Dear Atty. Gab,

Musta Atty? I hope this email finds you well. My family and I have been residents of Quezon City for almost 20 years. Recently, there’s been a lot of talk in our neighborhood about a foreign company possibly taking over the management of our water resources. I’m honestly quite worried because water is such a basic necessity, and the thought of a foreign entity controlling it makes me uneasy.

I heard that some government assets related to power generation are being privatized, and that includes facilities connected to our water supply. Our barangay captain mentioned something about a Korean company being involved, but I couldn’t quite grasp the details. I’m concerned about whether this means potential water rate hikes, or even worse, if our access to water might be compromised.

I’m not sure what my rights are as a citizen in this kind of situation. Does the government have the right to privatize something as essential as our water supply? And what guarantees do we have that a foreign company will prioritize our needs over profit? I would greatly appreciate your legal guidance on this matter. Thank you in advance.

Sincerely,
Luis Ramos

Dear Luis Ramos,

Musta! Thank you for reaching out with your concerns. I understand your apprehension about a foreign company potentially managing our water resources. Privatization of government assets, particularly those related to basic necessities like water, can indeed raise many questions about control, access, and affordability. Let me clarify some key legal principles that are pertinent to your situation.

At its core, Philippine law distinguishes between the ownership of natural resources and the operation of facilities utilizing those resources. The Constitution asserts that water resources are owned by the State, primarily managed by Filipino citizens or corporations with at least 60% Filipino ownership. The question revolves around how a foreign entity can participate in operating a facility related to water resources, considering these ownership limitations.

Defining the Line: Natural Resources vs. Operational Management

Philippine laws and jurisprudence recognize a critical distinction between owning natural resources and operating facilities that utilize them. The Constitution mandates that the exploration, development, and utilization of natural resources must be under the full control and supervision of the State. This can be achieved directly or through agreements with Filipino citizens or corporations with substantial Filipino ownership.

This principle is deeply rooted in our legal framework, as reflected in numerous court decisions and statutes. Let’s delve deeper into what the law says about these matters:

SEC.2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. (Section 2, Article XII of the 1987 Philippine Constitution)

This provision makes it clear that while the State owns all natural resources, it can partner with private entities for their utilization, provided that Filipino citizens or corporations maintain a controlling stake.

Presidential Decree No. 1067, otherwise known as “The Water Code of the Philippines” is the basic law governing the ownership, appropriation utilization, exploitation, development, conservation and protection of water resources and rights to land related thereto. (VILLARAMA, JR., J.)

This law emphasizes state control over water resources, with the National Water Resources Board (NWRB) overseeing water utilization and appropriation. This highlights the importance of permits and regulations to maintain state oversight, even in cases where private entities are involved.

However, these restrictions primarily apply to the extraction or appropriation of the natural resource itself. The line is drawn when it comes to the operation of facilities utilizing already appropriated resources. The Department of Justice (DOJ) has issued opinions clarifying this distinction:

This Department has declared that the nationality requirement imposed by the Water Code refers to the privilege “to appropriate and use water” and has interpreted this phrase to mean the extraction of water directly from its natural source (Secretary of Justice Opinion No. 14, s. 1995).“Natural” is defined as that which is produced without aid of stop, valves, slides, or other supplementary means (see Webster’s New International Dictionary, Second Edition, p. 1630). The water that is used by the power plant could not enter the intake gate without the dam, which is a man-made structure. (VILLARAMA, JR., J.)

This opinion suggests that once water is collected and stored (as in a dam), its subsequent use for power generation may not be subject to the same nationality restrictions. What this says is that foreign entities may be legally allowed to process or treat water after its removal from a natural source by a qualified person, natural or juridical.

Therefore, this means the critical question becomes: Is the foreign company directly extracting water from its natural source, or is it merely operating a facility using already appropriated water? If it’s the latter, the operation might be permissible under existing laws, provided that the State retains sufficient control and supervision. It is in these cases where MWSS, NPC and NIA come in to play.

Furthermore, the EPIRA itself mandates safeguards to protect public interests in cases involving multi-purpose hydro facilities:

(e) In cases of transfer of possession, control, operation or privatization of multi-purpose hydro facilities, safeguards shall be prescribed to ensure that the national government may direct water usage in cases of shortage to protect potable water, irrigation, and all other requirements imbued with public interest; (Sec. 47 (e) of EPIRA)

This provision reinforces the government’s power to prioritize water usage for essential needs, even when private entities are involved. With that, it is important to remember that this provision is consistent with the priority accorded to domestic and municipal uses of water under the Water Code. The interplay between these different agencies are vital to maintain that the needs of the people are placed above business and profit.

Practical Advice for Your Situation

• Stay informed about the details of any proposed privatization: Attend barangay meetings and seek information from local government officials about the specifics of the agreement with the Korean company.
• Understand the safeguards in place: Inquire about the specific provisions designed to ensure continued access to affordable and safe water for residents.
• Verify compliance with the Water Code: Ensure that the appropriate water permits are in place and that the state retains full control over the extraction and diversion of water resources.
• Advocate for public participation: Encourage your local government to hold public consultations and incorporate community feedback into the privatization process.
• Form community action groups: Organize concerned residents to collectively monitor the situation and advocate for policies that protect your water rights.
• Seek legal advice: Consult with a lawyer specializing in environmental or utility law to further understand your rights and options.

Hope this helps!

Sincerely,
Atty. Gabriel Ablola

For more specific legal assistance related to your situation, please contact me through gaboogle.com or via email at connect@gaboogle.com.

Disclaimer: This correspondence is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please schedule a formal consultation.