Shell Philippines vs.

Jalos

On December 11, 1990 petitioner Shell Philippines Exploration B.V. (Shell) and the
Republic of the Philippines entered into Service Contract 38 for the exploration
and extraction of petroleum in northwestern Palawan. Two years later, Shell
discovered natural gas in the Camago-Malampaya area and pursued its
development of the well under the Malampaya Natural Gas Project. This entailed
the construction and installation of a pipeline from Shells production platform to
its gas processing plant in Batangas. The pipeline spanned 504 kilometers and
crossed the Oriental Mindoro Sea
On May 19, 2003, respondents Efren Jalos, Joven Campang, Arnaldo Mijares, and
75 other individuals (Jalos, et al) filed a complaint for damages[1] against Shell
before the Regional Trial Court (RTC), Branch 41, Pinamalayan, Oriental
Mindoro. Jalos, et al claimed that they were all subsistence fishermen from the
coastal barangay of Bansud, Oriental Mindoro whose livelihood was adversely
affected by the construction and operation of Shells natural gas pipeline
Jalos, et al claimed that their fish catch became few after the construction of the
pipeline. They said that the pipeline greatly affected biogenically hard-structured
communities such as coral reefs and led [to] stress to the marine life in
the Mindoro Sea. They now have to stay longer and farther out at sea to catch
fish, as the pipelines operation has driven the fish population out of coastal
waters.
Shell: Jurisdiction should be with Pollution Adjudication Board; agent of the
Philippine government cannot be sued
Section 2(a) of P.D. 984 defines pollution as any alteration of the physical,
chemical and biological properties of any water x x x as will or is likely to
create or render such water x x x harmful, detrimental or injurious to public
health, safety or welfare or which will adversely affect their utilization for
domestic, commercial, industrial, agricultural, recreational or other legitimate
purposes.
It is clear from this definition that the stress to marine life claimed by Jalos, et al is
caused by some kind of pollution emanating from Shells natural gas pipeline. The
pipeline, they said, greatly affected or altered the natural habitat of fish and
affected the coastal waters natural function as fishing grounds. Inevitably, in
resolving Jalos, et als claim for damages, the proper tribunal must determine
whether or not the operation of the pipeline adversely altered the coastal waters
properties and negatively affected its life sustaining function. The power and
expertise needed to determine such issue lies with the PAB.
A cause of action is the wrongful act or omission committed by the defendant in
violation of the primary rights of the plaintiff. [20] Its elements consist of: (1) a right
existing in favor of the plaintiff, (2) a duty on the part of the defendant to respect
the plaintiffs right, and (3) an act or omission of the defendant in violation of such
right.[21] To sustain a motion to dismiss for lack of cause of action, however, the
complaint must show that the claim for relief does not exist and not only that the
claim was defectively stated or is ambiguous, indefinite or uncertain. [22]
Here, all the elements of a cause of action are present. First, Jalos, et
al undoubtedly had the right to the preferential use of marine and fishing
resources which is guaranteed by no less than the Constitution. [23] Second, Shell
had the correlative duty to refrain from acts or omissions that could impair
Jalos, et als use and enjoyment of the bounties of the seas. Lastly, Shells
construction and operation of the pipeline, which is an act of physical intrusion
into the marine environment, is said to have disrupted and impaired the natural
habitat of fish and resulted in considerable reduction of fish catch and income for
Jalos, et al.
Shells main undertaking under Service Contract 38 is to [p]erform all petroleum
operations and provide all necessary technology and finance as well as other
connected services[29] to the Philippine government. As defined under the
contract, petroleum operation means the searching for and obtaining Petroleum
within the Philippines, including the transportation, storage, handling and sale of

petroleum whether for export or domestic consumption. [30] Shells primary

obligation under the contract is not to represent the Philippine government for the
purpose of transacting business with third persons. Rather, its contractual
commitment is to develop and manage petroleum operations on behalf of the
State.
MMDA vs. Jancom
In 1994, then President Fidel V. Ramos issued Presidential Memorandum Order No.
202 creating the Executive Committee (EXECOM) to oversee the BOT
implementation of solid waste management projects, headed by the Chairman of
the MMDA and the Cabinet Officer for Regional Development-National Capital
Region (CORD-NCR). The EXECOM was to oversee and develop waste-to-energy
projects
for
the
waste
disposal
sites
in San
Mateo,
Rizal
and
Carmona, Cavite under the build-operate-transfer (BOT) scheme. The terms of
reference for the waste-to-energy projects provided that its proponents should
have the capability to establish municipal solid waste thermal plants using
incineration technology. This type of technology was selected because of its
alleged advantages of greatly reduced waste volume, prolongation of the service
life of the disposal site, and generation of electricity.

On May 2, 1996, the PBAC conducted a pre-bid conference where it required the
three pre-qualified bidders to submit, within ninety (90) days, their bid
proposals. On August 2, 1996, JANCOM and First Philippines requested for an
extension of time to submit their bids. PACTECH, on the other hand, withdrew
from the bidding.

Subsequently, JANCOM entered into a partnership with Asea Brown Boveri (ABB)
to form JANCOM Environmental Corporation while First Philippines formed a
partnership withOGDEN. Due to the change in the composition of the proponents,
particularly in their technology partners and contractors, the PBAC conducted a
post pre-qualification evaluation.

During the second bid conference, the bid proposals of First Philippines for the
Carmona site and JANCOM for the San Mateo site were found to be complete and
responsive.Consequently, on February 12, 1997, JANCOM and First Philippines
were declared the winning bidders, respectively, for the San Mateo and the
Carmona projects.

On May 2, 1996, the PBAC conducted a pre-bid conference where it required the
three pre-qualified bidders to submit, within ninety (90) days, their bid
proposals. On August 2, 1996, JANCOM and First Philippines requested for an
extension of time to submit their bids. PACTECH, on the other hand, withdrew
from the bidding.

Subsequently, JANCOM entered into a partnership with Asea Brown Boveri (ABB)
to form JANCOM Environmental Corporation while First Philippines formed a
partnership withOGDEN. Due to the change in the composition of the proponents,
particularly in their technology partners and contractors, the PBAC conducted a
post pre-qualification evaluation.

During the second bid conference, the bid proposals of First Philippines for the
Carmona site and JANCOM for the San Mateo site were found to be complete and
responsive.Consequently, on February 12, 1997, JANCOM and First Philippines
were declared the winning bidders, respectively, for the San Mateo and the
Carmona projects.

On March 5, 1998, the BOT contract was submitted to President Ramos for
approval but this was too close to the end of his term which expired without him
signing the contract.President Ramos, however, endorsed the contract to
incoming President Joseph E. Estrada.

With the change of administration, the composition of the EXECOM also changed.
Memorandum Order No. 19 appointed the Chairman of the Presidential Committee
on Flagship Programs and Project to be the EXECOM chairman. Too, Republic Act
No. 8749, otherwise known as the Clean Air Act of 1999, was passed by
Congress. And due to the clamor of residents of Rizal province, President Estrada
had, in the interim, also ordered the closure of the San Mateo landfill. Due to
these circumstances, the Greater Manila Solid Waste Management Committee
adopted a resolution not to pursue the BOT contract with JANCOM. Subsequently,
in a letter dated November 4, 1999, Roberto Aventajado, Chairman of the
Presidential Committee on Flagship Programs and Project informed Mr. Jay
Alparslan, Chairman of JANCOM, that due to changes in policy and economic
environment (Clean Air Act and non-availability of the San Mateo landfill), the
implementation of the BOT contract executed and signed between JANCOM and
the Philippine Government would no longer be pursued. The letter stated that
other alternative implementation arrangements for solid waste management for
Metro Manila would be considered instead.

Under Article 1305 of the Civil Code, [a] contract is a meeting of minds between
two persons whereby one binds himself, with respect to the other, to give
something or to render some service

[C]ontrary to petitioners insistence that there was no perfected contract, the

meeting of the offer and acceptance upon the thing and the cause, which are to
constitute the contract (Arts. 1315 and 1319, New Civil Code), is borne out by the
records.

Admittedly, when petitioners accepted private respondents bid proposal (offer),

there was, in effect, a meeting of the minds upon the object (waste management
project) and the cause (BOT scheme). Hence, the perfection of the
contract. In City of Cebu vs. Heirs of Candido Rubi (306 SCRA 108), the Supreme
Court held that the effect of an unqualified acceptance of the offer or proposal of
the bidder is to perfect a contract, upon notice of the award to the bidder.

In asserting that the notice of award to JANCOM is not a proper notice of award,
MMDA points to the Implementing Rules and Regulations of Republic Act No.
6957, otherwise known as the BOT Law, which require that i) prior to the notice of
award, an Investment Coordinating Committee clearance must first be obtained;
and ii) the notice of award indicate the time within which the awardee shall
submit the prescribed performance security, proof of commitment of equity
contributions and indications of financing resources.

Admittedly,
the
notice
of
award
has
not
complied
with
these
requirements. However, the defect was cured by the subsequent execution of the
contract entered into and signed by authorized representatives of the parties;
hence, it may not be gainsaid that there is a perfected contract existing between
the parties giving to them certain rights and obligations (conditions precedents) in
accordance with the terms and conditions thereof.

MMDA also points to the absence of the Presidents signature as proof that the
same has not yet been perfected. Not only that, the authority of the signatories to
bind the Republic has even been put to question

Contrary to petitioners claim that all infrastructure contracts require the

Presidents approval (Petition, p. 16), Sec. 59 provides that such approval is
required only in infrastructure contracts involving amounts exceeding the ceilings
set in Sec. 58. Significantly, the infrastructure contracts treated in Sec. 58 pertain
only to those which may be approved by the Secretaries of Public Works and
Highways, Transportation and Communications, Local Government (with respect
to Rural Road Improvement Project) and the governing boards of certain
government-owned or controlled corporations. Consequently, the BOT contract in
question, which was approved by the DENR Secretary and the EXCOM Chairman
and Co-Chairman, is not covered by Exec. Order No. 292

Sec. 20 of the Clean Air Act pertinently reads:

o

SECTION 20. Ban on Incineration. Incineration, hereby defined as the

burning of municipal, bio-chemical and hazardous wastes, which process
emits poisonous and toxic fumes, is hereby prohibited: x x x.

Section 20 does not absolutely prohibit incineration as a mode of waste disposal;

rather only those burning processes which emit poisonous and toxic fumes are
banned.

Universal Robina Corp. vs. LLDA

Universal Robina Corp. (petitioner) is engaged in, among other things, the
manufacture of animal feeds at its plant in Bagong Ilog, Pasig City.

Laguna Lake Development Authority (LLDA), respondent, through its Pollution

Control Division Monitoring and Enforcement Section, after conducting on March
14, 2000 a laboratory analysis of petitioners corn oil refinery plants wastewater,
found that it failed to comply with government standards provided under
Department of Environment and Natural Resources (DENR) Administrative Orders
(DAOs) Nos. 34 and 35, series of 1990.

Still later, the LLDA, after receiving a phone-in complaint conducted on August 31,
2000, another analysis of petitioners wastewater, which showed its continued
failure to conform to its effluent standard in terms of Total Suspended Solids (TSS),
Biochemical Oxygen Demand (BOD), Color and Oil/Grease.

Despite subsequent compliance monitoring and inspections conducted by the

LLDA, petitioners wastewater failed to conform to the parameters set by the
aforementioned DAOs.
In early 2003, petitioner notified LLDA of its plan to upgrade the wastewater
treatment facility (WTF) of its corn oil refinery plant in an effort to comply with
environmental laws, an upgrade that was completed only in 2007.
After conducting hearings, the LLDA issued its Order to Pay [5] (OP) dated January
21, 2008, the pertinent portion of which reads:
o After careful evaluation of the case, respondent is found to be discharging
pollutive wastewater computed in two periods reckoned from March 14,
2000 the date of initial sampling until November 3, 2003 the date it
requested for a re-sampling covering 932 days in consideration of the

interval of time when subsequent monitoring was conducted after an

interval of more than 2 years and from March 15, 2006 the date when resampling was done until April 17, 2007 covering 448 days[6] for a total of
1,247 days.
Petitioner moved to reconsider, praying that it be ordered to pay only
accumulated daily penalties in the sum of Five Hundred Sixty Thousand
(P560,000) Pesos[7] on grounds that the LLDA erred in first, adopting a straight
computation of the periods of violation based on the flawed assumption that
petitioner was operating on a daily basis without excluding, among others, the
period during which the LLDA Laboratory underwent rehabilitation work from
December 1, 2000 to June 30, 2001 (covering 212 days); and second, in
disregarding the Daily Operation Reports and Certifications which petitioner
submitted to attest to the actual number of its operating days, i.e., 560 days.
Executive Order No. 192[12] (EO 192) was issued on June 10, 1987 for the salutary
purpose of reorganizing the DENR, charging it with the task of promulgating rules
and regulations for the control of water, air and land pollution as well as of
promulgating ambient and effluent standards for water and air quality including
the allowable levels of other pollutants and radiations. EO 192 also created the
Pollution Adjudication Board under the Office of the DENR Secretary which took
over the powers and functions of the National Pollution Control Commission with
respect to the adjudication of pollution cases, including the latters role
as arbitrator for determining reparation, or restitution of the damages and losses
resulting from pollution

Velasco vs. MERALCO

In 1948, appellant Velasco bought from the People's Homesite and Housing
Corporation three (3) adjoining lots situated at the corner of South D and South 6
Streets, Diliman, Quezon City. These lots are within an area zoned out as a "first
residence" district by the City Council of Quezon City. Subsequently, the appellant
sold two (2) lots to the Meralco, but retained the third lot, which was farthest from
the street-corner, whereon he built his house.

In September, 1953, the appellee company started the construction of the substation in question and finished it the following November, without prior building
permit or authority from the Public Service Commission (Meralco vs. Public Service
Commission, 109 Phil. 603)

It is undisputed that a sound unceasingly emanates from the substation. Whether

this sound constitutes an actionable nuisance or not is the principal issue in this
case.

Plaintiff-appellant Velasco contends that the sound constitutes an actionable

nuisance under Article 694 of the Civil Code of the Philippines, reading as follows:
o

A nuisance is any act, omission, establishment, business condition of

property or anything else which:

(1) Injuries or endangers the health or safety of others; or

(2) Annoys or offends the senses;

The principles thus laid down make it readily apparent that inquiry must be
directed at the character and intensity of the noise generated by the particular
substation of the appellee. As can be anticipated, character and loudness of
sound being of subjective appreciation in ordinary witnesses, not much help can
be obtained from the testimonial evidence. That of plaintiff Velasco is too plainly
biased and emotional to be of much value

The estimate of the other witnesses on the point of inquiry are vague and
imprecise, and fail to give a definite idea of the intensity of the sound complained
of

Thus the impartial and objective evidence points to the sound emitted by the
appellee's substation transformers being of much higher level than the ambient
sound of the locality. The measurements taken by Dr. Almonte, who is not
connected with either party, and is a physician to boot (unlike appellee's electrical
superintendent Buenafe), appear more reliable. The conclusion must be that,
contrary to the finding of the trial court, the noise continuously emitted, day and
night, constitutes an actionable nuisance for which the appellant is entitled to
relief, by requiring the appellee company to adopt the necessary measures to
deaden or reduce the sound at the plaintiff's house, by replacing the interlink wire
fence with a partition made of sound absorbent material, since the relocation of
the substation is manifestly impracticable and would be prejudicial to the
customers of the Electric Company who are being serviced from the substation.

Appellee company insists that as the plaintiff's own evidence (Exhibit "NN-7[c]")
the intensity of the sound (as measured by Dr. Almonte) inside appellant's house
is only 46 to 47 decibels at the consultation room, and 43 to 45 decibels within
the treatment room, the appellant had no ground to complain. This argument is
not meritorious, because the noise at the bedrooms was determined to be around
64-65 decibels, and the medical evidence is to the effect that the basic root of the
appellant's ailments was his inability to sleep due to the incessant noise with
consequent irritation, thus weakening his constitution and making him easy prey
to pathogenic germs that could not otherwise affect a person of normal health.