At last, the departure of the Pandacan oil depot has been decided with finality by the Supreme Court. It’s taken a few years – and a few conflicting LGU actions to boot – but the depot has finally been ordered to leave. How did the Supreme Court decide? In explaining most things, it is best to start from the beginning. To narrow our focus, we will only tackle the 2 clearly conflicting Manila ordinances. Ordinance No. 8027 (2001) and G.R. 156052 The Manila local government enacted Ordinance No. 8027 which became effective on December 28, 2001. Because this ordinance ordered oil companies to leave the Pandacan oil depot and because tax payers questioned the delay in the implementation of the ordinance, legal issues were eventually raised with the Supreme Court. The Supreme Court issued their Resolution on the issues on February 13, 2008 in SOCIAL JUSTICE SOCIETY v. HON. JOSE L. ATIENZA, JR., (G.R. No. 156052) In resolving the issues in G.R. No. 156052, the Court first cited the pertinent provisions of Ordinance No. 8027:
“SECTION 1. For the purpose of promoting sound
urban planning and ensuring health, public safety, and general welfare of the
residents of Pandacan and Sta. Ana as well as its adjoining areas, the land use
of [those] portions of land bounded by the Pasig River in the north, PNR
Railroad Track in the east, Beata St. in the south, Palumpong St. in the
southwest, and Estero de Pancacan in the west[,] PNR Railroad in the northwest
area, Estero de Pandacan in the [n]ortheast, Pasig River in the southeast and
Dr. M.L. Carreon in the southwest. The area of Punta, Sta. Ana bounded by the
Pasig River, Marcelino Obrero St., Mayo 28 St., and F. Manalo Street, are hereby reclassified from Industrial II to
Commercial I.
xxx xxx xxx
SEC. 3. Owners
or operators of industries and other businesses, the operation of which are
no longer permitted under Section 1 hereof, are hereby given a period of six
(6) months from the date of effectivity of this Ordinance within which to cease and desist from the operation of
businesses which are hereby in consequence, disallowed.” [emphasis
supplied]
In
simple words, the area where the Pandacan oil depot is located was classified
from industrial to commercial and all covered businesses in said area were
ordered to leave within 6 months from the ordinance’s effectivity.
Then
the Court cited the history and significance of Pandacan and the rationale
behind the ordered departure of the oil depot under Ordinance No. 8027 -
Pandacan History
“Pandacan (one of
the districts of the City of Manila) is situated
along the banks of the Pasig
[R]iver. At the turn of the twentieth century, Pandacan was unofficially
designated as the industrial center of Manila.
The area, then largely uninhabited, was ideal for various emerging industries
as the nearby river facilitated the transportation of goods and products. In
the 1920s, it was classified as an industrial zone. Among its early industrial
settlers were the oil companies. x x x
On December 8,
1941, the Second World War reached the shores of the Philippine Islands. x x x
[I]n their zealous attempt to fend off the Japanese Imperial Army, the United
States Army took control of the Pandacan Terminals and hastily made plans to
destroy the storage facilities to deprive the advancing Japanese Army of a
valuable logistics weapon. The U.S. Army burned unused petroleum, causing a
frightening conflagration. Historian Nick Joaquin recounted the events as
follows:
After the USAFFE
evacuated the City late in December 1941, all army fuel storage dumps were set
on fire. The flames spread, enveloping the City in smoke, setting even the
rivers ablaze, endangering bridges and all riverside buildings. … For one week
longer, the “open city” blazed—a cloud of smoke by day, a pillar of fire by night.
The fire
consequently destroyed the Pandacan Terminals and rendered its network of
depots and service stations inoperative.
After the war, the
oil depots were reconstructed. Pandacan changed as Manila rebuilt itself. The three major oil
companies resumed the operation of their depots. But the district was no longer
a sparsely populated industrial zone; it had evolved into a bustling,
hodgepodge community. Today, Pandacan has become a densely populated area inhabited
by about 84,000 people, majority of whom are urban poor who call it home. Aside
from numerous industrial installations, there are also small businesses,
churches, restaurants, schools, daycare centers and residences situated there. Malacañang Palace,
the official residence of the President of the Philippines and the seat of
governmental power, is just two kilometers away. There is a private school near
the Petron depot.
Along the walls of
the Shell facility are shanties of informal settlers. More than 15,000 students
are enrolled in elementary and high schools situated near these facilities. A
university with a student population of about 25,000 is located directly across
the depot on the banks of the Pasig
[R]iver.
The 36-hectare
Pandacan Terminals house the oil companies’ distribution terminals and depot
facilities. The refineries of Chevron and Shell in Tabangao and Bauan, both in
Batangas, respectively, are connected to the Pandacan Terminals through a
114-kilometer underground pipeline system. Petron’s refinery in Limay, Bataan, on the other hand, also services the depot. The
terminals store fuel and other petroleum products and supply 95% of the fuel
requirements of Metro Manila, 50% of Luzon’s
consumption and 35% nationwide. Fuel can also be transported through barges
along the Pasig
[R]iver or tank trucks via the South Luzon Expressway. (Citations omitted)”
The Court also cited the
following facts which formed the
bases for the Committee on Housing, Resettlement and Urban Development
of the City of Manila
to recommend the approval of the ordinance:
(1)
the depot facilities contained 313.5 million liters of
highly flammable and highly volatile products which include petroleum gas,
liquefied petroleum gas, aviation fuel, diesel, gasoline, kerosene and fuel oil
among others;
(2)
the depot is open to attack through land, water or air;
(3)
it is situated in a densely populated place and near Malacañang Palace and in case of an explosion or
conflagration in the depot, the fire could spread to the neighboring
communities.
The Court added –
“The ordinance
was intended to safeguard the rights to life, security and safety of all the
inhabitants of Manila
and not just of a particular class. The
depot is perceived, rightly or wrongly, as a representation of western
interests which means that it is a terrorist target. As long as it there is
such a target in their midst, the residents of Manila are not safe. It therefore became
necessary to remove these terminals to dissipate the threat. According to [Mayor
Atienza]:
Such a public need became apparent after the 9/11 incident which showed
that what was perceived to be impossible to happen, to the most powerful
country in the world at that, is actually possible. The destruction of property
and the loss of thousands of lives on that fateful day became the impetus for a
public need. In the aftermath of the 9/11 tragedy, the threats of terrorism
continued [such] that it became imperative for governments to take measures to
combat their effects.”
And based on these findings, the Court made the
following rulings:
Ordinance No. 8027 was
enacted in accordance with the exercise of police power
The Court acknowledged that the Sangguniang
Panlungsod of Manila,
as the LGU’s legislature, was vested with delegated police power. The Court reminded
us that “[p]olice power is the plenary power vested in the legislature to make
statutes and ordinances to promote the health, morals, peace, education, good
order or safety and general welfare of the people.” And that police power
exists “only if the following requisites are met: (1) the interests of the public generally, as distinguished from those of a
particular class, require its exercise and (2) the means employed are reasonably necessary for the accomplishment of
the purpose and not unduly oppressive
upon individuals. In short, there must be a concurrence of a lawful subject and
a lawful method.” [emphasis supplied]
Thus, based on the history of Pandacan, the threats
to life posed by the depot’s existence, and the zoning reclassification done by
the city legislature, and despite curtailing the property rights of the oil
companies, the Court found that -
“Ordinance No. 8027 was enacted for the purpose of
promoting sound urban planning, ensuring health, public safety and general
welfare of the residents of Manila.
The Sanggunian was impelled to take measures to protect the residents of Manila from catastrophic
devastation in case of a terrorist attack on the Pandacan Terminals. Towards
this objective, the Sanggunian reclassified the area defined in the ordinance
from industrial to commercial.”
Ordinance No. 8027 Is
Not Unfair, Oppressive Or Confiscatory Which Amounts To Taking Without
Compensation
The
Court held that Ordinance 8027 is not unfair nor oppressive since it only
prohibits the oil companies from operating inside Pandacan and not the whole of
Manila.
And
neither is the ordinance confiscatory because “there is a limitation on or
restriction of property interests to promote public welfare which involves no
compensable taking. Compensation is necessary only when the states power of
eminent domain is exercised. In eminent domain, property is appropriated and
applied to some public purpose. Property condemned under the exercise of police
power, on the other hand, is noxious or intended for a noxious or forbidden purpose
and, consequently, is not compensable.”
In upholding the ordinance’s
restrictions and effect on the oil companies, their businesses, operations,
income and facilities, the Court further explained police power and the social
function of property -
“Police
power proceeds from the principle that every holder of property, however
absolute and unqualified may be his title, holds it under the implied liability
that his use of it shall not be injurious to the equal enjoyment of others
having an equal right to the enjoyment of their property, nor injurious to the
right of the community. Rights of property, like all other social and
conventional rights, are subject to reasonable limitations in their enjoyment
as shall prevent them from being injurious, and to such reasonable restraints
and regulations established by law as the legislature, under the governing and
controlling power vested in them by the constitution, may think necessary and
expedient.’
Ordinance No. 8027 Is
Not Partial And Discriminatory
The Court also held that Ordinance 8027 does not violate the Equal
Protection clause by not including in its scope “buildings and residences that
do not comply with the National Building Code, Fire Code and Health and
Sanitation Code.” The Court explained that
the “requirements for a valid and reasonable classification
are: (1) it must rest on substantial distinctions; (2) it must be germane to
the purpose of the law; (3) it must not be limited to existing conditions only
and (4) it must apply equally to all members of the same class.”
In explaining that there are “real
and substantial differences” between, and a “reasonable classification’ of,
those included and excluded from the ordinance’s scope, the Court said –
“… what
the ordinance seeks to prevent is a catastrophic devastation that will result
from a terrorist attack. Unlike the depot, the surrounding community is not a
high-value terrorist target. Any damage caused by fire or explosion occurring
in those areas would be nothing compared to the damage caused by a fire or
explosion in the depot itself. Accordingly,
there is a substantial distinction. The enactment of the ordinance which
provides for the cessation of the operations of these terminals removes the
threat they pose. Therefore it is germane to the purpose of the ordinance. The
classification is not limited to the conditions existing when the ordinance was
enacted but to future conditions as well. Finally, the ordinance is applicable
to all businesses and industries in the area it delineated.”
Ordinance No. 8027 Is
Not Contrary to RA 7638 (DOE Act of 1992) and RA 8479 (Downstream Oil
Industry Deregulation Law of 1998)
The Court held that local autonomy as
guaranteed under the Constitution, specifically Section 25 of Article II and all
of Article X, justify the City of Manila’s valid exercise of police power
despite the state policies and the authority given the DOE under RAs 7638 and
8479 -
“Under
Section 5 I of RA 7638, DOE was given the power to establish and administer
programs for the exploration, transportation, marketing, distribution,
utilization, conservation, stockpiling, and storage of energy resources. On the
other hand, under Section 7 of RA 8749, the DOE shall continue to encourage
certain practices in the Industry which serve the public interest and are
intended to achieve efficiency and cost reduction, ensure continuous supply of
petroleum products. Nothing in these statutes prohibits the City of Manila from enacting
ordinances in the exercise of its police power.”
The Court further clarified -
“The laws
cited merely gave DOE general powers to establish and administer programs for
the exploration, transportation, marketing, distribution, utilization,
conservation, stockpiling, and storage of energy resources and to encourage
certain practices in the [oil] industry which serve the public interest and are
intended to achieve efficiency and cost reduction, ensure continuous supply of
petroleum products. These powers can be exercised without emasculating the LGUs
of the powers granted them. When these ambiguous powers are pitted against the
unequivocal power of the LGU to enact police power and zoning ordinances for
the general welfare of its constituents, it is not difficult to rule in favor
of the latter. Considering that the powers of the DOE regarding the Pandacan
Terminals are not categorical, the doubt must be resolved in favor of the City
of Manila …”
The Court also emphasized that under the Article X Section
4 of the Constitution, the President’s power over LGUs is one of general
supervision. The DOE Secretary, being
merely the President’s alter ego cannot control LGUs -
“Thus, the
President and his or her alter egos, the department heads, cannot interfere
with the activities of local governments, so long as they act within the scope
of their authority. Accordingly, the DOE cannot substitute its own discretion
for the discretion exercised by the sanggunian of the City of Manila. In local affairs, the wisdom of local
officials must prevail as long as they are acting within the parameters of the
Constitution and the law.”
So there – based on the Constitution, law and
public interest, the Supreme Court held Ordinance No. 8027 to be a valid
exercise of police power and ordered the relocation of the Pandacan oil depot.
A happy ending, no? Of course not. We are talking about the Philippines. So, of course,
elections were held and a new Manila
government came into power and, on May 14, 2009, enacted Ordinance 8187 which
repealed Ordinance No. 8027.
[to be continued]
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