other useful non-agricultural purposes:
Provided, That the agricultural lessee shall be entitled to disturbance compensation
equivalent to five years rental on his landholding in addition to his rights under
Sections twenty-five and thirty-four, except when the land owned and leased by the
agricultural lessor is not more than five hectares, in which case instead of
disturbance compensation the lessee may be entitled to an advanced notice of at
least one agricultural year before ejectment proceedings are filed against
him: Provided, further, That should the landholder not cultivate the land himself
for three years or fail to substantially carry out such conversion within one
year after the dispossession of the tenant, it shall be presumed that he
acted in bad faith and the tenant shall have the right to demand possession
of the land and recover damages for any loss incurred by him because of
said dispossessions; xxx. (Emphasis supplied.)

On September 10, 1971, the Agricultural Land Reform Code was amended and it
came to be known as the Code of Agrarian Reforms. After its amendment, Section
36(1) stated:
(1) The landholding is declared by the department head upon recommendation of the
National Planning Commission to be suited for residential, commercial, industrial or
some other urban purposes: Provided, That the agricultural lessee shall be entitled to
disturbance compensation equivalent to five times the average of the gross harvests
on his landholding during the last five preceding calendar years.
At the time Resolution No. 29-A was enacted by the Municipality of Dasmarinas
on July 9, 1972, the Code of Agrarian Reforms was already in effect. The amended
Section 36(3) thereof no longer contained the one-year time frame within which
conversion should be carried out.
More importantly, Section 36(1) of the Code o[ Agrarian Reforms would apply only if
the land in question was subject of an agricultural leasehold, a fact that was not
established in the proceedings below. It may do well for the Buklod members to
remember that they filed their present Petition to seek award of ownership over
portions of the subject property as qualified farmer-beneficiaries under the CARP;
and not payment of disturbance compensation as agricultural lessees under the Code
of Agrarian Reforms. The insistence by Buklod on the requisites under Section 36(1)
of the Agricultural Land Reform Code/Code of Agrarian Reforms only serves to
muddle the issues rather than support its cause.
Buklod likewise invokes the vested rights of its members under the Agricultural Land
Reform Code/Code of Agrarian Reforms and the Tenants Emancipation Decree, which
preceded the CARP.  Yet, for the Buklod
members to be entitled to any of the rights and benefits under the said laws, it is
incumbent upon them to prove first that they qualify as agricultural lessees or farm
workers of the subject property, as defined in Section 166(2)[65] and (15)[66]of the
Code of Agrarian Reforms; and/or they are tenant-farmers of private agricultural
lands primarily devoted to rice and corn, under a system of share-crop or lease
tenancy, and are members of a duly recognized farmer's cooperative, as required by
the Tenants Emancipation Decree. None of these determinative facts were
established by Buklod.
Buklod counters that it precisely moved for a hearing before the Court of Appeals so
that it could present evidence to prove such facts, but the appellate court
erroneously denied its motion.
The Court finds that the Court of Appeals did not err on this matter.
In the recent case of Office of the Ombudsman v. Sison,[67] the Court expounded on
the rules on intervention:
It is fundamental that the allowance or disallowance of a Motion 10 Intervene is
addressed to the sound discretion of the court. The permissive tenor of the rules
shows the intention lo give to the court the full measure of discretion in permitting or
disallowing the intervention, thus:
SECTION 1. Who may intervene, - A person who has a Icga) interest in the mailer
in litigation, or in the success of either of the parties, or an interest against both, or
is so situated as to be adversely affected by a distribution or other disposition of
property in the custody of the court or of an officer thereof may, with leave of court,
be allowed to intervene in the action. The court shall consider whether or not the
intervention will unduly delay or prejudice the adjudication of the rights of the
original parties, and whether or not the intcrvenor's rights may be fully protected in
a separate proceeding.
SECTION 2. Time to intervene. - The motion to intervene may be filed al any
time before rendition of judgment by the trial court. A copy of the pleading-in-
intervention shall be attached to the motion and served on the original parties.
(Emphasis supplied.)
Simply, intervention is a procedure by which third persons, not originally parties to
the suit but claiming an interest in the subject matter, come into the case in order to
protect their right or interpose their claim. Its main purpose is to settle in one action
and by a single judgment all conflicting claims of, or the whole controversy among,
the persons involved.
To warrant intervention under Rule 19 of the Rules of Court, two requisites must
concur: (1) the movant has a legal interest in the matter in litigation; and (2)
intervention must not unduly delay or prejudice the adjudication of the rights of the
parties, nor should the claim of the intervenor be capable of being properly decided
in a separate proceeding. The interest,' which entitles one to intervene, must involve
the matter in litigation and of such direct and immediate character that the
intervenor will either gain or lose by the direct legal operation and effect of the
judgment.[68]
To apply the rules strictly, the motion of Buklod to intervene was filed too late.
According to Section 2, Rule 19 of the Rules of Civil Procedure, "a motion to
intervene may be filed at any time before rendition of judgment by the trial court."
Judgment was already rendered in DARAB Case No. IV-Ca-0084-92 (the petition of
EMRASON to nullify the notices of acquisition over the subject property), not only by
the DAR Hearing Officer, who originally heard the case, but also the DAR
Secretary, and then the OP, on appeal.
Buklod only sought to intervene when the case was already before the Court of
Appeals. The appellate court, in the exercise of its discretion, still allowed the
intervention of Buklod in CA-G.R. SP No. 40950 only because it was "not being in
any way prejudicial to the interest of the original parties, nor will such
intervention change the factual legal complexion of the case."[69] The
intervention of Buklod challenged only the remedy availed by EMRASON and the
propriety of the preliminary injunction issued by the Court of Appeals, which were
directly and adequately addressed by the appellate court in its Decision dated March G.R. No. 131624 are hereby DENIED. The Decision dated March 26, 1997 and the
26, 1997. Resolution dated November 24, 1997 of the Court of Appeals in CA-G.R. SP No.
40950 are hereby AFFIRMED.
The factual matters raised by Buklod in its Motion for Reconsideration of the March
26, 1997 Decision of the Court of Appeals, and which it sought to prove by evidence, SO ORDERED.
inevitably changes "the factual legal complexion of the case."  The allegations of
Buklod that its members are tenant-farmers of the subject property who acquired
vested rights under previous agrarian reform laws, go against the findings of the
DAR Region IV Hearing Officer, adopted by the DAR Secretary, the OP, and Court of
Appeals, that the subject property was being acquired under the CARP for
distribution to the tenant-farmers of the neighboring NDC property, after a
determination that the latter property was insufficient for the needs of both the NDC-
Marubeni industrial estate and the tenant-farmers.

Furthermore, these new claims of Buklod are beyond the appellate jurisdiction of the
Court of Appeals, being within the primary jurisdiction of the DAR. As Section 50 of
the CARL, as amended, reads:

SEC. 50. Quasi-Judicial Powers of the DAR. - The DAR is hereby vested with primary
jurisdiction to determine and adjudicate agrarian reform matters and shall have
exclusive original jurisdiction over all matters involving the implementation of
agrarian reform, except those falling under the exclusive jurisdiction of the
Department of Agriculture (DA) and the Department of Environment and Natural
Resources (DENR).

In fact, records reveal that Buklod already sought remedy from the DARAB. DARAB
Case No. IV-CA-0261, entitled Buklod nang Magbubukid sa Lupaing Ramos, rep. by
Edgardo Mendoza, et at. v. E.M. Ramos and Sons, Inc., et al., was pending at about
the same time as DARAB Case No. lV-Ca-0084-92, the petition of EMRASON for
nullification of the notices of acquisition covering the subject property. These two
cases were initially consolidated before the DARAB Region IV. The DARAB Region IV
eventually dismissed DARAB Case No. IV-Ca-0084-92 and referred the same to the
DAR Region IV Office, which had jurisdiction over the case. Records failed to reveal
the outcome of DARAB Case No. IV-CA-0261,

On a final note, this Court has stressed more than once that social justice - or any
justice for that matter - is for the deserving, whether he be a millionaire in his
mansion or a pauper in his hovel. It is true that, in case of reasonable doubt, the
Court is called upon to tilt the balance in favor of the poor to whom the Constitution
fittingly extends its sympathy and compassion. But never is it justified to give
preference to the poor simply because they are poor, or to reject the rich simply
because they are rich, for justice must always be served for poor and rich alike,
according to the mandate of the law.[70] Vigilance over the rights of the landowners is
equally important because social justice cannot be invoked to trample on the rights
of property owners, who under our Constitution and laws are also entitled to
protection.[71]

WHEREFORE, the Petitions for Review filed by the Buklod Nang Magbubukid Sa
Lupaing Ramos, Inc. in G.R. No. 131481 and the Department of Agrarian Reform in

G.R. No. 189185, August 16, 2016
WILFREDO MOSQUEDA, MARCELO VILLAGANES, JULIETA LAWAGON,
CRISPIN ALCOMENDRAS, CORAZON SABINADA, VIRGINIA CATA-AG,
FLORENCIA SABANDON, AND LEDEVINA ADLAWAN, Petitioners, v. PILIPINO
BANANA GROWERS & EXPORTERS ASSOCIATION, INC., DAVAO FRUITS
CORPORATION, AND LAPANDAY AGRICULTURAL AND DEVELOPMENT
CORPORATION, Respondents.
G.R. No. 189305
CITY GOVERNMENT OF DAVAO, Petitioner, v. COURT OF APPEALS, PILIPINO
BANANA GROWERS & EXPORTERS ASSOCIATION (PBGEA), DAVAO FRUITS
CORPORATION, AND LAPANDAY AGRICULTURAL AND DEVELOPMENT
CORPORATION, Respondent.
DECISION
BERSAMIN, J.:
This appeal through the consolidated petitions for review on certiorari assails the
decision promulgated on January 9, 20091 whereby the Court of Appeals (CA)
reversed and set aside the judgment rendered on September 22, 2007 by the
Regional Trial Court (RTC), Branch 17, in Davao City upholding the validity and
constitutionality of Davao City Ordinance No. 0309-07, to wit: ChanRoblesVirtualawlibrary
WHEREFORE, premises considered, the appeal is GRANTED. The assailed
September 22, 2007 Decision of the Regional Trial Court (RTC), 11th Judicial Region,
Branch 17, Davao City, upholding the validity and constitutionality of Davao City
Ordinance No. 0309-07, is hereby REVERSED and SET ASIDE.
FURTHER, the Writ of Preliminary Injunction dated 28 January 2008 enjoining the
City Government of Davao, and any other person or entity acting in its behalf, from
enforcing and implementing City Ordinance No. 0309-07, is hereby made
permanent.
SO ORDERED.
Antecedents
After several committee hearings and consultations with various
stakeholders, the Sangguniang Panlungsod of Davao City enacted Ordinance No.
0309, Series of 2007, to impose a ban against aerial spraying as an agricultural
practice by all agricultural entities within Davao City, viz.:
ChanRoblesVirtualawlibrary
ORDINANCE NO. 0309-07
Series of 2007
AN ORDINANCE BANNING AERIAL SPRAYING AS AN AGRICULTURAL PRACTICE IN
ALL AGRICULTURAL ACTIVITIES BY ALL AGRICULTURAL ENTITIES IN DAVAO CITY
Be it enacted by the Sangguniang Panlungsod of Davao City in session assembled
that:
SECTION 1. TITLE. This Ordinance shall be known as "An Ordinance Banning
chanRoblesvirtualLawlibrary
Aerial Spraying as an Agricultural Practice in all Agricultural Activities by all
Agricultural Entities in Davao City";
SECTION 2. POLICY OF THE CITY. It shall be the policy of the City of Davao to
eliminate the method of aerial spraying as an agricultural practice in all agricultural
activities by all entities within Davao City;
SECTION 3. DEFINITION OF TERMS:
a. Aerial Spraying - refers to application of substances through the use of aircraft
chanRoblesvirtualLawlibrary
of any form which dispenses the substances in the air.
b. Agricultural Practices - refer to the practices conducted by agricultural entities in
relation to their agricultural activities;
c. Agricultural Activities - refer to activities that include, but not limited to, land
preparation, seeding, planting, cultivation, harvesting and bagging;
d. Agricultural Entities - refer to persons, natural or juridical, involved in agricultural
activities
e. Buffer Zone - is an identified 30-meter zone within and around the boundaries of
agricultural farms/plantations that need special monitoring to avoid or minimize
harm to the environment and inhabitants pursuant to policies and guidelines set
forth in this Ordinance and other government regulations. It is an area of land that
must lie within the property which does not include public lands, public
thoroughfares or adjacent private properties. It must be planted with diversified
trees that grow taller than what are usually planted and grown in the plantation to
protect those within the adjacent fields, neighboring farms, residential area, schools
and workplaces.
SECTION 4. SCOPE AND APPLICABILITY - The provisions of this Ordinance shall
apply to all agricultural entities within the territorial jurisdiction of Davao City;
SECTION 5. BAN OF AERIAL SPRAYING - A ban on aerial spraying shall be strictly
enforced in the territorial jurisdiction of Davao City three (3) months after the
effectivity of this Ordinance.
SECTION 6. BUFFER ZONE - Consistent with national legislation and government
regulations, all agricultural entities must provide for a thirty (30) meter buffer zone
within the boundaries of their agricultural farms/plantations. This buffer zone must
be properly identified through Global Positioning System (GPS) survey. A survey plan
showing the metes and bounds of each agricultural farm/plantation must be
submitted to the City Mayor's Office, with the buffer zone clearly identified therein;
SECTION 7. PENAL PROVISION - Violation of any provision of this Ordinance shall be
punished as follows:
a. First Offense: Fine of P5,000.00 and imprisonment of not less than one (1)
chanRoblesvirtualLawlibrary
month but not more than three (3) months;
b. Second Offense: Fine of P5,000.00 and imprisonment of not less than three (3)
months but not more than six (6) months and suspension of City-issued permits and
licenses for one (1) year;
c. Third Offense: Fine of P5,000.00 and imprisonment of not less than six (6) months
but not more than one (1) year and perpetual cancellation of City issued permits and
licenses;
Provided, that in case the violation has been committed by a juridical person, the
person in charge of the management thereof shall be held liable;
SECTION 8. REPEALING CLAUSE - Any Ordinance that is contrary to or inconsistent
with any of the provisions of this Ordinance shall be deemed amended or repealed
accordingly.
SECTION 9. EFFECTIVITY - This Ordinance shall take effect thirty (30) days from its
publication in a newspaper of general circulation in Davao City;
ENACTED, January 23, 2007 by a majority vote of all the Members of the
Sangguniang Panlungsod.2 chanroblesvirtuallawlibrary
City Mayor Rodrigo Duterte approved the ordinance on February 9, 2007.3 The
ordinance took effect on March 23, 2007 after its publication in the
newspaper Mindanao Pioneer.4 Pursuant to Section 5 of the ordinance, the ban
against aerial spraying would be strictly enforced three months thereafter.
The Pilipino Banana Growers and Exporters Association, Inc. (PBGEA) and two of its
members, namely: Davao Fruits Corporation and Lapanday Agricultural and
Development Corporation (PBGEA, et al.), filed their petition in the RTC to challenge
the constitutionality of the ordinance, and to seek the issuance of provisional reliefs
through a temporary restraining order (TRO) and/or writ of preliminary
injunction.5They alleged that the ordinance exemplified the unreasonable exercise of
police power; violated the equal protection clause; amounted to the confiscation of
property without due process of law; and lacked publication pursuant] to Section
5116 of Republic Act No. 7160 (Local Government Code).
On May 8, 2007, the residents living within and adjacent to banana plantations in
Davao City led by Wilfredo Mosqueda,7 joined by other residents of Davao
City,8 (Mosqueda, et al.) submitted their Motion for Leave to Intervene and
Opposition to the Issuance of a Preliminary Injunction.9 The RTC granted their
motion on June 4, 2007.10 chanrobleslaw
On June 20, 2007, the RTC granted the prayer for issuance of the writ of preliminary
injunction, and subsequently issued the writ.11 chanrobleslaw
Judgment of the RTC
On September 22, 2007, after trial, the RTC rendered judgment declaring Ordinance
No. 0309-07 valid and constitutional, decreeing thusly: ChanRoblesVirtualawlibrary
WHEREFORE, finding the subject [O]rdinance No. 0309-07 valid and constitutional
in all aspect of the grounds assailed by the petitioner, said [C]ity [O]rdinance No.
0309-07, is sustained of its validity and constitutionality.
Accordingly, the order of this court dated June 20, 2007, granting the writ of
preliminary injunction as prayed for by petitioner is ordered cancelled and set aside
as a result of this decision.
SO ORDERED.12 chanroblesvirtuallawlibrary
The RTC opined that the City of Davao had validly exercised police power13 under the
General Welfare Clause of the Local Government Code;14 that the ordinance, being
based on a valid classification, was consistent with the Equal Protection Clause; that
aerial spraying was distinct from other methods of pesticides application because it
exposed the residents to a higher degree of health risk caused by aerial drift;15 and
that the ordinance enjoyed the presumption of constitutionality, and could be
invalidated only upon a clear showing that it had violated the Constitution.16 chanrobleslaw
However, the RTC, recognizing the impracticability of the 3-month transition period
under Section 5 of Ordinance No. 0309-07, recommended the parties to agree on an
extended transition period.17 chanrobleslaw
Decision of the CA
PBGEA, et al. appealed,18 and applied for injunctive relief from the CA,19 which
granted the application20and consequently issued a TRO to meanwhile enjoin the
effectivity of the ordinance.21 chanrobleslaw
On January 9, 2009, the CA promulgated its assailed decision reversing the
judgment of the RTC.22 It declared Section 5 of Ordinance No. 0309-07 as void and
unconstitutional for being unreasonable and oppressive; found the three-month
transition period impractical and oppressive in view of the engineering and technical
requirements of switching from aerial spraying to truck-mounted boom spraying;
and opined that the ban ran afoul with the Equal Protection Clause inasmuch as
Section 3(a) of the ordinance - which defined the term aerial spraying - did not make
reasonable distinction between the hazards, safety and beneficial effects of liquid
substances that were being applied aerially; the different classes of pesticides or
fungicides; and the levels of concentration of these substances that could be
beneficial and could enhance agricultural production.
The CA did not see any established relation between the purpose of protecting the
public and the environment against the harmful effects of aerial spraying, on one
hand, and the imposition of the ban against aerial spraying of all forms of
substances, on the other. It ruled that the maintenance of the 30-meter buffer zone
within and around the agricultural plantations under Section 6 of Ordinance No.
0309-07 constituted taking of property without due process because the landowners
were thereby compelled to cede portions of their property without just
compensation; that the exercise of police power to require the buffer zone was
invalid because there was no finding that the 30-meter surrounding belt was
obnoxious to the public welfare; and that, accordingly, Ordinance No. 0309-07 was
unconstitutional because of the absence of a separability clause.
The City of Davao and the intervenors filed their respective motions for
reconsideration, but the CA denied the motions on August 7, 2009.23 chanrobleslaw
Hence, the separate, but now consolidated, appeals by petition for review
on certiorari.
Issues
In G.R. No. 189185, petitioners Mosqueda, et al. rely on the following grounds,
namely: ChanRoblesVirtualawlibrary
I
THE COURT OF APPEALS IGNORED FUNDAMENTAL PRECEPTS AND CONCEPTS OF
LAW WHICH, PROPERLY CONSIDERED, NECESSARILY LEAD TO THE CONCLUSION
THAT THE DAVAO ORDINANCE IS CONSTITUTIONAL AND VALID
II
THE DAVAO ORDINANCE IS CONSISTENT WITH THE EQUAL PROTECTION CLAUSE
III
THE MEANS EMPLOYED BY THE DAVAO ORDINANCE IS MORE THAN REASONABLY
RELATED TO THE PURPOSE IT SEEKS TO ACHIEVE
IV
THE DAVAO ORDINANCE IS VALID, BEING DEMONSTRABLY REASONABLE AND FAIR
V
THE REQUIREMENT RELATING TO THE 30-METER BUFFER ZONE ARE [SIC]
CONSISTENT WITH DUE PROCESS OF LAW, BEING A VALID EXERCISE OF POLICE
POWER
Mosqueda, et al. state that the CA ignored well-established precepts like the primacy
of human rights over property rights and the presumption of validity in favor of the
ordinance; that the CA preferred the preservation of the profits of respondents
PBGEA, et al. to the residents' right to life, health and ecology,24 thereby
disregarding the benevolent purpose of the ordinance; that the CA assumed the
functions of the lawmaker when it set aside the wisdom behind the enactment of the
ordinance; that the CA failed to apply the precautionary principle, by which the State
was allowed to take positive actions to prevent harm to the environment and to
human health despite the lack of scientific certainty; that the CA erred in applying
the "strict scrutiny method" in holding that the ordinance violated the Equal
Protection Clause because it only thereby applied in reviewing classifications that
affected fundamental rights; that there was nothing wrong with prohibiting aerial
spraying per se considering that even the aerial spraying of water produced drift that
could affect unwilling neighbors whose, constitutional right to a clean and healthy
environment might be impinged;25  that as far as the three-month period was
cralawred
concerned, the CA should have considered that manual spraying could be conducted
while the PBGEA, et al. laid down the preparations for the conduct of boom
spraying;26 that "reasonableness" could be more appropriately weighed by balancing
the interests of the parties against the protection of basic rights, like the right to life,
to health, and to a balanced and healthful ecology;27 that PBGEA, et al. did not
substantiate their claim of potential profit losses that would result from the shift;
that business profits should remain inferior and subordinate to their fundamental
rights as residents of Davao City, which were the rights that the assailed ordinance
has sought to protect;28 that PBGEA, et al. did not explore other modes of pesticide
treatment either as a stop-gap or as a temporary measure while shifting to truck
mounted boom spraying;29 that the imposition of the 30-meter buffer zone was a
valid exercise of police power that necessarily flowed from the protection afforded by
the ordinance from the unwanted effects of ground spraying; that the imposition of
the buffer zone did not constitute compensable taking under police power, pursuant
to the pronouncements in Seng Kee & Co. v. Earnshaw and Piatt 30Patalinghug v.
Court of Appeals,31 and Social Justice Society (SJS) v. Atienza, Jr.;32 and that the 30-
meter buffer zone conformed with the ISO 1400033 and the DENR Environmental
Compliance Certificate (ECC) requirement.34 chanrobleslaw
In G.R. No. 189305, petitioner City of Davao submits the following as the issues to
be considered and resolved, to wit: ChanRoblesVirtualawlibrary
I promote human health but also serves as a measure against air pollution.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT
SECTION 5 OF ORDINANCE NO. 0309-07, SERIES OF 2007 IS OPPRESSIVE AND AN
UNREASONABLE EXERCISE OF DELEGATED POLICE POWER
II
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT
ORDINANCE NO. 0309-07 IS VIOLATIVE OF THE EQUAL PROTECTION CLAUSE OF
THE CONSTITUTION;
III
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT
ORDINANCE NO. 0309-07 CONSTITUTES TAKING OF PROPERTY WITHOUT
COMPENSATION, THUS, VIOLATIVE OF THE DUE PROCESS CLAUSE OF THE
CONSTITUTION
IV
WHETHER OR NOT AERIAL SPRAYING OF FUNGICIDES IS SAFE TO THE PEOPLE AND
THE ENVIRONMENT
The City of Davao explains that it had the authority to enact the assailed ordinance
because it would thereby protect the environment and regulate property and
business in the interest of the general welfare pursuant to Section 458 of the Local
Government Code;35 that the ordinance was enacted to carry out its mandate of
promoting the public welfare under the General Welfare Clause (Section 16 of
the Local Government Code); that the ordinance did not violate the Equal Protection
Clause because the distinction lies in aerial spray as a method of application being
more deleterious than other modes; that aerial spraying produces more drift that
causes discomfort, and an extremely offensive and obnoxious experience the part of
the residents; that spray drift cannot be controlled even with use by the respondents
of highly advanced apparatus, such as the Differential Global Positioning System,
Micronair Rotary Drift Control Atomizers, Intellimap, Intelliflow Spray Valve System,
Control and Display Unit and the Target Flow Spray Valve Switch System;36 that
because of the inherent toxicity of Mancozeb (the fungicide aerially applied by the
respondents), there is no need to provide for a substantial distinction based on the
level of concentration;37 that as soon as fungicides are released in the air, they
become air pollutants pursuant to Section 5 of Republic Act No. 8749 (Philippine
Clean Air Act of 1999),38 and the activity thus falls under the authority of the local
government units to ban; and that the ordinance does not only seek to protect and
The City of Davao insists that it validly exercised police power because it does not
thereby oblige the shift from aerial to truck-mounted boom spraying; that the
respondents only choose boom spraying to justify the alleged impracticability of the
transition period by erroneously adding the months required for each of the stages
without considering other steps that may be simultaneously undertaken;39 that the
Court should apply its ruling in Social Justice Society v. Atienza, Jr.,40 by which the
six-month period for the folding-up of business operations was declared a legitimate
exercise of police power; that the respondents did not present any documentary
evidence on the feasibility of adopting other methods;41that only 1,800 hectares out
of 5,200 hectares of plantations owned and operated by PBGEA's members use aerial
spraying, hence, the perceived ominous consequence of imposing a ban on aerial
spray to the banana industry is entirely misleading;42 that the urgency of prohibiting
aerial spray justifies the three-month transition period; that the complaints of the
community residents - ranging from skin itchiness, contraction and/or tightening in
the chest, nausea, appetite loss and difficulty in breathing after exposure to spray
mist - only prove that aerial spraying brings discomfort and harm to the residents;
that considering that the testimony of Dr. Lynn Crisanta R. Panganiban, a
pharmacologist and toxicologist, established that fungicides could cause debilitating
effects on the human body once inhaled or digested, the CA erred in holding that
there was no correlation between aerial application and the complaints of the
residents; that given that aerial spray produces more drift and is uncontrollable
compared to the other methods of applying fungicides, the ordinance becomes
reasonable;43 and that the medical-related complaints of the residents need not be
proven by medical records considering that these were based on personal
knowledge.44 chanrobleslaw
The City of Davao contends that the imposition of the 30-meter buffer zone is a valid
exercise of police power, rendering the claim for just compensation untenable; that
the maintenance of the buffer zone does not require the respondents to cede a
portion of their landholdings; that the planting of diversified trees within the buffer
zone will serve to insulate the residents from spray drift; that such buffer zone does
not deprive the landowners of the lawful and beneficial use of their property;45 and
that the buffer zone is consistent with the Constitution, which reminds property
owners that the use of property bears a social function.46chanrobleslaw
In their comment, the respondents posit that the petition of the City; of Davao
should be dismissed for failure to attach material portions of the records, and for
raising factual errors that are not within the realm of this appeal by petition for
review on certiorari;47 that the CA correctly declared the ordinance as unreasonable
due to the impossibility of complying with the three-month transition period; that
shifting from aerial to truck-mounted boom spraying will take at least three years
and entails careful planning, equipment and machineries, civil works, and capital
funding of at least P400,000,000.00;48 that the Court could rely on its ruling in City
of Manila v. Laguio, Jr.,49 where an ordinance directing an existing establishment to
wind up or to transfer its business was declared as confiscatory in nature, and,
therefore, unconstitutional;50 that the total ban against aerial sprayig, coupled with
the inadequate time to shift to truck-mounted boom spraying, effectively deprives
the respondents with an efficient means to control the spread of the Black Sigatoka
disease that threatens the banana plantations; that the ordinance will only expose
the plantations to the virulent disease that is capable of infecting 60% of the
plantations on a single cycle51 missed;52 that compared with other modes of
application, aerial spraying is more cost-efficient, safe and accurate; that truck-
mounted boom spraying, for instance, requires 80-200 liters of solution per
hectare,53 while manual spraying uses 200-300 liters of solution per hectare; that
aerial spraying oily requires 30 liters per hectare; that in terms of safety and
accuracy, manual spraying is the least safe and accurate,54 and produces more drift
than aerial spraying;55 that due to the 300-liter solution required, the workers will be
more exposed to the solution during manual application and such application will
thus be more in conflict with the purpose of the ordinance to prevent human
exposure;56 that the respondents also find the irrigation sprinklers suggested by the
City of Davao as wasteful, unsafe and impractical because it cannot provide the
needed coverage for application of the solution to effectively control. the Black
Sigatoka disease; that in contrast, aerial application, coupled with the latest state of
the art technology and equipment, ensures accuracy, effectiveness, efficiency and
safety compared to the other methods of application; that the respondents vouch for
the safety of the fungicides they use by virtue of such fungicides having been
registered with the Fertilizer and Pesticide Authority (FPA) and classified as Category
IV,57 and found to be mild; and that oral ingestion in large doses is required before
any adverse effects to humans may result.58 chanrobleslaw
The respondents lament that the ban was imposed without any scientific basis; that
the report59prepared by a fact-finding team (composed of the Vice Mayor, the City
Health Officer, The City Planning and Development Coordinator and the Assistance
City Planning and Development Coordinator) organized by the City of Davao revealed
that there was no scientific evidence to support the clamor for the ban against aerial
spraying; that furthermore, national government agencies like the Department of
Agriculture (DA), Department of Health (DOR) and the Department of Trade and
Industry (DTI) similarly concluded that there was no scientific evidence to support
the ban;60 that for four decades since the adoption of aerial spraying, there has been
no reported outbreak or any predisposition to ailment connected with the pesticides
applied; that the testimonies of the residents during the trial were mere "emotional
anecdotal evidence" that did not establish any scientific or medical bases of any
causal connection between the alleged health conditions complained of and the
fungicides applied during aerial spraying;61 that the allegations of health and
environmental harm brought by the pesticides used to treat the banana plantations
were unfounded; that the 2001 study of the International Agency for Research on
Cancer showed that, contrary to the claim of Dra. Panganiban, the by-product of
Mancozeb (Ethylenethiourea or ETU) was "non-genotoxic" and not expected to
produce thyroid cancer;62 that Carlos Mendoza, a geo-hydrologist and geophysicist,
testified that underground water contamination through aerial spraying would be
impossible because of the presence of latex, thick layers of clay and underlying rock
formations;63 that even the study conducted by the Philippine Coconut Authority
(PCA) showed that the rhinoceros beetle infestation in coconut plantations adjacent
to the banana plantations was due to the farmer's failure to observe phyto-sanitary
measures, not to aerial spraying;64 that furthermore, aerial spraying is internationally
accepted as a "Good Agricultural Practice" (GAP)65 under the International Code of
Conduct on the Distribution and Use of Pesticides by the United Nations-Food and
Agricultural Organization (UN-FAO); that as such, they observe the standards laid
down by the UN-FAO, and utilize aerial spraying equipment that will ensure
accuracy, safety and efficiency in applying the substances, and which more than
complies with the requirement under the Guidelines on Good Practice for Aerial
Application of Pesticides (Rome 2001);66 that in addition, they strictly observe
standard operating procedures prior to take-off,67 in-flight68 and post-flight;69 that
they substantially invested in state-of-the-art technology and equipment designed to
ensure safety, accuracy, and effectiveness of aerial spraying operations, to avoid
aerial drift;70 that their equipment include: wind meters (to measure the wind
velocity in a specific area), wind cones (to determine the wind direction, and whether
the wind is a headwind, tailwind or a crosswind); central weather station (to
measure wind speed, the temperature and relative humidity), Differential Global
Positioning System (DGPS),71 Intellimap,72Control and Display Unit,73 Micronair
Rotary Drift Control Atomizers (AU 5000 Low-Drift model),74Intelliflow Spray Valve
System,75 and Target Flow Spray Valve Switch System;76 and that they want to
minimize, if not, eliminate the occurrence of spray drift in order to minimize wastage
of resources and reduced efficiency of spraying programs implemented to control the
Black Sigatoka disease.77 chanrobleslaw
The respondents maintain that Ordinance No. 0309-07 will regulate aerial spraying
as a method of application, instead of the substances being used therein; that the
prohibition is overbroad in light of other available reasonable measures that may be
resorted to by the local government; that the ordinance is unreasonable, unfair,
oppressive, and tantamount to a restriction or prohibition of trade;78 that the
ordinance will effectively impose a prohibition against all pesticides, including
fungicides that fall under the mildest type of substance; that as such, the petitioner
has disregarded existing valid and substantive classifications established and
recognized by the World Health Organization (WHO) that are adopted by the FPA;
that the FPA is the national agency armed with the professional competence,
technical expertise, and legal mandate to deal with the issue of use and application
of pesticides in our country; that the fungicides they administer are duly registered
with the FPA, and with other more developed countries that have observed a stricter
environmental and public health regulation such as the United States Environmental
Protection Agency (EPA) and the European Union (EU); that as such, the City of
Davao has disregarded valid, substantial and significant distinctions between levels
of concentration of the fungicides in the water solution aerially sprayed; that it is the
FPA that regulates the level of concentration of agricultural chemicals prior to
commercial distribution and use in the country; that the members of PBGEA only
spray a water solution (water cocktail) containing 0.1 liter to 1.5 liters of the active
ingredient of fungicide in a 30-liter water solution per hectare that has undergone
rigorous testing and .evaluation prior to registration by the FPA; that the active
ingredients of the fungicide are so diluted that no harm may be posed to public
health or to the environment through aerial application;79 that the ordinance was so
broad that it prohibits aerial application of any substance, including water;80 and that
aside from fungicides, the respondents also aerially apply vitamins, minerals and
organic fertilizers.81
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The respondents submit that the maintenance of the 30-meter buffer zone under
Section 5 of the ordinance constitutes an improper exercise of police power; that the
ordinance will require all landholdings to maintain the buffer zone, thereby
diminishing to a mere 1,600 square meters of usable and productive land for every
hectare of the plantation bounding residential areas, with the zone being reserved
for planting "diversified trees;" that this requirement amounts to taking without just
compensation or due process; and that the imposition of the buffer zone unduly
deprives all landowners within the City of Davao the beneficial use of their
property;82 that the precautionary principle cannot be applied blindly, because its
application still requires some scientific basis; that the principle is also based on a
mere declaration that has not even reached the level of customary international law,
not on a treaty binding on the Government.83 chanrobleslaw
The respondents argue that the illegality of the transition period results in the
invalidity of the ordinance as it does not carry a separability clause; and that the
absence of such clause signifies the intention of the Sangguniang Panlungsod of City
of Davao to make the ordinance effective as a whole.84 chanrobleslaw
The main issue is whether or not Ordinance No. 0309-07 is unconstitutional on due
process and equal protection grounds for being unreasonable and oppressive, and an
invalid exercise of police power: (a) in imposing a ban on aerial spraying as an
agricultural practice in Davao City under Section 5; (b) in decreeing a 3-month
transition-period to shift to other modes of pesticide application under Section 5; and
(c) in requiring the maintenance of the 30-meter buffer zone under Section 6 thereof
in all agricultural lands in Davao City.
Ruling of the Court
We deny the petitions for review for their lack of merit.
I
Preliminary considerations:
The significant role of the banana industry
in ensuring economic stability and food security
There is no question that the implementation of Ordinance No. 0309-07, although
the ordinance concerns the imposition of the ban against aerial spraying in all
agricultural lands within Davao City, will inevitably have a considerable impact on the
country's banana industry, particularly on export trading.
Banana exportation plays a significant role in the maintenance of the country's
economic, stability and food security. Banana is a consistent dollar earner and the
fourth largest produced commodity in the Philippines.85 In 2010, the Philippines
figured among the top three banana producing countries in the world.86 In 2014,
fresh bananas accounted for 17% of the country's top agricultural export
commodities, gaining a close second to coconut oil with 18%.87 The Davao Region
(Region XI)88 was the top banana producing region in 2013, with a production growth
rate of 16.4%, and 33.76% share in the total agricultural output of the Region.89 chanrobleslaw
Despite these optimistic statistics, the banana industry players struggle to keep up
with the demands of the trade by combatting the main threat to production posed by
two major fungal diseases: the Panama Disease Tropical Race 4 (Fusarium oxysprum
f.sp. cubense) and the Black Sigatoka leaf spot disease (Mycosphaerella ffiensis
morelet). Pesticides have proven to be effective only against the Black Sigatoka
disease. There is yet no known cure for the Panama disease.90 chanrobleslaw
The menace of the Black Sigatoka disease cannot be taken lightly. The disease
causes destruction of the plant by significantly reducing the leaf area, leading to
premature ripening of the produce and resulting in yield losses of at least
50%.91 Due to its effects on banana export trading, the disease has emerged as a
global concern that has correspondingly forced banana producers to increase the use
of chemical pesticides.92 Protectant fungicides such as Mancozeb, chlorothalonil and
Propiconazole are applied to combat the disease.93 These agricultural chemicals are
aerially applied by the respondents in the banana plantations within the jurisdiction
of Davao City to arrest the proliferation of the disease.
Considering that banana export plantations exist in vast monocultures, effective
treatment of the Black Sigatoka disease is done by frequent aerial application of
fungicides. This is an expensive practice because it requires permanent landing
strips, facilities for the mixing and loading of fungicides, and high recurring expense
of spray materials.94 The cost of aerial spraying accounts to 15-20% of the final retail
price of the crop, making the technology essentially unavailable to small
landholdings that are more vulnerable to the disease.95 chanrobleslaw
Aerial spraying has become an agricultural practice in Davao City since the
establishment of the banana plantations in 1960.96 Out of the 5,205 hectares of
commercial plantations devoted to Cavendish banana being operated by the
respondents in Davao City,97 around 1,800 hectares receive treatment through aerial
application. These plantations are situated in Barangays Sirib, Manuel Guianga,
Tamayong, Subasta Dacudao, Lasang, Mandug, Waan, Tigatto and Callawa,98 and are
affected by the ban imposed by Ordinance No. 0309-07. The DTI has issued a
statement to the effect that the ban against aerial spraying in banana plantations "is
expected to kill the banana industry," affects the socio-economic development of the
barangays hosting the affected plantations, and has a disastrous impact on export
trading. The DTI has forecasted that the ban would discourage the entry of new
players in the locality, which would have a potential drawback in employment
generation.99chanrobleslaw
II
The Sangguniang Bayan of Davao City
enacted Ordinance No. 0309-07
under its corporate powers
The petitioners assert that Ordinance No. 0309-07 is a valid act of the Sangguniang
Bayan of Davao City- pursuant to its delegated authority to exercise police power in
the furtherance of public welfare and in ensuring a sound and balanced environment
for its constituents. The respondents negate this assertion, describing the ordinance
as unreasonable, discriminatory and oppressive.
The petitioners' assertion of its authority to enact Ordinance No. 0309-07 is upheld.
To be considered as a valid police power measure, an ordinance must pass a two-
pronged test: the formal (i.e., whether the ordinance is enacted within the corporate
powers of the local government unit, and whether it is passed in accordance with the
procedure prescribed by law); and the substantive (i.e., involving inherent merit, like
the conformity of the ordinance with the limitations under the Constitution and the
statutes, as well as with the requirements of fairness and reason, and its consistency
with public policy).100 chanrobleslaw
The formalities in enacting an ordinance are laid down in Section 53101 and Section
54102 of The Local Government Code. These provisions require the ordinance to be
passed by the majority of the members of the sanggunian concerned, and to be
presented to the mayor for approval. With no issues regarding quorum during its
deliberation having been raised, and with its approval of by City Mayor Duterte not
being disputed, we see no reason to strike down Ordinance No. 0309-07 for non-
compliance with the formal requisites under the Local Government Code.
We next ascertain whether the City of Davao acted within the limits of its corporate
powers in enacting Ordinance No. 0309-07.
The corporate powers of the local government unit confer the basic authority to
enact legislation that may interfere with personal liberty, property, lawful businesses
and occupations in order to promote the general welfare.103 Such legislative powers
spring from the delegation thereof by Congress through either the Local Government
Code or a special law. The General Welfare Clause in Section 16 of the Local
Government Code embodies the legislative grant that enables the local government
unit to effectively accomplish and carry out the declared objects of its creation, and
to promote and maintain local autonomy.104 Section 16 reads: ChanRoblesVirtualawlibrary
Sec. 16. General Welfare. — Every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers necessary,
appropriate, or incidental for its efficient and effective governance, and those which
are essential to the promotion of the general welfare. Within their respective
territorial jurisdictions, local government units shall ensure and support among other
things, the preservation and enrichment of culture, promote health and safety,
enhance the right of the people to a balanced ecology, encourage and support the
development of appropriate and self-reliant scientific and technological capabilities,
improve public morals, enhance economic prosperity and social justice, promote full
employment among their residents, maintain peace and order, and preserve the
comfort and convenience of their inhabitants.
Section 16 comprehends two branches of delegated powers, namely: the general
legislative power and the police power proper. General legislative power refers to the
power delegated by Congress to the local legislative body, or the Sangguniang
Panlungsod in the case of Dayao City,105 to enable the local legislative body to enact
ordinances and make regulations. This power is limited in that the enacted
ordinances must not be repugnant to law, and the power must be exercised to
effectuate and discharge the powers and duties legally conferred to the local
legislative body. The police power proper, on the other hand, authorizes the local
government unit to enact ordinances necessary and proper for the health and safety,
prosperity, morals, peace, good order, comfort, and convenience of the local
government unit and its constituents, and for the protection of their property.106
Section 458 of the Local Government Code explicitly vests the local government unit
with the authority to enact legislation .aimed at promoting the general
welfare, viz.:
ChanRoblesVirtualawlibrary
Section 458. Powers, Duties, Functions and Compensation. — (a) The sangguniang
panlungsod, as the legislative body of the city, shall enact ordinances, approve
resolutions and appropriate funds for the general welfare of the city and its
inhabitants pursuant to Section 16 of this Code and in the proper exercise of the
corporate powers of the city as provided for under Section 22 of this Code. x x x
In terms of the right of the citizens to health and to a balanced and healthful
ecology, the local government unit takes its cue from Section 15 and Section 16,
Article II of the 1987 Constitution. Following the provisions of the Local Government
Code and the Constitution, the acts of the local government unit designed to ensure
the health and lives of its constituents and to promote a balanced and healthful
ecology are well within the corporate powers vested in the local government unit.
Accordingly, the Sangguniang Bayan of Davao City is vested with the requisite
authority to enact an ordinance that seeks to protect the health and well-being of its
constituents.
The respondents pose a challenge against Ordinance No. 0309-07 on the ground that
the Sangguniang Bayan of Davao City has disregarded the health of the plantation
workers, contending that by imposing the ban against aerial spraying the ordinance
would place the plantation workers at a higher health risk because the alternatives of
either manual or truck-boom spraying method would be adopted; and that exposing
the workers to the same risk sought to be prevented by the ordinance would defeat
its purported purpose.
We disagree with the respondents.
With or without the ban against aerial spraying, the health and safety of plantation
workers are secured by existing state policies, rules and regulations implemented by
the FPA, among others, which the respondents are lawfully bound to comply with.
The respondents even manifested their strict compliance with these rules, including
those in the UN-FAO Guidelines on Good Practice for Aerial Application of Pesticides
(Rome 2001). We should note that the Rome 2001 guidelines require the pesticide
applicators to observe the standards provided therein to ensure the health and
safety of plantation workers. As such, there cannot be any imbalance between the
right to health of the residents vis-a-vis the workers even if a ban will be imposed
against aerial spraying and the consequent adoption of other modes of pesticide
treatment.
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Furthermore, the constitutional right to health and maintaining environmental
integrity are privileges that do not only advance the interests of a group of
individuals. The benefits of protecting human health and the environment transcend
geographical locations and even generations. This is the essence of Sections 15 and
16, Article II of the Constitution. In Oposa v. Factoran, Jr.107 we declared that the
right to a balanced and healthful ecology under Section 16 is an issue of
transcendental importance with intergenerational implications. It is under this milieu
that the questioned ordinance should be appreciated.
Advancing the interests of the residents who are vulnerable to the alleged health
risks due to their exposure to pesticide drift justifies the motivation behind the
enactment of the ordinance. The City of Davao has the authority to enact pieces of
legislation that will promote the general welfare, specifically the health of its
constituents. Such authority should not be construed, however, as a valid license for
the City of Davao to enact any ordinance it deems fit to discharge its mandate. A
thin but well-defined line separates authority to enact legislations from the method
of accomplishing the same.
By distinguishing authority from method we face this question: Is a prohibition
against aerial spraying a lawfully permissible method that the local government unit
of Davao City may adopt to prevent the purported effects of aerial drift? To resolve
this question, the Court must dig deeper into the intricate issues arising from these
petitions.
II
Ordinance No. 0309-07 violates the Due Process Clause
A valid ordinance must not only be enacted within the corporate powers of the local
government and passed according to the procedure prescribed by law.108 In order to
declare it as a valid piece of local legislation, it must also comply with the following
substantive requirements, namely: (1) it must not contravene the Constitution or
any statute; (2) it must be fair, not oppressive; (3) it must not be partial or
discriminatory; (4) it must not prohibit but may regulate trade; (5) it must be
general and consistent with public policy; and (6) it must not be unreasonable.109
In the State's exercise of police power, the property rights of individuals may be
subjected to restraints and burdens in order to fulfill the objectives of the
Government.110 A local government unit is considered to have properly exercised its
police powers only if it satisfies the following requisites, to wit: (1) the interests of
the public generally, as distinguished from those of a particular class, require the
interference of the State; and (2) the means employed are reasonably necessary for
the attainment of the object sought to be accomplished and not unduly
oppressive.111 The first requirement refers to the Equal Protection Clause of the
Constitution; the second, to the Due Process Clause of the Constitution.112 chanrobleslaw
Substantive due process requires that a valid ordinance must have a sufficient
justification for the Government's action.113 This means that in exercising police
power the local government unit must not arbitrarily, whimsically or despotically
enact the ordinance regardless of its salutary purpose. So long as the ordinance
realistically serves a legitimate public purpose, and it employs means that are
reasonably necessary to achieve that purpose without unduly oppressing the
individuals regulated, the ordinance must survive a due process challenge.114
The respondents challenge Section 5 of Ordinance No. 0309-07 for being
unreasonable and oppressive in that it sets the effectivity of the ban at three months
after publication of the ordinance. They allege that three months will be inadequate
time to shift from aerial to truck-mounted boom spraying, and effectively deprives
them of efficient means to combat the Black Sigatoka disease.
The petitioners counter that the period is justified considering the urgency of
protecting the health of the residents.
We find for the respondents.
The impossibility of carrying out a shift to another mode of pesticide application
within three months can readily be appreciated given the vast area of the affected
plantations and the corresponding resources required therefor. To recall, even the
RTC recognized the impracticality of attaining a full-shift to other modes of spraying
within three months in view of the costly financial and civil works required for the
conversion.115 In the assailed decision, the CA appropriately observed: ChanRoblesVirtualawlibrary
There appears to be three (3) forms of ground spraying, as distinguished from aerial
spraying, which are: 1. "Truck-mounted boom spraying;" 2. "manual or backpack
spraying." and 3. "sprinkler spraying." Petitioners-appellants claim that it was
physically impossible for them to shift to "truck-mounted boom spraying" within
three (3) months before the aerial spraying ban is actually enforced. They cited the
testimony of Dr. Maria Emilia Rita G. Fabregar, Ph.D, PBGEA Chairperson, to the
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effect that since banana plantations in Davao City were configured for aerial
spraying, the same lack the road network to make "truck-mounted boom spraying"
possible. According to Dr. Fabregar, it was impossible to construct such road
networks in a span of three (3) months. Engr. Magno P. Porticos, Jr., confirmed that
the shift demands the construction of three hundred sixty (360) linear kilometers of
road which cannot be completed in three (3) months.
In their separate testimonies, Dr. Fabregar and Engr. Porticos explained that a shift
to "truck-mounted boom spraying" requires the following steps which may be
completed in three (3) years: ChanRoblesVirtualawlibrary
1. six (6) months for planning the reconfiguration of banana plantations to ensure
effective truck-mounted boom spraying for the adequate protections of the
plantations from the Black Sigatoka fungus and other diseases, while maximizing
land use;
2. two (2) months to secure government permits for infrastructure works to be
undertaken thereon;
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3. clearing banana plants and dismantling or reconstructing fixed infrastructures,
such as roads, drains, cable ways, and irrigation facilities, which phase may be
completed in eighteen (18) months;
4. importation and purchase of trucks mounted with boom spraying, nurse trucks
and protective gears. The placing of orders and delivery of these equipments,
including the training [of] the personnel who would man the same, would take six
(6) months; and  cralawlawlibrary
5. securing the needed capitalization to finance these undertakings would take six
(6) months to a year.
Ms. Maria Victoria E. Sembrano, CPA, Chairperson of the PBGEA Finance Committee,
testified that her committee and the Technical Committee and Engineering Group of
PBGEA conducted a feasibility study to determine the cost in undertaking the shift to
ground spraying. Their findings fixed the estimated cost for the purpose at Php 400
Million.
xxxx
Both appellees failed to rebut the foregoing testimonies with empirical findings to the
contrary.
xxxx
Thus, in view of the infrastructural requirements as methodically explained, We are
convinced that it was physically impossible for petitioners-appellants to carry out a
carefully planned configuration of vast hectares of banana plantations and be able to
actually adopt "truck-mounted boom spraying" within three (3) months. To compel
petitioners-appellants to abandon aerial spraying in favor of "manual or backpack
spraying" or "sprinkler spraying" within 3 months puts petitioners-appellants in a
vicious dilemma between protecting its investments and the health of its workers, on
the one hand, and the threat of prosecution if they refuse to comply with the
imposition. We even find the 3-months transition period insufficient, not only in
acquiring and gearing-up the plantation workers of safety appurtenances, but more
importantly in reviewing safety procedures for "manual or backpack spraying" and in
training such workers for the purpose. Additionally, the engineering works for a
sprinkler system in vast hectares of banana plantations could not possibly be
completed within such period, considering that safety and efficiency factors need to
be considered in its structural re-designing.
xxxx
Respondent-appellee argues that the Ordinance merely banned an agricultural
practice and did not actually prohibit the operation of banana plantations; hence, it is
not oppressive. While We agree that the measure did not impose a closure of a
lawful enterprise, the proviso in Section 5, however, compels petitioners-appellants
to abandon aerial spraying without affording them enough time to convert and adopt
other spraying practices. This would preclude petitioners-appellants from being able
to fertilize their plantations with essential vitamins and minerals substances, aside
from applying thereon the needed fungicides or pesticides to control, if not eliminate
the threat of, plant diseases. Such an apparent eventuality would prejudice the
operation of the plantations, and the economic repercussions thereof would just be
akin to shutting down the venture.
This Court, therefore, finds Section 5 of Ordinance No. 0309-07 an invalid provision
because the compulsion thereunder to abandon aerial spraying within an
impracticable period of "three (3) months after the effectivity of this Ordinance" is
"unreasonable, oppressive and impossible to comply with."116 chanroblesvirtuallawlibrary
The required civil works for the conversion to truck-mounted boom spraying alone
will consume considerable time and financial resources given the topography and
geographical features of the plantations.117 As such, the conversion could not be
completed within the short timeframe of three months. Requiring the respondents
and other affected individuals to comply with the consequences of the ban within the
three-month period under pain of penalty like fine, imprisonment and even
cancellation of business permits would definitely be oppressive as to constitute abuse
of police power.
The respondents posit that the requirement of maintaining a buffer zone under
Section 6 of the ordinance violates due process for being confiscatory; and that the
imposition unduly deprives all agricultural landowners within Davao City of the
beneficial use of their property that amounts to taking without just compensation.
The position of the respondents is untenable.
In City of Manila v. Laguio, Jr.,118 we have thoroughly explained that taking only
becomes confiscatory if it substantially divests the owner of the beneficial use of its
property, viz.:
ChanRoblesVirtualawlibrary
An ordinance which permanently restricts the use of property that it cannot be used
for any reasonable purpose goes beyond regulation and must be recognized as a
taking of the property without just compensation. It is intrusive and violative of the
private property rights of individuals.
The Constitution expressly provides in Article III, Section 9, that "private property
shall not be taken for public use without just compensation." The provision is the
most important protection of property rights in the Constitution. This is a restriction
on the general power of the government to take property. The constitutional
provision is about ensuring that the government does not confiscate the property of
some to give it to others. In part too, it is about loss spreading. If the government
takes away a person's property to benefit society, then society should pay. The
principal purpose of the guarantee is "to bar the Government from forcing some
people alone to bear public burdens which, in all fairness and justice, should be
borne by the public as a whole.
There are two different types of taking that can be identified. A "possessory" taking
occurs when the government confiscates or physically occupies property. A
"regulatory" taking occurs when the government's regulation leaves no reasonable
economically viable use of the property.
In the landmark case of Pennsylvania Coal v. Mahon, it was held that a taking also
could be found if government regulation of the use of property went "too far." When
regulation reaches a certain magnitude, in most if not in all cases there must be an
exercise of eminent domain and compensation to support the act. While property
may be regulated to a certain extent, if regulation goes too far it will be recognized
as a taking.
No formula or rule can be devised to answer the questions of what is too far and
when regulation becomes a taking. In Mahon, Justice Holmes recognized that it was
"a question of degree and therefore cannot be disposed of by general propositions."
On many other occasions as well, the U.S. Supreme Court has said that the issue of
when regulation constitutes a taking is a matter of considering the facts in each
case. The Court asks whether justice and fairness require that the economic loss
caused by public action must be compensated by the government and thus borne by
the public as a whole, or whether the loss should remain concentrated on those few
persons subject to the public action.
What is crucial in judicial consideration of regulatory takings is that government
regulation is a taking if it leaves no reasonable economically viable use of property in
a manner that interferes with reasonable expectations for use. A regulation that
permanently denies all economically beneficial or productive use of land is, from the
owner's point of view, equivalent to a "taking" unless principles of nuisance or
property law that existed when the owner acquired the land make the use
prohibitable. When the owner of real property has been called upon to sacrifice all
economically beneficial uses in the name of the common good, that is, to leave his
property economically idle, he has suffered a taking.
A regulation which denies all economically beneficial or productive use of land will
require compensation under the takings clause. Where a regulation places limitations
on land that fall short of eliminating all economically beneficial use, a taking
nonetheless may have occurred, depending on a complex of factors including the
regulation's economic effect on the landowner, the extent to which the regulation
interferes with reasonable investment-backed expectations and the character of
government action. These inquiries are informed by the purpose of the takings
clause which is to prevent the government from forcing some people alone to bear
public burdens which, in all fairness and justice, should be borne by the public as a
whole.
A restriction on use of property may also constitute a "taking" if not reasonably
necessary to the effectuation of a substantial public purpose or if it has an unduly
harsh impact on the distinct investment-backed expectations of the owner.
(bold Emphasis supplied)
The establishment of the buffer zone is required for the purpose of minimizing the
effects of aerial spraying within and near the plantations. Although Section 3(e) of
the ordinance requires the planting of diversified trees within the identified buffer
zone, the requirement cannot be construed and deemed as confiscatory requiring
payment of just compensation. A landowner may only be entitled to compensation if
the taking amounts to a permanent denial of all economically beneficial or productive
uses of the land. The respondents cannot be said to be permanently and completely
deprived of their landholdings because they can still cultivate or make other
productive uses of the areas to be identified as the buffer zones.
III
Ordinance No. 0309-07 violates the Equal Protection Clause
A serious challenge being posed against Ordinance No. 0309-07 rests on its
supposed collision with the Equal Protection Clause. The respondents submit that the
ordinance transgresses this constitutional guaranty on two counts, to wit: (1) by
prohibiting aerial spraying per se, regardless of the substance or the level of
concentration of the chemicals to be applied; and (2) by imposing the 30-meter
buffer zone in all agricultural lands in Davao City regardless of the sizes of the
landholding.
The constitutional right to equal protection requires that all persons or things
similarly situated should be treated alike, both as to rights conferred and
responsibilities imposed. It requires public bodies and institutions to treat similarly
situated individuals in a similar manner. The guaranty equal protection secures every
person within the State's jurisdiction against intentional and arbitrary discrimination,
whether occasioned by the express terms of a statue or by its improper execution
through the State's duly constituted authorities. The concept of equal justice under
the law demands that the State governs impartially, and not to draw distinctions
between individuals solely on differences that are irrelevant to the legitimate
governmental objective.119 chanrobleslaw
Equal treatment neither requires universal application of laws to all persons or things
without distinction,120 nor intends to prohibit legislation by limiting the object to
which it is directed or by the territory in which it is to operate.121 The guaranty of
equal protection envisions equality among equals determined according to a valid
classification.122 If the groupings are characterized by substantial distinctions that
make real differences, one class may be treated and regulated differently from
another.123 In other word, a valid classification must be: (1) based on substantial
distinctions; (2) germane to the purposes of the law; (3) not limited to existing
conditions only; and (4) equally applicable to all members of the class.124chanrobleslaw

Based on these parameters, we find for the respondents.
The reasonability of a distinction and sufficiency of the justification given by the
Government for its conduct is gauged by using the means-end test.125 This test
requires analysis of: (1) the interests of the public that generally require its exercise,
as distinguished from those of a particular class; and (2) the means employed that
are reasonably necessary for the accomplishment of the purpose and are not unduly
oppressive upon individuals.126 To determine the propriety of the classification, courts
resort to three levels of scrutiny, viz: the rational scrutiny, intermediate
scrutiny and strict scrutiny.
The rational basis scrutiny (also known as the rational relation test or rational basis
test) demands that the classification reasonably relate to the legislative
purpose.127 The rational basis test often applies in cases involving economics or social
welfare,128 or to any other case not involving a suspect class.129 chanrobleslaw
When the classification puts a quasi-suspect class at a disadvantage, it will be
treated under intermediate or heightened review. Classifications based on gender or
illegitimacy receives intermediate scrutiny.130 To survive intermediate scrutiny, the
law must not only further an important governmental interest and be substantially
related to that interest, but the justification for the classification must be genuine
and must not depend on broad generalizations.131 chanrobleslaw
The strict scrutiny review applies when a legislative classification impermissibly
interferes with the exercise of a fundamental right or operates to the peculiar class
disadvantage of a suspect class. The Government carries the burden to prove that
the classification is necessary to achieve a compelling state interest, and that it is
the least restrictive means to protect such interest.132 chanrobleslaw
The petitioners advocate the rational basis test. In particular, the petitioning
residents of Davao City argue that the CA erroneously applied the strict scrutiny
approach when it declared that the ordinance violated the Equal Protection Clause
because the ban included all substances including water and vitamins. The
respondents agree with the CA, however, and add that the ordinance does not rest
on a valid distinction because it has lacked scientific basis and has ignored the
classifications of pesticides observed by the FPA.
We partly agree with both parties.
In our view, the petitioners correctly argue that the rational basis approach
appropriately applies herein. Under the rational basis test, we shall: (1) discern the
reasonable relationship between the means and the purpose of the ordinance; and
(2) examine whether the means or the prohibition against aerial spraying is based on
a substantial or reasonable distinction. A reasonable classification includes all
persons or things similarly situated with respect to the purpose of the law.133 chanrobleslaw
Applying the test, the established classification under Ordinance No. 0309-07 is to be
viewed in relation to the group of individuals similarly situated with respect to the
avowed purpose. This gives rise to two classes, namely: (1) the classification under
Ordinance No. 0309-07 (legislative classification); and (2) the classification based on
purpose (elimination of the mischief). The legislative classification found in Section 4
of the ordinance refers to "all agricultural entities" within Davao City. Meanwhile, the
classification based on the purpose of the ordinance cannot be easily discerned
because the ordinance does not make any express or implied reference to it. We
have to search the voluminous records of this case to divine the animus behind the
action of the Sangguniang Panglungsod in prohibiting aerial spraying as an
agricultural activity. The effort has led uS to the following proposed resolution of the
Sangguniang Panglungsod,134viz.: ChanRoblesVirtualawlibrary
RESOLUTION NO. ____
Series of 2007
A RESOLUTION TO ENACT AN ORDINANCE BANNING AERIAL SPRAYING AS AN
AGRICULTURAL PRACTICE IN ALL AGRICULTURAL ENTITIES IN DAVAO CITY
WHEREAS, the City of Davao, with fertile lands and ideal climactic condition, hosts
various large farms planted with different crops;
WHEREAS, these farms, lay adjacent to other agricultural businesses and that
residential areas abuts these farm boundaries;
WHEREAS, aerial spraying as a mode of applying chemical substances such as
fungicides and pesticides is being used by investors/companies over large
agricultural plantations in Davao City;
WHEREAS, the Davao City watersheds and ground water sources, located within and
adjacent to Mount Apo may be affected by the aerial spraying of chemical substances
on the agricultural farms and plantations therein;
WHEREAS, the effects of aerial spraying are found to be detrimental to the health of
the residents of Davao City most especially the inhabitants nearby agricultural
plantations practicing aerials spraying;
WHEREAS, the unstable wind direction during the conduct of aerial spray application
of these chemical substances pose health hazards to people, animals, other crops
and ground water sources;

WHEREAS, in order to achieve sustainable development, politics must be based on
the Precautionary Principle. Environment measures must anticipate, prevent, and
attack the causes of environmental degradation. Where there are threats of serious,
irreversible damage, lack of scientific certainty should not be used as a reason for
postponing measures to prevent environmental degradation;
WHEREAS, it is the policy of the City of Davao to ensure the safety of its inhabitants
from all forms of hazards, especially if such hazards come from development
activities that are supposed to be beneficial to everybody;
WHEREAS, pesticides are by its nature poisonous, it is all the more dangerous when
dispensed aerially through aircraft because of unstable wind conditions which in turn
makes aerial spray drifting to unintended targets a commonplace.
WHEREAS, aerial spraying of pesticides is undeniably a nuisance.
WHEREAS, looking at the plight of the complainants and other stakeholders opposed
to aerial spraying, the issue of aerial spraying of pesticides is in all fours a nuisance.
Given the vastness of the reach of aerial spraying, the said form of dispensation falls
into the category of a public nuisance. Public nuisance is defined by the New Civil
Code as one which affects a community or neighborhood or any considerable number
of persons, although the extent of the annoyance, danger or damage upon
individuals may be unequal.
WHEREAS, the General Welfare Clause of the Local Government Code empowers
Local Government Units to enact ordinances that provide for the health and safety,
promote the comfort and convenience of the City and the inhabitants thereof.
NOW THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, that for the
health, safety and peace of mind of all the inhabitants of Davao City, let an
ordinance be enacted banning aerial spraying as an agricultural practice in all
agricultural entities in Davao City.
xxxx
The proposed resolution identified aerial spraying of pesticides as a nuisance because
of the unstable wind direction during the aerial application, which (1) could
potentially contaminate the Davao City watersheds and ground water sources; (2)
was detrimental to the health of Davao City residents, most especially those living in
the. nearby plantations; and (3) posed a hazard to animals and other crops. Plainly,
the mischief that the prohibition sought to address was the fungicide drift resulting
from the aerial application; hence, the classification based on the intent of the
proposed ordinance covered all agricultural entities conducting aerial spraying of
fungicides that caused drift.
The assailed ordinance thus becomes riddled with several distinction issues.
A brief discussion on the occurrence of the drift that the ordinance seeks to address
is necessary.
Pesticide treatment is based on the use of different methods of application and
equipment,135 the choice of which methods depend largely on the objective of
distributing the correct dose to a defined target with the minimum of wastage due to
"drift."136 The term "drift" refers to the movement of airborne spray droplets, vapors,
or dust particles away from the target area during pesticide application.137 Inevitably,
any method of application causes drift, which may either be primary or secondary.
As fittingly described by scholars:138
Primary drift is the off-site movement of spray droplets at, or very close to, the time
of application. For example, a field application using a boom in a gusty wind situation
could easily lead to a primary drift. Primary spray drift is not product specific, and
the active ingredients do not differ in their potential to drift. However, the type of
formulation, surfactant, or other adjuvant may affect spray drift potential.
Secondary drift is associated with pesticide vapor. Pesticide vapor drift is the
movement of the gas that forms when an active ingredient evaporates from plants,
soil, or other surfaces. And while vapor drift is an important issue, it only pertains to
certain volatile products. Vapor drift and other forms of secondary drift are product
specific. Water-based sprays will volatize more quickly than oil-based sprays.
However, oil-based sprays can drift farther, especially above 95°F, because they are
lighter.
Understandably, aerial drift occurs using any method of application, be it through
airplanes, ground sprayers, airblast sprayers or irrigation systems.139 Several factors
contribute to the occurrence of drift depending on the method of application, viz.: ChanRoblesVirtualawlibrary
AERIAL AIRBLAST GROUND CHEMIGATION
Crop Droplet
Droplet size Application height
canopy size
Boom
Application height Droplet size Wind speed
height

Wind
Wind speed Wind speed
speed
Swath adjustment
Canopy
Boom length
Tank mix physical
properties
Source: F.M. Fishel and J.A. Ferrell, "Managing Pesticide Drift," available
at http://edis.ifas.edu/pi232. citing Pesticide Notes, MSU Extension.
The four most common pesticide treatment methods adopted in Davao City are
aerial, truck-mounted boom, truck-mounted mechanical, and manual
spraying.140 However, Ordinance No. 0309-07 imposes the prohibition only against
aerial spraying.
Davao City justifies the prohibition against aerial spraying by insisting that the
occurrence of drift causes inconvenience and harm to the residents and degrades the
environment. Given this justification, does the ordinance satisfy the requirement that
the classification must rest on substantial distinction?
We answer in the negative.
The occurrence of pesticide drift is not limited to aerial spraying but results from the
conduct of any mode of pesticide application. Even manual spraying or truck-
mounted boom spraying produces drift that may bring about the same
inconvenience, discomfort and alleged health risks to the community and to the
environment.141 A ban against aerial spraying does not weed out the harm that the
ordinance seeks to achieve.142 In the process, the ordinance suffers from being
"underinclusive" because the classification does not include all individuals tainted
with the same mischief that the law seeks to eliminate.143 A classification that is
drastically underinclusive with respect to the purpose or end appears as an irrational
means to the legislative end because it poorly serves the intended purpose of the
law.144
chanrobleslaw
The claim that aerial spraying produces more aerial drift cannot likewise be sustained
in view of the petitioners' failure to substantiate the same. The respondents have
refuted this claim, and have maintained that on the contrary, manual spraying
produces more drift than aerial treatment145 As such, the decision of prohibiting only
aerial spraying is tainted with arbitrariness.
Aside from its being underinclusive, the assailed ordinance also tends to be
"overinclusive" because its .impending implementation will affect groups that have
no relation to the accomplishment of the legislative purpose. Its implementation will
unnecessarily impose a burden on a wider range of individuals than those included in
the intended class based on the purpose of the law.146
chanrobleslaw
It can be noted that the imposition of the ban is too broad because the ordinance
applies irrespective of the substance to be aerially applied and irrespective of the
agricultural activity to be conducted. The respondents admit that they aerially treat
their plantations not only with pesticides but also vitamins and other substances. The
imposition of the ban against aerial spraying of substances other than fungicides and
regardless of the agricultural activity being performed becomes unreasonable
inasmuch as it patently bears no relation to the purported inconvenience, discomfort,
health risk and environmental danger which the ordinance, seeks to address. The
burden now will become more onerous to various entities including the respondents
and even others with no connection whatsoever to the intended purpose of the
ordinance.
In this respect, the CA correctly observed:
ChanRoblesVirtualawlibrary
Ordinance No. 0309-07 defines "aerial spraying" as the "application of substances
through the use of aircraft of any form which dispenses the substances in the air."
Inevitably, the ban imposed therein encompasses aerial application of practically all
substances, not only pesticides or fungicides but including water and all forms of
chemicals, regardless of its elements, composition, or degree of safety.
Going along with respondent-appellee's ratiocination that the prohibition in the
Ordinance refers to aerial spraying as a method of spraying pesticides or fungicides,
there appears to be a need to single out pesticides or fungicides in imposing such a
ban because there is a striking distinction between such chemicals and other
substances (including water), particularly with respect to its safety implications to
the public welfare and ecology.
xxxx
We are, therefore, convinced that the total ban on aerial spraying runs afoul with the
equal protection clause because it does not classify which substances are prohibited
from being applied aerially even as reasonable distinctions should be made in terms
of the hazards, safety or beneficial effects of liquid substances to the public health,
livelihood and the environment.147 chanroblesvirtuallawlibrary
We clarify that the CA did not thereby apply the strict scrutiny approach but only
evaluated the classification established by the ordinance in relation to the purpose.
This is the essence of the rational basis approach.
The petitioners should be made aware that the rational basis scrutiny is not based on
a simple means-purpose correlation; nor does the rational basis scrutiny
automatically result in a presumption of validity of the ordinance or deference to the
wisdom of the local legislature.148 To reiterate, aside from ascertaining that the
means and purpose of the ordinance are reasonably related, the classification should
be based on a substantial distinction.
However, we do not subscribe to the respondents' position that there must be a
distinction based on the level of concentration or the classification imposed by the
FPA on pesticides. This strenuous requirement cannot be expected from a local
government unit that should only be concerned with general policies in local
administration and should not be restricted by technical concerns that are best left to
agencies vested with the appropriate special competencies. The disregard of the
pesticide classification is not an equal protection issue but is more relevant in
another aspect of delegated police power that we consider to be more appropriate in
a later discussion.
The overinclusiveness of Ordinance No. 0309-07 may also be traced to its Section 6
by virtue of its requirement for the maintenance of the 30- meter buffer zone. This
requirement applies regardless of the area of the agricultural landholding,
geographical location, topography, crops grown and other distinguishing
characteristics that ideally should bear a reasonable relation to the evil sought to be
avoided. As earlier discussed, only large banana plantations could rely on aerial
technology because of the financial capital required therefor.
The establishment and maintenance of the buffer zone will become more
burdensome to the small agricultural landholders because: (1) they have to reserve
the 30-meter belt surrounding their property; (2) that will have to be identified
through GPS; (3) the metes and bounds of the buffer zone will have to be plotted in
a survey plan for submission to the local government unit; and (4) will be limited as
to the crops that may be cultivated therein based on the mandate that the zone shall
be devoted to "diversified trees" taller than what are being grown therein.149 The
arbitrariness of Section 6 all the more becomes evident when the land is presently
devoted to the cultivation of root crops and vegetables, and trees or plants slightly
taller than the root crops and vegetables are then to be planted. It is seriously to be
doubted whether such circumstance will prevent the occurrence of the drift to the
nearby residential areas.
Section 6 also subjects to the 30-meter buffer zone requirement agricultural entities
engaging in organic farming, and' do not contribute to the occurrence of pesticide
drift. The classification indisputably becomes arbitrary and whimsical.
A substantially overinclusive or underinclusive classification tends to undercut the
governmental claim that the classification serves legitimate political ends.150 Where
overinclusiveness is the problem, the vice is that the law has a greater
discriminatory or burdensome effect than necessary.151 In this light, we strike down
Section 5 and Section 6 of Ordinance No. 0309-07 for carrying an invidious
classification, and for thereby violating the Equal Protection Clause.
The discriminatory nature of the ordinance can be seen from its policy as stated in its
Section 2, to wit:ChanRoblesVirtualawlibrary
Section 2. POLICY OF THE CITY. It shall be the policy of the City of Davao to
eliminate the method of aerial spraying as an agricultural practice in all agricultural
activities by all entities within Davao City.
Evidently, the ordinance discriminates against large farmholdings that are the only
ideal venues for the investment of machineries and equipment capable of aerial
spraying. It effectively denies the affected individuals the technology aimed at
efficient and cost-effective operations and cultivation not only of banana but of other
crops as well. The prohibition against aerial spraying will seriously hamper the
operations of the banana plantations that depend on aerial technology to arrest the
spread of the Black Sigatoka disease and other menaces that threaten their
production and harvest. As earlier shown, the effect of the ban will not be limited to
Davao City in view of the significant contribution of banana export trading to the
country's economy.
The discriminatory character of the ordinance makes it oppressive and unreasonable
in light of the existence and availability of more permissible and practical alternatives
that will not overburden the respondents and those dependent on their operations as
well as those who stand to be affected by the ordinance. In the view of Regional
Director Roger C. Chio of DA Regional Field Unit XI, the alleged harm caused by
aerial spraying may be addressed by following the GAP that the DA has been
promoting among plantation operators. He explained his view thusly: ChanRoblesVirtualawlibrary
The allegation that aerial spraying is hazardous to animal and human being remains
an allegation and assumptions until otherwise scientifically proven by concerned
authorities and agencies. This issue can be addressed by following Good Agricultural
Practices, which DA is promoting among fruit and vegetable growers/plantations.
Any method of agri-chemical application whether aerial or non-aerial if not properly
done in accordance with established procedures and code of good agricultural
practices and if the chemical applicators and or handlers lack of necessary
competency, certainly it could be hazardous. For the assurance that commercial
applicators/aerial applicators possessed the competency and responsibility of
handling agri-chemical, such applicators are required under Article III, Paragraph 2
of FPA Rules and Regulation No. 1 to secure license from FPA.
Furthermore users and applicators of agri-chemicals are also guided by Section 6
Paragraph 2 and 3 under column of Pesticides and Other agricultural Chemicals of PD
11445 which stated: "FPA shall establish and enforce tolerance levels and good
agricultural practices in raw agricultural commodities; to restrict or ban the use of
any chemical or the formulation of certain pesticides in specific areas or during
certain period upon evidence that the pesticide is eminent [sic] hazards has caused,
or is causing widespread serious damage to crops, fish, livestock or to public health
and environment."
Besides the aforecited policy, rules and regulation enforced by DA, there are other
laws and regulations protecting and preserving the environment. If the
implementation and monitoring of all these laws and regulation are closely
coordinated with concerned LGUs, Gas and NGAs and other private sectors, perhaps
we can maintain a sound and health environment x x x.152 chanroblesvirtuallawlibrary
Indeed, based on the Summary Report on the Assessment and Factfinding Activities
on the Issue of Aerial Spraying in Banana Plantations,153 submitted by the fact-
finding team organized by Davao City, only three out of the 13 barangays consulted
by the fact-finding team opposed the conduct of aerial spraying; and of the three
barangays, aerial spraying was conducted only in Barangay Subasta. In fact, the
fact-finding team found that the residents in those barangays were generally in favor
of the operations of the banana plantations, and did not oppose the conduct of aerial
spraying.
IV
The Precautionary Principle still requires scientific basis
The petitioners finally plead that the Court should look at the merits of the ordinance
based on the precautionary principle. They argue that under the precautionary
principle, the City of Davao is justified in enacting Ordinance No. 0309-07 in order to
prevent harm to the environment and human health despite the lack of scientific
certainty.
The petitioners' plea and argument cannot be sustained.
The principle of precaution originated as a social planning principle in Germany. In
the 1980s, the Federal Republic of Germany used the Vorsogeprinzip ("foresight
principle") to justify the implementation of vigorous policies to tackle acid rain,
global warming and pollution of the North Sea.154 It has since emerged from a need
to protect humans and the environment from increasingly unpredictable, uncertain,
and unquantifiable but possibly catastrophic risks such as those associated with
Genetically Modified Organisms and climate change,155 among others. The oft-cited
Principle 15 of the 1992 Rio Declaration on Environment and Development (1992 Rio
Agenda), first embodied this principle, as follows: ChanRoblesVirtualawlibrary
Principle 15
In order to protect the environment, the precautionary approach shall be widely
applied by States according to their capabilities. Where there are threats of serious
or irreversible damage, lack of full scientific certainty shall not be used as a reason
for postponing cost-effective measures to prevent environmental degradation.
In this jurisdiction, the principle of precaution appearing in the Rules of Procedure
for Environmental Cases (A.M. No. 09-6-8-SC) involves matters of evidence in cases
where there is lack of full scientific certainty in establishing a causal link between
human activity and environmental effect.156 In such an event, the courts may
construe a set of facts as warranting either judicial action or inaction with the goal of
preserving and protecting the environment.157 chanrobleslaw
It is notable, therefore, that the precautionary principle shall only be relevant if there
is concurrence of three elements, namely: uncertainty, threat of environmental
damage and serious or irreversible harm. In situations where the threat is relatively
certain, or that the causal link between an action and environmental damage can be
established, or the probability of occurrence can be calculated, only preventive, not
precautionary measures, may be taken. Neither will the precautionary principle apply
if there is no indication of a threat of environmental harm; or if the threatened harm
is trivial or easily reversible.158
chanrobleslaw
We cannot see the presence of all the elements. To begin with, there has been no
scientific study. Although the precautionary principle allows lack of full scientific
certainty in establishing a connection between the serious or irreversible harm and
the human activity, its application is still premised on empirical studies. Scientific
analysis is still a necessary basis for effective policy choices under the precautionary
principle.159
chanrobleslaw
Precaution is a risk management principle invoked after scientific inquiry takes place.
This scientific stage is often considered synonympus with risk assessment.160 As
such, resort to the principle shall not be based on anxiety or emotion, but from a
rational decision rule, based in ethics.161 As much as possible, a complete and
objective scientific evaluation of the risk to the environment or health should be
conducted and made available to decision-makers for them to choose the most
appropriate course of action.162Furthermore, the positive and negative effects of an
activity is also important in the application of the principle. The potential harm
resulting from certain activities should always be judged in view of the potential
benefits they offer, while the positive and negative effects of potential precautionary
measures should be considered.163 chanrobleslaw
The only study conducted to validate the effects of aerial spraying appears to be
the Summary Report on the Assessment and Fact-Finding Activities on the Issue of
Aerial Spraying in Banana Plantations.164 Yet, the fact-finding team that generated
the report was not a scientific study that could justify the resort to the
.precautionary principle. In fact, the Sangguniang Bayan ignored the findings and
conclusions of the fact-finding team that recommended only a regulation, not a ban,
against aerial spraying. The recommendation was in line with the advocacy of
judicious handling and application of chemical pesticides by the DOH-Center for
Health Development in the Davao Region in view of the scarcity of scientific studies
to support the ban against aerial spraying.165 chanrobleslaw
We should not apply the precautionary approach in sustaining the ban against aerial
spraying if little or nothing is known of the exact or potential dangers that aerial
spraying may bring to the health of the residents within and near the plantations and
to the integrity and balance of the environment. It is dangerous to quickly presume
that the effects of aerial spraying would be adverse even in the absence of evidence.
Accordingly, for lack of scientific data supporting a ban on aerial spraying, Ordinance
No. 0309-07 should be struck down for being unreasonable.
V  local government units; of their legislative powers in order to promote the general
Ordinance No. 0309-07 is an ultra vires act
The Court further holds that in addition to its unconstitutionality for carrying an
unwarranted classification that contravenes the Equal Protection Clause, Ordinance
No. 0309-07 suffers from another legal infirmity.
The petitioners represent that Ordinance No. 0309-07 is a valid exercise of
legislative and police powers by the Sangguniang Bayan of Davao City pursuant to
Section 458 in relation to Section 16 both of the Local Government Code. The
respondents counter that Davao City thereby disregarded the regulations
implemented by the Fertilizer and Pesticide Authority (FPA), including its
identification and classification of safe pesticides and other agricultural chemicals.
We uphold the respondents.
An ordinance enjoys the presumption of validity on the basis that: ChanRoblesVirtualawlibrary
The action of the elected representatives of the people cannot be lightly set aside.
The councilors must, in the very nature of things, be familiar with the necessities of
their particular municipality and with all the facts and circumstances which surround
the subject, and necessities of their particular municipality and with all the facts and
circumstances which surround the subject, and necessitate action. The local
legislative body, by enacting the ordinance, has in effect given notice that the
regulations are essential to the well-being of the people.166chanroblesvirtuallawlibrary
Section 5(c) of the Local Government Code accords a liberal interpretation to its
general welfare provisions. The policy of liberal construction is consistent with the
spirit of local autonomy that endows local government units with sufficient power
and discretion to accelerate their economic development and uplift the quality of life
for their constituents.
Verily, the Court has championed the cause of public welfare on several occasions. In
so doing, it has accorded liberality to the general welfare provisions of the Local
Government Code by upholding the validity of local ordinances enacted for the
common good. For instance, in Social Justice Society (SJS) v. Atienza, Jr.,167 the
Court validated a zoning ordinance that reclassified areas covered by a large oil
depot from industrial to commercial in order to ensure the life, health and property
of the inhabitants residing within the periphery of the oil depot. Another instance
is Gancayco v. City Government of Quezon City,168 where the Court declared as valid
a city ordinance ordering the construction of arcades that would ensure the health
and safety of the city and its inhabitants, improvement of their morals, peace, good
order, comfort and convenience, as well as the promotion of their prosperity. Even in
its early years, the Court already extended liberality towards the exercise by the
welfare of their communities. This was exemplified in United States v.
Salaveria,169 wherein gambling was characterized as "an act beyond the pale of good
morals" that the local legislative council could validly suppress to protect the well-
being of its constituents; and in United States v. Abendan,170 whereby the right of
the then Municipality of Cebu to enact an ordinance relating to sanitation and public
health was upheld.
The power to legislate under the General Welfare Clause is not meant to be an
invincible authority. In fact, Salaveria and Abendan emphasized the reasonableness
and consistency of the exercise by the local government units with the laws or
policies of the State.171 More importantly, because the police power of the local
government units flows from the express delegation of the power by Congress, its
exercise is to be construed in strictissimi juris. Any doubt or ambiguity arising out of
the terms used in granting the power should be construed against the local
legislative units.172 Judicial scrutiny comes into play whenever the exercise of police
power affects life, liberty or property.173 The presumption of validity and the policy of
liberality are not restraints on the power of judicial review in the face of questions
about whether an ordinance conforms with the Constitution, the laws or public
policy, or if it is unreasonable, oppressive, partial, discriminating or in derogation of
a common right. The ordinance must pass the test of constitutionality and the test of
consistency with the prevailing laws.174 chanrobleslaw
Although the Local Government Code vests the municipal corporations with sufficient
power to govern themselves and manage their affairs and activities, they definitely
have no right to enact ordinances dissonant with the State's laws and policy.
The Local Government Code has been fashioned to delineate the specific parameters
and limitations to guide each local government unit in exercising its delegated
powers with the view of making the local government unit a fully functioning
subdivision of the State within the constitutional and statutory
restraints.175 The Local Government Code is not intended to vest in the local
government unit the blanket authority to legislate upon any subject that it finds
proper to legislate upon in the guise of serving the common good.
The function of pesticides control, regulation and development is within the
jurisdiction of the FPA under Presidential Decree No. 1144.176 The FPA was
established in recognition of the need for a technically oriented government
entity177 that will protect the public from the risks inherent in the use of
pesticides.178 To perform its mandate, it was given under Section 6 of Presidential
Decree No. 1144 the following powers and functions with respect to pesticides and
other agricultural chemicals, viz.: ChanRoblesVirtualawlibrary
Section 6. Powers and functions. The FPA shall have jurisdiction, on over all existing
handlers of pesticides, fertilizers and other agricultural chemical inputs. The FPA shall
have the following powers and functions:
chanRoblesvirtualLawlibrary xxxx
III. Pesticides and Other Agricultural Chemicals
1. To determine specific uses or manners of use for each pesticide or pesticide
formulation;
2. To establish and enforce levels and good agricultural practices for use of
pesticides in raw agricultural commodities;
3. To restrict or ban the use of any pesticide or the formulation of certain pesticides
in specific areas or during certain periods upon evidence that the pesticide is an
imminent hazard, has caused, or is causing widespread serious damage to crops, fish
or livestock, or to public health and environment;
xxxx
5. To inspect the establishment and premises of pesticide handlers to insure that
industrial health and safety rules and anti-pollution regulations are followed;
6. To enter and inspect farmers' fields to ensure that only the recommended
pesticides are used in specific crops in accordance with good agricultural practice;
x x x x (Emphasis supplied).
Evidently, the FPA was responsible for ensuring the compatibility between the usage
and the application of pesticides in agricultural activities and the demands for human
health and environmental safety. This responsibility includes not only the
identification of safe and unsafe pesticides, but also the prescription of the safe
modes of application in keeping with the standard of good agricultural practices.
On the other hand, the enumerated devolved functions to the local government units
do not include the regulation and control of pesticides and other agricultural
chemicals.179 The non-inclusion should preclude the Sangguniang Bayan of Davao
City from enacting Ordinance No. 0309-07, for otherwise it would be arrogating unto
itself the authority to prohibit the aerial application of pesticides in derogation of the
authority expressly vested in the FPA by Presidential Decree No. 1144.
In enacting Ordinance No. 0309-07 without the inherent and explicit authority to do
so, the City of Davao performed an ultra vires act. As a local government unit, the
City of Davao could act only as an agent of Congress, and its every act should
always conform to and reflect the will of its principal.180 As clarified in
Batangas CATV, Inc. v. Court of Appeals:181
[W]here the state legislature has made provision for the regulation of conduct, it has
manifested its intention that the subject matter shall be fully covered by the statute,
and that a municipality, under its general powers, cannot regulate the same conduct.
In Keller vs. State, it was held that: "Where there is no express power in the charter
of a municipality authorizing it to adopt ordinances regulating certain matters which
are specifically covered by a general statute, a municipal ordinance, insofar as it
attempts to regulate the subject which is completely covered by a general statute of
the legislature, may be rendered invalid. x x x Where the subject is of statewide
concern, and the legislature has appropriated the field and declared the rule, its
declaration is binding throughout the State." A reason advanced for this view is that
such ordinances are in excess of the powers granted to the municipal corporation.
Since E.O. No. 205, a general law, mandates that the regulation of CATV operations
shall be exercised by the NTC, an LGU cannot enact an ordinance or approve a
resolution in violation of the said law.
It is a fundamental principle that municipal ordinances are inferior in status and
subordinate to the laws of the state. An ordinance in conflict with a state law of
general character and statewide application is universally held to be invalid. The the maintenance of the 30-meter buffer zone to be planted with diversified trees.195 chanrobleslaw

principle is frequently expressed in the declaration that municipal authorities, under

a general grant of power, cannot adopt ordinances which infringe the spirit of a state Devoid of the specific delegation to its local legislative body, the City of Davao
law or repugnant to the general policy of the state. In every power to pass exceeded its delegated authority to enact Ordinance No. 0309-07. Hence, Ordinance
ordinances given to a municipality, there is an implied restriction that the ordinances No. 0309-07 must be struck down also for being an ultra vires act on the part of the
shall be consistent with the general law.182 (Emphasis ours) Sangguniang Bayan of Davao City.

For sure, every local government unit only derives its legislative authority from
Congress. In no instance can the local government unit rise above its source of
authority. As such, its ordinance cannot run against or contravene existing laws,
precisely because its authority is only by virtue of the valid delegation from
Congress. As emphasized in City of Manila v. Laguio, Jr.:183
The requirement that the enactment must not violate existing law gives stress to the
precept that local government units are able to legislate only by virtue of their
derivative legislative power, a delegation of legislative power from the national
legislature. The delegate cannot be superior to the principal or exercise powers
higher than those of the latter.
We must emphasize that our ruling herein does not seek to deprive the LGUs their
right to regulate activities within their jurisdiction. They are empowered under
Section 16 of the Local Government Codeto promote the general welfare of the
people through regulatory, not prohibitive, ordinances that conform with the policy
directions of the National Government. Ordinance No. 0309-07 failed to pass this
test as it contravenes the specific regulatory policy on aerial spraying in banana
plantations on a nationwide scale of the National Government, through the FPA.
Finally, the unconstitutionality of the ban renders nugatory Ordinance No. 0309-07 in
its entirety. Consequently, any discussion on the lack of the separability clause
becomes entirely irrelevant.

This relationship between the national legislature and the local government units has
not been enfeebled by the new provisions in the Constitution strengthening the
policy of local autonomy. The national legislature is still the principal of the local
government units, which cannot defy its will or modify or violate it.184
chanroblesvirtuallawlibrary
WHEREFORE, the Court DENIES the consolidated petitions for review
on certiorari for their lack of merit; AFFIRMS the decision promulgated on January
9, 2009 in C.A.-G.R. CV No. 01389-MIN. declaring Ordinance No. 0309-

07 UNCONSTITUTIONAL; PERMANENTLY ENJOINS respondent City of Davao,

and all persons or entities acting in its behalf or under its authority, from enforcing
Moreover, Ordinance No. 0309-07 proposes to prohibit an activity already covered by
and implementing Ordinance No. 0309-07; and ORDERS the petitioners to pay the
the jurisdiction of the FPA, which has issued its own regulations under its
costs of suit.
Memorandum Circular No. 02, Series of 2009, entitled Good Agricultural Practices for
Aerial Spraying of Fungicide in Banana Plantations.185 While Ordinance No. 0309-07
SO ORDERED.
prohibits aerial spraying in banana plantations within the City of Davao,
chanRoblesvirtualLawlibrary

Memorandum Circular No. 02 seeks to regulate the conduct of aerial spraying in

banana plantations186pursuant to Section 6, Presidential Decree No. 1144, and in
conformity with the standard of Good Agricultural Practices (GAP). Memorandum
Circular No. 02 covers safety procedures,187 handling188 and post-
application,189 including the qualifications of applicators,190 storing of
fungicides,191 safety and equipment of plantation personnel,192 all of which are
incompatible with the prohibition against aerial spraying under Ordinance No. 0309-
07.

Although Memorandum Circular No. 02 and Ordinance No. 0309-07 both require the
maintenance of the buffer zone, they differ as to their treatment and maintenance of
the buffer zone. Under Memorandum Circular No. 02, a 50-meter "no-spray
boundary" buffer zone should be observed by the spray pilots,193and the observance
of the zone should be recorded in the Aerial Spray Final Report (ASFR) as a post-
application safety measure.194 On the other hand, Ordinance No. 0309-07 requires
G.R. No. 203754               June 16, 2015

FILM DEVELOPMENT COUNCIL OF THE PHILIPPINES, Petitioner, 

vs.
COLON HERITAGE REALTY CORPORATION, operator of Oriente Group
Theaters, represented by ISIDORO A. CANIZARES, Respondent.

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

FILM DEVELOPMENT COUNCIL OF THE PHILIPPINES, Petitioner, 

vs.
CITY OF CEBU and SM PRIME HOLDINGS, INC., Respondents.

DECISION

VELASCO, JR., J.:

The Constitution is the basic law to which all laws must conform; no act shall
be valid if it conflicts with the Constitution. In the discharge of their defined
functions, the three departments of government have no choice but to yield
obedience to the commands of the Constitution. Whatever limits it imposes
must be observed. 1

The Case

Once again, We are called upon to resolve a clash between the Inherent
taxing power of the legislature and the constitutionally-delegated power to tax
of local governments in these consolidated Petitions for Review on Certiorari
under Rule 45 of the Rules of Court seeking the reversal of the Decision dated
September 25, 2012 of the Regional Trial Court (RTC), Branch 5 in Cebu City,
in Civil Case No. CEB-35601, entitled Colon Heritage Realty Corp.,
represented by Isidoro Canizares v. Film Development Council of the'
Philippines, and Decision dated October 24, 2012 of the RTC, Branch 14 in
Cebu City, in Civil Case No. CEB-35529, entitled City of Cebu v. Film
Development Council of the Philippines, collectively declaring Sections 13 and
14 of Republic Act No. (RA) 9167 invalid and unconstitutional.
The Facts
The facts are simple and undisputed.
Sometime in 1993, respondent City of Cebu, in its exercise of its power to
impose amusement taxes under Section 140 of the Local Government
Code  (LGC) anchored on the constitutional policy on local autonomy,  passed
2 3
City Ordinance No. LXIX otherwise known as the "Revised Omnibus Tax
Ordinance of the City of Cebu (tax ordinance)." Central to the case at bar are
Sections 42 and 43, Chapter XI thereof which require proprietors, lessees or
operators of theatres, cinemas, concert halls, circuses, boxing stadia, and
other places of amusement, to pay an amusement tax equivalent to thirty
percent (30%) of the gross receipts of admission fees to the Office of the City
Treasurer of Cebu City. Said provisions read:
CHAPTER XI - Amusement Tax
Section 42. Rate of Tax. - There shall be paid to the Office of the City
Treasurer by the proprietors, lessees, or operators of theaters, cinemas,
concert halls, circuses, boxing stadia and other places of amusement, an
amusement tax at the rate of thirty percent (30%) of the gross receipts from
admission fees. 4
Section 43. Manner of Payment. - In the case of theaters or cinemas, the tax
shall first be deducted and withheld by their proprietors, lessees, or operators
and paid to the city treasurer before the gross receipts are divided between
said proprietor, lessees, operators, and the distributors of the cinematographic
films.
Almost a decade later, or on June 7, 2002, Congress passed RA
9167,  creating the Film Development Council qf the Philippines (FDCP) and
5 Accordingly, petitioner, through the Office of the Solicitor General, sent on
abolishing the Film Development Foundation of the Philippines, Inc. and the
Film Rating Board. Secs. 13 and 14 of RA 9167 provided for the tax treatment
of certain graded films as follows:
Section 13. Privileges of Graded Films. - Films which have obtained an "A" or
"B" grading from the Council pursuant to Sections 11 and 12 of this Act shall
Proprietor/Operator
be entitled to the following privileges:
a. Amusement tax reward. - A grade "A" or "B" film shall entitle its producer to
an incentive equivalent to the amusement tax imposed and collected on the
graded films by cities and municipalities in Metro Manila and other highly
urbanized and independent component cities in the Philippines pursuant to
Sections 140 to 151 of Republic Act No. 7160 at the following rates:
1. For grade "A" films - 100% of the amusement tax collected on such
film; and
2. For grade "B" films - 65% of the amusement tax collected on such
films. The remaining thirty-five (35%) shall accrue to the funds of the
Council.
Section 14. Amusement Tax Deduction and Remittance. - All revenue from the
amusement tax on the graded film which may otherwise accrue to the cities
and municipalities in Metropolitan Manila and highly urbanized and
independent component cities in the Philippines pursuant to Section 140 of
Republic Act. No. 7160 during the period the graded film is exhibited, shall be
deducted and withheld by the proprietors, operators or lessees of theaters or
cinemas and remitted within thirty (30) days from the termination of the
exhibition to the Council which shall reward the corresponding amusement tax
to the producers of the graded film within fifteen (15) days from receipt thereof.
Proprietors, operators and lessees of theaters or cinemas who fail to remit the
amusement tax proceeds within the prescribed period shall be liable to a
surcharge equivalent to five percent (5%) of the amount due for each month of
delinquency which shall be paid to the Council. (emphasis added)
According to petitioner, from the time RA 9167 took effect up to the present, all
the cities and municipalities in Metro Manila, as well as urbanized and
independent component cities, with the sole exception of Cebu City, have
complied with the mandate of said law.
January 2009 demand letters for unpaid amusement tax reward (with 5%
surcharge for each month of delinquency) due to the producers of the Grade
"A" or "B" films to the following cinema proprietors and operators in Cebu City:
Cinema Amusement Number
Tax Reward of CEB Period Covered
(with 5% Graded
 surcharge for assertion of a claim on the amounts in question, the city finally filed on May 18,
2009 before the RTC, Branch 14 a petition for declaratory relief with
each moth of Films
application for a writ of preliminary injunction, docketed as Civil Case No. CEB-
delinquency) 35529 (City of Cebu v. FDCP). In said petition, Cebu City sought the
declaration of Secs. 13 and 14 of RA 9167 as invalid and unconstitutional.
SM Prime Holdings Inc. 76,836,807.08 89 Sept. 11, 2003 - Nov. 4, 2008
Similarly, Colon Heritage filed before the RTC, Branch 5 Civil Case No. CEB-
Ayala Center Cinemas 43,435,718.23 70 May 14, 2003 - Nov. 4, 2008 35601 (Colon Heritage v. FDCP), seeking to declare Sec. 14 of RA 9167 as
unconstitutional.

Colon Heritage Realty 8,071,267.00 50 Aug. 11, 2004-Nov. 4, 2008 On May 25, 2010, the RTC, Branch 14 issued a temporary restraining order
Corp. (TRO) restraining and enjoining FDCP, et al. from, inter alia:

Eden Theater 428,938.25 4 May 5, 2005 - Sept. 2, 2008 (a) Collecting amusement tax incentive award in the City of Cebu and
from imposing surcharges thereon;
Cinema Theater 3,100,354.80 22 Feb. 18, 2004-Oct. 7, 2008
(b) Demanding from the owners, proprietors, and lessees of theaters
and cinemas located and operated within Cebu City, payment of said
Visaya Cineplex Corp. 17,582,521.89 86 June 25, 2005 - Oct. 21, 2008 amusement tax incentive award which should have been deducted,
withheld, and remitted to FDCP, etc. by the owners, etc., or being
Ultra Vistarama Cinema 68,821.60 2 July 2 - 22, 2008 operated within Cebu City and imposing surcharges on the unpaid
amount; and
Cebu Central Realty Corp. 9,853,559.69 48 Jan. 1, 2004 - Oct. 21, 2008
(c) Filing any suit due to or arising from the failure of the owners, etc.,
of theaters or cinemas within Cebu City, to deduct, withhold, and remit
the incentive to FDCP.
In said letters, the proprietors and cinema operators, including private
respondent Colon Heritage Realty Corp. (Colon Heritage), operator of the Meanwhile, on August 13, 2010, SM Prime Holdings, Inc. moved for leave to
Oriente theater, were given ten (10) days from receipt thereof to pay the file and admit attached comment-in-intervention and was later granted. 6

aforestated amounts to FDCP. The demand, however, fell on deaf ears.

Rulings of the Trial Courts
Meanwhile, on March 25, 2009, petitioner received a letter from Regal
Entertainment, Inc., inquiring on the status of its receivables for tax rebates in
In City of Cebu v. FDCP, the RTC, Branch 14 issued the challenged
Cebu cinemas for all their A and B rate films along with those which it co-
Decision  declaring Secs. 13 and 14 of RA 9167 unconstitutional, disposing as
7

produced with GMA films. This was followed by a letter from

follows:
Star Cinema ABS-CBN Film Productions, Inc., requesting the immediate
WHEREFORE, in view of all the disquisitions, judgment is rendered in favor of
remittance of its amusement tax rewards for its graded films for the years
petitioner City of Cebu against respondent Film Development Council of the
2004-2008.
Philippines, as follows:
Because of the persistent refusal of the proprietors and cinema operators to
remit the said amounts as FDCP demanded, on one hand, and Cebu City's
 1. Declaring Sections 13 and 14 of the (sic) Republic Act No. 9167
otherwise known as an Act Creating the Film Development Council of
the Philippines, Defining its Powers and Functions, Appropriating
Funds Therefor and for other purposes, as violative of Section 5 Article
X of the 1997 (sic) Philippine Constitution; Consequently
2. Declaring that defendant Film Development Council of the
Philippines (FDCP) cannot collect under Sections 13 and 14 of R.A.
9167 as of the finality of the decision in G.R. Nos. 203754 and 204418;
3. Declaring that Intervenor SM Cinema Corporation has the obligation
to remit the amusement taxes, withheld on graded cinema films to
respondent FDCP under Sections 13 and 14 of R.A. 9167 for taxes
due prior to the finality of the decision in G.R. Nos. 203754 and
204418;
4. Declaring that after the finality of the decision in G.R. Nos. 203 754
and 204418, all amusement taxes withheld and those which may be
collected by Intervenor SM on graded films shown in SM Cinemas in
Cebu City shall be remitted to petitioner Cebu City pursuant to City
Ordinance LXIX, Chapter XI, Section 42.
As to the sum of PhP 76,836,807.08 remitted by the Intervenor SM to
petitioner City of Cebu, said amount shall be remitted by the City of Cebu to
petitioner FDCP within thirty (30) days from finality of this decision in G.R. Nos.
203754 and 204418 without interests and surcharges.
SO ORDERED.
According to the court, what RA 9167 seeks to accomplish is the segregation
of the amusement taxes raised and collected by Cebu City and its subsequent
transfer to FDCP. The court concluded that this arrangement cannot be
classified as a tax exemption but is a confiscatory measure where the national
government extracts money from the local government's coffers and transfers
it to FDCP, a private agency, which in turn, will award the money to private
persons, the film producers, for having produced graded films.
The court further held that Secs. 13 and 14 of RA 9167 are contrary to the
basic policy in local autonomy that all taxes, fees, and charges imposed by the
LGUs shall accrue exclusively to them, as articulated in A1iicle X,. Sec. 5 of
the 1987 Constitution. This edict, according to the court, is a limitation upon
the rule-making power of Congress when it provides guidelines and limitations
on the local government unit's (LGU's) power of taxation. Therefore, when
Congress passed this "limitation," if went beyond its legislative authority,
rendering the questioned provisions unconstitutional.
By the same token, in Colon Heritage v. FDCP, the RTC, Branch 5, in its
Decision of September 25, 2012, also ruled against the constitutionality of said
Secs. 13 and 14 of RA 9167 for the following reasons: (a) while Congress,
through the enactment of RA 9167, may have amended Secs. 140(a)  and 8
151  of the LGC, in the exercise of its plenary power to amend laws, such
9
power must be exercised within constitutional parameters; (b) the assailed
provision violates the constitutional directive that taxes should accrue
exclusively to the LGU concerned; (c) the Constitution, through its Art. X, Sec.
5,  directly conferred LGUs with authority to levy taxes-the power is no longer
10
delegated by the legislature; (d) In CIR v. SM Prime Holdings,  the Court ruled
11
that amusement tax on cinema/theater operators or proprietors remain with the
LGU, amusement tax, being, by nature, a local tax. The fallo of the questioned
judgment reads:
WHEREFORE, in view of all the foregoing, Judgment is hereby rendered in
favor of petitioner, as follows:
(1) Declaring Republic Act No. 9167 as invalid and unconstitutional;
(2) The obligation to remit amusement taxes for the graded films to
respondent is ordered extinguished;
(3) Directing respondent to refund all the amounts paid by petitioner,
by way of amusement tax, plus the legal rate of interest thereof, until
the whole amount is paid in full.
Notify parties and counsels of this order.
SO ORDERED.
The Issue
Undeterred by two defeats, petitioner has come directly to this Court,
presenting the singular issue: whether or not the RTC (Branches 5 and 14)
gravely erred in declaring Secs. 13 and 14 of RA 9167 invalid for being
unconstitutional.
Anent Sec. 13,  FDCP concedes that the amusement taxes assessed in RA
12
9167 are to be given to the producers of graded films who are private persons.
Nevertheless, according to FDCP, this particular tax arrangement is not a
violation of the rule on the use of public funds for RA 9167 was enacted for a
public purpose, that is, the promotion and support of the "development and
growth of the local film industry as a medium for the upliftment of aesthetic,
cultural, and social values for the better understanding and appreciation of the
Filipino identity" as well as the "encouragement of the production of quality
films that will promote the growth and development' of the local film
industry."  Moreover, FDCP suggests that "even if the resultant effect would be
13
a certain loss of revenue, [LGUs] do not feel deprived nor bitter for they realize
that the benefits for the film industry, the fortification of our values system, and
the cultural boost for the nation as a whole, far outweigh the pecuniary cost
they would shoulder by backing this law."  Finally, in support of its stance,
14
FDCP invites attention to the following words of former Associate Justice
Isagani A. Cruz: "[t]he mere fact that the tax will be directly enjoyed by a
private individual does not make it invalid so long as some link to the public
welfare is established." 15
As regards Sec. 14  of RA 9167, FDCP is of the position that Sec. 5, Article X
16
of the Constitution does not change the doctrine that municipal corporations
only possess delegated, not inherent, powers of taxation and that the power to
tax is still primarily vested in the Congress. Thus, wielding its power to impose
limitations on this delegated power, Congress further restricted the LGU's
power to impose amusement taxes via Secs. 13 and 14 of RA 9167-an
express and real intention of Congress to further contain the LGU's delegated
taxing power. It, therefore, cannot be construed as an undue limitation since it
is well within the power of Congress to make such restriction. Furthermore, the
LGC is a mere statute which Congress can amend, which it in fact did when it
enacted RA 9164  and, later, the questioned law, RA 9167.
17 18
This, according to FDCP, evinces the overriding intent of Congress to remove
from the LGU' s delegated taxing power all revenues from amusement taxes
on grade "A" or "B" films which would otherwise accrue to the cities and
municipalities in Metropolitan Manila and highly urbanized and independent
component cities in the Philippines pursuant to Secs. 140 and 151 of the LGC.
In fine, it is petitioner's posture that the inclusion in RA 9167 of the questioned
provisions was a valid exercise of the legislature's power to amend laws and
an assertion of its constitutional authority to set limitations on the LGU' s
authority to tax.
The Court's Ruling
We find no reason to disturb the assailed rulings.
Local fiscal autonomy and the constitutionally-delegated power to tax
The power of taxation, being an essential and inherent attribute of sovereignty,
belongs, as a matter of right, to every independent government, and needs no
express conferment by the people before it can be exercised. It is purely
legislative and, thus, cannot be delegated to the executive and judicial
branches of government without running afoul to the theory of separation of
powers. It, however, can be delegated to municipal corporations, consistent
with the principle that legislative powers may be delegated to local
governments in respect of matters of local concern.  The authority of
19
provinces, cities, and municipalities to create their own sources of revenue and
to levy taxes, therefore, is not inherent and may be exercised only to the extent
that such power might be delegated to them either by the basic law or by
statute.  Under the regime of the 1935 Constitution, there was no
20
constitutional provision on the delegation of the power to tax to municipal
corporations. They only derived such under a limited statutory authority,
outside of which, it was deemed withheld.  Local governments, thus, had very
21
restricted taxing powers which they derive from numerous tax laws. This
highly-centralized government structure was later seen to have arrested the
growth and efficient operations of LG Us, paving the way for the adoption of a
more decentralized system which granted LGUs local autonomy, both
administrative and fiscal autonomy. 22
Material to the case at bar is the concept and scope of local fiscal autonomy.
In Pimentel v. Aguirre,  fiscal autonomy was defined as "the power [of LGUs]
23
to create their own sources of revenue in addition to their equitable share in
the national taxes released by the national government, as well as the power
to allocate their resources in accordance with their own priorities. It extends to
the preparation of their budgets, and local officials in tum have to work within
the constraints thereof."
With the adoption of the 1973 Constitution,  and later the 1987 Constitution,
24
municipal corporations were granted fiscal autonomy via a general delegation
of the power to tax.  Section 5, Article XI of the 1973 Constitution gave LGUs
25
the "power to create its own sources of revenue and to levy taxes, subject to
such limitations as may be provided by law.'' This authority was further
strengthened in the 1987 Constitution, through the inclusion in Section 5,
Article X thereof of the condition that " [s]uch taxes, fees, and charges shall
accrue exclusively to local governments." 26
Accordingly, under the present Constitution, where there is neither a grant nor
a prohibition by statute, the tax power of municipal corporations must be
deemed to exist although Congress may provide statutory limitations and
guidelines.  The basic rationale for the current rule on local fiscal autonomy is
27
the strengthening of LGUs and the safeguarding of their viability and self-
sufficiency through a direct grant of general and broad tax powers.
Nevertheless, the fundamental law did not intend the delegation to be absolute
and unconditional. The legislature must still see to it that (a) the taxpayer will
not be over-burdened or saddled with multiple and unreasonable impositions;
(b) each LGU will have its fair share of available resources; ( c) the resources
of the national government will not be unduly disturbed; and ( d) local taxation
will be fair, uniform, and just.
28
In conformity to the dictate of the fundamental law for the legislature to "enact
a local government code which shall provide for a more responsive and
accountable local government structure instituted through a system of
decentralization,"  consistent with the basic policy of local autonomy,
29
Congress enacted the LGC, Book II of which governs local taxation and fiscal
matters and sets forth the guidelines and limitations for the exercise of this
power. In Pelizloy Realty Corporation v. The Province of Benguet,  the Court
30
alluded to the fundamental principles governing the taxing powers of LGUs as
laid out in Section 130 of the LGC, to wit:
1. Taxation shall be uniform in each LGU.
2. Taxes, fees, charges and other impositions shall:
a. be equitable and based as far as practicable on the
taxpayer's ability to pay;
b. be levied and collected only for public purposes;
c. not be unjust, excessive, oppressive, or confiscatory;
d. not be contrary to law, public policy, national economic
policy, or in the restraint of trade.
3. The collection of local taxes, fees, charges and other impositions
shall in no case be let to any private person.
4. The revenue collected pursuant to the provisions of the LGC shall
inure solely to the benefit of, and be subject to the disposition by, the
LGU levying the tax, fee, charge or other imposition unless otherwise
specifically provided by the LGC.
5. Each LGU shall, as far as practicable, evolve a progressive system
of taxation.
It is in the application of the adverted fourth rule, that is-all revenue collected
pursuant to the provisions of the LGC shall inure solely to the benefit of, and
be subject to the disposition by, the LGU levying the tax, fee, charge or other
imposition unless otherwise specifically provided by the LGC-upon which the
present controversy grew.
RA 9167 violates local fiscal autonomy
It is beyond cavil that the City of Cebu had the authority to issue its City
Ordinance No. LXIX and impose an amusement tax on cinemas pursuant to
Sec. 140 in relation to Sec. 151 of the LGC. Sec. 140 states, among other
things, that a "province may levy an amusement tax to be collected from the
proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses,
boxing stadia, and other places of amusement at a rate of not more than thirty
percent (30%) of the gross receipts from admission fees." By operation of said
Sec. 151,  extending to them the authority of provinces and municipalities to
31
levy certain taxes, fees, and charges, cities, such as respondent city
government, may therefore validly levy amusement taxes subject to the
parameters set forth under the law. Based on this authority, the City of Cebu
passed, in 1993, its Revised Omnibus Tax Ordinance,  Chapter XI, Secs. 42
32
and 43 of which reads:
CHAPTER XI - Amusement Tax
Section 42. Rate of Tax. - There shall be paid to the Office of the City
Treasurer by the proprietors, lessees, or operators of theaters, cinemas,
concert halls, circuses, boxing stadia and other places of amusement, an
amusement tax at the rate of thirty percent (30%) of the gross receipts from
admission fees. 33
Section 43. Manner of Payment. - In the case of theaters or cinemas, the tax
shall first be deducted and withheld by their proprietors, lessees, or operators
and paid to the city treasurer before the gross receipts are divided between
said proprietor, lessees, operators, and the distributors of the cinematographic
films.
Then, after almost a decade of cities reaping benefits from this imposition,
Congress, through RA 9167, amending Section 140 of the LGC,  among34
others, transferred this income from the cities and municipalities in
Metropolitan Manila and highly urbanized and independent component cities,
such as respondent City of Cebu, to petitioner FDCP, which proceeds will
ultimately be rewarded to the producers of graded films. We reproduce anew
Secs. 13 and 14 of RA 9167, thus:
Section 13. Privileges of Graded Films. - Films which have obtained an "A" or
"B" grading from the Council pursuant to Sections 11 and 12 of this Act shall
be entitled to the following privileges: a. Amusement tax reward. - A grade "A"
or "B" film shall entitle its producer to an incentive equivalent to the
amusement tax imposed and collected on the graded films by cities and
municipalities in Metro Manila and other highly urbanized and independent
component cities in the Philippines pursuant to Sections 140 to 151 of
Republic Act No. 7160 at the following rates:
1. For grade "A" films - 100% of the amusement tax collected on such
film; and
2. For grade "B" films - 65% of the amusement tax collected on such
films. The remaining thirty-five (35%) shall accrue to the funds of the
Council.
Section 14. Amusement Tax Deduction and Remittance. -All revenue from the
amusement tax on the graded film which may otherwise accrue to the cities
and municipalities in Metropolitan Manila and highly urbanized and
independent component cities in the Philippines pursuant to Section 140 of
Republic Act. No. 7160 during the period the graded film is exhibited, shall be
deducted and withheld by the proprietors, operators or lessees of theaters or
cinemas and remitted within thirty (30) days from the termination of the
exhibition to the Council which shall reward the corresponding amusement tax
to the producers of the graded film within fifteen (15) days from receipt thereof.
Proprietors, operators and lessees of theaters or cinemas who fail to remit the
amusement tax proceeds within the prescribed period shall be liable to a
surcharge equivalent to five percent (5%) of the amount due for each month of
delinquency which shall be paid to the Council.
Considering the amendment, the present rule is that ALL amusement taxes
levied by covered cities and municipalities shall be 2iven by proprietors,
operators or lessees of theatres and cinemas to FDCP, which shall then
reward said amount to the producers of graded films in this wise:
1. For grade "A" films, ALL amusement taxes collected by ALL covered
LGUs on said films shall be given to the producer thereof. The LGU,
therefore, is entitled to NOTHING from its own imposition.
2. For grade "B" films, SIXTY FIVE PERCENT (65%) of ALL
amusement taxes derived by ALL covered LGUs on said film shall be
given to the producer thereof. In this case, however, the LGU is still
NOT entitled to any portion of the imposition, in view of Sec. 16 of RA
9167 which provides that the remaining 35% may be expended for the
Council's operational expenses. Thus: Section 16. Funding. - The
Executive Secretary shall immediately include in the Office of the
President's program the implementation of this Act, the funding of
which shall be included in the annual General Appropriations Act.
To augment the operational expenses of the Council, the Council may:
a. Utilize the remaining thirty-five (35%) percent of the amusement tax
collected during the period of grade "B" film is exhibited, as provided under
Sections 13 and 14 hereof x x x.
For petitioner, the amendment is a valid legislative manifestation of the
intention to remove from the grasp of the taxing power of the covered LGUs all
revenues from amusement taxes on grade "A" or "B" films which would
otherwise accrue to them. An evaluation of the provisions in question,
however, compels Us to disagree.
RA 9167, Sec. 14 states:
Section 14. Amusement Tax Deduction and Remittance. - All revenue from the
amusement tax on the graded film which may otherwise accrue to the cities
and municipalities in Metropolitan Manila and highly urbanized and
independent component cities in the Philippines pursuant to Section 140 of
Republic Act. No. 7160 during the period the graded film is exhibited, shall be
deducted and withheld by the proprietors, operators or lessees of theaters or
cinemas and remitted within thirty (30) days from the termination of the
exhibition to the Council which shall reward the corresponding amusement tax
to the producers of the graded film within fifteen (15) days from receipt thereof.
A reading of the challenged provision reveals that the power to impose
amusement taxes was NOT removed from the covered LGUs, unlike what
Congress did for the taxes enumerated in Sec. 133, Article X of the
LGC,  which lays down the common limitations on the taxing powers of LGUs.
35
Thus:
Section 133. Common Limitations on the Taxing Powers of Local Government
Units. -Unless otherwise provided herein, the exercise of the taxing powers of
provinces, cities, municipalities, and barangays shall not extend to the levy of
the following:
(a) Income tax, except when levied on banks and other financial
institutions;
(b) Documentary stamp tax;
(c) Taxes on estates, inheritance, gifts, legacies and other acquisitions
mortis causa, except as otherwise provided herein;
(d) Customs duties, registration fees of vessel and wharfage on
wharves, tonnage dues, and all other kinds of customs fees, charges
and dues except wharfage on wharves constructed and maintained by
the local government unit concerned;
(e) Taxes, fees, and charges and other impositions upon goods carried
into or out of, or passing through, the territorial jurisdictions of local
government units in the guise of charges for wharfage, tolls for bridges
or otherwise, or other taxes, fees, or charges in any form whatsoever
upon such goods or merchandise;
(f) Taxes, fees or charges on agricultural and aquatic products when
sold by marginal farmers or fishermen;
(g) Taxes on business enterprises certified to by the Board of
Investments as pioneer or non-pioneer for a period of six (6) and four
(4) years, respectively from the date of registration;
(h) Excise taxes on articles enumerated under the national Internal
Revenue Code, as amended, and taxes, fees or charges on petroleum
products;
(i) Percentage or value-added tax (VAT) on sales, barters or
exchanges or similar transactions on goods or services except as
otherwise provided herein;
(j) Taxes on the gross receipts of transportation contractors and
persons engaged in the transportation of passengers or freight by hire
and common carriers by air, land or water, except as provided in this
Code;
(k) Taxes on premiums paid by way or reinsurance or retrocession;
(l) Taxes, fees or charges for the registration of motor vehicles and for
the issuance of all kinds of licenses or permits for the driving thereof,
except tricycles;
(m) Taxes, fees, or other charges on Philippine products actually
exported, except as otherwise provided herein;
(n) Taxes, fees, or charges, on Countryside and Barangay Business
Enterprises and cooperatives duly registered under R.A. No. 6810 and
Republic Act Numbered Sixty-nine hundred thirty-eight (R.A. No. 6938)
otherwise known as the "Cooperative Code of the Philippines"
respectively; and
(o) Taxes, fees or charges of any kind on the National Government, its
agencies and instrumentalities, and local government units. (emphasis
ours)
From the above, the difference between Sec. 133 and the questioned
amendment of Sec. 140 of the LGC by RA 9167 is readily revealed. In Sec. ·
133, what Congress did was to prohibit the levy by LGUs of the enumerated
taxes. For RA 9167, however, the covered LGUs were deprived of the income
which they will otherwise be collecting should they impose amusement taxes,
or, in petitioner's own words, "Section 14 of [RA 9167] can be viewed as an
express and real intention on the part of Congress to remove from the LGU's
delegated taxing power, all revenues from the amusement taxes on graded
films which would otherwise accrue to [them] pursuant to Section 140 of the
[LGC]."36
In other words, per RA 9167, covered LGUs still have the power to levy
amusement taxes, albeit at the end of the day, they will derive no revenue
therefrom. The same, however, cannot be said for FDCP and the producers of
graded films since the amounts thus levied by the LGUs which should rightfully
accrue to them, they being the taxing authority-will be going to their coffers. As
a matter of fact, it is only through the exercise by the LGU of said power that
the funds to be used for the amusement tax reward can be raised. Without
said imposition, the producers of graded films will receive nothing from the
owners, proprietors and lessees of cinemas operating within the territory of the
covered LGU.
Taking the resulting scheme into consideration, it is apparent that what
Congress did in this instance was not to exclude the authority to levy
amusement taxes from the taxing power of the covered LGUs, but to earmark,
if not altogether confiscate, the income to be received by the LGU from the
taxpayers in favor of and for transmittal to FDCP, instead of the taxing
authority. This, to Our mind, is in clear contravention of the constitutional
command that taxes levied by LGUs shall accrue exclusively to said LGU and
is repugnant to the power of LGUs to apportion their resources in line with their
priorities.
It is a basic precept that the inherent legislative powers of Congress, broad as
they may be, are limited and confined within the four walls of the
Constitution.  Accordingly, whenever the legislature exercises its power to
37
enact, amend, and repeal laws, it should do so without going beyond the
parameters wrought by the organic law.
In the case at bar, through the application and enforcement of Sec. 14 of RA
9167, the income from the amusement taxes levied by the covered LGUs did
not and will under no circumstance accrue to them, not even partially, despite
being the taxing authority therefor. Congress, therefore, clearly overstepped its
plenary legislative power, the amendment being violative of the fundamental
law's guarantee on local autonomy, as echoed in Sec. 130(d) of the LGC, thus:
Section 130. Fundamental Principles. - The following fundamental principles
shall govern the exercise of the taxing and other revenue-raising powers of
local government units:
xxxx
(d) The revenue collected pursuant to the provisions of this Code shall inure
solely to the benefit of, and be subject to the disposition by, the local
government unit levying the tax, fee, charge or other imposition unless
otherwise specifically provided herein x x x.
Moreover, in Pimentel,  the Court elucidated that local fiscal autonomy
38
includes the power of LGUs to allocate their resources in accordance with their
own priorities. By earmarking the income on amusement taxes imposed by the
LGUs in favor of FDCP and the producers of graded films, the legislature
appropriated and distributed the LGUs' funds-as though it were legally within
its control-under the guise of setting a limitation on the LGUs' exercise of their
delegated taxing power. This, undoubtedly, is a usurpation of the latter's
exclusive prerogative to apportion their funds, an impermissible intrusion into
the LGUs' constitutionally-protected domain which puts to naught the
guarantee of fiscal autonomy to municipal corporations enshrined in our basic
law.
Grant of amusement tax reward incentive:
not a tax exemption
It was argued that subject Sec. 13 is a grant by Congress of an exemption
from amusement taxes in favor of producers of graded films. Without question,
this Court has previously upheld the power of Congress to grant exemptions
over the power of LGUs to impose taxes.  This amusement tax reward,
39
however, is not, as the lower court posited, a tax exemption. Exempting a
person or entity from tax is to relieve or to excuse that person or entity from the
burden of the imposition. Here, however, it cannot be said that an exemption
from amusement taxes was granted by Congress to the producers of graded
films. Take note that the burden of paying the amusement tax in question is on
the proprietors, lessors, and operators of the theaters and cinemas that
showed the graded films. Thus, per City Ordinance No. LXIX: CHAPTER XI -
Amusement Tax
Section 42. Rate of Tax. - There shall be paid to the Office of the City
Treasurer by the proprietors, lessees, or operators of theaters, cinemas,
concert halls,, circuses, boxing stadia and other places of amusement, an
amusement tax at the rate of thirty percent (30%) of the gross receipts from
admission fees.
Section 43. Manner of Payment. - In the case of theaters or cinemas, the tax
shall first be deducted and withheld by their proprietors, lessees, or operators
and paid to the city treasurer before the gross receipts are divided between
said proprietor, lessees, operators, and the distributors of the cinematographic
films.
Similarly, the LGC provides as follows:
Section 140. Amusement Tax. –
(a) The province may levy an amusement tax to be collected from the
proprietors, lessees, or operators of theaters, cinemas, concert halls,
circuses, boxing stadia, and other places of amusement at a rate of not
more than thirty percent (30%) of the gross receipts from admission
fees.
(b) In the case of theaters or cinemas, the tax shall first be deducted
and withheld by their proprietors, lessees, or operators and paid to the
provincial treasurer before the gross receipts are divided between said
proprietors, lessees, or operators and the distributors of the
cinematographic films.
Simply put, both the burden and incidence of the amusement tax are borne by
the proprietors, lessors, and operators, not by the producers of the graded
films. The transfer of the amount to the film producers is actually a monetary
reward given to them for having produced a graded film, the funding for which
was taken by the national government from the coffers of the covered LGUs.
Without a doubt, this is not an exemption from payment of tax.
Declaration by the RTC, Branch 5 of the
entire RA 9167 as unconstitutional
Noticeably, the RTC, Branch 5, in its September 25, 2012 Decision in Colon
Heritage v. FDCP, ruled against the constitutionality of the entire law, not just
the assailed Sec. 14. The fallo of the judgment reads:
WHEREFORE, in view of all the foregoing, Judgment is hereby rendered in
favor of petitioner, as follows:
(1) Declaring Republic Act No. 9167 as invalid and unconstitutional;
(2) The obligation to remit amusement taxes for the graded films to
respondent is ordered extinguished;
(3) Directing respondent to refund all the amounts paid by petitioner,
by way of amusement tax, plus the legal rate of interest thereof, until
the whole amount is paid in full.
In this regard, it is well to emphasize that if it appears that the rest of the law is
free from the taint of unconstitutionality, then it should remain in force and
effect if said law contains a separability clause. A separability clause is a
legislative expression of intent that the nullity of one provision shall not
invalidate the other provisions of the act. Such a clause is not, however,
controlling and the courts, in spite of it, may invalidate the whole statute where
what is left, after the void part, is not complete and workable. 40
In this case, not only does RA 9167 have a separability clause, contained in
Section 23 thereof which reads:
Section 23. Separability Clause. -If, for any reason, any provision of this Act, or
any part thereof, is declared invalid or unconstitutional, all other sections or
provisions not affected thereby shall remain in force and effect.
it is also true that the constitutionality of the entire law was not put m question
in any of the said cases.
Moreover, a perusal of RA 9167 easily reveals that even with the removal of
Secs. 13 and 14 of the law, the remaining provisions can survive as they
mandate other matters like a cinema evaluation system, an incentive and
reward system, and local and international film festivals and activities that "will
promote the growth and development of the local film industry and promote its
participation in both domestic and foreign markets," and to "enhance the skills
and expertise of Filipino talents."41
Where a part of a statute is void as repugnant to the Constitution, while
another part is valid, the valid portion, if separable from the invalid, may stand-
and be enforced. The exception to this is when the parts of a statute are so
mutually dependent and connected, as conditions, considerations,
inducements, or compensations for each other, as to warrant a belief that the
legislature intended them as a whole, in which case, the nullity of one part will
vitiate the rest.
42
Here, the constitutionality of the rest of the provisions of RA 9167 was never
put in question. Too, nowhere in the assailed judgment of the RTC was it
explicated why the entire law was being declared as unconstitutional.
It is a basic tenet that courts cannot go beyond the issues in a case,  which
43
the RTC, Branch 5 did when it declared RA 9167 unconstitutional. This being
the case, and in view of the elementary rule that every statute is presumed
valid,  the declaration by the R TC, Branch 5 of the entirety of RA 9167 as
44
unconstitutional, is improper.
Amounts paid by Colon Heritage
need not be returned
Having ruled that the questioned provisions are unconstitutional, the RTC,
Branch 5, in Colon Heritage v. FDCP, ordered the return of all amounts paid by
respondent Colon Heritage to FDCP by way of amusement tax. Thus:
WHEREFORE, in view of all the foregoing, Judgment is hereby rendered in
favor of petitioner, as follows:
(1) Declaring Republic Act No. 9167 as invalid and unconstitutional;
(2) The obligation to remit amusement taxes for the graded films to
respondent is ordered extinguished;
(3) Directing respondent to refund all the amounts paid by petitioner,
by way of amusement tax, plus the legal rate of interest thereof, until
the whole amount is paid in full.
As regards the refund, the Court cannot subscribe to this position.
It is a well-settled rule that an unconstitutional act is not a law; it . confers no
rights; it imposes no duties; it affords no protection; it creates no office; it is
inoperative as if it has not been passed at all. Applying this principle, the
logical conclusion would be to order the return of all the amounts remitted to
FDCP and given to the producers of graded films, by all of the covered cities,
which actually amounts to hundreds of millions, if not billions. In fact, just for
Cebu City, the aggregate deficiency claimed by FDCP is ONE HUNDRED
FIFTY NINE MILLION THREE HUNDRED SEVENTY SEVEN THOUSAND
NINE HUNDRED EIGHTY-EIGHT PESOS AND FIFTY FOUR CENTAVOS
(₱159,377,988.54). Again, this amount represents the unpaid amounts to
FDCP by eight cinema operators or proprietors in only one covered city.
An exception to the above rule, however, is the doctrine of operative fact,
which applies as a matter of equity and fair play. This doctrine nullifies the
effects of an unconstitutional law or an executive act by recognizing that the
existence of a statute prior to a determination of unconstitutionality is an
operative fact and may have consequences that cannot always be ignored. It
applies when a declaration of unconstitutionality will impose an undue burden
on those who have relied on the invalid law. 45
In Hacienda Luisita v. PARC, the Court elucidated the meaning and scope of
the operative fact doctrine, viz:
The "operative fact" doctrine is embodied in De Agbayani v. Court of Appeals,
wherein it is stated that a legislative or executive act, prior to its being declared
as unconstitutional by the courts, is valid and must be complied with, thus:
x x x           x x x          x x x
This doctrine was reiterated in the more recent case of City of Makati v. Civil
Service Commission, wherein we ruled that:
Moreover, we certainly cannot nullify the City Government's order of
suspension, as we have no reason to do so, much less retroactively apply
such nullification to deprive private respondent of a compelling and valid
reason for not filing the leave application. For as we have held, a void act
though in law a mere scrap of paper nonetheless confers legitimacy upon past
acts or omissions done in reliance thereof. Consequently, the existence of a
statute or executive order prior to its being adjudged void is an operative fact
to which legal consequences are attached. It would indeed be ghastly unfair to
prevent private respondent from relying upon the order of suspension in lieu of
a formal leave application.
The applicability of the operative fact doctrine to executive acts was further
explicated by this Court in Rieta v. People, thus:
Petitioner contends that his arrest by virtue of Arrest . Search and Seizure
Order (ASSO) No. 4754 was invalid, as the law upon which it was predicated-
General Order No. 60, issued by then President Ferdinand E. Marcos - was
subsequently declared by the Court, in Tanada v. Tuvera, 33 to have no force
and effect. Thus, he asserts, any evidence obtained pursuant thereto is
inadmissible in evidence.
We do not agree. In Tanada, the Court addressed the possible effects of its
declaration of the invalidity of various presidential issuances.  Discussing
1a\^/phi1
therein how such a declaration might affect acts done on a presumption of
their validity, the Court said:
" ... In similar situations in the past this Court had taken the pragmatic and
realistic course set forth in Chicot County Drainage District vs. Baxter Bank to
wit:
'The courts below have proceeded on the theory that the Act of Congress,
having been found to be unconstitutional, was not a law; that it was
inoperative, conferring no rights and imposing no duties, and hence affording
no basis for the challenged decree. . . . It is quite clear, however, that such
broad statements as to the effect of a determination of unconstitutionality must
be taken with qualifications. The actual existence of a statute, prior to [the
determination of its invalidity], is an operative fact and may have
consequences which cannot justly be ignored. The past cannot always be
erased by a new judicial declaration. The effect of the subsequent ruling as to
invalidity may have to be considered in various aspects – with respect to
particular conduct, private and official. Questions of rights claimed to have
become vested, of status, of prior determinations deemed to have finality and
acted upon accordingly, of public policy in the light of the nature both of the
statute and of its previous application, demand examination. These questions
are among the most difficult of those which have engaged the attention of
courts, state and federal, and it is manifest from numerous decisions that an
all-inclusive statement of a principle of absolute retroactive invalidity cannot be
justified.'
x x x           x x x          x x x
"Similarly, the implementation/ enforcement of presidential decrees prior to
their publication in the Official Gazette is 'an operative fact which may have
consequences which cannot be justly ignored. The past cannot always be
erased by a new judicial declaration ... that an all-inclusive statement of a
principle of absolute retroactive invalidity cannot be justified."
The Chicot doctrine cited in Tanada advocates that, prior to the nullification of
a statute, there is an imperative necessity of taking into account its actual
existence as an operative fact negating the acceptance of "a principle of
absolute retroactive invalidity." Whatever was done while the legislative or the
executive act was in operation should be duly recognized and presumed to be
valid in all respects. The ASSO that was issued in 1979 under General Order
No. 60 - long before our Deeision n Taiiada and the arrest of petitioner - is an
operative fact that can no longer be disturbed or simply ignored. (citations
omitted; emphasis in the original.)
Bearing in mind that PARC Resolution No. 89-12-2-an executive act-was
declared invalid in the instant case, the operative fact doctrine is clearly
applicable.46
Here, to order FDCP and the producers of graded films which may have
already received the amusement tax incentive reward pursuant to the
questioned provisions of RA 9167, to return the amounts received to the
respective taxing authorities would certainly impose a heavy, and possibly
crippling, financial burden upon them who merely, and presumably in good
faith, complied with the legislative fiat subject of this case. For these reasons,
We are of the considered view that the application of the doctrine of operative
facts in the case at bar is proper so as not to penalize FDCP for having
complied with the legislative command in RA 9167, and the producers of
graded films who have already received their tax cut prior to this Decision for
having produced top-quality films.
With respect to the amounts retained by the cinema proprietors due to
petitioner FDCP, said proprietors are required under the law to remit the same
to petitioner. Obeisance to the rule of law must always be protected and
preserved at all times and the unjustified refusal of said proprietors cannot be
tolerated. The operative fact doctrine equally applies to the non-remittance by
said proprietors since the law produced legal effects prior to the declaration of
the nullity of Secs. 13 and 14 in these instant petitions. It can be surmised,
however, that the proprietors were at a loss whether or not to remit said
amounts to FDCP considering the position of the City of Cebu for them to remit
the amusement taxes directly to the local government. For this reason, the
proprietors shall not be liable for surcharges.
In view of the declaration of nullity of unconstitutionality of Secs. 13 and 14 of
RA 9167, all amusement taxes remitted to petitioner FDCP prior to the date of
the finality of this decision shall remain legal and valid under the operative fact
doctrine. Amusement taxes due to petitioner but unremitted up to the finality of
this decision shall be remitted to petitioner within thirty (30) days from date of
finality. Thereafter, amusement taxes previously covered by RA 9167 shall be
remitted to the local governments.
WHEREFORE, premises considered, the consolidated petitions are hereby
PARTIALLY GRANTED. The questioned Decision of the RTC, Branch 5 of
Cebu City in Civil Case No. CEB-35601 dated September 25, 2012 and that of
the R TC, Branch 14, Cebu City in Civil Case No. CEB-35529 dated October
24, 2012, collectively declaring Sections 13 and 14 of Republic Act No. 9167
invalid and unconstitutional, are hereby AFFIRMED with MODIFICATION.
As modified, the decisions of the lower courts shall read:
1. Civil Case No. CEB-35601 entitled Colon Heritage Realty Corp. v. Film
Development Council of the Philippines:
WHEREFORE, in view of all the foregoing, Judgment is hereby rendered in
favor of Colon Heritage Realty Corp. and against the Film Development
council of the Philippines, as follows: 1. Declaring Sections 13 and 14 of
Republic Act No. 9167 otherwise known as an Act Creating the Film
Development Council of the Philippines, Defining its Powers and Functions,
Appropriating Funds therefor arid for other purposes, as invalid and
unconstitutional;
2. Declaring that the Film Development Council of the Philippines
cannot collect under Sections 13 and 14 of R.A. 9167 as of the finality
of the decision in G.R. Nos. 203754 and 204418;
3. Declaring that Colon Heritage Realty Corp. has the obligation to
remit the amusement taxes withheld on graded cinema films to FDCP
under Sections 13 and 14 of R.A. 9167 for taxes due prior to the finality
of this Decision, without surcharges;
4. Declaring that upon the finality of this decision, all amusement taxes
withheld and those which may be collected by Colon Heritage Realty
Corp. on graded films shown in its cinemas in Cebu City shall be
remitted to Cebu City pursuant to City Ordinance LXIX, Chapter XI,
Section 42.
2. Civil Case No. CEB-35529 entitled City of Cebu v. Film Development
Council of the Philippines:
WHEREFORE, in view of all the disquisitions, judgment is rendered in favor of
the City of Cebu against the Film development Council of the Philippines, as
follows:
1. Declaring Sections 13 and 14 of Republic Act No. 9167 otherwise
known as an Act Creating the Film Development Council of the
Philippines, Defining its Powers and Functions, Appropriating Funds
therefor and for other purposes, void and unconstitutional;
2. Declaring that the Film Development Council of the Philippines
cannot collect under Sections 13 and 14 of R.A. 9167 as of the finality
of this Decision;
3. Declaring that Intervenor SM Cinema Corporation has the obligation
to remit the amusement taxes, withheld on graded cinema films to
respondent FDCP under Sections 13 and 14 of R.A. 9167 for taxes
due prior to the finality of this Decision, without surcharges;
4. Declaring that after the finality of this Decision, all amusement taxes
withheld and those which may be collected by Intervenor SM on
graded films shown in SM Cinemas in Cebu City shall be remitted to
petitioner Cebu City pursuant to City Ordinance LXIX, Chapter XI,
Section 42.
As to the sum of PhP 76,836,807.08 remitted by the Intervenor SM to
petitioner City of Cebu, said amount shall be remitted by the City of Cebu to
petitioner FDCP within thirty (30) days from finality of this decision in G.R. Nos.
203754 and 204418 without interests and surcharges. Since Sections 13 and
14 of Republic Act No. 9167 were declared void and unconstitutional, all
remittances of amusement taxes pursuant to said Sections 13 and 14 of said
law prior to the date of finality of this Decision shall remain valid and legal.
Cinema proprietors who failed to remit said amusement taxes to petitioner
FDCP prior to the date of finality of this Decision are obliged to remit the same,
without surcharges, to petitioner FDCP under the doctrine of operative fact.
SO ORDERED.