Republic v. Dela Merced & Sons
REITERATIONFacts
The Antecedents: The Environmental Management Bureau-National Capital Region (EMB-NCR) inspected the Guadalupe Commercial Complex, owned by N. Dela Merced & Sons, Inc. (Dela Merced & Sons), and found violations of Republic Act No. (R.A.) 9275 (The Clean Water Act of 2004) and DENR Administrative Order No. 2004-26. Specifically, Dela Merced & Sons operated air pollution source installations without a permit and discharged regulated water pollutants without a discharge permit. Subsequent inspections revealed that effluent samples failed to conform to DENR Effluent Standards. Consequently, a cease and desist order (CDO) was issued, and later partially executed by sealing kitchen sinks. Dela Merced & Sons filed a motion for reconsideration and submitted required documents, leading to the issuance of a Temporary Lifting Order (TLO). An EMB-NCR inspection confirmed that the effluent conformed to DENR Effluent Standards. The DENR-Pollution Adjudication Board (PAB) then issued a notice of technical conference for the imposition of fines, proposing ₱3.98 million for 398 days of violation. Procedural History: The DENR-PAB, following the recommendation of its Committee on Fines, issued an Order dated 13 November 2008 imposing a fine of ₱3.98 million on Dela Merced & Sons. A motion for reconsideration was denied. Aggrieved, Dela Merced & Sons filed a Petition for Review with the Court of Appeals (CA), assailing the DENR-PAB orders. The CA denied the prayer for a TRO and/or injunction but reduced the fine to ₱2.63 million, citing unreasonable delay by EMB-NCR in conducting effluent sampling. Both parties filed their respective motions for reconsideration, which were denied. This led to the consolidated Petitions for Review on Certiorari before the Supreme Court. The Petition: The Republic of the Philippines, represented by the DENR-PAB, filed a petition contesting the CA's reduction of the fine. Dela Merced & Sons filed its own petition questioning the imposed fine and the constitutionality of Section 28 of R.A. 9275 for being excessive.
Issue(s)
Whether Dela Merced & Sons was denied due process. Whether the issuance of a Certificate of Non-Coverage (CNC) exempts Dela Merced & Sons from compliance with R.A. 9275. Whether Section 28 of R.A. 9275 on the imposition of fines is unconstitutional for being excessive under Section 19(1), Article III of the Constitution. Whether the amount of the fine imposed was correct.
Ruling
The Supreme Court granted the petition of the Republic of the Philippines (G.R. No. 201501) and denied the petition of Dela Merced & Sons, Inc. (G.R. No. 201658). The Court affirmed the DENR-PAB's Order imposing a fine of ₱3,980,000.00 on Dela Merced & Sons, Inc., modifying the Court of Appeals' decision by reinstating the original fine amount.
Ratio Decidendi
On the issue of due process: The Court held that Dela Merced & Sons was not denied due process. The records showed that the company participated in all stages of the administrative proceedings, was given opportunities to comply with requirements, requested and was granted extensions, and was invited to a technical conference where it submitted a position paper. The Court reiterated that administrative due process does not always require a trial-type hearing and that resolving a case based on position papers and documentary evidence is not legally objectionable. Furthermore, any procedural defect was deemed cured by the company's motion for reconsideration. On the issue of exemption from compliance due to CNC: The Court ruled that a Certificate of Non-Coverage (CNC) only exempts a project from the Environmental Impact Statement (EIS) System and does not exempt the entity from complying with other environmental laws, such as the Clean Water Act. The CNC signifies that the project is not environmentally critical and thus not covered by the EIS System, but Section 5 of P.D. No. 1586 explicitly states that environmentally non-critical projects are still expected to provide additional environmental safeguards as deemed necessary. Therefore, Dela Merced & Sons remained bound by the Clean Water Act despite possessing a CNC. On the constitutionality of Section 28 of R.A. 9275: The Court found that Dela Merced & Sons' attempt to assail the constitutionality of Section 28 of R.A. 9275 constituted a collateral attack, which is contrary to the rule that such issues must be raised directly. Moreover, the issue of constitutionality was not the lis mota (the very motive or essential reason for the litigation) of the case, as the case could be resolved on other grounds. Therefore, the presumption of constitutionality of Section 28 of R.A. 9275 stands. On whether the amount of the fine imposed was correct: The Court found that the Court of Appeals erred in reducing the fine. The DENR-PAB's computation of ₱3.98 million for 398 days (October 12, 2006, to November 13, 2007) was upheld. The CA's reduction to ₱2.63 million, based on the issuance of the TLO on July 3, 2007, was deemed improper. The Court explained that the TLO did not signify compliance but merely a provisional lifting of the CDO pending submission of documents. The sampling conducted on November 14, 2007, was within the 150-day timeframe provided in the TLO, and Dela Merced & Sons only formally informed the PAB of the permanent facility's completion on November 26, 2007. Therefore, the period of violation should extend until November 13, 2007, as determined by the DENR-PAB. Even if the constitutional issue were properly raised, the Court found the fine not to be excessive. The prohibition against excessive fines under Article III, Section 19(1) of the Constitution applies only to criminal prosecutions, not to administrative proceedings like this one. The fine imposed under R.A. 9275 is not a criminal penalty. Furthermore, the Court clarified that for a penalty to be considered unconstitutional, it must be flagrantly and plainly oppressive or so disproportionate as to shock the moral sense of reasonable persons. The allegations of Dela Merced & Sons that the fine was "exorbitant" and "unconscionable" were unsubstantiated. The Court also noted that the daily rate of ₱10,000.00 is the minimum imposable amount under the law, and the legislature's intent in increasing fines was to protect and conserve water resources.
Main Doctrine
A Certificate of Non-Coverage (CNC) under Presidential Decree No. 1586 exempts a project from the Environmental Impact Statement (EIS) System but does not exempt it from complying with other environmental laws, such as the Clean Water Act. Furthermore, the imposition of fines under administrative proceedings for environmental violations does not constitute a criminal penalty and is therefore not subject to the constitutional prohibition against excessive fines, provided the fines are not flagrantly and plainly oppressive or disproportionate to the offense.