ENVIRONMENT MIDTERMS DIGEST

1.DASMARINAS VS MONTERREY GR. No. 175550

CORONA, J.:
This is a petition for review on certiorari 1 of the May 26, 2006 decision 2 and November 21, 2006 resolution3 of the
Court of Appeals (CA) in CA-G.R. SP No. 90855.
Respondent Monterey Foods Corporation is a domestic corporation primarily engaged in the livestock and agriculture
business. It was issued water permit nos. 17779 and 17780 by the National Water Resources Board (NWRB) 4 for its
two deep wells located at Barangay Langcaan, Dasmarias, Cavite. The water drawn from the wells was used solely
for respondents business and not for the purpose of selling it to third persons for profit.
Petitioner Dasmarias Water District is a government-owned corporation organized by the Sangguniang Bayan of
Dasmarias in accordance with the provisions of PD 198 (otherwise known as the "Provincial Water Utilities Act of
1973").5
On March 30, 2004, petitioner filed a complaint for payment of production assessment against respondent in the
Regional Trial Court (RTC) of Imus, Cavite, Branch 90, docketed as Civil Case No. 0113-04. Invoking Sec. 39 of PD
198, it prayed that respondent be ordered to pay the following: (1) monthly production assessment for the two deep
wells in the amount of P55,112.46 from the date of demand; (2) actual expenses of at least P50,000 and (3) attorneys
fees and costs of suit.6
On June 8, 2004, respondent filed a motion to dismiss on the ground that the RTC had no jurisdiction to hear the case
because, under PD 1067 (otherwise known as the "Water Code of the Philippines"), 7 it was the NWRB that had
jurisdiction.8
On April 28, 2005, the RTC issued an order denying the motion to dismiss. 9 It ruled that it had jurisdiction over the
subject matter of the case because it referred to the right of petitioner to collect production assessments. It denied
reconsideration in an order dated June 8, 2005.10
Aggrieved, respondent filed a petition for certiorari 11 in the CA under Rule 65 of the Rules of Court docketed as CAG.R. SP No. 90855 assailing the April 28, 2005 and June 8, 2005 RTC orders. Aside from the issue of jurisdiction, it
likewise raised the issue of whether petitioner had the authority to impose a production assessment under Sec. 39 of
PD 198.
In a decision promulgated on May 26, 2006, the CA granted herein respondents petition and dismissed petitioners
complaint.12 It held that since the complaint involved a dispute relating to the appropriation, utilization, exploitation,
development, control, conservation and protection of waters, the NWRB had original jurisdiction over it under Art. 88
of PD 1067. It also ruled that under PD 1067, petitioner had no authority to impose the assessment without the prior
approval of the NWRB.13
Hence this petition. The sole issue is whether it is the RTC or the NWRB which has jurisdiction over the collection of
water production assessments.
The CA ruled that the NWRB had original jurisdiction over the complaint under Arts. 3 (d), 88 and 89 of PD 1067 and
that the regular courts exercised only appellate jurisdiction:
ART. 3. The underlying principles of this Code are:
xxx xxx xxx
d. The utilization, exploitation, development, conservation and protection of water resources shall be subject to the
control and regulation of the government through the [NWRB].
xxx xxx xxx
ART. 88. The [NWRB] shall have original jurisdiction over all disputes relating to appropriation, utilization,
exploitation, development, control, conservation and protection of waters within the meaning and context of the
provision of this Code.
xxx xxx xxx
ART. 89. The decisions of the [NWRB] on water rights controversies may be appealed to the [RTC] 14 of the province
where the subject matter of the controversy is situated within fifteen (15) days from the date the party appealing
receives a copy of the decision, on any of the following grounds: (1) grave abuse of discretion; (2) question of law;
and (3) questions of fact and law.
Petitioner argues that the issue in its complaint was the determination of its right as a water district under Sec. 39 of
PD 198 to impose production assessments on respondent:
Sec. 39. Production Assessment. - In the event the board of a district finds, after notice and hearing, that production
of ground water by other entities within the district for commercial or industrial uses is injuring or reducing the
districts financial condition, the board may adopt and levy a ground water production assessment to compensate
for such loss. In connection therewith, the district may require necessary reports by the operator of any commercial or
industrial well. Failure to pay said assessment shall constitute an invasion of the waters of the district and shall entitle
this district to an injunction and damages pursuant to Section 3215 of this Title. (Emphasis supplied)
Thus, it avers that the regular courts had jurisdiction over the subject matter thereof. It asserts that since it was not
questioning the validity of the water permits issued by the NWRB to respondent, it was not a water rights dispute over

which the NWRB had original jurisdiction.16

The petition has merit.
It is axiomatic that jurisdiction is determined by the allegations in the complaint. 17 Petitioner alleged the following:
1. That [petitioner] is a government owned agency duly organized by the Sangguniang Bayan of the Municipality of
Dasmarias pursuant to the express provisions of [PD. 198], as amended, particularly Secs. 5, 6, 7, Chapter 1, Title 2,
thereof and with principal office at Camerino Avenue, Dasmarias, Cavite
3. That under the provisions of [PD 198], specifically Sec. 47 thereof, [petitioner] is the exclusive franchise holder in
the maintenance and operation of water supply and in the distribution thereof for domestic, industrial uses, and that no
franchise shall be granted to any other person, agency or corporation for domestic, industrial or commercial water
service within its district without the consent of [petitioner] and subject only to the review by the Local Water Utilities
Administration;
4. That [respondent] is engaged in farm business, in the operation of which [respondent] has installed two (2)
deepwells, namely Well No. 1 and Well No. 2, with the following description and capacity:
WELL No. HP CAPACITY
1 30 300 gpm
2 7.5 75 gpm
5. That under the provision of [PD 198], particularly Sec. 39 Chapter VIII, Title II thereof, if the district ([petitioner]
herein) thru its board of directors, finds, after notice and hearing, that production of ground water by other entities,
including [respondent] herein, within the district for commercial or industrial uses is injuring or reducing the districts
financial condition, the Board may adopt and levy a ground-water assessment to compensate for such loss;
6. Since the operation of [respondents] business, together with other companies or entities within the district,
[petitioner] has found that [respondents] operation of its two (2) deepwells has adversely affected [petitioners]
financial condition;
7. That [petitioner] therefore invited [respondents] representative or representatives to discuss the matter of
production assessment on the basis of the volume of water consumption extracted from [respondents] two (2)
deepwells and its adverse effect on [petitioners] financial condition, as shown by [petitioners] letters dated 24 March
1998 and 31 August 2002 and others, xerox copies of said letters dated 24 March 1998 and 31 August 2002 are hereto
attached and marked as Annexes "A" and "B" hereof;
8. That [petitioner] thru its authorized inspectors, conducted inspection of [respondents] deepwells Nos. 1 and 2 and
submitted their own findings of the daily and monthly average consumption of [respondents] subject deepwells, and
on the basis of [petitioners] duly approved resolution regarding charge rate of P2.00 per cubic meter, petitioner came
up with the following production assessment charge:
Well

HP

Capacity

Hrs. of

Charge

Operation

Rate
Peso/m3

AverageConsumption Actual Charge Average xerox copies

of
said
Daily Monthly
Daily Monthly
finding and
computation
peso/m3 peso/m3
is
hereto
marked as

30

300

12

P2.00

816.48 2,449.42

7.5

75

P2.00

102.06 3,061.80

1,632.96 48,988.85
204.12 6.123.61

Annex
hereof;

"C"

9.
That
despite
demands
made upon [respondent], the latter failed and refused and continues to fail and refuse to pay [petitioners] fair and just
demands, to the damage and prejudice of [petitioner].18
P55,112.46

It is clear from the allegations that the complaint involved the determination and enforcement of petitioners right
under PD 198 to impose production assessments, not the appropriation and use of water and the adjudication of the
parties respective water rights.19 It was admitted that petitioner was a duly constituted water district. Respondent, on
the other hand, obtained water permits from the NWRB. Both thus had respective rights to the use of the water. But
petitioner was not challenging the water permits acquired by respondent. As we held in Atis v. CA:20
The case at bar does not involve any dispute relating to appropriation or use of waters. "Appropriation" as used in the
Water Code means the "acquisition of rights over the use of waters or the taking or diverting of waters from a natural
source" (Art. 9); while "use of water for fisheries is the utilization of water for the propagation and culture of fish as a
commercial enterprise." In fact, Petitioner is the holder of [two water permits]. The issuance of said permits served to
grant petitioner water rights or the privilege to appropriate and use water (Art. 13, [PD] 1067) from the San Pedro
Creek and sea water from Dapitan Bay for his fishpond.
Private Respondents/Intervenors do not dispute the water rights petitioner had acquired by reason of those permits
xxxx
xxx no dispute lies relative to the use or appropriation by Petitioner of water from the San Pedro Creek and sea water
from the Dapitan Bay. The case does not involve a determination of the parties' respective water rights, which would
otherwise be within the competence and original jurisdiction of the [NWRB]. Rather, the issue is whether or not the
construction of the dike, obstructed the natural water course or the free flow or water from Petitioner's higher estate to

Intervenors' lower estate thereby causing injury to petitioner's rights and impairing the use of his fishpond. 21
Also, in Amistoso v. Ong, et al.,22 we explained:
As correctly postulated by the petitioner, the court a quo is not being asked to grant petitioner the right to use but to
compel private respondents to recognize that right and have the same annotated on respondent Neri's Torrens
Certificate of Title. Resort to judicial intervention becomes necessary because of the closure made by the respondents
of the irrigation canal thus depriving the petitioner to continue enjoying irrigation water coming from Silmod River
through respondents' property. The interruption of the free flow of water caused by the refusal to re-open the closed
irrigation canal constituted petitioner's cause of action in the court below, which decidedly do not fall within the
domain of the authority of the [NWRB].
Respondents, however, rely very heavily on the dictum laid down in the Abe-Abe vs. Manta23 xxxx
The said pronouncement, however, finds no application to the instant case for in there, both petitioners and respondent
have no established right emanating from any grant by any governmental agency to the use, appropriation and
exploitation of water. In the case at bar, however, a grant indubitably exists in favor of the petitioner. It is the
enjoyment of the right emanating from that grant that is in litigation. Violation of the grantee's right, who in this case
is the petitioner, by the closure of the irrigation canal, does not bring the case anew within the jurisdiction of the
[NWRB].24
Clearly at issue in this case is whether, under the factual allegations of petitioner, it had the right under PD 198 to
impose production assessments on respondent. It did and it was a judicial question properly addressed to the courts.
A judicial question is raised when the determination of the question involves the exercise of a judicial function, that is,
it involves the determination of what the law is and what the legal rights of the parties are with respect to the matter in
controversy.25
Aside from the aforequoted cases, we ruled in the following that judicial questions were raised and were thus properly
cognizable by the regular courts:
(1) in Metro Iloilo Water District v. CA,26 the issue was whether the extraction and sale of ground water within
petitioners service area violated petitioners rights as a water district, justifying the issuance of an injunction.
(2) the action in Bulao v. CA27 was for damages predicated on a quasi-delict. Private respondent alleged that petitioner
maliciously constructed a dam and diverted the flow of water, causing the interruption of water passing through
petitioners land towards that of private respondent and resulting in the loss of harvest of rice and loss of income. 28
In the same vein, the claim under Sec. 39 related to a prejudice or damage to petitioners finances as a water district
which gave it the right to levy a production assessment to compensate for the loss. Under the provision, the water
district was also entitled to injunction and damages in case there was failure to pay. Obviously, this was a judicial
issue which fell under the jurisdiction of the regular courts. Since this involved a judicial question, it followed that the
doctrine of primary jurisdiction did not apply because the technical expertise of the NWRB was not required.
Specifically, the action was within the exclusive jurisdiction of the RTC because it was incapable of pecuniary
estimation as provided in Sec. 19 (1) of BP 129, 29 as amended by RA 7691.30 The basic issue was petitioners
entitlement to the right provided under Sec. 39 of PD 198. Although there was a claim for a sum of money, it was
purely incidental to, or a consequence of, the principal relief sought.31
We note that the CA already ruled on the issue of whether petitioner had the authority to impose production
assessments. Petitioner did not raise this issue in its petition before us. Did this amount to a waiver of the issue? No, it
did not. In its motion to dismiss in the RTC, respondent raised the sole issue of lack of jurisdiction. Accordingly, the
RTC in its April 28, 2005 and June 8, 2005 orders dealt only with this issue. However, respondent, in its petition for
certiorari in the CA, raised the additional question of petitioners authority to impose the production assessments. This
was obviously premature because it already went into the merits of the case and the RTC had not yet had the
opportunity to resolve the issue. Furthermore, points of law, theories, issues and arguments not brought to the attention
of the trial court ought not to be considered by a reviewing court as these cannot be raised for the first time on
appeal.32 Therefore, it was an error for the CA to rule on this issue.
Finally, respondent challenged the constitutionality of Sec. 39 of PD 198 in its memorandum. It contended that said
provision was an undue delegation of legislative power.33 A collateral attack on a presumably valid law is not allowed.
We have ruled time and again that the constitutionality or validity of laws, orders, or such other rules with the force of
law cannot be attacked collaterally. There is a legal presumption of validity of these laws and rules. Unless a law or
rule is annulled in a direct proceeding, the legal presumption of its validity stands. 34
Besides,
[a] law is deemed valid unless declared null and void by a competent court; more so when the issue has not been duly
pleaded in the trial court. The question of constitutionality must be raised at the earliest opportunity. xxx The settled
rule is that courts will not anticipate a question of constitutional law in advance of the necessity of deciding it. 35
WHEREFORE, the petition is hereby GRANTED. The decision and resolution of the Court of Appeals dated May
26, 2006 and November 21, 2006, respectively, are REVERSED and SET ASIDE. The case is REMANDED to
Branch 90 of the Regional Trial Court of Imus, Cavite for further proceedings.
SO ORDERED

2. G.R. No. 166471 March 22, 2011 TAWANG MULTI-PURPOSE COOPERATIVE Petitioner, vs. LA TRINIDAD WATER
DISTRICT, Respondent.
Facts
Petitioner Tawang Multi-Purpose Cooperative (TMPC), a registered cooperative established by Barangay Tawang, La Trinidad
residents for the purpose of operating a domestic drinking water service, applied with the National Water Resources Board (the
Board) for a Certificate of Public Convenience (CPC) to maintain and operate a waterworks system within its barangay.
But respondent La Trinidad Water District (LTWD), a government-owned corporation that supplied water within La Trinidad for
domestic, industrial, and commercial purposes, opposed the application. LTWD claimed that its franchise was exclusive in that its
charter provides that no separate franchise can be granted within its area of operation without its prior written consent. Still, the
Board granted TMPCs application.
Sec. 47. Exclusive Franchise. No franchise shall be granted to any other person or agency for domestic, industrial or commercial
water service within the district or any portion thereof unless and except to the extent that the board of directors of said district
consents thereto by resolution duly adopted, such resolution, however, shall be subject to review by the Administration.
LTWD contested the grant before the Regional Trial Court (RTC) of La Trinidad which, after hearing, rendered judgment setting
aside the Boards decision and canceling the CPC it issued to TMPC. The RTC denied TMPCs motion for reconsideration,
prompting the latter to come to this Court on petition for review.
Issue
Whether or not Section 47 of PD No. 198, as amended, is valid to be the foundation of the rulings of RTC.
Rulings
The court ruled on the negative. Section 5, Article XIV of the 1973 Constitution and Section 11, Article XII of the 1987
Constitution states that:
No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens
of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose
capital is owned by such citizens, nor shall such franchise, certificate or authorization be exclusive in character or for a longer
period than fifty years.
Plain words do not require explanation. The constitution is clear that franchises for the operation of a public utility cannot be
exclusive in character. There is no exception. In case of conflict between the Constitution and a statute, the Constitution always
prevails because the Constitution is the basic law to which all other laws must conform to. The duty of the Court is to uphold the
Constitution and to declare void all laws that do not conform to it. Since the Court, exercising its Constitutional power of judicial
review, has declared Section 47 of P.D. 198 void and unconstitutional, such section ceased to become law from the beginning.
Thus, the decision of the RTC was set aside and the decision of the NWRB was reinstated.
3. G.R. No. 165993

September 30, 2008

MERIDA WATER DISTRICT; ITS BOARD OF DIRECTORS, NAMELY: SUSANO TOREJAS JR., LOURDES QUINTE,
ROMULO PALES, CARMELITA DE LOS ANGELES, VILLAFRANCA ROSAL; AND MWD GENERAL MANAGER
NILO
C.
LUCERO, Petitioners,
vs.
FRANCISCO BACARRO, VICTORINO DOMANILLO, PATRICK BACOL, CARLITO BARRERA, RUSTICA
MENDOLA, JOSE DELIO HERMOSO, CHARITO TOLORIO, MA. VICTORIA MAINGqUE, ELMER GO, and
GERARDO BIOCO, Respondents.
DECISION
PUNO, C.J.:
This Petition for Review on Certiorari seeks to set aside the Decision 1 and Resolution2 of the Court of Appeals (CA), dated
January 30, 2004 and September 16, 2004, respectively, in CA-G.R. SP No.77141, which affirmed the Orders 3 of the Regional
Trial Court (RTC) in favor of respondents.
Petitioners are Merida Water District, a government-owned and controlled corporation 4 that operates the water utility services in
the municipality of Merida, Leyte; its Chairman, Susano Torejas, Jr.; other members of the Board of Directors, Lourdes Quinte,
Romulo Pales, Carmelita De Los Angeles, and Villafranca Rosal; and General Manager, Nilo C. Lucero. On October 10, 2001,
Merida Water District conducted a public hearing for the purpose of increasing the water rate. 5
On March 7, 2002, Merida Water District received a letter from the Local Water Utilities Administration (LWUA). 6 The letter
stated that on March 5, 2002, the LWUA Board of Trustees, per Board Resolution No. 63, series of 2002, confirmed Merida Water
Districts proposed water rates. 7 Attached to the letter was the Rate Schedule of Approved Water Rates containing a progressive
increase of water rates over a certain period.8
On September 3, 2002, Merida Water District approved Resolution No. 006-02, implementing a water rate increase of P90 for the
first ten cubic meters of water consumption.9 Thereafter, petitioners issued notices of disconnection to concessionaires who refused
to pay the water rate increase and did not render service to those who opted to pay the increased rate on installment basis. 10
On February 13, 2003, respondents, consumers of Merida Water District, filed a Petition for Injunction, etc. 11 against petitioners
before the RTC. Respondents sought to enjoin the petitioners from collecting payment of P90 for the first ten cubic meters of water
consumption. Respondents alleged that this imposed rate was contrary to the rate increase agreed upon during the public hearing.

Respondents claimed that petitioners violated Letter of Instructions (LOI) No. 700 by: (1) implementing a water rate increase
exceeding 60% of the current rate; and (2) failing to conduct a public hearing for the imposed rate of P90.12
On February 24, 2003, petitioners filed a Motion to Dismiss, 13 alleging that respondents petition lacked a cause of action as they
failed to exhaust administrative remedies under Presidential Decree (P.D.) No. 198, the Provincial Water Utilities Act of 1973, as
amended by P.D. Nos. 768 and 1479.
On February 26, 2003, one of the respondents questioned the legality of the water rate increase before the National Water
Resources Board (NWRB).14
In its Order15 dated March 3, 2003, the RTC denied petitioners motion to dismiss. The RTC held that there was no need to exhaust
administrative remedies due to the following circumstances, that by imposing and collecting P90 for the first ten cubic meters of
water consumption from its concessionaires, petitioners: (1) failed to comply with the legal requisites of hearing and notice; and
(2) violated LOI No. 700 for prescribing a water rate increase of almost 100% from the previous rate. On March 8, 2003,
petitioners filed a Motion for Reconsideration,16 which the RTC denied in its Order17 dated March 31, 2003.
On April 15, 2003, petitioners filed a Petition for Certiorari18 with the CA, assailing the RTCs orders for lack of jurisdiction. The
CA affirmed the RTCs orders, upholding its jurisdiction and the propriety of respondents recourse to the trial court
notwithstanding the rule on the exhaustion of administrative remedies. On March 1, 2004, petitioners filed a Motion for
Reconsideration,19 which the CA denied in a Resolution.
Petitioners raise the same arguments before this Court, alleging the RTCs lack of jurisdiction over respondents petition and the
impropriety of the respondents recourse to the RTC considering their failure to exhaust administrative remedies. The Solicitor
General supports the petitioners arguments. 20
The following issues require resolution:
1. whether the RTC has jurisdiction over respondents petition; and
2. in the event of an affirmative answer of the first issue, whether respondents recourse to the trial court is proper despite
their failure to exhaust administrative remedies.
Petitioners argue that the NWRB has original and exclusive jurisdiction over the case brought by the respondents before the RTC,
and for this reason, the RTC has no jurisdiction over the same. Petitioners cite P.D. No. 1067, the Water Code of the Philippines, to
support this argument:
Art. 88. The [NWRB] shall have original jurisdiction over all disputes relating to appropriation, utilization, exploitation,
development, control, conservation and protection of waters within the meaning and context of the provisions of this Code. 21
At the outset, it must be clarified that P.D. No. 1067 vests the NWRB with original jurisdiction over disputes relating to the
utilization of waters within the context of the Water Code. However, it must be noted that respondents allegations all point to the
legality in Merida Water Districts implementation of the water rate increase. P.D. No. 1479 provides for the administrative
remedies regarding a review of water rates, to determine whether a local water district had complied with the legal requirements in
establishing such rates:
SEC. 11. The last paragraph of Section 63 of the same decree is hereby amended to read as follows:
The rates or charges established by such local district, after hearing shall have been conducted for the purpose, shall be subject to
review by the Administration to establish compliance with the abovestated provisions. Said review of rates or charges shall be
executory and enforceable after the lapse of seven calendar days from posting thereof in a public place in the locality of the water
district, without prejudice to an appeal being taken therefrom by a water concessionaire to the [NWRB] whose decision thereon
shall be appealable to the Office of the President. An appeal to the [NWRB] shall be perfected within thirty days after the
expiration of the seven-day period of posting. The [NWRB] shall decide on appeal within thirty days from perfection. 22
After review by the LWUA, a water concessionaire may appeal the same to the NWRB, and the NWRBs decision may then be
appealed to the Office of the President.
Neither P.D. No. 1067, as cited by petitioners, nor P.D. No. 1479, which governs the procedure for the review of water rates,
expressly states that the NWRB has original and exclusive jurisdiction over a dispute concerning the increase of water
rates.23 Moreover, petitioners failed to cite any law which impliedly grants the NWRB original and exclusive jurisdiction to resolve
a dispute regarding the increase of water rates. A grant of exclusive jurisdiction cannot be implied from the language of a statute in
the absence of a clear legislative intent to that effect. 24 An administrative agency with quasi-judicial power is a tribunal of limited
jurisdiction, and "[i]ts jurisdiction should be interpreted in strictissimi juris."25
Petitioners reliance on Abe-Abe v. Manta[26] to support their allegation that the NWRB has original and exclusive jurisdiction
over a dispute concerning a local water districts water rate increase is misplaced. First, the abovementioned case involved a
dispute over water rights for irrigation purposes,27 a dispute clearly governed by P.D. No. 1067. The case at bar concerns a local
water districts increase of water rates, and P.D. No. 1479 provides for the administrative procedure regarding a review of the said
rates. Second, the Court discussed the NWRBs jurisdiction vis--vis the doctrine of the exhaustion of administrative
remedies.28 The doctrine of exhaustion does not apply when jurisdiction is exclusive. An administrative agencys exclusive
jurisdiction over a certain dispute renders the courts without jurisdiction to adjudicate the same at that stage. 29 The doctrine of
exhaustion applies "where a claim is cognizable in the first instance by an administrative agency alone; judicial intervention is
withheld until the administrative process has run its course." 30 To cite Abe-Abe v. Manta as the authority to support the allegation
that the NWRB has original and exclusive jurisdiction over a dispute regarding a water rate increase is a strained construction of
this Courts pronouncements. Thus, petitioners contention that the RTC has no jurisdiction because the NWRB has original and
exclusive jurisdiction over a dispute concerning the increase of water rates is clearly without merit.
Respondents failed to exhaust administrative remedies by stopping their pursuit of the administrative process before the NWRB.
Their failure to exhaust administrative remedies, however, does not affect the jurisdiction of the RTC. 31 Non-exhaustion of
administrative remedies only renders the action premature, that the "claimed cause of action is not ripe for judicial
determination."32

It is incumbent upon the party who has an administrative remedy to pursue the same to its appropriate conclusion before seeking
judicial intervention. The Court has consistently reiterated the rationale behind the doctrine of the exhaustion of administrative
remedies:
One of the reasons for the doctrine of exhaustion is the separation of powers, which enjoins upon the Judiciary a becoming policy
of non-interference with matters coming primarily (albeit not exclusively) within the competence of the other departments. The
theory is that the administrative authorities are in a better position to resolve questions addressed to their particular expertise and
that errors committed by subordinates in their resolution may be rectified by their superiors if given a chance to do so It may be
added that strict enforcement of the rule could also relieve the courts of a considerable number of avoidable cases which otherwise
would burden their heavily loaded dockets.33
Although the doctrine of exhaustion does not preclude in all cases a party from seeking judicial relief, cases where its observance
has been disregarded require a strong showing of the inadequacy of the prescribed procedure and of impending harm.
Respondents justify their failure to observe the administrative process on the following exceptions to the doctrine of exhaustion of
administrative remedies: (1) patent illegality; and (2) a denial of due process. However, respondents fail to show that the instant
case merits the application of these exceptions.
First, respondents claim that Merida Water Districts increase of the water rate is patently illegal for violating LOI No. 700, which
provides that the LWUA shall:
(f) Ensure that the water rates are not abruptly increased beyond the water users ability to pay, seeing to it that each increase if
warranted, does not exceed 60% of the current rate.34
The cases where this Court has upheld the non-observance of exhaustion of administrative remedies because of patently illegal
actions35 do not involve issues that require the consideration of the existence and relevancy of specific surrounding circumstances
and their relation to each other. In these cases, the question of patent illegality arose from a set of undisputed facts. Here, certain
facts need to be resolved first, in order to arrive at a conclusion of patent illegality. The LWUA confirmed the Rate Schedule of
Approved Water Rates for Merida Water District, a schedule that outlines different rates due to the progressive increase of water
rates. Thus, the determination of the current rate from which to measure the allowable increase prescribed by LOI No. 700 is a
factual matter best left to the expertise of the NWRB.
Second, respondents claim that Merida Water District violated due process by failing to conduct a hearing for the purpose of
establishing a water rate increase. Section 11 of P.D. No. 1479 provides that hearing is a requirement in establishing water rates:
The rates or charges established by such local district, after hearing shall have been conducted for the purpose , shall be
subject to review by the Administration to establish compliance with the abovestated provisions. (Emphasis supplied) 36
Jurisprudence affirming the failure to observe the doctrine of exhaustion due to a denial of due process involves instances when the
party seeking outright judicial intervention was denied the opportunity to be heard. 37 Here, respondents admit that Merida Water
District conducted a public hearing on October 10, 2001 regarding the increase of water rates. The existence of a hearing for this
purpose renders the allegation of a denial of due process without merit.
The failure of the respondents to show that the instant case falls within the exceptions to the doctrine of exhaustion necessitates in
the due observance of exhausting the proper administrative remedies before seeking judicial intervention.
IN VIEW WHEREOF, the petition is GRANTED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP
No.77141 dated January 30, 2004 and September 16, 2004, respectively, are REVERSED and SET ASIDE.
SO ORDERED.
4. [G.R. No. 122855. March 31, 2005]
METRO ILOILO WATER DISTRICT, petitioner, vs. HON. COURT OF APPEALS, Former SECOND DIVISION, Manila,
HON. SEVERINO C. AGUILAR, Presiding Judge, Branch 35, RTC, Iloilo, EMMA NAVA, RUFINO SITACA, JR., REXES
URSUA, CARMEN PANGANTIHON, BENITO GO, REBECCA BERLIN, and / or CHIT BERLIN, LUIS CARREON,
CHARLES KANA-AN and GERRY LUZURIAGA, respondents.
DECISION
TINGA, J.:
Before this Court is a Petition[1] dated November 9, 1995 filed by the Metro Iloilo Water District assailing the Decision[2] of
the Court of appeals dated June 19, 1995 which affirmed the trial courtsOrder[3] dismissing the petitions for injunction filed by
petitioner against private respondents.
Petitioner is a water district organized under the provisions of Presidential Decree No. 198 (P.D. 198), as amended. It was
granted by the Local Water Utilities Administration Conditional Certificate of Conformance No. 71 [4] on January 12, 1979. Its
service areas encompass the entire territorial areas of Iloilo City and the Municipalities of Ma-asin, Cabanatuan, Santa Barbara and
Pavia.
Sometime between April and May of 1993, petitioner filed nine (9) individual yet identical petitions for injunction with
prayer for preliminary injunction and / or temporary restraining order [5] against herein private respondents the pertinent portions of
which read:

4. That pursuant to the provisions of section 31 (a) of P.D. 198, as amended, the petitioner as a Water District was authorized to
adopt laws and regulations governing the drilling, maintenance and operation of wells within its boundaries for purposes other than
single family domestic use on overlying land, with then provision that any well operated in violation of such regulations shall be
deemed an interference with the waters of the district;

5. That by virtue of said authorization, the Board of Directors for the petitioner promulgated its Rules Governing Ground Water
Pumping and spring Development Within the Territorial Jurisdiction of the Metro Iloilo Water District, Section 3 of which
provides as follows:
Ground Water Pumping and Spring Development. Except when the use of water is for single family domestic use, no person,
natural or juridical shall abstract or withdraw ground water and appropriate the waters from springs within the jurisdiction of the
District without first securing a water permit from the Council and no person shall engage in the business of drilling wells either as
test wells or production wells for the purpose of abstracting or withdrawing ground water without first registering as well as driller
with the Council; Provided, that the person drilling his own well or through the services of a qualified well driller shall comply
with the standards and requirements established herein in addition to those established by the Council for the exploitation of
ground water resources.
6. That the respondent has abstracted or withdrawn ground water within the territorial jurisdiction of the petitioner at
_________________________ Iloilo City, without first securing a Water Permit from the National Water Resources Council nor
had its well driller registered as such with said council, and sold said water so extracted to commercial and other consumers in
Iloilo City, within petitioners service area;
7. That the unauthorized extraction or withdrawal of ground water by the respondent without the necessary permit therefore is in
violation of the rules and regulations prescribed by the Board of Directors of the petitioner as above-mentioned duly approved by
the National Water Resources Council and constitutes interference with or deterioration of water quality or the natural flow of
surface or ground water supply which maybe used or useful for any purpose of the petitioner for which the petitioner as a Water
District may commence, maintain, intervene in, defend and compromise actions or proceedings under Section 31 (a) of P.D. 198,
as amended;
8. That the act of the respondent in continuing to extract or withdraw ground water without a Water Permit therefor, is in violation
of Art. XIII of P.D. 1067 of the Water Code of the Philippines, and unless such act is restrained, will definitely cause great loss
upon the petitioner as a Water District.[6]
In their respective answers, private respondents uniformly invoked the lack of jurisdiction of the trial court, contending that
the cases were within the original and exclusive jurisdiction of the National Water Resources Council (Water Council) under
Presidential Decree No. 1067, otherwise known as the Water Code of the Philippines (Water Code). In addition, private
respondents Emma Nava[7] and Rebecca Berlin[8] denied having extracted or withdrawn water from the ground, much less sold the
same.[9] Private respondent Carmen Pangantihon likewise denied having constructed any waterworks system in her area but
admitted that she had constructed her own deep well, unaware that she needed to get a permit to do the same. [10] Private respondent
Rufino Sitaca maintained the petitioners source of water are reservoirs from rivers and are thus not affected by his well.
Moreover, he claimed that his water permit application was deemed approved, and thus he is entitled to use the water from his
well.[11]
Private respondent Benito Go admitted that he extracted water from the ground, which he claimed to be his private property,
and used the water for his lumberyard and domestic purposes. [12]Additionally, he alleged the petitioners rules and regulations were
not published in the Official Gazette and hence petitioner had no cause of action. [13] Private respondent Charles Kana-an asserted
that he had complied with the requirements for the approval of his water permit application. He claimed that he was extracting and
selling water with petitioners knowledge, and without damage and injury to the latter. [14] Meanwhile, private respondent Gerry
Luzuriaga claimed that he was not the real party in interest, but Shoemart, Inc. which has the control and possession of the
property where the alleged withdrawal of ground water was taking place.[15]
The trial court dismissed the petitions in its Order [16] dated March 17, 1994, ruling that the controversy was within the
original jurisdiction of the Water Council, involving, as it did, the appropriation, exploitation, and utilization of water, and factual
issues which were within the Water Councils competence. In addition, the trial court held that petitioner failed to exhaust
administrative remedies under the doctrine of primary administrative jurisdiction. Petitioners Motion for Reconsideration[17] was
thereafter denied on April 29, 1994.[18]
A petition[19] dated May 27, 1994 seeking a review of the trial courts order of dismissal was filed before this Court but the
same was referred to the Court of Appeals for consideration and adjudication on the merits in the Resolution[20] dated July 11, 1994.
Petitioner sought the review of the order of the trial court dismissing the petitions and denying its motion for reconsideration,
on the ground that the trial court failed to adhere to this Courts rulings inAmistoso v. Ong[21] and Santos v. Court of Appeals,
[22]
which upheld the regular courts jurisdiction over disputes which involve not the settlement of water rights but the enjoyment of
the right to water use for which a permit had already been granted.
The Court of Appeals denied the petition, holding that the trial court did not err in dismissing the case for want of jurisdiction
as it was the Water Council which had jurisdiction over the case. The appellate court ratiocinated:
The controversy in this case arose from the fact that the petitioner Iloilo Water District was granted water rights in Iloilo City and
the respondents also extracted or withdrew ground water within the same jurisdiction.
While at first impression this case involves a violation of the petitioners enjoyment of a right to water use, the fact is that it
actually involves also a dispute over the appropriation, utilization, exploitation development, control, conversation and protection
of waters because the respondents have allegedly engaged in the extraction or withdrawal of ground water without a permit from
the NWRC within the territorial jurisdiction of the petitioner. Therefore, Art. 88 of P.D. No. 1067 giving the NWRC original
jurisdiction over the cases is applicable.
The NWRC has jurisdiction to hear and decide disputes relating to appropriation, utilization and control of water while the
Regional Trial Court only has appellate jurisdiction over the case. This was the ruling of the Supreme Court inAbe-abe vs. Manta,
90 SCRA 524 which was reiterated in Tanjay Water District vs. Gabanton, 172 SCRA 253.

The cases of Santos v. Court of Appeals, 214 SCRA 170 and Amistoso vs. Ong, 130 SCRA 288 are not applicable to the case at
bar for here, what is involved is not only the alleged violation of the grantees right but a question of whether or not the
respondents have equal right to the appropriation, utilization and exploitation of water rights. [23]

The Court of Appeals denied petitioners Motion for Reconsideration[24] dated July 11, 1995 in its Resolution of September
29, 1995.[25]
Petitioner now contends that the extraction or withdrawal of ground water as well as the sale thereof within its territorial
jurisdiction is a violation of its rights as a water district. [26] Being a violation thereof, the regular courts have jurisdiction over the
dispute. On the other hand, private respondents unanimously maintain that it is the Water Council which has jurisdiction over the
subject matter of this case. Thus, the sole issue in this petition, as presented by petitioner, is:
DID THE REGIONAL TRIAL COURT OF ILOILO HAVE JURISDICTION OVER THE SUBJECT MATTER OF THE
PETITIONS?[27]
Petitioner anchors its claim on Section 31 (now 32) of PD 198, as amended, which reads:
Sec. 32. Protection of waters and Facilities of District. A district shall have the right to :
(a) Commence, maintain, intervene in, defend and compromise actions or proceedings to prevent interference with or
deterioration of water quality or the natural flow of any surface, stream or ground water supply which may be used or useful
for any purpose of the district or be a common benefit to the lands or its inhabitants. The ground water within a district is necessary
to the performance of the districts powers and such districts hereby authorized to adopt rules and regulations subject to the
approval of the National Water Resources Council governing the drilling, maintenance and operation of wells within its boundaries
for purposes other than a singled family domestic use on overlying land. Any well operated on violation of such regulations shall
be deemed in interference with the waters of the district.

(c) Prohibit any person, firm or corporation from vending, selling, or otherwise disposing of water for public purposes within the
service area of the district where district facilities are available to provide such service, or fix terms and conditions by permit for
such sale or disposition of water.
By virtue of the above provisions, petitioner states that as a water district, it has the right to prevent interference with the
water of the district; and to enforce such right, it is given remedies of commencing, maintaining, or intervening in, defending or
entering into appropriate actions or proceedings.
In asserting the jurisdiction of the regular courts over its petitions and the propriety of its filing of the petitions before the trial
court, petitioner invokes the ruling of the Court in Amistoso v. Ong,[28] as reiterated in Santos v. Court of Appeals,[29] that where the
issue involved is not the settlement of a water rights dispute, but the enjoyment of a right to water use for which a permit was
already granted, the regular court has jurisdiction and not the Water Council.
Petitioner insists that there is no occasion to invoke the original jurisdiction of the Water Council in this case since there is no
question of appropriation, exploitation, utilization, development, control, conservation, and protection of water. The only dispute,
according to petitioner, pertains to the act of private respondents in extracting ground water from the territory of petitioner as a
water district and selling the same within its service area, or more succinctly, private respondents interference with the granted
right of petitioner over ground water within its territorial jurisdiction.[30]
Private respondents, for their part, staunchly invoke Article 88 of the Water Code, which grants original jurisdiction over all
disputes relating to the appropriation, utilization, exploitation, development, control, conservation and protection of waters to the
Water Council.[31]
Relying on the cases of Abe-abe v. Manta[32] and Tanjay Water District v. Gabaton,[33] private respondents maintain that the
Water Council is exclusively vested with original jurisdiction to settle water disputes under the Water Code. They claim that
the Amistoso and Santos cases do not apply to the instant case since in Amistoso, the issue was the prevention of the flow of water
through an irrigation canal, and in Santos, the issue referred to the prevention of the enjoyment of a water right. In contrast, the
issue in the instant case is the right to appropriate water which petitioner and some of the private respondents profess to have.
We find merit in the petition.
The petitions file before the trial court were for the issuance of an injunction order for respondents to cease and desist from
extracting or withdrawing water from petitioners well and from selling the same within its service areas. [34] The petitions
contained factual allegations in support of the prayer for injunction, to wit:
1. the grant to petitioner of a Conditional Certificate of Conformance by the Local Water Utilities Administration over areas
from which water was allegedly extracted or withdrawn by private respondents, by virtue of which its Board of Directors
promulgated rules governing ground water pumping within its service areas;
2. abstraction or withdrawal of water within the territorial jurisdiction of petitioner by private respondents without first
securing a permit from the Water Council, or registering their well drillers, and sale of said water so extracted to
commercial and other consumers within petitioners service areas;
3. that the unauthorized extraction or withdrawal of ground water by private respondents without the necessary permit was in
violation of petitioners prescribed rules, and constitutes interference for which petitioner may commence, maintain,
intervene in, defend and compromise actions or proceedings under Sec. 31 of P.D. No. 198;
4. that the extraction or withdrawal of ground water without the corresponding permit was a violation of Art. 13 of the Water
Code; and
5. that great damage and prejudice will be suffered by petitioner if private respondents extraction and withdrawal of ground
water, as well as the selling thereof be allowed to continue.
In essence, the petitions focus on the violations incurred by private respondents by virtue of their alleged unauthorized
extraction and withdrawal of ground water within petitioners service area, visa-a-vis petitioners vested rights as a water district.
At issue is whether or not private respondents extraction and sale of ground water within petitioners service area violated
petitioners rights as a water district. It is at once obvious that the petitions raise a judicial question.

A judicial question is raised when the determination of the questions involves the exercise of a judicial function, i.e., the
question involves the determination of what the law is and what the legal rights of the parties are with respect to the matter in
controversy. As opposed to a moot question or one properly decided by the executive or legislative branch, a judicial question is
properly addressed to the courts.[35]
The instant case certainly calls for the application and interpretation of pertinent laws and jurisprudence in order to determine
whether private respondents actions violate petitioners rights as a water district and justify an injunction. This issue does not so
much provide occasion to invoke the special knowledge and expertise of the Water Council as it necessitates judicial intervention.
While initially it may appear that there is a dimension to the petitions which pertains to the sphere of the Water Council, i.e., the
appropriation of water which the Water Code defines as 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, in reality the matter is at most merely
collateral to the main thrust of the petitions.
The petitions having raised a judicial question, it follows that the doctrine of exhaustion of administrative remedies, on the
basis of which the petitions were dismissed by the trial court and the Court of Appeals, does not even come to play.[36]
Notably too, private respondents themselves do not dispute petitioners rights as a water district. The cases of Abe-Abe v.
Manta[37] and Tanjay Water District v. Gabaton[38] invoked by private respondents are thus inapplicable. In Abe-Abe v. Manta, both
petitioners and respondent had no established right emanating from any grant by any governmental agency to the use,
appropriation and exploitation of water, while in Tanjay Water District v. Gabaton, petitioner Tanjay sought to enjoin the
Municipality of Pamplona and its officials from interfering in the management of the Tanjay Waterworks System.
On the other hand, in the analogous case of Amistoso v. Ong[39], petitioner had an approved Water Rights Grant from the
Department of Public Works, Transportation and Communications. The trial court was not asked to grant petitioner the right to use
but to compel private respondents to recognize that right. Thus, we declared that the trial courts jurisdiction must be upheld where
the issue involved is not the settlement of a water rights dispute, but the enjoyment of a right to water use for which a permit was
already granted.[40]
In like manner, the present petition calls for the issuance of an injunction order to prevent private respondents from extracting
and selling ground water within petitioners service area in violation of the latters water permit. There is no dispute regarding
petitioners right to ground water within its service area. It is petitioners enjoyment of its rights as a water district which it seeks
to assert against private respondents.
WHEREFORE, the Decision of the Court of Appeals dated June 19, 1995 is SET ASIDE and the case is ordered
REMANDED to the trial court for further proceedings, with costs against respondents.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.
5. METROPOLITAN CEBU WATER DISTRICT (MCWD
versus MARGARITA A. ADALA,

G.R. No. 168914

FACTS:
Respondent filed on October 24, 2002 an application with the National Water Resources Board (NWRB) for the issuance of a
Certificate of Public Convenience (CPC) to operate and maintain waterworks system in sitios San Vicente, Fatima, and Sambag in
Barangay Bulacao, Cebu City.
At the initial hearing of December 16, 2002 during which respondent submitted proof of compliance with jurisdictional
requirements of notice and publication, herein petitioner Metropolitan Cebu Water District, a government-owned and controlled
corporation created pursuant to P.D. 198 which took effect upon its issuance by then President Marcos on May 25, 1973, as
amended, appeared through its lawyers to oppose the application.
In its Opposition, petitioner prayed for the denial of respondents application on the following grounds: (1) petitionersBoard of
Directors had not consented to the issuance of the franchise applied for, such consent being a mandatory condition pursuant to P.D.
198, (2) the proposed waterworks would interfere with petitioners water supply which it has the right to protect, and (3) the water
needs of the residents in the subject area was already being well served by petitioner.
NWRB granted Adalas application after hearing and an ocular inspection of the area and denied MCWDs MFR.
RTC denied the appeal and upheld NWRB Decision. RTC denied MFR
ISSUE:
WON Section 47 of PF 198, which vests an exclusive franchise upon the public utilities is constitutional and may be relled upon
by MCWD in its opposition of Adalas application for a CPC.
HELD: No.
Section 47 Exclusive Franchise No franchise shall be granted to any other person or agency for domestic, industrial or
commercial water service within the district or any portion thereof unless and except to the extent that the board of directors of

said district consents thereto by resolution duly adopted, such resolution, however, shall be subject to review by the
Administration. There being no such consent on the part of its board of directors, petitioner concludes that respondents application
for CPC should be denied.
Possession of franchise by water district does not bar the issuance of a CPC for an area covered by water district
A CPC is formal written authority issued by quasi-judicial bodies for the operation and maintenance of a public utility for which a
franchise is not required by law and a CPC issued by this Board is an authority to operate and maintain a waterworks system or
water supply service. On the other hand, a Franchise is privilege or authority to operate appropriate private property for public use
vested by Congress through legislation. Clearly, therefore, a CPC is different from a franchise and Section 47 of Presidential
Decree 198 refers only to franchise.
Sec. 47 of P.D. 198 is UNCONSTITUTIONAL
The provision must be deemed void ab initio for being irreconcilable with Article XIV Section 5 of the 1973Constitution which
was ratified on Jan. 17, 1973 the constitution in force when P.D. 198 was issued on May 25, 1973.
SECTION 5. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted
except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty per
centum of the capital of which is owned by such citizens, nor shall such franchise, certificate, or authorization be exclusive in
character or for a longer period than fifty years. x x x
This provision has been substantially reproduced in Article XII Section 11 of the 1987 Constitution, including the prohibition
against exclusive franchises.
Water districts fall under the term public utility
A "public utility" is a business or service engaged in regularly
Supplying the public with some commodity or service of public consequence such as electricity, gas, water, transportation,
telephone or telegraph service. x x x (National Power Corp. v. CA)