G.R. Nos. 190266-67. March 15, 2023.
City of Batangas, represented by Hon. Eduardo B. Dimacuha, in his capacity as the Mayor of Batangas City, Petitioner, vs. JG Summit Petrochemical Corporation and First Gas Power Corporation and FGP Corporation, Respondents.

FACTS

The Sangguniang Panlungsod of Batangas City enacted Ordinance No. 3, Series of 2001, which required all heavy industries established or to be established along the Batangas City portion of Batangas Bay and other areas declared as heavy industrial zones to construct a desalination plant and prohibited the use or exploitation of underground freshwater for cooling systems and industrial purposes. The Ordinance aimed to preserve local aquifers and conserve freshwater for residents. It imposed penalties, including imprisonment, fines, and administrative fines per day of violation, and empowered the City Mayor to issue cease and desist orders. JG Summit Petrochemical Corporation and First Gas Power Corporation (and FGP Corporation) filed separate Petitions for Declaratory Relief before the Regional Trial Court (RTC), challenging the Ordinance. They argued it contravened the Water Code of the Philippines, which grants the National Water Resources Board (NWRB) the power to regulate water resources, and was unconstitutional for being oppressive and violating due process. The RTC declared the Ordinance unconstitutional. The Court of Appeals affirmed the RTC’s decision. The City of Batangas filed a Petition for Review on Certiorari before the Supreme Court.

ISSUE

Whether Ordinance No. 3, Series of 2001, enacted by the City of Batangas, is valid and constitutional.

RULING

The Supreme Court DENIED the petition and AFFIRMED the Court of Appeals’ decision. Ordinance No. 3, Series of 2001, is INVALID for contravening national legislation, specifically the Water Code of the Philippines (Presidential Decree No. 1067). The Court held that local government units derive their power from the State legislature and cannot regulate activities already allowed by statute. The Water Code establishes a comprehensive system for governing water utilization and conservation, vesting regulatory authority in the NWRB. By prohibiting the use of underground freshwater for industrial purposes and mandating desalination plants, the Ordinance encroached upon the NWRB’s exclusive authority to regulate and control the appropriation and utilization of water resources. The Ordinance effectively amended or repealed the Water Code’s permit system at the local level, which is beyond the power of the Sangguniang Panlungsod. Furthermore, the Ordinance violated the principle of due process as it imposed a mandatory requirement with severe penalties without a proper public hearing or consultation with the NWRB, and it was deemed unreasonable and oppressive for imposing a significant financial burden on industries without a clear showing of necessity, especially since the respondents were already operating under valid water permits issued by the NWRB.