Metro Iloilo Water District vs. Court of Appeals

Where a water district already vested with a water right seeks to enjoin the unauthorized extraction and sale of ground water within its service area, the regular courts have jurisdiction, the controversy being the enforcement or enjoyment of a granted right rather than the settlement of a water rights dispute cognizable by the National Water Resources Council. Corollarily, the doctrine of exhaustion of administrative remedies does not apply where the petition raises a judicial question.

Metro Iloilo Water District is a water district organized under the provisions of Presidential Decree No. 198, as amended, and was granted Conditional Certificate of Conformance No. 71 by the Local Water Utilities Administration on January 12, 1979, with service areas encompassing the entire territorial areas of Iloilo City and the Municipalities of Maasin, Cabanatuan, Santa Barbara and Pavia. Section 31 (now Section 32) of P.D. 198 authorizes a district to commence, maintain, intervene in, defend and compromise actions to prevent interference with or deterioration of water quality or the natural flow of any surface, stream or ground water supply useful to the district, and 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 single family domestic use on overlying land. Presidential Decree No. 1067, the Water Code of the Philippines, by contrast, vests in the National Water Resources Council original jurisdiction over all disputes relating to the appropriation, utilization, exploitation, development, control, conservation and protection of waters. The competing reach of these two statutes frames the jurisdictional question presented.

Metro Iloilo Water District is a water district organized under the provisions of Presidential Decree No. 198, as amended, and was granted by the Local Water Utilities Administration Conditional Certificate of Conformance No. 71 on January 12, 1979. Its service areas encompass the entire territorial areas of Iloilo City and the Municipalities of Maasin, Cabanatuan, Santa Barbara and Pavia. The private respondents are individual landowners, drillers, and water sellers whose wells and water-selling operations were alleged to lie within that territory.

Pursuant to Section 31(a) of P.D. 198, as amended, which authorized a water district to adopt rules and regulations governing the drilling, maintenance and operation of wells within its boundaries for purposes other than single family domestic use on overlying land, the Board of Directors of the district promulgated its "Rules Governing Ground Water Pumping and Spring Development Within the Territorial Jurisdiction of the Metro Iloilo Water District." Section 3 of those Rules provided that, 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 that no person shall engage in the business of drilling wells, whether as test wells or production wells, without first registering as a well driller with the Council.

Sometime between April and May of 1993, the district filed nine individual yet identical petitions for injunction, with prayer for preliminary injunction and/or temporary restraining order, against the private respondents. The petitions alleged that each respondent had abstracted or withdrawn ground water within the territorial jurisdiction of the district without first securing a water permit from the National Water Resources Council and without having its well driller registered with the said Council, and had sold the water so extracted to commercial and other consumers in Iloilo City within the district's service area. The district asserted that the unauthorized extraction and withdrawal violated its own rules and regulations, duly approved by the National Water Resources Council, and Article XIII of P.D. 1067 of the Water Code of the Philippines, and constituted interference with or deterioration of water quality or the natural flow of surface or ground water supply useful to the district; it further alleged that unless restrained, the acts would cause it great loss.

In their respective answers, the private respondents uniformly invoked the lack of jurisdiction of the trial court, contending that the cases fell within the original and exclusive jurisdiction of the National Water Resources Council under Presidential Decree No. 1067, otherwise known as the Water Code of the Philippines. On the merits, their defenses diverged. Emma Nava and Rebecca Berlin denied having extracted or withdrawn water from the ground, much less sold the same. 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 a permit to do so. Rufino Sitaca maintained that the district's source of water consisted of reservoirs from rivers and was thus not affected by his well, and claimed that his water permit application was deemed approved, entitling him to use the water from his well. Benito Go admitted that he extracted water from the ground, which he claimed to be his private property, and used it for his lumberyard and domestic purposes; he additionally alleged that the district's rules and regulations were not published in the Official Gazette and that the district therefore had no cause of action. Charles Kana-an asserted that he had complied with the requirements for the approval of his water permit application, and that he was extracting and selling water with the district's knowledge and without damage or injury to it. Gerry Luzuriaga claimed that he was not the real party in interest, but that Shoemart, Inc. had the control and possession of the property where the alleged withdrawal of ground water was taking place.

The trial court dismissed the petitions, and the Court of Appeals affirmed, both courts treating the controversy as one involving the appropriation, exploitation and utilization of water, together with factual issues within the Water Council's competence. On the factual character of the controversy, the appellate court observed that the dispute arose from the circumstance that the district had been granted water rights in Iloilo City while the respondents also extracted or withdrew ground water within the same jurisdiction, and that the respondents had allegedly engaged in such extraction or withdrawal without a permit from the National Water Resources Council within the district's territorial jurisdiction.

• Jurisdiction of the Regular Courts: Petitioner invoked the rulings in Amistoso vs. Ong and Santos vs. Court of Appeals, which upheld the regular court's jurisdiction over disputes involving not the settlement of water rights but the enjoyment of the right to water use for which a permit had already been granted.
• Absence of a Water Rights Dispute: Petitioner insisted that there was no occasion to invoke the original jurisdiction of the Water Council, since no question of appropriation, exploitation, utilization, development, control, conservation and protection of water was presented; the only dispute pertained to the private respondents' extraction of ground water from its territory and sale of the same within its service area.
• Interference with a Vested Right: Petitioner contended that the extraction or withdrawal of ground water, as well as the sale thereof within its territorial jurisdiction, violated its rights as a water district and constituted interference with its granted right over ground water within its territorial jurisdiction, so that the regular courts had jurisdiction over the dispute.
• Statutory Basis for the Action: Petitioner anchored its claim on Section 31 (now 32) of P.D. 198, as amended, which grants a district the right to 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 useful for any purpose of the district, and to 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.

• Exclusive Original Jurisdiction of the Water Council: Private respondents unanimously maintained that it is the Water Council which has jurisdiction over the subject matter of the case, invoking 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.
• Reliance on Abe-abe and Tanjay: Relying on Abe-abe vs. Manta and Tanjay Water District vs. Gabaton, private respondents maintained that the Water Council is exclusively vested with original jurisdiction to settle water disputes under the Water Code.
• Inapplicability of Amistoso and Santos: They claimed that Amistoso and Santos do not apply, 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, whereas the issue in the instant case is the right to appropriate water which petitioner and some of the private respondents profess to have.
• Denials of Extraction and Sale: Emma Nava and Rebecca Berlin denied having extracted or withdrawn water from the ground, much less sold the same.
• Admission with Lack of Knowledge of Permit Requirement: Carmen Pangantihon denied having constructed any waterworks system in her area but admitted having constructed her own deep well, unaware that she needed a permit to do the same.
• Deemed-Approved Permit and Non-Interference: Rufino Sitaca maintained that the petitioner's source of water consisted of reservoirs from rivers and was thus not affected by his well, and that his water permit application was deemed approved, entitling him to use the water from his well.
• Private Property and Non-Publication: 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; he further alleged that the petitioner's rules and regulations were not published in the Official Gazette and hence petitioner had no cause of action.
• Compliance and Absence of Injury: Charles Kana-an asserted that he had complied with the requirements for the approval of his water permit application, and that he was extracting and selling water with petitioner's knowledge and without damage and injury to the latter.
• Lack of Real Party in Interest: 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.

• Jurisdiction Over the Subject Matter: Whether the Regional Trial Court of Iloilo had jurisdiction over the subject matter of the petitions for injunction filed by the Metro Iloilo Water District against the private respondents.
• Exhaustion of Administrative Remedies: Whether the doctrine of exhaustion of administrative remedies, or primary administrative jurisdiction, barred the petitions and warranted their dismissal.

• Jurisdiction Over the Subject Matter: Yes. The petitions raised a judicial question — the determination of what the law is and what the legal rights of the parties are with respect to the matter in controversy — and the appropriation of water was at most merely collateral to the main thrust of the petitions.
• Exhaustion of Administrative Remedies: No. 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 once the petitions are shown to have raised a judicial question.

• Jurisdiction Over the Subject Matter: The petitions filed before the trial court were for the issuance of an injunction order for respondents to cease and desist from extracting or withdrawing water from petitioner's well and from selling the same within its service areas. They contained factual allegations of (a) the grant to petitioner of a Conditional Certificate of Conformance by the Local Water Utilities Administration over the areas from which water was allegedly extracted or withdrawn, by virtue of which its Board of Directors promulgated rules governing ground water pumping within its service areas; (b) abstraction or withdrawal of water within petitioner's territorial jurisdiction by private respondents without first securing a permit from the Water Council, or registering their well drillers, and sale of the water so extracted to commercial and other consumers within petitioner's service areas; (c) the violation of petitioner's prescribed rules and the consequent interference for which petitioner may commence, maintain, intervene in, defend and compromise actions or proceedings under Section 31 of P.D. No. 198; (d) the violation of Article 13 of the Water Code; and (e) the great damage and prejudice that petitioner would suffer if the extraction, withdrawal and sale were allowed to continue. In essence, the petitions focused on the violations incurred by private respondents by virtue of their alleged unauthorized extraction and withdrawal of ground water within petitioner's service area, vis-a-vis petitioner's vested rights as a water district. At issue was whether private respondents' extraction and sale of ground water within petitioner's service area violated petitioner's rights as a water district. A judicial question is raised when the determination of the questions involves the exercise of a judicial function, that is, 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. The instant case called for the application and interpretation of pertinent laws and jurisprudence in order to determine whether private respondents' actions violated petitioner's rights as a water district and justified an injunction. The issue did not so much provide occasion to invoke the special knowledge and expertise of the Water Council as it necessitated judicial intervention. While initially it may have appeared that there was a dimension to the petitions pertaining to the sphere of the Water Council — namely, 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 was at most merely collateral to the main thrust of the petitions. The cases of Abe-Abe vs. Manta and Tanjay Water District vs. Gabaton invoked by private respondents were inapplicable: in Abe-Abe vs. 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 vs. Gabaton, petitioner Tanjay sought to enjoin the Municipality of Pamplona and its officials from interfering in the management of the Tanjay Waterworks System. In the analogous case of Amistoso vs. Ong, 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, and the trial court's jurisdiction was upheld where the issue involved was not the settlement of a water rights dispute but the enjoyment of a right to water use for which a permit had already been granted. In like manner, the present petition called for the issuance of an injunction order to prevent private respondents from extracting and selling ground water within petitioner's service area in violation of the latter's water permit. There was no dispute regarding petitioner's right to ground water within its service area; it was petitioner's enjoyment of its rights as a water district which it sought to assert against private respondents.
• Exhaustion of Administrative Remedies: The petitions having raised a judicial question, it followed 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, did not even come to play. The trial court had dismissed the petitions on the additional ground that petitioner failed to exhaust administrative remedies under the doctrine of primary administrative jurisdiction, and the appellate court affirmed on the premise that Article 88 of P.D. No. 1067 conferred original jurisdiction on the Water Council over disputes relating to appropriation, utilization and control of water, with the Regional Trial Court having only appellate jurisdiction. Because the controversy was properly characterized as one calling for judicial intervention rather than administrative expertise, the exhaustion requirement had no application and could not sustain the dismissal.

• Judicial question — A judicial question is raised when the determination of the questions involves the exercise of a judicial function, that is, 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; it stands opposed to a moot question or one properly decided by the executive or legislative branch, and is properly addressed to the courts. The Court applied the doctrine by characterizing the district's injunction suits as calling for the application and interpretation of pertinent laws and jurisprudence to determine whether the private respondents' acts violated the district's rights and justified an injunction, an inquiry that necessitated judicial intervention rather than the Water Council's special knowledge and expertise.
• Primary administrative jurisdiction and exhaustion of administrative remedies — Where a controversy raises a judicial question, the doctrine of exhaustion of administrative remedies does not come into play, and the dismissal of the action for failure to exhaust administrative remedies cannot stand. The Court held that because the petitions raised a judicial question, the doctrine on the basis of which both the trial court and the Court of Appeals dismissed the petitions had no application.
• Enforcement of a granted water right vs. settlement of a water rights dispute — The regular courts have jurisdiction 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 trial court is not asked to grant the petitioner the right to use water but to compel the respondents to recognize that right. The Court applied this doctrine because the district held a Conditional Certificate of Conformance and sought only to prevent the private respondents from extracting and selling ground water within its service area in violation of its water permit, there being no dispute regarding its right to ground water within that area.
• Collateral administrative dimension — Where a matter falling within an administrative body's sphere appears in a case, but only as an incident to the main thrust of the pleadings, that dimension is merely collateral and does not divest the regular courts of jurisdiction. The Court so held with respect to 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," and which appeared only collaterally in the district's petitions.

• "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." — This is the Court's canonical formulation of a judicial question, the threshold characterization on which its entire jurisdictional holding rests.
• "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 court's 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." — This passage states the ratio of Amistoso vs. Ong as the Court adopts it, and supplies the controlling distinction between enforcement of a granted water right and settlement of a water rights dispute.
• "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." — This is the Court's direct resolution of the second issue and the ground on which the dismissal by both lower courts was reversed.
• "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 petitioner's service area in violation of the latter's water permit. There is no dispute regarding petitioner's right to ground water within its service area. It is petitioner's enjoyment of its rights as a water district which it seeks to assert against private respondents." — This passage applies the Amistoso doctrine to the facts and articulates why the appropriation dimension of the case is merely collateral.

• Amistoso vs. Ong, 215 Phil. 197 (1984) — Controlling and analogous precedent. The Court relied on it for the rule that the trial court's 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, the petitioner there holding an approved Water Rights Grant from the Department of Public Works, Transportation and Communications.
• Santos vs. Court of Appeals, G.R. No. 61218, September 23, 1992, 214 SCRA 162 (1992) — Reiterating precedent. Cited by petitioner and by the Court as having reiterated the Amistoso ruling on the regular courts' jurisdiction over disputes involving the enjoyment of a water right for which a permit had already been granted.
• Abe-abe vs. Manta, G.R. No. L-4827, May 31, 1979, 90 SCRA 524 — Distinguished. Invoked by private respondents for the Water Council's exclusive original jurisdiction, but held inapplicable because in that case both petitioners and respondent had no established right emanating from any grant by any governmental agency to the use, appropriation and exploitation of water.
• Tanjay Water District vs. Gabaton, G.R. No. 63742, April 17, 1989, 172 SCRA 253 — Distinguished. Also invoked by private respondents, but held inapplicable because there petitioner Tanjay sought to enjoin the Municipality of Pamplona and its officials from interfering in the management of the Tanjay Waterworks System.
• Atis vs. Court of Appeals, G.R. No. 96401, April 6, 1992, 207 SCRA 742 — Cited in support of the ruling that the doctrine of exhaustion of administrative remedies does not apply where the petitions raise a judicial question.
• Jorge Gonzales and Panel of Arbitrators vs. Climax Mining Ltd., Climax-Arimco Mining Corp., and Australasian Philippines Mining Inc., G.R. No. 161957, February 28, 2005 — Cited as authority for the definition of a judicial question as one involving the exercise of a judicial function, that is, the determination of what the law is and what the legal rights of the parties are with respect to the matter in controversy.

• Section 31 (now Section 32), Presidential Decree No. 198, as amended (Protection of Waters and Facilities of District) — Grants a district the right to 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; authorizes districts to adopt rules and regulations, subject to the approval of the National Water Resources Council, governing the drilling, maintenance and operation of wells within their boundaries for purposes other than single family domestic use on overlying land, with any well operated in violation of such regulations deemed an interference with the waters of the district; and grants the right to 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. The Court relied on this provision as the statutory source of the district's right to bring the injunction actions and of the substantive right it sought to protect, which in turn made the controversy a judicial question.
• Section 3, "Rules Governing Ground Water Pumping and Spring Development Within the Territorial Jurisdiction of the Metro Iloilo Water District" — Promulgated by the district's Board of Directors pursuant to Section 31(a) of P.D. 198, it provides that, 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 that no person shall engage in the business of drilling wells, whether as test wells or production wells, without first registering as a well driller with the Council. The alleged violation of this Rule supplied the factual predicate of the injunction petitions.
• Article 88, Presidential Decree No. 1067 (The Water Code of the Philippines) — Provides that the Council 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 the Code. This is the provision on which the private respondents anchored their jurisdictional objection and on which both lower courts dismissed the petitions; the Court held it inapplicable because the petitions did not present a dispute of that character.
• Article 13, Presidential Decree No. 1067 (The Water Code of the Philippines) — Cited in the petition as the provision violated by the private respondents' extraction or withdrawal of ground water without the corresponding permit. It formed part of the factual allegations supporting the prayer for injunction rather than the basis of the jurisdictional ruling.

Puno (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.