IDEALS, Inc. v. PSALM Corporation

GR No. 192088, Oct. 9, 2012


PSALM is a GOCC mandated by RA 9136 (Electric Power Industry Reform Act of 2001 or the EPIRA Law) to manage the orderly sale, disposition, and privatization of the assets of the National Power Corporation (NPC). In the discharge of its said duties, PSALM held a public bidding for the sale of AHEPP, a 246-MW hydroelectric power plant. After evaluating the submitted bids, PSALM awarded the sale to K-Water, a Korean company.

Petitioners filed for a petition with prayer for a temporary restraining order (TRO) and/or writ of preliminary injunction , they alleged that PSALM violated the constitutional provisions on the appropriation and utilization of water as a natural resource, as implemented by the Water Code of the Philippines limiting water rights to Filipino citizens and corporations which are at least 60% Filipino-owned.


Whether or not the acquisition by K-Water of the AHEPP in relation to the constitutional policy on our natural resources is valid?

(1) Yes. Foreign ownership of a hydropower facility is not prohibited under existing laws. The construction, rehabilitation and development of hydropower plants are among those infrastructure projects which even wholly-owned foreign corporations are allowed to undertake under the Amended Build-Operate-Transfer (Amended BOT) Law (R.A. No. 7718) 

While the sale of AHEPP to a foreign corporation pursuant to the privatization mandated by the EPIRA did not violate Sec. 2, Art. XII of the 1987 Constitution, the Asset Purchase Agreement and Operation & Management Agreement between NPC/PSALM and K-Water must be amended accordingly. 

NPC shall continue to be the holder of the water permit even as the operational control and day-to-day management of the AHEPP is turned over to K-Water under the terms and conditions of their APA and O & M Agreement, whereby NPC grants authority to K-Water to utilize the waters diverted or collected in the Angat Dam for hydropower generation. Further, NPC and K-Water shall faithfully comply with the terms and conditions of the Memorandum of Agreement on Water Protocol, as well as with such other regulations and issuances of the NWRB governing water rights and water usage.