Republic Of The Philippines v. N. Dela Merced & Sons
Republic of the Philippines v. N. Dela Merced & Sons, Inc., G.R. No. 201501 & N. Dela Merced & Sons, Inc. v. Republic of the Philippines, G.R. No. 201658, January 22, 2018
- Procedural (Remedial Law)
- Civil Law
- Political Law
- Clean Water Act
- R.A. 9275
- DENR-PAB
- environmental administrative enforcement
- cease and desist order
- temporary lifting order
- Certificate of Non-Coverage
- effluent sampling
- administrative fines
- due process
- collateral attack
- excessive fines
I. Facts of the Case
N. Dela Merced & Sons, Inc. operated a wet market and eateries/kitchenettes in the Guadalupe Commercial Complex along the Pasig River, and the DENR EMB-NCR found that the facility discharged regulated water pollutants without the required discharge permit and failed effluent standards. After administrative proceedings under R.A. 9275, the DENR Pollution Adjudication Board imposed a fine for the period of violation, which the Court of Appeals reduced due to alleged delay in sampling; both the DENR-PAB and the company challenged the fine before the Supreme Court.
July 13, 2006
The DENR Environmental Management Bureau-National Capital Region (EMB-NCR) inspected the Guadalupe Commercial Complex and found violations relating to air pollution source operations without a permit to operate and to water pollution discharges without a discharge permit.
August 28, 2006
The EMB-NCR served a Notice of Violation (NOV) on N. Dela Merced & Sons, Inc. and granted an extension to comply with the NOV requirements.
October 11, 2006
EMB-NCR conducted another inspection and collected effluent samples to monitor compliance with R.A. 8749, R.A. 9275, and their implementing rules; laboratory results showed the effluent failed to conform to DENR effluent standards.
February 6, 2007
The DENR Secretary, based on EMB-NCR recommendation, issued a cease and desist order (CDO) against N. Dela Merced & Sons, Inc. for violation of R.A. 9275 and its IRR, with notice that no temporary lifting order (TLO) would be issued absent submission of required documents.
March 30, 2007
EMB-NCR partially executed the CDO by sealing identified wastewater sources (kitchen sinks), while the wet market and ground-floor kitchenettes were only warned.
April 3, 2007
N. Dela Merced & Sons, Inc. filed a Motion for Reconsideration (MR) of the CDO and submitted documents for issuance of a TLO.
July 3, 2007
The DENR-Pollution Adjudication Board issued the TLO in favor of N. Dela Merced & Sons, Inc.
August 9, 2007
The EMB-DENR issued a Certificate of Non-Coverage (CNC) to N. Dela Merced & Sons, Inc. pursuant to P.D. No. 1586.
November 14, 2007
Another efficient sampling was conducted; the results showed the effluent conformed to the DENR effluent standards.
November 13, 2008
The DENR-PAB issued an Order imposing an administrative fine of ₱3.98 million for the period of violation computed at ₱10,000 per day from the date of failed effluent standards up to the later compliance sampling date, after a technical conference on the fine.
January 30, 2009
The DENR-PAB denied N. Dela Merced & Sons, Inc.’s motion for reconsideration.
March 1, 2010
In the Court of Appeals, the company’s petition for review under Rule 43 and prayer for TRO/injunction were denied in a CA Resolution.
June 30, 2011
The Court of Appeals affirmed the DENR-PAB orders but reduced the fine from ₱3.98 million to ₱2.63 million, citing unreasonable delay in complying with effluent sampling.
April 18, 2012
The Court of Appeals denied both parties’ motions for reconsideration in a CA Resolution.
June 5, 2012
The DENR-PAB filed a Petition for Review on Certiorari with the Supreme Court (G.R. No. 201501) contesting the CA’s reduction of the fine.
June 8, 2012
N. Dela Merced & Sons, Inc. filed a Petition for Review on Certiorari with the Supreme Court (G.R. No. 201658) contesting the fine and raising a constitutional challenge to the statutory basis for the fine.
January 22, 2018
The Supreme Court resolved the consolidated petitions and affirmed with modification, reversing the Court of Appeals’ reduction by upholding the DENR-PAB fine based on its corrected computation and rejecting due process, CNC-exemption, and constitutional-excessive-fines challenges.
II. Issues
Whether N. Dela Merced & Sons, Inc. was denied due process in the administrative proceedings before the DENR-PAB.
Whether or not the issuance of a Certificate of Non-Coverage (CNC) means exemption from compliance with R.A. 9275.
Whether Section 28 of R.A. 9275 on the imposition of fines is unconstitutional under Section 19(1), Article III of the Constitution for being excessive.
Whether the amount of the fine imposed was correct, assuming that its imposition was proper.
III. Ruling
Whether N. Dela Merced & Sons, Inc. was denied due process in the administrative proceedings before the DENR-PAB.
The Supreme Court found that N. Dela Merced & Sons, Inc. was not denied due process in the DENR-PAB proceedings.
How the Court reasoned
- Administrative proceedings require observance of the basic right to notice and an opportunity to be heard, but do not require the same formalities as courts.
- The record of proceedings included the issuance of a NOV, opportunity to comply, issuance of orders by the DENR-PAB, and participation by the company through motions and submissions.
- The company was able to file a motion for reconsideration and to submit required documents, and the DENR-PAB conducted proceedings culminating in the imposition of the fine.
- The Supreme Court determined that the company’s participation and the procedural steps taken negated the claim that it was deprived of due process.
Rule applied
Constitution, Article III, Section 14
Whether or not the issuance of a Certificate of Non-Coverage (CNC) means exemption from compliance with R.A. 9275.
The issuance of a CNC did not exempt N. Dela Merced & Sons, Inc. from complying with R.A. 9275 and its discharge requirements.
How the Court reasoned
- A CNC issued under P.D. No. 1586 relates to the environmental impact assessment system and does not automatically negate statutory duties under the Clean Water Act.
- R.A. 9275 imposes obligations on covered facilities to obtain permits and comply with effluent standards regardless of later compliance documents such as a CNC.
- The Court treated the Clean Water Act’s command as independent and enforceable through the DENR’s regulatory and adjudicatory processes.
- Thus, even with a CNC, the company remained liable for discharge violations established by effluent sampling results during the period of non-compliance.
Rule applied
R.A. No. 9275
Whether Section 28 of R.A. 9275 on the imposition of fines is unconstitutional under Section 19(1), Article III of the Constitution for being excessive.
Section 28 of R.A. 9275 was not declared unconstitutional on the ground that the fine is excessive; the Court rejected the constitutional attack.
How the Court reasoned
- The Supreme Court treated the constitutional challenge as a collateral attack and, in any event, found that the issue was not the lis mota of the case as framed by the petitions.
- Even assuming the point could be considered, the Court examined the statutory fine provision against the constitutional standard of excessiveness.
- The fine provided by R.A. 9275 is tied to the violation period and is intended as a regulatory penalty for non-compliance with effluent standards.
- The Court concluded that the fine imposed was not excessive under the Constitution.
Rule applied
Constitution, Article III, Section 19(1)
Whether the amount of the fine imposed was correct, assuming that its imposition was proper.
The Supreme Court reversed the Court of Appeals’ reduction and upheld the DENR-PAB’s fine amount by correcting the computation of the period of violation.
How the Court reasoned
- The Court of Appeals reduced the fine due to alleged unreasonable delay in complying with the sampling requirement.
- The Supreme Court found the CA’s basis for reduction erroneous, specifically with respect to the computation of the period of violation.
- The DENR-PAB’s computation used the established timeline from the date when effluent failed standards until the later sampling date when compliance was shown.
- Accordingly, the Supreme Court reinstated the DENR-PAB’s fine as properly computed.
“We deny Dela Merced & Sons' petition, but grant that of the DENR-PAB.”
Rule applied
R.A. No. 9275, Section 28
Doctrines
A Certificate of Non-Coverage (CNC) issued pursuant to P.D. No. 1586 does not exempt a facility from compliance with the Clean Water Act (R.A. 9275) and its discharge requirements, and it does not negate liability for violations proven by effluent standards results.
In administrative enforcement under environmental statutes, the constitutional challenge to the statutory basis of fines may be treated as collateral to the principal controversy, and a fine tied to the period of violation under R.A. 9275 is not necessarily excessive under Article III, Section 19(1) of the Constitution.
Courts will uphold the DENR-PAB’s administrative fine when the computation of the violation period is supported by the dates of effluent non-compliance and later compliance sampling, and will correct computations when the appellate court’s basis for reduction is erroneous.
Final Disposition
WHEREFORE, premises considered, the Petition in G.R. No. 201501 is GRANTED, while that in G.R. No. 201658 is DENIED. The Ruling of the Court of Appeals in CA-G.R. SP. No. 107626 dated 30 June 2011 and its Resolution on 18 April 2012, are hereby AFFIRMED WITH MODIFICATION as to the amount of fine imposed.
Notes
The Supreme Court consolidated G.R. Nos. 201501 and 201658, with G.R. No. 201501 (DENR-PAB) contesting the CA reduction and G.R. No. 201658 (company) contesting liability, computation, and the constitutionality of the fine provision.