G.R. No. 201501 - Republic vs. N. Dela Merced and Sons, Inc.

The Guadalupe Commercial Complex, owned and operated by N. Dela Merced & Sons, Inc. (“Dela Merced”), is a riverside building housing a wet market, kitchenettes, and a generator set.
The Pollution Adjudication Board (DENR-PAB), under the Department of Environment and Natural Resources (DENR), oversees compliance with the Clean Water Act (R.A. 9275) and related regulations.

On 13 July 2006, the EMB-NCR inspected the complex and found unpermitted air pollution sources and unpermitted discharge of water pollutants. A Notice of Violation (NOV) was issued on 28 August 2006.
After an extension request, a follow-up inspection on 11 October 2006 revealed effluent non-compliance with DENR standards. On 6 February 2007, the DENR Secretary issued a Cease and Desist Order (CDO), denying any Temporary Lifting Order (TLO) until compliance documents were submitted.
On 30 March 2007, the EMB partially executed the CDO by sealing kitchen sinks. On 3 April 2007, Dela Merced filed a Motion for Reconsideration and submitted the required pollution control program, bond, interim measures, accredited Pollution Control Officer proof, and a presidential undertaking.
A TLO was issued on 3 July 2007. A Certificate of Non-Coverage (CNC) under P.D. 1586 was granted on 9 August 2007, exempting the complex only from the EIS requirement.
Effluent sampling on 14 November 2007 passed DENR standards. The DENR-PAB then convened a technical conference, computed P3.98 million in fines (P10,000 per day for 398 days of violation from 12 October 2006 to 13 November 2007), and issued an Order on 13 November 2008 imposing the fine. A Motion for Reconsideration was denied on 30 January 2009.

Dela Merced filed a Rule 43 petition with the Court of Appeals (CA), seeking injunctions and questioning due process, constitutionality of fines, and exemption under the CNC. The CA denied injunctive relief on 1 March 2010.
On 30 June 2011, the CA affirmed the DENR-PAB’s orders but reduced the fine to P2.63 million—capping the violation period at 263 days (10/12/06–7/3/07) due to an alleged “unreasonable delay” by EMB-NCR. Motions for reconsideration were denied on 18 April 2012.
Two consolidated Rule 45 petitions to the Supreme Court followed: G.R. No. 201501 (DENR-PAB challenging the reduced fine) and G.R. No. 201658 (Dela Merced challenging the fine and its constitutionality).

Was Dela Merced denied due process in the administrative proceedings?
Does issuance of a CNC exempt Dela Merced from compliance with R.A. 9275?
Is Section 28 of R.A. 9275 unconstitutional under Article III, Section 19(1) of the Constitution as imposing excessive fines?
Was the amount of the fine correctly computed and imposed?