FACTS:

The case involves Dela Merced & Sons, a company engaged in the operation of a wastewater treatment facility, and the Department of Environment and Natural Resources Pollution Adjudication Board (DENR-PAB). The DENR-PAB issued a notice of violation to Dela Merced & Sons for its failure to comply with environmental laws. Dela Merced & Sons participated in the administrative proceedings before the DENR-PAB, including submitting a position paper. After deliberation, the DENR-PAB imposed fines on Dela Merced & Sons. Dela Merced & Sons filed a motion for reconsideration, which was denied. Both parties appealed to the Court of Appeals (CA) and later filed petitions for review with the Supreme Court. The Supreme Court denied Dela Merced & Sons' petition but granted that of the DENR-PAB. The Court held that Dela Merced & Sons was not denied due process and clarified that administrative due process may differ from judicial due process.

ISSUES:

1. Whether the respondent DENR-PAB denied the petitioner due process in the administrative proceedings.

2. Whether the petitioner, having been issued a CNC, is exempt from complying with the environmental requirements of R.A. 9275.

3. Whether the constitutionality of Section 28 of R.A. 9275 was properly questioned.

4. Whether the fine imposed on the petitioner is excessive under the Constitution.

5. Whether the proscription under Article III, Section 19 of the Constitution on excessive fines is applicable to administrative proceedings.

6. Whether the fines imposed under R.A. 9275 can be classified as excessive.

7. Whether the amount of fine imposed by DENR-PAB must be upheld.

8. Whether N. Dela Merced and Sons, Inc. should be ordered to pay a fine.

RULING:

1. The petitioner was not denied due process. In administrative proceedings, a fair and reasonable opportunity to explain one's side suffices to meet the requirements of due process. The petitioner was able to take advantage of available opportunities to explain its side and question the acts and orders of the respondent. It is not legally objectionable for an administrative agency to resolve a case based solely on position papers, affidavits, or documentary evidence submitted by the parties.

2. The petitioner, despite being issued a CNC, is not exempt from complying with other environmental laws. The CNC only exempts the petitioner from securing an Environmental Compliance Certificate. Section 5 of P.D. 1586 states that environmentally non-critical projects are still expected to provide additional environmental safeguards as deemed necessary. Hence, the petitioner is still bound to abide by environmental laws such as the Clean Water Act, even if it possesses a CNC.

3. The constitutionality of Section 28 of R.A. 9275 was not properly questioned. The petitioner failed to satisfy the requirement that the case cannot be resolved unless the disposition of the constitutional question is unavoidable. The issue of constitutionality of Section 28 is not the lis mota of the case, as there are other grounds upon which the court may rest its judgment. Therefore, the presumption of constitutionality of Section 28 of R.A. 9275 stands.

4. The fine imposed on the petitioner is not excessive under the Constitution. The constitutional prohibition on the imposition of excessive fines applies only to criminal prosecutions. As this case involves an administrative proceeding, the fine imposed does not violate the constitutional provision on excessive fines.

5. The proscription under Article III, Section 19 of the Constitution on excessive fines is inapplicable to administrative proceedings.

6. The fines imposed under R.A. 9275 cannot be classified as excessive.

7. Yes, the amount of fine imposed by DENR-PAB must be upheld.

8. Yes, N. Dela Merced and Sons, Inc. should be ordered to pay a fine in the amount of P3,980,000.

PRINCIPLES:

• In administrative proceedings, a fair and reasonable opportunity to explain one's side suffices to meet the requirements of due process.

• Administrative due process cannot be fully equated with due process in its strict judicial sense. A formal or trial-type hearing is not always necessary, and technical rules of procedure are not strictly applied.

• A CNC only exempts the holder from securing an Environmental Compliance Certificate, but does not exempt it from complying with other environmental laws.

• Issues of constitutionality must be pleaded directly and cannot be raised in a collateral attack. The constitutional presumption of the law's validity remains unless the law is annulled in a direct proceeding.

• The lis mota requirement states that if there is some other ground upon which the court may rest its judgment, the question of constitutionality should be avoided.

• The constitutional prohibition on the imposition of excessive fines applies only to criminal prosecutions, not administrative proceedings.

• To be considered obnoxious to the Constitution, a penalty must be flagrantly and plainly oppressive or so disproportionate to the offense committed as to shock the moral sense of all reasonable persons as to what is right and proper under the circumstances.

• Unsubstantiated allegations of the fine being "exorbitant," "arbitrary, unconscionable," and "too excessive" are not enough to declare the fine as unconstitutional for being excessive.

• The possibility that a law may work hardship does not render it unconstitutional.

• The fixing of penalties for the violation of statutes is primarily a legislative function, and the courts hesitate to interfere unless the fine provided for is so far excessive as to shock the sense of mankind.

• The importance of water resources for our existence and the need for their preservation.

• The abuse and pollution of water resources as a perennial problem.

• The Clean Water Act as a measure to abate, control, and prevent water pollution.

• The responsibility of individuals and organizations in the protection and conservation of water resources.

• Use of water resources wisely for the future generation.