(b) Appointing authority.
The person empowered to appoint the members of the board of
EN BANC
G.R. No. 197146, December 06, 2016
HON. MICHAEL L. RAMA, IN HIS CAPACITY AS MAYOR OF CEBU CITY,
METROPOLITAN CEBU WATER DISTRICT (MCWD), REPRESENTED BY ITS
GENERAL MANAGER, ARMANDO PAREDES; THE BOARD OF DIRECTORS OF
MCWD, REPRESENTED BY ITS CHAIR, ELIGIO A. PACANA; JOEL MARI S. YU,
IN HIS CAPACITY AS MEMBER OF THE MCWD BOARD; AND THE
HONORABLE TOMAS R. OSMEA, IN HIS CAPACITY AS CONGRESSIONAL
REPRESENTATIVE OF THE SOUTH DISTRICT, CEBU CITY, Petitioners, v. HON.
GILBERT P. MOISES, IN HIS CAPACITY AS PRESIDING JUDGE OF REGIONAL
TRIAL COURT, BRANCH 18, CEBU CITY; AND HON. GWENDOLYN F. GARCIA,
IN HER CAPACITY AS GOVERNOR OF THE PROVINCE OF CEBU, Respondents.
DECISION
BERSAMIN, J.:
A law enacted prior to the 1987 Constitution, like a presidential decree, is presumed to be
valid and constitutional on the theory that it was carefully studied by the Legislative and
Executive Departments prior to its enactment, and determined to be in accord with the
Fundamental Law. However, the presumption of validity and constitutionality is overturned
and the law should be struck down once it becomes inconsistent with the present Constitution
and the later laws.
Antecedents
On May 25, 1973, President Ferdinand E. Marcos issued Presidential Decree No. 198
(Provincial Water Utilities Act of 1973). By virtue of P. D. No. 198, Cebu City formed the
Metro Cebu Water District (MCWD) in 1974. Thereafter, the Cities of Mandaue, Lapu-Lapu
and Talisay, and the Municipalities of Liloan, Compostela, Consolacion, and Cordova turned
over their waterworks systems and services to the MCWD. Since then, the MCWD has
distributed water and sold water services to said cities and municipalities. From 1974 to 2002,
the Cebu City Mayor appointed all the members of the MCWD Board of Directors in
accordance with Section 3 (b) of P. D. No. 198, to wit:
Section 3. Definitions. - As used in this Decree, the following words and terms shall have the
meanings herein set forth, unless a different meaning clearly appears from the context. The
definition of a word or term applies to any of its variants.
(a) Act. This is the Provincial Water Utilities Act of 1973.
Directors of a local water district, depending upon the geographic coverage and population
make-up of the particular district. In the event that more than seventy-five percent of the
total active water service connections of a local water district are within the boundary of
any city or municipality, the appointing authority shall be the mayor of that city or
municipality, as the case may be; otherwise, the appointing authority shall be the
governor of the province within which the district is located. If portions of more than one
province are included within the boundary of the district, and the appointing authority is to be
the governors then the power to appoint shall rotate between the governors involved with the
initial appointments made by the governor in whose province the greatest number of service
connections exists. (bold underscoring supplied for emphasis)
In July 2002, Cebu Provincial Governor Pablo L. Garcia wrote to the MCWD to assert his
authority and intention to appoint the members of the MCWD Board of Directors. 1 He stated
in his letter that since 1996, the active water service connections in Cebu City had been below
75% of the total active water service connection of the MCWD; that no other city or
municipality under the MCWD had reached the required percentage of 75%; and that,
accordingly, he, as the Provincial Governor of Cebu, was the appointing authority for the
members of the MCWD Board of Directors pursuant to Section 3 (b) of P. D. No. 198.
Later on, the MCWD commenced in the Regional Trial Court in Cebu City (RTC) its action
for declaratory relief seeking to declare Section 3(b) of P.D. No. 198 unconstitutional; or,
should the provision be declared valid, it should be interpreted to mean that the authority to
appoint the members of the MCWD Board of Directors belonged solely to the Cebu City
Mayor.2
The RTC (Branch 7) dismissed the action for declaratory relief without any finding and
declaration as to the proper appointing authority for the members of the MCWD Board of
Directors should none of the cities and municipalities reach 75% of the total water service
connections in the areas under the MCWD.3
In the meanwhile, the terms of two members of the MCWD Board of Directors ended,
resulting in two vacancies. To avoid a vacuum and in the exigency of the service, Provincial
Governor Gwendolyn F. Garcia and Cebu City Mayor Tomas R. Osmea jointly appointed
Atty. Adelino Sitoy and Leo Pacaa to fill the vacancies. 4However, the position of Atty. Sitoy
was deemed vacated upon his election as the Municipal Mayor of Cordova, Cebu in the 2007
elections.
Consequently, Governor Garcia commenced an action for declaratory relief to seek the
interpretation of Section 3 (b) of P.D. No. 198 on the proper appointing authority for the
members of the MCWD Board of Directors.5
It appears that on February 7, 2008, the Cebu Provincial Legal Office, upon being informed
that Mayor Osmea would be appointing Joel Mari S. Yu to replace Atty. Sitoy as a member
of the MCWD Board of Directors, formally advised in writing Cynthia A. Barrit, the MCWD
Board Secretary, to defer the submission of the list of nominees to any appointing authority
until the RTC rendered its final ruling on the issue of the proper appointing authority. 6 On
February 22, 2008, however, Mayor Osmea appointed Yu as a member of the MCWD Board
of Directors.7 Accordingly, on May 20, 2008, the RTC dismissed the action for declaratory
relief on the ground that declaratory relief became improper once there was a breach or
violation of the provision.8
On June 13, 2008, Governor Garcia filed a complaint to declare the nullity of the appointment
of Yu as a member of the MCWD Board of Directors (docketed as Civil Case No. CEB-
34459), alleging that the appointment by Mayor Osmea was illegal; that under Section 3(b)
of P.D. No. 198, it was she as the Provincial Governor of Cebu who was vested with the
authority to appoint members of the MCWD Board of Directors because the total active water
service connections of Cebu City and of the other cities and municipalities were below 75% of
the total water service connections in the area of the MCWD.9 She impleaded Mayor Osmea,
the MCWD, and Yu as defendants.
In his answer, Mayor Osmea contended that the authority to appoint the members of the
MCWD Board of Directors solely belonged to him; that since the creation of the MCWD in
1974, it was the Cebu City Mayor who had been appointing the members of the MCWD Board
of Directors; that the Province of Cebu had not invested or participated in the creation of the
MCWD; and that Cebu City, being a highly urbanized city (HUC), was independent from the
Province of Cebu under the provisions on local autonomy of the 1987 Constitution. 10
The RTC (Branch 18), to which the case was raffled, required the parties to submit their
memorandum.
In their joint memorandum, Osmea and Yu posited that the Province of Cebu did not
participate in the organization of the MCWD; that the words and sentences of Section 3(b) of
P.D. No. 198 should not be read and understood or interpreted literally; and that the case
should be dismissed because: (1) Section 3(b) of P.D. No. 198 was unconstitutional for being
arbitrary and unreasonable; (2) Governor Garcia had no authority to appoint any members of
the MCWD Board of Directors; and (3) that the Mayor of the city or municipality having the
majority of water connections within the area under the MCWD had the power to appoint the
members of the MCWD Board of Directors.11
On November 16, 2010, the RTC rendered the assailed judgment declaring the appointment of
Yu as illegal and void,12 holding as follows:
The questioned provision, paragraph (b) of Section 3 of P.O. 198 is clear enough that it needs
no interpretation. It expressly states in unequivocal terms the appointing authority in the water
district's board of directors --- if more than seventy-five percent of the total active water
service connections of a local water district are within the boundary of any city or
municipality, the appointing authority shall be the mayor of the city or municipality, as the
case may be; otherwise, the appointing authority shall be the governor of the province within
which the district is located.
It has not been belied by defendants that the active water service connections of Cebu City in
the Metropolitan Cebu Water District (MCWD), at 61.28%, have gone below the required
75% required by law for the city mayor to have the authority to appoint members of the board
of directors of the water district. Lacking such percentage requisite, the appointing power is
now vested with the governor of the Province of Cebu. While it may be true that the governor
had not participated in organizing MCWD and neither did the Province of Cebu invest in
establishing waterworks in the component local governments, the law, however, does not
impose any condition or restriction in transferring the power to the governor to appoint
members of the board of directors when the percentage falls below 75%. Thus, there is no
doubt that when any of the water district's participating city or municipality could not obtain
75% of the active water service connections, the governor shall appoint the members of the
board of directors of the water district, whether it is a participant or not, in its organization.
As to the constitutionality of the questioned provision, the Court finds that Sec. 3 of P.O. 198
does not violate the Constitution or the Local Government Code. Vesting the authority in the
governor to appoint a member of the board of directors of a water district is not intruding into
the affairs of the highly urbanized cities and component cities which comprise the district, and
neither is it a threat to their autonomy. It does not interfere with their powers and functions
and neither can it be considered an exercise of the provincial government's supervisory
powers. At most, it is simply giving the authority to appoint the head of the government unit
(the governor) where all the members of the water district are geographically located, and only
when none of these cities and municipalities has the required 75% of the active water service
connections. Nevertheless, the issue is not whether the governor took any part in organizing
the water district or has contributed to its formation, but that by law, she has been made the
appointing authority even if she has no participation or involvement in the cooperative effort
of the members of the water district. This may not be the most expedient and appropriate
solution, but still, it is not illegal. As to why this is so is a question only our lawmakers could
answer.
All presumptions are indulged in favor of constitutionality, one who attacks a statute, alleging
constitutionality must prove its invalidity beyond a reasonable doubt; that a law may work
hardship does not render it unconstitutional, that if any reasonable basis may be conceived
which supports the statute, it will be upheld and the challenger must negate all possible bases;
that the courts are not concerned with the wisdom, justice, policy or expediency of a statute,
and that a liberal interpretation of the constitution in favour of the constitutionality of
legislation should be adopted.
Notably, among the admissions found in the Answer for defendants Yu and MCWD states: "x
x x with respect to the two (2) vacancies in the Board of MCWD and that joint appointment
was made by the plaintiff and defendant Mayor Osmea to Atty. Adelino Sitoy and Mr. Eligio
Pacana." The Court surmises from this statement that as early as the previous appointments
(of Mr. Pacana and Atty. Sitoy) defendants have already recognized the appointing authority
of the governor for members of the MCWD board of directors, considering Cebu City's failure
to reach the 75% benchmark on active water service connections.
In sum, the Court has not been able to find any constitutional infirmity in the questioned
provision (Sec. 3) of Presidential Decree No. 198. The fundamental criterion is that all
reasonable doubts should be resolved in favor of the constitutionality of a statute. Every law
has in its favor the presumption of constitutionality. For a law to be nullified, there must be
shown that there is a clear and unequivocal breach of the Constitution. The ground for nullity
must be clear and beyond reasonable doubt. Those who seek to declare the law, or parts
thereof unconstitutional, must clearly establish the basis therefore. Otherwise, the arguments
fall short.
Based on the grounds raised by defendants to challenge the constitutionality of Section 3 of
P.D. 198, the Court finds that defendants have failed to overcome the presumption of
constitutionality of the law. As to whether the questioned section constitutes a wise legislation,
considering the issues being raised by petitioners, is for Congress to determine.
WHEREFORE, Judgment is hereby rendered in favour of plaintiff and against defendants,
finding the appointment of defendant Joel Mari S. Yu as member of the Metropolitan Cebu
Water District (MCWD) as illegal, null and void.13
Mayor Osmea and Yu jointly moved for reconsideration,14 but the RTC denied their
motion.15
Issues

Hence, the petitioners have instituted this special civil action for certiorari,16 contending that:
I.
THE RESPONDENT COURT ABDICATED ITS CONSTITUTIONAL DUTY IN
REFUSING TO DELVE ON THE ISSUE OF CONSTITUTIONALITY.
II.
THE JUDGMENT IS VOID ON ITS FACE BECAUSE OF CLEAR
CONSTITUTIONAL VIOLATIONS APPARENT BY A MERE READING OF THE
DECREE.
III.
THE JUDGMENT VIOLATES DUE PROCESS AND THE EQUAL PROTECTION
CLAUSE OF THE CONSTITUTION.17
Ruling of the Court
The petition for certiorari is granted.
1.
Preliminary Matter:
Yu's expiration of term did not render case moot and academic
We note that respondent Yu's term as a member of the MCWD Board of Directors expired on
December 31, 2012.18 However, this fact does not justify the dismissal of the petition on the
ground of its being rendered moot and academic. The case should still be decided, despite the
intervening developments that could have rendered the case moot and academic, because
public interest is involved, and because the issue is capable of repetition yet evading review. 19
For sure, the appointment by the proper official of the individuals to manage the system of
water distribution and service for the consumers residing in the concerned cities and
municipalities involves the interest of their populations and the general public affected by the
services of the MCWD as a public utility. Moreover, the question on the proper appointing
authority for the members of the MCWD Board of Directors should none of the cities and
municipalities have at least 75% of the water consumers will not be definitively resolved with
finality if we dismiss the petition on the ground of mootness. It is notable that the two cases
for declaratory relief filed for the purpose of determining the proper appointing authority were
dismissed without any definitive declaration or ultimate determination of the merits of the
issue. The issue festers. Hence, the Court needs to decide it now, not later.
2.
First Issue:
RTC explained its holding of the assailed provision as valid and constitutional but it
thereby erred nonetheless
The petitioners take the RTC to task for not explaining why it held Section 3(b) of P.D. No.
198 to be not violative of the constitutional provision on local autonomy and HUCs, and why
it only opined that the question of constitutionality of the provision should be left to Congress;
that it did not determine whether the requisites for raising the constitutional issue had been
met; that it did not discuss the reasons for holding that the issue about Section 3(b) of P.D. No.
198 was a political question; that no political question was involved because what was being
inquired into was not the wisdom of the provision but its validity; and that because it did not
perform its constitutional duty of reviewing the provision, its judgment was void. 20
The petitioners are mistaken on the first issue. The records show that the RTC, which
indisputably had the power and the duty to determine and decide the issue of the
constitutionality of Section 3(b) of P.D. No. 198, 21 fully discharged its duty. In its assailed
decision of November 16, 2010, the RTC ruled as follows:
As to the constitutionality of the questioned provision, the Court finds that Sec. 3 of P.D. 198
does not violate the Constitution or the Local Government Code. Vesting the authority in the
governor to appoint a member of the board of directors of a water district is not intruding into
the affairs of the highly urbanized cities and component cities which comprise the district, and
neither is it a threat to their autonomy. It does not interfere with their powers and functions
and neither can it be considered an exercise of the provincial government's supervisory
powers. At most, it is simply giving the authority to appoint the head oftbe government unit
(the governor) where all the members of the water district are geographically located, and only
when none of these cities and municipalities has the required 75% of the active water service
connections. Nevertheless, the issue is not whether the governor took any part in organizing
the water district or has contributed to its formation, but that by law, she has been made the
appointing authority even if she has no participation or involvement in the cooperative effort
of the members of the water district. This may not be the most expedient and appropriate
solution, but still, it is not illegal. As to why this is so is a question only our lawmakers could
answer.
All presumptions are indulged in favor of constitutionality; one who attacks a statute, alleging
constitutionality must prove its invalidity beyond a reasonable doubt; that a law may work
hardship does not render it unconstitutional; that if any reasonable basis may be conceived
which supports the statute, it will be upheld and the challenger must negate all possible bases,
that the courts are not concerned with the wisdom, justice, policy or expediency of a statute;
and that a liberal interpretation of the constitution in favor of the constitutionality of
legislation should be adopted.
xxxx
In sum, the Court has not been able to find any constitutional infirmity in the questioned
provision (Sec. 3) of Presidential Decree No. 198. The fundamental criterion is that all
reasonable doubts should be resolved in favor of the constitutionality of a statute. Every law
has in its favor the presumption of constitutionality. For a law to be nullified, there must be
shown that there is a clear and unequivocal breach of the Constitution. The ground for nullity
must be clear and beyond reasonable doubt. Those who seek to declare the law, or parts
thereof, unconstitutional, must clearly establish the basis therefore. Otherwise, the arguments
fall short.22
Nonetheless, the petitioners rightly contend that the RTC improperly regarded the matter about
Section 3(b) of P.D. No. 198 as a political question; hence, not justiciable. It was not.
Political questions refer to "those questions which, under the Constitution, are to be decided by
the people in their sovereign capacity; or in regard to which full discretionary authority has
been delegated to the legislature or executive branch of the government."23 They are "neatly
associated with the wisdom" of a particular act.24
The difference between the political and the justiciable questions has been noted in Sanidad v.
Commission on Elections,25cralawred as follows:
x x x The implementing Presidential Decree Nos. 991, 1031, and 1033, which commonly
purport to have the force and effect of legislation are assailed as invalid, thus the issue of the
validity of said Decrees is plainly a justiciable one, within the competence of this Court to
pass upon. Section 2 (2), Article X of the new Constitution provides: "All cases involving the
constitutionality of a treaty, executive agreement, or law may shall be heard and decided by
the Supreme Court en bane and no treaty, executive agreement, or law may be declared
unconstitutional without the concurrence of at least ten Members...." The Supreme Court has
the last word in the construction not only of treaties and statutes, but also of the Constitution
itself. The amending, like all other powers organized in the Constitution, is in form a delegated
and hence a limited power, so that the Supreme Court is vested with that authority to
determine whether that power has been discharged within its limits. (Emphasis supplied)
The petitioners have averred the unconstitutionality or invalidity of Section3 (b) of P.D. No
198 based on the provision's arbitrariness in denying substantive due process and equal
protection to the affected local government units (LGUs). Such issue, being justiciable, comes
within the power of judicial review. As such, the RTC skirted its duty of judicial review by
improperly relying on the political question doctrine. It should have instead adhered to the
pronouncement in Estrada v. Desierto,26 to wit:
To a great degree, the 1987 Constitution has narrowed the reach of the political question
doctrine when it expanded the power of judicial review of this court not only to settle actual
controversies involving rights which are legally demandable and enforceable but also to
determine whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of government. Heretofore,
the judiciary has focused on the "thou shalt not's" of the Constitution directed against the
exercise of its jurisdiction. With the new provision, however, courts are given a greater
prerogative to determine what it can do to prevent grave abuse of discretion amounting to lack
or excess of jurisdiction on the part of any branch or instrumentality of government. Clearly,
the new provision did not just grant the Court power of doing nothing. x x x (Italics omitted)
3.
Second Issue:
Section 3(b) of P.D. 198 is already superseded
The petitioners argue that the MCWD became a water district by the pooling of the water
utilities belonging to several HUCs and municipalities; that the active water connections in the
MCWD have been distributed as follows: Cebu City: 61.28%; Mandaue City: 16%; Lapulapu
City: 6.8%; Talisay City and the Municipalities of Liloan, Consolacion, Compostela, and
Cordova: 16.92%; that Section 3 (b) of P.D. No. 198 was unconstitutional on its face for being
unreasonable and arbitrary because the determination of who would exercise the power to
appoint the members of the MCWD Board of Directors was thereby made to depend on the
shifting number of water users in the water district's component LGUs; that the provision on
the authority of the Provincial Governor to appoint in cases where the water connections of
any of the water district's cities or municipalities were below 75% was arbitrary for not
distinguishing whether or not the province had contributed any waterworks to the water
district; that the provision did not consider whether a city or municipality comprised the
majority or more of the water consumers; that the provision was irrational as it gave the
Provincial Governor the power to appoint regardless of whether the province had participated
in the organization of the water district or not; that in a democracy, the principle that if power
or authority was conferred through determination of numerical figures then the numerical
superiority or the rule of the majority should apply; that the rule of the majority was being
applied in electing government leaders as well as in choosing the leaders in the private sector;
that the provision violated the rule of the majority; that at the time of the filing of this case, the
majority of MCWD water service connections were in Cebu City (61.28%); and that the
appointing power should necessarily remain in the City Mayor of Cebu City because the
appointing power was based on the number of water service connections.
The petitioners asseverate that the provision or any part of P.D. No. 198 did not state any
reason for departing from the rule of the majority; that the provision failed reasonableness as a
standard of substantive due process; that the appointing authority should be the mayor of the
city or municipality having the majority of the water connections; that if such majority could
not be attained, there must be a power sharing scheme among those having the largest number
of water connections conformably with the rule of the majority; that the temporary alternative
was the Board of Directors themselves, who, under Section 10 of P.D. No. 198, could appoint
upon failure of the appointing authority to do so; that the assailed provision was void on its
face for violating the constitutional provision on local autonomy and independence of HUCs
under Article X of the 1987 Constitution; that the provision unduly interfered with the internal
affairs of Cebu City, and diminished the autonomy of the LGUs; that the provision
undermined the independence of HUCs; that both the Office of the Government Corporate
Counsel and the Office of the Solicitor General have opined that because Cebu City was an
HUC, the City Mayor of Cebu City should retain the right to appoint the members of the
MCWD Board of Directors; that the chief executive of the LGU having the majority of water
consumers was in the best position to exercise the discretion of choosing the most competent
persons who could best serve the constituents; that because the largest number of water
consumers were in Cebu City, any intrusion on the City Mayor's power to appoint would
violate its independence and autonomy; that the Province of Cebu could not exercise powers
that affected the constituents of HUCs; that providing water to constituents was the sole
responsibility of the concerned LGU; that the water utility of the LGU was a patrimonial
property that was not for public use; that as such, the operation, ownership and management of
the public utility should belong to the LGU; and that the operation of the water utilities
involved the private rights of the LGUs that could not be amended or altered by a statute.27
The Court opines that Section 3(b) of P.D. No. 198 should be partially struck down for being
repugnant to the local autonomy granted by the 1987 Constitution to LGUs, and for being
inconsistent with R.A. No. 7160 (1991 Local Government Code) and related laws on local
governments.
P.D. No. 198 - issued by President Marcos in the exercise of his legislative power during the
period of Martial Law proclaimed under the 1973 Constitution - relevantly provided:
MALACAANG
Manila
PRESIDENTIAL DECREE No. 198 May 25, 1973
DECLARING A NATIONAL POLICY FAVORING LOCAL OPERATION AND
CONTROL OF WATER SYSTEMS; AUTHORIZING THE FORMATION OF LOCAL
WATER DISTRICTS AND PROVIDING FOR THE GOVERNMENT AND
ADMINISTRATION OF SUCH DISTRICTS; CHARTERING A NATIONAL
ADMINISTRATION TO FACILITATE IMPROVEMENT OF LOCAL WATER UTILITIES;
GRANTING SAID ADMINISTRATION SUCH POWERS AS ARE NECESSARY TO
OPTIMIZE PUBLIC SERVICE FROM WATER UTILITY OPERATIONS, AND FOR
OTHER PURPOSES
WHEREAS, one of the pre-requisites to the orderly and well balanced growth of urban areas
is an effective system of local utilities, the absence of which is recognized as a deterrent to
economic growth, a hazard to public health and an irritant to the spirit and well-being of the
citizenry;
WHEREAS, domestic water systems and sanitary sewers are two of the most basic and
essential elements of local utility system, which, with a few exceptions, do not exist in
provincial areas in the Philippines;
WHEREAS, existing domestic water utilities are not meeting the needs of the communities
they serve; water quality is unsatisfactory; pressure is inadequate; and reliability of service is
poor; in fact, many persons receive no piped water service whatsoever;
WHEREAS, conditions of service continue to worsen for two apparent reasons, namely: (1)
that key element of existing systems are deteriorating faster than they are being maintained or
replaced, and (2) that they are not being expanded at a rate sufficient to match population
growth; and
WHEREAS, local water utilities should be locally-controlled and managed, as well as have
support on the national level in the area of technical advisory services and financing;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue
of the powers vested in my by the Constitution, as Commander-in-Chief of all the Armed
Forces of the Philippines, and pursuant to Proclamation No. 1081 dated September 21, 1972
and General Order No. 1 dated September 22, 1972, as amended, do hereby decree, order and
make as part of the law of the land the following measure:
TITLE I
PRELIMINARY PROVISIONS
Section 1. Title. - This Decree shall be known and referred to as the "Provincial Water
Utilities Act of 1973."
Section 2. Declaration of Policy. - The creation, operation, maintenance and expansion of
reliable and economically viable and sound water supply and wastewater disposal system for
population centers of the Philippines is hereby declared to be an objective of national policy of
high priority. For purpose of achieving said objective, the formulation and operation of
independent, locally controlled public water districts is found and declared to be the most
feasible and favored institutional structure. To this end, it is hereby declared to be in the
national interest that said districts be formed and that local water supply and wastewater
disposal systems be operated by and through such districts to the greatest extent practicable.
To encourage the formulation of such local water districts and the transfer thereto to existing
water supply and wastewater disposal facilities, this Decree provides the general act the
authority for the formation thereof, on a local option basis. It is likewise declared appropriate,
necessary and advisable that all funding requirements for such local water systems, other than
those provided by local revenues, should be channeled through and administered by an
institution on the national level, which institution shall be responsible for and have authority to
promulgate and enforce certain rules and regulations to achieve national goals and the
objective of providing public waterworks services to the greatest number at least cost, to effect
system integration or joint investments and operations whenever economically warranted and
to assure the maintenance of uniform standards, training of personnel and the adoption of
sound operating and accounting procedures.
Section 3. Definitions. - As used in this Decree, the following words and terms shall have the
meanings herein set forth, unless a different meaning clearly appears from the context. The
definition of a word or term applies to any of its variants.
(a) Act. This Provincial Water Utilities Act of 1973.
(b) Appointing authority. The person empowered to appoint the members of the Board of
Directors of a local water district, depending upon the geographic coverage and population
make-up of the particular district. In the event that more than seventy-five percent of the
total active water service connections of a local water district are within the boundary of
any city or municipality, the appointing authority shall be the mayor of that city or
municipality, as the case may be; otherwise, the appointing authority shall be the
governor of the province within which the district is located. If portions of more than one
province are included within the boundary of the district, and the appointing authority is to be
the governors then the power to appoint shall rotate between the governors involved with the
initial appointments made by the governor in whose province the greatest number of service
connections exists. (Emphasis supplied)
xxxx
The enactment of P.D. No. 198 on May 25, 1973 was prior to the enactment on December 22,
1979 of Batas Pambansa Blg. 51 (An Act Providing for the Elective or Appointive Positions in
Various Local Governments and for Other Purposes) and antedated as well the effectivity of
the 1991 Local Government Code on January 1, 1992. At the time of the enactment of P.D.
No. 198, Cebu City was still a component city of Cebu Province. Section 328 of B.P. Blg. 51
reclassified the cities of the Philippines based on well-defined criteria. Cebu City thus became
an HUC, which immediately meant that its inhabitants were ineligible to vote for the officials
of Cebu Province. In accordance with Section 12 of Article X of the 1987 Constitution, cities
that are highly urbanized, as determined by law, and component cities whose charters prohibit
their voters from voting for provincial elective officials, shall be independent of the province,
but the voters of component cities within a province, whose charters contain no such
prohibition, shall not be deprived of their right to vote for elective provincial officials. Later
on, Cebu City, already an HUC, was further effectively rendered independent fromCebu
Province pursuant to Section 29 of the 1991 Local Government Code, viz.:
Section 29. Provincial Relations with Component Cities and Municipalities. - The province,
through the governor, shall ensure that every component city and municipality within its
territorial jurisdiction acts within the scope of its prescribed powers and functions. Highly
urbanized cities and independent component cities shall be independent of the
province. (Emphasis supplied)
Hence, all matters relating to its administration, powers and functions were exercised through
its local executives led by the City Mayor, subject to the President's retained power of general
supervision over provinces, HUCs, and independent component cities pursuant to and in
accordance with Section 2529 of the 1991 Local Government Code, a law enacted for the
purpose of strengthening the autonomy of the LGUs in accordance with the 1987 Constitution.
Article X of the 1987 Constitution guarantees and promotes the administrative and fiscal
autonomy of the LGUs.30 The foregoing statutory enactments enunciate and implement the
local autonomy provisions explicitly recognized under the 1987 Constitution. To conform with
the guarantees of the Constitution in favor of the autonomy of the LGUs, therefore, it becomes
the duty of the Court to declare and pronounce Section 3(b) of P.D. No. 198 as already
partially unconstitutional. We note that this pronouncement is also advocated by the National
Government, as shown in the comment of the Solicitor General.31
In Navarro v. Ermita,32 the Court has pointed out that the central policy considerations in the
creation of local government units are economic viability, efficient administration, and
capability to deliver basic services to their constituents. These considerations must be given
importance as they ensure the success of local autonomy. It is accepted that the LGUs, more
than the National Government itself, know the needs of their constituents, and cater to such
needs based on the particular circumstances of their localities. Where a particular law or
statute affecting the LGUs infringes on their autonomy, and on their rights and powers to
efficiently and effectively address the needs of their constituents, we should lean in favor of
their autonomy, their rights and their powers.
Water and its efficient supply are among the primary concerns of every LGU. Issues that tend
to reduce or diminish the authority of the boards of directors to manage the water districts are
imbued with public interest. Bearing this in mind, and recalling that the MCWD had been
established from the erstwhile Osmea Waterworks Systems (OWS) without any investment
or contribution of funds and material from the Province of Cebu towards the creation and
maintenance of OWS and the MCWD,33 and considering that it had always been the City
Mayor of the City of Cebu who appointed the members of the MCWD Board of Directors
regardless of the percentage of the water subscribers, our pronouncement herein rests on firm
ground.
4.
Third Issue:
Section 3(b) of P.D. 198 is unconstitutional for violating the Due Process Clause and the
Equal Protection Clause
The petitioners assert that Section 3(b) of P.D. No. 198, being unfair, violated substantive due
process; that Governor Garcia could not determine the water needs of each of the LGUs within
the MCWD; that the provision allowed inequality of treatment of the cities and municipalities
in relation to the province, and thus violated the Equal Protection Clause of the Constitution;
that the provision unduly deprived Cebu City of the power to determine the membership in the
MCWD Board of Directors despite Cebu City having the majority of the water service
connections; that the Province of Cebu was given unreasonable and unwarranted benefit
despite Cebu City being independent from the Province of Cebu; that Section 3(b) of P.D. No.
198 did not distinguish whether the province contributed any resource to the water district or
not; that under the provision, if two or more provinces contributed to the water district, they
were not subject to the 75% requirement to avail of the power of appointment, indicating that
the power to appoint devolved only in the provinces; that this violated the guarantee of
equality of treatment in favor of the participating LGUs; that the provision created a privileged
class (the provinces) without any justification in reason; and that "the classification is not
germane to the purpose of the law and is not based on substantial distinctions that make real
differences."34
Substantive due process "requires that the law itself, not merely the procedures by which the
law would be enforced, is fair, reasonable, and just."35 It demands the intrinsic validity of the
law in interfering with the rights of the person to life, liberty or property. In short, to be
determined is whether the law has a valid governmental objective, like the interest of the
public as against that of a particular class.36
On the other hand, the principle of equal protection enshrined in the Constitution does not
require the territorial uniformity of laws. According to Tiu v. Court of Appeals,37 the
fundamental right of equal protection of the law is not absolute, but subject to reasonable
classification. Classification, to be valid, must: (1) rest on substantial distinctions; (2) be
germane to the purpose of the law; (3) not be limited to existing conditions only; and (4) apply
equally to all members of the same class.
We opine that although Section 3(b) of P.D. No. 198 provided for substantial distinction and
was germane to the purpose of P.D. No. 198 when it was enacted in 1973, the intervening
reclassification of the City of Cebu into an HUC and the subsequent enactment of the 1991
Local Government Code rendered the continued application of Section 3(b) in disregard of the
reclassification unreasonable and unfair. Clearly, the assailed provision no longer provided for
substantial distinction because, firstly, it ignored that the MCWD was built without the
participation of the provincial government; secondly, it failed to consider that the MCWD
existed to serve the community that represents the needs of the majority of the active water
service connections; and, thirdly, the main objective of the decree was to improve the water
service while keeping up with the needs of the growing population.
The Whereas Clauses of P.D. No. 198 essentially state the raison d'etre of its enactment, to
wit:
WHEREAS, existing domestic water utilities are not meeting the needs of the
communities they serve; water quality is unsatisfactory; pressure is inadequate; and reliability
of service is poor; in fact, many persons receive no piped water service whatsoever;
WHEREAS, conditions of service continue to worsen for two apparent reasons, namely: (1)
that key element of existing systems are deteriorating faster than they are being maintained or
replaced, and (2) that they are not being expanded at a rate sufficient to match population
growth; and
WHEREAS, local water utilities should be locally-controlled and managed, as well as have
support on the national level in the area of technical advisory services and financing;
(bold emphasis supplied)
Verily, the decree was enacted to provide adequate, quality and reliable water and waste-water
services to meet the needs of the local communities and their growing populations. The needs
of the communities served were paramount. Hence, we deem it to be inconsistent with the true
objectives of the decree to still leave to the provincial governor the appointing authority if the
provincial governor had administrative supervision only over municipalities and component
cities accounting for 16.92% of the active water service connection in the MCWD. In
comparison, the City of Cebu had 61.28%38 of the active service water connections; Mandaue,
another HUC, 16%; and Lapu Lapu City, another HUC, 6.8%. There is no denying that the
MCWD has been primarily serving the needs of Cebu City. Although it is impermissible to
inquire into why the decree set 75% as the marker for determining the proper appointing
authority, the provision has meanwhile become unfair for ignoring the needs and
circumstances of Cebu City as the LGU accounting for the majority of the active water service
connections, and whose constituency stood to be the most affected by the decisions made by
the MCWD's Board of Directors. Indeed, the classification has truly ceased to be germane or
related to the main objective for the enactment of P.D. No. 198 in 1973.
Grave abuse of discretion means either that the judicial or quasi judicial power was exercised
in an arbitrary or despotic manner by reason of passion or personal hostility, or that the
respondent judge, tribunal or board evaded a positive duty, or virtually refused to perform the
duty enjoined or to act in contemplation of law, such as when such judge, tribunal or board
exercising judicial or quasi-judicial powers acted in a capricious or whimsical manner as to be
equivalent to lack of jurisdiction. Mere abuse of discretion is not enough to warrant the
issuance of the writ. The abuse of discretion must be grave.39
Under the foregoing circumstances, therefore, the RTC gravely abused its discretion in
upholding Section 3(b) of P.D. No. 198. It thereby utterly disregarded the clear policies
favoring local autonomy enshrined in the 1987 Constitution and effected by the 1991 Local
Government Code and related subsequent statutory enactments, and for being violative of the
Due Process Clause and the Equal Protection Clause of the 1987 Constitution.

WHEREFORE, we GRANT the petition for certiorari; ANNUL and SET ASIDE the
decision rendered in Civil Case No. CEB-34459 on November 16, 2010 by the Regional Trial
Court, Branch 18, in Cebu City; and DECLARE as UNCONSTITUTIONAL Section 3(b) of
Presidential Decree No. 198 to the extent that it applies to highly urbanized cities like the City
of Cebu and to component cities with charters expressly providing for their voters not to be
eligible to vote for the officials of the provinces to which they belong for being in violation of
the express policy of the 1987 Constitution on local autonomy, the 1991 Local Government
Codeand subsequent statutory enactments, and for being also in violation of the Due Process
Clause and the Equal Protection Clause.

ACCORDINGLY, the Mayor of the the City of Cebu is declared to be the appointing
authority of the Members of the Board of Directors of the Metro Cebu Water District.

No pronouncement on costs of suit.

SO ORDERED. cralawlawlibrary