Title
IDEALS, Inc. vs. PSALM Corp.
Case
G.R. No. 192088
Decision Date
Oct 9, 2012
PSALM's sale of Angat Hydro-Electric Power Plant to K-Water nullified by Supreme Court for violating transparency, co-ownership rules, and constitutional limits on natural resource utilization, prioritizing public interest and water security.

Case Summary (G.R. No. 192088)

Bidding Procedures and Award to K-Water

PSALM’s Invitation to Bid required a Letter of Interest, Confidentiality Agreement, and US$2,500 participation fee. The Asset Purchase Agreement covered AHEPP’s four main and three auxiliary units (218 MW); the Operations & Maintenance Agreement covered non-power components (Angat Dam, facilities). Six bidders qualified; K-Water submitted the highest bid of US$440.88 million. On May 5, 2010, PSALM’s Board confirmed the Notice of Award to K-Water.

Petitioners’ Contentions

  1. Right to Information: PSALM failed to disclose material terms (minimum bid, qualified bidders, sale conditions), violating Art. III, Sec. 7 and EPIRA’s transparency mandate.
  2. Co-ownership and Civil Code: PSALM cannot unilaterally dispose of AHEPP without offering co-owners (MWSS, NIA) their shares (Art. 498, Civil Code).
  3. Water Rights and National Patrimony: Sale to K-Water (a foreign entity) breaches Art. XII, Sec. 2 of the Constitution and Water Code nationality restrictions; risks public water supply and irrigation priorities.
  4. International Law: CHR advisory warned privatization threatens the human right to water; petitioners seek annulment to protect water security.

PSALM’s Defense

• Bidding was open and transparent (press releases, pre-bid forums, website updates).
• Non-disclosure of reserve price and ongoing evaluative data conformed to confidentiality needs and EPIRA/COA rules.
• AHEPP sale excluded dam ownership; dam remains state-owned; NPC/NWRB control water allocation.
• No co-ownership arose from MWSS funding; separate water permits govern rights.
• Foreign participation in power generation is allowed under EPIRA; DOJ opinions distinguish water appropriation from power-plant water intake.

MWSS’s Position

• Statutory jurisdiction over Angat Dam under MWSS Charter (R.A. 6234) and its investments justify management control.
• PSALM failed to institute EPIRA Sec. 47(e) safeguards for potable water and irrigation.
• Sale to a wholly foreign corporation violates Constitution’s preference to Filipino-owned entities for natural-resource activities.

First Gen’s Position

• NPC held exclusive jurisdiction over AHEPP and watershed; no co-ownership.
• EPIRA mandates privatization; water priorities are safeguarded by NWRB rules and EPIRA provisions.
• Bidding and award were valid; nationality issues misconstrued.

Issues Presented

  1. Whether certiorari/prohibition was the proper remedy.
  2. Whether the petition is moot after issuance of the Notice of Award.
  3. Whether the case raises a political question.
  4. Petitioners’ legal standing.
  5. Violation of right to information.
  6. PSALM’s jurisdictional discretion in privatizing AHEPP.
  7. Legality of K-Water’s participation and award under constitutional and statutory nationality and water-rights restrictions.

Mootness and Standing

• Petition is not moot: permanent injunction against privatization sought and constitutional questions require resolution despite Notice of Award.
• Petitioners (citizens and taxpayer-based organizations) have standing to enforce the people’s right to information and protection of national patrimony and water rights.

Right to Information Ruling

• EPIRA and the Constitution impose a duty on PSALM to disclose property descriptions, terms and conditions of sale, qualified bidders, and minimum price from the outset.
• PSALM’s website posts and stakeholder forums satisfied initial disclosure obligations.
• PSALM unlawfully denied petitioners’ specific requests (April 20, May 14 letters) for records on the winning bidder’s company profile, legal capacity, and related documents.
• Relief: PSALM must furnish non-proprietary documents and records pertaining to K-Water.

Mandatory Privatization under EPIRA

• Sec. 47(d) of EPIRA requires sale of all NPC assets by public bidding, excluding only SPUG, Agus, and Pulangui complexes.
• PSALM’s decision to privatize AHEPP did not constitute grave abuse of discretion; MWSS and NIA lacked statutory authority to acquire or operate hydropower assets.

Foreign Sale and Nationality Restrictions on Water Rights

• Constitution Art. XII, Sec. 2 and the Water Code reserve all waters as state property and limit water-rights grants to Filipino citizens and 60% Filipino-owned corporations.
• DOJ opinions permitting foreign operation of power plants do not override explicit water-rights nationality requirements.
• ASP 6(a), Rule 23 of EPIRA IRR directing transfer of water rights is directory, not mandatory.

Retention of NPC as Water Permit Holder

• Water Permit No. 6512 remains vested in NPC; AHEPP buyer (K-Water) may be authorized to use


    ...continue reading

    Analyze Cases Smarter, Faster
    Jur helps you analyze cases smarter to comprehend faster—building context before diving into full texts.

    About Privacy Terms