G.R. No. 185184 - Concurring Opinion

G.R. No. 185184, October 3, 2023,
♦ Decision, Inting, [J]
♦ Concurring Opinion, Gesmundo, [CJ]
♦ Concurring Opinion, Caguioa, [J]
♦ Separate Opinion, Leonen, [J]
♦ Concurring Opinion, Lazaro-Javier, [J]

METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM, REPRESENTED BY ITS ADMINISTRATOR, DIOSDADO JOSE M. ALLADO, PETITIONER, VS. PROVINCIAL GOVERNMENT OF BULACAN, REPRESENTED BY GOV. JOSEFINA M. DELA CRUZ, RESPONDENT.

The ponencia granted the Petition, dismissing the complaint for specific performance/payment of national wealth share filed by respondent Government of Bulacan (respondent local government unit [LGU]) against petitioner Metropolitan Waterworks and Sewerage System (MWSS) for the latter's alleged utilization and development of national wealth within its area, specifically, water from the Angat Dam which sources most of its reserve from respondent LGU.

To settle the issue, the ponencia laid down the following requisites before an LGU may demand its share in the proceeds of the utilization and development of national wealth within its territorial jurisdiction pursuant to Section 7, Article X of the 1987 Constitution:1 first, there must exist a national wealth forming part of a natural resource; second, the national wealth must be located within the LGU's territory; and third, the proceeds must have been generated from the utilization and development of national wealth. Prescinding from these standards, it then ordained that the first and third requisites are wanting since dam water is already considered appropriated water, having been diverted from its natural source; and MWSS is not engaged in the utilization and development of national wealth as it does not operate for profit but performs regulatory functions to ensure the delivery of public services in Metro Manila.

In sum, the ponencia ordained that water as a natural resource is national wealth. Consequently, when water is utilized and developed directly from a natural source, the concerned government entity must abide by the constitutional requirement to give the concerned LGU its equitable share in the proceeds of the utilization and development of national wealth. Here, however, since the ponencia classified dam water as appropriated water, it was held that the same is no longer a natural resource that is subject to national wealth tax. Appropriate tax ought to be determined and imposed upon the extraction of water from a natural resource and accordingly, prior to impounding and appropriation of the water.2

I fully agree to grant the Petition, albeit, on a different, simpler, and more rudimentary ground. The complaint for specific performance must be dismissed simply because it lacks a cause of action. For MWSS is not the entity liable to pay the national wealth tax to respondent LGU.

It is elementary that every ordinary civil action, such as a complaint for specific performance, must be based on a cause of action,3 which requires the following elements: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff.4

There is no question as regards the existence of the first element for respondent LGU has the right to share in the proceeds pertinent to the utilization and development of national wealth within its area. This is clearly enshrined under Section 7, Article X of the 1987 Constitution and Sections 289,5 2906 and 2917 of the Local Government Code (LGC).

It is clear from the aforesaid provisions of the Constitution and the LGC that the obligation to pay national wealth share rests with the entity which utilized and developed the national wealth found within respondent LGU's territory, i.e., the waters from the Angat River which were subsequently diverted and stored in the Angat Dam.

On this score, I agree that "utilization and development" of the subject waters stems from "appropriation" thereof, which requires the issuance of the necessary water permit by the National Water Resources Board (NWRB). As defined under the Water Code of the Philippines,8 "appropriation of water" is the "acquisition of rights over the use of waters or the taking or diverting of waters from a natural source in the manner and for any purpose allowed by law."9 It has been established, however, that MWSS is not the entity which controls the diversion of waters from their respective natural sources to the Angat Dam.

Quite clearly, in IDEALS, Inc., et al v. PSALM, et al.,10 we already identified the National Power Corporation (NPC) as the appropriator of the waters that are subsequently impounded in the Angat Dam, viz.:

Under the Water Code concept of appropriation, a foreign company may not be said to be "appropriating" our natural resources if it utilizes the waters collected in the dam and converts the same into electricity through artificial devices. Since the NPC remains in control of the operation of the dam by virtue of the water rights granted to it, as determined under DOJ Opinion No. 122, s. 1998, there is no legal impediment to foreign-owned companies undertaking the generation of electric power using waters already appropriated by NPC, the holder of water permit. x x x (Emphasis supplied, citations omitted).

Consequently, it is NPC, not MWSS, which respondent LGU ought to have impleaded as the defendant in its complaint. As it stands, therefore, the Court may already grant the Petition on this score alone.1aшphi1 Whether dam water is identified as national wealth or otherwise, the fact that respondent LGU has no cause of action against MWSS remains.

On the merits, however, I respectfully voice my dissent. For I am of the humble view that water does not cease to be part of the national wealth just because it is removed from its natural source. This interpretation, I believe, is more consistent with the intention of no ordinary provision of law but of an important and innovative aspect of the highest law of the land, the Constitution.

First. The interpretation of the ponencia that for a water resource to be considered as national wealth, it is and must remain part of its natural source finds no basis in law. Allow me quote the relevant portions of the ponencia which demonstrated this inference, thus:11

Foremost, the quoted Article 386(b) of the Implementing Rules and Regulations of the LGC, on which the ponencia anchored its interpretation, merely identified waters as natural resources. On this score, I agree with the initial inference of the ponencia that based on this legal provision, to be considered national wealth, the subject matter must exist in a natural source. Nowhere, however, did Article 386(b) qualify that the same, to be considered as such, must remain in its natural source.

To be sure, "to exist" in a natural source, is obviously different and non sequitur to "remaining part" of an organic source. For one could have existed at a certain place but ceases to remain there, yet, retains its original nature until transformed.

Neither do I subscribe to the inference that followed which prescinded from the definition of "appropriation" under the Water Code. As established under the earlier discussion, "appropriation" more properly refers to the "utilization and development" of national wealth rather than identifying what comprises national wealth. It simply meant to say that water is appropriated once it is diverted from where it is naturally found, but did not, in any categorical manner, state that once it is diverted, it is no longer a natural resource.

Second. We need not go further to define what is meant by national wealth under the Constitution to aid us in determining whether dam water can be classified as such. For it is quite apparent from the Constitutional Commission's deliberations, which the ponencia itself quoted, that "remaining part" of the natural source is not a qualification to being a natural resource. Consider:

Note that the Constitutional Commission, and the proponent of the subject Constitutional provision himself, cited hydroelectric facilities as an example of exploitation or development and utilization of natural resources. This mention of hydroelectric facilities is most telling. For hydroelectric facilities typically use waters impounded in dams or other diversion facilities to generate hydroelectric power. Clearly, dam water, albeit removed from its original and natural source, does not necessarily cease to be a natural resource.

Third. The reliance on IDEALS, Inc., et al v. PSALM, et al12 to justify their non-classification of dam water as natural resource is tragically misplaced. To recall, one of the bone of contention in IDEALS is whether the transfer of ownership and operations of the Angat Hydroelectric Power Plant (AHEPP) to Korea Water Resources Corporation (K-Water), a foreign company, violates the Constitution insofar as it allegedly allows said non-Filipino entity to utilize our natural resources, including the waters in Angat Dam to operate the power plant.

The Court ruled in the negative. More than the nature of dam water as its basis, the Court anchored its ruling especially on the fact that while K-Water shall operate the hydroelectric power plant, control of the Angat Dam and the flow of the waters therein into the tunnels of the power plant remains with the NPC, a government-owned and controlled corporation, viz.:

If, as the ponencia posits, dam water is not a natural resource, there would have been no issue whether K-Water or NPC controls the Angat Dam. For a foreign corporation could have freely maintained the same if the impounded waters therein did not constitute national wealth as the same would not run counter to the Constitution.

Fourth. The quandary at hand is clearly caused by the silence of the law as to the exact nature of dam water vis-à-vis national wealth. I humbly maintain, however, that whenever the law is silent, obscure, or ambiguous, the same must be interpreted, first, in a manner consistent with the intent of the lawmakers; and second, with sound practicality as to render the same fully operational.

With due respect, the interpretation endorsed by the ponencia runs counter to these two precepts: first, as discussed, the framers of the Constitution considered the generation of electricity by hydroelectric powerplants using waters, such as dam waters, as utilization and development of national wealth; and second, declaring that waters cease to be natural resources once removed from their natural source means that there will never be an occasion when water, as a natural resource, may be utilized and developed.

The ponencia itself admitted that appropriation of waters is a primordial requirement in concluding that there is utilization and development of national wealth. In other words, water may only be used and developed if it is first appropriated. This is but natural. For how can anyone make use of water if they do not first seize it from the rivers, lakes, or ocean? Yet, if we follow the reasoning of the ponencia, any use and development of such appropriated water will always merely amount to utilization and development of water, as an object of commerce, but never as a natural resource. Consequently, there will never be any occasion when LGUs may be entitled to their national wealth share pursuant to such activity.

It bears stress that this innovative feature of the Constitution was introduced to fortify the LGUs' self-sustainability and grant them additional means to fund the development of their respective communities. To thus construe water as natural resource in the manner proposed by the ponencia would reduce the ingenious thrust of Section 7, Article X of the 1987 Constitution to a mere lip service to the Filipino people.

Lastly. Classifying dam water as natural resource is within the best interest of the public and in keeping with the mandate of the Constitution to conserve and develop our patrimony for the benefit of the Filipino people.

We cannot lose sight of the big picture here. When we speak of dam water in this case, we do not refer to a negligible man-made structure in the province of Bulacan. We speak of the Angat Dam on which the very heart and capital of our country depends. The significance of the Angat Dam cannot be overemphasized. Without its waters, the entire population of Metro Manila would be crippled as it would be drained, so to speak, of its primary source of water supply. Our agriculture would be imperiled without the irrigation water sourced therefrom while the supply of electricity produced by the AHEPP would fluctuate. It is all but clear that the waters in Angat Dam, if not natural resource, are, at the very least, imbued with the highest of public interest.

Verily, to declare the same as fair object of commerce would open the floodgates to future possible appropriation and exploitation by foreign entities of the same. Not only is this detrimental to the security of significant public utilities, it creates an absurd situation where Filipino entities divert the waters from their natural sources yet it is the foreign entities which may ultimately own, exploit, and develop the same without guarantee that beneficial use would pertain to the Filipino public.

Finally, I reiterate my view that for an act to be considered utilization and development of national wealth, it is not required that proceeds must be subsequently derived. There is simply no law which narrowly restricts the definition of utilization and development of national wealth or natural resource to the extraction of a valuable by-product or the presence of a commercial undertaking and the production of income. It is a dangerous precedent to introduce one now when the case records are scant of discussions on this matter and when the implication of this not-thoroughly-sorted-out definition is far and deep reaching. There is that obvious constitutional implication because activities not covered by the narrow definition could very well skirt the nationality requirement.

At this point, I sincerely believe it is unnecessary to delve into any kind of definition of utilization and development of national wealth and natural resource. For the present case may already be dismissed for lack of cause of action, as I have discussed.

ALL TOLD, I express my concurrence in the result, i.e., to dismiss the Complaint, but for a different ground – lack of cause of action. In the alternative, I respectfully reiterate my dissent to the ratio and vote to consider dam water in the Angat Dam as natural resource, regardless of its diversion from its natural source.