Boracay Foundation, Inc. v.

Province
of Aklan
G.R. No. 196870, June 26, 2012

FACTS:

Claiming that tourist arrivals to Boracay would reach 1 million in the future, respondent Province
of Aklan planned to expand the port facilities at Barangay Caticlan, Municipality of Malay. Thus, on
May 7, 2009, the Sangguniang Panlalawigan of Aklan Province issued a resolution, authorizing
Governor Carlito Marquez to file an application with respondent Philippine Reclamation Authority
(PRA) to reclaim the 2.64 hectares of foreshore area in Caticlan. In the same year, the Province
deliberated on the possible expansion from its original proposed reclamation area of 2.64 hectares
to forty (40) hectares in order to maximize the utilization of its resources.

After PRA’s approval, on April 27, 2010, respondent Department of Environment and
Natural Resources-Environmental Management Bureau-Region VI (DENR-EMB RVI) issued to
the Province Environmental Compliance Certificate-R6-1003-096-7100 (the questioned ECC) for
Phase 1 of the Reclamation Project to the extent of 2.64 hectares to be done along the Caticlan
side beside the existing jetty port.

On May 17, 2010, the Province finally entered into a MOA with PRA which stated that
the land use development of the reclamation project shall be for commercial, recreational and
institutional and other applicable uses. It was at this point that the Province deemed it
necessary to conduct a series of public consultation meetings.

On the other hand, the Sangguniang Barangay of Caticlan, the Sangguniang Bayan of
the Municipality of Malay and petitioner Boracay Foundation, Inc. (BFI), an organization
composed of some 160 businessmen and residents in Boracay, expressed their strong
opposition to the reclamation project on environmental, socio-economic and legal grounds.

Despite the opposition, the Province merely noted their objections and issued a notice to
the contractor on December 1, 2010 to commence with the construction of the project. Thus,
on June 1, 2011, BFI filed with the Supreme Court the instant Petition for Environmental
Protection Order/Issuance of the Writ of Continuing Mandamus. Thereafter, the Court issued a
Temporary Environmental Protection Order (TEPO) and ordered the respondents to file their
respective comments to the petition.

The Petition was premised on the following grounds, among others:

a) the Province failed to obtain the favorable endorsement of the LGU concerned;
b) the Province failed to conduct the required consultation procedures as required by
the Local Government Code (LGC).

The Province responded by claiming that its compliance with the requirements of DENR-
EMB RVI and PRA that led to the approval of the reclamation project by the said government
agencies, as well as the recent enactments of the Barangay Council of Caticlan and the
Sangguniang Bayan of the
Municipality of Malay favorably endorsing the said project, had “categorically addressed all the
issues” raised by the BFI in its Petition. It also considered the Petition to be premature for lack
of cause of action due to the failure of BFI to fully exhaust the available administrative remedies
even before seeking judicial relief.

ISSUES:

WON the petition is premature because petitioner failed to exhaust administrative

remedies before filing this case?

WON there was proper, timely, and sufficient public consultation for the project?

RULING:

On the issue of prematurity due to failure to exhaust administrative remedies

The Court held that the petition is not premature for failing to exhaust administrative
remedies and to observe the hierarchy of courts as claimed by the respondents.

The Court reiterated their ruling in Pagara v. Court of Appeals where they clarified that
the rule regarding exhaustion of administrative remedies is not a hard and fast rule. It is not
applicable where, among others, there are circumstances indicating the urgency of judicial
intervention such as in the instant case. The rule may also be disregarded when it does not
provide a plain, speedy and adequate remedy or where the protestant has no other recourse.

Meanwhile, the new Rules of Procedure for Environmental Cases, A.M. No. 09-6-8-SC,
provides a relief for petitioner under the writ of continuing mandamus, which is a special civil
action that may be availed of “to compel the performance of an act specifically enjoined by law”
and which provides for the issuance of a TEPO “as an auxiliary remedy prior to the issuance of
the writ itself.”

The writ of continuing mandamus allows an aggrieved party to file a verified petition in
the proper court when any government agency or instrumentality or officer thereof “unlawfully
neglects the performance of an act which the law specifically enjoins as a duty xxx in
connection with the enforcement or violation of an environmental law rule or regulation or a
right therein, xxx and there is no other plain, speedy and adequate remedy in the ordinary
course of law.” Such proper court may be the Regional Trial Court exercising jurisdiction over
the territory where the actionable neglect or omission occurred, the Court of Appeals, or the
Supreme Court.

Here, the Court found that BFI had no other plain, speedy, or adequate remedy in the
ordinary course of law to determine the questions of unique national and local importance
raised that pertain to laws and rules for environmental protection.
 Moreover, the writ of continuing mandamus “permits the court to retain jurisdiction after
judgment in order to ensure the successful implementation of the reliefs mandated under the
court’s decision” and, in order to do this, “the court may compel the submission of compliance
reports from the respondent government agencies as well as avail of other means to monitor
compliance with its decision.”

On the issue of whether or not there was proper, timely, and sufficient public
consultation for the project

The Court found that there was no proper, timely, and sufficient public consultation for
the
project.

The Local Government Code (LGC) establishes the duties of national government
agencies in the maintenance of ecological balance and requires them to secure prior public
consultations and approval of local government units. In Province of Rizal v. Executive
Secretary, the Court emphasized that, under the Local Government Code, two requisites must
be met before a national project that affects the environmental and ecological balance of local
communities can be implemented: (1) prior consultation with the affected local communities,
and (2) prior approval of the project by the appropriate sanggunian. The absence of either of
such mandatory requirements will render the project’s implementation as illegal.

Here, the Court classified the reclamation project as a national project since it affects
the environmental and ecological balance of local communities. In one ruling, the Court noted
that such national projects mentioned in Section 27 of the LGC include those that may cause
pollution and bring about climate change, among others, such as the reclamation project in this
case.

Also, DENR DAO 2003-30 provides that project proponents should “initiate public
consultations early in order to ensure that environmentally relevant concerns of stakeholders
are taken into consideration in the EIA study and the formulation of the management plan”.

Thus, the law requires the Province, being the delegate of the PRA’s power to reclaim
land in this case, to conduct prior consultations and prior approval. However, the information
dissemination conducted months after the ECC had already been issued was insufficient to
comply with the requirements under the LGC.

Furthermore, the lack of prior public consultation and approval is not corrected by the
subsequent endorsement of the reclamation project by the Sangguniang Barangay of Caticlan
and the Sangguniang Bayan in 2012, which were both undoubtedly achieved at the urging and
insistence of the Province.

Alvarez V. Picop Resources, Inc.:

FACTS:
In 1952, Bislig Bay Lumber Co., Inc. (BBLCI), the predecessor of Paper Industries Corporation
of the Philippines (Picop) was granted Timber License Agreement (TLA) No. 43. The Agreement
covered an area of 75,545 hectares in Surigao del Sur, Agusan del Sur, Compostela Valley, and
Davao Oriental.
The late Marcos allegedly issued, sometime in 1969, a Presidential Warranty confirming
that TLA No. 43 “definitely establishes the boundary lines of [BBLCI’s] concession area.” Upon
its expiry in 1977, this Agreement -- as amended -- was renewed for another 25 years, to
“terminate on April 25, 2002.”
On December 23, 1999, the Department of Environment and Natural Resources (DENR)
promulgated DENR Administrative Order (DAO) No. 99-53 or the “Regulations Governing
the Integrated Forest Management Program (IFMP).”
In a letter dated August 28 2000, Picop signified its intention to convert TLA No. 43 into
an Integrated Forest Management Agreement (IFMA), pursuant to DAO No. 99-53.
During the performance evaluation of Picop, the DENR found that respondent had
violated the rules and regulations governing TLA No. 43. Some of these violations were the
non-submission of a five-year forest protection plan and a seven-year reforestation
plan; nonpayment of overdue forest and other charges in the total amount of
P167,592,440.90 as of August 30, 2002; and failure to secure a clearance from the National
Commission on Indigenous Peoples (NCIP), considering the presence of indigenous peoples in
the area, as well as a Certificate of Ancestral Domain Claims covering part of the area.
Meanwhile, Picop received from the DENR secretary a letter, which reads
thus:
25 October 2001

MR. TEODORO G. BERNARDINO

President
PICOP Resources Incorporated
2nd Flr, Moredel Building
2280 Pasong Tamo Extension
Makati City

Dear Mr. Bernardino:

Consistent with our attached Memorandum to Her Excellency, the President, dated 17
October 2001 and in response to your Letter of Intent dated 25 February 2001, we wish to
inform you that, pursuant to DENR Administrative Order No. 99-53, we have cleared the
conversion of PICOP’s Timber License Agreement (TLA) No. 43 to Integrated Forest
Management Agreement (IFMA) effective from the expiration of said TLA on April
26, 2002.

In this regard, you are hereby requested to designate PICOP’s representative(s) to

discuss with the DENR Team, created under Special Order No. 2001-638, the conditions and
details of the said IFMA, including the production sharing agreement between PICOP and the
government.

For your information and guidance.

 Very truly yours,

(sgd)
HEHERSON T. ALVAREZ
Secretary
By virtue of this letter, Picop claimed that “the TLA has been converted.” The
DENR believed, however, that respondent’s application for an IFMA should undergo the process
as provided in DAO No. 99-53. Thus, petitioner required Picop to submit the following to the
DENR:

1. Certificate of Filing of Amended Articles of Incorporation issued on 12 August2002

that extended PICOP’s corporate term for another fifty (50) years;

2. Proof of Payment of forest charges;

3. Proof of Payment of Reforestation Deposit;

4. Response to social issues, particularly clearance from the NCIP; and

5. Map showing reforestation activities on an annual basis.

Upon evaluation of the documents subsequently submitted, the DENR noted as follows:

a) PICOP did not submit the required NCIP clearance;

b) The proof of payments for forest charges covers only the production period from
1 July 2001 to 21 September 2001;

c) The proof of payment of reforestation deposits covers only the period from the
first quarter of CY 1999 to the second quarter of CY 2001;

d) The map of the areas planted through supplemental planting and social forestry is
not sufficient compliance per Performance Evaluation Team’s 11 July 2001 report on PICOP’s
performance on its TLA No. 43, pursuant to Section 6.6 of DAO 79-87; and

e) PICOP failed to respond completely to all the social issues raised.

Insisting that the conversion of its TLA No. 43 had been completed, Picop filed a
Petition for Mandamus (“mandamus case”) against then DENR Secretary Heherson T.
Alvarez before the Regional Trial Court (RTC) of Quezon City. The RTC granted the Petition in
its October 11, 2002 Decision, which was later affirmed by the Court of Appeals (CA).

Meanwhile, in 2002, President Macapagal-Arroyo issued Proclamation No. 297,

“Excluding a Certain Area from the Operation of Proclamation No. 369 Dated
February 27, 1931, and Declaring the Same as Mineral Reservation and as
 Environmentally Critical Area.” The excluded area consisted of about 8,100 hectares of
respondent’s TLA No. 43.

On January 21, 2003, Picop filed a Petition for the Declaration of Nullity of the aforesaid
presidential proclamation, as well as of the implementing order, DAO No. 2002-35 (“nullity
case”). Initially, the RTC issued a Temporary Restraining Order (TRO) enjoining respondents in
that case from implementing the questioned issuances. Subsequently, however, it dismissed
Picop’s Petition for not stating a cause of action. On reconsideration, it set for hearing
respondent’s application for preliminary injunction.
Thus, these consolidated Petitions have been brought before the Court, assailing (1) the
grant of a writ of mandamus to compel the DENR to issue an IFMA in favor of Picop; (2) the
immediate execution of the writ; and (3) the non-dismissal of the nullity case.
Issues
Briefly, the following main issues were considered:
1. Whether the mandamus case should be dismissed, because (1) it lacked a cause of
action; and (2) its subject matter pertained to the exclusive administrative domain of the DENR
secretary
2. Whether the presidential warranty was a contract, by virtue of which Picop acquired a
vested right over its forest concession area
3. Whether Picop had complied with all the administrative and statutory requirements
entitling it to an IFMA conversion
4. Whether it was proper to determine the constitutionality of Proclamation No. 297

Ruling

Whether Outright Dismissal Was Proper

The Petition filed before the trial court was one for mandamus with a prayer for the
issuance of a writ of preliminary prohibitory and mandatory injunction, with damages.
Specifically, the Petition sought to compel the DENR secretary to (1) sign, execute and
deliver the IFMA documents to Picop; (2) issue the corresponding IFMA number
assignment; and (3) approve respondent’s harvesting of timber from the area of TLA
No. 43. Petitioner contended that these acts related to the licensing, regulation and
management of forest resources, a task that belonged exclusively to the exclusive
administrative domain of the DENR.
Picop, however, alleged grave abuse of discretion on the part of the DENR secretary.
Thus, it behooved the Court to determine whether the department head had indeed gravely
abused his discretion. An outright dismissal of the case would have prevented the Court’s
resolution of the issue.
For the same reason, the Petition could not be dismissed outright on the ground of lack
of cause of action. A motion to dismiss on that basis would hypothetically admit the truth of
the allegations in the Complaint. In ruling upon the DENR secretary’s Motion to Dismiss, the
allegation of respondent that it had a contract with the government should thus be
hypothetically admitted. Necessarily, petitioner’s argument that there was no such contract
should be considered in the trial of the case.
Petitioner countered that he had not yet exercised his exclusive jurisdiction over the
subject matter of the case -- either to approve or to disapprove Picop’s application for IFMA
conversion. Hence, he argued that respondent’s immediate resort to the trial court was
precipitate, in violation of the doctrine of exhaustion of administrative remedies.
The Court of Appeals ruled that the doctrine of exhaustion of administrative remedies
could be disregarded when there were circumstances indicating the urgency of judicial
intervention. In this case, it cited the employment by Picop of a sizeable number of workers
and respondent’s payment of millions in taxes to the government.
The issue of whether there was indeed an urgency of judicial intervention (as to warrant
the issuance of a writ of mandamus despite the exclusive jurisdiction of the DENR) was
ultimately connected to the truth of Picop’s assertions, which were hypothetically admitted in
the Motion to Dismiss filed by the DENR. In other words, the issue still boiled down to whether
petitioner had committed grave abuse of discretion in not executing the IFMA documents and in
not approving respondent’s harvesting of timber from the area of TLA No. 43. Hence, the
mandamus case could not have been subjected to outright dismissal.

Another issue raised by the DENR concerned Section 1 of Presidential Decree (PD) No.
605 which, according to the CA, had been partly repealed by Republic Act 8975.
Republic Act 8975 was not intended to set forth in full all laws concerning the prohibition
on temporary restraining orders, preliminary injunctions and preliminary mandatory injunctions.
This law prohibited lower courts from issuing such orders in connection with the implementation
of government infrastructure projects. On the other hand, PD 605 prohibited the issuance of
these orders in any case involving licenses, concessions and the like, in connection with the
natural resources of the Philippines. When the licenses, concessions and the like also entailed
government infrastructure projects, however, the provisions of Republic Act 8975 were deemed
to apply. Thus, PD 605 was modified in this sense.

In Datiles and Co. v. Sucaldito, the Court held that the prohibition in PD 605 “pertains to
the issuance of injunctions or restraining orders by courts against administrative acts in
controversies involving facts or the exercise of discretion in technical cases, because to allow
courts to judge these matters could disturb the smooth functioning of the administrative
machinery. But on issues definitely outside of this dimension and involving questions of law,
courts are not prevented by Presidential Decree No. 605 from exercising their power to restrain
or prohibit administrative acts.”

While there were indeed questions of fact in the present Petitions, the overriding
controversy involved was one of law: whether the Presidential Warranty issued by former
President Marcos was a contract within the purview of the Constitution’s NonImpairment
Clause. Accordingly, the prohibition in PD 605 against the issuance of preliminary injunction in
cases involving permits for the exploitation of natural resources was inapplicable to this case.

Moreover, as the Court held in Republic v. Nolasco,[1] statutes such as PD 605, PD 1818
and Republic Act 8975 merely proscribed the issuance of temporary restraining orders and writs
of preliminary injunction and preliminary mandatory injunction. They could not, under pain of
violating the Constitution, deprive the courts of authority to take cognizance of issues raised in
the principal action, as long as that action and the relief sought were within their jurisdiction.

Whether the Presidential Warranty Was a Contract

 The Court had consistently held that licenses concerning the harvesting of timber in the
country’s forests could not be considered contracts that would bind the government regardless
of changes in policy and the demands of public interest and welfare.
Thus, the argument that the Presidential Warranty was a contract because there were
mutual considerations taken into account consisting of investments on Picop’s part was
considered preposterous. All licensees put up investments in pursuing their businesses. To
construe these investments as consideration in a contract would be to stealthily render
ineffective the settled jurisprudence that “a license or a permit is not a contract between the
sovereignty and the licensee or permittee, and is not a property in the constitutional sense, as
to which the constitutional proscription against the impairment of contracts may extend.”
Neither should a circumvention of the doctrine be allowed by terming the permit a “warranty.”

Whether Picop Had Complied with the Requirements for the Conversion of TLA No. 43
into an IFMA
Under DAO No. 99-53, the following are the requisites for the automatic conversion of a
TLA into an IFMA:

1. The TLA holder had signified its intent to convert its TLA into an IFMA priorto the
expiration of its TLA
2. Proper evaluation was conducted on the application, and
3. The TLA holder has satisfactorily performed and complied with the termsand
conditions of the TLA and the pertinent rules and regulations
Upon close scrutiny of the evidence on record, the Court observed that Picop had failed
to comply with the above requirements. As stated earlier, the Performance Evaluation Team
tasked to review the application of respondent found that it had violated existing DENR rules
and regulations.
On the statutory requirement of procuring a clearance from the NCIP, the Court of
Appeals held that Picop did not need to comply. According to the CA, respondent had acquired
property rights over the TLA No. 43 areas, as the latter was in exclusive, continuous and
uninterrupted possession and occupation of the areas from 1952 up to the present.
This ruling defied the settled jurisprudence mentioned earlier, including that of Oposa
and Tan, which held that “[a] license is merely a permit or privilege to do what otherwise would
be unlawful, and is not a contract between the authority, federal, state or municipal, granting it
and the person to whom it is granted; neither is it property or a property right, nor does it
create a vested right; x x x.”
Section 59 of Republic Act 8371 is clear and unambiguous:

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. x x x.

Ancestral domains remain as such, even when possession or occupation of the area has
been interrupted by causes provided under the law, such as voluntary dealings entered into by
the government and private individuals or corporations. Therefore, the issuance of TLA No. 43
in 1952 did not cause the indigenous cultural communities or indigenous peoples to lose their
 possession or occupation of the area covered by TLA No. 43.
Furthermore, under Sections 26 and 27 of the Local Government Code, the prior
approval of local government units affected by the proposed conversion of a TLA into an IFMA
was necessary before any project or program could be implemented by government authorities
in a way that would cause “depletion of nonrenewable resources, loss of crop land, rangeland
or forest cover, and extinction of animal or plant species.”
Finally, the DENR’s factual findings that PICOP had not yet complied with the
requirements for the conversion should be accorded great respect, if not finality, by the courts,
because of the agency’s special knowledge and expertise over matters falling under its
jurisdiction. The finality of the DENR’s findings of fact, supported as they were by substantial
evidence, could be overcome only by a grave abuse of discretion amounting to lack or excess of
jurisdiction.

Whether There Had Already Been a Conversion of TLA No. 43 into an IFMA
Former DENR Secretary Alvarez’s October 25, 2001 letter merely gave clearance for the
conversion of Picop’s TLA into an IFMA. He did not, by any stretch of imagination, grant the
conversion itself. The letter was clear that the “conversion” could not have been final, since the
conditions and details still had to be discussed.
Likewise, then DENR Secretary Alvarez’s April 26, 2002 letter approving Picop’s
Transition Development and Management Plan (TDMP) could not be considered as an approval
of Picop’s application for IFMA conversion. The letter itself stated that respondent’s application
was still pending approval, as petitioner had yet to “submit/comply with all the necessary
requisites for final conversion of TLA No. 43 into IFMA.”

Whether It Was Proper to Determine the Constitutionality of Proclamation No. 297

Settled is the rule that the Court will not touch the issue of unconstitutionality, unless it
is the very lis mota. A court should not pass upon a constitutional question and decide a law to
be unconstitutional or invalid, unless the parties raise that question. But even when it is raised,
if the record also presents some other ground upon which the court may base its judgment, the
latter course would be adopted, and the constitutional question left for consideration until it
becomes unavoidable.
The constitutional question presented by Picop was not the very lis mota in the
consolidated cases, as the preceding discussions very well gave the Court adequate grounds to
resolve the controversy.
In sum, the DENR secretary adequately proved that Picop had failed to comply with the
administrative and statutory requirements for the conversion of TLA No. 43 into an IFMA. On
the other hand, as respondent was not yet entitled to the conversion, petitioner was correct in
withholding that course of action and could not be held liable for damages.
In closing, the Court noted that the noncompliance of Picop with the requirements for
the conversion of the latter’s TLA was so glaring. The noncompliance of respondent almost
amounted to a reluctance to uphold the law, just because of its sizeable investments in its
business, a fact it repeatedly stressed in its pleadings. In applying the judicial policy of
nurturing prosperity, the Court took into consideration the long-term effects of the judicial
evaluations involved, particularly to our nation’s greatest wealth -- our vast natural resources.
Picop was fortunate to have been awarded an enormous concession area, and thus a
huge chunk of the benefits of the country’s natural resources. Attached to this fortune was the
 responsibility to comply with the laws and regulations implementing the stated legislative
policies of environmental preservation and benefit distribution.
These laws and regulations should not be ignored. The courts should not condone their
blatant disregard by those who believe they are above the law, simply because of their sizeable
investments and significant numbers of employees.
The present respondent had only itself to blame for the withholding of the conversion of
its TLA. But while another chance to comply with the foregoing requirements was conferred on
the DENR secretary by the Court’s disposition, he could rightfully grow weary if the persistent
noncompliance continued. The judicial policy of nurturing prosperity would be better served by
granting concessions to those who would abide by the law.

CORDILLERA VS PAJER
FACTS: DENR issued an Environmental Compliance Certificate (ECC) CAR0106-047-120 to SM
Investments Corporation for its SM Pines Resort Project. This mix-use, ecotourism project would
span 8.5 hectares and cover a shopping mall, a hotel, service apartments, a multi-purpose
entertainment center, and other related structures.
After completion of the project and a few years later, SM City Baguio undertook to
expand its existing mall on Luneta Hill (the Expansion Project) to increase parking and
commercial spaces and submitted an Environmental Performance Report and Management Plan
to the Environmental Management Bureau-Cordillera Administrative Region (EMB-CAR) as part
of its application to amend its ECC.
EMB-CAR requested that additional information on the inventory of the affected trees,
among others, be included in the Environmental Performance Report and Management Plan.
SM Investments Corporation submitted the revised Environmental Performance Report
and Management Plan.
DENR granted SM Investments Corporation's request for the amendment of its ECC.
Cordillera Global Network filed a Complaint (first environmental case) against SM
Investments Corporation, Secretary Paje, Atty. Juan Miguel Cuna, the director of the EMB, and
Secretary Rogelio L. Singson of the Department of Public Works and Highways praying, among
others, that a temporary environmental protection order (TEPO) be immediately issued to
enjoin SM Investments Corporation from cutting and/or earth-balling the 182 Benguet pine and
Alnus trees on Luneta Hill.

SM Investments Corporation reiterated its request to cut or earth-ball the affected trees.
On April 4, 2012, Regional Executive Director Clarence L. Baguilat (RED Baguilat) of the DENR-
CAR gave the go-signal to earth-ball the trees.

On April 9, 2012, SM Investments Corporation began earth-balling the Benguet pine and
Alnus trees.

The trial court granted the Motion and issued a Temporary Environmental Protection
Order effective for 72 hours. Upon receipt of the Temporary Environmental Protection Order on
April 11, 2012, SM Investments Corporation ceased its earth-balling and transplanting
operations.

Another environmental case was filed and consolidated with the first one both alleging
that the cutting or earth-balling of the 182 trees on Luneta Hill would severely damage the
environment and health of Baguio City residents. They also assailed the regularity of the
permits issued, further claiming that the Expansion Project violated zoning and environmental
laws.
Defendants asserted that the pertinent permits were issued only after strict compliance
with the relevant rules and regulations. The public officials added that a team had been created
to monitor the cutting and earth balling of the trees. They also emphasized that they
immediately complied with the Temporary Environmental Protection Order upon receipt from
the trial court and directed private defendants to pursue remedial measures over the affected
trees.
RTC Ruling
The Regional Trial Court dismissed the consolidated cases.

The trial court held that Cordillera Global Network and Adajar, et al. failed to
substantiate their claims of irregularities in the cutting and earth-balling permits and building
permits issued to Investments Corporation.
The trial court also set aside the challenges raised against the amended Environmental
Compliance Certificate. It stated that the field of expertise Professor Cecilia M. Austria (Dr.
Austria)—who questioned the reliability of the Environmental Performance Report and
Management Plan—is zoology, not environmental science. This makes her incompetent to
determine lapses in the Environmental Impact Assessment. On the other hand, the trial court
found that SM Investments Corporation and its subsidiaries were able to prove that it had
complied with the requirements to issue an environmental compliance certificate.
CA Ruling
The Court of Appeals denied the appeals and upheld the findings of the Regional Trial
Court.
The Court of Appeals held that Cordillera Global Network and Adajar, et al. failed to
rebut the presumption of regularity of official acts. It explained that they failed to prove their
allegations of irregularity in the issuance of the amended Environmental Compliance Certificate,
building permit, and tree-cutting and earth-balling permit.
ISSUE
Whether or not the assailed permits issued in favor of private respondents were validly
and regularly issued.
HELD
No. In an October 17, 2011 Memorandum, public respondent Paje directed the Regional
Executive Director to issue a tree-cutting and earth balling permit with the issuance subject to
the following conditions:
xxx
2. The permittee shall secure an Environmental Compliance Certificate before the start
of any tree cutting and earthballing operations;
xxx
 The clear wording of this Memorandum belies private respondents' assertion that no
separate environmental compliance certificate was needed prior to the tree removal and
transplanting operations.
The necessity of a separate environmental compliance certificate is evident as the
original Environmental Compliance Certificate only contemplated the removal of 112 trees for
the entire SM Pines Resort Project.
Meanwhile, the amended Environmental Compliance Certificate issued for the Expansion
Project considered the environmental impact of the "additional parking levels, retail shops[,]
and restaurants; and construction of a new 1,200 m3/day capacity Sewage Treatment
Plant"152 but did not account for removing an additional 182 Benguet pine and Alnus trees.
It does not escape this Court's attention that both the Regional Trial Court and the Court
of Appeals missed private respondents' application for the cutting of 182 trees—in addition to
112 already allowed in the earlier Environmental Compliance Certificate—merely through an
amended Environmental Compliance Certificate and almost nine (9) years after the original had
been used. This Court also notes the lower court's nonchalant attitude when it failed to notify
the Department of Environment and Natural Resources' failure to distinguish indigenous long-
standing pine trees from those recently planted when it issued the amended Environmental
Compliance Certificate despite the existence of Executive Order No. 23.
Obiter Dictum
Commerce is important for human survival, but so is ecology.
In addition to upholding what the law contains, let this Decision affirm our human
stewardship of the planet. We belong to the land, its waters, and its forests. The protection of
the environment on behalf of our present and future communities is progress. During our
watch, we will be on constant guard not only on what is done beyond the law but also against
the hastened demise of the natural endowments entrusted to us

REPUBLIC OF THE PHILIPPINES vs. PROVINCIAL GOVERNMENT OF PALAWAN,

REPRESENTED BY GOVERNOR ABRAHAM KAHLIL B. MITRA, RESPONDENT. (G.R. No.
170867, December 04, 2018)

Facts:

On December 11, 1990, the Republic of the Philippines (Republic or National Government),
through the Department of Energy (DoE), entered into Service Contract No. 38 with Shell
Philippines Exploration B.V. and Occidental Philippines, Incorporated (collectively SPEX/OXY), as
Contractor, for the exclusive conduct of petroleum operations in the area known as "Camago-
Malampaya" located offshore northwest of Palawan. Exploration of the area led to the drilling of
the Camago-Malampaya natural gas reservoir about 80 kilometers from the main island of
Palawan and 30 kms from the platform. The Provincial Government of Palawan asserted its claim
over forty percent (40%) of the National Government's share in the proceeds of the project. It
argued that since the reservoir is located within its territorial jurisdiction, it is entitled to said share
under Section 290 of the Local Government Code. The National Government disputed the claim,
arguing that since the gas fields were approximately 80 k.ms from Palawan's coastline, they are
outside the territorial jurisdiction of the province and is within the national territory of the
Philippines.
Issue:

a. Whether Palawan is entitled to 40% share in the proceeds of the Project? (Is the reservoir
within the territorial jurisdiction of Palawan so that it is entitled to such share?) NO

b. Corollary, is the Doctrine of Federal Paramountcy Applicable in the Philippines? NO

Ratio:

First Issue:

No. The Local Government Code does not define the term "territorial jurisdiction." Provisions
therein, however, indicate that territorial jurisdiction refers to the LGU's territorial boundaries. In
the creation of municipalities, cities and barangays, the Local Government Code uniformly requires
that the territorial jurisdiction of these government units be "properly identified by metes and
bounds:. The intention, therefore, is to consider an LGU's territorial jurisdiction as pertaining to a
physical location or area as identified by its boundaries. That "territorial jurisdiction" refers to the
LGU's territorial boundaries is a construction reflective of the discussion of the framers of the 1987
Constitution who referred to the local government as the "locality" that is "hosting" the national
resources and a "place where God chose to locate His bounty." It is also consistent with the
language ultimately used by the Constitutional Commission when they referred to the national
wealth as those found within (the LGU's) respective areas. By definition, "area" refers to a
particular extent of space or surface or a geographic region.

The importance of drawing with precise strokes the territorial boundaries of a local unit of
government cannot be overemphasized. The boundaries must be clear for they define the limits of
the territorial jurisdiction of a local government unit. It can legitimately exercise powers of
government only within the limits of its territorial jurisdiction. Beyond these limits, its acts
are ultra vires. Needless to state, any uncertainty in the boundaries of local government units will
sow costly conflicts in the exercise of governmental powers which ultimately will prejudice the
people's welfare. This is the evil sought to be avoided by the Local Government Unit in requiring
that the land area of a local government unit must be spelled out in metes and bounds, with
technical descriptions. Clearly, therefore, a local government's territorial jurisdiction cannot extend
beyond the boundaries set by its organic law.

Territorial jurisdiction is defined, not by the local government, but by the law that creates it; it is
delimited, not by the extent of the LGU's exercise of authority, but by physical boundaries as fixed
in its charter.

Since it refers to a demarcated area, the term "territorial jurisdiction" is evidently synonymous
with the term "territory." In fact, "territorial jurisdiction" is defined as the limits or territory within
which authority may be exercised.

The parties all agree that the Camago-Malampaya reservoir is located in the continental shelf.  If
the marginal sea is not included in the LGU's territory, with more reason should the continental
shelf, located miles further, be deemed excluded therefrom. An LGU's territorial jurisdiction refers
to its territorial boundaries or to its territory. The territory of LGUs, in turn, refers to their land
area, unless expanded by law to include the maritime area. Accordingly, only the utilization of
natural resources found within the land area as delimited by law is subject to the LGU's equitable
share under Sections 290 and 291 of the Local Government Code. 

Furthermore, the Court examined the organic law creating municipalities of Palawan and found
that the municipalities of Palawan do not include the continental shelf where the Camago-
Malampaya reservoir is concededly located. In fact, with the exception of Kalayaan, which
includes the seabed, the subsoil and the continental margin as part of its demarcated area, the
municipalities are either located within an island or are comprised of islands.

Second Issue:
No. Doctrine of Federal Paramountcy is A doctrine of constitutional law which gives priority to the
application of a federal statute where those terms conflict with the operation of a provincial
statute. (In this case, if there is a conflict between the claim of federal government and the
coastal state over the natural resources found in the area of the coastal state, the claim of the
Federal Government is given priority.)
There are several reasons why the foregoing doctrine cannot be applied to this case. First, the
U.S. does not appear to have an equitable sharing provision similar to Section 7, Article X of the
1987 Constitution. Second, the Philippines is not composed of states that were previously
independent nations. Third, the resolution of these cases does not necessitate distinguishing
between dominium and imperium since neither determines the LGU's entitlement to the equitable
share under Section 7 of Article X. Fourth, the Court is not called upon to determine who between
the Province of Palawan and the National Government has the paramount or dominant right to
explore or exploit the natural resources in the marginal sea or beyond. Fifth, adjudication of these
cases does not entail upholding the dominion of the National Government over a political
subdivision since ownership of the natural resources is concededly vested in the State. Sixth, it is
settled that dominion over national wealth belongs to the State under the regalian doctrine.
Ownership of the subject reservoir, therefore, is a nonissue and what simply needs to be
determined is whether said resource is located within the area or territorial jurisdiction of the
Province of Palawan.