City of Batangas vs. Philippine Shell Petroleum Corporation

G.R. No. 195003. June 7, 2017
Ponente: Caguioa, J.,

FACTS

On May 28, 2001, the Sangguniang Panlungsod enacted Ordinance No. 3, Series of 2001 which requires heavy industries operating along the portions of Batangas Bay within the territorial jurisdiction of Batangas City to construct desalination plants to facilitate the use of seawater as coolant for their industrial facilities instead of underground fresh water.

PSPC with other similar industries (SPEX, JG Summit and First Gas) filed separate petitions for Declaration of Nullity before the RTC praying that the Assailed Ordinance be declared null and void. The petitioner alleged that the ordinance constitutes an invalid exercise of police power as it failed to meet the substantive requirements for validity. Particularly, PSPC argued that the Assailed Ordinance contravenes the Water Code of the Philippines (Water Code), and encroaches upon the power of the National Water Resources Board (NWRB) to regulate and control the Philippines’ water resources.

In response, Batangas City and the Sangguniang Panlungsod maintained that they have the power to enact the Assailed Ordinance pursuant to the general welfare clause under the LGC. The rationale of the ordinance is to  promote the use of seawater for cooling purpose, considering that fresh ground water is a “perishable commodity.” 

ISSUE

(1) Whether or not the control and regulation of the use of water may be made subject of a city ordinance under the regime of the Water Code — a national statute governing the same subject matter.

RULING

Ruling of the RTC: 

The RTC resolved the Petition by issuing a Decision declaring the Assailed Ordinance null and void for violating the due process clause of the Constitution. The RTC gave credence to the testimony of PSPC’s witness Engineer Joeffrey Caranto (Engineer Caranto) who conducted a hydrogeology study finding that there is no threat of depletion of the ground water resource[s] in the Tabangao-Malitam [w]atershed that purportedly may result from PSPC’s deep well pumping.

The RTC also noted that the Sangguniang Panlungsod failed to consult the NWRB before enacting the Assailed Ordinance, thereby encroaching upon its authority.

Ruling of the CA:

The CA affirmed the RTC’s decisions and held that “City Ordinance No. 3, S. 2001 contravenes Presidential Decree No. 1067, better known as “The Water Code of the Philippines” as it is an encroachment into the authority of the [NWRB]. The use of water resources is under the regulatory power of the national government.”

Ruling of the SC:

NO. 

The Water Code governs the ownership, appropriation, utilization, exploitation, development, conservation and protection of water resources. Under Article 3 thereof, water resources are placed under the control and regulation of the government through the National Water Resources Council, now the NWRB. In turn, the privilege to appropriate and use water is one which is exclusively granted and regulated by the State through water permits issued by the NWRB. Once granted, these water permits continue to be valid save only for reasons spelled out under the Water Code itself.

The Assailed Ordinance effectively contravenes the provisions of the Water Code as it arrogates unto Batangas City the power to control and regulate the use of ground water which, by virtue of the provisions of the Water Code, pertains solely to the NWRB. By enacting the Assailed Ordinance, Batangas City acted in excess of the powers granted to it as an LGU, rendering the Assailed Ordinance ultra vires. 

Being ultra vires, the Assailed Ordinance, in its entirety, is null and void.

DOCTRINE

The Water Code governs the ownership, appropriation, utilization, exploitation, development, conservation and protection of water resources. Under Article 3 thereof, water resources are placed under the control and regulation of the government through the National Water Resources Council, now the NWRB. In turn, the privilege to appropriate and use water is one which is exclusively granted and regulated by the State through water permits issued by the NWRB