G.R. No.
147465 January 30, 2002 change in the composition of the proponents, particularly in their technology partners and contractors,
METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner,
vs.
JANCOM ENVIRONMENTAL CORPORATION and JANCOM INTERNATIONAL
DEVELOPMENT PROJECTS PTY. LIMITED OF AUSTRALIA, respondents.
DECISION
MELO, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Civil Procedure
filed by petitioner Metropolitan Manila Development Authority (MMDA), seeking to reverse and set
aside the November 13, 2000 decision of the Court of Appeals declaring valid and perfected the waste
management contract entered into by the Republic of the Philippines, represented by the Secretary of
National Resources and the Executive Committee to oversee the build-operate-transfer implementation
of solid waste management projects, and JANCOM Environmental Corporation.
The pertinent facts are as follows:
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.
While eleven (11) proponents submitted their pre-qualification documents, most failed to comply with
the requirements under Section 5.4 of the Implementing Rules and Regulations (IRR) of Republic Act
No. 6957, otherwise known as the Build-Operate-Transfer Law. On July 21, 1995, the Pre-
qualification, Bids and Awards Committee (PBAC) recommended the pre-qualification of three
proponents, namely: i) JANCOM International Pty. Ltd.; ii) First Philippine International W-E
Managers; and iii) PACTECH Development Corporation. On July 26, 1995, the EXECOM approved
the recommendation of the PBAC. On July 27, 1995, MMDA forwarded to the Investment
Coordinating Committee (ICC) Secretariat the pre-feasibility study on the privatization of the Carmona
and San Mateo landfill sites. The project was later presented to the ICC-Technical Board (ICC-TB)
and then endorsed to the ICC-Cabinet Committee (ICC-CC).
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 with OGDEN. Due to the
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.
In a letter dated February 27, 1997, then MMDA Chairman Prospero I. Oreta informed JANCOMs
Chief Executive Officer Jay Alparslan that the EXECOM had approved the PBAC recommendation to
award to JANCOM the San Mateo Waste-to-Energy Project on the basis of the final Evaluation Report
declaring JANCOM International Ltd., Pty., together with Asea Broewn Boveri (ABB), as the sole
complying (winning) bidder for the San Mateo Waste Disposal site, subject to negotiation and mutual
approval of the terms and conditions of the contract of award. The letter also notified Alparslan that
the EXECOM had created a negotiating team composed of Secretary General Antonio Hidalgo of
the Housing and Urban Development Coordinating Council, Director Ronald G. Fontamillas, General
Manager Roberto Nacianceno of MMDA, and Atty. Eduardo Torres of the host local government unit
to work out and finalize the contract award. Chairman Oreta requested JANCOM to submit to the
EXECOM the composition of its own negotiating team.
Thereafter, after a series of meetings and consultations between the negotiating teams of EXECOM
and JANCOM, a draft BOT contract was prepared and presented to the Presidential Task Force on
Solid Waste Management.
On December 19, 1997, the BOT Contract for the waste-to-energy project was signed between
JANCOM and the Philippine Government, represented by the Presidential Task Force on Solid Waste
Management through DENR Secretary Victor Ramos, CORD-NCR Chairman Dionisio dela Serna,
and MMDA Chairman Prospero Oreta.
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.
JANCOM appealed to President Joseph Estrada the position taken by the EXECOM not to pursue the
BOT Contract executed and signed between JANCOM and the Philippine Government, refuting the
cited reasons for non-implementation. Despite the pendency of the appeal, MMDA, on February 22,
2000, caused the publication in a newspaper of an invitation to pre-qualify and to submit proposals for
solid waste management projects for Metro Manila. JANCOM thus filed with the Regional Trial Court
of Pasig a petition for certiorari to declare i) the resolution of the Greater Metropolitan Manila Solid
Waste Management Committee disregarding the BOT Contract and ii) the acts of MMDA calling for
bids and authorizing a new contract for Metro Manila waste management, as illegal, unconstitutional,
and void; and for prohibition to enjoin the Greater Metropolitan Manila Solid Waste Management
Committee and MMDA from implementing the assailed resolution and disregarding the Award to, and
the BOT contract with, JANCOM, and from making another award in its place. On May 29, 2000, the
trial court rendered a decision, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing, the Court hereby renders judgment in favor of petitioners
JANCOM ENVIRONMENTAL CORPORATION, and JANCOM INTERNATIONAL
DEVELOPMENT PROJECTS PTY., LIMITED OF AUSTRALIA, and against respondent
GREATER METROPOLITAN MANILA SOLID WASTE MANAGEMENT COMM., and HON.
ROBERTO N. AVENTAJADO, in his Capacity as Chairman of the said Committee, METRO
MANILA DEVELOPMENT AUTHORITY and HON. JEJOMAR C. BINAY, in his capacity as
Chairman of said Authority, declaring the Resolution of respondent Greater Metropolitan Manila Solid
Waste Management Committee disregarding petitioners BOT Award Contract and calling for bids for
and authorizing a new contract for the Metro Manila waste management ILLEGAL and VOID.
Moreover, respondents and their agents are hereby PROHIBITED and ENJOINED from implementing
the aforesaid Resolution and disregarding petitioners BOT Award Contract and from making another
award in its place.
Let it be emphasized that this Court is not preventing or stopping the government from implementing
infrastructure projects as it is aware of the proscription under PD 1818. On the contrary, the Court is
paving the way for the necessary and modern solution to the perennial garbage problem that has been
the major headache of the government and in the process would serve to attract more investors in the
country.
(Rollo,p. 159.)
Instead of appealing the decision, MMDA filed a special civil action for certiorari with prayer for a
temporary restraining order with the Court of Appeals which was later docketed therein as CA-G.R.
SP No. 59021. The appellate court not only required JANCOM to comment on the petition, it also
granted MMDAs prayer for a temporary restraining order. During the pendency of the petition
for certiorari, JANCOM moved for the execution of the RTC decision, which was opposed by
MMDA. However, the RTC granted the motion for execution on the ground that its decision had
become final since MMDA had not appealed the same to the Court of Appeals. MMDA moved to
declare respondents and the RTC judge in contempt of court, alleging that the RTCs grant of execution
was abuse of and interference with judicial rules and processes.
On November 13, 2001, the Court of Appeals dismissed the petition in CA-G.R. SP No. 59021 and a
companion case, CA-G.R. SP No. 60303.
MMDAs motion for reconsideration of said decision having been denied, MMDA filed the instant
petition, alleging that the Court of Appeals gravely erred in finding that:
1) There is a valid and binding contract between the Republic of the Philippines and
JANCOM given that: a) the contract does not bear the signature of the President of the
Philippines; b) the conditions precedent specified in the contract were not complied with; and
c) there was no valid notice of award.
2) The MMDA had not seasonably appealed the Decision of the lower court via a petition for
certiorari.
Before taking up the substantive issue in question, we shall first dispose of the question as to whether
it is fatal to petitioners cause, that rather than appealing the trial courts decision to the Court of
Appeals, it instead filed a petition for certiorari. While petitioner claims that the trial courts decision
never became final by virtue of its having appealed by certiorari to the Court of Appeals, the trial court
ruled that petitioners failure to file an appeal has made its decision final and executory. At bottom, the
question involves a determination of the propriety of petitioners choice of the remedy of certiorari in
questioning the decision of the trial court.
Section 1, Rule 65 of the 1997 Rules of Civil Procedure provides:
Section 1. Petition for certiorari. When any tribunal, board or officer exercising judicial or quasi-
judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy,
and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified
petition in the proper court, alleging the facts with certainty and praying that judgment be rendered
annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental
reliefs as law and justice may require.
The petition shall be accompanied by a certified true copy of the judgment, order, or resolution subject
thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn certification
of non-forum shopping as provided in the third paragraph of section 3, Rule 46.
Plain it is from a reading of the above provision that certiorari will lie only where a court has acted
without or in excess of jurisdiction or with grave abuse of discretion. If the court has jurisdiction over
the subject matter and of the person, its rulings upon all questions involved are within its jurisdiction,
however irregular or erroneous these may be, they cannot be corrected by certiorari. Correction may
be obtained only by an appeal from the final decision.
Verily, Section 1, Rule 41 of the 1997 Rules of Civil Procedure provides:
SEC. 1. Subject of appeal. An appeal may be taken from a judgment or final order that completely
disposes of the case or of a particular matter therein when declared by these Rules to be appealable.
xxx xxx xxx
In all the above instances where the judgment or final order is not appealable, the aggrieved party may
file an appropriate special civil action under Rule 65.
There can be no dispute that the trial courts May 29, 2000 decision was a final order or judgment
which MMDA should have appealed, had it been so minded. In its decision, the trial court disposed of
the main controversy by "declaring the Resolution of respondent Greater Metropolitan Manila Solid
Waste Management Committee disregarding petitioners BOT Award Contract and calling for bids for
and authorizing a new contract for the Metro Manila waste management ILLEGAL and VOID." This
ruling completely disposed of the controversy between MMDA and JANCOM. In BA Finance
Corporation vs. CA (229 SCRA 5667 [1994]), we held that a "final" order or judgment is one which
"disposes of the whole subject matter or terminates a particular proceeding or action, leaving nothing
to be done but to enforce by execution what has been determined." An order or judgment is deemed
final when it finally disposes of the pending action so that nothing more can be done with it in the trial
court. In other words, a final order is that which gives an end to the litigation. A final order or judgment
finally disposes of, adjudicates, or determines the rights, or some right or rights of the parties, either
on the entire controversy or on some definite and separate branch thereof, and concludes them until it
is reversed or set aside. Where no issue is left for future consideration, except the fact of compliance
or non-compliance with the terms of the judgment or doer, such judgment or order is final and
appealable (Investments, Inc. vs. Court of Appeals, 147 SCRA 334 [1987]).
However, instead of appealing the decision, MMDA resorted to the extraordinary remedy
of certiorari, as a mode of obtaining reversal of the judgment. This cannot be done. The judgment was
not in any sense null and void ab initio, incapable of producing any legal effects whatever, which could
be resisted at any time and in any court it was attempted. It was a judgment which could or may have
suffered from some substantial error in procedure or in findings of fact or of law, and on that account,
it could have been reversed or modified on appeal. But since it was not appealed, it became final and
has thus gone beyond the reach of any court to modify in any substantive aspect. The remedy to obtain
reversal or modification of the judgment on the merits is appeal. This is true even if the error, or one
of the errors, ascribed to the court rendering the judgment is its lack of jurisdiction over the subject
matter, or the exercise of power in excess thereof, or grave abuse of discretion in the findings of fact
or of law set out in the decision. The existence and availability of the right of appeal proscribes a resort
to certiorari, because one of the requirements for availment of the latter remedy is precisely that "there
should be no appeal" (Mercado vs. CA, 162 SCRA 75 [1988]). As incisively observed by the Court of
Appeals:
The special civil action for certiorari is available only when there is no appeal nor any plain, speedy
and adequate remedy in the ordinary course of law (Sec. 1, rule 65, id.)
Admittedly, appeal could have been taken from the assailed RTC decision. However, petitioners
maintain that appeal is not a speedy remedy because the RTC decision prohibiting them from
conducting a bidding for a new waste disposal project has adverse and serious effects on the citys
garbage situation.
Nevertheless, the RTC decision is not immediately executory. Only judgments in actions for
injunction, receivership, accounting and support and such other judgments as are now or may hereafter
be declared to be immediately executory shall be enforced after their rendition and shall not be stayed
by an appeal therefrom, unless otherwise ordered by the trial court (Sec. 4, rule 39, id.).
Since the RTC decision is not immediately executory, appeal would have stayed its execution.
Consequently, the adverse effects of said decision will not visit upon petitioners during the appeal. In
other words, appeal is a plain, speedy and adequate remedy in the ordinary course of the law.
But as no appeal was taken within the reglementary period, the RTC decision had become final and
executory. Well-settled is the rule that the special civil action for certiorari may not be invoked as a
substitute for the remedy of appeal (BF Corporation vs. Court of Appeals, 288 SCRA 267). Therefore,
the extraordinary remedy of certiorari does not lie.
Moreover, petitioners instituted the instant action without filing a motion for reconsideration of the
RTC decision. Doctrinal is the rule that certiorari will not lie unless a motion for reconsideration is
first filed before the respondent tribunal to allow it an opportunity to correct its errors (Zapanta vs.
NLRC, 292 SCRA 580).
(Rollo, p. 47-48.)
Admittedly, there are instances where the extraordinary remedy of certiorari may be resorted to despite
the availability of an appeal. In Ruiz, Jr. vs. Court of Appeals (220 SCRA 490 [1993]), we held:
Considered extraordinary, [certiorari] is made available only when there is no appeal, nor any plain,
speedy or adequate remedy in the ordinary course of the law (Rule 65, Rules of Court, Section 1). The
long line of decisions denying the petition for certiorari, either before appeal was availed or specially
in instances where the appeal period has lapsed, far outnumbers the instances when certiorari was given
due course. The few significant exceptions were: when public welfare and the advancement of public
policy dictate; or when the broader interests of justice so require, or when the writs issued are null . .
. or when the questioned order amounts to an oppressive exercise of judicial authority.
In the instant case, however, MMDA has not sufficiently established the existence of any fact or reason
to justify its resort to the extraordinary remedy of certiorari. Neither does the record show that the
instant case, indeed, falls under any of the exceptions aforementioned.
The Court thus holds that the Court of Appeals did not err in declaring that the trial courts decision
has become final due to the failure of MMDA to perfect an appeal within the reglementary period.
With the foregoing disquisition, it would appear unnecessarily to discuss and resolve the substantive
issue posed before the Court. However, the procedural flaw notwithstanding, the Court deems it
judicious to take cognizance of the substantive question, if only to put petitioners mind to rest.
In its second assignment of errors, petitioner MMDA contends that there is no valid and binding
contract between the Republic of the Philippines and respondents because: a) the BOT contract does
not bear the signature of the President of the Philippines; b) the conditions precedent specified in the
contract were not complied with; and that c) there was no valid notice of award.
These contentions hold no water.
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." A contract
undergoes three distinct stages preparation or negotiation, its perfection, and finally, its
consummation. Negotiation begins from the time the prospective contracting parties manifest their
interest in the contract and ends at the moment of agreement of the parties. The perfection or birth of
the contract takes place when the parties agree upon the essential elements of the contract. The last
stage is the consummation of the contract wherein the parties fulfill or perform the terms agreed upon
in the contract, culminating in the extinguishment thereof (Bugatti vs. CA, 343 SCRA 335 [2000]).
Article 1315 of the Civil Code, provides that a contract is perfected by mere consent. Consent, on the
other hand, is manifested by the meeting of the offer and the acceptance upon the thing and the cause
which are to constitute the contract (See Article 1319, Civil Code). In the case at bar, the signing and
execution of the contract by the parties clearly show that, as between the parties, there was a
concurrence of offer and acceptance with respect to the material details of the contract, thereby giving
rise to the perfection of the contract. The execution and signing of the contract is not disputed by the
parties. As the Court of Appeals aptly held:
[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.
(Rollo, p. 48-49.)
In fact, in asserting that there is no valid and binding contract between the parties, MMDA can only
allege that there was no valid notice of award; that the contract does not bear the signature of the
President of the Philippines; and that the conditions precedent specified in the contract were not
complied with.
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. We borrow the words of the Court of Appeals:
Petitioners belabor the point that there was no valid notice of award as to constitute acceptance of
private respondents offer. They maintain that former MMDA Chairman Oretas letter to JANCOM
EC dated February 27, 1997 cannot be considered as a valid notice of award as it does not comply with
the rules implementing Rep. Act No. 6957, as amended. The argument is untenable.
The fact that Chairman Oretas letter informed JANCOM EC that it was the "sole complying (winning)
bidder for the San Mateo project leads to no other conclusion than that the project was being awarded
to it. But assuming that said notice of award did not comply with the legal requirements, private
respondents cannot be faulted therefore as it was the government representatives duty to issue
the proper notice.
In any event, petitioners, as successors of those who previously acted for the government (Chairman
Oreta, et al), are estopped from assailing the validity of the notice of award issued by the latter. As
private respondents correctly observed, in negotiating on the terms and conditions of the BOT contract
and eventually signing said contract, the government had led private respondents to believe that the
notice of award given to them satisfied all the requirement of the law.
While the government cannot be estopped by the erroneous acts of its agents, nevertheless, petitioners
may not now assail the validity of the subject notice of award to the prejudice of private respondents.
Until the institution of the original action before the RTC, invalidity of the notice of award was never
invoked as a ground for termination of the BOT contract. In fact, the reasons cited for terminating the
San Mateo project, per Chairman Aventajados letter to JANCOM EC dated November 4, 1999, were
its purported non-implementability and non-viability on account of supervening events, e.g., passage
of the Clean Air Act, etc.
(Rollo, p. 49-50.)
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. Firstly, it is pointed out that Memorandum Order No. 202 creating the Executive Committee
to oversee the BOT implementation of solid waste management projects only charged the officials
thereof with the duty of recommending to the President the specific project to be implemented under
the BOT scheme for both San Mateo and Carmona sites. Hence, it is concluded that the signatories,
CORD-NCR Chairman Dionisio dela Serna and MMDA Chairman Prospero Oreta, had no authority
to enter into any waste management project for and in behalf of the Government. Secondly, Section
59 of Executive Order No. 292 is relied upon as authority for the proposition that presidential approval
is necessary for the validity of the contract.
The first argument conveniently overlooks the fact that then Secretary of Environment and Natural
Resources Victor Ramos was likewise a signatory to the contract. While dela Serna and Oreta may not
have had any authority to sign, the Secretary of Environment and Natural Resources has such an
authority. In fact, the authority of the signatories to the contract was not denied by the Solicitor General.
Moreover, as observed by the Court of Appeals, "[i]t was not alleged, much less shown, that those who
signed in behalf of the Republic had acted beyond the scope of their authority."
In truth, the argument raised by MMDA does not focus on the lack of authority of the signatories, but
on the amount involved as placing the contract beyond the authority of the signatories to approve.
Section 59 of Executive Order No. 292 reads:
Section 59. Contracts for Approval by the President. Contracts for infrastructure projects, including
contracts for the supply of materials and equipment to be used in said projects, which involve amounts
above the ceilings provided in the preceding section shall be approved by the President: Provided, That
the President may, when conditions so warrant, and upon recommendation of the National Economic
and Development Authority, revise the aforesaid ceilings of approving authority.
However, the Court of Appeals trenchantly observed in this connection:
As regards the Presidents approval of infrastructure projects required under Section 59 of Executive
Order No. 292, said section does not apply to the BOT contract in question. Sec. 59 should be correlated
with Sec. 58 of Exec. Order No. 292. Said sections read:
SECTION 58. Ceiling for Infrastructure Contracts. The following shall be the ceilings for all civil
works, construction and other contracts for infrastructure projects, including supply contracts for said
projects, awarded through public bidding or through negotiation, 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 governing boards of government-owned or
controlled corporations:
xxx xxx xxx
Save as provided for above, the approval ceilings assigned to the departments/agencies involved in
national infrastructure and construction projects shall remain at the levels provided in existing laws,
rules and regulations.
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.
(Rollo, p. 51-52.)
The provision pertinent to the authority of the Secretary of Environment and Natural Resources would
actually be Section 1 of Executive Order No. 380, Series of 1989 which provides that "The Secretaries
of all Departments and Governing Boards of government-owned or controlled corporations [except the
Secretaries of Public Works and Highways, Transportation and Communication, and Local
Government with respect to Rural Road Improvement projects] can enter into publicly bidded
contracts regardless of amount (See also Section 515, Government Accounting and Auditing Manual
Volume I)." Consequently, MMDA may not claim that the BOT contract is not valid and binding
due to the lack of presidential approval.
Significantly, the contract itself provides that the signature of the President is necessary only for its
effectivity (not perfection), pursuant to Article 19 of the contract, which reads:
This contract shall become effective upon approval by the President of the Republic of the Philippines
pursuant to existing laws subject to the condition, precedent in Article 18. This contract shall remain
in full force and effect for twenty-five (25) years subject to renewal for another twenty-five (25) years
from the date of Effectivity. Such renewal will be subject to mutual agreement of the parties and
approval of the President of the Republic of the Philippines.
(Rollo, p. 94.)
Stated differently, while the twenty-five year effectivity period of the contract has not yet started to
run because of the absence of the Presidents signature, the contract has, nonetheless, already been
perfected.
As to the contention that there is no perfected contract due to JANCOMs failure to comply with several
conditions precedent, the same is, likewise, unmeritorious. Article 18 of the BOT contract reads:
ARTICLE 18
CONDITIONS PRECEDENT
xxx
18.2.1. The BOT COMPANY hereby undertakes to provide the following within 2 months from
execution of this Contract as an effective document:
a) sufficient proof of the actual equity contributions from the proposed shareholders of the
BOT COMPANY in a total amount not less than PHP500,000,000 in accordance with the
BOT Law and the implementing rules and regulations;
b) sufficient proof of financial commitment from a lending institution sufficient to cover total
project cost in accordance with the BOT Law and the implementing rules and regulations;
c) to support its obligation under this Contract, the BOT COMPANY shall submit a security
bond to the CLIENT in accordance with the form and amount required under the BOT Law.
xxx
18.2.3 Completion of Documentary Requirements as per Schedule 4 by the BOT Company
As clearly stated in Article 18, JANCOM undertook to comply with the stated conditions within 2
months from execution of the Contract as an effective document. Since the President of the Philippines
has not yet affixed his signature on the contract, the same has not yet become an effective document.
Thus, the two-month period within which JANCOM should comply with the conditions has not yet
started to run. It cannot thus be said that JANCOM has already failed to comply with the "conditions
precedent" mandated by the contract. By arguing that "failure [of JANCOM] to comply with the
conditions results in the failure of a contract or prevents the judicial relation from coming into
existence," MMDA reads into the contract something which is not contemplated by the parties. If the
terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal
meaning of its stipulations shall control (Art. 1370, Civil Code).
We, therefore, hold that the Court of Appeals did not err when it declared the existence of a valid and
perfected contract between the Republic of the Philippines and JANCOM. There being a perfected
contract, MMDA cannot revoke or renounce the same without the consent of the other. From the
moment of perfection, the parties are bound not only to the fulfillment of what has been expressly
stipulated but also to all the consequences which, according to their nature, may be in keeping with
good faith, usage, and law (Article 1315, Civil Code). The contract has the force of law between the
parties and they are expected to abide in good faith by their respective contractual commitments, not
weasel out of them. Just as nobody can be forced to enter into a contract, in the same manner, once a
contract is entered into, no party can renounce it unilaterally or without the consent of the other. It is a
general principle of law that no one may be permitted to change his mind or disavow and go back upon
his own acts, or to proceed contrary thereto, to the prejudice of the other party. Nonetheless, it has to
be repeated that although the contract is a perfected one, it is still ineffective or unimplementable until
and unless it is approved by the President.
Moreover, if after a perfected and binding contract has been executed between the parties, it occurs to
one of them to allege some defect therein as reason for annulling it, the alleged defect must be
conclusively proven, since the validity and the fulfillment of contracts cannot be left to the will of one
of the contracting parties. In the case at bar, the reasons cited by MMDA for not pushing through with
the subject contract were: 1) the passage of the Clean Air Act, which allegedly bans incineration; 2)
the closure of the San Mateo landfill site; and 3) the costly tipping fee. These reasons are bereft of
merit
Once again, we make reference to the insightful declarations of the Court of Appeals:
Sec. 20 of the Clean Air Act pertinently reads:
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.
As regards the projected closure of the San Mateo landfill vis--vis the implementability of the
contract, Art. 2.3 thereof expressly states that "[i]n the event the project Site is not delivered x x x, the
Presidential task Force on Solid Waste Management (PTFSWM) and the Client, shall provide within
a reasonable period of time, a suitable alternative acceptable to the BOT COMPANY."
With respect to the alleged financial non-viability of the project because the MMDA and the local
government units cannot afford the tipping fees under the contract, this circumstance cannot, by itself,
abrogate the entire agreement.1wphi1
Doctrinal is the rule that neither the law nor the courts will extricate a party from an unwise or
undesirable contract, or stipulation for that matter, he or she entered into with full awareness of its
consequences (Opulencia vs. CA, 293 SCRA 385). Indeed, the terms and conditions of the subject
contract were arrived at after due negotiations between the parties thereto.
(Rollo, p. 54.)
WHEREFORE, premises considered, the petition is hereby DISMISSED for lack of merit and the
decision of the Court of Appeals in CA-G.R. SP No. 59021 dated November 13, 2001 AFFIRMED.
No costs.
SO ORDERED.
G.R. No. 158290 October 23, 2006
HILARION M. HENARES, JR., VICTOR C. AGUSTIN, ALFREDO L. HENARES, DANIEL
L. HENARES, ENRIQUE BELO HENARES, and CRISTINA BELO HENARES, petitioners,
vs.
LAND TRANSPORTATION FRANCHISING AND REGULATORY BOARD and
DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, respondents.
RESOLUTION
QUISUMBING, J.:
Petitioners challenge this Court to issue a writ of mandamus commanding respondents Land
Transportation Franchising and Regulatory Board (LTFRB) and the Department of Transportation and
Communications (DOTC) to require public utility vehicles (PUVs) to use compressed natural gas
(CNG) as alternative fuel.
Citing statistics from the Metro Manila Transportation and Traffic Situation Study of 1996, 1 the
Environmental Management Bureau (EMB) of the National Capital Region, 2 a study of the Asian
Development Bank,3 the Manila Observatory4 and the Department of Environment and Natural
Resources5 (DENR) on the high growth and low turnover in vehicle ownership in the Philippines,
including diesel-powered vehicles, two-stroke engine powered motorcycles and their concomitant
emission of air pollutants, petitioners attempt to present a compelling case for judicial action against
the bane of air pollution and related environmental hazards.
Petitioners allege that the particulate matters (PM) complex mixtures of dust, dirt, smoke, and liquid
droplets, varying in sizes and compositions emitted into the air from various engine combustions
have caused detrimental effects on health, productivity, infrastructure and the overall quality of life.
Petitioners particularly cite the effects of certain fuel emissions from engine combustion when these
react to other pollutants. For instance, petitioners aver, with hydrocarbons, oxide of nitrogen (NO x)
creates smog; with sulfur dioxide, it creates acid rain; and with ammonia, moisture and other
compounds, it reacts to form nitric acid and harmful nitrates. Fuel emissions also cause retardation and
leaf bleaching in plants. According to petitioner, another emission, carbon monoxide (CO), when not
completely burned but emitted into the atmosphere and then inhaled can disrupt the necessary oxygen
in blood. With prolonged exposure, CO affects the nervous system and can be lethal to people with
weak hearts.6
Petitioners add that although much of the new power generated in the country will use natural gas while
a number of oil and coal-fired fuel stations are being phased-out, still with the projected doubling of
power generation over the next 10 years, and with the continuing high demand for motor vehicles, the
energy and transport sectors are likely to remain the major sources of harmful emissions. Petitioners
refer us to the study of the Philippine Environment Monitor 2002 7, stating that in four of the country's
major cities, Metro Manila, Davao, Cebu and Baguio, the exposure to PM 10, a finer PM which can
penetrate deep into the lungs causing serious health problems, is estimated at over US$430
million.8 The study also reports that the emissions of PMs have caused the following:
 Over 2,000 people die prematurely. This loss is valued at about US$140 million.
Over 9,000 people suffer from chronic bronchitis, which is valued at about US$120 million.
Nearly 51 million cases of respiratory symptom days in Metro Manila (averaging twice a
year in Davao and Cebu, and five to six times in Metro Manila and Baguio), costs about
US$170 million. This is a 70 percent increase, over a decade, when compared with the
findings of a similar study done in 1992 for Metro Manila, which reported 33 million cases. 9
Petitioners likewise cite the University of the Philippines' studies in 1990-91 and 1994 showing that
vehicular emissions in Metro Manila have resulted to the prevalence of chronic obstructive pulmonary
diseases (COPD); that pulmonary tuberculosis is highest among jeepney drivers; and there is a 4.8 to
27.5 percent prevalence of respiratory symptoms among school children and 15.8 to 40.6 percent
among child vendors. The studies also revealed that the children in Metro Manila showed more
compromised pulmonary function than their rural counterparts. Petitioners infer that these are mostly
due to the emissions of PUVs.
To counter the aforementioned detrimental effects of emissions from PUVs, petitioners propose the
use of CNG. According to petitioners, CNG is a natural gas comprised mostly of methane which
although containing small amounts of propane and butane, 10 is colorless and odorless and considered
the cleanest fossil fuel because it produces much less pollutants than coal and petroleum; produces up
to 90 percent less CO compared to gasoline and diesel fuel; reduces NO x emissions by 50 percent and
cuts hydrocarbon emissions by half; emits 60 percent less PMs; and releases virtually no sulfur dioxide.
Although, according to petitioners, the only drawback of CNG is that it produces more methane, one
of the gases blamed for global warming.11
Asserting their right to clean air, petitioners contend that the bases for their petition for a writ of
mandamus to order the LTFRB to require PUVs to use CNG as an alternative fuel, lie in Section
16,12 Article II of the 1987 Constitution, our ruling in Oposa v. Factoran, Jr.,13 and Section 414 of
Republic Act No. 8749 otherwise known as the "Philippine Clean Air Act of 1999."
Meantime, following a subsequent motion, the Court granted petitioners' motion to implead the
Department of Transportation and Communications (DOTC) as additional respondent.
In his Comment for respondents LTFRB and DOTC, the Solicitor General, cites Section 3, Rule 65 of
the Revised Rules of Court and explains that the writ of mandamus is not the correct remedy since the
writ may be issued only to command a tribunal, corporation, board or person to do an act that is required
to be done, when he or it unlawfully neglects the performance of an act which the law specifically
enjoins as a duty resulting from an office, trust or station, or unlawfully excludes another from the use
and enjoyment of a right or office to which such other is entitled, there being no other plain, speedy
and adequate remedy in the ordinary course of law.15 Further citing existing jurisprudence, the Solicitor
General explains that in contrast to a discretionary act, a ministerial act, which a mandamus is, is one
in which an officer or tribunal performs in a given state of facts, in a prescribed manner, in obedience
to a mandate of legal authority, without regard to or the exercise of his own judgment upon the
propriety or impropriety of an act done.
The Solicitor General also notes that nothing in Rep. Act No. 8749 that petitioners invoke, prohibits
the use of gasoline and diesel by owners of motor vehicles. Sadly too, according to the Solicitor
General, Rep. Act No. 8749 does not even mention the existence of CNG as alternative fuel and avers
that unless this law is amended to provide CNG as alternative fuel for PUVs, the respondents cannot
propose that PUVs use CNG as alternative fuel.
The Solicitor General also adds that it is the DENR that is tasked to implement Rep. Act No. 8749 and
not the LTFRB nor the DOTC. Moreover, he says, it is the Department of Energy (DOE), under Section
2616 of Rep. Act No. 8749, that is required to set the specifications for all types of fuel and fuel-related
products to improve fuel compositions for improved efficiency and reduced emissions. He adds that
under Section 2117 of the cited Republic Act, the DOTC is limited to implementing the emission
standards for motor vehicles, and the herein respondents cannot alter, change or modify the emission
standards. The Solicitor General opines that the Court should declare the instant petition for mandamus
without merit.
Petitioners, in their Reply, insist that the respondents possess the administrative and regulatory powers
to implement measures in accordance with the policies and principles mandated by Rep. Act No. 8749,
specifically Section 218 and Section 21.19 Petitioners state that under these laws and with all the
available information provided by the DOE on the benefits of CNG, respondents cannot ignore the
existence of CNG, and their failure to recognize CNG and compel its use by PUVs as alternative fuel
while air pollution brought about by the emissions of gasoline and diesel endanger the environment
and the people, is tantamount to neglect in the performance of a duty which the law enjoins.
Lastly, petitioners aver that other than the writ applied for, they have no other plain, speedy and
adequate remedy in the ordinary course of law. Petitioners insist that the writ in fact should be issued
pursuant to the very same Section 3, Rule 65 of the Revised Rules of Court that the Solicitor General
invokes.
In their Memorandum, petitioners phrase the issues before us as follows:
I. WHETHER OR NOT THE PETITIONERS HAVE THE PERSONALITY TO BRING
THE PRESENT ACTION
II. WHETHER OR NOT THE PRESENT ACTION IS SUPPORTED BY LAW
III. WHETHER OR NOT THE RESPONDENT IS THE AGENCY RESPONSIBLE TO
IMPLEMENT THE SUGGESTED ALTERNATIVE OF REQUIRING PUBLIC UTILITY
VEHICLES TO USE COMPRESSED NATURAL GAS (CNG)
IV. WHETHER OR NOT THE RESPONDENT CAN BE COMPELLED TO REQUIRE
PUBLIC UTILITY VEHICLES TO USE COMPRESSED NATURAL GAS THROUGH A
WRIT OF MANDAMUS20
Briefly put, the issues are two-fold. First, Do petitioners have legal personality to bring this petition
before us? Second, Should mandamus issue against respondents to compel PUVs to use CNG as
alternative fuel?
According to petitioners, Section 16,21 Article II of the 1987 Constitution is the policy statement that
bestows on the people the right to breathe clean air in a healthy environment. This policy is enunciated
in Oposa.22 The implementation of this policy is articulated in Rep. Act No. 8749. These, according to
petitioners, are the bases for their standing to file the instant petition. They aver that when there is an
omission by the government to safeguard a right, in this case their right to clean air, then, the citizens
can resort to and exhaust all remedies to challenge this omission by the government. This, they say, is
embodied in Section 423 of Rep. Act No. 8749.
Petitioners insist that since it is the LTFRB and the DOTC that are the government agencies clothed
with power to regulate and control motor vehicles, particularly PUVs, and with the same agencies'
awareness and knowledge that the PUVs emit dangerous levels of air pollutants, then, the responsibility
to see that these are curbed falls under respondents' functions and a writ of mandamus should issue
against them.
The Solicitor General, for his part, reiterates his position that the respondent government agencies, the
DOTC and the LTFRB, are not in a position to compel the PUVs to use CNG as alternative fuel. The
Solicitor General explains that the function of the DOTC is limited to implementing the emission
standards set forth in Rep. Act No. 8749 and the said law only goes as far as setting the maximum limit
for the emission of vehicles, but it does not recognize CNG as alternative engine fuel. The Solicitor
General avers that the petition should be addressed to Congress for it to come up with a policy that
would compel the use of CNG as alternative fuel.
Patently, this Court is being asked to resolve issues that are not only procedural. Petitioners challenge
this Court to decide if what petitioners propose could be done through a less circuitous, speedy and
unchartered course in an issue that Chief Justice Hilario G. Davide, Jr. in his ponencia in
the Oposa case,24 describes as "inter-generational responsibility" and "inter-generational justice."
Now, as to petitioners' standing. There is no dispute that petitioners have standing to bring their case
before this Court. Even respondents do not question their standing. This petition focuses on one
fundamental legal right of petitioners, their right to clean air. Moreover, as held previously, a party's
standing before this Court is a procedural technicality which may, in the exercise of the Court's
discretion, be set aside in view of the importance of the issue raised. We brush aside this issue of
technicality under the principle of the transcendental importance to the public, especially so if these
cases demand that they be settled promptly.
Undeniably, the right to clean air not only is an issue of paramount importance to petitioners for it
concerns the air they breathe, but it is also impressed with public interest. The consequences of the
counter-productive and retrogressive effects of a neglected environment due to emissions of motor
vehicles immeasurably affect the well-being of petitioners. On these considerations, the legal standing
of the petitioners deserves recognition.
Our next concern is whether the writ of mandamus is the proper remedy, and if the writ could issue
against respondents.
Under Section 3, Rule 65 of the Rules of Court, mandamus lies under any of the following cases: (1)
against any tribunal which unlawfully neglects the performance of an act which the law specifically
enjoins as a duty; (2) in case any corporation, board or person unlawfully neglects the performance of
an act which the law enjoins as a duty resulting from an office, trust, or station; and (3) in case any
tribunal, corporation, board or person unlawfully excludes another from the use and enjoyment of a
right or office to which such other is legally entitled; and there is no other plain, speedy, and adequate
remedy in the ordinary course of law.
In University of San Agustin, Inc. v. Court of Appeals,25 we said,
It is settled that mandamus is employed to compel the performance, when
refused, of a ministerial duty, this being its main objective. It does not lie to require
anyone to fulfill contractual obligations or to compel a course of conduct, nor to
control or review the exercise of discretion. On the part of the petitioner, it is
essential to the issuance of a writ of mandamus that he should have a clear legal
right to the thing demanded and it must be the imperative duty of the respondent to
perform the act required. It never issues in doubtful cases. While it may not be
necessary that the duty be absolutely expressed, it must however, be clear. The writ
will not issue to compel an official to do anything which is not his duty to do or
which is his duty not to do, or give to the applicant anything to which he is not
entitled by law. The writ neither confers powers nor imposes duties. It is simply a
command to exercise a power already possessed and to perform a duty already
imposed. (Emphasis supplied.)
In this petition the legal right which is sought to be recognized and enforced hinges on a constitutional
and a statutory policy already articulated in operational terms, e.g. in Rep. Act No. 8749, the Philippine
Clean Air Act of 1999. Paragraph (a), Section 21 of the Act specifically provides that when PUVs are
concerned, the responsibility of implementing the policy falls on respondent DOTC. It provides as
follows:
SEC 21. Pollution from Motor Vehicles. - a) The DOTC shall implement the emission
standards for motor vehicles set pursuant to and as provided in this Act. To further improve
the emission standards, the Department [DENR] shall review, revise and publish the
standards every two (2) years, or as the need arises. It shall consider the maximum limits for
all major pollutants to ensure substantial improvement in air quality for the health, safety and
welfare of the general public.
Paragraph (b) states:
b) The Department [DENR] in collaboration with the DOTC, DTI and LGUs, shall develop
an action plan for the control and management of air pollution from motor
vehicles consistent with the Integrated Air Quality Framework . . . . (Emphasis supplied.)
There is no dispute that under the Clean Air Act it is the DENR that is tasked to set the emission
standards for fuel use and the task of developing an action plan. As far as motor vehicles are concerned,
it devolves upon the DOTC and the line agency whose mandate is to oversee that motor vehicles
prepare an action plan and implement the emission standards for motor vehicles, namely the LTFRB.
In Oposa26 we said, the right to a balanced and healthful ecology carries with it the correlative duty to
refrain from impairing the environment. We also said, it is clearly the duty of the responsible
government agencies to advance the said right.
Petitioners invoke the provisions of the Constitution and the Clean Air Act in their prayer for issuance
of a writ of mandamus commanding the respondents to require PUVs to use CNG as an alternative
fuel. Although both are general mandates that do not specifically enjoin the use of any kind of fuel,
particularly the use of CNG, there is an executive order implementing a program on the use of CNG
by public vehicles. Executive Order No. 290, entitled Implementing the Natural Gas Vehicle Program
for Public Transport (NGVPPT), took effect on February 24, 2004. The program recognized, among
others, natural gas as a clean burning alternative fuel for vehicle which has the potential to produce
substantially lower pollutants; and the Malampaya Gas-to-Power Project as representing the beginning
of the natural gas industry of the Philippines. Paragraph 1.2, Section 1 of E.O. No. 290 cites as one of
its objectives, the use of CNG as a clean alternative fuel for transport. Furthermore, one of the
components of the program is the development of CNG refueling stations and all related facilities in
strategic locations in the country to serve the needs of CNG-powered PUVs. Section 3 of E.O. No.
290, consistent with E.O. No. 66, series of 2002, designated the DOE as the lead agency (a) in
developing the natural gas industry of the country with the DENR, through the EMB and (b) in
formulating emission standards for CNG. Most significantly, par. 4.5, Section 4 tasks the DOTC,
working with the DOE, to develop an implementation plan for "a gradual shift to CNG fuel utilization
in PUVs and promote NGVs [natural gas vehicles] in Metro Manila and Luzon through the issuance
of directives/orders providing preferential franchises in present day major routes and exclusive
franchises to NGVs in newly opened routes" A thorough reading of the executive order assures us
that implementation for a cleaner environment is being addressed. To a certain extent, the instant
petition had been mooted by the issuance of E.O. No. 290.
Regrettably, however, the plain, speedy and adequate remedy herein sought by petitioners, i.e., a writ
of mandamus commanding the respondents to require PUVs to use CNG, is unavailing. Mandamus is
available only to compel the doing of an act specifically enjoined by law as a duty. Here, there is no
law that mandates the respondents LTFRB and the DOTC to order owners of motor vehicles to use
CNG. At most the LTFRB has been tasked by E.O. No. 290 in par. 4.5 (ii), Section 4 "to grant
preferential and exclusive Certificates of Public Convenience (CPC) or franchises to operators of
NGVs based on the results of the DOTC surveys."
Further, mandamus will not generally lie from one branch of government to a coordinate branch, for
the obvious reason that neither is inferior to the other.27 The need for future changes in both legislation
and its implementation cannot be preempted by orders from this Court, especially when what is prayed
for is procedurally infirm. Besides, comity with and courtesy to a coequal branch dictate that we give
sufficient time and leeway for the coequal branches to address by themselves the environmental
problems raised in this petition.
In the same manner that we have associated the fundamental right to a balanced and healthful ecology
with the twin concepts of "inter-generational responsibility" and "inter-generational justice"
in Oposa,28 where we upheld the right of future Filipinos to prevent the destruction of the rainforests,
so do we recognize, in this petition, the right of petitioners and the future generation to clean air.
In Oposa we said that if the right to a balanced and healthful ecology is now explicitly found in the
Constitution even if the right is "assumed to exist from the inception of humankind, it is because of
the well-founded fear of its framers [of the Constitution] that unless the rights to a balanced and
healthful ecology and to health are mandated as state policies by the Constitution itself, thereby
highlighting their continuing importance and imposing upon the state a solemn obligation to preserve
the first and protect and advance the second, the day would not be too far when all else would be lost
not only for the present generation, but also for those to come. . ."29
It is the firm belief of this Court that in this case, it is timely to reaffirm the premium we have placed
on the protection of the environment in the landmark case of Oposa. Yet, as serious as the statistics are
on air pollution, with the present fuels deemed toxic as they are to the environment, as fatal as these
pollutants are to the health of the citizens, and urgently requiring resort to drastic measures to reduce
air pollutants emitted by motor vehicles, we must admit in particular that petitioners are unable to
pinpoint the law that imposes an indubitable legal duty on respondents that will justify a grant of the
writ of mandamus compelling the use of CNG for public utility vehicles. It appears to us that more
properly, the legislature should provide first the specific statutory remedy to the complex
environmental problems bared by herein petitioners before any judicial recourse by mandamus is taken.
WHEREFORE, the petition for the issuance of a writ of mandamus is DISMISSED for lack of merit.
SO ORDERED.
G.R. No. 194239 June 16, 2015
WEST TOWER CONDOMINIUM CORPORATION, on behalf of the Residents of West Tower
Condominium and in representation of Barangay Bangkal, and others, including minors and
generations yet unborn,Petitioners,
vs.
FIRST PHILIPPINE INDUSTRIAL CORPORATION, FIRST GEN CORPORATION and
their RESPECTIVE BOARD OF DIRECTORS AND OFFICERS, JOHN DOES, and
RICHARD DOES, Respondents.
DECISION
VELASCO, JR., J.:
Nature of the Case
Before the Court is the Petition for the Issuance of a Writ of Kalikasan filed following the leak in the
oil pipeline owned by First Philippine Industrial Corporation (FPIC) in Makati City. The Facts
Respondent FPI C operates two pipelines since 1969, viz: ( 1) the White Oil Pipeline (WOPL) System,
which covers a 117-kilometer stretch from Batangas to the Pandacan Terminal in Manila and transports
diesel, gasoline, jet fuel and kerosene; and (b) the Black Oil Pipeline (BOPL) System which extends
105 kilometers and transports bunker fuel from Batangas to a depot in Sucat, Paraaque. These systems
transport nearly 60% of the petroleum requirements of Metro Manila and parts of the provinces of
Bulacan, Laguna, and Rizal.
The two pipelines were supposedly designed to provide more than double the standard safety allowance
against leakage, considering that they are made out of heavy duty steel that can withstand more than
twice the current operating pressure and are buried at a minimum depth of 1.5 meters, which is deeper
than the US Department of Transportation standard of 0.9 meters. In May 2010, however, a leakage
from one of the pipelines was suspected after the residents of West Tower Condominium (West Tower)
started to smell gas within the condominium. A search made on July 10, 2010 within the condominium
premises led to the discovery of a fuel leak from the wall of its Basement 2. Owing to its inability to
control the flow, West Tower's management reported the matter to the Police Department of Makati
City, which in turn called the city's Bureau of Fire Protection.
What started as a two-drum leak at the initial stages became a 15-20 drum a day affair. Eventually, the
sump pit of the condominium was ordered shut down by the City of Makati to prevent the discharge
of contaminated water into the drainage system of Barangay Bangkal. Eventually, the fumes compelled
the residents of West Tower to abandon their respective units on July 23, 2010 and the condo's power
was shut down.
Petitioner FPIC initially disowned any leak from its oil pipeline. Thus, the residents of West Tower
shouldered the expenses of hauling the waste water from its basement, which eventually required the
setting up of a treatment plant in the area to separate fuel from the waste water. On October 28, 2010,
the University of the Philippines-National Institute of Geological Sciences (UP-NIGS), which the City
of Makati invited to determine the source of the fuel, found a leak in FPIC's WOPL about 86 meters
from West Tower.
A day after, or on October 29, 2010, FPIC admitted that indeed the source of the fuel leak is the WOPL,
which was already closed since October 24, 2010, but denied liability by placing blame on the
construction activities on the roads surrounding West Tower.
On November 15, 2010, West Tower Condominium Corporation (West Tower Corp.) interposed the
present Petition for the Issuance of a Writ of Kalikasan on behalf of the residents of West Tower and
in representation of the surrounding communities in Barangay Bangkal, Makati City. West Tower
Corp. also alleged that it is joined by the civil society and several people's organizations, non-
governmental organizations and public interest groups who have expressed their intent to join the suit
because of the magnitude of the environmental issues involved. 1
In their petition, petitioners prayed that respondents FPIC and its board of directors and officers, and
First Gen Corporation (FGC) and its board of directors and officers be directed to: (1) permanently
cease and desist from committing acts of negligence in the performance of their functions as a common
carrier; (2) continue to check the structural integrity of the whole 117-kilometer pipeline and to replace
the same; (3) make periodic reports on their findings with regard to the 117-kilometer pipeline and
their replacement of the same; (4) rehabilitate and restore the environment, especially Barangay
Bangkal and West Tower, at least to what it was before the signs of the leak became manifest; and (5)
to open a special trust fund to answer for similar and future contingencies in the future. Furthermore,
petitioners pray that respondents be prohibited from opening the pipeline and allowing the use thereof
until the same has been thoroughly checked and replaced, and be temporarily restrained from operating
the pipeline until the final resolution of the case.
To bolster their petition, petitioners argued that FPIC's omission or failure to timely replace. its
pipelines and to observe extraordinary diligence caused the petroleum spill in the City of Makati. Thus,
for petitioners, the continued use of the now 4 7-year old pipeline would not only be a hazard or a
threat to the lives, health, and property of those who live or sojourn in all the municipalities in which
the pipeline is laid, but would also affect the rights of the generations yet unborn to live in a balanced
and "healthful ecology," guaranteed under Section 16, Article II of the 1987 Constitution.
On November 19, 2010, the Court issued the Writ of Kalikasan 2 with a Temporary Environmental
Protection Order (TEPO) requiring respondents FPIC, FGC, and the members of their Boards of
Directors to file their respective verified returns. The TEPO enjoined FPIC and FGC to: (a) cease and
desist from operating the WOPL until further orders; (b) check the structural integrity of the whole
span of the 11 7-kilometer WOPL while implementing sufficient measures to prevent and avert any
untoward incident that may result from any leak of the pipeline; and ( c) make a report thereon within
60 days from receipt thereof.
In compliance with the writ, FPIC directors Edgar Chua, Dennis Javier, Dennis Gamab and Willie
Sarmiento submitted a Joint Return3 praying for the dismissal of the petition and the denial of the
privilege of the Writ of Kalikasan. They alleged that: petitioners had no legal capacity to institute the
petition; there is no allegation that the environmental damage affected the inhabitants of two (2) or
more cities or provinces; and the continued operation of the pipeline should be allowed in the interest
of maintaining adequate petroleum supply to the public.
Respondents FPIC and its directors and officers, other than the aforementioned four ( 4) directors, also
filed a Verified Return4 claiming that not all requirements for the issuance of the Writ of Kalikasan are
present and there is no showing that West Tower Corp. was authorized by all those it claimed to
represent. They further averred that the petition contains no allegation that respondents FPIC directors
and officers acted in such a manner as to allow the piercing of the corporate veil.
Meanwhile, on January 18, 201-1, FGC and the members of its Board of Directors and Officers filed
a Joint Compliance5 submitting the report required by the Writ of Kalikasan/TEPO. They contended
that they neither own nor operate the pipelines, adding that it is impossible for them to report on the
structural integrity of the pipelines, much less to cease and desist from operating them as they have no
capability, power, control or responsibility over the pipelines. They, thus, prayed that the directives of
the Writ of Kalikasan/TEPO be considered as sufficiently performed, as to them.
On January 21, 2011, FPIC, in compliance with the writ, submitted its 4-page "Report on Pipeline
Integrity Check and Preventive Maintenance Program."6 In gist, FPIC reported the following: (I) For
the structural integrity of the 117-kilometer pipeline, (a) the DOE engaged the services of UP-NIGS to
do borehole testing on 81 pre-identified critical areas of the WQPL in eight cities and municipalities-
all the boreholes showed negative presence of petroleum vapors; (b) pressure tests were conducted
after the repair of the leak and results showed negative leaks and the DOE's pipeline expert, Societe
General de Surveillance, New Zealand, has developed a pressure test protocol requiring a 24-hour
operation of running a scraper pig through the pipeline to eliminate air gap; (c) In-Line Inspection Test,
was conducted by NDT through MFL and ultrasonic. The NDT later cleared the WOPL from any
damage or corrosion.
(II) For preventive maintenance measures, (a) Cathodic Protection Systems are installed involving the
use of anode materials and the introduction of electric current in the pipeline to enhance prevention of
corrosion; (b) Regular Scraper Runs through the pipeline to maintain cleanliness and integrity of the
pipelines' internal surface; (c) Daily Patrols every two hours of the pipeline route to deter unauthorized
diggings in the vicinity of the pipeline segments; ( d) Regular coordination meetings with DPWH,
MMDA and utility companies to monitor projects that might involve digging or excavation in the
vicinity of the pipeline segments; (e) Installation of Security Warning Signs along the pipeline route
with toll free number which can be called in the event of an accident or emergency; (f) Emergency
Response Procedure of the ERT is activated by a call-out procedure; (g) Maintenance of Emergency
Equipment and Repair Kit which are always on standby; and, (h) Remotely controlled Isolation Valves
are in place to shut the pipeline when necessary.
On February 9, 2011, petitioners filed, and the Court eventually granted, their Motion to Set the Case
for Preliminary Conference and Hearing7 pursuant to Sec. 11, Rule 7 of the Rules of Procedure for
Environmental Cases.
On April 15, 2011, the Court conducted an ocular inspection of the WOPL in the vicinity of West
Tower to determine the veracity of the claim that there were two (2) additional leaks on FPIC's pipeline.
Results of the ocular inspection belied the claim.
In the meantime, petitioners also filed civil and criminal complaints against respondents arising from
the same incident or leakage from the WOPL.8
Since after the Court's issuance of the Writ of Kalikasan and the TEPO on November 19, 2010, FPIC
has ceased operations on both the WOPL and the BOPL. On May 31, 2011, however, the Court,
answering a query of the DOE, clarified and confirmed that what is covered by the Writ of Kalikasan
and TEPO is only the WOPL System of FPIC; thus, FPIC can resume operation of its BOPL System. 9
On July 7, 2011, petitioners filed an Omnibus Motion10 assailing the Court's May 31, 2011 Resolution,
praying for the conduct of oral argument on the issue of reopening the BOPL System. This was
followed, on September 9, 2011, by a Manifestation (Re: Current Developments) with Omnibus
Motion11 wherein petitioners invoked the precautionary principle12 and asserted that the possibility of
a leak in the BOPL System leading to catastrophic environmental damage is enough reason to order
the closure of its operation. They likewise alleged that the entities contracted by FPIC to clean and
remediate the environment are illegally discharging waste water, which had not undergone proper
treatment, into the Paraaque River. Petitioners, thus, prayed that respondents be directed to comply
with environmental laws in rehabilitating the surroundings affected by the oil leak and to submit a copy
of their work plan and monthly reports on the progress thereof. To these omnibus motions, respondents
were directed to file their respective comments.
On September 28, 2011, respondent FPIC filed an Urgent Motion for Leave (To Undertake "Bangkal
Realignment" Project)13 in order to reduce stress on the WOPL System. FPIC sought to construct a
new realigned segment to replace the old pipe segment under the Magallanes Interchange, which covers
the portion that leaked. Petitioners were directed to file their comment on FPIC's motion.
Report and Recommendation of the Court of Appeals
To expedite the resolution of the controversy, the Court remanded the case to the Court of Appeals
(CA). By this Court's Resolution dated November 22, 2011,14 the appellate court was required to
conduct hearings and, thereafter, submit a report and recommendation within 30 days after the receipt
of the parties' memoranda.
On March 21, 2012, the preliminary conference was continued before the CA wherein the parties made
admissions and stipulations of facts and defined the issues for resolution. In view of the technical nature
of the case, the CA also appointed15 several amici curiae,16 but only four (4) filed their reports.17
On December 26, 2012, the CA Former 11th Division submitted to the Court its well-crafted and
exhaustive 156-page Report and Recommendation18 dated December 21, 2012 (CA Report). Some
highlights of the Report:
1. Anent petitioners' June 28, 2011 Omnibus Motion assailing the reopening of the BOPL
System, the CA directed respondent FPIC to submit the appropriate certification from the
DOE as to the safe commercial operation of the BOPL; otherwise, the operation of the BOPL
must also be enjoined.
2. On petitioners' September 9, 2011 Manifestation (Re: Current Developments) with
Omnibus Motion, the CA directed the Inter-Agency Committee on Health to submit its
evaluation of the remediation plan prepared by CH2M Hill Philippines, Inc. for FPIC.
Further, the appellate court directed FPIC to strictly comply with the stipulations contained
in the permits issued by the Department of Environment and Natural Resources (DENR) for
its remediation activities in Barangay Bangkal, Makati City. The DENR was in turn directed
by the CA to:
(a) monitor compliance by respondent FPIC with applicable environmental laws
and regulations and conditions set forth in the permits issued;
(b) conduct independent analysis of end-products of the Multi-Phase Extraction
System;
(c) conduct regular consultative meetings with the City of Makati, residents of
Barangay Bangkal and other stakeholders concerning the remediation activities;
and,
(d) evaluate the viability of the recommendation of amicus Dr. Benjamin R. De
Jesus, Jr. to include the use of surfactants and oxygen-releasing compounds (ORCs)
in the middle and terminal portions of the remediation plan.
3. Respondent's September 27, 2011 Urgent Motion for Leave (To Undertake "Bangkal
Realignment" Project) was denied.
4. With regard to the March 29, 2012 Supplemental Manifestation (Re: List of Amici Curiae
and Recent Possible Leak in the Pipeline) filed by petitioners, the CA found that the existence
of another possible leak alleged by petitioners was not established. Nonetheless, to prevent
such event, the CA ordered FPIC to: (i) review, adopt and strictly observe appropriate safety
and precautionary measures; (ii) closely monitor the conduct of its maintenance and repair
works; and (iii) submit to the DOE regular monthly reports on the structural integrity and safe
commercial operation of the pipeline.
5. As to the merits of the case, the CA submitted the following recommendations:
(a) That the people's organizations, non-governmental organizations, and public
interest groups that indicated their intention to join the petition and submitted proof
of juridical personality (namely: the Catholic Bishop's Conference of the
Philippines; Kilusang Makabansang Ekonomiya, Inc.; Women's Business Council
of the Philippines, Inc.; Junior Chambers International Philippines, Inc. - San Juan
Chapter; Zonta Club of Makati Ayala Foundations; and the Consolidated Mansions
Condominium Corporation) be allowed to be formally impleaded as petitioners.
(b) That respondent FPIC be ordered to submit a certification from the DOE
Secretary that the WOPL is already safe for commercial operation. The certification
should take into consideration the adoption by FPIC of the appropriate leak
detection system to be used in monitoring the entire pipeline's mass input versus
mass output. The certification must also consider the necessity of replacing the
pipes with existing patches and sleeves. In case of failure of respondent FPIC to
submit the required certification from the DOE Secretary within sixty (60) days
from notice of the Honorable Supreme Court's approval of this recommendation,
the TEPO must be made permanent.
(c) That petitioners' prayer for the creation of a special trust fund to answer for
similar contingencies in the future be denied for lack of sufficient basis.
 d) That respondent FGC be not held solidarily liable under the TEPO.
(e) That without prejudice to the outcome of the civil and criminal cases filed
against respondents, the individual directors and officers of FPIC and FGC be not
held liable in their individual capacities.
On January 11, 2013, petitioners filed their Motion for Partial Reconsideration 19 of the CA's Report
praying that (a) instead of the DOE, the required certification should be issued by the DOST-Metal
Industry Research and Development Center; (b) a trust fund be created to answer for future
contingencies; and ( c) the directors and officers of FPIC and FGC be held accountable.
On January 25, 2013, FPIC filed its Compliance (Re: Department of Energy Certification on the Black
Oil Pipeline)20and submitted the required DOE Certification21 issued on January 22, 2013 by DOE
Secretary Carlos Jericho L. Petilla (Secretary Petilla). On March 14, 2013, petitioners countered with
a Manifestation with Motion22 asserting that FPIC's certification is not compliant with the CA's
requirement. Hence, petitioners moved that the certification should be disregarded, the 30-day period
be deemed to have lapsed, and FPIC be permanently enjoined from operating the BOPL.
On July 30, 2013, the Court issued a Resolution adopting the recommendation of the CA in its Report
and Recommendation that FPIC be ordered to secure a certification from the DOE Secretary before
the WOPL may resume its operations. The pertinent portion of said Resolution reads:
[FPIC] is hereby ORDERED to submit a certification from the DOE Secretary that the pipeline is
already safe for commercial operation. The certification should take into consideration the adoption by
FPIC of the appropriate leak detection system to be used in monitoring the entire pipeline's mass input
versus mass output. The certification must also consider the necessity of replacing the pipes with
existing patches and sleeves x x x.23
The DOE Secretary is DIRECTED to consult the [DOST] regarding the adoption of the appropriate
leak detection system and the necessity of replacing the pipes with existing patches and sleeves.
On October 2, 2013, petitioners, in a Motion for Reconsideration with Motion for Clarification,
emphasized that the CA found FPIC's tests and maintenance program to be insufficient and
inconclusive to establish the WOPL' s structural integrity for continued commercial
operation.24 Furthermore, petitioners point out that the DOE is biased and incapable of determining the
WOPL's structural integrity.
Respondents, for their part, maintain that the DOE has the technical competence and expertise to assess
the structural integrity of the WOPL and to certify the system's safety for commercial
operation.25 Respondents further allege that the DOE is the agency empowered to regulate the
transportation and distribution of petroleum products, and to regulate and monitor downstream oil
industry activities, including "product distribution" through pipelines. 26
In compliance with the Court's July 30, 2013 Resolution, the DOE Secretary issued on October 25,
2013 a Certification,27 attesting that the WOPL is safe to resume commercial operations, subject to
monitoring or inspection requirements, and imposing several conditions that FPIC must comply with.
The Certification, in its entirety, reads:
This is to certify that based on the Pipeline Integrity Management Systems (PIMS) being implemented
by [FPIC] for its [WOPL] facility, the same is safe to resume commercial operations. This certification
is being issued after consultation with the [DOST] and on the basis of the following considerations, to
wit:
1. DOE noted the adoption by FPIC of the appropriate leak detection system to be used in
monitoring the pipeline's mass input versus mass output, as well as the other measures of leak
detection and prevention adopted by the latter;
2. DOE further noted that FPIC has already undertaken realignment and reinforcement works
on the current pipeline to remove majority of the patches. FPIC has likewise presented
substantial and adequate documentation showing that the remaining patches and sleeves are
safe, and that the use of such is recognized by the industry and complies with existing
standards;
3. DOE finally noted the results of various tests and inspections done on the pipeline as
indicated in the Manifestation submitted by ,the DOE on March 31, 2012, in the civil case
docketed as CA GR SP No. 00008 and entitled West Tower Condominium, et al. [v.] First
Philippine Industrial Corporation, et al.
This certification is being issued subject to the condition that FPIC will submit itself to regular
monitoring and validation by the Oil Industry Management Bureau (OIMB) of the implementation of
its PIMS, particularly on the following: (a) mass or volume input versus mass or volume output
loss/gain accounting; (b) results of borehole monitoring, (c) inspection of the pipeline cathodic
protection and (d) pressure test.
Further, FPIC shall submit itself to any test or inspection that the DOE and DOST may deem
appropriate for purposes of monitoring the operations of the WOPL facility.
The Court is fully cognizant of the WOPL' s value in commerce and the adverse effects of a prolonged
closure thereof. Nevertheless, there is a need to balance the necessity of the immediate reopening of
the WOPL with the more important need to ensure that it is sound for continued operation, since the
substances it carries pose a significant hazard to the surrounding population and to the
environment.28 A cursory review of the most recent oil pipeline tragedies around the world will readily
show that extreme caution should be exercised in the monitoring and operation of these common
carriers:
(1) On August 1, 2014, a series of powerful explosions from underground pipeline systems
ripped up the streets of Kaohsiung, Taiwan, killing at least 28 people and injuring 299 more.
Further, 23 ,600, 2,268 and 6,000 households were left without gas, power and water,
respectively, in the 2-3 square kilometer blast area.29
(2) On November 22, 2013, an oil pipeline leaked, caught fire, and exploded in Qingdao,
Shangdao Province in China, killing 55 people and injuring more than a hundred more. 30
(3) On September 14, 2011, a fuel pipeline exploded in Kenya's capital city, Nairobi, reducing
bodies to dust and flattening homes. At least 7 5 people died in the explosion, while more
than a hundred people were injured.31
 (4) In September 2010, a natural gas pipeline ruptured and set off a fireball, killing eight (8) i. Determine location of sleeves.
people and leveling 3 8 homes in San Bruno, California in the United States. 32
ii. Review of procedures on repair of sleeves.
(5) On July 30, 2004, a rupture of an underground natural gas pipeline buried six (6) meters
in Ghislenghien, Belgium resulted in 24 deaths and over 120 injuries. 33 iii. Random visual inspection of areas easily accessible.

On April 29 and 30, 2014, the DOE organized a dialogue between said government agencies and the c. Cathodic protection's onsite inspection on rectifier to check readings
FPIC. There it was stated that during the dialogue, "the division heads and a high profile team from
FPIC, both from operation and management made presentations and answered questions on pipeline
i. Old readings
pumping operation and product delivery, and a detailed explanation of the FPIC PIMS' control
measures, condition monitoring measures, and emergency measures, as well as its various activities
and projects implemented since 2010 such as pipeline replacement and realignment in Pandacan and ii. Current Readings
Bangkal, inspection and reinforcement of all patches in the WOPL, inspection and reinforcement of a
number of reported dents in the WOPL, conduct of successful leak tests, and installation of boreholes iii. Segment covered
that are gas-tested on a weekly basis, and the safety systems that go with the daily pipeline operation
and maintenance and project execution."34 iv. Criteria for prioritization for corrective action

On August 5, 2014, Secretary Carlos Jericho L. Petilla of the DOE submitted a letter 35 recommending d. Observe and witness the running/operation of the cleaning pig.
activities and timetable for the resumption of the WOPL operations, to wit:
e. Check and validate all calibration certificate of instruments
A. Preparatory to the Test Run
i. Instrument verification and calibration.
I. FPIC Tasks:
B. Actual Test Run (to be undertaken both by FPIC and inter-agency)
a. Continue submission of monitoring charts, data/reading, accomplishment reports, and
project status for all related activities/works. Respond to comments and prepare for site
inspection. a. Perform Cleaning Pig Run

b. Continue gas testing along the right-of-way using the monitoring wells or boreholes. i. Witness launching and receiving of the cleaning pig.
Prepare for inspection of right-of-way and observation of gas testing activities on monitoring
wells and boreholes. ii. Handling of the residuals after cleaning.

c. Expound on the selection of borehole location. For example, identify those located in b. Demonstrate Various Pressure Tests (already being conducted by FPIC)
pipeline bends, bodies of water, residential areas, repaired portions of the pipelines, dents and
welded joints. i. Blocked-in pressure test (Leak Test, not in operation)

d. Continue submitting status report relating to "Project Mojica" (an ongoing pipeline ii. In-operation (hourly reading)
segment realignment activity undertaken by FPIC to give way to a flood control project of
MMDA in the vicinity of Mojica St. and Pres. Osmea Highway in Makati City). Prepare for
c. Continue Current Gas Monitoring (boreholes)
site inspection.

i. Ocular inspection of selected areas

II. Inter-agency undertaking:

d. Demonstrate mass or volume balance computation during WOPL test run (already being
a. Conduct onsite inspection of right-of-way
implemented in the BOPL)

b. Review/check remaining 22 patches that were already inspected and reinforced with
i. 30 days baseline data generation
Clockspring sleeves.
 ii. 30 days computational analysis and monitoring
C. Commissioning or Return to Commercial Operation
I. FPIC Tasks:
a. Continue implementation of the PIMS. Review recommendations from DOE.
b. Continue monthly reporting of operations and maintenance activities with DOE.
c. Continue reporting and coordination with DOE and other government agencies for
implementation of projects.36
Secretary Petilla also recounted to the Court in his August 5, 2014 letter that the DOE, together with
the DPWH and the Metropolitan Manila Development Authority (MMDA), observed the different
milestones of the realignment project being undertaken by FPIC in support of the MMDA Flood
Control Project and stated that the new line segment as laid was coated with corrosion protection prior
to the backfilling of the excavated portion.
On February 3, 2015, the Court required the parties to submit their comment on Sec. Petilla's letter
within ten (10) days from receipt of the Resolution. On various dates, respondents First Gen
Corporation, FPIC, and petitioner West Tower filed their respective comments 37 in compliance with
the Court's resolution. The intervenors were unable to comply with the Court's directive; hence, they
are deemed to have waived their right to file their respective comments. The Issues
Having received the October 25, 2013 Certification and the August 5, 2014 Letter from the DOE on
the state of the WOPL, as well as the parties' comments thereon, the following issues defined by the
parties during the March 21, 2012 preliminary conference are now ripe for adjudication:
1. Whether petitioner West Tower Corp. has the legal capacity to represent the other
petitioners and whether the other petitioners, apart from the residents of West Tower and
Barangay Bangkal, are real parties-in-interest;
2. Whether a Permanent Environmental Protection Order should be issued to direct the
respondents to perform or to desist from performing acts in order to protect, preserve, and
rehabilitate the affected environment;
3. Whether a special trust fund should be opened by respondents to answer for future similar
contingencies; and
4. Whether FGC and the directors and officers of respondents FPIC and FGC may be held
liable under the environmental protection order.38
The Court's Ruling
We adopt, with modifications, the recommendations of the CA and discuss the foregoing issues in
seriatim.
I.
Petitioners as Real Parties-in-Interest
On the procedural aspect, We agree with the CA that petitioners who are affected residents of West
Tower and Barangay Bangkal have the requisite concern to be real parties-in-interest to pursue the
instant petition.
Residents of West Tower and Barangay Bangkal
As defined, a real party-in-interest is the party who stands to be benefited or injured by the judgment
in the suit, or the party entitled to the avails of the suit. 39 Generally, every action must be prosecuted
or defended in the name of the real parties-in-interest.40 In other words, the action must be brought by
the person who, by substantive law, possesses the right sought to be enforced.41 Alternatively, one who
has no right or interest to protect cannot invoke the jurisdiction of the court as party-plaintiff-in-action
for it is jurisprudentially ordained that every action must be prosecuted or defended in the name of the
real party-in-interest.42
In the case at bar, there can be no quibble that the oil leak from the WOPL affected all the condominium
unit owners and residents of West Tower as, in fact, all had to evacuate their units at the wee hours in
the morning of July 23, 2010, when the condominium's electrical power was shut down. Until now,
the unit owners and residents of West Tower could still not return to their condominium units. Thus,
there is no gainsaying that the residents of West Tower are real parties-in-interest.
There can also be no denying that West Tower Corp. represents the common interest of its unit owners
and residents, and has the legal standing to file and pursue the instant petition. While a condominium
corporation has limited powers under RA 4 726, otherwise known as The Condominium Act, 43 it is
empowered to pursue actions in behalf of its members. In the instant case, the condominium
corporation .is the management body of West Tower and deals with everything that may affect some
or all of the condominium unit owners or users.
It is of no moment that only five residents of West Tower signed their acquiescence to the filing of the
petition for the issuance of the Writ of Kalikasan, as the merits of such petition is, as aptly put by the
CA, not measured by the number of persons who signified their assent thereto, but on the existence of
a prima facie case of a massive environmental disaster.
Moreover, the fact that no board resolution was submitted by West Tower Corp. authorizing Manuel
Dy Chuaunsu, Jr. to sign the Verification and Certification of Non-forum Shopping is irrelevant. The
records show that petitioners submitted a notarized Secretary's Certificate44 attesting that the authority
of Chuaunsu to represent the condominium corporation in filing the petition is from the resolution of
the total membership of West Tower Corp. issued during their November 9, 2010 meeting with the
requisite quorum. It is, thus, clear that it was not the Board of West Tower Corp. which granted
Chuaunsu the authority but the full membership of the condominium corporation itself.
As to the residents of Barangay Bangkal, they are similarly situated with the unit owners and residents
of West Tower and are real parties-in-interest to the instant case, i.e., if they so wish to join the
petitioners.
Organizations that indicated their intention to join the petition
and submitted proof of juridical personality
Anent the propriety of including the Catholic Bishops' Conference of the Philippines, Kilusang
Makabansang Ekonomiya, Inc., Women's Business Council of the Philippines, Inc., Junior Chambers
International Philippines, Inc. - San Juan Chapter, Zonta Club of Makati Ayala Foundations, and the
Consolidated Mansions Condominium Corporation, as petitioners in the case, the Court already
granted their intervention in the present controversy in the adverted July 30, 2013 Resolution.
This is so considering that the filing of a petition for the issuance of a writ of kalikasan under Sec. 1,
Rule 745 of the Rules of Procedure for Environmental Cases does not require that a petitioner be directly
affected by an environmental disaster. The rule clearly allows juridical persons to file the petition on
behalf of persons whose constitutional right to a balanced and healthful ecology is violated, or
threatened with violation.
Thus, as parties to the case, they are entitled to be furnished copies of all the submissions to the Court,
including the periodic reports of FPIC and the results of the evaluations and tests conducted on the
WOPL.
Having disposed of the procedural issue, We proceed to the bone of contention in the pending motions.
Suffice it to state in the outset that as regards the substantive issues presented, the Court, likewise,
concurs with the other recommendations of the CA, with a few modifications.
II.
Propriety of Converting the TEPO to PEPO or its Lifting in light of the
DOE Certification of the WOPL's Commercial Viability
To recall, petitioners' persistent plea is for the conversion of the November 19, 2010 TEPO into a
Permanent Environmental Protection Order (PEPO) pursuant to Sec. 3,46 Rule 5 of the Rules of
Procedure for Environmental Cases. For its part, respondent FPIC asserts that regular testing, as well
as the measures that are already in place, will sufficiently address any concern of oil leaks from the
WOPL.
With respect to leak detection, FPIC claims that it has in place the following systems: (a) regular
cleaning scraper runs, which are done quarterly; (b) pipeline integrity gauge (PIG) tests/Intelligent
PIG, now known as in-line inspections (ILI), which is done every five years; (c) pressure monitoring
valves; and ( d) 24-hour patrols. Additionally, FPIC asserted that it also undertook the following: (a)
monitoring of wells and borehole testing/vapor tests; (b) leak tightness test, also known as segment
pressure test; (c) pressure-controlled test; (d) inspection and reinforcement of patches; (e) inspection
and reinforcement of dents; and (f) Pandacan segment replacement.47Furthermore, in August 2010,
with the oil leak hogging the headlines, FPIC hired NDT Middle East FZE (NDT) to conduct ILI
inspections through magnetic flux leakage (MFL) and ultrasonic tests to, respectively, detect wall
thinning of the pipeline and check it for cracks.
The CA, however, observed that all of these tests and measures are inconclusive and insufficient for
purposes of leak detection and pipeline integrity maintenance. Hence, considering the necessary
caution and level of assurance required to ensure that the WOPL system is free from leaks and is safe
for commercial operation, the CA recommended that FPIC obtain from the DOE a certification that
the WOPL is already safe for commercial operation. This certification, according to the CA, was to be
issued with due consideration of the adoption by FPIC of the appropriate leak detection systems to
monitor sufficiently the entire WOPL and the need to replace portions of the pipes with existing patches
and sleeves. Sans the required certification, use of the WOPL shall remain abated.
The Court found this recommendation of the appellate court proper. Hence, We required FPIC to obtain
the adverted DOE Certification in Our July 30, 2013 Resolution. We deemed it proper to require said
certification from the DOE considering that the core issue of this case requires the specialized
knowledge and special expertise of the DOE and various other administrative agencies. On October
25, 2013, the DOE submitted the certification pursuant to the July 30, 2013 Resolution of the Court.
Later, however, on August 5, 2014, DOE Secretary Carlos Jericho I. Petilla submitted a letter
recommending certain activities and the timetable for the resumption of the WOPL operations after
conducting a dialogue between the concerned government agencies and FPIC.
After a perusal of the recommendations of the DOE and the submissions of the parties, the Court adopts
the activities and measures prescribed in the DOE letter dated August 5, 2014 to be complied with by
FPIC as conditions for the resumption of the commercial operations of the WOPL. The DOE should,
therefore, proceed with the implementation of the tests proposed in the said August 5, 2014 letter.
Thereafter, if it is satisfied that the results warrant the immediate reopening of the WOPL, the DOE
shall issue an order allowing FPIC to resume the operation of the WOPL. On the other hand, should
the probe result in a finding that the pipeline is no longer safe for continued use and that its condition
is irremediable, or that it already exceeded its serviceable life, among others, the closure of the WOPL
may be ordered.
The DOE is specially equipped to consider FPIC's proper implementation and compliance with its
PIMS and to evaluate the result of the various tests conducted on the pipeline. The DOE is empowered
by Sec. 12(b)(l), RA 7638 to formulate and implement policies for the efficient and economical
"distribution, transportation, and storage of petroleum, coal, natural gas."48 Thus, it cannot be gainsaid
that the DOE possesses technical knowledge and special expertise with respect to practices in the
transportation of oil through pipelines.
Moreover, it is notable that the DOE did not only limit itself to the knowledge and proficiency available
within its offices, it has also rallied around the assistance of pertinent bureaus of the other
administrative agencies: the ITDI49of the DOST, which is mandated to undertake technical services
including standards, analytical and calibration services; the MIRDC,50 also of the DOST, which is the
sole government entity directly supporting the metals and engineering industry; 51 the EMB52 of the
DENR, the agency mandated to implement, among others, RA 6969 (Toxic Substances and Hazardous
and Nuclear Waste Control Act of 1990) and RA 9275 (Philippine Clean Water Act of 2004); and the
BOD of the DPWH, which is mandated to conduct, supervise, and review the technical design aspects
of projects of government agencies.53
The specialized knowledge and expertise of the foregoing agencies must, therefore, be availed of to
arrive at a judicious decision on the propriety of allowing the immediate resumption of the WOPL's
operation. In a host of cases, this Court held that when the adjudication of a controversy requires the
resolution of issues within the expertise of an administrative body, such issues must be investigated
and resolved by the administrative body equipped with the specialized knowledge and the technical
expertise.54 Hence, the courts, although they may have jurisdiction and power to decide cases, can
utilize the findings and recommendations of the administrative agency on questions that demand "the
exercise of sound administrative discretion requiring the special knowledge, experience, and services
of the administrative tribunal to determine technical and intricate matters of fact."55
Justice Leonen, in his dissent, is of the view that the petition should be denied and the TEPO
immediately lifted in light of the DOE's issuance of a certification attesting to the safety of the WOPL
for continued commercial operations, thereby rendering the instant petition moot and academic,
seeking, as it does, the checking of the pipeline's structural integrity. According to his dissent, the writ
of kalikasan issued by the Court has already served its functions and, therefore, is functus officio.
Moreover, he argues that directing the DOE and FPIC to repeat their previous procedures is tantamount
to doubting the agency's performance of its statutorily-mandated tasks, over which they have the
necessary expertise, and implies that said DOE certification is improper, a breach, allegedly, of the
principle of separation of powers.
He also contends that the majority ordered the repetition of the procedures and tests already conducted
on the WOPL because of the fear and uncertainty on its safeness despite the finding of the DOE in
favor of its reopening, taking into consideration the occurrence of numerous pipeline incidents
worldwide. The dissent argues that the precautionary principle should not be so strictly applied as to
unjustifiably deprive the public of the benefits of the activity to be inhibited, and to unduly create other
risks.
The dissent's contentions that the case is already moot and academic, that the writ of kalikasan has
already served its function, and that the delay in the lifting of the TEPO may do more harm than good
are anchored on the mistaken premise that the precautionary principle was applied in order to justify
the order to the DOE and the FPIC for the conduct of the various tests anew. The following reasons
easily debunk these arguments:
1. The precautionary principle is not applicable to the instant case;
2. The DOE certification is not an absolute attestation as to the WOPL's structural integrity
and in fact imposes several conditions for FPIC's compliance;
3. The DOE itself, in consultation with FPIC and the other concerned agencies, proposed the
activities to be conducted preparatory to the reopening of the pipeline; and
4 . There are no conclusive findings yet on the WOPL's structural integrity.
Section 1, Rule 20 of A.M. No. 09-6-8-SC or the Rules of Procedure for Environmental Cases, on the
Precautionary Principle, provides that "[ w ]hen there is lack of full scientific certainty in establishing
a causal link between human activity and environmental effect, the court shall apply the precautionary
principle in resolving the case before it."
According to the dissent, the directive for the repetition of the tests is based on speculations, justified
by the application of said principle. This, however, is not the case. Nowhere did We apply the
precautionary principle in deciding the issue on the WOPL's structural integrity.
The precautionary principle only applies when the link between the cause, that is the human activity
sought to be inhibited, and the effect, that is the damage to the environment, cannot be established with
full scientific certainty. Here, however, such absence of a link is not an issue. Detecting the existence
of a leak or the presence of defects in the WOPL, which is the issue in the case at bar, is different from
determining whether the spillage of hazardous materials into the surroundings will cause
environmental damage or will harm human health or that of other organisms. As a matter of fact, the
petroleum leak and the harm that it caused to the environment and to the residents of the affected areas
is not even questioned by FPIC.
It must be stressed that what is in issue in the instant petition is the WOPL's compliance with pipeline
structure standards so as to make it fit for its purpose, a question of fact that is to be determined on the
basis of the evidence presented by the parties on the WOPL's actual state. Hence, Our consideration of
the numerous findings and recommendations of the CA, the DOE, and the amici curiae on the WOPL'
s present structure, and not the cited pipeline incidents as the dissent propounds.
Consider also the fact that it is the DOE itself that imposed several conditions upon FPIC for the
resumption of the operations of the WOPL. This, coupled with the submission by the DOE of its
proposed activities and timetable, is a clear and unequivocal message coming from the DOE that the
WOPL's soundness for resumption of and continued commercial operations is not yet fully determined.
And it is only after an extensive determination by the DOE of the pipeline's actual physical state
through its proposed activities, and not merely through a short-form integrity audit,56that the factual
issue on the WOPL's viability can be settled. The issue, therefore, on the pipeline's structural integrity
has not yet been rendered moot and remains to be subject to this Court's resolution. Consequently, We
cannot say that the DOE's issuance of the certification adverted to equates to the writ of kalikasan being
functus officio at this point.
The dissent is correct in emphasizing that We defer to the findings of fact of administrative agencies
considering their specialized knowledge in their field. And We, as a matter of fact, acceded to the DOE'
s conclusions on the necessity of the conduct of the various activities and tests enumerated in Sec.
Petilla's letter to this Court dated August 5, 2014. Hence, Our directive for the DOE to immediately
commence the activities enumerated in said Letter, to determine the pipeline's reliability, and to order
its reopening should the DOE find that such is proper.
The dissent also loses sight of the fact that the petition not only seeks the checking of the WOPL's
structural integrity, but also prays for the rehabilitation of the areas affected by the leak, the creation
of a special trust fund, the imposition of liability upon the directors of FPIC, among others. These
issues, undoubtedly, are matters that are not addressed by the DOE certification alone. Furthermore,
these are issues that no longer relate to the WOPL' s structure but to its maintenance and operations, as
well as to the residues of the incident. It will, thus, be improper for Us to simply dismiss the petition
on the basis solely of the alleged resolution of only one of several issues, which purportedly renders
the issue on the WOPL' s soundness moot, without disposing of the other issues presented.
Lastly, any delay in the reopening of the WOPL, if said delay is for the purpose of making sure that
the pipeline is commercially viable, is better than hastily allowing its reopening without an extensive
check on its structural integrity when experience shows that there were and may still be flaws in the
pipeline. Even the DOE, the agency tasked to oversee the supply and distribution of petroleum in the
country, is well aware of this and even recommended the checking of the patched portions of the
pipeline, among others. In this regard, the Court deems it best to take the necessary safeguards, which
are not similar to applying the precautionary principle as previously explained, in order to prevent a
similar incident from happening in the future.
III.
Propriety of the Creation of a Special Trust Fund
Anent petitioners' prayer for the creation of a special trust fund, We note that under Sec. 1, Rule 5 of
the Rules of Procedure for Environmental Cases, a trust fund is limited solely for the purpose of
rehabilitating or restoring the environment. Said proviso pertinently provides:
SEC. 1. Reliefs in a citizen suit. - If warranted, the court may grant to the plaintiff proper reliefs which
shall include the protection, preservation or rehabilitation of the environment and the payment of
attorney's fees, costs of suit and other litigation expenses. It may also require the violator to submit a
program of rehabilitation or restoration of the environment, the costs of which shall be borne by the
violator, or to contribute to a special trust fund for that purpose subject to the control of the court.
(emphasis supplied)
Furthermore, Sec. 15( e ), Rule 7 of the Rules of Procedure for Environmental Cases expressly prohibits
the grant of damages to petitioners in a petition for the issuance of a writ of kalikasan, viz:
Section 15. Judgment. - Within sixty (60) days from the time the petition is submitted for decision, the
court shall render judgment granting or denying the privilege of the writ of kalikasan.
The reliefs that may be granted under the writ are the following:
xxxx
(e) Such other reliefs which relate to the right of the people to a balanced and healthful ecology or to
the protection, preservation, rehabilitation or restoration of the environment, except the award of
damages to individual petitioners.
A reading of the petition and the motion for partial reconsideration readily reveals that the prayer is for
the creation of a trust fund for similar future contingencies. This is clearly outside the limited purpose
of a special trust fund under the Rules of Procedure for Environmental Cases, which is to rehabilitate
or restore the environment that has presumably already suffered. Hence, the Court affirms with
concurrence the observation of the appellate court that the prayer is but a claim for damages, which is
prohibited by the Rules of Procedure for Environmental Cases. As such, the Court is of the considered
view that the creation of a special trust fund is misplaced. The present ruling on petitioners' prayer for
the creation of a special trust fund in the instant recourse, however, is without prejudice to the
judgment/s that may be rendered in the civil and/or criminal cases filed by petitioners arising from the
same incident if the payment of damages is found warranted.
IV.
Liability of FPIC, FGC and their respective Directors and Officers
On the last issue of the liability of FPIC, FGC and their respective directors and officers, the CA found
FGC not liable under the TEPO and, without prejudice to the outcome of the civil case (Civil Case No.
11-256, RTC, Branch 58 in Makati City) and criminal complaint (Complaint-Affidavit for Reckless
Imprudence, Office of the Provincial Prosecutor of Makati City) filed against them, the individual
directors and officers of FPIC and FGC are not liable in their individual capacities.
The Court will refrain from ruling on the finding of the CA that the individual directors and officers of
FPIC and FGC are not liable due to the explicit rule in the Rules of Procedure for Environmental cases
that in a petition for a writ of kalikasan, the Court cannot grant the award of damages to individual
petitioners under Rule 7, Sec. 15(e) of the Rules of Procedure for Environmental Cases. As duly noted
by the CA, the civil case and criminal complaint filed by petitioners against respondents are the proper
proceedings to ventilate and determine the individual liability of respondents, if any, on their exercise
of corporate powers and the management of FPIC relative to the dire environmental impact of the
dumping of petroleum products stemming from the leak in the WOPL in Barangay Bangkal, Makati
City.
Hence, the Court will not rule on the alleged liability on the part of the FPIC and FGC officials which
can, however, be properly resolved in the civil and criminal cases now pending against them.
Other Matters
The CA's resolution on petitioners' September 9, 2011 Manifestation (Re: Current Developments) with
Omnibus Motion on the remediation plan in Barangay Bangkal by directing the Inter-Agency
Committee on Environmental Health to submit its evaluation of the said plan prepared by CH2M
Philippines, Inc., for FPIC to strictly comply with the stipulations embodied in the permits issued by
the DENR, and to get a certification from the DENR of its compliance thereto is well taken. DENR is
the government agency tasked to implement the state policy of "maintaining a sound ecological balance
and protecting and enhancing the quality of the environment" 57 and to "promulgate rules and
regulations for the control of water, air, and land pollution."58 It is indubitable that the DENR has
jurisdiction in overseeing and supervising the environmental remediation of Barangay Bangkal, which
is adversely affected by the leak in the WOPL in 2010.
With regard to petitioners' March 29, 2012 Supplemental Manifestation about a recent possible leak in
the pipeline, the CA appropriately found no additional leak. However, due to the devastating effect on
the environs in Barangay Bangkal due to the 2010 leak, the Court finds it fitting that the pipeline be
closely and regularly monitored to obviate another catastrophic event which will prejudice the health
of the affected people, and to preserve and protect the environment not only for the present but also for
the future generations to come.
Petitioner's January 10, 2013 Motion for Partial Recommendation of the CA' s Report need not be
discussed and given consideration. As the CA' s Report contains but the appellate court's
recommendation on how the issues should be resolved, and not the adjudication by this Court, there is
nothing for the appellate court to reconsider.
As to petitioner's October 2, 2013 Motion for Reconsideration with Motion for Clarification, the
matters contained therein have been considered in the foregoing discussion of the primary issues of
this case. With all these, We need not belabor the other arguments raised by the parties.
IN VIEW OF THE FOREGOING, the Motion for Partial Reconsideration is hereby DENIED. The
Motion for Reconsideration with Motion for Clarification is PARTLY GRANTED. The Court of
Appeals' recommendations, embodied in its December 21, 2012 Report and Recommendation, are
hereby ADOPTED with the following MODIFICATIONS:
I. The Department of Energy (DOE) is hereby ORDERED to oversee the strict implementation of the
following activities:
A. Preparatory to the Test Run of the entire stretch of the WOPL:
1) FPIC shall perform the following:
a. Continue submission of monitoring charts, data/reading,
accomplishment reports, and project status for all related activities/works.
Respond to comments and prepare for site inspection.
b. Continue gas testing along the right-of-way using the monitoring wells
or boreholes. Prepare for inspection of right-of-way and observation of
gas testing activities on monitoring wells and boreholes.
c. Explain the process of the selection of borehole location and identify
those located in pipeline bends, bodies of water, highways, residential
areas, repaired portions of the pipelines, dents and welded joints, as well
other notable factors, circumstances, or exposure to stresses. d. Set up
additional boreholes and monitoring wells sufficient to cover the entire
stretch of the WOPL, the number and location of which shall be
determined by the DOE.
e. Continue submitting status report to the concerned government
agency/ies relating to "Project Mojica," or the on-going pipeline segment
realignment activity being undertaken by FPIC to give way to a flood
control project of the MMDA in the vicinity of Mojica St. and Pres.
Osmea Highway, and prepare for site inspection.
2) The DOE shall perform the following undertakings:
a. Conduct onsite inspection of the pipeline right-of-way, the area around
the WOPL and the equipment installed underground or aboveground.
b. Review and check the condition of the 22 patches reinforced with
Clockspring sleeves by performing the following:
i. Determine the location of the sleeves
ii. Review the procedure for the repair of the sleeves
iii. Inspect the areas where the affected portions of the WOPL
are located and which are easily accessible.
c. Inspect onsite the cathodic protection rectifier to check the following:
i. old and current readings
ii. the segment/s covered by the cathodic protection system
iii. review the criteria for prioritization of corrective action.
d. Observe and witness the running/operation of the intelligent and
cleaning pigs.
e. Check and calibrate the instruments that will be used for the actual tests
on the pipeline, and validate the calibration certificates of these
instruments.
B. During the Actual Test Run:
1) FPIC shall perform the following:
a. Perform Cleaning Pig run and witness the launching and receiving of
the intelligent and cleaning pigs.
b. Demonstrate and observe the various pressure and leakage tests,
including the following:
i. "Blocked-in pressure test" or the pressure test conducted while
all the WOPL's openings are blocked or closed off; and
ii. "In-operation test" or the hourly monitoring of pressure rating
after the pipeline is filled with dyed water and pressurized at a
specified rate.
c. Continue, inspect, and oversee the current gas monitoring system, or the
monitoring of gas flow from the boreholes and monitoring wells of the
WOPL.
d. Check the mass or volume balance computation during WOPL test run
by conducting:
i. 30 days baseline data generation
ii. Computational analysis and monitoring of the data generated.
II. After FPIC has undertaken the activities prescribed in the preceding paragraph 1, the DOE shall
determine if the activities and the results of the test run warrant the re-opening of the WOPL. In the
event that the DOE is satisfied that the WOPL is safe for continued commercial operations, it shall
issue an order allowing FPIC to resume the operations of the pipeline.
III. Once the WOPL is re-opened, the DOE shall see to it that FPIC strictly complies with the following
directives:
a. Continue implementation of its Pipeline Integrity Management System (PIMS), as
reviewed by the DOE, which shall include, but shall not be limited to:
1. the conduct of daily patrols on the entire stretch of the WOPL, every two hours;
 2. continued close monitoring of all the boreholes and monitoring wells of the
WOPL pipeline;

3. regular periodic testing and maintenance based on its PIMS; and

4. the auditing of the pipeline's mass input versus mass output;

b. submit to the DOE, within ten (10) days of each succeeding month, monthly reports on its
compliance with the above directives and any other conditions that the DOE may impose, the
results of the monitoring, tests, and audit, as well as any and all activities undertaken on the
WOPL or in connection with its operation. The concerned government agencies, namely: the
Industrial Technology Development Institute (ITDI) and the Metals Industry Research and
Development Center (MIRDC), both under the Department of Science and Technology
(DOST), the Environmental Management Bureau (EMB) of the Department of Environment
and Natural Resources (DENR), the Bureau of Design (BOD) of the Department of Public
Works and Highways (DPWH), the University of the Philippines - National Institute of
Geological Science (UP-NI GS) and University of the Philippines - Institute of Civil
Engineering (UP-ICE), the petitioners, intervenors and this Court shall likewise be furnished
by FPIC with the monthly reports. This shall include, but shall not be limited to: realignment,
repairs, and maintenance works; and

c. continue coordination with the concerned government agencies for the implementation of
its projects.1wphi1

IV. Respondent FPIC is also DIRECTED to undertake and continue the remediation, rehabilitation and
restoration of the affected Barangay Bangkal environment until full restoration of the affected area to
its condition prior to the leakage is achieved. For this purpose, respondent FPIC must strictly comply
with the measures, directives and permits issued by the DENR for its remediation activities in Barangay
Bangkal, including but not limited to, the Wastewater Discharge Permit and Permit to Operate. The
DENR has the authority to oversee and supervise the aforesaid activities on said affected barangay.

V. The Inter-Agency Committee on Environmental Health under the City Government of Makati shall
SUBMIT to the DENR its evaluation of the Remediation Plan prepared by CH2M Hill Philippines,
Inc. within thirty (30) days from receipt hereof.

VI. Petitioners' prayer for the creation of a special trust fund to answer for similar contingencies in the
future is DENIED.

SO ORDERED.