Title
Dasmarinas Water District vs. Monterey Foods Corp.
Case
G.R. No. 175550
Decision Date
Sep 17, 2008
Dasmariñas Water District sought production assessments from Monterey Foods for water extraction. SC ruled RTC had jurisdiction, not NWRB, as the case involved enforcing PD 198, not water rights.
dispute
authority
production assessments

Case Summary (G.R. No. 189723)

Factual Background

Respondent operated two deep wells within petitioner’s water district and used the groundwater solely for its business, not for sale to third persons for profit. Petitioner alleged that respondent’s ground water production for commercial or industrial uses injured or reduced petitioner’s financial condition as contemplated under Sec. 39 of PD 198. Petitioner asserted that it conducted inspection of respondent’s deep wells and computed the monthly production assessment charge based on a charge rate it claimed had been duly approved by its board of directors. Petitioner further alleged that, despite demands, respondent failed and refused to pay the production assessment.

Initiation of the RTC Action and Motion to Dismiss

Petitioner’s complaint, filed on March 30, 2004, sought (a) monthly production assessment in the amount of P55,112.46 from the date of demand, (b) actual expenses of at least P50,000, and (c) attorney’s fees and costs of suit, invoking Sec. 39 of PD 198. Respondent moved to dismiss on June 8, 2004, asserting that the RTC lacked jurisdiction because, under PD 1067, the NWRB possessed jurisdiction over disputes relating to the appropriation, utilization, exploitation, development, control, conservation, and protection of waters.

On April 28, 2005, the RTC denied the motion to dismiss. It held that it had jurisdiction because petitioner’s case involved the right to collect production assessments rather than a water-rights adjudication. The RTC likewise denied reconsideration on June 8, 2005.

CA Proceedings and Jurisdictional Ruling

Respondent filed a petition for certiorari in the CA under Rule 65, assailing the RTC’s orders. Respondent argued not only lack of jurisdiction but also that petitioner had no authority to impose production assessments under Sec. 39 of PD 198 without the NWRB’s prior approval.

In its decision dated May 26, 2006, the CA granted respondent’s petition and dismissed petitioner’s complaint. The CA reasoned that because the complaint concerned a dispute relating to the appropriation, utilization, exploitation, development, control, conservation, and protection of waters, the matter fell within the NWRB’s original jurisdiction under Art. 88 of PD 1067. It further concluded that under PD 1067, petitioner had no authority to impose the assessment without prior approval from the NWRB. The CA thus treated the controversy as water-resources regulatory in nature, within the NWRB’s technical competence.

Issues Presented to the Supreme Court

The petition presented a single issue: whether the RTC or the NWRB had jurisdiction over the collection of water production assessments. The Court framed the determination as dependent on the nature of the cause of action as alleged in the complaint.

The Parties’ Contentions

Petitioner maintained that it did not contest respondent’s water permits or seek any adjudication of water rights. It argued that the RTC had jurisdiction because its action merely enforced its statutory authority as a water district under Sec. 39 of PD 198 to levy production assessments when ground water production by other entities injures or reduces the district’s financial condition. It asserted that the case did not concern appropriation and use in the sense of disputes over water-rights acquisition, since it sought only enforcement of its assessment mechanism.

Respondent relied on PD 1067, insisting that the RTC had no jurisdiction over disputes relating to waters and that such disputes were within the NWRB’s original competence. Respondent also argued in the CA that petitioner’s authority to impose assessments was conditioned on the NWRB’s prior approval.

Supreme Court’s Jurisdictional Analysis

The Court reiterated the doctrine that jurisdiction is determined by the allegations in the complaint. Examining the complaint’s averments, the Court found it clear that petitioner’s action involved the determination and enforcement of petitioner’s right under Sec. 39 of PD 198 to impose and collect production assessments, not a controversy over appropriation and use of waters that would require adjudication of the parties’ respective water rights.

The Court stressed that, while both parties had respective rights to use water, petitioner was not challenging respondent’s permits issued by the NWRB. Thus, the dispute did not require resolution of competing water rights. The Court invoked its earlier rulings to distinguish between cases that fall within Art. 88 of PD 1067 and cases where the water-rights grant exists and the litigation instead concerns the enjoyment or enforcement of a right already granted.

In Atis v. CA, the Court had held that the controversy did not involve appropriation or use of waters in the sense requiring NWRB intervention because the permits already conferred the relevant water rights; the actual dispute related to injury to the enjoyment of those rights. Likewise, in Amistoso v. Ong, the Court had clarified that where judicial intervention becomes necessary because the enjoyment of a right emanating from a permit is in litigation, the matter did not fall within the NWRB’s authority.

Applying those principles, the Court concluded that the controversy in the present case was essentially whether, under the factual allegations, petitioner had a right under Sec. 39 of PD 198 to impose production assessments on respondent, and whether failure to pay warranted the statutory consequences sought by petitioner.

Judicial Question and Inapplicability of Primary Jurisdiction

The Court characterized the core inquiry as a judicial question because it involved determining the applicable law and the legal rights of the parties under Sec. 39 of PD 198. Since the technical expertise of the NWRB was not required to resolve the legal entitlement, the Court held that the doctrine of primary jurisdiction did not apply.

The Court also addressed the jurisdictional connection to the RTC by explaining that the action was within the RTC’s authority. It noted that, although petitioner claimed a sum of money, the monetary demand was incidental to the principal relief based on enforcement of the water district’s statutory right to levy and collect assessments and to secure the remedies provided under Sec. 39 in relation to Sec. 32.

Consideration of the CA’s Additional Ruling on Petitioner’s Authority

The Court further held that the CA committed error when it ruled on whether petitioner had authority to impose production assessments. The Court observed that the CA had already resolved the authority issue, but petitioner had not raised it in its petition before the Supreme Court. The Court also examined respondent’s conduct in the trial court and the procedural stage at which the issue arose.

Respondent had raised in the RTC only the jurisdictional argument based on lack of forum. The RTC’s orders addressed that jurisdictional question alone. When respondent later brought the matter to the CA, it added the merits issue regarding petitioner’s authority to impose assessments without NWRB approval. The Court considered that addition premature because the RTC had not yet ruled on the merits; it also emphasized that issues, theories, and arguments not brought to the attention of the trial court should not be introduced for the first time on appeal or review.

Accordingly, the Court declared that the CA’s ruling on petitioner’s authority to impose assessments was erroneous.

Rejection of Const

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