SECOND DIVISION

G.R. No. 125018 April 6, 2000

REMMAN ENTERPRISES, INC., petitioner,

vs.
COURT OF APPEALS and CRISPIN E. LAT, respondents.

BELLOSILLO, J.:

REMMAN ENTERPRISES, INC. (REMMAN), and CRISPIN E. LAT are adjoining landowners in Barangay
Bugtong Na Pulo, Lipa City. The land of Lat containing an area of 1.8 hectares is agricultural and planted mostly
with fruit trees while REMMAN occupies a land area of fifteen (15) hectares six (6) hectares of which are devoted
to its piggery business. REMMAN's land is one and a half (1 1/2) meters higher in elevation than that of respondent
Lat.

Sometime in July 1984 Lat noticed that REMMAN's waste disposal lagoon was already overflowing and inundating
one-fourth (1/4) of Lat's plantation. He made several representations with REMMAN but they fell on deaf ears. On
14 March 1985, after almost one (1) hectare of Lat's plantation was already inundated with water containing pig
manure, as a result of which the trees growing on the flooded portion started to wither and die, Lat filed a complaint
for damages with preliminary mandatory injunction against REMMAN. Lat alleged that the acidity of the soil in his
plantation increased because of the overflow of the water heavy with pig manure from REMMAN's piggery farm.

REMMAN denied all the allegations of Lat and raised as an affirmative defense that measures such as the
construction of additional lagoons were already adopted to contain the waste water coming from its piggery to
prevent any damage to the adjoining estates.

After conducting an ocular inspection and evaluating the evidence of both parties the Regional Trial Court found
that indeed REMMAN’s waste disposal lagoon overflowed with the contaminated water flooding one (1) hectare of
Lat's plantation. The waste water was ankle-deep and caused death and destruction to one (1) jackfruit tree, fifteen
(15) coconut trees, one hundred twenty-two (122) coffee trees, and an unspecified number of mango trees, bananas
and vegetables. As a consequence, the trial court ordered REMMAN to indemnify Lat P186,975.00 for lost profits
for three (3) crop years and P30,000.00 as attorney's fees. 1

The decision of the court a quo was affirmed in toto by the Court of Appeals.2

In this Petition for Review on Certiorari REMMAN prays that we pass upon the findings of the trial court as well as
of the appellate court. REMMAN insists that factual findings of lower courts may be passed upon, reviewed and
reversed: (a) when the conclusion is a finding grounded entirely on speculation, surmises or conjectures; (b) when
the inference made is manifestly mistaken, absurd or impossible; (c) when there is grave abuse of discretion; (d)
when the judgment is based on a misapprehension of facts; (e) when the Court of Appeals manifestly overlooked
certain relevant facts not disputed by the parties and which, if properly considered, would justify a different
conclusion; (f) when the conclusions of the Court of Appeals are not supported by the evidence on record; (g) when
facts of substance were overlooked which, if correctly considered, might have changed the outcome of the case; and,
(h) when the findings of the Court of Appeals are not in accord with what reasonable men would readily accept are
the correct inferences from the evidence extant in the records. 3

Indeed, in the abovementioned instances, the factual milieu of a particular case may be passed upon, reversed or
modified by this Court. But examination of the record reveals that all the above instances are unavailing. From this
point of view alone the instant petition is dismissible. Nevertheless, we shall discuss them hereunder to dispose
finally of the contentions of REMMAN.

First, REMMAN argues that its liability for the damages suffered by Lat was not clearly established.
We disagree. During the ocular inspection conducted by the lower court where representatives of both parties were
present, it was established that the waste water containing pig manure was continuously flowing from REMMAN's
piggery farm to Lat's plantation. The water was ankle-deep and flooded one (1) hectare of Lat's plantation. The
overflow of the "acidic, malodorous and polluted water" continued from June 1984 to March 1985 thus destroying
one (1) jackfruit tree, fifteen (15) coconut trees, one hundred an twenty-two (122) coffee trees, and an unspecified
number of mango trees, bananas and vegetables.4

In addition, the appellate court found that there was indeed negligence on the part of REMMAN which directly
caused the damage to the plantation of Lat. Thus —

. . . Negligence was clearly established. It is uncontroverted that the land of appellee was flooded on
account of the overflow of acidic, malodorous and polluted water coming from the adjacent piggery farm of
appellant sometime in May 1984. This resulted in the impairment of the productivity of appellee's land as
well as the eventual destruction and death of several fruit trees, such as coconuts, coffee, jackfruits,
bananas and other plants . . . . Appellant cannot avoid liability because their negligence was the proximate
cause of the damage. Appellee's property was practically made a catch-basin of polluted water and other
noxious substances emptying from appellant's piggery which could have been prevented had it not been for
the negligence of appellant arising from its: (a) failure to monitor the increases in the level of water in the
lagoons before, during and after the heavy downpours which occurred during the rainy months of 1984; (b)
failure to augment the existing lagoons prior to the incident, notwithstanding the fact that at the time of the
flooding, the piggery had grown to a capacity of 11,000 heads, and considering that it was reasonably
forseeable that the existing waste disposal facilities were no longer adequate to accomodate the increasing
volume of waste matters in such a big farm; and more importantly, (c) the repeated failure to comply with
their promise to appellee.5

Second, REMMAN argues that the trial court as well as the Court of Appeals should not have rejected its request for
the production of Lat's income tax returns. According to REMMAN had Lat's income tax returns been produced, the
issue of the alleged damages suffered by Lat would have been settled.

This argument is moot, if not trite. For this matter has been laid to rest when we affirmed the Court of Appeals'
decision in an earlier case involving the same parties.6 In sustaining the trial court's quashal of the subpoena duces
tecum previously issued compelling Lat to produce his income tax returns for the years 1982-1986, the appellate
court explained that the production of the income tax returns would not necessarily serve to prove the special and
affirmative defenses set up by REMMAN nor rebut Lat's testimony regarding the losses he sustained due to the
piggery. The tax returns per se could not reflect the total amount of damages suffered by Lat, as income losses from
a portion of the plantation could be offset by any profit derived from the rest of the plantation or from other sources
of income. Conversely, losses incurred from other sources of income would be totally unrelated to the income from
the particular portion of the plantation flooded with waste matter coming from REMMAN's piggery. 7

Third, REMMAN contends that the damages allegedly sustained by Lat have not been satisfactorily
established.1âwphi1

We a not convinced. The factual findings of the court a quo rightly support its conclusions on this respect —

Coming now to the issue of damages, We find appellant's allegations not well-taken. Appellant contends
that actual and compensatory damages require evidentiary proof, and there being no evidence presented as
to the necessity of the award for damages, it was erroneous for the lower court to have made such award. It
must be remembered that after the ocular inspection, the court a quo rendered an inventory of dead and
rotten trees and plants found in appellee's property. Appellee also testified on the approximate annual
harvest and fair market value thereof. Significantly, no opposition or controverting evidence was presented
by appellant on the matter. Hence, appellant is bound thereby and cannot now be heard to complain. As
correctly held by the court a quo:
 An ocular inspection has been conducted by the trial court. The inventory of the trees damaged
and the itemized valuation placed therein by private respondent after the ocular inspection which
is not rebutted by the petitioner, is the more accurate indicator of the said amount prayed for as
damages. If the valuation is indeed unreasonable, petitioner should present controverting evidence
of the fair market value of the crops involved. The trial court held that the private respondent
himself had been subjected to extensive cross and re-cross examination by the counsel for the
petitioner on the amount of damages.8

Finally, REMMAN complains that the damages, if any, were due to a fortuitous event.

Again, we cannot agree with petitioner. We defer instead to the findings opinions expressed by the lower courts —

Even assuming that the heavy rains constituted an act of God, by reason of their negligence, the fortuitous
event became humanized, rendering appellants liable for the ensuing damages. In National Power
Corporation v. Court of Appeals, 233 SCRA 649 (1993), the Supreme Court held:

Accordingly, petitioners cannot be heard to invoke the act of God or force majeure to escape
liability for the loss or damage sustained by private respondents since they, the petitioners, were
guilty of negligence. This event then was not occasioned exclusively by an act of God or force
majeure; a human factor — negligence or imprudence — had intervened. The effect then of
the force majeure in question may be deemed to have, even if only partly, resulted from the
participation of man. Thus, the whole occurrence was thereby humanized, as it were, and removed
from the rules applicable to acts of God.

As regards the alleged natural easement imposed upon the property of appellee, resort to pertinent
provisions of applicable law is imperative. Under the Civil Code, it is provided:

Art. 637. Lower estates are obliged to receive the waters which naturally and without the
intervention of man descend from the higher estates, as well as the stones or earth which they
carry with them.

The owner of the lower estate cannot construct works which will impede this easement; neither
can the owner of the higher estate make works which will increase the burden.

A similar provision is found in the Water Code of the Philippines (P.D. No. 1067), which provides:

Art. 50. Lower estates are obliged to receive the water which naturally and without the
intervention of man flow from the higher estates, as well as the stone or earth which they carry
with them.

The owner of the lower estate cannot construct works which will impede this natural flow, unless
he provides an alternative method of drainage; neither can the owner of the higher estate make
works which will increase this natural flow.

As worded, the two (2) aforecited provisions impose a natural easement upon the lower estate to receive the
waters which naturally and without the intervention of man descend from higher states. However, where
the waters which flow from a higher state are those which are artificially collected in man-made lagoons,
any damage occasioned thereby entitles the owner of the lower or servient estate to compensation. 9

On the basis of the foregoing discussion, it is crystal clear that REMMAN is directly accountable to Lat for the
damages sustained by him. The negligence of REMMAN in maintaining the level of waste water in its lagoons has
been satisfactorily established. The extent of damages suffered by Lat remains unrebutted; in fact, has been proved.
WHEREFORE, the petition is DENIED. The 19 October 1995 Decision of the Court of Appeals affirming that of
the Regional Trial Court-Br. 16, Lipa City, holding petitioner Remman Enterprises, Inc. (REMMAN) liable to
private respondent Crispin E. Lat for damages and to indemnify the latter P186,975.00 for lost profits for three (3)
crop years and P30,000.00 as attorneys fees, is AFFIRMED. Costs against petitioner.1âwphi1.nêt

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-17821 November 29, 1963

PRIMITIVO LOVINA, and NELLY MONTILLA, plaintiffs-appellees,

vs.
HON. FLORENCIO MORENO, as Secretary of Public Works and Communications, and BENJAMIN
YONZON,defendants-appellants.

Gil R. Carlos and Associates for plaintiffs-appellees.

Office of the Solicitor General for defendants-appellants.

REYES, J.B.L., J.:

This is an appeal from a decision of the Court of First Instance of Manila (Branch X), in its Civil Case No. 41639,
enjoining the Secretary of Public Works and Communications from causing the removal of certain dams and dikes
in a fishpond owned by Primitivo and Nelly Lovina in the Municipality of Macabebe Province of Pampanga,
covered by T.C.T. No. 15905.

The cause started by a petition of numerous residents of the said municipality to the Secretary of Public Works and
Communications, complaining that appellees had blocked the "Sapang Bulati", a navigable river in Macabebe,
Pampanga, and asking that the obstructions be ordered removed, under the provisions of Republic Act No. 2056.
After notice and hearing to the parties, the said Secretary found the constructions to be a public nuisance in
navigable waters, and, in his decision dated 11 August 1959, ordered the land owners, spouses Lovina, to remove
five (5) closures of Sapang Bulati; otherwise, the Secretary would order their removal at the expense of the
respondent. After receipt of the decision, the respondent filed a petition in the Court of First Instance of Manila to
restrain the Secretary from enforcing his decision. The trial court, after due hearing, granted a permanent injunction,
which is now the subject of the present appeal.

The respondents-appellants, Florencio Moreno, Secretary of Public Works and Communications, and Benjamin
Yonzon, investigator, question the jurisdiction of the trial court, and attribute to it the following errors:

1. The trial court erred in holding in effect, that Republic Act No. 2056 is unconstitutional:

2. The trial court erred in receiving evidence de novo at the trial of the case;

3. The trial court erred in substituting its judgment for that of defendant Secretary of Public Works and
Communications and in reversing the latter's finding that the stream in question is a navigable river which
was illegally closed by plaintiffs;

4. The trial court erred in holding that the Sapang Bulati is a private stream; and

5. The lower court erred in not holding that plaintiffs should first exhaust administrative remedy before
filing the instant petition.

The position of the plaintiffs-appellees in the court below was that Republic Act No. 2056 is unconstitutional
because it invests the Secretary of Public Works and Communications with sweeping, unrestrained, final and
unappealable authority to pass upon the issues of whether a river or stream is public and navigable, whether a dam
encroaches upon such waters and is constitutive as a public nuisance, and whether the law applies to the state of
facts, thereby Constituting an alleged unlawful delegation of judicial power to the Secretary of Public Works and
Communications.

Sections 1 and 2 of Republic Act 2056 provides:

Section 1. Any provision or provisions of law to the contrary notwithstanding, the construction or building
of dams, dikes or any other works which encroaches into any public navigable river, stream, coastal waters
and any other navigable public waters or waterways as well as the construction or building of dams, dikes
or any other works in areas declared as communal fishing grounds, shall be ordered removed as public
nuisances or a prohibited constructions as herein provided: Provided, however, That the Secretary of Public
Works and Communications may authorize the construction of any such work when public interest or
safety so requires or when it is absolutely necessary for the protection of private property.

Section 2. When it is found by the Secretary of Public Works and Communications, after due notice and
hearing, that any dam, dike or any other works now existing or may there after be constructed encroaches
into any public navigable waters, or that they are constructed in areas declared as communal fishing
grounds, he shall have the authority to order the removal of any such works and shall give the party
concerned a period not to exceed thirty days for the removal of the same: Provided, That fishpond
constructions or works on communal fishing grounds introduced in good faith before the areas we
proclaimed as fishing grounds shall be exempted from the provisions of this Act, provided such
constructions or works do not obstruct or impede the free passage of any navigable river, stream, or would
not cause inundations of agricultural areas: Provided, further, That should the party concerned fail to
comply with the order of the Secretary of Public Works and Communications within the period so stated in
the order, such removal shall be effected by the Secretary of Public Works and Communications at the
expense of the said party within ten days following the expiration of the period given the party
concerned: Provided, furthermore, That the investigation and hearing to be conducted by the Secretary of
Public Works and Communications under this section shall be terminated and decided by him within a
period which shall not exceed ninety days from the time he shall have been notified in writing or a written
complaint shall have been filed with him by any interested party apprising him of the existence of a dam,
dike or any other works that encroaches into any other public navigable river, stream, coastal waters or any
other public navigable waters or waterways and in areas declared as communal fishing grounds: Provided,
still furthermore, That the failure on the part of the Secretary of Public Works and Communications
without justifiable or valid reason to terminate and decide a case or effect the removal of any such works,
as provided for in this section, shall constitute an offense punishable under section three of this Act: And
provided, finally, That the removal of any such works shall not impair fishponds completed or about to be
completed which do not encroach or obstruct any public navigable river or stream and/or which would not
cause inundations of agricultural areas and which have been constructed in good faith before the area was
declared communal fishing grounds.

The objections of the appellees to the constitutionality of Republic Act No. 2056, not only as an undue delegation of
judicial power to the Secretary of Public Works but also for being unreasonable and arbitrary, are not tenable. It will
be noted that the Act (R.A. 2056) merely empowers the Secretary to remove unauthorized obstructions or
encroachments upon public streams, constructions that no private person was anyway entitled to make, because the
bed of navigable streams is public property, and ownership thereof is not acquirable by adverse possession (Palanca
vs. Commonwealth, 69 Phil. 449).

It is true that the exercise of the Secretary's power under the Act necessarily involves the determination of some
questions of fact, such as the existence of the stream and its previous navigable character; but these functions,
whether judicial or quasi-judicial, are merely incidental to the exercise of the power granted by law to clear
navigable streams of unauthorized obstructions or encroachments, and authorities are clear that they are, validly
conferable upon executive officials provided the party affected is given opportunity to be heard, as is expressly
required by Republic Act No. 2056, section 2.

It thus appears that the delegation by Congress to executive or administrative agencies of functions of
judicial, or at least, quasi-judicial functions is incidental to the exercise by such agencies of their executive
 or administrative powers, is not in violation of the Separation of Powers so far as that principle is
recognized by the Federal Constitution nor is it in violation of due process of law. (3 Willoughby on the
Const. of the U.S., pp. 1654-1655)

The mere fact that an officer is required by law to inquire the existence of certain facts and to apply the law
thereto in order to determine what his official conduct shall be and the fact that these acts may affect
private, rights do not constitute an exercise of judicial powers. Accordingly, a statute may give to non-
judicial officers the power to declare the existence of facts which call into operation its provisions, and
similarly may grant to commissioners and other subordinate officer, power to ascertain and determine
appropriate facts as a basis for procedure in the enforcement of particular laws. (11 Am. Jur., Const. Law,
p. 950, sec. 235)

s. 237. Powers to determine cases within Statute. — One important class of cases in which discretion may
properly be vested in administrative officers, which class is almost an operation of the general rule relating
to the ascertainment of facts, consists of those cases in which a general rule or prohibition is laid down and
power is vested in an executive officer to determine when particular cases do or do not fall within such rule
or prohibition. Power exercised under such statutes, calling for the exercise of judgment in the execution of
a ministerial act, is never judicial in nature within the sense prohibited by the Constitution. (11 Am. Jur.,
Const. Law, sec. 237, p. 952)

A direct precedent can be found in the "Bridge cases" upholding the constitutionality of the U.S. River and Harbor
Act of March 3, 1899, that empowered (sec. 18) the Secretary of War to take action, after hearing, for the removal or
alteration of bridges unreasonably obstructing navigation. On the issue of undue delegation of power, the U.S.
Supreme Court ruled as follows:

Congress thereby declared that whenever the Secretary of War should find any bridge theretofore or
thereafter constructed over any of the navigable waterways of the United States to be an unreasonable
obstruction to the free navigation of such waters on account of insufficient height, width of span, or
otherwise, it should be the duty of the Secretary, after hearing the parties concerned, to take action looking
to the removal or alteration of the bridge, so as to render navigation through or under it reasonably free,
easy, and unobstructed. As this court repeatedly has held, this is not an unconstitutional delegation of
legislative or judicial power to the Secretary. Union Bridge Co. vs. United States, 204 U.S. 364, 385, 51 L.
ed. 523, 533, 27 Sup. Ct. Rep. 367; Monongahela Bridge Co. v. United States, 216 U.S. 177, 192,54 L. ed.
435, 441, 30 Sup. Ct. Rep. 356; Hannibal Bridge Co. v. United States, 221 U.S. 194. 205, 55 L. ed. 699,
703, 31 Sup. Ct. Rep. 603. The statute itself prescribes the general rule applicable to all navigable waters,
and merely charged the Secretary of War with the duty of ascertaining in each case, upon notice to the
parties concerned, whether the particular bridge came within the general rule. Of course, the Secretary's
finding must be based upon the conditions as they exist at the time he acts. But the law imposing this duty
upon him speaks from the time of its enactment. (Louisville Bridge Co. v. U.S., 61 L. ed. 395). (Emphasis
supplied)

Appellees invoke American rulings that abatement as nuisances of properties of great value can not be done except
through court proceedings; but these rulings refer to summary abatements without previous hearing, and are
inapplicable to the case before us where the law provides, and the investigator actually held, a hearing with notice to
the complainants and the, appellees, who appeared therein. It is noteworthy that Republic Act 2605 authorizes
removal of the unauthorized dikes either as "public nuisances or as prohibited constructions" on public navigable
streams, and those of appellees clearly are in the latter class.

It may not be amiss to state that the power of the Secretary of Public Works to investigate and clear public streams
free from unauthorized encroachments and obstructions was granted as far back as Act 3208 of the old Philippine
Legislature, and has been upheld by this Court (Palanca vs. Commonwealth, supra; Meneses vs. Commonwealth, 69
Phil. 647). We do not believe that the absence of an express appeal to the courts under the present Republic Act
2056 is a substantial difference, so far as the Constitution is concerned, for it is a well-known rule that due process
does not have to be judicial process; and moreover, the judicial review of the Secretary's decision would always
remain, even if not expressly granted, whenever his act violates the law or the Constitution, or imports abuse of
discretion amounting to excess of jurisdiction.

The argument that the action of the Secretary amounts to a confiscation of private property leads us directly to the
issue of fact whether a navigable portion of the Bulati creek had once traversed the registered lot of the appellees
Lovina and connected with Manampil creek that borders said lot on the northwest before it was closed by Jose de
Leon, Lovina's predecessor. The Secretary of Public Works has found from the evidence before him that, originally,
the sapang (creek) Bulati flowed across the property in question, and connected the Nasi river
with sapangManampil; that in 1926 or thereabouts, the Bulati creek was 2 meters deep at high tide and 1/2 meter
deep at low tide, and the people used it as fishing grounds and as a communication way, navigating along its length
in bancas; that former registered owner, Jose de Jesus, closed about meters of the course of the sapang Bulati that
lay within the lot in question by constructing dams or dikes at both sides and converting the lot into a fishpond.

The appellees, on the other hand, rely on the 1916 registration plan of the property (Exh. C), showing it to be merely
bounded by the Bulati creek on the southeast, as well as on the testimony introduced at the hearing of prohibition
case (over the objection of the Government counsel) that the Bulati creek did not enter the property.

The Court of First Instance found that "according to the location plan, Exhibit "C", the "Bulati creek, on which dikes
and dams in question were constructed was a mere estero and could not be considered a navigable stream then." It is
not explained how such fact could appear solely from the plan Exhibit "C" (no other proof being referred to), unless
indeed the court below so concluded from the fact that in said plan the Bulati creek does not appear to run within the
registered lot. The conclusion of lower court is not supported by its premises, because by law, the issuance of a
Torrens title does not confer title navigable streams (which are fluvial highways) within registered property, nor is it
conclusive on their non-existence, unless the boundaries of such streams had been expressly delimited in the
registration plan (Act 496, sec. 39 cf. Palanca vs. Commonwealth, 69 Phil. 449; Meneses Commonwealth, 69 Phil.
647), so that delimitation of their course may be made even after the decree of registration has become final. In the
present case, in truth the very plan of the appellees, Exhibit "C", shows parallel reentrant lines, around its point 65
and between points 44 and that indicate the existence of a stream connecting the sapangBulati on the southeast and
the sapang Manampil on the northwest, and which the surveyor apparently failed delimit for some undisclosed
reason. That the stream was the prolongation of the sapang Bulati, that formerly flow across the registered lot, is
also shown by the fact that appellees' plan Exhibit "C", the westward continuation the Bulati creek (west of point
65), which bounds the registered lot, is labelled "Etero Mabao". The plan thus corroborates the previously
summarized testimony laid before investigator Yonzon and relied upon by the Secretary in his administrative
decision. Even more, appellees' own caretaker, Yambao, showed investigator Yonzon the old course of the Bulati
within the fishpond itself; and this evidence is, likewise, confirmed by the cross-section profile of the ground near
the dams in question (See plan Annex "AA" of Yonzon's Report), where the old channel of the creek is clearly
discernible. To be sure, appellees contend that they were not shown this plan; but in their evidence before the court
of first instance, they never attempted, or offered, to prove that said plan is incorrect.

That the creek was navigable in fact before it was closed was also testified to by the government witnesses, whose
version is corroborated as we have seen.

Considering the well-established rule that findings of fact in executive decisions in matters within their jurisdiction
are entitled to respect from the courts in the absence of fraud, collusion, or grave abuse of discretion (Com. of
Customs vs. Valencia, 54 O.G. 3505), none of which has been shown to exist in this case, we agree with appellant
that the court below erred in rejecting the findings of fact of the Secretary of Public Works.

The findings of the Secretary can not be enervated by new evidence not laid down before him, for that would be
tantamount to holding a new investigation, and to substitute for the discretion and judgment of the Secretary the
discretion and judgment of the court, to whom the statute had entrusted the case. It is immaterial that the present
action should be one for prohibition or injunction and not one for certiorari, in either event the case must be
resolved upon the evidence submitted to the Secretary, since a judicial review of executive decisions does not import
a trial de novo, but only an ascertainment of whether the executive findings are not in violation of the constitution or
of the laws, and are free from fraud or imposition, and whether they find reasonable support in the evidence. 1 Here,
the proof preponderates in favor of the Secretary's decision.
Nevertheless, we, agree with appellees that they can not be charged with failure to exhaust administrative remedies,
for the Secretary's decision is that of the President, in the absence of disapproval (Villena vs. Secretary of the
interior, 67 Phil. 451).

Finally, there being a possibility that when they purchased the property in question the appellees Lovina were not
informed of the illegal closure of the Bulati creek, their action, if any, against their vendor, should be, and is hereby,
reserved.

In resume, we rule:

(1) That Republic Act No. 2056 does not constitute an unlawful delegation of judicial power to the Secretary of
Public Works;

(2) That absence of any mention of a navigable stream within a property covered by Torrens title does not confer
title to it nor preclude a subsequent investigation and determination of its existence;

(3) That the findings of fact of the Secretary of Public Works under Republic Act No. 2056 should be respected in
the absence of illegality, error of law, fraud, or imposition, so long as the said, findings are supported by substantial
evidence submitted to him.

(4) That ownership of a navigable stream or of its bed is not acquirable by prescription.

WHEREFORE, the decision appealed from is reversed, and the writs of injunction issued therein are annulled and
set aside. Costs against appellees Lovina.
 FIRST DIVISION

G.R. No. 112526 October 12, 2001

STA. ROSA REALTY DEVELOPMENT CORPORATION, petitioner,

vs.
COURT OF APPEALS, JUAN B. AMANTE, FRANCISCO L. ANDAL, LUCIA ANDAL, ANDREA P.
AYENDE, LETICIA P. BALAT, FILOMENA B. BATINO, ANICETO A. BURGOS, JAIME A. BURGOS,
FLORENCIA CANUBAS, LORETO A. CANUBAS, MAXIMO A. CANUBAS, REYNALDO CARINGAL,
QUIRINO C. CASALME, BENIGNO A. CRUZAT, ELINO A. CRUZAT, GREGORIO F. CRUZAT,
RUFINO C. CRUZAT, SERGIO CRUZAT, SEVERINO F. CRUZAT, VICTORIA DE SAGUN, SEVERINO
DE SAGUN, FELICISIMO A. GONZALES, FRANCISCO A. GONZALES, GREGORIO GONZALES,
LEODEGARIO N. GONZALES, PASCUAL P. GONZALES, ROLANDO A. GONZALES, FRANCISCO A.
JUANGCO, GERVACIO A. JUANGCO, LOURDES U. LUNA, ANSELMO M. MANDANAS, CRISANTO
MANDANAS, EMILIO M. MANDANAS, GREGORIO A. MANDANAS, MARIO G. MANDANAS,
TEODORO MANDANAS, CONSTANCIO B. MARQUEZ, EUGENIO B. MARQUEZ, ARMANDO P.
MATIENZO, DANIEL D. MATIENZO, MAXIMINO MATIENZO, PACENCIA P. MATIENZO,
DOROTEA L. PANGANIBAN, JUANITO T. PEREZ, MARIANITO T. PEREZ, SEVERO M. PEREZ,
INOCENCIA S. PASQUIZA, BIENVENIDO F. PETATE, IGNACIO F. PETATE, JUANITO PETATE,
PABLO A. PLATON, PRECILLO V. PLATON, AQUILINO B. SUBOL, CASIANO T. VILLA, DOMINGO
VILLA, JUAN T. VILLA, MARIO C. VILLA, NATIVIDAD A. VILLA, JACINTA S. ALVARADO,
RODOLFO ANGELES, DOMINGO A. CANUBAS, EDGARDO L. CASALME, QUIRINO DE LEON,
LEONILO M. ENRIQUEZ, CLAUDIA P. GONZALES, FELISA R. LANGUE, QUINTILLANO LANGUE,
REYNALDO LANGUE, ROMEO S. LANGUE, BONIFACIO VILLA, ROGELIO AYENDE, ANTONIO B.
FERNANDEZ, ZACARIAS HERRERA, ZACARIAS HERRERA, REYNARIO U. LAZO, AGAPITO
MATIENZO, DIONISIO F. PETATE, LITO G. REYES, JOSE M. SUBOL, CELESTINO G. TOPI NO,
ROSA C. AMANTE, SOTERA CASALME, REMIGIO M. SILVERIO, THE SECRETARY OF AGRARIAN
REFORM, DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD, LAND BANK OF THE
PHILIPPINES, REGISTER OF DEEDS OF LAGUNA, DEPARTMENT OF ENVIRONMENT AND
NATURAL RESOURCES REGIONAL EXECUTIVE DIRECTOR FOR REGION IV, and REGIONAL
AGRARIAN REFORM OFFICER FOR REGION IV, respondents.

PARDO, J.:

The case before the Court is a petition for review on certiorari of the decision of the Court of Appeals 1 affirming the
decision of the Department of Agrarian Reform Adjudication Board 2 (hereafter DARAB) ordering the compulsory
acquisition of petitioner's property under the Comprehensive Agrarian Reform Program (CARP).

Petitioner Sta. Rosa Realty Development Corporation (hereafter, SRRDC) was the registered owner of two parcels
of land, situated at Barangay Casile, Cabuyao, Laguna covered by TCT Nos. 81949 and 84891, with a total area of
254.6 hectares. According to petitioner, the parcels of land are watersheds, which provide clean potable water to the
Canlubang community, and that ninety (90) light industries are now located in the area.3

Petitioner alleged that respondents usurped its rights over the property, thereby destroying the ecosystem. Sometime
in December 1985, respondents filed a civil case4 with the Regional Trial Court, Laguna, seeking an easement of a
right of way to and from Barangay Casile. By way of counterclaim, however, petitioner sought the ejectment of
private respondents.

In October 1986 to August 1987, petitioner filed with the Municipal Trial Court, Cabuyao, Laguna separate
complaints for forcible entry against respondents.5

After the filing of the ejectment cases, respondents petitioned the Department of Agrarian Reform (DAR) for the
compulsory acquisition of the SRRDC property under the CARP.
On August 11, 1989, the Municipal Agrarian Reform Officer (MARO) of Cabuyao, Laguna issued a notice of
coverage to petitioner and invited its officials or representatives to a conference on August 18, 1989. 6 During the
meeting, the following were present: representatives of petitioner, the Land Bank of the Philippines, PARCCOM,
PARO of Laguna, MARO of Laguna, the BARC Chairman of Barangay Casile and some potential farmer
beneficiaries, who are residents of Barangay Casile, Cabuyao, Laguna. It was the consensus and recommendation of
the assembly that the landholding of SRRDC be placed under compulsory acquisition.

On August 17, 1989, petitioner filed with the Municipal Agrarian Reform Office (MARO), Cabuyao, Laguna a
"Protest and Objection" to the compulsory acquisition of the property on the ground that the area was not
appropriate for agricultural purposes. The area was rugged in terrain with slopes of 18% and above and that the
occupants of the land were squatters, who were not entitled to any land as beneficiaries. 7

On August 29, 1989, the farmer beneficiaries together with the BARC chairman answered the protest and objection
stating that the slope of the land is not 18% but only 5-10% and that the land is suitable and economically viable for
agricultural purposes, as evidenced by the Certification of the Department of Agriculture, municipality of Cabuyao,
Laguna.8

On September 8, 1989, MARO Belen dela Torre made a summary investigation report and forwarded the
Compulsory Acquisition Folder Indorsement (CAFI) to the Provincial Agrarian Reform Officer (hereafter, PARO). 9

On September 21, 1989, PARO Durante Ubeda forwarded his endorsement of the compulsory acquisition to the
Secretary of Agrarian Reform.

On November 23, 1989, Acting Director Eduardo C. Visperas of the Bureau of Land Acquisition and Development,
DAR forwarded two (2) Compulsory Acquisition Claim Folders covering the landholding of SRRDC, covered by
TCT Nos. T-81949 and T-84891 to the President, Land Bank of the Philippines for further review and evaluation. 10

On December 12, 1989, Secretary of Agrarian Reform Miriam Defensor Santiago sent two (2) notices of
acquisition11 to petitioner, stating that petitioner's landholdings covered by TCT Nos. 81949 and 84891, containing
an area of 188.2858 and 58.5800 hectares, valued at P4,417,735.65 and P1,220,229.93, respectively, had been
placed under the Comprehensive Agrarian Reform Program.

On February 6, 1990, petitioner SRRDC in two letters12 separately addressed to Secretary Florencio B. Abad and the
Director, Bureau of Land Acquisition and Distribution, sent its formal protest, protesting not only the amount of
compensation offered by DAR for the property but also the two (2) notices of acquisition.

On March 17, 1990, Secretary Abad referred the case to the DARAB for summary proceedings to determine just
compensation under R. A. No. 6657, Section 16.

On March 23, 1990, the LBP returned the two (2) claim folders previously referred for review and evaluation to the
Director of BLAD mentioning its inability to value the SRRDC landholding due to some deficiencies.

On March 28, 1990, Executive Director Emmanuel S. Galvez wrote Land Bank President Deogracias Vistan to
forward the two (2) claim folders involving the property of SRRDC to the DARAB for it to conduct summary
proceedings to determine the just compensation for the land.

On April 6, 1990, petitioner sent a letter to the Land Bank of the Philippines stating that its property under the
aforesaid land titles were exempt from CARP coverage because they had been classified as watershed area and were
the subject of a pending petition for land conversion.

On May 10, 1990, Director Narciso Villapando of BLAD turned over the two (2) claim folders (CACF's) to the
Executive Director of the DAR Adjudication Board for proper administrative valuation. Acting on the CACF's, on
September 10, 1990, the Board promulgated a resolution asking the office of the Secretary of Agrarian Reform
(DAR) to first resolve two (2) issues before it proceeds with the summary land valuation proceedings. 13

The issues that need to be threshed out were as follows: (1) whether the subject parcels of land fall within the
coverage of the Compulsory Acquisition Program of the CARP; and (2) whether the petition for land conversion of
the parcels of land may be granted.

On December 7, 1990, the Office of the Secretary, DAR, through the Undersecretary for Operations (Assistant
Secretary for Luzon Operations) and the Regional Director of Region IV, submitted a report answering the two
issues raised. According to them, firstly, by virtue of the issuance of the notice of coverage on August 11, 1989, and
notice of acquisition on December 12, 1989, the property is covered under compulsory acquisition. Secondly,
Administrative Order No. 1, Series of 1990, Section IV D also supports the DAR position on the coverage of the
said property. During the consideration of the case by the Board, there was no pending petition for land conversion
specifically concerning the parcels of land in question.

On February 19, 1991, the Board sent a notice of hearing to all the parties interested, setting the hearing for the
administrative valuation of the subject parcels of land on March 6, 1991. However, on February 22, 1991, Atty. Ma.
Elena P. Hernandez-Cueva, counsel for SRRDC, wrote the Board requesting for its assistance in the reconstruction
of the records of the case because the records could not be found as her co-counsel, Atty. Ricardo Blancaflor, who
originally handled the case for SRRDC and had possession of all the records of the case was on indefinite leave and
could not be contacted. The Board granted counsel's request and moved the hearing to April 4, 1991.

On March 18, 1991, SRRDC submitted a petition to the Board for the latter to resolve SRRDC's petition for
exemption from CARP coverage before any administrative valuation of their landholding could be had by the Board.

On April 4, 1991, the initial DARAB hearing of the case was held and subsequently, different dates of hearing were
set without objection from counsel of SRRDC. During the April 15, 1991 hearing, the subdivision plan of subject
property at Casile, Cabuyao, Laguna was submitted and marked as Exhibit "5" for SRRDC. At the hearing on April
23, 1991, the Land Bank asked for a period of one month to value the land in dispute.

At the hearing on April 23, 1991, certification from Deputy Zoning Administrator Generoso B. Opina was
presented. The certification issued on September 8, 1989, stated that the parcels of land subject of the case were
classified as "industrial Park" per Sanguniang Bayan Resolution No. 45-89 dated March 29, 1989.14

To avert any opportunity that the DARAB might distribute the lands to the farmer beneficiaries, on April 30, 1991,
petitioner filed a petition15 with DARAB to disqualify private respondents as beneficiaries. However, DARAB
refused to address the issue of beneficiaries.

In the meantime, on January 20, 1992, the Regional Trial Court, Laguna, Branch 24, rendered a decision, 16 finding
that private respondents illegally entered the SRRDC property, and ordered them evicted.

On July 11, 1991, DAR Secretary Benjamin T. Leong issued a memorandum directing the Land Bank of the
Philippines to open a trust account in favor of SRRDC, for P5,637,965.55, as valuation for the SRRDC property.

On December 19, 1991, DARAB promulgated a decision, the decretal portion of which reads:

"WHEREFORE, based on the foregoing premises, the Board hereby orders:

"1. The dismissal for lack of merit of the protest against the compulsory coverage of the landholdings of
Sta. Rosa Realty Development Corporation (Transfer Certificates of Title Nos. 81949 and 84891 with an
area of 254.766 hectares) in Barangay Casile, Municipality of Cabuyao, Province of Laguna under the
Comprehensive Agrarian Reform Program is hereby affirmed;
 "2. The Land Bank of the Philippines (LBP) to pay Sta. Rosa Realty Development Corporation the amount
of Seven Million Eight Hundred Forty-One Thousand, Nine Hundred Ninety Seven Pesos and Sixty-Four
centavos (P7,841,997.64) for its landholdings covered by the two (2) Transfer Certificates of Title
mentioned above. Should there be a rejection of the payment tendered, to open, if none has yet been
made, a trust account for said amount in the name of Sta. Rosa Realty Development Corporation;

"3. The Register of Deeds of the Province of Laguna to cancel with dispatch Transfer certificate of Title
Nos. 84891 and 81949 and new one be issued in the name of the Republic of the Philippines, free from
liens and encumbrances;

"4 The Department of Environment and Natural Resources either through its Provincial Office in Laguna or
the Regional Office, Region IV, to conduct a final segregation survey on the lands covered by Transfer
certificate of Title Nos. 84891 and 81949 so the same can be transferred by the Register of Deeds to the
name of the Republic of the Philippines;

"5. The Regional Office of the Department of Agrarian Reform through its Municipal and Provincial
Agrarian Reform Office to take immediate possession on the said landholding after Title shall have been
transferred to the name of the Republic of the Philippines, and distribute the same to the immediate
issuance of Emancipation Patents to the farmer-beneficiaries as determined by the Municipal Agrarian
Reform Office of Cabuyao, Laguna." 17

On January 20, 1992, the Regional Trial Court, Laguna, Branch 24, rendered a decision in Civil Case No. B-
233318ruling that respondents were builders in bad faith.

On February 6, 1992, petitioner filed with the Court of Appeals a petition for review of the DARAB decision. 19 On
November 5, 1993, the Court of Appeals promulgated a decision affirming the decision of DARAB. The decretal
portion of the Court of Appeals decision reads:

"WHEREFORE, premises considered, the DARAB decision dated September 19, 1991 is AFFIRMED,
without prejudice to petitioner Sta. Rosa Realty Development Corporation ventilating its case with the
Special Agrarian Court on the issue of just compensation." 20Hence, this petition.21

On December 15, 1993, the Court issued a Resolution which reads:

"G. R. Nos. 112526 (Sta. Rosa Realty Development Corporation vs. Court of Appeals, et. al.) –
Considering the compliance, dated December 13, 1993, filed by counsel for petitioner, with the resolution
of December 8, 1993 which required petitioner to post a cash bond or surety bond in the amount of
P1,500,000.00 Pesos before issuing a temporary restraining order prayed for, manifesting that it has posted
a CASH BOND in the same amount with the Cashier of the Court as evidenced by the attached official
receipt no. 315519, the Court resolved to ISSUE the Temporary Retraining Order prayed for.

"The Court therefore, resolved to restrain: (a) the Department of Agrarian Reform Adjudication Board from
enforcing its decision dated December 19, 1991 in DARAB Case No. JC-R-IV-LAG-0001, which was
affirmed by the Court of Appeals in a Decision dated November 5, 1993, and which ordered, among others,
the Regional Office of the Department of Agrarian Reform through its Municipal and Provincial Reform
Office to take immediate possession of the landholding in dispute after title shall have been transferred to
the name of the Republic of the Philippines and to distribute the same through the immediate issuance of
Emancipation Patents to the farmer-beneficiaries as determined by the Municipal Agrarian Officer of
Cabuyao, Laguna, (b) The Department of Agrarian Reform and/or the Department of Agrarian Reform
Adjudication Board, and all persons acting for and in their behalf and under their authority from entering
the properties involved in this case and from introducing permanent infrastructures thereon; and (c) the
private respondents from further clearing the said properties of their green cover by the cutting or burning
of trees and other vegetation, effective today until further orders from this Court." 22
The main issue raised is whether the property in question is covered by CARP despite the fact that the entire
property formed part of a watershed area prior to the enactment of R. A. No. 6657.

Under Republic Act No. 6657, there are two modes of acquisition of private land: compulsory and voluntary. In the
case at bar, the Department of Agrarian Reform sought the compulsory acquisition of subject property under R. A.
No. 6657, Section 16, to wit:

"Sec. 16. Procedure for Acquisition of Private Lands. – For purposes of acquisition of private lands, the
following procedures shall be followed:

a.) After having identified the land, the landowners and the beneficiaries, the DAR shall send its
notice to acquire the land to the owners thereof, by personal delivery or registered mail, and post
the same in a conspicuous place in the municipal building and barangay hall of the place where the
property is located. Said notice shall contain the offer of the DAR to pay corresponding value in
accordance with the valuation set forth in Sections 17, 18, and other pertinent provisions hereof.

b.) Within thirty (30) days from the date of the receipt of written notice by personal delivery or
registered mail, the landowner, his administrator or representative shall inform the DAR of his
acceptance or rejection of the offer.

c.) If the landowner accepts the offer of the DAR, the LBP shall pay the landowner the purchase
price of the land within thirty (30) days after he executes and delivers a deed of transfer in favor of
the government and other muniments of title.

d.) In case of rejection or failure to reply, the DAR shall conduct summary administrative
proceedings to determine the compensation for the land requiring the landowner, the LBP and
other interested parties to submit fifteen (15) days from receipt of the notice. After the expiration
of the above period, the matter is deemed submitted for decision. The DAR shall decide the case
within thirty (30) days after it is submitted for decision.

e.) Upon receipt by the landowner of the corresponding payment, or, in case of rejection or no
response from the landowner, upon the deposit with an accessible bank designated by the DAR of
the compensation in cash or in LBP bonds in accordance with this act, the DAR shall make
immediate possession of the land and shall request the proper Register of Deeds to issue Transfer
Certificate of Titles (TCT) in the name of the Republic of the Philippines. The DAR shall
thereafter proceed with the redistribution of the land to the qualified beneficiaries.

f.) Any party who disagrees with the decision may bring the matter to the court23 of proper
jurisdiction for final determination of just compensation.

In compulsory acquisition of private lands, the landholding, the landowners and farmer beneficiaries must first be
identified. After identification, the DAR shall send a notice of acquisition to the landowner, by personal delivery or
registered mail, and post it in a conspicuous place in the municipal building and barangay hall of the place where the
property is located.

Within thirty (30) days from receipt of the notice of acquisition, the landowner, his administrator or representative
shall inform the DAR of his acceptance or rejection of the offer.

If the landowner accepts, he executes and delivers a deed of transfer in favor of the government and surrenders the
certificate of title. Within thirty (30) days from the execution of the deed of transfer, the Land Bank of the
Philippines (LBP) pays the owner the purchase price. If the landowner accepts, he executes and delivers a deed of
transfer in favor of the government and surrenders the certificate of title. Within thirty days from the execution of
the deed of transfer, the Land Bank of the Philippines (LBP) pays the owner the purchase price. If the landowner
rejects the DAR's offer or fails to make a reply, the DAR conducts summary administrative proceedings to
determine just compensation for the land. The landowner, the LBP representative and other interested parties may
submit evidence on just compensation within fifteen days from notice. Within thirty days from submission, the DAR
shall decide the case and inform the owner of its decision and the amount of just compensation.

Upon receipt by the owner of the corresponding payment, or, in case of rejection or lack of response from the latter,
the DAR shall deposit the compensation in cash or in LBP bonds with an accessible bank. The DAR shall
immediately take possession of the land and cause the issuance of a transfer certificate of title in the name of the
Republic of the Philippines. The land shall then be redistributed to the farmer beneficiaries. Any party may question
the decision of the DAR in the special agrarian courts (provisionally the Supreme Court designated branches of the
regional trial court as special agrarian courts) for final determination of just compensation.

The DAR has made compulsory acquisition the priority mode of land acquisition to hasten the implementation of the
Comprehensive Agrarian Reform Program (CARP). Under Sec. 16 of the CARL, the first step in compulsory
acquisition is the identification of the land, the landowners and the farmer beneficiaries. However, the law is silent
on how the identification process shall be made. To fill this gap, on July 26, 1989, the DAR issued Administrative
Order No. 12, series of 1989, which set the operating procedure in the identification of such lands. The procedure is
as follows:

A. The Municipal Agrarian Reform Officer (MARO), with the assistance of the pertinent Barangay
Agrarian Reform Committee (BARC), shall:

1. Update the masterlist of all agricultural lands covered under the CARP in his area of responsibility; the
masterlist should include such information as required under the attached CARP masterlist form which
shall include the name of the landowner, landholding area, TCT/OCT number, and tax declaration number.

2. Prepare the Compulsory Acquisition Case Folder (CACF) for each title (OCT/TCT) or landholding
covered under Phase I and II of the CARP except those for which the landowners have already filed
applications to avail of other modes of land acquisition. A case folder shall contain the following duly
accomplished forms:

a) CARP CA Form 1—MARO investigation report

b) CARP CA Form No 2 – Summary investigation report findings and evaluation

c) CARP CA Form 3—Applicant's Information sheet

d) CARP CA Form 4 – Beneficiaries undertaking

e) CARP CA Form 5 – Transmittal report to the PARO

The MARO/BARC shall certify that all information contained in the above-mentioned forms have been
examined and verified by him and that the same are true and correct.

3. Send notice of coverage and a letter of invitation to a conference/meeting to the landowner covered by
the Compulsory Case Acquisition Folder. Invitations to the said conference meeting shall also be sent to the
prospective farmer-beneficiaries, the BARC representatives, the Land Bank of the Philippines (LBP)
representative, and the other interested parties to discuss the inputs to the valuation of the property.

He shall discuss the MARO/BARC investigation report and solicit the views, objection, agreements or
suggestions of the participants thereon. The landowner shall also ask to indicate his retention area. The
minutes of the meeting shall be signed by all participants in the conference and shall form an integral part
of the CACF.
 4. Submit all completed case folders to the Provincial Agrarian Reform Officer (PARO).

B. The PARO shall:

1. Ensure the individual case folders are forwarded to him by his MAROs.

2. Immediately upon receipt of a case folder, compute the valuation of the land in accordance with A.O.
No. 6, series of 1988. The valuation worksheet and the related CACF valuation forms shall be duly
certified correct by the PARO and all the personnel who participated in the accomplishment of these forms.

3. In all cases, the PARO may validate the report of the MARO through ocular inspection and verification
of the property. This ocular inspection and verification shall be mandatory when the computed value
exceeds P500,000 per estate.

4. Upon determination of the valuation, forward the case folder, together with the duly accomplished
valuation forms and his recommendations, to the Central Office.

The LBP representative and the MARO concerned shall be furnished a copy each of his report.

C. DAR Central Office, specifically through the Bureau of Land Acquisition and Distribution (BLAD),
shall:

1. Within three days from receipt of the case folder from the PARO, review, evaluate and determine the
final land valuation of the property covered by the case folder. A summary review and evaluation report
shall be prepared and duly certified by the BLAD Director and the personnel directly participating in the
review and final valuation.

2. Prepare, for the signature of the Secretary or her duly authorized representative, a notice of acquisition
(CARP Form 8) for the subject property. Serve the notice to the landowner personally or through registered
mail within three days from its approval. The notice shall include among others, the area subject of
compulsory acquisition, and the amount of just compensation offered by DAR.

3. Should the landowner accept the DAR's offered value, the BLAD shall prepare and submit to the
Secretary for approval the order of acquisition. However, in case of rejection or non-reply, the DAR
Adjudication Board (DARAB) shall conduct a summary administrative hearing to determine just
compensation, in accordance with the procedures provided under Administrative Order No. 13, series of
1989. Immediately upon receipt of the DARAB's decision on just compensation, the BLAD shall prepare
and submit to the Secretary for approval the required order of acquisition.

4. Upon the landowner's receipt of payment, in case of acceptance, or upon deposit of payment in the
designated bank, in case of rejection or non-response, the Secretary shall immediately direct the pertinent
Register of Deeds to issue the corresponding Transfer Certificate of Title (TCT) in the name of the
Republic of the Philippines. Once the property is transferred, the DAR, through the PARO, shall take
possession of the land for redistribution to qualified beneficiaries."

Administrative Order No. 12, Series of 1989 requires that the Municipal Agrarian Reform Officer (MARO) keep an
updated master list of all agricultural lands under the CARP in his area of responsibility containing all the required
information. The MARO prepares a Compulsory Acquisition Case Folder (CACF) for each title covered by CARP.
The MARO then sends the landowner a "Notice of Coverage" and a "letter of invitation" to a "conference/ meeting"
over the land covered by the CACF. He also sends invitations to the prospective farmer-beneficiaries, the
representatives of the Barangay Agrarian Reform Committee (BARC), the Land Bank of the Philippines (LBP) and
other interested parties to discuss the inputs to the valuation of the property and solicit views, suggestions,
objections or agreements of the parties. At the meeting, the landowner is asked to indicate his retention area.
The MARO shall make a report of the case to the Provincial Agrarian Reform Officer (PARO) who shall complete
the valuation of the land. Ocular inspection and verification of the property by the PARO shall be mandatory when
the computed value of the estate exceeds P500,000.00. Upon determination of the valuation, the PARO shall
forward all papers together with his recommendation to the Central Office of the DAR. The DAR Central Office,
specifically, the Bureau of Land Acquisition and Distribution (BLAD) shall prepare, on the signature of the
Secretary or his duly authorized representative, a notice of acquisition of the subject property. From this point, the
provisions of R. A. No. 6657, Section 16 shall apply.

For a valid implementation of the CARP Program, two notices are required: (1) the notice of coverage and letter of
invitation to a preliminary conference sent to the landowner, the representative of the BARC, LBP, farmer
beneficiaries and other interested parties pursuant to DAR A. O. No. 12, series of 1989; and (2) the notice of
acquisition sent to the landowner under Section 16 of the CARL.

The importance of the first notice, that is, the notice of coverage and the letter of invitation to a conference, and its
actual conduct cannot be understated. They are steps designed to comply with the requirements of administrative
due process. The implementation of the CARL is an exercise of the State's police power and the power of eminent
domain. To the extent that the CARL prescribes retention limits to the landowners, there is an exercise of police
power for the regulation of private property in accordance with the Constitution. But where, to carry out such
regulation, the owners are deprived of lands they own in excess of the maximum area allowed, there is also a taking
under the power of eminent domain. The taking contemplated is not mere limitation of the use of the land. What is
required is the surrender of the title to and physical possession of the excess and all beneficial rights accruing to the
owner in favor of the farmer beneficiary.

In the case at bar, DAR has executed the taking of the property in question. However, payment of just compensation
was not in accordance with the procedural requirement. The law required payment in cash or LBP bonds, not by
trust account as was done by DAR.

In Association of Small Landowners in the Philippines v. Secretary of Agrarian Reform, we held that "The CARP
Law, for its part, conditions the transfer of possession and ownership of the land to the government on receipt of the
landowner of the corresponding payment or the deposit by the DAR of the compensation in cash or LBP bonds with
an accessible bank. Until then, title also remains with the landowner. No outright change of ownership is
contemplated either."24

Consequently, petitioner questioned before the Court of Appeals DARAB's decision ordering the compulsory
acquisition of petitioner's property.25 Here, petitioner pressed the question of whether the property was a watershed,
not covered by CARP.

Article 67 of the Water Code of the Philippines (P. D. No. 1067) provides:

"Art. 67. Any watershed or any area of land adjacent to any surface water or overlying any ground water
may be declared by the Department of Natural resources as a protected area. Rules and Regulations may be
promulgated by such Department to prohibit or control such activities by the owners or occupants thereof
within the protected area which may damage or cause the deterioration of the surface water or ground water
or interfere with the investigation, use, control, protection, management or administration of such waters."

Watersheds may be defined as "an area drained by a river and its tributaries and enclosed by a boundary or divide
which separates it from adjacent watersheds." Watersheds generally are outside the commerce of man, so why was
the Casile property titled in the name of SRRDC? The answer is simple. At the time of the titling, the Department of
Agriculture and Natural Resources had not declared the property as watershed area. The parcels of land in Barangay
Casile were declared as "PARK" by a Zoning Ordinance adopted by the municipality of Cabuyao in 1979, as
certified by the Housing and Land Use Regulatory Board. On January 5, 1994, the Sangguniang Bayan of Cabuyao,
Laguna issued a Resolution26 voiding the zoning classification of the land at Barangay Casile as Park and declaring
that the land is now classified as agricultural land.
The authority of the municipality of Cabuyao, Laguna to issue zoning classification is an exercise of its police
power, not the power of eminent domain. "A zoning ordinance is defined as a local city or municipal legislation
which logically arranges, prescribes, defines and apportions a given political subdivision into specific land uses as
present and future projection of needs." 27

In Natalia Realty, Inc. v. Department of Agrarian Reform28 we held that lands classified as non-agricultural prior to
the effectivity of the CARL may not be compulsorily acquired for distribution to farmer beneficiaries.

However, more than the classification of the subject land as PARK is the fact that subsequent studies and survey
showed that the parcels of land in question form a vital part of a watershed area. 29

Now, petitioner has offered to prove that the land in dispute is a "watershed or part of the protected area for
watershed purposes." Ecological balances and environmental disasters in our day and age seem to be interconnected.
Property developers and tillers of the land must be aware of this deadly combination. In the case at bar, DAR
included the disputed parcels of land for compulsory acquisition simply because the land was allegedly devoted to
agriculture and was titled to SRRDC, hence, private and alienable land that may be subject to CARP.

However, the scenario has changed, after an in-depth study, survey and reassessment. We cannot ignore the fact that
the disputed parcels of land form a vital part of an area that need to be protected for watershed purposes. In a report
of the Ecosystems Research and Development Bureau (ERDB), a research arm of the DENR, regarding the
environmental assessment of the Casile and Kabanga-an river watersheds, they concluded that:

"The Casile barangay covered by CLOA in question is situated in the heartland of both watersheds.
Considering the barangays proximity to the Matangtubig waterworks, the activities of the farmers which
are in conflict with proper soil and water conservation practices jeopardize and endanger the vital
waterworks. Degradation of the land would have double edge detrimental effects. On the Casile side this
would mean direct siltation of the Mangumit river which drains to the water impounding reservoir below.
On the Kabanga-an side, this would mean destruction of forest covers which acts as recharged areas of the
Matang Tubig springs. Considering that the people have little if no direct interest in the protection of the
Matang Tubig structures they couldn't care less even if it would be destroyed.

The Casile and Kabanga-an watersheds can be considered a most vital life support system to thousands of
inhabitants directly and indirectly affected by it. From these watersheds come the natural God-given
precious resource – water. x x x x x

Clearing and tilling of the lands are totally inconsistent with sound watershed management. More so, the
introduction of earth disturbing activities like road building and erection of permanent infrastructures.
Unless the pernicious agricultural activities of the Casile farmers are immediately stopped, it would not be
long before these watersheds would cease to be of value. The impact of watershed degredation threatens the
livelihood of thousands of people dependent upon it. Toward this, we hope that an acceptable
comprehensive watershed development policy and program be immediately formulated and implemented
before the irreversible damage finally happens.

Hence, the following are recommended:

7.2 The Casile farmers should be relocated and given financial assistance.

7.3 Declaration of the two watersheds as critical and in need of immediate rehabilitation.

7.4 A comprehensive and detailed watershed management plan and program be formulated and
implemented by the Canlubang Estate in coordination with pertinent government agencies." 30
The ERDB report was prepared by a composite team headed by Dr. Emilio Rosario, the ERDB Director, who holds
a doctorate degree in water resources from U.P. Los Banos in 1987; Dr. Medel Limsuan, who obtained his doctorate
degree in watershed management from Colorado University (US) in 1989; and Dr. Antonio M. Dano, who obtained
his doctorate degree in Soil and Water management Conservation from U.P. Los Banos in 1993.

Also, DENR Secretary Angel Alcala submitted a Memorandum for the President dated September 7, 1993 (Subject:
PFVR HWI Ref.: 933103 Presidential Instructions on the Protection of Watersheds of the Canlubang Estates at
Barrio Casile, Cabuyao, Laguna) which reads:

"It is the opinion of this office that the area in question must be maintained for watershed purposes for
ecological and environmental considerations, among others. Although the 88 families who are the proposed
CARP beneficiaries will be affected, it is important that a larger view of the situation be taken as one
should also consider the adverse effect on thousands of residents downstream if the watershed will not be
protected and maintained for watershed purposes.

"The foregoing considered, it is recommended that if possible, an alternate area be allocated for the affected
farmers, and that the Canlubang Estates be mandated to protect and maintain the area in question as a
permanent watershed reserved."31

The definition does not exactly depict the complexities of a watershed. The most important product of a watershed is
water which is one of the most important human necessity. The protection of watersheds ensures an adequate supply
of water for future generations and the control of flashfloods that not only damage property but cause loss of lives.
Protection of watersheds is an "intergenerational responsibility" that needs to be answered now.

Another factor that needs to be mentioned is the fact that during the DARAB hearing, petitioner presented proof that
the Casile property has slopes of 18% and over, which exempted the land from the coverage of CARL. R. A. No.
6657, Section 10, provides:

"Section 10. Exemptions and Exclusions. – Lands actually, directly and exclusively used and found to be
necessary for parks, wildlife, forest reserves, reforestration, fish sanctuaries and breeding grounds,
watersheds and mangroves, national defense, school sites and campuses including experimental farm
stations operated by public or private schools for educational purposes, seeds and seedlings research and
pilot production centers, church sites and convents appurtenent thereto, communal burial grounds and
cemeteries, penal colonies and penal farms actually worked by the inmates, government and private
research and quarantine centers, and all lands with eighteen percent (18%) slope and over, except those
already developed shall be exempt from coverage of this Act."

Hence, during the hearing at DARAB, there was proof showing that the disputed parcels of land may be excluded
from the compulsory acquisition coverage of CARP because of its very high slopes.

To resolve the issue as to the true nature of the parcels of land involved in the case at bar, the Court directs the
DARAB to conduct a re-evaluation of the issue.

IN VIEW WHEREOF, the Court SETS ASIDE the decision of the Court of Appeals in CA-G. R. SP No. 27234.

In lieu thereof, the Court REMANDS the case to the DARAB for re-evaluation and determination of the nature of
the parcels of land involved to resolve the issue of its coverage by the Comprehensive Land Reform Program.

In the meantime, the effects of the CLOAs issued by the DAR to supposed farmer beneficiaries shall continue to be
stayed by the temporary restraining order issued on December 15, 1993, which shall remain in effect until final
decision on the case.

No costs.SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-63742 April 17, 1989

TANJAY WATER DISTRICT, represented by Engr. JOEL B. BORROMEO, Manager, petitioner,

vs.
HON. PEDRO GABATON, MUN. OF PAMPLONA, APOLINARIO ARNAIZ, ROMULO ALPAS,
WENCESLAO DURAN, SERGIO SALMA, APOLLO BOBON, CATALINO ORTEGA, FRANCISCO
ZERNA, ANTONIO DIVINAGRACIA, PEDRO SINCERO, DIONISIO TABALOC, ROMEO RAMIREZ,
FRANCISCO CABILAO and ESPERIDION MOSO, respondents.

G.R. No. 84300 April 17, 1989

JOSEFINO DATUIN, petitioner,

vs.
TARLAC WATER DISTRICT, respondent.

Rodulfo O. Navarro and Baldomero Limbaga for petitioner in G.R. No. 63742.

Joaquin R. Hitosis for respondents in G.R. No. 63742.

Isabelo C. Salamida for petitioner in G.R. No. 84300.

Conrado C. Ginelo Jr. for respondent in G.R. No. 84300.

Bernardito A. Florido for Philippine Association of Water Districts.

Reuben A. Espancho for Esperidion Moso.

GRIÑO-AQUINO, J.:

The common issue in these consolidated cases is whether or not water districts created under PD No. 198, as
amended, are private corporations or government-owned or controlled corporations. Another issue in G.R. No.
63742 is whether respondent Judge acted without, or in excess of, jurisdiction or with grave abuse of discretion in
dismissing Civil Case No. 8144 for alleged lack of jurisdiction over the subject matter.

I. G.R. No. 63742

On March 3, 1983, petitioner Tanjay Water District, represented by its manager, Joel B. Borromeo, filed in the
Regional Trial Court of Negros Oriental, Dumaguete City, 7th Judicial Region, Civil Case No. 8144, an action for
injunction with preliminary mandatory injunction and damages, against respondent Municipality of Pamplona and
its officials to prevent them from interfering in the management of the Tanjay Waterworks System.

Respondent Judge set the hearing of the application for injunction on March 16, 1983. The Municipality and its
officials answered the complaint. Esperidion Moso filed a separate answer.
When the case was called for hearing on March 16, 1983, respondent Judge gave the parties five (5) days to submit
their respective position papers on the issue of the court's jurisdiction (or lack of it), over the action. The
respondents' position paper questioned the court's jurisdiction over the case and asked for its dismissal of the
complaint (Annex F). Instead of a position paper, the petitioner filed a reply with opposition to the motion to dismiss
(Annex G).

On March 25, 1983, respondent Judge issued an order dismissing the complaint for lack of jurisdiction over the
subject matter (water) and over the parties (both being government instrumentalities) by virtue of Art. 88 of PD No.
1067 and PD No. 242. He declared that the petitioner's recourse to the court was premature because the controversy
should have been ventilated first before the National Water Resources Council pursuant to Arts. 88 and 89 of PD
No. 1067. He further ruled that as the parties are government instrumentalities, the dispute should be
administratively settled in accordance with PD No. 242.

Petitioner filed a petition for certiorari in this Court alleging that respondent Judge acted without or in excess of
jurisdiction or with grave abuse of discretion in dismissing the case.

II. G.R. No. 84300

Petitioner Josefino Datuin filed a complaint for illegal dismissal against respondent Tarlac Water District in the
Department of Labor and Employment (DOLE) which decided in his favor. However, upon respondent's motion for
reconsideration (which was treated as an appeal) the National Labor Relations Commission (NLRC) reversed the
decision and dismissed the complaint "for lack of jurisdiction," holding that as the respondent Tarlac Water District
is a corporation created by a special law (PD No. 198), its officers and employees belong to the civil service and
their separation from office should be governed by Civil Service Rules and Regulations.

Petitioner contends that this case is similar to the case of Tanjay Water District versus Hon. Pedro C. Gabaton, et
al., G.R. No. 63742, because the lone issue in both cases is whether or not water districts created under PD No. 198,
as amended, are private corporations or government-owned or controlled corporations. The two cases were
consolidated pursuant to the resolution dated July 25, 1988 of this Court.

Actually the question of the corporate personality of local water districts is not new. The Court ruled in the recent
case of Hagonoy Water District vs. NLRC, G.R. No. 81490, August 31, 1988, that they are quasi public corporations
whose employees belong to the civil service, hence, the dismissal of those employees shall be governed by the civil
service law, rules and regulations. The pertinent part of this Court's decision reads as follows:

The only question here is whether or not local water districts are government owned or controlled
corporations whose employees are subject to the provisions of the Civil Service Law. The Labor
Arbiter asserted jurisdiction over the alleged illegal dismissal of private respondent Villanueva by
relying on Section 25 of Presidential Decree No. 198, known as the 'Provincial Water Utilities Act
of 1973' which went into effect on 25 May 1973, and which provides as follows:

Exemption from Civil Service. — The district and its employees, being engaged in a proprietary
function, are hereby exempt from the provisions of the Civil Service Law. Collective Bargaining
shall be available only to personnel below supervisory levels: Provided, however, That the total of
all salaries, wages, emoluments, benefits or other compensation paid to all employees in any
month shall not exceed fifty percent (50%) of average net monthly revenue, said net revenue
representing income from water sales and sewerage service charges, less pro-rata share of debt
service and expenses for fuel or energy for pumping during the preceding fiscal year.

The Labor Arbiter failed to take into account the provisions of Presidential, Decree No. 1479,
which went into effect on 11 June 1978. P.D. No. 1479 wiped away Section 25 of P.D. 198 quoted
above, and Section 26 of P.D. 198 was renumbered as Section 25 in the following manner:

Section 26. of the same decree P.D. 198 is hereby amended to read as Section 25 as follows:
 Section 25. Authorization. — The district may exercise all the powers which are expressly granted
by this Title or which are necessarily implied from or incidental to the powers and purposes herein
stated. For the purpose of carrying out the objectives of this Act, a district is hereby granted the
power of eminent domain, the exercise thereof shall, however, be subject to review by the
Administration.

Thus, Section 25 of P.D. 198 exempting the employees of water districts from the application of
the Civil Service Law was removed from the statute books.

This is not the first time that officials of the Department of Labor and Employment have taken the
position that the Labor Arbiter here adopted. In Baguio Water District vs. Cresenciano B. Trajano
etc., et al. (127 SCRA 730 [1984]), the petitioner Water District sought review of a decision of the
Bureau of Labor Relations which affirmed that of a Med-Arbiter calling for a certification election
among the regular rank-and-file employees of the Baguio Water District (BWD). In granting the
petition, the Court said

The Baguio Water District was formed pursuant to Title II — Local Water District Law — of P.D.
No. 198, as amended. The BWD is by Sec. 6 of that decree 'a quasi-public corporation performing
public service and supplying public wants'.

xxxxxx

We grant the petition for the following reasons:

I. Section 25 of P.D. No. 198 was repealed by Sec. 3 of P.D. No. 1479; Section 26 of P.E. No. 198
was amended to read as Sec. 25 by Sec. 4 of P.D. No. 1479. The amendatory decree took effect on
June 11, 1978.

xxxxxxxxx

3. The BWD is a corporation created pursuant to a special law — P.D. No. 198, as amended. As
such its officers and employees are part of the Civil Service. (Sec. 1, Art. XII-B, [1973]
Constitution; P.D. No. 868.)

The hiring and firing of employees of government-owned or controlled corporations are governed by the Civil
Service Law and Civil Service Rules and Regulations. In National Housing Corporation vs. Juco, 134 SCRA
172,176, We held:

There should no longer be any question at this time that employees of government-owned or
controlled corporations are governed by the civil service law and civil service rules and
regulations.

Section 1, Article XII-B of the [1973] Constitution specifically provides:

The Civil Service embraces every branch, agency, subdivision, and instrumentality of the
Government, including every government-owned or controlled corporation ... .

The 1935 Constitution had a similar provision in its Section 1, Article XII which stated:

A Civil Service embracing all branches and subdivisions of the Government shall be provided by
law.
 The inclusion of 'government-owned or controlled corporations' within the embrace of the civil
service shows a deliberate effort of the framers to plug an earlier loophole which allowed
government-owned or controlled corporations to avoid the full consequences of the all-
encompassing coverage of the civil service system. The same explicit intent is shown by the
addition of 'agency' and 'instrumentality' to branches and subdivisions of the Government. All
offices and firms of the government are covered.

The amendments introduced in 1973 are not Idle exercises or meaningless gestures. They carry the
strong message that civil service coverage is broad and all-embracing insofar as employment in
the government in any of its governmental or corporate arms is concerned.

xxxxxxxxx

Section 1 of Article XII-B, 1973 Constitution uses the word 'every' to modify the phrase
'government-owned or controlled corporation'

'Every' means each one of a group, without exception. It means all possible and all, taken one by
one. Of course, our decision in this case refers to a corporation created as a government-owned
or controlled entity. It does not cover cases involving private firms taken over by the government
in foreclosure or similar proceedings. We reserve judgment on these latter cases when the
appropriate controversy is brought to this Court. (Emphasis ours)

Significantly, Article XIB Section 2(l) of the 1987 Constitution provides that "(t)he civil service embraces all
branches, subdivisions, instrumentalities, and agencies of the government, including government-owned or
controlled corporations with original charters." Inasmuch as PD No. 198, as amended, is the original charter of the
petitioner, Tanjay Water District, and respondent Tarlac Water District and all water districts in the country, they
come under the coverage of the civil service law, rules and regulations. (Sec. 35, Art VIII and Sec. 37, Art. IX of PD
No. 807.)

In G.R. No. 63742, respondent Judge ruled that as the subject matter of Civil Case No. 8144 was water, the case
should have been brought first to the National Water Resources Council in accordance with Articles 88 and 89 of
PD No. 1067, and, as the parties are government instrumentalities (The Tanjay Water District and the Municipality
of Pamplona), the dispute should be administratively settled in accordance with PD No. 242.

Articles 88 and 89 of The Water Code (PD No. 1067, promulgated on January 25, 1977) provide as follows:

ART. 88. The [Water Resources] 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 this Code.

The decisions of the Council on water rights controversies shall be immediately executory and the
enforcement thereof may be suspended only when a bond, in an amount fixed by the Council to
answer for damages occasioned by the suspension or stay of execution, shall have been filed by
the appealing party, unless the suspension is by virtue of an order of a competent court.

All disputes shall be decided within sixty (60) days after the parties submit the same for decision
or resolution.

The Council shall have the power to issue writs of execution and enforce its decisions with the
assistance of local or national police agencies.

ART. 89. The decisions of the Council on water rights controversies may be appealed to the Court
of First Instance 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: (2) grave abuse of discretion question of law; and (3) questions of fact and
law. (Emphasis supplied.)

Inasmuch as Civil Case No. 8144 involves the appropriation, utilization and control of water, We hold that the
jurisdiction to hear and decide the dispute in the first instance, pertains to the Water Resources Council as provided
in PD No. 1067 which is the special law on the subject. The Court of First Instance (now Regional Trial Court) has
only appellate jurisdiction over the case.

P.D. No. 242 which was issued on July 9, 1973, prescribes administrative procedures for the settlement of:

.... all disputes, claims and controversies solely between or among the departments, bureaus,
offices, agencies and instrumentalities of the National Government, including government-owned
or controlled corporations but excluding constitutional offices or agencies, arising from the
interpretation and application of statutes, contracts or agreements.

by either the Secretary of Justice, or the Solicitor General, or the Government Corporate Counsel, depending on the
parties involved and whether the case raises pure questions of law or mixed questions of law and fact.

P.D. No. 242 is inapplicable to this case because the controversy herein did not arise from the "interpretation and
application of statutes, contracts, or agreements" of the parties herein. As previously stated, it involves the
appropriation, utilization, and control of water.

Our determination in the earlier cases (Baguio Water District vs. Trajano, 127 SCRA 730; Hagonoy Water District
vs. NLRC, G.R. No. 81490, August 31, 1988) that water districts are government instrumentalities and that their
employees belong to the civil service, disposes of Datuin's petition in G.R. No. 84300. The National Labor Relations
Commission has no jurisdiction over his complaint for illegal dismissal.

WHEREFORE, both petitions in G.R. Nos. 63742 and 84300 are dismissed without prejudice to the petitioners in
G.R. No. 63742 filing their complaint in the National Water Resources Council and the petitioner in G.R. No. 84300
seeking redress in the Civil Service Commission. No costs.

SO ORDERED.
 SECOND DIVISION

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 Petition1 dated November 9, 1995 filed by the Metro Iloilo Water District assailing
the Decision2 of the Court of appeals dated June 19, 1995 which affirmed the trial court’s Order3 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. 714 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 petitioner’s 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 Berlin8 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
petitioner’s 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 petitioner’s
rules and regulations were not published in the Official Gazette and hence petitioner had no cause of action. 13Private
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 petitioner’s 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 Order16 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 Council’s competence. In addition, the trial court held that
petitioner failed to exhaust administrative remedies under the doctrine of "primary administrative jurisdiction."
Petitioner’s Motion for Reconsideration17 was thereafter denied on April 29, 1994.18

A petition19 dated May 27, 1994 seeking a review of the trial court’s 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 Resolution20 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 Court’s rulings in Amistoso v.
Ong21 and Santos v. Court of Appeals,22 which upheld the regular court’s 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 petitioner’s 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 in Abe-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 grantee’s 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 petitioner’s Motion for Reconsideration24 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 district’s
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. Manta32 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 petitioner’s 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 petitioner’s service areas;

3. that the unauthorized extraction or withdrawal of ground water by private respondents without the
necessary permit was in violation of petitioner’s 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 petitioner’s service area, visa-a-vis petitioner’s
vested rights as a water district. At issue is whether or not private respondents’ extraction and sale of ground water
within petitioner’s service area violated petitioner’s 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 petitioner’s 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 petitioner’s rights as a water district. The cases of Abe-
Abe v. Manta37 and Tanjay Water District v. Gabaton38 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. Ong39, 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
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. 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 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.

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.