Coal Development Act of 1976 – Presidential Decree 972, as amended by Presidential Decree

1174
 Promotes accelerated exploration, development, exploitation, production, and
utilization of coal.
 Introduces the Coal Operating Contract (COC) system.
 Assigns the operator to conduct the exploration, development, exploitation, and
marketing of coal resources.
 Sets out obligations of operators, and incentives to coal operators and end-users.

Reasons why it is necessary to amend and/or supplement existing legislation relating to

coal:
 The increasing cost of imported crude oil imposes an unduly heavy demand on the
country's international reserves thereby making it imperative for the government
to pursue actively the exploration, development and exploitation of indigenous
energy resources; 
 While coal has been identified as a fossil fuel known to exist in mineable quantities in
the country which could provide a viable energy source for some vital industries, large
tracts of coal bearing lands have not been explored and mined in a manner and to an
extent adequate to meet the needs of the economy;
 The proliferation of fragmented coal permits and leases has prevented, or deterred, the
adequate and speedy exploration, development, exploitation and production of
indigenous coal resources; 
 To develop, achieve and implement a well-planned, systematic and meaningful
exploration, development, exploitation and production of local coal resources,
participation of the private sector with sufficient capital, technical and managerial
resources must be encouraged and the technical and financial capabilities of the coal
industry upgraded;
 Hand in hand with an accelerated coal exploration, development, exploitation and
production program, it is essential that the market for domestic coal production
be developed by granting incentives to prospective coal users to convert their facilities
for coal utilization.

Declaration of Policy 
 To immediately accelerate the exploration, development, exploitation production
and utilization of the country's coal resources. A coal development program is
therefore promulgated and established by this Decree.

Coal Operating Contract – Exploration Phase and Development and Production Phase 
Exploration Phase: 
 Two (2) year period
 Two (2) year allowable extension (maximum)

Development and Production Phase: 

 Remaining period of Exploration Phase and/or
  Ten (10) year period (additional)
 Ten (10) year allowance extension (maximum)
 Series of three (3) year allowable extensions not exceeding a total of twelve (12) years

Incentives and Privileges – Coal Operating Contract

 Exemption from all national taxes except income tax
 Exemption from payment of duties on machinery/equipment importation
 Recovery of Operating Expense
 Entry of foreign technical personnel
 Preference in grant of government loans
 Accelerated Depreciation

Local Government Code of 1991 – Utilization of LGU share

 Local government units shall receive 40% of gross collection from mining taxes
 Divided between province (20%), municipality (45%), and barangay (35%)
 At least 80% of the said fund shall be used to lower cost of electricity
 Remaining amount shall be used for local livelihood projects

Environmental Regulation – General Provisions

Subject to the Environmental Impact System (EIS) of the Department of Energy and
Natural Resources. Outside the scope of EIS, coal operators are required to:
1. Rehabilitate affected sites after contract termination.
2. Render comprehensive anti-pollution reclamation plan.
3. Follow government guidelines on: mining procedures to minimize environmental
damage; water waste control; erosion control; and re-vegetation.

Conclusion:
 Coal mining operation remains small in some areas.
 Earmarking for electrification leads to spending constraint among LGU’s.
 Government is subsidizing coal operation.
 Existing laws are silent in terms of absorbing negative externalities of coal mining.
 Coal mining has negative impact on household income.

REPUBLIC ACT NO. 387

 
AN ACT TO PROMOTE THE EXPLORATION, DEVELOPMENT, EXPLOITATION, AND
UTILIZATION OF THE PETROLEUM RESOURCES OF THE PHILIPPINES; TO ENCOURAGE
THE CONSERVATION OF SUCH PETROLEUM RESOURCES; TO AUTHORIZE THE
SECRETARY OF AGRICULTURE AND NATURAL RESOURCES TO CREATE AN
ADMINISTRATION UNIT AND A TECHNICAL BOARD IN THE BUREAU OF MINES; TO
APPROPRIATE FUNDS THEREFORE; AND FOR OTHER PURPOSES
 
"Petroleum Act of 1949."
Definition of terms. When used in this Act, the following terms shall, unless the context
"Petroleum" shall include any mineral oil, hydrocarbon gas, bitumen, asphalt, mineral wax, and
all other similar or naturally associated substances; with the exception of coal, peat, bituminous
shale, and/or other stratified mineral fuel deposits.
"Crude oil" means oil in its natural state before the same has been refined or otherwise treated,
but excluding water and foreign substances.
"Natural gas" means gas obtained from boreholes and wells and consisting primarily of
hydrocarbon.
"Permittee," "concessionaire" or "contractor" means a person to whom a permit, concession, or
contract, as the case may be, has been granted or awarded under the provisions of this Act, his
successors and assigns.
"Person" includes a natural person, corporation, or partnership.

State ownership. All natural deposits or occurrences of petroleum or natural gas in public
and/or private lands in the Philippines, whether found in, on or under the surface of dry lands,
creeks, rivers, lakes, or other submerged lands within the territorial waters or on the continental
shelf, or its analogue in an archipelago, seaward from the shores of the Philippines which are
not within the territories of other countries, belong to the State, inalienably and imprescriptibly.

Title to land. The ownership or the right to the use of lands for agricultural, industrial,
commercial, residential, mining, or for any purpose other than for petroleum exploration,
development or exploitation does not include the ownership of, nor the right to explore for,
exploit, or utilize the petroleum or natural gas deposits in, on or under the surface of such land.

Granting of petroleum rights. The right to explore for, develop, exploit or utilize the petroleum
resources may only be granted to duly qualified persons by means of concessions. The
Government, however, reserves the right to undertake such work either by itself or through its
instrumentalities, or through competent persons qualified to undertake such work as
independent contractor or contractors under a contract of service executed for the Republic of
the Philippines by the President and approved by the Congress of the Philippines.Exploration or
exploitation rights may be exclusive within certain areas; but no exclusive rights may be granted
for refining or transportation.

Granting of concession is discretionary with the Government. 

Petroleum operation a public utility. Everything relating to the exploration for and exploitation
of petroleum which may exist naturally or below the surface of the earth, and everything relating
to the manufacture, refining, storage, or transportation by special methods of petroleum, is
hereby declared to be of public utility.
Ownership not conferred. Exploration and Exploitation Concessions do not confer upon the
concessionaire the ownership over the petroleum lands and petroleum deposits, but only the
right to explore for, develop, exploit, and utilize them for the period and under the conditions
determined by this Act.
 
Kinds of concessions. Concessions may be any of the following kinds and have the following
respective objects:
a. Non-Exclusive Exploration Permit, which grants to the permittee the non-exclusive right to
conduct geological or geophysical exploration on specified areas.
b. Exploration Concession, which grants to the concessionaire the exclusive right to explore for
petroleum within specified areas.
c. Exploitation Concession, which grants to the concessionaire the exclusive right to develop
petroleum production within the specified areas.
d. Refining Concession, which grants to the concessionaire the right to manufacture or refine
petroleum, or to extract its derivatives.
e. Pipe Line Concession, which grants to the concessionaire the right to provide and operate
pipe line systems for transporting petroleum.

Designation of petroleum regions. The Secretary of Agriculture and Natural Resources, after
due study of the different prospective petroleum lands of the Philippines, may divide them into a
number of prospective petroleum regions, delimiting their extent and boundaries, and issuing
the order and notice establishing such regions.
Petroleum reservation. Upon the recommendation of the Secretary of Agriculture and Natural
Resources, the President of the Philippines may set apart petroleum reservations, and shall, by
proclamation, declare the establishment of such reservations and the boundaries thereof.
The Government may explore, develop, and exploit such petroleum reservation either by itself
or through its instrumentalities, or through competent persons under a contract of service, in
accordance with article five of this Act. Proposals by qualified persons to carry out such work for
the Government as independent contractor or contractors shall be filed with the Director of
Mines who shall forward the same with his findings and recommendations to the Secretary of
Agriculture and Natural Resources who, in turn, shall submit the same with his
recommendations to the President of the Philippines. The President is hereby authorized to take
such necessary action as he may deem proper on such proposals and for this purpose, may
execute the necessary contract or contracts for and in behalf of the Government. In the event
such contract is executed, the same shall be submitted to the Congress of the Philippines for its
approval.

Free areas. All lands within the territorial limits of the Philippines including those submerged
beneath seas, bays, lakes, rivers, lagoons, or the territorial waters, or on the continental shelf,
or its analogue in an archipelago, but which are not within the National Reserve Areas, or
Petroleum Reservations, or covered by valid and existing Exploration or Exploitation
Concession, or Petroleum Drilling Leases.

Right to enter private land. Exploration and exploitation concessionaires are granted the right
to enter upon private lands covered by their concessions for the purpose of conducting
geological or geophysical studies, with the right to use all instruments and apparatus necessary
to carry out such studies, subject to the obligations to indemnify the owner or legal occupant of
the land for all material damage suffered by the property, its annexes or appurtenances as a
result of such studies, provided that in no case shall the occupancy of private buildings, yards or
gardens be authorized against the will of their owner.
In the event that the right granted in this article shall be denied by the owner of the private land
or by its legal occupant, the concessionaire may apply for and, upon posting such bond as may
be fixed and approved by the Court of First Instance of the province where the land is situated,
the court shall issue an order allowing such right pending the final determination of the proper
amount that shall be paid by the concessionaire to the landowner or legal occupant.

Qualifications of applicants. Applicants for concessions under this Act shall have the following
qualifications:
In case of an individual, he shall be a citizen of the Philippines, be of legal age, and have the
capacity to contract obligations.
In case of an association of individuals, it shall be either a partnership or a corporation duly
organized and constituted under the laws of the Philippines, at least sixty per centum of the
capital of which is and shall at all times be owned and held by citizens of the Philippines. 
During the effectivity and subject to the provisions of the ordinance appended to the Constitution
of the Philippines, citizens of the United States and all forms of business enterprises owned and
controlled, directly or indirectly, by citizens of the United States shall enjoy the same rights and
obligations under the provisions of this Act in the same manner as to, and under the same
conditions imposed upon, citizens of the Philippines or corporations or associations owned or
controlled by citizens of the Philippines.
Any applicant shall present satisfactory evidence showing that sufficient finance, organization,
resources, technical competence, and skills necessary to conduct the operations to be
undertaken under the concession being applied for, in a manner which is in accordance with the
best method known to the industry, are available to such applicant. chan robles virtual law
library
Officials and employees of the Government disqualified. Officials and employees of the
executive branch of the Government connected with the administration and disposition of
mineral resources including petroleum, shall not be allowed, directly or indirectly during their
incumbency and for five years thereafter, to apply or acquire concessions, or to be interested, in
anywise, in any application filed, or concession acquired.
 
 
Definition of Exploration. The term "Exploration" means all work that have for their object the
discovery of petroleum, including, but not restricted to, surveying and mapping, aerial
photography, surface geology, geophysical investigations, testing of subsurface conditions by
means of borings or structural drillings, and all such auxiliary work as are useful in connection
with such operations.
Test wells drilled for exploratory purposes may be of such size and type suitable for oil
production, but the actual production of oil is not included in the term "Exploration," except that
oil found during exploration may be freely used by the concessionaire in his operations for
exploration purposes only within the same concession.

Areas available for Exploration Concessions. Exploration Concessions may be granted on

any lands within the Free, and National Reserve, Areas which are not covered by valid and
existing Exploration or Exploitation Concessions, or by Petroleum Drilling Leases acquired
under the Petroleum Act (Act No. 2932), or by petroleum mining claims.

Maximum exploration area a person may acquire. No person shall be entitled to more than
five hundred thousand hectares of exploration areas in any one petroleum region, nor more than
one million hectares in the whole territory of the Philippines.
Rights conveyed under Exploration Concession. The Exploration Concession conveys upon
the concessionaire, his heirs and assigns, from the date of the granting of the concession, and
during the exploration period and any extension thereof, the exclusive right to explore the block
granted, to do geological and geophysical work, to open test pits, to conduct drilling operations,
and to do such other work related to exploration.
Term of Exploration Concession. The initial term of an Exploration Concession shall be not
more than four years counted from the date of its issuance:  
Definition of Exploitation. "Exploitation" means all work within the area embraced by an
Exploitation Concession that have for their object the production of petroleum within such area,
including, but not restricted to, drilling and operating wells, providing and operating pumping and
storage facilities; pipe lines and other such work and facilities as are useful for the purpose of
making petroleum available for sale, manufacture or refining within or for shipment from such
area; but does not include any operation which is a part of manufacturing or refining, or any
work outside such area which are a part of a pipe line or other special transportation system.

Areas available for exploitation. Areas covered by Exploration Concession held by the
applicant, subject to the provisions of article fifty-three of this Act, and areas within the National
Reserve, are available for exploitation.

Rights conveyed under exploitation concession. An exploitation concessionaire, his heirs

and assigns, has the exclusive right, during the term of the concession, to drill within the
boundaries projected vertically downward of the parcel or parcels covered by his concession, to
extract within the boundaries thereof the substances, to utilize them once they are extracted,
and to do all acts authorized within the scope of exploitation subject to the provisions of this Act
and the Regulations that may be issued by the Secretary of Agriculture and Natural Resources
regarding conservation, prevention of waste, and other pertinent matter.
In case roads and/or bridges are constructed by the concessionaire in connection with the
operation of his exploitation concession, the same shall be available for public use except when
otherwise agreed upon between the Secretary of Agriculture and Natural Resources and the
concessionaire.
 
Definition of Refining. The term "Refining" means the processing or treating of petroleum by
chemical or physical means for the purpose of making or separating marketable products; not
including, however, such operations, separate from the foregoing, as gas compression, removal
of noxious gases, crude oil stabilization or treatment for emulsion, or any other operation which
has as its principal aim the avoidance of hazard or loss, or which is incidental to production or to
transportation.
The Secretary of Agriculture and Natural Resources may, in his discretion, grant a Refining
Concession to any person duly qualified under the provisions of this Act even though he is not a
holder of an Exploitation Concession. Likewise a refining concession may be granted to any
person who, without being a holder of an Exploitation Concession discovers and registers with
the Bureau of Mines under the provision of article sixty-five hereof, any natural deposit of oil or
seep or emanation of gas.

Rights conveyed under Refining Concession. Refining Concession confers upon the
concessionaire the non-exclusive right to provide facilities for the manufacture of, and to
manufacture, petroleum products, subject to the provisions of this Act; and to carry out such
auxiliary works and operations as are essential to the successful conduct of the undertaking,
such as, but not limited to, the generation of steam and electricity; the treatment and use of
water; the production or regeneration of chemicals used in manufacturing; the fabrication and
filling of containers; the erection of shops, warehouses, and other buildings; the construction
and operation of communication systems and roads within and for access to the works; and the
provision and operation of facilities for receiving, storing, and shipping materials or products and
for their transportation within or between parts of the works to which the concession relates. 

Renunciation of Refining Concession. Any Refining Concession may be renounced at any

time, except when the undertaking to build a refinery is imposed upon an Exploitation
Concessionaire under the provisions of articles nineteen and eighty-one of this Act, in which
case, the renunciation shall be subject to the prior written approval of the Secretary of
Agriculture and Natural Resources.
Renunciation extinguishes all rights granted by the concession, but does not relieve the
concessionaire from making any payments due to the Government.
Rights conveyed under Pipe Line Concession. A pipe line concessionaire acquires the non-
exclusive right to transport petroleum, by means of, and through, a pipe line or system of pipe
lines, between the sources of production and/or refining and the places defined in the Pipe Line
Concession, in accordance with the provisions of this Act and the Regulations. 
This concession right includes the construction and operation of pipe lines, pumping or
compressing stations, storage tanks, gas tanks, power plants, shops, storehouses and other
buildings, water supply and communication systems, roads, and such other equipment or
facilities as may be needed for the purpose of the concession.

Pipe line concessionaire as common carrier. A pipe line concessionaire shall have the
preferential right to utilize his installations for the transportation of petroleum owned by him, but
is obligated to utilize any remaining transportation capacity pro rata for the transportation of
such other petroleum as may be offered by others for transport, and to charge without
discrimination such rates as may have been approved by the Secretary of Agriculture and
Natural Resources. 

Settlement of disputes by agreement. For the purpose of settling or terminating any

controversy arising out of the provisions of this Act, other than those arising out of conflict of
applications, the Secretary of Agriculture and Natural Resources is authorized, to enter into
agreement with any petroleum concessionaire, and in case of their failure to come to such an
agreement, the Secretary of Agriculture and Natural Resources shall render his decision
thereon, from which decision the concessionaire adversely affected thereby, may bring the
matter to the court of competent jurisdiction within forty-five days from the date of his receipt of
a copy of said decision. 
Definition of "waste." The term "waste" shall specifically include among other things the
following:
(a) The operation of any petroleum well or wells with an inefficient gas-oil ratio.
(b) The drowning with water of any stratum or part thereof capable of producing oil or gas, or
both oil and gas, in paying quantities.
(c) Permitting any natural gas well to burn wastefully.
(d) Physical waste or loss incident to, or resulting from, so drilling, equipping, locating, spacing,
or operating well or wells as to reduce or tend to reduce the total ultimate recovery of crude
petroleum oil or natural gas from any pool.
(e) Waste or loss incident to, or resulting from, the unnecessary, inefficient, excessive or
improper use of the reservoir energy, including the gas energy or water drive, in any well or
pool.
(f) Surface waste or surface loss, including the storage either permanent or temporary of crude
petroleum or the placing of any product thereof, in open pits or earthen storage, and all other
forms of surface waste or surface loss, including unnecessary or excessive surface losses, or
destruction without beneficial use, either of crude petroleum or of natural gas.
(g) The production of crude petroleum or natural gas in excess of transportation or market
facilities or reasonable market demand.

Approved: June 18, 1949

RA 7586 (NIPAS)

National Integrated Protected Areas System Act of 1992

 A. NIPAS- the classification and administration of all designated protected areas to maintain
essential ecological processes and life-support systems, to preserve genetic diversity, to ensure
sustainable use of resources found therein, and to maintain their natural conditions to the
greatest extent possible.

Provides for the establishment and management of a national integrated protected areas system, to
secure the perpetual existence of all native plants and animals through the establishment of a
comprehensive system, of integrated protected areas.

NIPAS aimed at biodiversity conservation. Takes into account irreplaceable areas with unique natural
characteristics and culturally important areas.

Protected Area – identified portions of land and water set aside by reason of their unique physical and
biological significance, managed to enhance biological diversity and protected against destructive
human exploitation.

Buffer zones – identified areas outside the boundaries of and immediately adjacent to designated
protected areas pursuant to Section 8 that need special development control in order to avoid or
minimize harm to the protected area

For each protected areas, peripheral buffer zones shall be established to protect the same from activities
that will directly and indirectly harm it. Such buffer zones shall be included in the individual management
of protected area management plan to be prepared for the purpose. Buffer zonesmay include public
and private lands. Prescriptions for the management of the buffer zones shall be included as
component of the individual  protected area management plan. The DENR shall exercise the same
authority over buffer zones in the same manner as protected areas.

Categories:

a. Strict nature reserve

b. B. Natural Park
c. Natural Monument
d. Wildlife Sanctuary
e. Protected landscapes and seascapes
f. Resource reserve
g. Natural biotic area
h. Other categories established by law, conventions or international agreements to which the Phil
govt is a signatory.

a. Taňon Strait – a protected area

b. No energy resource exploitation and utilization may be done in a protected seascape, like the
Taňon Strait, without a law for the purpose.
c. Calauit Island, Busuanga, Palawan, declared a game preserve and wildlife sanctuary but later
proclaimed by the Pres as an ancestral land belonging to the Indigenous Cultural Community
of Tagbanua as their privatr community

B. Establishment and Extent of the System

 Sec 5 of NIPAS – The establishment and operationalization of the System.
a. All areas and islands in the Phils, proclaimed, designated or set aside, pursuant to a law,
presidential decree, presidential proclamation or EO as national park, game refuge, bird and
wildlife sanctuary, wilderness area, strict nature reserve, watershed, mangrove reserve, fish
sanctuary, natural and historical landmark, protected and managed landscape/seascape as
well as identified virgin forests before the effectivity of the Act are hereby designated as
initial components of the system. These shall be governed by the IRR of this Act.

Management Plans

There shall be a general management planning strategy to serve as guide in formulating

individual plans for each protected area.

Shall promote adoption and implementation of innovative management techniques, including, if

necessary, the concept of zoning. 

C. Administration and Management of the System

NIPAS is placed under the control and administration of DENR. Each regional office where
protected areas have been established shall have a Protected Areas and Wildlife Division which
shall manage protected areas and promote the permanent preservation of their natural
conditions.

D. Protected Area Management Board

Composed of the following: the regional executive director under whose jurisdiction the
protected area is located; a representative from the autonomous regional government (if
applicable); the provincial development officer; one representative each from the municipal
govt, barangay covering the protected area, and tribal community (if applicable); three
representative from NGO/ local community organizations; and one rep each fr the other
departments or national govt agencies involved in protected area management.

E. Environmental Impact Assessment

Proposals for activities which are outside the scope of the management plan for protected
areas shall be subject to an environmental impact assessment before they are adopted, and
the results thereof shall be taken into consideration in the decision-making process.

No actual implementation of such activities shall be allowed without the required ECC under
the Phil Environmental Impact Assessment (ELA) System.

When allowed, the proponent shall plan and carry them out in such a manner as will minimize
any adverse effects and take preventive and remedial action when appropriate. The
proponent shall be liable for any damage due to lack of caution or indiscretion.

F. Prohibited Acts
 G. Penalties
Whoever violates the NIPAS Act or any IRR by the Department pursuant to the NIPAS Act, or
whoever is found guilty by a competent court of justice of any of the offenses provided shall
be fined of not less than P5,000 not more than P500,000, exclusive of the value of the thing
damaged; or imprisonment for not less than a year but nor more than 6 years, both to be
determined by court.

If the area requires rehabilitation or restoration as determined by the court, the offender shall
be required to restore or compensate for the restoration of the damaged area.

01 PICOP Resources, Inc. vs. Base Metals Mineral Resources Corporation, 

G.R. NO.: 510 SCRA 400   G.R. No. 163509            

DATE OF JUDGMENT: December 6, 2006 

PARTIES INVOLVED: PETITIONER/S:  PICOP RESOURCES, INC

RESPONDENT/S: BASE METALS MINERAL

GENERAL TOPIC
DISCUSSED/KEYWORD:
RESOURCES CORPORATION, and THE MINES
ADJUDICATION BOARD, 
Principle of Multiple Land Use
National Integrated Protected Areas System Act (RA 7586)

OVERVIEW: PICOP Resources, Inc. (PICOP) assails the Decision  of 1

the Court of Appeals dated November 28, 2003 and its

Resolution  dated May 5, 2004, which respectively denied
2

its petition for review and motion for reconsideration.

FACTS OF THE CASE:
In 1987, the Central Mindanao Mining and Development
Corporation (CMMCI for brevity) entered into a Mines
Operating Agreement with Banahaw Mining and
Development Corporation (Banahaw Mining for brevity)
whereby the latter agreed to act as Mine Operator for the
exploration, development, and eventual commercial
operation of CMMCI's eighteen (18) mining claims located
in Agusan del Sur.
Since a portion of Banahaw Mining's mining claims was
located in petitioner PICOP's logging concession in
Agusan del Sur, Banahaw Mining and petitioner PICOP
entered into a Memorandum of Agreement, whereby, in
mutual recognition of each other's right to the area
concerned, petitioner PICOP allowed Banahaw Mining an
access/right of way to its mining claims.
In 1991, Banahaw Mining converted its mining claims to
applications for Mineral Production Sharing Agreements
(MPSA for brevity).
While the MPSA were pending, Banahaw Mining, on
December 18, 1996, decided to sell/assign its rights and
interests over thirty-seven (37) mining claims in favor of
private respondent Base Metals Mineral Resources
Corporation (Base Metals for brevity)

On March 10, 1997, private respondent Base Metals

amended Banahaw Mining's pending MPSA applications
with the Bureau of Mines to substitute itself as applicant
and to submit additional documents in support of the
application
On November 18, 1997, petitioner PICOP filed with the
Mines Geo-Sciences Bureau (MGB), Caraga Regional
Office No. XIII an Adverse Claim and/or Opposition to
private respondent Base Metals' application on the
following grounds:

I. THE APPROVAL OF THE APPLICATION

AND ISSUANCE OF THE MPSA OF BASE
METALS WILL VIOLATE THE
CONSTITUTIONAL MANDATE AGAINST
IMPAIRMENT OF OBLIGATION IN A
CONTRACT.
II. THE APPROVAL OF THE APPLICATION
WILL DEFEAT THE RIGHTS OF THE
HEREIN ADVERSE CLAIMANT AND/OR
OPPOSITOR.

In its Answer to the Adverse Claim and/or Opposition,

private respondent Base Metals alleged that:
b) petitioner PICOP has no rights over the mineral
resources on their concession area. PICOP is asserting a
privilege which is not protected by the non-impairment
clause of the Constitution;
c) the grant of the MPSA will not impair the rights of
PICOP nor create confusion, chaos or conflict.
As a Rejoinder, private respondent Base Metals stated
that:

1. it is seeking the right to extract the

mineral resources in the applied areas. It is
 not applying for any right to the forest
resources within the concession areas of
PICOP;
2. timber or forest lands are open to Mining
Applications;
3. the grant of the MPSA will not violate the
so called "presidential fiat";
4. the MPSA application of Base Metals
does not require the consent of PICOP; and
5. it signified its willingness to enter into a
voluntary agreement with PICOP on the
matter of compensation for damages. In the
absence of such agreement, the matter will
be brought to the Panel of Arbitration in
accordance with law
Ruling of MGB: 

WHEREFORE, premises considered, Mineral Production

Sharing Agreement Application Nos. (XIII) 010, 011, 012
of Base Metal Resources Corporation should be set
aside.
The disapproval of private respondent Base Metals'
MPSA was due to the following reasons:
The Panel believe (sic) that mining location in forest or
timberland is allowed only if such forest or timberland is
not leased by the government to a qualified person or
entity. If it is leased the consent of the lessor is necessary,
in addition to the area clearance to be issued by the
agency concerned before it is subjected to mining
operation.PICOP did not consent to the assignment as
embodied in the agreement. Neither did it ratify the Deed
of Assignment. Accordingly, it has no force and effect.
Thus, for lack of consent, the MPSA must fall.
On January 11, 1999, private respondent Base Metals
filed a Notice of Appeal with public respondent MAB

Motion For Reconsideration Before the MGB

After the filing of petitioner PICOP's Reply Memorandum,
public respondent rendered the assailed decision setting
aside the Panel Arbitrator's order. Accordingly, private
respondent Base Metals' MPSA's were reinstated and
given due course subject to compliance with the pertinent
requirements of the existing rules and regulations.
PICOP appealed to the C.A.
C.A RULING: 
The Court of Appeals upheld the decision of the MAB,
ruling that the Presidential Warranty of September 25,
1968 issued by then President Ferdinand E. Marcos
merely confirmed the timber license granted to PICOP
and warranted the latter's peaceful and adequate
possession and enjoyment of its concession areas. It was
only given upon the request of the Board of Investments
to establish the boundaries of PICOP's timber license
agreement. The Presidential Warranty did not convert
PICOP's timber license into a contract because it did not
create any obligation on the part of the government in
favor of PICOP. Thus, the non-impairment clause finds no
application.
Neither did the Presidential Warranty grant PICOP the
exclusive possession, occupation and exploration of the
concession areas covered. If that were so, the
government would have effectively surrendered its police
power to control and supervise the exploration,
development and utilization of the country's natural
resources.

In its Resolution  dated May 5, 2004, the appellate court

7

denied PICOP's Motion for Reconsideration. It ruled that

PICOP failed to substantiate its allegation that the area
applied for is a forest reserve and is therefore closed to
mining operations because it did not identify the particular
law which set aside the contested area as one where
mining is prohibited pursuant to applicable laws.
The case is now before us for review.
PICOP asserts that its concession areas are closed to
mining operations as these are within the Agusan-
Surigao-Davao forest reserve established under
Proclamation No. 369 of then Gov. Gen. Dwight Davis.
The area is allegedly also part of permanent forest
established under Republic Act No. 3092 (RA 3092),  and
9

overlaps the wilderness area where mining applications

are expressly prohibited under RA 7586

According to PICOP, in 1962 and 1963, blocks A, B and C

within the Agusan-Surigao-Davao forest reserve under
Proclamation No. 369 were surveyed as permanent forest
blocks in accordance with RA 3092. These areas cover
PICOP's PTLA No. 47, part of which later became IFMA
No. 35. In turn, the areas set aside as wilderness as in
PTLA No. 47 became the initial components of the NIPAS
under Sec. 5(a) of RA 7586. When RA 7942 was signed
into law, the areas covered by the NIPAS were expressly
determined as areas where mineral agreements or
financial or technical assistance agreement applications
shall not be allowed.
PICOP further argues that under DENR Administrative
Order (DAO) No. 96-40 implementing RA 7942, an
exploration permit must be secured before mining
operations in government reservations may be
undertaken. There being no exploration permit issued to
Banahaw Mining or appended to its MPSA, the MAB and
the Court of Appeals should not have reinstated its
application.
Base Metals notes that RA 7586 expressly requires that
there be a prior presidential decree, presidential
proclamation, or executive order issued by the President
of the Philippines, expressly proclaiming, designating, and
setting aside the wilderness area before the same may be
considered part of the NIPAS as a protected area.
Allegedly, PICOP has not shown that such an express
presidential proclamation exists setting aside the subject
area as a forest reserve, and excluding the same from the
commerce of man.
PICOP also allegedly misquoted Sec. 19 of RA 7942 by
placing a comma between the words "watershed" and
"forest" thereby giving an altogether different and
misleading interpretation of the cited provision. The cited
provision, in fact, states that for an area to be closed to
mining applications, the same must be a watershed forest
reserve duly identified and proclaimed by the President of
the Philippines. In this case, no presidential proclamation
exists setting aside the contested area as such.
Base Metals reiterates that the non-impairment clause is a
limit on the exercise of legislative power and not of judicial
or quasi-judicial power. The Constitution prohibits the
passage of a law which enlarges, abridges or in any
manner changes the intention of the contracting parties.
The decision of the MAB and the Court of Appeals are not
legislative acts within the purview of the constitutional
proscription. Besides, the Presidential Warranty is not a
contract that may be impaired by the reinstatement of the
MPSA. It is a mere confirmation of PICOP's timber license
and draws its life from PTLA No. 47. Furthermore, PICOP
fails to show how the reinstatement of the MPSA will
impair its timber license.
Following the regalian doctrine, Base Metals avers that
 the State may opt to enter into contractual arrangements
for the exploration, development, and extraction of
minerals even it the same should mean amending,
revising, or even revoking PICOP's timber license.
The Office of the Solicitor General (OSG) filed a
Memorandum  dated April 21, 2005 on behalf of the MAB,
14

contending that PICOP's attempt to raise new issues,

such as its argument that the contested area is classified
as a permanent forest and hence, closed to mining
activities, is offensive to due process and should not be
allowed.
The OSG argues that a timber license is not a contract
within the purview of the due process and non-impairment
clauses. The Presidential Warranty merely guarantees
PICOP's tenure over its concession area and covers only
the right to cut, collect and remove timber therein

The OSG further asserts that mining operations are

legally permissible over PICOP's concession areas.
Allegedly, what is closed to mining applications under RA
7942 are areas proclaimed as watershed forest reserves.
The law does not totally prohibit mining operations over
forest reserves.

In addition, PICOP's claimed wilderness area has not

been designated as a protected area that would operate
to bar mining operations therein. PICOP failed to prove
that the alleged wilderness area has been designated as
an initial component of the NIPAS pursuant to a law,
presidential decree, presidential proclamation or executive
order. Hence, it cannot correctly claim that the same falls
within the coverage of the restrictive provisions of RA
7586.
Finally, the OSG maintains that pursuant to the State's
policy of multiple land use, R.A. No. 7942 provides for
appropriate measures for a harmonized utilization of the
forest resources and compensation for whatever damage
done to the property of the surface owner or
concessionaire as a consequence of mining operations.
Multiple land use is best demonstrated by the
Memorandum of Agreement between PICOP and
Banahaw Mining.
 
ISSUE/S: PICOP presents the following issues: 
 1. Whether or Not the 2,756 hectares subject of
Base Metals' MPSA are closed to mining
operations except upon PICOP's written
consent pursuant to existing laws, rules and
regulations and by virtue of the Presidential
Warranty; 

2. Whether or not its Presidential Warranty is

protected by the non-impairment clause of the
Constitution;

RULING/S:  We should state at this juncture that the policy of multiple

land use is enshrined in our laws towards the end that the
country's natural resources may be rationally explored,
developed, utilized and conserved. 
Sec. 2, PD.705. Policies.—The State hereby adopts the
following policies:

a) The multiple uses of forest lands shall be

oriented to the development and progress
requirements of the country, the
advancement of science and technology,
and the public welfare;

In like manner, RA 7942, recognizing the equiponderance

between mining and timber rights, gives a mining
contractor the right to enter a timber concession and cut
timber therein provided that the surface owner or
concessionaire shall be properly compensated for any
damage done to the property as a consequence of mining
operations.

PICOP contends that its concession area is within the

Agusan-Surigao-Davao Forest Reserve established under
Proclamation No. 369 and is closed to mining application
citing several paragraphs of Sec. 19 of RA 7942.
The cited provision states:
Sec. 19 Areas Closed to Mining Applications.—Mineral
agreement or financial or technical assistance agreement
applications shall not be allowed:
f) Old growth or virgin forests, proclaimed watershed
forest reserves, wilderness areas, mangrove forests,
mossy forests, national parks, provincial/municipal forests,
parks, greenbelts, game refuge and bird sanctuaries as
defined by law in areas expressly prohibited under the
National Ingrated Protected Areas System (NIPAS) under
Republic Act No. 7586

I. Whether the 2,756 hectares subject of Base

Metals' MPSA are closed to mining operations
except upon PICOP's written consent

NO.
Firstly, assuming that the area covered by Base Metals'
MPSA is a government reservation, defined as proclaimed
reserved lands for specific purposes other than mineral
reservations,  such does not necessarily preclude mining
21

activities in the area. Sec. 15(b) of DAO 96-40 provides

that government reservations may be opened for mining
applications upon prior written clearance by the
government agency having jurisdiction over such
reservation.
Secondly, RA 7942 does not disallow mining applications
in all forest reserves but only those proclaimed
as watershed forest reserves. There is no evidence in this
case that the area covered by Base Metals' MPSA has
been proclaimed as watershed forest reserves.
Even granting that the area covered by the MPSA is part
of the Agusan-Davao-Surigao Forest Reserve, such does
not necessarily signify that the area is absolutely closed to
mining activities.

Moreover, Sec. 18 RA 7942 allows mining even in

timberland or forestty subject to existing rights and
reservations. It provides:

Sec. 18. Areas Open to Mining Operations.—

Subject to any existing rights or reservations and
prior agreements of all parties, all mineral
resources in public or private lands, including
timber or forestlands as defined in existing laws,
shall be open to mineral agreements or financial or
technical assistance agreement applications. Any
conflict that may arise under this provision shall be
heard and resolved by the panel of arbitrators.

Significantly, the above-quoted provision does not require

that the consent of existing licensees be obtained but that
they be notified before mining activities may be
commenced inside forest concessions.
Thirdly, PICOP failed to present any evidence that the
area covered by the MPSA is a protected wilderness area
designated as an initial component of the NIPAS pursuant
to a law, presidential decree, presidential proclamation or
executive order as required by RA 7586.It should be
emphasized that it is only when this area has been so
designated that Sec. 20 of RA 7586, which prohibits
mineral locating within protected areas, becomes
operational.
From the foregoing, there is clearly no merit to PICOP's
contention that the area covered by Base Metals' MPSA
is, by law, closed to mining activities.

II. Whether PICOP’s Presidential Warranty is

protected by the non-impairment clause of the
Constitution;

NO.
Finally, we do not subscribe to PICOP's argument that the
Presidential Warranty dated September 25, 1968 is a
contract protected by the non-impairment clause of the
1987 Constitution.
An examination of the Presidential Warranty at once
reveals that it simply reassures PICOP of the
government's commitment to uphold the terms and
conditions of its timber license and guarantees PICOP's
peaceful and adequate possession and enjoyment of the
areas which are the basic sources of raw materials for its
wood processing complex. The warranty covers only the
right to cut, collect, and remove timber in its concession
area, and does not extend to the utilization of other
resources, such as mineral resources, occurring within the
concession.
The Presidential Warranty cannot be considered a
contract distinct from PTLA No. 47 and IFMA No. 35. We
agree with the OSG's position that it is merely a collateral
undertaking which cannot amplify PICOP's rights under its
timber license. Our definitive ruling in Oposa v.
Factoran  that a timber license is not a contract within the
27

purview of the non-impairment clause is edifying.

A timber license is not a contract within the purview

of the due process clause; it is only a license or a
privilege, which can be validly withdrawn whenever
dictated by public interest or public welfare as in this
 case.
Since timber licenses are not contracts, the non-
impairment clause, which reads:
"Sec. 10. No law impairing the obligation of contracts shall
be passed."
cannot be invoked.
The Presidential Warranty cannot, in any manner, be
construed as a contractual undertaking assuring PICOP of
exclusive possession and enjoyment of its concession
areas. Such an interpretation would result in the complete
abdication by the State in favor of PICOP of the sovereign
power to control and supervise the exploration,
development and utilization of the natural resources in the
area.
IN VIEW OF THE FOREGOING, the instant petition is
DENIED. The Decision of the Court of Appeals November
28, 2003 is AFFIRMED. No pronouncement as to costs.
SO ORDERED.

OTHER NOTES: 

Establishing an Environmental Impact Statement System (PD 1586)

Main objective: To maintain the balance between the environment and the socio-economic
development of the country. It aims to protect the environment despite the increasing demand
of natural resources and development to attain sustainability.

 Every proposed environmentally critical project or project located in

environmentally critical area shall prepare an Environmental Impact Statement
to justify why the project should be implemented.
 The Environmental impact Statement also contains the predicted impact which is
most likely to occur and affect the environment and the surrounding
communities as well.
 Along with it are the proper mitigation or environmental measures to minimize if
not prevented the said negative impacts to the environment. However, the EIS
or Environmental Impact Statement does not end with that.
 It covers the monitoring program for different environmental media such as air,
water, soil and development program for the existing community. Upon the
approval of the EIS, Environmental Compliance Certificate will be issued by the
Environmental Management Bureau.
 On the other hand, the non- environmentally critical project or projects that are
not located in environmentally critical areas are required to submit Project
Description Report which indicates the environmental measures basic
information about the proposed project. Upon its approval, Certificate of Non-
 Coverage or CNC will be issued by the Environmental Management Bureau.
Failure to comply with this law has a corresponding punishment, e.g. suspension
or cancellation of certificates or fine not exceeding Php 50,000.00.
 Compliance with this law is essential in protecting the environment. Through EIS,
the likely adverse ecological impact of the project that might occur will properly
be mitigated.
 It is also for the benefit of the people in the community that will be affected if
the project will cause negative impact on the environment.
 The permits like Environmental Compliance Certificate or Certificate of Non-
Coverage that will be issued by the DENR-EMB will certify that the project is
environmentally safe.

PHILIPPINE CLEAN WATER ACT

(RA No. 9275)

Long Title:
An act providing for a comprehensive water quality management and for other purposes

General Information:
- Enacted on March 22, 2004
- Based on the policy of economic growth in a manner consistent with the
protection, preservation and revival of the quality of our fresh, brackish and marine
waters

Reason for Enactment:

To restore and maintain the integrity of the nation’s water.

2 fundamental goals:
1. To eliminate discharge of pollutants into the nation
2. To achieve water quality levels that are fishable and swimmable

Declaration of Policy:
The State shall pursue a policy of economic growth in a manner consistent with
the protection, preservation and revival of the quality of our fresh, brackish and marine
waters. To achieve this end, the framework for sustainable development shall be
pursued. As such, it shall be the policy of the State: 
a) To streamline processes and procedures in the prevention, control and
abatement of pollution of the country’s water resources; 
b) To promote environmental strategies, use of appropriate economic
instruments and of control mechanisms for the protection of water resources;
c) To formulate a holistic national program of water quality management that
recognizes that water quality management issues cannot be separated from concerns
about water sources and ecological protection, water supply, public health and quality of
life; 
d) To formulate an integrated water quality management framework through
proper delegation and effective coordination of functions and activities; 
 e) To promote commercial and industrial processes and products that are
environment friendly and energy efficient; 
f) To encourage cooperation and self-regulation among citizens and industries
through the application of incentives and market-based instruments and to promote the
role of private industrial enterprises in shaping its regulatory prole within the acceptable
boundaries of public health and environment; 
g) To provide for a comprehensive management program for water pollution
focusing on pollution prevention; 
h) To promote public information and education and to encourage the
participation of an informed and active public in water quality management and
monitoring;
i) To formulate and enforce a system of accountability for short and long-term
adverse environmental impact of a project, program or activity; and 
j) To encourage civil society and other sectors, particularly labor, the academe
and business undertaking environment-related activities in their efforts to organize,
educate and motivate the people in addressing pertinent environmental issues and
problems at the local and national levels.

Scope:
This Act shall apply to water quality management in all water bodies: Provided,
That it shall primarily apply to the abatement and control of pollution from land based
sources: Provided, further, That the water quality standards and regulations and the civil
liability and penal provisions under this Act shall be enforced irrespective of sources of
pollution.

SHELL VS. JALOS

G.R. NO.: G.R. NO. 179918

DATE OF JUDGMENT: September 8, 2010

PARTIES INVOLVED: Petitioners : SHELL PHILIPPINES EXPLORATION

B.V., represented by its Managing Director, Jeremy
Cliff,
Respondents: EFREN JALOS ET. AL

GENERAL TOPIC This case is about a question of jurisdiction over an

DISCUSSED/KEYWORD: action against a petroleum contractor, whose pipeline
operation has allegedly driven the fish away from
coastal areas, inflicting loss of earnings among
fishermen.

OVERVIEW:
FACTS OF THE CASE:
On December 11, 1990 petitioner Shell Philippines
Exploration B.V. (Shell) and the Republic of the
Philippines entered into Service Contract 38 for the
exploration and extraction of petroleum in
northwestern Palawan. Two years later, Shell
discovered natural gas in the Camago-Malampaya
area and pursued its development of the well under
the Malampaya Natural Gas Project. This entailed the
construction and installation of a pipeline from Shell’s
production platform to its gas processing plant in
Batangas. The pipeline spanned 504 kilometers and
crossed the Oriental Mindoro Sea.

Petitioners filed a complaint for damages before RTC

against Shell claiming that their livelihood as fishermen
were adversely affected by the construction and
operation of Shell’s natural gas pipeline.

Shell moved for dismissal, alleging that RTC has no

jurisdiction. It was a “pollution case” thus, must be
heard in the Pollution Adjudication Board (PAB).

RTC dismissed, stating the case is ACTUALLY

pollution related.

A petition for certiorari was filed in CA, which reversed

such order stating Shell was not being sued for
pollution but for loss of income due to the construction.
Claim for damages was thus based on a quasi delict
over which the regular courts have jurisdiction.

ISSUE/S: Whether or not the complaint is a pollution case that

falls within the primary jurisdiction of the PAB;

RULING/S:  YES.
Although the complaint of Jalos, et al does not use the
word "pollution" in describing the cause of the alleged
fish decline in the Mindoro Sea, it is unmistakable
based on their allegations that Shell’s pipeline
produced some kind of poison or emission that drove
the fish away from the coastal areas. While the
complaint did not specifically attribute to Shell any
specific act of "pollution," it alleged that "the pipeline
greatly affected biogenically hard-structured
communities such as coral reefs and led [to] stress to
 the marine life in the Mindoro Sea."10 This constitutes
"pollution" as defined by law.Jalos, et al had, therefore,
an administrative recourse before filing their complaint
with the regular courts. The laws creating the PAB and
vesting it with powers are wise. The definition of the
term "pollution" itself connotes the need for specialized
knowledge and skills, technical and scientific, in
determining the presence, the cause, and the effects
of pollution. These knowledge and skills are not within
the competence of ordinary courts.18 Consequently,
resort must first be made to the PAB, which is the
agency possessed of expertise in determining
pollution-related matters.1

OTHER NOTES: 

CASE #: 

G.R. NO.: G.R. Nos. 171947-48             

DATE OF JUDGMENT: December 18, 2008

PARTIES INVOLVED: Petitioners: METROPOLITAN MANILA

DEVELOPMENT AUTHORITY, DENR, DECS, DOH,
DA, DPWH, DBM,Phil Coast Guard, PNP Maritme
Group, DILG
 Respondents: CONCERNED RESIDENTS OF
MANILA BAY, represented and joined by DIVINA V.
ILAS, SABINIANO ALBARRACIN, MANUEL SANTOS,
JR., DINAH DELA PEÑA, PAUL DENNIS QUINTERO,
MA. VICTORIA LLENOS, DONNA CALOZA, FATIMA
QUITAIN, VENICE SEGARRA, FRITZIE TANGKIA,
SARAH JOELLE LINTAG, HANNIBAL AUGUSTUS
BOBIS, FELIMON SANTIAGUEL, and JAIME
AGUSTIN R. OPOSA

GENERAL TOPIC Pollution in Manila Bay

DISCUSSED/KEYWORD: Duties of National Agencies

OVERVIEW: This case turns on government agencies and their

officers who, by the nature of their respective offices or
by direct statutory command, are tasked to protect and
 preserve, at the first instance, our internal waters,
rivers, shores, and seas polluted by human activities.
To most of these agencies and their official
complement, the pollution menace does not seem to
carry the high national priority it deserves, if their track
records are to be the norm. Their cavalier attitude
towards solving, if not mitigating, the environmental
pollution problem, is a sad commentary on bureaucratic
efficiency and commitment.

At the core of the case is the Manila Bay, a place with a

proud historic past, once brimming with marine life and,
for so many decades in the past, a spot for different
contact recreation activities, but now a dirty and slowly
dying expanse mainly because of the abject official
indifference of people and institutions that could have
otherwise made a difference.

FACTS OF THE CASE:  on January 29, 1999, respondents Concerned

Residents of Manila Bay filed a complaint before
the Regional Trial Court (RTC) in Imus, Cavite
against several government agencies, among them
the petitioners, for the cleanup, rehabilitation, and
protection of the Manila Bay. Complaint alleged
that the water quality of the Manila Bay had fallen
way below the allowable standards set by law,
specifically Presidential Decree No. (PD) 1152 or
the Philippine Environment Code.
 
 In their individual causes of action,
respondents alleged that the continued neglect
of petitioners in abating the pollution of the
Manila Bay constitutes a violation of ; (1)
Respondents’ constitutional right to life, health,
and a balanced ecology; (2) The Environment
Code (PD 1152); (3) The Pollution Control Law (PD
984); (4) The Water Code (PD 1067); (5) The
Sanitation Code (PD 856); (6) The Illegal Disposal
of Wastes Decree (PD 825); (7) The Marine
Pollution Law (PD 979); (8) Executive Order No.
192; (9) The Toxic and Hazardous Wastes Law
(Republic Act No. 6969); (10) Civil Code provisions
on nuisance and human relations; (11) The Trust
Doctrine and the Principle of Guardianship; and
(12) International Law
 Respondents as plaintiffs in the case filed in
the RTC of Manila prayed that petitioners be
ordered to clean the Manila Bay.

 The trial of the case started off, Renato T. Cruz,

the Chief of the Water Quality Management
Section, DENR, testifying for petitioners, stated
that water samples collected from different
beaches around the Manila Bay showed that
the amount of fecal coliform content ranged
from 50,000 to 80,000. He says it is  a safe level
for bathing and other forms of contact
recreational activities.

 Rebecca de Vera, for Metropolitan Waterworks

and Sewerage System (MWSS) and in behalf of
other petitioners, testified about the MWSS’ efforts
to reduce pollution stating their related projects.

RTC RULING
Rendered judgment in favor of the concerned
residents and Ordered Petitioners to Clean Up
and Rehabilitate Manila Bay within 6 months
from the receipt of decision. The ff agencies
must;
1. MWSS is directed to install, operate and
maintain adequate [sewerage] treatment facilitie.
2. LWUA, to see to it that the water districts under
its wings, construct  sewage facilities for the
proper disposal of waste.
3. DENR, which is the lead agency in cleaning up
Manila Bay, to install, operate and maintain
waste facilities to rid the bay of toxic and
hazardous substances.
4. MMDA, to establish, operate and maintain an
adequate and appropriate sanitary landfill and/or
adequate solid waste and liquid disposal,
alternative garbage disposal system such as re-
use or recycling of wastes.
5. DA, through the Bureau of Fisheries and Aquatic
Resources, to revitalize the marine life in Manila
Bay, restock its waters with indigenous fish and
other aquatic animals.
6. DBM, to provide and set aside an adequate
budget.
7. DPWH, to remove and demolish structures and
 other nuisances that obstruct the free flow of
waters to the bay. 
8. DOH, to closely supervise and monitor the
operations of septic and sludge companies.
9. DECS, to inculcate in the minds and hearts of
the people through education the importance of
preserving and protecting the environment.
10. Philippine Coast Guard and the PNP Maritime
Group, to protect at all costs the Manila Bay
from all forms of illegal fishing.
 
 The MWSS, Local Water Utilities
Administration (LWUA), and PPA filed before
the Court of Appeals (CA) while other
directed to the SC for petition for review
under Rule 45 in which Resolution on
December 9, 2002 was sent the said petition
to the CA for consolidation.

RULING OF CA
 The CA Sustained the RTC

ISSUE/S: Whether or not Sections 17 and 20 of PD 1152 under

the headings, Upgrading of Water Quality and Clean-
up Operations, envisage a cleanup in general or are
they limited only to the cleanup of specific pollution
incidents.

Whether or not the petitioners can be compelled by

mandamus to clean up and rehabilitate the Manila Bay

RULING/S: 
1. When the Clean Water Act (RA 9275) took
effect, its Sec. 16 on the subject, Cleanup
Operations, it amended the counterpart provision
(Sec. 20) of the Environment Code (PD 1152).
Sec. 17 of PD 1152 continues, however, to be
operational.

As may be noted, the amendment to Sec. 20 of the

Environment Code is more apparent than real since
the amendment, insofar as it is relevant to this case,
merely consists in the designation of the DENR as
lead agency in the cleanup operations and  Sec.
17 requires them to act even in the absence of a
specific pollution incident, as long as water
quality "has deteriorated to a degree where its
state will adversely affect its best usage."

This section, to stress, commands concerned

government agencies, when appropriate, "to
take  such measures as may be necessary to
meet the prescribed water quality standards."

As earlier discussed, the complementary Sec. 17 of

the Environment Code comes into play and the
specific duties of the agencies to clean up come in
even if there are no pollution incidents staring at
them.

Granting arguendo that petitioners' position thus

described vis-à-vis the implementation of Sec. 20
is correct, they seem to have overlooked the fact
that the pollution of the Manila Bay is of such
magnitude and scope that it is well-nigh
impossible to draw the line between a specific
and a general pollution incident.

Giving an urgent dimension to the necessity of

removing illegal structures is Art. 51 of PD 1067 or
the Water Code, which prohibits the building of
structures within a given length along banks of rivers
and other waterways.

Judicial notice may likewise be taken of factories and

other industrial establishments standing along or
near the banks of the Pasig River, other major rivers,
and connecting waterways.

In the light of the ongoing environmental

degradation, the Court wishes to emphasize the
extreme necessity for all concerned executive
departments and agencies to immediately act
and discharge their respective official duties and
obligations.

Petitioners must transcend their limitations, real

or imaginary, and buckle down to work before
the problem at hand becomes unmanageable.

Judgment is hereby rendered ordering the

defendant-government agencies to clean up,
rehabilitate, and preserve Manila Bay, and restore
and maintain its waters to SB level (Class B sea
waters per Water Classification Tables under DENR

2. The Cleaning or Rehabilitation of Manila Bay

Can be Compelled by Mandamus.

Generally, the writ of mandamus lies to require the

execution of a ministerial duty. A ministerial duty is
one that requires neither the exercise of official
discretion nor judgment. It connotes an act in which
nothing is left to the discretion of the person
executing it. It is a simple, definite duty arising under
conditions admitted or proved to exist and imposed
by law.  Mandamus is available to compel action,
when refused, on matters involving discretion, but
not to direct the exercise of judgment or discretion
one way or the other..

The MMDA's duty in this regard is spelled out in Sec.

3(c) of Republic Act No. (RA) 7924 creating the
MMDA. This section defines and delineates the
scope of the MMDA's waste disposal services to
include:

Solid waste disposal and management which include

formulation and implementation of policies,
standards, programs and projects for proper and
sanitary waste disposal. It shall likewise include the
establishment and operation of sanitary land fill and
related... facilities and the implementation of other
alternative programs intended to reduce, reuse and
recycle solid waste.

The MMDA is duty-bound to comply with Sec. 41 of

the Ecological Solid Waste Management Act (RA
9003) which prescribes the minimum criteria for the
establishment of sanitary landfills and Sec. 42 which
provides the minimum operating requirements that
each site operator shall maintain in the operation of
a sanitary landfill. Any suggestion that the MMDA
has the option whether or not to perform its solid
waste disposal-related duties ought to be dismissed
for want of legal basis.

A perusal of other petitioners respective charters or

 like enabling statutes and pertinent laws would yield
this conclusion: these government agencies are
enjoined, as a matter of statutory obligation, to
perform certain functions relating directly or
indirectly to the cleanup, rehabilitation,
protection, and preservation of the Manila Bay.
They are precluded from choosing not to
perform these duties.

OTHER NOTES:  One of the country's development objectives is

enshrined in RA 9275 or the Philippine Clean Water
Act of 2004. This law stresses that the State shall
pursue a policy of economic growth in a manner
consistent with the protection, preservation, and revival
of the quality of our... fresh, brackish, and marine
waters.

Secs. 17 and 20 of the Environment Code Include

Cleaning in General

The disputed sections are quoted as follows:

Section 17. Upgrading of Water Quality. Where the

quality of water has deteriorated to a degree where
its state will adversely affect its best usage, the
government agencies concerned shall take such
measures as may be necessary to upgrade the
quality of such... water to meet the prescribed water
quality standards.

Section 20. Clean-up Operations It shall be the

responsibility of the polluter to contain, remove and
clean-up water pollution incidents at his own
expense. In case of his failure to do so, the
government agencies concerned shall undertake
containment, removal and... clean-up operations and
expenses incurred in said operations shall be
charged against the persons and/or entities
responsible for such pollution.

The amendatory Sec. 16 of RA 9275 reads:

SEC. 16. Cleanup  Operations. Notwithstanding the

provisions of Sections 15 and 26 hereof, any person
who causes pollution in or pollutes water bodies in
excess of the applicable and prevailing standards
 shall be responsible to contain, remove and clean...
up any pollution incident at his own expense to the
extent that the same water bodies have been
rendered unfit for utilization and beneficial use:
Provided, That in the event emergency cleanup
operations are necessary and the polluter fails to
immediately undertake the same, the

[DENR] in coordination with other government

agencies concerned, shall undertake containment,
removal and cleanup operations. Expenses incurred
in said operations shall be reimbursed by the
persons found to have caused such pollution under
proper administrative determination x x... x.
Reimbursements of the cost incurred shall be made
to the Water Quality Management Fund or to such
other funds where said disbursements were sourced.

RA 9003 is a sweeping piece of legislation enacted

to radically transform and improve waste
management.  It implements Sec. 16, Art. II of the
1987 Constitution, which explicitly provides that the
State shall protect and advance the right of the
people to a balanced and... healthful ecology in
accord with the rhythm and harmony of nature.

CASE #4 - Pacific Steam Laundry, Inc. vs. LLDA

G.R. NO.: G.R. NO. 165299

DATE OF December 18, 2009

JUDGMENT:

PARTIES PACIFIC STEAM LAUNDRY, INC., Petitioner

INVOLVED: GUNA LAKE DEVELOPMENT AUTHORITY, Respondent.

FACTS OF 1. Petitioner Pacific Steam Laundry, Inc. (petitioner) is a company

THE CASE: engaged in the business of laundry services.
2. The Environmental Management Bureau of the Department of
Environment and Natural Resources (DENR) endorsed to
respondent Laguna Lake Development Authority (LLDA) the
inspection report on the complaint of black smoke emission from
petitioner's plant.
3. LLDA conducted an investigation and found that untreated
wastewater generated from petitioner's laundry washing activities
 was discharged directly to the San Francisco Del Monte River.
4. The Investigation Report stated that petitioner's plant was operating
without LLDA clearance, AC/PO-ESI, and Discharge Permit from
LLDA.
5. The Environmental Quality Management Division of LLDA
conducted wastewater sampling of petitioner's effluent. The result
of the laboratory analysis showed non-compliance with effluent
standards particularly Total Suspended Solids (TSS), Biochemical
Oxygen Demand (BOD), Oil/Grease Concentration and Color
Units.
6. Consequently, LLDA issued to petitioner a Notice of Violation. The
company was ordered to pay a penalty of P1,000/day of discharging
pollutive wastewater and P5,000/year for operating without the
necessary clearance or permits.
7. A compliance monitoring was conducted and the result of the
laboratory analysis still showed non-compliance with effluent
standards in terms of TSS, BOD, Chemical Oxygen Demand
(COD), and Oil/Grease Concentration.
8. A Pollution Control and Abatement case was filed against petitioner
before the LLDA.
9. LLDA informed petitioner of its continuous non-compliance with
the effluent standards.
10. Petitioner requested for another wastewater sampling. The
laboratory results of the wastewater sampling finally showed
compliance with the effluent standard in all parameters.
11. Another public hearing was held to discuss the dismissal of the
water pollution case and the payment of the accumulated daily
penalty. According to LLDA, the penalty should be reckoned from
5 September 2001, the date of initial sampling, to 17 May 2002, the
date LLDA received the request for re-sampling.
12. Petitioner manifested that its wastewater discharge was not on a
daily basis. In its position paper, petitioner prayed that the Notice of
Violation be set aside and the penalty and fine imposed be reckoned
from the date of actual hearing on 15 April 2002.
13. LLDA issued an Order to Pay.
14. Respondent prayed that the Notice of Violation issued on 30
October 2001 and its corresponding daily penalty be set aside and
that the imposable penalty be reckoned from the date of actual
hearing and not on 5 September 2001. It is respondent's position
that the Notice of Violation and the imposition of the penalty had no
legal and factual basis because it had already installed the necessary
wastewater treatment to abate the water pollution.
15. The Public Hearing Committee of LLDA finds respondent's
arguments devoid of merit. Presidential Decree No. 984 prohibits
the discharge of pollutive wastewater and any person found in
violation thereof shall pay a fine not exceeding five thousand pesos
 (PhP5,000.00) for every day during which such violation continues.
The mere discharge of wastewater not conforming with the effluent
standard is the violation referred to in PD No. 984.
16. Petitioner then filed with the Court of Appeals a Petition for Review
under Rule 43 of the Rules of Court. The Court of Appeals denied
the petition, as well as the motion for reconsideration filed by
petitioner.
17. CA Ruling: Indeed, the express grant of power to impose
administrative fines as couched in the language of P.D. 984 was not
reproduced in E.O. 927, however, it can be logically implied from
LLDA's authority to exercise the power to "make, alter or modify
orders requiring the discontinuance of pollution...The LLDA, as an
agency implementing pollution laws, rules and regulations, should
be given some measures of flexibility in its operations in order not
to hamper it unduly in the fulfillment of its objectives. How could it
effectively perform its role if in every act of violation, it must resort
to other venue for the appropriate remedy, because it is impotent by
itself to punish or deal with it?"

ISSUE/S: 1. Does the respondent LLDA have the implied power to impose fines as
set forth in PD 984?

2. Does the grant of implied power to LLDA to impose penalties violate the
rule on non-delegation of legislative powers?

RULING/S:  1. YES, LLDA has the implied power to impose fines as set forth in
PD 984.

LLDA is a special agency created under Republic Act No. 4850

(RA 4850)20 to manage and develop the Laguna Lake region,
comprising of the provinces of Rizal and Laguna and the cities of
San Pablo, Manila, Pasay, Quezon and Caloocan. RA 4850, as
amended by Presidential Decree No. 813 (PD 813) mandates LLDA
to carry out the development of the Laguna Lake region, with due
regard and adequate provisions for environmental management and
control, preservation of the quality of human life and ecological
systems, and the prevention of undue ecological disturbances,
deterioration and pollution.

Under Executive Order No. 927 (EO 927), LLDA is granted

additional powers and functions to effectively perform its role and
to enlarge its prerogatives of monitoring, licensing and
enforcement.

Although petitioner in that case did not challenge LLDA's authority

to impose fine, the Court acknowledged the power of LLDA to
 impose fines, holding that under Section 4-A of RA 4850, as
amended, LLDA is entitled to compensation for damages resulting
from failure to meet established water and effluent standards.

The Court ruled that LLDA, in the exercise of its express powers
under its charter, as a regulatory and quasi-judicial body with
respect to pollution cases in the Laguna Lake region, has the
implied authority to issue a "cease and desist order." In the same
manner, we hold that the LLDA has the power to impose fines in
the exercise of its function as a regulatory and quasi-judicial body
with respect to pollution cases in the Laguna Lake region.

2. NO, there is no undue delegation of power.

LLDA's power to impose fines is not unrestricted. In this case,

LLDA investigated the pollution complaint against petitioner and
conducted wastewater sampling of petitioner's effluent. It was only
after the investigation result showing petitioner's failure to meet the
established water and effluent quality standards that LLDA imposed
a fine against petitioner. LLDA then imposed upon petitioner a
penalty of P1,000 per day of discharging pollutive wastewater. The
P1,000 penalty per day is in accordance with the amount of penalty
prescribed under PD 984.

Clearly, there are adequate statutory limitations on LLDA's power

to impose fines which obviates unbridled discretion in the exercise
of such power.

OTHER The SC denied the petition and affirmed CA’s decision.

NOTES: 

5 -  The Alexandra Condominium Corporation vs. LLDA

G.R. NO.: 169228

DATE OF September 11, 2009

JUDGMENT:

PARTIES PETITIONER/S: THE ALEXANDRA CONDOMINIUM CORPORATION, (TACC) 

INVOLVED:
RESPONDENT/S: . LAGUNA LAKE DEVELOPMENT AUTHORITY

FACTS OF  Philippine Realty and Holdings, Inc. (PhilRealty) developed,

THE CASE:
established, and constructed The Alexandra Condominium Complex
 from 1987 to 1993. 
 On 2 September 1987, the Human Settlements Regulatory Commission
issued a Development Permit to PhilRealty to develop the project. 
 In the Development Permit, PhilRealty was required to submit its
condominium plans to the Building Official of Pasig City. 
 Architect Perez, then Building Official of Pasig City, reviewed the Site
Development and Location Plan as well as the Sanitary/Plumbing Plans
and Specifications of the project. 
 Architect Perez issued a Building Permit and a Sanitary/Plumbing
Permit acknowledging the fixtures to be installed but without
indicating the System of Disposal including a Waste Water Treatment
Plan. 
 PhilRealty turned over the project to TACC.
 On 24 June 1998, Laguna Lake Development Authority (LLDA) advised
TACC that its wastewater did not meet government effluent standards
provided in Sections 68 and 69 of the 1978 National Pollution Control
Commission Rules and Regulations (NPCC) as amended by Department
of Energy and Natural Resources (DENR) Administrative Order No. 34. 
 LLDA informed TACC that it must put up its own Sewage Treatment
Plant (STP) for its effluent discharge to meet government standards.
 In a Notice of Violation  LLDA directed TACC to submit corrective
measures to abate or control its water effluents discharged into the
Laguna de Bay. 
 LLDA likewise imposed upon TACC a daily fine of P1,000 from 26
March 1999 until full cessation of pollutive wastewater discharge.
 TACC entered into an agreement with World Chem Marketing for the
construction of the Sewage Treatment Plant (STP) for P7,550,000. 
 In an Order dated 19 July 1999, LLDA stated that the daily penalty was
imposed upon TACC for the pollutive wastewater discharge, and to
condone the penalty would be tantamount to tolerating the pollution
of the river bodies and the Laguna de Bay which is contrary to LLDAs
mandate.
 On 1 April 2002, TACC requested LLDA to dismiss the water pollution
case against it because of the favorable analysis undertaken by the
LLDAs Pollution Control Division. 
 TACC requested LLDA to condone the imposition of the penalty
of P1,000 per day since March 1999 in recognition of the remedial
and corrective measures it undertook to comply with government
standards.
 On 4 September 2003, LLDA issued an ORDER requiring TACC to pay a
fine of P1,062,000 representing the penalty from 26 March 1999 to 20
February 2002.
 TACC filed a petition for certiorari before the Court of Appeals with a
 prayer for the issuance of a temporary restraining order.

Court of Appeals
 
 Petition for certiorari was prematurely filed. 
 Pointed out that TACC failed to file a motion for reconsideration of the
4 September 2003 ORDER before filing the petition before the CA. 
 The Court of Appeals ruled that due to the transfer of LLDA to the
DENR under Executive Order No. 149 (EO 149), TACC should have first
resorted to an administrative remedy before the DENR Secretary prior
to filing a petition for certiorari before the Court of Appeals.

ISSUE/S: 1. WON an administrative remedy was available to TACC;

2. WON LLDA has the power to impose the penalty;
3. WON TACC’s request for compromise before LLDA for the condonation
of penalty was proper.

RULING/S:  1. Admin remedy available before the DENR Secretary  

 EO 149 transferred LLDA from the Office of the President to the DENR
for policy and program coordination and/or administrative
supervision x x x. Under EO 149, DENR only has administrative power
over LLDA. 
 Administrative power is concerned with the work of applying policies
and enforcing orders as determined by proper governmental organs. 
 However, Executive Order No. 192 (EO 192), which reorganized the
DENR, created the Pollution Adjudication Board under the Office of
the DENR Secretary which assumed the powers and functions of the
NPCC with respect to the adjudication of pollution cases, including
NPCCs function to serve as arbitrator for the determination of
reparation, or restitution of the damages and losses resulting from
pollution. 
 Hence, TACC has an administrative recourse before the DENR
Secretary which it should have first pursued before filing a petition
for certiorari before the Court of Appeals.

2. LLDA has the power to impose penalty under RA 4850 

 RA 4850 specific LLDA, by virtue of its special charter, has the
responsibility to protect the inhabitants of the Laguna Lake region
from the deleterious effects of pollutants emanating from the
discharge of wastes from the surrounding areas. 
 Under Section 4-A of RA 4850, as amended, LLDA is entitled to
compensation for damages resulting from failure to meet established
water and effluent quality standards.
 3. Power to compromise claims is vested with COA
 As regards the condonation of the penalty, the power to compromise
claims is vested exclusively in the COA or Congress pursuant to Section
20 (1), Chapter IV, Subtitle B, Title I, Book V of Executive Order No. 292
(Administrative Code of 1987) which provides:

Section 20. Power to Compromise Claims. - (1) When the

interest of the Government so requires, the Commission may
compromise or release in whole or in part, any settled claim or
liability to any government agency not exceeding ten thousand
pesos arising out of any matter or case before it or within its
jurisdiction, and with the written approval of the President, it
may likewise compromise or release any similar claim or
liability not exceeding one hundred thousand pesos. In case the
claim or liability exceeds one hundred thousand pesos, the
application for relief therefrom shall be submitted, through the
Commission and the President, with their recommendations, to
the Congress[.] x x x
 
 TACC manifested its offer to compromise by paying a reduced fine
of P500,000.  
 LLDA referred the offer to its resident auditor Auditor Malit on the
ground that only the COA had the authority to compromise settlement
of obligations to the State. 
 In a letter dated 23 September 2004, Auditor Malit informed LLDA that
the power to compromise claims is vested exclusively in the COA
pursuant to Section 36 of Presidential Decree No. 1445. 
 Auditor Malit stated that the request for compromise should be
addressed to COA. 
 However, since the amount of the penalty sought to be condoned
is P1,062,000, the authority to compromise such claim is vested
exclusively in Congress pursuant to Section 20 (1), Chapter IV, Subtitle
B, Title I, Book V of the Administrative Code of 1987. 
 This remedy is not administrative but legislative, and need not be
resorted to before filing a judicial action.

OTHER Petition was denied, CA decision was affirmed

NOTES: