The Supreme Court affirmed that water concessionaires Maynilad and Manila Water, along with the Metropolitan Waterworks and Sewerage System (MWSS), are liable for violating the Philippine Clean Water Act due to their failure to connect existing sewage lines to available sewerage systems within the mandated five-year period. This ruling underscores the importance of adhering to environmental laws and fulfilling obligations to protect water resources for the benefit of present and future generations, mandating compliance and imposing significant fines for continued non-compliance.

A River Runs Through It: Holding Water Concessionaires Accountable for Clean Water Act Violations

The case of Maynilad Water Services, Inc. vs. The Secretary of the Department of Environment and Natural Resources arose from complaints filed against MWSS and its concessionaires, Maynilad and Manila Water, for failing to provide adequate Wastewater Treatment Facilities (WWTFs), leading to the degradation of water quality in Manila Bay and its tributaries. These complaints triggered a series of legal proceedings, culminating in the Supreme Court, which was tasked with determining whether the petitioners violated Section 8 of the Clean Water Act and whether the imposed fines were justified. This case highlights the critical intersection of environmental law, public health, and corporate responsibility, making it a landmark decision in Philippine jurisprudence.

The Supreme Court’s decision hinged on the interpretation of Section 8 of the Clean Water Act, which mandates that water supply and sewerage facilities and/or concessionaires in Metro Manila and other highly urbanized cities connect existing sewage lines to available sewerage systems within five years of the Act’s effectivity. The petitioners argued that their compliance was contingent on the Department of Public Works and Highways (DPWH) first establishing a national program on sewerage and septage management under Section 7 of the same Act. However, the Court rejected this argument, emphasizing that Section 8 imposes a direct and unconditional obligation on the concessionaires.

Furthermore, the Court found that the concessionaires’ reliance on their Concession Agreements with MWSS, which contained different timelines for sewerage projects, was misplaced. The Court underscored that these agreements explicitly required compliance with all Philippine laws, including the Clean Water Act. The Court noted that these agreements cannot supersede statutory obligations aimed at protecting public health and the environment. The Supreme Court stated in the decision:

The Concessionaire shall comply with all Philippine laws, statutes, rules Regulations, orders and directives of any governmental authority that may affect the Concession from time to time.

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE REPUBLIC OF THE PHILIPPINES.

The Court also addressed the petitioners’ claim that the Supreme Court’s earlier ruling in Metropolitan Manila Development Authority (MMDA) v. Concerned Residents of Manila Bay effectively extended the compliance period until 2037. The Supreme Court clarified that the MMDA case, while ordering the construction of wastewater treatment facilities, did not nullify the specific five-year timeline stipulated in Section 8 of the Clean Water Act. Instead, it was a directive to expedite the cleanup of Manila Bay, separate from the concessionaires’ obligation to connect existing sewage lines.

Building on this principle, the Supreme Court underscored the importance of the Public Trust Doctrine, which imposes a duty on the State and its representatives to continuously supervise the use of appropriated water. This doctrine emphasizes that water is not merely a commodity for sale but a vital resource that must be protected for present and future generations. The Court’s decision highlighted the need for a holistic approach to water quality management, recognizing the interconnectedness of water sources, ecological protection, public health, and quality of life.

The Court emphasized the dire consequences of non-compliance with environmental laws, particularly in densely populated urban areas like Metro Manila, where water pollution poses significant risks to public health. The Court noted that the Clean Water Act aims to address the fragmentation and lack of coordination among government agencies involved in water management. It seeks to integrate state policies on water management and conservation and assigns specific obligations to stakeholders, including concessionaires.

In its analysis, the Court also took note of the historical context of the Clean Water Act, tracing its origins to Senate Bill No. 2115, which aimed to consolidate fragmented aspects of water quality management. The deliberations on the bill revealed the importance of a comprehensive national program that addresses the sources of water pollution and promotes sustainable practices. The Court observed that the legislative intent behind reducing the compliance period from seven to five years was to ensure immediate enforcement and implementation of the law.

Regarding the fines imposed by the Secretary of the DENR, the Court found that the petitioners were given ample opportunity to be heard and present their arguments. The Court noted that the Regional Directors of the DENR-EMB filed complaints, and the SENR issued a Notice of Violation (NOV) detailing the charges against the petitioners. Petitioners were able to participate in a technical conference and submit their respective answers to the charges. The Court thus determined that the Secretary of the DENR was acting within their authority.

However, the Court modified the computation of the fines, noting that the DENR Secretary had failed to include the additional ten percent increase every two years, as mandated by Section 28 of the Clean Water Act, to account for inflation. As stated in the court decision:

SECTION 28. Fines, Damages and Penalties. – Unless otherwise provided herein, any person who commits any of the prohibited acts provided in the immediately preceding section or violates any of the provisions of this Act or its implementing rules and regulations, shall be fined by the Secretary, upon the recommendation of the PAB in the amount of not less than Ten thousand pesos (P10,000.00) nor more than Two hundred thousand pesos (P200,000.00) for every day of violation. The fines herein prescribed shall be increased by ten percent (10%) every two (2) years to compensate for inflation and to maintain the deterrent function of such fines

As such, the Court imposed fines of PhP 921,464,184.00 on both Maynilad and Manila Water, jointly and severally liable with MWSS, covering the period from May 7, 2009, to the date of promulgation of the decision. Furthermore, the Court ordered that from the finality of the decision, petitioners would be fined PhP 322,102.00 per day, subject to a further 10% increase every two years, until full compliance with Section 8 of the Clean Water Act.

FAQs

What was the key issue in this case?	The central issue was whether Maynilad and Manila Water, along with MWSS, violated Section 8 of the Philippine Clean Water Act by failing to connect existing sewage lines to available sewerage systems within the prescribed five-year period.
What is Section 8 of the Clean Water Act?	Section 8 mandates water supply and sewerage facilities and concessionaires in Metro Manila and other highly urbanized cities to connect existing sewage lines to available sewerage systems within five years of the Act’s effectivity.
Why did the petitioners argue they were not in violation?	The petitioners contended that their compliance was contingent on the DPWH first establishing a national program on sewerage and septage management under Section 7 of the Act, and that their concession agreements superseded the Act’s requirements.
How did the Court address the argument regarding Section 7 of the Clean Water Act?	The Court rejected the argument, stating that Section 8 imposes a direct and unconditional obligation on the concessionaires, not contingent on Section 7.
What is the Public Trust Doctrine, and how did it apply to this case?	The Public Trust Doctrine imposes a duty on the State and its representatives to continuously supervise the use of appropriated water, emphasizing that water is a vital resource for present and future generations.
What was the consequence of the court ruling?	Maynilad and Manila Water, along with MWSS, were held liable for fines, and an ongoing daily fine was imposed until full compliance with Section 8 of the Clean Water Act.
Did the ruling in MMDA v. Concerned Residents of Manila Bay affect the outcome?	The Court clarified that the MMDA case, while ordering the construction of wastewater treatment facilities, did not nullify the specific five-year timeline stipulated in Section 8 of the Clean Water Act.
What are the practical implications of this ruling?	This ruling emphasizes the importance of strict compliance with environmental laws, ensuring the protection of water resources and imposing significant financial consequences for non-compliance.

In conclusion, the Supreme Court’s decision in Maynilad Water Services, Inc. vs. The Secretary of the Department of Environment and Natural Resources serves as a firm reminder of the importance of environmental stewardship and the legal obligations of water concessionaires to protect public health and the environment. The ruling underscores the need for strict compliance with the Clean Water Act, holding concessionaires accountable for their failure to meet the mandated timelines for connecting sewage lines. The imposition of substantial fines and the emphasis on the Public Trust Doctrine sends a clear message that environmental protection is a non-negotiable responsibility.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Maynilad Water Services, Inc. vs. The Secretary of the Department of Environment and Natural Resources, G.R. No. 202897, August 06, 2019