Case Summary (G.R. No. 195003)
RTC Proceedings and Findings
PSPC sued, joined by SPEX, JG Summit and First Gas Power, challenging the ordinance as:
• An invalid exercise of municipal police power;
• A usurpation of the National Water Resources Board’s (NWRB) exclusive regulatory authority under the Water Code;
• Lacking factual and technical basis;
• Violative of due process (no publication, hearing, or provincial referral).
The Regional Trial Court credited hydrogeology studies showing no depletion or saltwater intrusion in the local aquifer, found that the city failed to consult the NWRB, and held that summary cease-and-desist orders violated due process. It declared the ordinance entirely invalid.
Court of Appeals Proceedings
Separate appeals consolidated into two CA divisions affirmed the RTC:
• Ordinance contradicted the Water Code by regulating groundwater—a national concern under NWRB’s control;
• The city failed to demonstrate reasonable necessity or factual basis for compelling desalination plant installation;
• Police power must be exercised reasonably, without arbitrary invasion of private rights.
The CA dismissed the petitions for lack of merit and denied motions for reconsideration.
Issue before the Supreme Court
Whether the CA erred in affirming the invalidation of Batangas City Ordinance No. 3, s. 2001.
Supreme Court Ruling
The petition is denied. The CA’s decision and resolution are affirmed.
Analysis of Local Police Power and Ultra Vires Action
• Local governments exercise delegated police power under Section 16, LGC, but must conform with national statutes and the Constitution.
• The Water Code vests control and regulation of water resources exclusively in the NWRB; water permits are granted, modified, or revoked only by that body.
• Batangas City’s ordinance usurped NWRB authority by prohibiting groundwater use and mandating desalination without permits—an ultra vires act.
Requirement of Factual Basis for Ordinance Validity
• A valid police measure requires a reasonable relation bet
Case Syllabus (G.R. No. 195003)
Parties and Representation
- Petitioner: City of Batangas, through City Mayor Severina Vilma Abaya
- Respondents: Philippine Shell Petroleum Corporation (PSPC) and Shell Philippines Exploration, B.V. (SPEX)
- Lower court judges and justices involved: Presiding Judge Paterno V. Tac-an (RTC Branch 84); CA Fourth Division (Justices Reyes, Peralta, Bruselas); CA Tenth Division (Justices Carandang, Garcia, Barrios)
Nature of the Case
- Petition for review on certiorari under Rule 45, Rules of Court
- Challenge to the Court of Appeals Decision (May 25, 2010) and Resolution (Dec. 30, 2010) affirming RTC’s invalidation of City Ordinance No. 3, s. 2001
- Central legal question: validity of a city ordinance requiring heavy industries to install desalination plants and prohibiting reliance on fresh groundwater
Relevant Legal Framework
- Local Government Code (LGC) Section 16 (general welfare clause) and Section 56 (referral of ordinances)
- Water Code of the Philippines (PD 1067), assigning regulation of water resources to the National Water Resources Board (NWRB)
- Police power of LGUs as agents of the State, subject to national law
Factual Background
- Batangas City created by RA 5495; enjoys corporate powers of a municipal corporation
- PSPC operates the Tabangao Refinery; SPEX holds Service Contract No. 38 and developed the Malampaya natural gas project with a pipeline to Batangas
- Concerns over depletion of aquifers along Batangas Bay led to enactment of Ordinance No. 3, s. 2001
Provisions of the Assailed Ordinance
- Section 3: Mandatory desalination plants for new heavy industries; denial of permit without it
- Section 4: Five-year grace period for existing industries to install desalination plants
- Section 5: Exemptions by Mayor and Sangguniang Panlungsod, conditional on studies and public hearing
- Section 7–9: Penal fines, imprisonment