davao vs. csc case digest

7/27/2019 Davao vs. CSC Case Digest

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G.R. No. 95237-38 September 13, 1991

DAVAO CITY WATR DISTRICT, CAGAYAN D ORO CITYWATR DISTRICT, !TRO C"# WATR DISTRICT,$A!"OANGA CITY WATR DISTRICT, %YT !TROWATR DISTRICT, "#T#AN CITY WATR DISTRICT,CA!ARINS NORT WATR DISTRICT, %AG#NA WATR

DISTRICT, D#!AG#T CITY WATR DISTRICT, %A #NIONWATR DISTRICT, "AY"AY WATR DISTRICT, !TRO%INGAYN WATR DISTRICT, #RDANTA WATRDISTRICT, COTA"ATO CITY WATR DISTRICT, !ARAWIWATR DISTRICT, TAG#! WATR DISTRICT, DIGOSWATR DISTRICT, "IS%IG WATR DISTRICT, &'(!CA#AYAN WATR DISTRICT, petitioners,vs.CIVI% SRVIC CO!!ISSION, &'( CO!!ISSION ONA#DIT, respondents.

Rodolfo S. De Jesus for petitioners.

Evalyn H. Itaas-Fetalino, Rogelio C. Limare and Daisy .

!ar"ia-#ing$on for CSC.

!DIA%DA, J.)p

Whether or not the Local Water Districts formed and createdpursuant to the provisions of Presidential Decree No. 198, asamended, are government-owned or controlled corporationswith original charter falling under the ivil !ervice Law and"orcovered #$ the visitorial power of the ommission on %udit isthe issue which the petitioners entreat this ourt, en %an", toshed light on.

Petitioners are among the more than five hundred &'(() waterdistricts e*isting throughout the countr$ formed pursuant to theprovisions of Presidential Decree No. 198, as amended #$Presidential Decrees Nos. +8 and 1+9, otherwise nown asthe /Provincial Water 0tilities %ct of 19+./

Presidential Decree No. 198 was issued #$ the then President2erdinand 3. 4arcos #$ virtue of his legislative power underProclamation No. 1(81. 5t authori6ed the different locallegislative #odies to form and create their respective waterdistricts through a resolution the$ will pass su#7ect to theguidelines, rules and regulations therein laid down. he decreefurther created and formed the /Local Water 0tilities

%dministration/ &LW0%), a national agenc$ attached to the

National 3conomic and Development %uthorit$ &N3D%), andgranted with regulator$ power necessar$ to optimi6e pu#licservice from water utilities operations.

he respondents, on the other hand, are the ivil !erviceommission &!) and the ommission on %udit &%), #othgovernment agencies and represented in this case #$ the!olicitor :eneral.

n %pril 1+, 1989, this ourt ruled in the case of #an&ay 'aterDistri"t v. !a%aton, et al.&:.;. No. + of PD No. 8(+).

%s an offshoot of the immediatel$ cited ruling, the !. issued;esolution No. 9(-'+', the dispositive portion of which reads=

NW A3;32;3, in view of all the foregoing, theommission resolved, as it here#$ resolves to rule thatLocal Water Districts, #eing Buasi-pu#lic corporationscreated #$ law to perform pu#lic services and suppl$

pu#lic wants, the matter of hiring and firing of its officersand emplo$ees should #e governed #$ the ivil !erviceLaw, rules and regulations. Aenceforth, all appointmentsof personnel of the different local water districts in thecountr$ shall #e su#mitted to the ommission forappropriate action. &Rollo. p.


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s#usidiar$ of the National 5nvestmentDevelopment orporation &N5D) which inturn was a su#sidiar$ of the PhilippineNational ?an, a #an chartered #$ a specialstatute. hus, government-owned orcontrolled corporations lie N%!3 areeffectivel$, e*cluded from the scope of the

ivil !ervice. &emphasis supplied)

2rom the foregoing pronouncement, it is clear that what has#een e*cluded from the coverage of the ! are thosecorporations created pursuant to the orporation ode.!ignificantl$, petitioners are not created under the said code,#ut on the contrar$, the$ were created pursuant to a speciallaw and are governed primaril$ #$ its provision.

No consideration ma$ thus #e given to petitioners contentionthat the operative act which created the water districts are theresolutions of the respective local sanggunians and thatconseBuentl$, PD 198, as amended, cannot #e considered astheir charter.

5t is to #e noted that PD 198, as amended is the source ofauthori6ation and power to form and maintain a district. !ection of said decree provides=

!ec. . Formation of Distri"t. E his %ct isthe source of authori6ation and power toform and maintain a district. nce formed, adistrict is su#7ect to the provisions of this %ctand not under the 7urisdiction of an$ politicalsu#division, . . . .

4oreover, it must #e o#served that PD 198, contains all theessential terms necessar$ to constitute a charter creating a

7uridical person. 2or e*ample, !ection &a) provides for thename that will #e used #$ a water district, thus=

!ec. . . . . o form a district, the legislative#od$ of an$ cit$, municipalit$ or provinceshall enact a resolution containing thefollowing=

a) he name of the local water district, whichshall include the name of the cit$,municipalit$, or province, or region thereof,served #$ said s$stem, followed #$ thewords /Water District./

5t also prescri#es for the num#ers and Bualifications of themem#ers of the ?oard of Directors=

!ec. 8. *um%er and 4ualifi"ation. E he ?oard ofDirectors of a district shall #e composed of fiveciti6ens of the Philippines who are of voting age andresidents within the district. ne mem#er shall #e arepresentative of civic-oriented service clu#s, onemem#er of representative of professionalassociations, one mem#er a representative of#usiness, commercial or financial organi6ations, onemem#er a representative of educational institutionsand one mem#er a representative of womensorgani6ation. No pu#lic official shall serve as director.

rovided, o+ever, that if the district has availed ofthe financial assistance of the %dministration, the

%dministration ma$ appoint an$ of its personnel to sitin the #oard of directors with all the rights andprivileges appertaining to a regular mem#er for suchperiod as the inde#tedness remains unpaid in whichcase the #oard shall #e composed of si* mem#ersG&as amended #$ PDs Nos. +8 and 1+9).

the manner of their appointment and nominationsG

!ec. 9./ppointment. E ?oard mem#ers shall #eappointed #$ the appointing authorit$. !aidappointments shall #e made from a list of nominees, ifan$, su#mitted pursuant to !ection 1(. 5f nonominations are su#mitted, the appointing authorit$shall appoint an$ Bualified person of the categor$ tothe vacant positionG

!ec.1(. *ominations. E n or #efore cto#er 1 ofeach even num#ered $ear, the secretar$ of the districtshall contact each nown organi6ation, association, orinstitution #eing represented #$ the director whoseterm will e*pire on Decem#er 1 and solicitnominations from these organi6ations to fill theposition for the ensuing term. ne nomination ma$ #esu#mitted in writing #$ each such organi6ation to the!ecretar$ of the district on or #efore Novem#er 1 ofsuch $ear= his list of nominees shall #e transmitted#$ the !ecretar$ of the district to the office of theappointing authorit$ on or #efore Novem#er 1' ofsuch $ear and he shall mae his appointment fromthe list su#mitted on or #efore Decem#er 1'. 5n the

event the appointing authorit$ fails to mae hisappointments on or #efore Decem#er 1', selectionshall #e made from said list of nominees #$ ma7orit$vote of the seated directors of the district constitutinga Buorum. 5nitial nominations for all five seats of the#oard shall #e solicited #$ the legislative #od$ or#odies at the time of adoption of the resolutionforming the district. hirt$ da$s thereafter, a list ofnominees shall #e su#mitted to the provincialgovernor in the event the resolution forming thedistrict is #$ a provincial #oard, or the ma$or of thecit$ or municipalit$ in the event the resolution formingthe adoption of the district is #$ the cit$ or municipal#oard of councilors, who shall select the initial

directors therefrom within 1' da$s after receipt ofsuch nominationsG

their terms of office=

!ec. 11. #erm of 1ffi"e. E f the five initial directorsof each newl$ formed district, two shall #e appointedfor a ma*imum term of two $ears, two for a ma*imumterm of four $ears, and one for a ma*imum term of si*$ears. erms of office of all directors in a given districtshall #e such that the term of at least one director, #utnot more then two, shall e*pire on Decem#er 1 ofeach even-num#ered $ear. ;egular terms of officeafter the initial terms shall #e for si* $earscommencing on Canuar$ 1 of odd-num#ered $ears.Directors ma$ #e removed for cause onl$, su#7ect toreview and approval of the %dministrationG &asamended #$ PD +8).

the manner of filling up vacancies=

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manner. he director thus appointed shall serve theune*pired term onl$G &as amended #$ PD +8).

and the compensation and personal lia#ilit$ of the mem#ers ofthe ?oard of Directors=

!ec. 1. Compensation. E 3ach director shall receivea per diem, to #e determined #$ the #oard, for eachmeeting of the #oard actuall$ attended #$ him, #ut nodirector shag receive per diems in an$ given month ine*cess of the eBuivalent of the total per diems of fourmeetings in an$ given month. No director shallreceive other compensation for services to the district.

%n$ per diem in e*cess of P'(.(( shall #e su#7ect toapproval of the %dministration &as amended #$ PD+8).

!ec. 1. ersonal Lia%ility. E No director ma$ #e heldto #e personall$ lia#le for an$ action of the district.

Noteworth$, the a#ove Buoted provisions of PD 198, asamended, are similar to those which are actuall$ contained inother corporate charters. he conclusion is inescapa#le thatthe said decree is in truth and in fact the charter of the differentwater districts for it clearl$ defines the latters primar$ purposeand its #asic organi6ational set-up. 5n other words, PD 198, asamended, is the ver$ law which gives a water district 7uridicalpersonalit$. While it is true that a resolution of a localsanggunian is still necessar$ for the final creation of a district,this ourt is of the opinion that said resolution cannot #econsidered as its charter, the same #eing intended onl$ toimplement the provisions of said decree. 5n passing aresolution forming a water district, the local sanggunian isentrusted with no authorit$ or discretion to grant a charter for

the creation of a private corporation. 5t is merel$ given theauthorit$ for the formation of a water district, on a local option#asis, to #e e*ercised under and in pursuance of PD 198.

4ore than the aforeBuoted provisions, what is of importantinterest in the case at #ar is !ection , par. ) of the samedecree which reads=

!ec. )./ppointing autority. E he personempowered to appoint the mem#ers of the ?oard ofDirectors of a local water district, depending upon thegeographic coverage and population mae-up of theparticular district. 5n the event that more than sevent$-fivepercent of the total active water service connections of a

local water districts are within the #oundar$ of an$ cit$ ormunicipalit$, the appointing authorit$ shall #e the ma$orof that cit$ or municipalit$, as the case ma$ #eGotherwise, the appointing authorit$ shall #e the governorof the province within which the district is located=rovided, hat if the e*isting waterwors s$stem in thecit$ or municipalit$ esta#lished as a water district underthis Decree is operated and managed #$ the province,initial appointment shall #e e*tended #$ the governor ofthe province. !u#seBuent appointments shall #e asspecified herein.

5f portions of more than one province are included withinthe #oundar$ of the district, and the appointing authorit$is to #e the governors then the power to appoint shallrotate #etween the governors involved with the initialappointments made #$ the governor in whose provincethe greatest num#er of service connections e*ists &asamended #$ PD +8).

he a#ove-Buoted section definitel$ sets to naught petitionerscontention that the$ are private corporations. 5t is cleartherefrom that the power to appoint the mem#ers who willcomprise the ?oard of Directors #elongs to the local e*ecutives

of the local su#division units where such districts are located.5n contrast, the mem#ers of the ?oard of Directors or trusteesof a private corporation are elected from among the mem#ersand stocholders thereof. 5t would not #e amiss to emphasi6eat this point that a private corporation is created for the privatepurpose, #enefit, aim and end of its mem#ers or stocholders.Necessaril$, said mem#ers or stocholders should #e given a

free hand to choose those who will compose the governing#od$ of their corporation. ?ut this is not the case here and thisclearl$ indicates that petitioners are definitel$ not privatecorporations.

he foregoing disBuisition notwithstanding, We are, however,not unaware of the serious repercussion this ma$ #ring to thethousands of water districts emplo$ees throughout the countr$who stand to #e affected #ecause the$ do not have thenecessar$ civil service eligi#ilities. %s these emplo$ees areeBuall$ protected #$ the constitutional guarantee to securit$ oftenure, We find it necessar$ to rule for the protection of suchright which cannot #e impaired #$ a su#seBuent ruling of thisourt. hus, those emplo$ees who have alread$ acBuired theirpermanent emplo$ment status at the time of the promulgation

of this decision cannot #e removed #$ the mere reason thatthe$ lac the necessar$ civil service eligi#ilities.

%;D5N:LJ, the petition is here#$ D5!45!!3D. Petitionersare declared /government-owned or controlled corporationswith original charter/ which fall under the 7urisdiction of thepu#lic respondents ! and %.

! ;D3;3D.

davao vs. csc case digest

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