SC rules dam water excluded from tax on national wealth


THE Supreme Court (SC) has ruled that dam water no longer fits the definition of natural resources and cannot be subject to the tax on national wealth.

In a 28-page decision, the SC sitting en banc reversed a decision of the Court of Appeals (CA), which had found the Metropolitan Waterworks and Sewerage System (MWSS) liable to pay the Bulacan provincial government a share in the use of water from Angat Dam.

“All told, the Court finds that the CA erred in affirming the RTC Decision which found petitioner liable to pay respondent a share in the utilization and development of national wealth,” according to the decision, written by Associate Justice Henri Jean Paul B. Inting.

The Supreme Court said water impounded in a dam ceases to a natural resource, and thus cannot be subject to the tax on national wealth.

“Being already appropriated, dam water is no longer subject to national wealth tax because appropriate tax is to be determined and imposed upon the extraction of water from a natural resource and accordingly, prior to the impounding and appropriation of water,” according to the decision.

The Bulacan provincial government, through Governor Josefina M. Dela Cruz, had claimed that the MWSS profited from the water resources of Angat Dam, located in Bulacan.

They argued that MWSS is liable to pay the local government a share from its utilization and development of national wealth.

The tribunal decided otherwise, noting that the MWSS does not generate income or derive profit from the use and development of dam water. the MWSS was created for regulatory purposes, it added.

The MWSS had argued that water in Angat Dam doesn’t necessarily come from Bulacan, but was stored in the catchment area.

“A dam is a man-made structure; it does not fall within the purview of national wealth that would entitle a local government unit to an equitable share in the proceeds derived from its utilization and development,” the MWSS said. — Chloe Mari A. Hufana