Initiatives for Dialogue and Empowerment Through Alternative Legal Services, Inc. v. Power Sector Assets and Liabilities Management Corporation
REITERATIONFacts
The Antecedents: Pursuant to the Electric Power Industry Reform Act of 2001 (EPIRA), the Power Sector Assets and Liabilities Management Corporation (PSALM) initiated the privatization of the 246-megawatt Angat Hydro-Electric Power Plant (AHEPP). AHEPP is part of the Angat Complex, which includes the Angat Dam and Reservoir, a multi-purpose facility crucial for power generation, irrigation for Bulacan and Pampanga, and supplying 97% of Metro Manila's domestic water. Procedural History: PSALM published an Invitation to Bid for the AHEPP. The bidding package stipulated that the sale was on an "AS IS, WHERE IS" basis, that the buyer must observe the priority of water usage under Philippine law, and that the winning bidder would enter into an operations and maintenance (O&M) agreement for the non-power components, including the dam. After a public bidding, Korea Water Resources Corporation (K-Water), a foreign corporation, was declared the highest bidder. On May 5, 2010, PSALM's Board issued a Notice of Award to K-Water. The Petition: Petitioners filed a petition for certiorari and prohibition, arguing that PSALM committed grave abuse of discretion. They alleged violations of the people's right to information, as critical details of the sale were not disclosed. They also contended that the sale to K-Water, a foreign corporation, violated Article XII, Section 2 of the Constitution and the Water Code, which reserve the utilization of natural resources like water to Filipino citizens or 60% Filipino-owned corporations. They further argued that PSALM failed to provide safeguards to protect public interest in water usage as required by the EPIRA.
Issue(s)
Whether petitioners have legal standing. Whether the petition is moot and academic. Whether PSALM violated the people's right to information. Whether the privatization of AHEPP is mandatory under EPIRA. Whether the sale of AHEPP to K-Water, a foreign corporation, violates the constitutional prohibition on foreign exploitation of natural resources. Whether the transfer of water rights to K-Water is valid.
Ruling
The petition is PARTLY GRANTED. The bidding conducted and the Notice of Award issued by PSALM in favor of K-Water are declared VALID and LEGAL. However, the transfer of the water permit to K-Water is prohibited. The National Power Corporation (NPC) shall continue to be the holder of the water permit and shall merely authorize K-Water to use the water for hydropower generation. PSALM is directed to furnish petitioners with copies of documents pertaining to K-Water. The Status Quo Ante Order issued on May 24, 2010 is lifted and set aside.
Ratio Decidendi
On Legal Standing: The Court held that petitioners possess the requisite legal standing as citizens and taxpayers. The issue of ensuring adequate water supply for domestic use is one of paramount importance to the public, conferring upon petitioners a personal stake in the controversy. Furthermore, when a petition is anchored on the people's right to information on matters of public concern, any citizen can be the real party in interest, and the requirement of personal interest is satisfied by the mere fact that the petitioner is a citizen. On Mootness: The Court ruled that the petition was not mooted by the issuance of the Notice of Award to K-Water. Petitioners sought not only to enjoin the award but to permanently enjoin the entire privatization of AHEPP on constitutional grounds. Citing Chavez v. Philippine Estates Authority, the Court emphasized that supervening events cannot prevent it from rendering a decision if there is a grave violation of the Constitution. On the Right to Information: The Court found that PSALM committed a violation of the right to information. While PSALM's general disclosures on its website were sufficient during the negotiation phase, its evasive response to petitioners' specific request for information about the winning bidder, K-Water, after the award was made, was an insufficient compliance with the constitutional requirement. PSALM's action of merely referring the request to K-Water's counsel was unjustified because it already possessed the requested non-privileged documents, such as company profiles, which were submitted during the bidding process. Consequently, PSALM was directed to furnish petitioners with the requested documents. On the Privatization of AHEPP: The Court determined that the privatization of AHEPP is mandatory under EPIRA. Section 47 of EPIRA explicitly mandates the privatization of all NPC generation assets, except for the Agus and Pulangui complexes in Mindanao and the assets of the Small Power Utilities Group (SPUG). Applying the statutory construction principle of expressio unius est exclusio alterius, the express exclusion of certain assets implies that all others, including AHEPP, are subject to mandatory privatization. Therefore, PSALM did not commit grave abuse of discretion as it was merely fulfilling its legal mandate. On the Sale to a Foreign Corporation: The Court held that the sale of the AHEPP facility itself to a foreign corporation does not violate the Constitution. Under Section 6 of EPIRA, power generation is not considered a public utility operation, and thus, no franchise is necessary and foreign ownership is not prohibited. The constitutional restriction in Article XII, Section 2 applies to the "exploration, development, and utilization of natural resources," not to the ownership of a power generation facility which is an artificial structure. The DOJ has consistently opined that once water is removed from its natural source, it becomes subject to ordinary commerce. On the Transfer of Water Rights: The Court ruled that the stipulation in the Asset Purchase Agreement for the transfer of NPC's water permit to K-Water is unconstitutional and invalid. The utilization of water is a constitutionally protected activity limited to Filipinos. The Water Code (P.D. 1067) explicitly states that only citizens of the Philippines or qualified juridical persons (at least 60% Filipino-owned) may be granted water rights. To harmonize EPIRA's privatization mandate with the Constitution's nationality requirement, the Court ruled that NPC must retain ownership of the water permit. NPC can then authorize K-Water, as the operator of AHEPP, to use the water for power generation, thereby ensuring the State, through NPC, maintains full control and supervision over the natural resource.
Main Doctrine
The sale of a government-owned hydroelectric power plant to a foreign corporation is not per se unconstitutional, as power generation is not considered a public utility operation under the Electric Power Industry Reform Act (EPIRA) and is thus open to foreign ownership. However, the appropriation and utilization of water, a natural resource, is constitutionally limited under Article XII, Section 2 to Filipino citizens or corporations at least 60% Filipino-owned. Therefore, while the foreign corporation can own and operate the power plant, the water rights (evidenced by a water permit) must remain with a qualified government entity, which can then authorize the foreign operator to use the water for power generation, thereby ensuring the State's full control and supervision over its natural resources.