Case Summary (G.R. No. 179918)
Petitioner
Shell Philippines Exploration B.V., a private service contractor under Service Contract No. 38.
Respondents
Efren Jalos et al., coastal barangay fishermen claiming reduced fish catch and income due to pipeline-related marine habitat disruption.
Key Dates
• December 11, 1990 – Execution of Service Contract No. 38.
• 1992 – Discovery of natural gas in the Camago–Malampaya area.
• May 19, 2003 – Filing of complaint for damages before RTC Branch 41, Pinamalayan.
• March 24, 2004 – RTC dismissal of complaint for lack of jurisdiction.
• November 20, 2006 – Court of Appeals reversal, upholding RTC jurisdiction.
• September 8, 2010 – Supreme Court decision reversing CA and dismissing complaint without prejudice.
Applicable Law
• 1987 Philippine Constitution, Article XIII, Section 7 (preferential use of communal marine and fishing resources).
• Republic Act No. 3931, as amended by Presidential Decree No. 984 (Pollution Control Law).
• Executive Order No. 192 (transferring functions to the Pollution Adjudication Board).
• Rules of Court, Rule 45 (petition for review).
Facts and Proceedings
Shell and the Republic entered into Service Contract No. 38 for petroleum exploration and development in northwestern Palawan. Shell discovered natural gas and constructed a 504-kilometer subsea pipeline to Batangas. Respondents, subsistence fishermen of Bansud, claimed that pipeline construction and operation stressed coral reefs and drove fish from coastal waters, reducing their average net monthly income from ₱4,848 to ₱573.
Instead of answering, Shell moved to dismiss for lack of jurisdiction—asserting primary jurisdiction of the Pollution Adjudication Board (“PAB”), state-immunity defense, and failure to state a cause of action or comply with class-action requisites. The RTC granted the motion, deeming the complaint a “pollution case.” The CA reversed, holding that the complaint alleged a quasi-delict for pipeline construction and operation, not pollution; that Shell was not a state agent; and that respondents substantially complied with procedural requirements.
Issues
- Whether the complaint is a pollution case under RA 3931 as amended by PD 984, falling within PAB’s exclusive jurisdiction.
- Whether the complaint states a valid cause of action against Shell.
- Whether Shell is immune from suit under the doctrine of state immunity as an agent of the Republic.
Court’s Analysis
- Jurisdiction—Pollution Adjudication Board
The complaint alleges that pipeline operations “greatly affected” biogenic coral communities and stressed marine life, fitting the statutory definition of “pollution” as any alteration of water properties harmful to utilization. Determination of causation, magnitude, and effects of alleged pollution requires technical expertise vested in the PAB (P.D. 984, Sec. 6; EO 192). Respondents’ failure to invoke administrative remedies before PAB renders their complaint defective for lack of jurisdiction in regular courts. - Sufficiency of Cause of Action
A cause of action requires a legal right of the plaintiff, a correlative duty of the defendant, and an act or omission violating that duty. The complaint alleged respondents’ constitutional right to preferential use of marine resources (Const., Art. XIII, Sec. 7), Shell’s duty to respect those rights, and pipeline op
Case Syllabus (G.R. No. 179918)
Facts and Background
- On December 11, 1990, Shell Philippines Exploration B.V. (“Shell”) and the Republic of the Philippines executed Service Contract No. 38 for petroleum exploration and extraction in northwestern Palawan.
- In 1992, Shell discovered natural gas in the Camago-Malampaya area and proceeded to develop the Malampaya Natural Gas Project.
- The project required a 504-kilometer submarine pipeline from Shell’s production platform to its gas processing plant in Batangas, crossing the Oriental Mindoro Sea.
- On May 19, 2003, 78 fishermen from Bansud, Oriental Mindoro (led by Efren Jalos and others) filed Civil Case P-1818-03 in the RTC, Branch 41, Pinamalayan, Oriental Mindoro, claiming:
- Their subsistence livelihood was impaired by the pipeline’s construction and operation.
- Monthly net income fell from ₱4,848.00 to ₱573.00.
- The pipeline “greatly affected biogenically hard-structured communities such as coral reefs” and “led [to] stress to the marine life,” driving fish away from coastal areas.
Trial Court Proceedings
- Shell moved to dismiss for lack of jurisdiction, asserting:
- The action was “pollution‐related” under Republic Act No. 3931, as amended by P.D. 984, thus within the Pollution Adjudication Board’s (PAB) primary jurisdiction.
- Under Service Contract 38, Shell acted as an agent of the State and was immune from suit without the State’s consent.
- The complaint failed to allege a specific wrongful act, lacked class-action prerequisites, verification, and certification against forum shopping, and pauper litigant requirements.
- On March 24, 2004, the RTC granted the motion and dismissed the complaint, holding that the dispute was pollution‐related and belonged before the PAB.
Court of Appeals Decision
- The fishermen petitioned for certiorari (CA-G.R. CV 82404).
- The CA reversed the RTC, ruling that:
- The cause