Title
Paje vs. Casino
Case
G.R. No. 207257
Decision Date
Feb 3, 2015
A coal-fired power plant project in Subic Bay faced opposition from local officials and environmental advocates, challenging ECC amendments, LGC and IPRA compliance, and environmental standards. The Supreme Court upheld the project, ruling it complied with laws and lacked evidence of environmental harm.
power company
environmental damage
health risks

Case Summary (G.R. No. 207257)

Factual Background

The dispute arose from plans to construct and operate a coal-fired power plant in the Subic Bay Freeport Zone. SBMA and Taiwan Cogeneration Corporation first executed memoranda of understanding in 2006 identifying Sitio Naglatore, Mt. Redondo as the project site. The DENR Ecology Center issued an Environmental Compliance Certificate (ECC) to a proponent in December 2008. The original proponent assigned its rights to Redondo Peninsula Energy, Inc. (RP Energy), which later contracted consultants to prepare an Environmental Impact Statement (EIS) and sought amendments to the ECC as project design changed. RP Energy executed a Lease and Development Agreement with SBMA on June 8, 2010 and applied for successive amendments to the ECC reflecting added components and configuration changes. Local governments and other stakeholders adopted resolutions opposing the project. Petitioners collectively filed a Petition for a Writ of kalikasan challenging the ECC, its amendments and the LDA.

Procedural History

This Court initially issued the writ and referred the matter to the Court of Appeals for hearing and reception of evidence. The case was docketed in the Court of Appeals as CA‑G.R. SP No. 00015 and tried before its Fifteenth Division. On January 30, 2013 the Court of Appeals denied the privilege of the writ but invalidated the original ECC and its first and second amendments and annulled the LDA for specified statutory infractions. The Court of Appeals denied motions for reconsideration by its May 22, 2013 Resolution. The DENR, SBMA and RP Energy separately appealed to this Court under Section 16, Rule 7, and the appeals were consolidated for En Banc resolution.

Issues Presented to the Supreme Court

The Supreme Court identified and resolved, among others, these principal issues: whether the Casino Group proved that construction and operation of the power plant would cause grave environmental damage sufficient to warrant the Writ of kalikasan; whether an ECC lacking the proponent’s signature in its Statement of Accountability is invalid; whether the first and second ECC amendments were void for failure to require a new Environmental Impact Assessment (EIA); whether a Certificate of Non‑Overlap (CNO) under Section 59 of the IPRA Law is a precondition to issuance of an ECC and to consummation of the LDA; whether Sections 26 and 27 of the Local Government Code were contravened and whether those requirements applied despite RA 7227 and SBMA authority; and whether the third amendment could be adjudicated in the proceedings.

Nature and Scope of the Writ of kalikasan

The Court explained that the Writ of kalikasan is an extraordinary, equitable special civil action aimed at preventing or redressing actual or threatened violations of the constitutional right to a balanced and healthful ecology that involve environmental damage of such magnitude as to prejudice life, health or property in two or more cities or provinces. The requisites are: an actual or threatened violation of the constitutional right; an unlawful act or omission by public or private actors; and environmental damage of the territorial magnitude specified in Rule 7. The reliefs available under Section 15, Rule 7 are broad, non‑exclusive and include cease and desist orders, orders to protect or restore the environment, monitoring commands and such other reliefs related to environmental protection.

Threshold Rule on Challenging an ECC in a Writ of kalikasan Proceeding

The Court ruled that challenges to the validity of an ECC may be raised in a Writ of kalikasan action only with qualifications. A petitioner who attacks an ECC in that extraordinary proceeding must allege and prove both the defects in the ECC and a causal or reasonable connection between those defects and an actual or threatened environmental violation of the magnitude contemplated under the Rules. Absent such a connection, the writ is not the appropriate forum and the doctrine of exhaustion of administrative remedies ordinarily applies. The Court gave a concrete example where fraud in obtaining an ECC could justify the writ without prior administrative exhaustion. The Court, however, found the present case an exception to exhaustion because of the national urgency posed by a looming power crisis and chose to examine the issues on their merits.

Evidence Presented at Trial

The Casino Group presented three lay witnesses who disavowed technical expertise on coal combustion technology and environmental modeling. They relied largely on documentary materials and a Final Report from SBMA social acceptability consultations, which included statements attributed to several experts who did not testify. RP Energy presented five witnesses including engineers and environmental experts who testified to technical studies, to the operation and emissions profile of Circulating Fluidized Bed (CFB) coal technology, and to environmental modeling. SBMA offered testimony through a legal manager. The DENR offered no testimonial evidence. RP Energy submitted an EIS, an Environmental Performance Report and Management Plan (EPRMP) and a Project Description Report (PDR) in support of its amendment applications. A CNO was issued October 31, 2012 and the DENR‑EMB granted a third ECC amendment on November 15, 2012.

Court of Appeals Decision

The Court of Appeals denied the writ of kalikasan for failure of proof concerning an actual or threatened environmental violation, but it invalidated the original ECC (Dec. 22, 2008), the first amendment (July 8, 2010) and the second amendment (May 26, 2011), and it set aside the LDA. The appellate court held that Section 8.3 of DAO 2003-30 was not ultra vires but ruled collateral attack inappropriate. The Court of Appeals nevertheless concluded that the ECC and the first two amendments contravened Section 59 of the IPRA Law and Sections 26 and 27 of the LGC, and it found a material defect in a missing signature on the Statement of Accountability. The CA reserved judgment on the third amendment as not in issue at pretrial.

Parties’ Principal Contentions before the Supreme Court

The Casino Group reiterated claims of specific environmental harms from thermal discharge, air and water pollution, and acid deposition, and it argued for invalidation of the ECCs and the LDA for statutory noncompliance including lack of sanggunian approval and absence of a prior CNO. The DENR and SBMA defended the DENR’s procedures and the LDA, contending that the ECC and amendments were issued in accordance with DAO 2003‑30 and the Revised Manual, that an updated EIS was not necessary for the amendments in the circumstances, and that an ECC is a compliance certificate and not a license requiring prior CNO under Section 59. RP Energy likewise defended its technical submissions, the EPRMP and PDR, and raised non‑exhaustion and procedural objections.

Supreme Court’s Evaluation of the Environmental Substantive Claims

The Supreme Court affirmed the Court of Appeals on the central factual point that the Casino Group failed to prove the alleged grave environmental damage. The Court agreed with the CA that the Casino Group’s witnesses were not experts and that the documents they relied upon were largely hearsay and unsworn expert testimony. In contrast, RP Energy produced detailed expert testimony and modeling on thermal plume, air dispersion and mitigation measures. The Court accepted expert evidence that predicted thermal rises within regulatory limits, that air emissions under normal and upset conditions would be within applicable standards, and that mitigation and management measures were specified in the project’s Environmental Management Plan (EMP). The Court held that petitioners did not meet their burden to establish environmental injury of the magnitude required for the writ.

Ruling on the Signature in the Statement of Accountability

The Court addressed the Court of Appeals ruling that the ECC was invalid because a copy filed lacked the signature of RP Energy’s director on the Statement of Accountability. The Supreme Court recognized that the proponent’s signature on the Statement of Accountability is material to the ECC’s purpose. The Court nevertheless reversed the CA and found that, under the particular circumstances, substantial compliance was shown pro hac vice. The Court noted procedural unfairness because the matter was not an issue framed at pretrial and the parties were not apprised that the signature defect would be decisive. RP Energy later produced a certified true copy of the ECC on file with the DENR‑EMB bearing the signature dated December 24, 2008. The Court found no proof of bad faith or inexcusable negligence. It admonished the DENR to adhere strictly to its procedures but held that the signature requirement had been substantially complied with.

Ruling on the First and Second ECC Amendments (EPRMP and PDR)

The Supreme Court held that the Court of Appeals erred in invalidating the first and second ECC amendments for lack of a new EIA. The Court reviewed DAO 2003‑30 and the Revised Manual and found that the amendment provisions allow flexible documentary requirements tailored to the nature of the amendment. The DENR‑EMB’s determination that the first amendment was a major amendment and that an EPRMP was the appropriate EIA document type was entitled to deference. Likewise the DENR‑EMB permissibly treated the second amendment as minor and required a PDR. The Court explained that the EIA is a process and that an EPRMP or a PDR may constitute the documentary basis for conducting a new EIA of the modified project. The Court concluded that the DENR reasonably exercised its discretion and that no grave abuse of discretion or patent illegality had been shown.

Ruling on the CNO Requirement under Section 59 of the IPRA Law as to the ECC

The Court ruled that Section 59 of the IPRA Law, which requires a CNO certifying that a proposed concession, license or lease does not overlap ancestral domain,

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