CASE: SHELL PHILIPPINES EXPLORATION B.V. v. EFREN JALOS, et.al. (G.R. No.

179918)
DATE: 8 September 2010
PONENTE: J. Abad
FACTS

On 11 December 1990, 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.
The Project entailed the construction and installation of a pipeline from Shells
production platform to its gas processing plant in Batangas. The pipeline spanned 504
kilometers and crossed the Oriental Mindoro Sea.
On 5 May 2013, respondent Efren Jalos, et.al., fishermen from Bansud, Oriental
Mindoro, filed a complaint for damages against Shell before the RTC Pinamalayan,
Oriental Mindoro claiming that their livelihood was adversely affected by the
construction and operation of Shells natural gas pipeline which greatly affected
biogenically hard-structured communities and led to stress the marine life in Mindoro
Sea. From Php 4,848.00 per month, their average net income fell to only Php 573.00.
Shell moved to dismiss the complaint alleging the following:
- It is a pollution case; thus, the trial court had no jurisdiction but the Pollution
Adjudication Board (PAB).
- It serves as an agent of the Philippine government. It cannot therefore be sued under
the doctrine of state immunity without the consent of the State.
- The complaint failed to state a cause of action since it did not specify any actionable
wrong or particular act or omission that could have caused the alleged injury.
On 24 March 2004, the RTC dismissed the complaint ruling that the action was actually
pollution-related.
Jalos, et.al. filed a petition for certiorari before the CA.
CA reversed the RTC decision, ruling that:
- Shell was not being sued for committing pollution, but for constructing and operating
a natural gas pipeline that caused fish decline and considerable reduction in the
fishermens income. The claim for damages was thus based on a quasi-delict over
which the regular courts have jurisdiction.
- The doctrine of state immunity is inapplicable. The State was not even impleaded as
party defendant. Besides, the State should be deemed to have given its consent to be
sued when it entered into contract with Shell.
- The complaint sufficiently alleged an actionable wrong. Jalos, et.al. invoked their
right to fish the sea and earn a living, which Shell had the correlative obligation to
respect. Failure to do so resulted in a violation of the fishermens right and thus gave
rise to a cause of action for damages.
Shell moved to reconsider the CA decision but the same was denied. Hence, the present
petition for review under Rule 45.

ISSUES
1. WON the complaint is a pollution case that falls within the primary jurisdiction of the
PAB
2. WON the complaint sufficiently alleges a cause of action against Shell
3. WON the suit is actually against the State and is barred under the doctrine of state
immunity
RULING
1. Yes. Section 2(a) of P.D. 984 entitled, Providing for the Revision of Republic Act No. 3931,
commonly known as the Pollution Control Law, and for Other Purposes defines pollution in
this wise:
(a) "Pollution" means any alteration of the physical, chemical and
biological properties of any water, air and/or land resources of the
Philippines, or any discharge thereto of any liquid, gaseous or solid wastes as
will or is likely to create or to render such water, air and land resources
harmful, detrimental or injurious to public health, safety or welfare or which
will adversely affect their utilization for domestic, commercial, industrial,
agricultural, recreational or other legitimate purposes. (Emphasis supplied)
It is clear from the definition that the stress to marine life claimed by Jalos, et.al. is
caused by some kind of pollution emanating from Shells natural gas pipeline. The pipeline,
they said, greatly affected or altered the natural habitat of fish and affected the coastal waters
natural function as fishing grounds.
Inevitably, in resolving the claim for damages of Jalos, et.al., the proper tribunal must
determine whether or not the operation of the pipeline adversely altered the coastal waters
properties and negatively affected its life sustaining function. The power and expertise
needed to determine such issues lies with the PAB.
Executive Order 192 transferred to the PAB the powers and functions of the National
Pollution and Control Commission provided under R.A. 3931, as amended by P.D. 984.
These empowered the PAB to determine the location, magnitude, extent, severity, causes and
effects of water pollution.
Among its functions is to serve as arbitrator for the determination of reparation, or
restitution of the damages and losses resulting from pollution. In this regard, the PAB has the
power to conduct hearings, impose penalties for violation of P.D. 984, and issue writs of
execution to enforce its orders and decisions. The PABs final decisions may be reviewed by
the CA under Rule 43 of the Rules of Court.
Therefore, Jalos, et.al. had administrative recourse before filing their complaint with the
regular courts. 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. Consequently, resort must first be made to PAB, which is the agency possessed of
expertise in determining pollution-related matters.
2. Yes. A cause of action is the wrongful act or omission committed by the defendant in
violation of the primary rights of the plaintiff. Its elements consist of: (1) a right existing in
favour of the plaintiff; (2) a duty on the part of the defendant to respect the plaintiffs right;
and (3) an act or omission of the defendant in violation of such right.
To sustain a motion to dismiss for lack of cause of action, however, the complaint must
show that the claim for relief does not exist and not only that the claim was defectively stated
or is ambiguous, indefinite or uncertain.
Here, all the elements of a cause of action are present:
a. Jalos, et.al. undoubtedly had the right to the preferential use of marine and fishing
resources which is guaranteed by no less than the Constitution;
b. Shell had the correlative duty to refrain from acts or omissions that could impair
Jalos, et.al.s use and enjoyment of the bounties of the seas; and
c. Shells construction and operation of the pipeline, which is an act of physical
intrusion into the marine environment, is said to have disrupted and impaired the
natural habitat of fish and resulted in considerable reduction of fish catch and income
for Jalos, et.al.
Thus, the construction and operation of the pipeline may, in itself, be a wrongful act that
could be the basis of Jalos, et.al.s cause of action. The rules do not require that the complaint
establish in detail the causal link between the construction and operation of the pipeline, on
the one hand, and the fish decline and loss of income, on the other hand, it being sufficient
that the complaint alleges facts which, if true would justify the relief demanded.
3. No. Shells main undertaking under Service Contract 38 is to perform all petroleum
operations and provide all necessary technology and finance as well as other connected
services to the Philippine government. As defined under the contract, petroleum operation
means the searching for and obtaining Petroleum within the Philippines, including the
transportation, storage, handling and sale of petroleum whether for export or domestic
consumption. Shells primary obligation under the contract is not to represent the Philippine
government for the purpose of transacting business with third persons. Rather, its contractual
commitment is to develop and manage petroleum operations on behalf of the State.
Consequently, Shell is not an agent of the Philippine government, but a provider of
services, technology and financing for the Malampaya Natural Gas Project. It is not immune
from suit and may be sued for claim even without the States consent.
Notably, Article II, paragraph 8, Annex B of Service Contract 38 states that legal
expenses, including judgments obtained against the Parties or any of them on account of the

Petroleum Operations, can be recovered by Shell as part of operating expenses to be

deducted from gross proceeds. Article II, paragraph 9B of the same document allows a
similar recovery for all actual expenditures incurred and paid by CONTRACTOR (Shell) in
settlement of any and all losses, claims, damages, judgments, and any other expenses not
covered by insurance, including legal services. This signifies that the State itself
acknowledged the suability of Shell. Since payment of claims and damages pursuant to a
judgment against Shell can be deducted from gross proceeds, the State will not be required to
perform any additional affirmative act to satisfy such a judgment.

CASE: PACIFIC STEAM LAUNDRY, INC. v. LAGUNA LAKE DEVELOPMENT

AUTHORITY (LLDA) (G.R. No. 165299)
DATE: 18 December 2009
PONENTE: J. Carpio
FACTS

Pacific Steam Laundry, Inc. (PSLI) is a company engaged in the business of laundry
services.
On 6 June 2001, DENR-EMB endorsed to LLDA the inspection report on the complaint
of black smoke emission from PSLIs plant at 114 Roosevelt Avenue, Quezon City.
On 22 June 2001, LLDA conducted an investigation and found that untreated wastewater
generated from PSLIs laundry washing activities was discharged directly to the San
Francisco Del Monte River and that it was operating without LLDA clearance.
On 5 September 2001, LLDAs Environmental Quality Management Division conducted
wastewater sampling of PSLIs effluent.
Due to non-compliance with effluent standards, LLDA issued a Notice of Violation to
PSLI on 30 October 2001, directing PSLI to undertake corrective measures to
abate/control the water pollution and to pay Php 1,000.00 per day of discharging
pollutive wastewater from 5 September 2001 and Php 5,000.00 per year for operating
without the necessary LLDA clearance/permit.
PSLI submitted an application for LLDA Clearance and Discharge Permit and informed
LLDA that it would undertake necessary measures to abate the water pollution.
On 1 March 2002 and 25 April 2002, compliance monitoring was conducted but PSLI
still failed to conform with the effluent standards in terms of Oil/Grease Concentration.
Meanwhile, on 15 April 2002, a pollution control and abatement case was filed against
PSLI before the LLDA. The former, during the public hearing, was informed of its
noncompliance.
On 17 May 2002, PSLI requested for another wastewater sampling which was conducted
on 5 June 2002. The lab results finally showed compliance in all parameters.
On 9 August 2002, 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.
PSLI, on the other hand, manifested that its wastewater discharge was not on a daily
basis. In its position paper, dated 25 August 2002, it prayed that the Notice of Violation
be set aside and the penalty and fine imposed be reckoned from the date of the actual
hearing on 15 April 2002.
On 16 September 2002, LLDA issued an Order to Pay stating that the Public Hearing
Committee finds PSLIs arguments devoid of merit. The mere discharge of wastewater
not conforming with the effluent standards is the violation referred to in Presidential
Decree No. 984 entitled, Providing for the Revision of Republic Act No. 3931,
Commonly Known as the Pollution Control Law, and for Other Purposes. Thus, it is but
just and proper that the penalty should be imposed from the date of initial sampling, 5

September 2001, to 17 May 2002, the date the request for re-sampling was received by
LLDA.
PSLI filed a motion for reconsideration (MR) but it was denied by the LLDA in its Order
dated 27 November 2002.
PSLI then filed a petition for review under Rule 43 of the Rules of Court to the CA.
CA denied the petition as well as the MR filed by PSLI, holding that LLDA has the
power to impose fines. Hence, the present petition.
PSLI asserts the following;
- LLDA has no power to impose fines since such power to impose penal sanctions,
which was once lodged with the National Pollution Control Commission (NPCC), is
now assumed by the Pollution Adjudication Board (PAB) pursuant to Executive Order
No. 192 (EO 192); and
- If LLDA is deemed to have implied power to impose penalties, then LLDA will have
unfettered decision to determine for itself the penalties it may impose, which will
amount to undue delegation of legislative power.

ISSUES
1. WON LLDA has the implied power to impose fines as set forth in PD 984; and
2. WON the grant of implied power to LLDA to impose penalties violate the rule on nondelegation of legislative powers.
RULING
1. Yes. PD 984 created and established the NPCC under the Office of the President. EO 192,
which reorganized the DENR, created the PAB under the Office of the DENR Secretary
which assumed the powers and functions of the NPCC with respect to adjudication of
pollution cases.
On the other hand, LLDA is a special agency created under Republic Act No. 4850 (RA
4850) 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
function to effectively perform its role and to enlarge its prerogatives of monitoring,
licensing and enforcement.
A comparison of the powers and functions of the PAB and LLDA reveals substantial
similarity. Both the PAB and the LLDA are empowered, among others, to (1) make, alter,
modify orders requiring the discontinuance of pollution; (2) issue, renew, or deny permits for

the prevention and abatement of pollution, for the discharge of sewage, industrial waste, or
for the installation or operation of sewage works and industrial disposal system; and (3)
exercise such powers and perform such other functions necessary to carry out their duties and
responsibilities.
The difference is that while Section 19 of EO 192 vested the PAB with the specific power
to adjudicate pollution cases in general, the scope of authority of LLDA to adjudicate
pollution cases is limited to the Laguna Lake region as defined by RA 4850, as amended.
However, although the PAB assumed the powers and functions of the NPCC with respect
to adjudication of pollution cases, this does not preclude LLDA from assuming jurisdiction
over pollution cases within its area of responsibility and to impose fines as penalty.
In LLDA v. CA, G.R. No. 110120, 16 March 1994, the Court upheld the LLDAs power
to issue an ex parte cease and desist order even if such power is not expressly conferred by
law, holding that an administrative agency has also such power as are necessarily implied in
the exercise of its express powers.
In the same manner, the Court now holds that 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. LLDAs power to impose fines is not unrestricted. In this case, LLDA investigated the
pollution complaint against PSLI and conducted wastewater sampling of its effluent. It was
only after investigation result showing PSLIs failure to meet the established water and
effluent quality that LLDA imposed a fine as prescribed under PD 984, to wit:
SEC. 8. Prohibitions. No person shall throw, run, drain, or otherwise
dispose into any of the water, air and/or land resources of the Philippines,
or cause, permit, suffer to be thrown, run, drain, allow to seep or
otherwise dispose thereto any organic or inorganic matter or any
substance in gaseous or liquid form that shall cause pollution thereof.
xxx
SEC 9. Penalties. x x x
(b) Any person who shall violate any of the previous provisions of Section
Eight of this Decree or its implementing rules and regulations, or any Order
or Decision of the Commission,shall be liable to a penalty of not to exceed
one thousand pesos each day during which the violation continues, or by
imprisonment of from two years to six years, or by both fine and
imprisonment, and in addition such person may be required or enjoined from
continuing such violation as hereinafter provided.
x x x (Emphasis supplied)
Clearly, there are adequate statutory limitations on LLDAs power to impose fines which
obviates unbridled discretion in the exercise of such power.

CASE: ALFREDO ESTRADA, et.al. v. CA and BACNOTAN CEMENT CORPORATION

(G.R. No. 137862)
DATE: 11 November 2004
PONENTE: J. Austria-Martinez
FACTS

On 31 July 1996, Alfredo Estrada, Renato Canilang and Manuel Lim (Estrada, et.al.), as
concerned citizen and taxpayers, filed a complaint for injunction and damages with
prayer for preliminary injunction and temporary restraining order (TRO) against
Bacnotan Cement Corporation (BCC), Wawandue Fishing Port, Inc. (WFPI), Jeffrey
Khong Hun as President of WFPI, Manuel Molina as Mayor of Subic, Zambales, and
Ricardo Serrano as Regional Director of DENR (Respondents).
Said complaint alleges the following:
- WFPI and the Municipality of Subic entered into an illegal lease contract, which in
turn became the basis of a sub-lease in favour of BCC;
- The sublease between WFPI and BCC is a violation of the first lease because the
cement plant is not related to the fish port business of WFPI; and
- BCCs cement plant is a nuisance because it will cause pollution, endanger the health,
life and limb of the residents and deprive them of the full use and enjoyment of their
properties.
The respondents filed separate motions to dismiss alleging that the complaint states no
cause of action. Also, Estrada, et.al. failed to exhaust administrative remedies.
On 6 December 1996, RTC Olongapo City issued an order denying respondents motions
to dismiss and granting the prayer for a writ of preliminary injunction. Pertinent portions
of the order states that:
The Court notes that the powers vested by law under Executive Order
192, Republic Act 3931 and Presidential Decree 984 are regulatory merely
and for the purpose of determining whether pollution exists.
However, under the laws above-mentioned, the powers granted to the
DENR thru the Pollution Adjudication Board did not expressly
exclude the Courts which under the law are empowered to try both
questions of facts and law to determine whether pollution which
maybe nuisance per se or by accidents (sic) exist or likely to exist.
Under the Constitution, the courts are imbued the inherent power of
general jurisdiction to resolve these issues. While it maybe (sic) true
that petitioners might have first to seek relief thru the DENRs Pollution
Adjudication Board a resort to the remedy provided under the Pollution
Adjudication Board is rendered useless and ineffective in the light of the
urgency that the said pollution be restrained outright in lieu of the
impending risk described in the petition. It will be noted that the DENR
did not have the power either in Executive Order 192, Republic Act
3931 and Presidential Decree 984 to issue a writ of injunction. The
argument therefore for the exhaustion of administrative remedy and

lack of jurisdiction does not warrant the dismissal of this petition

against Bacnotan Cement Corporation.

Respondents filed motions for reconsideration (MR) but it was denied by the RTC in an
Order dated 13 May 1997.
BCC then went to CA on a petition for certiorari and prohibition with preliminary
injunction and/or TRO seeking to reverse and set aside the RTC Orders and to lift the writ
of preliminary injunction issued.
On 16 April 1998, CA rendered its decision granting BCCs petition. It reasoned that:
- Denial of the MRs was a grave abuse of discretion because the doctrine of
administrative remedy requires that where an administrative remedy is provided by
statute, relief must be sought administratively first before the Court will take action;
- The specific issue of pollution, which is under the jurisdiction of DENR, prevails
over the general issue of nuisance, which is under the jurisdiction of the RTC.
Therefore, the former has jurisdiction over the subject matter.
- It should be remembered that BCC, at the time, did not yet have the permit to operate
for the actual constriction of the cement bulk terminal. Hence, the injunction issued is
premature.
An MR was filed by Estrada, et.al. but the same was denied by the CA. Hence, the
present petition.
Estrada, et.al. argue that:
- Prior resort to an administrative agency is futile and unnecessary since great and
irreparable injury would ensue if the cement repacking plant is allowed to operate in
Wawandue, Subic, Zambales.
- Only the court can grant them speedy, effective and immediate relief since the
DENR-Pollution Adjudication Board has no authority to issue the needed writ of
injunction;
- EO 192 (Providing for the Reorganization of the DENR), RA 3931 (An Act Creating
the National Water and Air Pollution Control Commission) or PD 984 (Providing for
the Revision of RA 3931) do not expressly exclude the power and authority of the
RTC to try both questions and of fact and of law relative to the determination of the
existence of pollution arising from the operation of BCCs cement repacking plant
either as a nuisance per se or nuisance per accidens; and
- The lower court, under the Constitution, is imbued with the inherent power and
jurisdiction to resolve the issue of pollution.

ISSUE
WON there was a failure to exhaust administrative remedies
RULING
Yes. The doctrine of exhaustion of administrative remedies requires that resort be first
made with the administrative authorities in the resolution of a controversy falling under their
jurisdiction before the same may be elevated to a court of justice for review. If a remedy within
the administrative machinery is still available, with a procedure pursuant to law for an

administrative officer to decide the controversy, a party should first exhaust such remedy before
going to court. A premature invocation of a courts intervention renders the complaint without
cause of action and dismissible on such ground.
The reason for this is that prior availment of administrative remedies entails lesser
expenses and provides for a speedier disposition of controversies. Comity and convenience also
impels courts of justice to shy away from a dispute until the system of administrative redress has
been completed and complied with.
While the doctrine of exhaustion of administrative remedies is inflexible and may be
disregarded in certain instances, the Court finds, however, that the instant case does not fall
under any of the exceptions.
Republic Act No. 3931, An Act Creating the National Water and Air Pollution Control
Commission, was passed on June 18, 1964 to maintain reasonable standards of purity for the
waters and air of the country with their utilization for domestic, agricultural, industrial and other
legitimate purposes. It created the NPCC which had the power, to issue, renew, or deny permits,
for the prevention and abatement of pollution.
In 1976, Presidential Decree No. 984 was enacted to strengthen the NPCC giving it,
among others, the following:
Sec. 6. Powers and Functions . . .
...
(e) Issue orders or decisions to compel compliance with the provisions of this
Decree and its implementing rules and regulations only after proper notice and
hearing.
(f)
Make, alter or modify orders requiring the discontinuance of pollution
specifying the conditions and the time within which such discontinuance must be
accomplished.
(g) Issue, renew, or deny permits, under such conditions as it may determine to
be reasonable, for the prevention and abatement of pollution, for the discharge of
sewage, industrial waste, or for the installation or operation of sewage works and
industrial disposal system or parts thereof
(j)
serve as arbitrator for the determination of reparations, or restitution of the
damages and losses resulting from pollution.
P.D. No. 984 also empowered the commission to issue ex parte orders directing the
discontinuance or temporary suspension or cessation of operation of an establishment or person
generating sewage or wastes without the necessity of prior public hearing whenever it finds
a prima facie evidence that the discharged sewage or wastes are of immediate threat to life,
public health, safety or welfare, or to animal or plant life, or exceed the allowable standards set
by the commission.

In 1987, Executive Order No. 192 was passed, reorganizing the DENR. It transferred the
power of the NPCC to the Environmental Management Bureau and created the PAB, under the
Office of the Secretary, which assumed the powers and functions of the NPCC with respect to the
adjudication of pollution cases under R.A. No. 3931 and P.D. No. 984.
In Pollution Adjudication Board vs. Court of Appeals, G.R. No. 93891, March 11, 1991,
the Court stated that the PAB is the very agency of the government with the task of determining
whether the effluents of a particular industrial establishment comply with or violate applicable
anti-pollution statutory and regulatory provisions. It also recognized its power to issue, ex parte,
cease and desist orders.
In Laguna Lake Development Authority vs. Court of Appeals, G.R. No. 110120, March
16, 1994 the Court also pronounced that:
The matter of determining whether there is pollution of the environment that
requires control, if not prohibition, of the operation of a business establishment is
essentially addressed to the Environmental Management Bureau (EMB) of the
DENR which, by virtue of Section 16 of Executive Order No. 192, series of 1987
has assumed the powers and functions of the defunct National Pollution Control
Commission created under Republic Act No. 3931. Under said Executive Order,
a Pollution Adjudication Board (PAB) under the Office of the DENR Secretary
now assumes the powers and functions of the National Pollution Control
Commission with respect to adjudication of pollution cases.
As a general rule, the adjudication of pollution cases generally pertains to the
Pollution Adjudication Board (PAB), except in cases where the special law
provides for another forum.
Clearly, the claim of petitioners that their immediate recourse to the regular courts is
justified because the DENR is powerless to grant them proper relief is without basis.

CASE: REPUBLIC OF THE PHILIPPINES represented by the POLLUTION

ADJUDICATION BOARD (DENR) v. MARCOPPER MINING CORPORATION (G.R.
No. 137174)
DATE: 10 July 2000
PONENTE: J. Gonzaga-Reyes
FACTS

Marcopper Mining Corporation (MMC) was issued a temporary permit to operate a

tailings sea disposal system for 31 October 1985 to 21 October 1986.
Prior to expiration, MMC filed an application for renewal before the National Pollution
Control Commission (NPCC).
Certain religious groups have protested MMCs tailings sea disposal system.
On 20 September 1986, MMC received a telegraphic order from NPCC directing it to
immediately cease and desist from discharging mine tailings into Calancan Bay.
MMC requested NPCC to refrain from implementing the directive. It was granted.
A conference was called to discuss possible alternative disposal systems. Subsequently,
an Environmental Technical Committee was created to study the feasibility of various
tailings disposal systems.
A new temporary permit was issued on 11 November 1986, to expire on 10 February
1987, with the condition that the tailings disposal system shall be transferred to San
Antonio Pond within 2 months from the date of the permit.
MMC moved for the deletion of the condition stating that it needed to develop and mine
the ore deposits underneath the San Antonio pond for it to continue its mining operations.
In a letter-manifestation dated 5 February 1987, MMC requested NPCC for an extension
of its temporary permit to operate and the indefinite suspension of the condition until
such time the NPCC shall have finally resolved the NPCC case entitled Msgr. Rolly
Oliverio, et.al. v. MMC.
In the meantime, NPCC was abolished by Executive Order No. 192 dated 10 June 1987,
and its powers and functions were integrated into the Environmental Management Bureau
(EMB) and into the Pollution Adjudication Board (PAB).
On 11 April 1988, the DENR Secretary, in his capacity as Chairman of the PAB, issued
an Order directing MMC to cease and desist from discharging mine tailings into Calancan
Bay considering that the temporary permit to operate issued to the latter had expired on
10 February 1987. Moreover, NPCC Rules provides that in no case can a permit be valid
for more than one (1) year. Records show that MMC has not filed any application for
renewal thereafter.
On 15 April 1988, the DENR Undersecretary for Environment and Research issued a
telegraphic order enjoining immediate compliance by MMC on the cease and desist
order.
MMC appealed to the Office of the President (OP) which initially denied its requests for
issuance of restraining orders against PAB but partially granted the same upon MMCs
motion for reconsideration in an Order dated 13 May 1988, the OP thus:
- enjoined the enforcement of the cease and desist order pending resolution of appeal;

directed that the status quo prior to the issuance of the order be maintained until
further orders from the Office; and
- directed MMC to immediately undertake, at a cost not less than Php 30,000.00 a day,
the building of artificial reefs and planting of sea grass, mangroves and vegetation on
the causeway of Calancan Bay under the supervision of PAB and subject to such
guidelines as the Board may impose.
In line with the OP directive, the Calancan Bay Rehabilitation Project was created. MMC
remitted Php 30,000.00 a day, starting from 13 May 1988 to the Ecology Trust Fund
(ETF).
On 30 June 1991, MMC stopped discharging its tailings in the Bay. Hence, it likewise
ceased from making further deposits to the ETF.
From the issuance of the OP Order, MMC made its contribution in the total amount of
Php 32,975,000.00. The latter filed a motion manifesting that it would discontinue its
contributions/deposits to the ETF and prays that the OP Order be lifted.
On 5 February 1993, the OP rendered a decision dismissing the appeal; affirming the
cease and desist order issued by PAB; and lifting the TRO dated 13 May 1988.
In a letter dated 22 January 1997, Municipal Mayor Wilfredo A. Red of Sta.Cruz,
Marinduque informed the PAB that MMC stopped remitting the amount of Php 30,000.00
as of 1 July 1991. This letter-complaint was docketed as DENR-PAB Case No. 04-0059796 for violation of P.D. 984 and its Implementing Rules and Regulations.
In an Order dated 23 April 1997, PAB ruled that the obligation of MMC to deposit to
the ETF subsists during the efficacy of the OP Order restraining PAB from enforcing the
cease and desist order against MMC. The OP Order was lifted only on 5 February 1993,
the obligation of MMC to remit was likewise extinguished only on said date and not
earlier as contended by MMC i.e. from the time it ceased dumping tailings into the Bay
on 1 July 1991.
MMC, in a petition for certiorari and prohibition before the CA, assailed the 23 April
1997 PAB Order as null and void for having been issued without jurisdiction or with
grave abuse of discretion.
On 7 January 1998, the CA granted the petition and set aside the PAB Order ordering
PAB to refrain and desist from enforcing the same. It explained that:
- Prior to the passage of the Mining Act, the PAB had jurisdiction to act on pollutionrelated matters in the mining business. With the effectivity of the Mining Act and in
congruence with its Section 115 (Repealing and Amending Clause), the power to
impose measures against violations of environmental policies by mining operators is
now vested on the Mines Regional Director.
- The obligation of MMC to contribute to the ETF ceased inasmuch as the latter
discontinued dumping tailings into the Bay and the actual funds in the ETF are
sufficient to rehabilitate the Bay.
The motion for reconsideration on the CA decision was denied. Hence, the present
petition.
OSG argues that:
- The Philippine Mining Act did not amend or repeal the provisions of RA 3931, as
amended by PD 984 otherwise known as the National Pollution Control Decree of
1976.

The jurisdiction of the Mines Regional Director with respect to anti-pollution laws is
limited to practices committed within the confines of a mining or quarrying
installation
PAB did not violate MMCs right to due process by the issuance of the Order dated
23 April 1988 without notice and hearing as it was simply requiring MMC to comply
with its obligations in an Order which has long become final and executory

ISSUE
WON the PAB under RA 3931 as amended by PD 984 (National Pollution Control
Decree of 1976) has been divested of its authority to try and hear pollution cases connected with
mining operations by virtue of the subsequent enactment of RA 7942 (Philippine Mining Act of
1995)
RULING
No. The provisions of RA 7942 do not necessarily repeal RA 3931, as amended by PD
984 and EO 192. RA 7942 does not contain any provision which categorically and expressly
repeals the provisions of the Pollution Control law. Neither could there be an implied repeal. It is
well-settled that repeals of laws by implication are not favoured and that courts must generally
assume their congruent application.
Section 19 of EO 192 vested the PAB with the specific power to adjudicate pollution
cases in general. Sec. 2, par. (a) of PD 984 defines the term pollution as referring to any
alteration of the physical, chemical and biological properties of any water, air and/or land
resources of the Philippines, or any discharge thereto of any liquid, gaseous or solid wastes as
will or is likely to create or to render such water, air and land resources harmful, detrimental or
injurious to public health, safety or welfare or which will adversely affect their utilization for
domestic, commercial, industrial, agricultural, recreational or other legitimate purposes.
On the other hand, the authority of the mines regional director is complementary to that
of the PAB. Section 66 of RA 7942 gives the mines regional director exclusive jurisdiction over
the safety inspection of all installations, surface or underground in mining operations. Section 67
thereof vests upon the regional director power to issue orders requiring a contractor to remedy
any practice connected with mining or quarrying operations which is not in accordance with
safety and anti-pollution laws and regulations; and to summarily suspend mining or quarrying
operations in case of imminent danger to life or property. The law likewise requires every
contractor to undertake an environmental protection and enhancement program which shall be
incorporated in the work program which the contractor shall submit as an accompanying
document to the application for a mineral agreement or permit. In addition, an environmental
clearance certificate is required based on an environment impact assessment. The law also
requires contractors and permittees to rehabilitate the mined-out areas, and set up a mine
rehabilitation fund. Significantly, the law allows and encourages peoples organizations and nongovernmental organizations to participate in ensuring that contractors/permittees shall observe all
the requirements of environmental protection.

From the foregoing, it readily appears that the power of the mines regional director does
not foreclose PABs authority to determine and act on complaints filed before it. The power
granted to the mines regional director to issue orders requiring the contractor to remedy any
practice connected with mining or quarrying operations or to summarily suspend the same in
cases of violation of pollution laws is for purposes of effectively regulating and monitoring
activities within mining operations and installations pursuant to the environmental protection and
enhancement program undertaken by contractors and permittees in procuring their mining
permit. While the mines regional director has express administrative and regulatory powers over
mining operations and installations, it has no adjudicative powers over complaints for violation
of pollution control statutes and regulations.

CASE: AC ENTERPRISES, INC v. FRABELLE PROPERTIES CORPORATION (G.R.

No. 166744)
DATE: 2 November 2006
PONENTE: J. Callejo, Sr.
FACTS

AC Enterprises, Inc (ACEI) owns a 10-storey Feliza Building in Herrera Street, Legaspi
Village, Makati City. The building was subdivided into commercial/office units which
were leased to private persons and entities. There are 36 blowers from 18 air-cooled type
airconditioning units in the building, 4 blowers on each floor, from the 2 nd to the 10th
floors.
Frabelle Properties Corporation (FPC) is the developer of Frabella I Condominium, a 29storey commercial/residential condominium at Rada Street, Legaspi Village, Makati City.
Since the Rada and Herrera Streets lie parallel to each other, the exhaust of the blowers
from the airconditioning units at the Feliza Building were directed towards the rear of
Frabella I.
On 11 April 1995, FPC wrote to ACEI demanding the abatement of the daily continuous,
intense and unbearable noise and the hot air blast coming from the 36 blowers of the
Feliza Building. The latter rejected the demand.
On 29 June 1995, FPC requested the DENR-EMB NCR to test the 36 blowers of the
Feliza Building. Three (3) tests were conducted on different dates bearing the same result
i.e. the noise generated by the blowers is beyond the legal allowable level under Section
78(b) of the Presidential Decree NO. 984, as amended.
ACEI, despite several demands, refused to act on the matter.
FPC then filed a complaint against ACEI before the Pollution Adjudication Board for the
abatement of noise and/or air pollution and damages with a plea for injunctive relief. FPC
prayed that the intolerable noise, hot air and vibration generated by the Feliza Building
blowers be declared as a noise and/or air pollution and that the same be abated and the
establishment closed.
While the case was pending, FPC coordinated with Dr. Maria Leonor Soledad, City
Health Officer of Makati City, and Makati City Mayor Jejomar Binay requesting
intervention and nonrewal/cancellation of Mayors License and Business Permits in
favour of Feliza Building, respectively.
Engr. Nelson Morales, the City Building Official, requested EMB on 30 April 2002 to
conduct investigation relative to the noise of the airconditioning units.
The Report from the EMB panel who conducted the tests stated that other factors
contribute to the noise e.g. passing vehicles and blowers of nearby buildings. It was also
stated therein that DENR Administrative Order No. 30 devolved the functions of the
DENR on the abatement of noise nuisance to the LGU.
Despite endorsement to the LGU, Engr. Morales referred the matter back to EMB.
Upon request of FPC, SPL measurements were conducted by the EMB anew. The latter
stated that the noise need not be high or low to annoy or cause nuisance to the receptor,
for as long as the complainant is disturbed with the level of sound coming from the firm,
it was considered a nuisance.

On 1 July 2003, FPC filed a complaint for the abatement of nuisance with damages with
prayer for the issuance of a writ of preliminary and permanent injunction before the RTC
Malabon City against ACEI.
ACEI moved for the dismissal of the complaint on the following grounds:
- Lack of jurisdiction of the court over the subject matter of the complaint since the
Makati City Government had jurisdiction pursuant to RA 7160 and DENR
Administrative Order No. 30, issued on 30 June 1992;
- The complaint does not state a cause of action because FPC failed to allege any right
which it was obliged to respect; and
- The action is barred by res judicata, litis pendentia, and forum shopping because of
the pending action before PAB.
Before the RTC could resolve the motion to dismiss, PAB resolved to dismiss the
complaint of FPC noting that the case is more of a nuisance over the LGUs have the
power to abate.
The RTC denied ACEIs motion to dismiss as well as its subsequent MR.
ACEI filed a petition for certiorari before the CA but the same was likewise denied.
Hence, the present petition for review on certiorari, praying for the reversal of the CA
decision. ACEI maintains the following:
- RTC has no jurisdiction over the case but the City of Makati as the power to abate
nuisances and control noise pollution has been devolved to the latter pursuant to RA
7160
- The doctrine of primary jurisdiction and the doctrine of exhaustion of administrative
remedies are both applicable
- The complaint is barred by litis pendentia, res judicata and forum shopping
- There is a failure to state a cause of action

ISSUE
1. WON the RTC has jurisdiction over the case
2. WON the PAB has the primary jurisdiction
3. WON the complaint filed by FPC is barred by litis pendentia, res judicata and forum
shopping
4. WON there is failure to state a cause of action
RULING
1. Yes. The petition is one for the judicial abatement of a private nuisance, more specifically the
noise generated by the blowers of the airconditioning system of the Feliza Building owned by
ACEI, with a plea for a writ of preliminary and permanent injunction, plus damages. FPCs
action is incapable of pecuniary estimation because the basic issue is something other than
the right to recover a sum of money. Although FPC prayed for judgment for temperate or
moderate damages and exemplary damages, such claims are merely incidental to or as a
consequence of, the principal relief sought by FPC. An action incapable of pecuniary
estimation is within the exclusive jurisdiction of the RTC under BP 129, as amended by RA
7691.

2. No. The PAB has no primary jurisdiction over the noise complained of FPC. The resolution
of the issue before the RTC, which is whether the noise complained of is actionable nuisance,
does not require any special technical knowledge, expertise and experience of the PAB or
even Makati City requiring the determination of technical and intricate matters of fact.
Indeed, the PAB dismissed the complaint of FPC declaring that, based on the pleadings
before it and the evidence of the parties, the case is more of an abatement of nuisance under
the New Civil Code and DENR Order No. 30, series of 1992. It declared that it was not a
pollution case.
The Court, however, agrees with ACEIs contention that, under Section 447(a)(3)(i) of
RA 7160, the Sangguniang Panglungsod is empowered to enact ordinances declaring,
preventing or abating noise and other forms of nuisance. It bears stressing, however, that the
Sangguniang Bayan cannot declare a particular thins as a nuisance per se and order its
condemnation. It does not have the power to find, as a fact, that a particular thing is a
nuisance when such thing is not a nuisance which in its nature, situation or use is not such.
Those things must be determined and resolved in the ordinary course of law.
What were devolved by the DENR to the LGUs under DENR Administrative Order No.
30, series of 1992, in relation to RA 7160, were the regulatory functions/duties of the
National Pollution Control Commission (NPCC) which were absorbed and integrated by the
EMB, as provided in Title No. XIV, Chapter 2, Section 17 of the 1987 Administrative Code.
However, the DENR exercises administrative supervision and control over the LGUs.
Enumerated in Chapter IV, Article 1, Section 74 to 79 of the Rules and Regulations
promulgated by the NPCC implementing PD 984 are the regulations relative to noise control,
specifically, the noise quality standards.
3. No. ACEIs contention that the action of FPC was barred by the decision of PAB which
ruled that the latters action was for abatement of a nuisance which was already devolved to
the local government was barren of merit.
As gleaned from the PAB Resolution, the dismissal was without prejudice. Since the PAB
had no jurisdiction over the complaint and the dismissal was without prejudice, FPCs action
before the RTC was not barred by res judicata or litis pendentia. The decision of the PAB was
not a decision on the merits of the case. Consequently, the contention of ACEI that FPC is
guilty of forum shopping has no factual basis.
4. No. The fundamental test for failure to state a cause of action is whether, admitting the
veracity of what appears on the face and within the four corners of the complaint, plaintiff is
entitled to the relief prayed for. Stated otherwise, may the court render a valid judgment upon
the facts alleged therein? Indeed, the inquiry is into the sufficiency, not the veracity of the
material allegations. If the allegations in the complaint furnish sufficient basis on which it
can be maintained, it should not be dismissed regardless of the defences that may be
presented by defendants.
By filing a motion to dismiss the complaint on the ground that the complaint does not
state a sufficient cause of action for abatement of nuisance and damages, ACEI

hypothetically admitted the material allegations of the complaint. A plain reading of the
material averments therein and its appendages will readily show that FPC had a cause of
action for abatement of a private nuisance and for damages.