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Davao vs. CSC Case Digest

Davao vs. CSC Case Digest
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  G.R. No. 95237-38 September 13, 1991DAVAO CITY WATR DISTRICT, CAGAYAN D ORO CITY WATR DISTRICT, !TRO C # WATR DISTRICT, $A! OANGA CITY WATR DISTRICT, %YT !TRO WATR DISTRICT, #T#AN CITY WATR DISTRICT, CA!ARINS NORT WATR DISTRICT, %AG#NA WATR DISTRICT, D#!AG#T CITY WATR DISTRICT, %A #NIONWATR DISTRICT, AY AY WATR DISTRICT, !TRO %INGAYN WATR DISTRICT, #RDANTA WATR DISTRICT, COTA ATO CITY WATR DISTRICT, !ARAWI WATR DISTRICT, TAG#! WATR DISTRICT, DIGOS WATR DISTRICT, IS%IG WATR DISTRICT, &'( !CA#AYAN WATR DISTRICT, petitioners, vs. CIVI% SRVIC CO!!ISSION, &'( CO!!ISSION ON A#DIT, respondents . Rodolfo S. De Jesus for petitioners.Evalyn H. Itaas-Fetalino, Rogelio C. Limare and Daisy . !ar ia-#ing$on for CSC.   !DIA%DA, J  .)  p Whether or not the Local Water Districts formed and created pursuant to the provisions of Presidential Decree No. 198, as amended, are government-owned or controlled corporations with srcinal charter falling under the ivil !ervice Law and or covered #$ the visitorial power of the ommission on %udit is the issue which the petitioners entreat this ourt, en %an   , to shed light on.Petitioners are among the more than five hundred &'(() water districts e*isting throughout the countr$ formed pursuant to the provisions of Presidential Decree No. 198, as amended #$ Presidential Decrees Nos. +8 and 1+9, otherwise nown as the /Provincial Water 0tilities %ct of 19+./Presidential Decree No. 198 was issued #$ the then President 2erdinand 3. 4arcos #$ virtue of his legislative power under Proclamation No. 1(81. 5t authori6ed the different local legislative #odies to form and create their respective water districts through a resolution the$ will pass su#7ect to the guidelines, 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%), and granted with regulator$ power necessar$ to optimi6e pu#lic service from water utilities operations.he respondents, on the other hand, are the ivil !ervice ommission &!) and the ommission on %udit &%), #oth government agencies and represented in this case #$ the !olicitor :eneral.n %pril 1+, 1989, this ourt ruled in the case of #an&ay 'ater Distri t v. !a%aton, et al.  &:.;. No. +<, 1+< !;% <')=!ignificantl$, %rticle 5> &?), !ection <&1) of the 198+ onstitution provides that the ivil !ervice em#races all #ranches, su#divisions, instrumentalities, and agencies of the government, including government-owned and controlled corporations with srcinal charters. 5nasmuch as PD No. 198, as amended, is thesrcinal charter of the petitioner, an7a$ Water District, and respondent arlac Water District and all water districts in the countr$, the$ come under the coverage of the ivil !ervice Law, rules and regulations. &!ec. ', %rt. @555 and !ec. +, %rt. 5> of PD No. 8(+). %s an offshoot of the immediatel$ cited ruling, the !. issued ;esolution No. 9(-'+', the dispositive portion of which reads=NW A3;32;3, in view of all the foregoing, the ommission resolved, as it here#$ resolves to rule that Local Water Districts, #eing Buasi-pu#lic corporations created #$ law to perform pu#lic services and suppl$ pu#lic wants, the matter of hiring and firing of its officers and emplo$ees should #e governed #$ the ivil !ervice Law, rules and regulations. Aenceforth, all appointmentsof personnel of the different local water districts in the countr$ shall #e su#mitted to the ommission for appropriate action. & Rollo . p. <<).Aowever, on 4a$ 1, 199(, in :.;. No. 8'+(, entitled ()etro Iloilo 'ater Distri t v. *ational La%or Relations Commission, et al.,( the hird Division of this ourt ruled in a minute resolution=*** *** ***onsidering that PD 198 is a general legislation empowering and or authori6ing government agencies and entities to create water districts, said PD 198 cannot #e considered as the charter itself creating the Water District. Pu#lic respondent NL; did not commit an$ grave a#use of discretion in holding that the operative act, that created the 4etro 5loilo Water District was the resolution of the !angguniang Panglunsod of 5loilo it$. Aence, the emplo$ees of Water Districts are not covered #$ ivil !ervice Laws as the latter do &sic) not have srcinal charters.5n adherence to the 7ust cited ruling, the ! suspended the implementation of ;esolution No. 9(-'+' #$ issuing ;esolutionNo. 9(-++( which reads=*** *** ***NW, A3;32;3, in view of all the foregoing, the ommission resolved to rule, as it here#$ rules, that the implementation of !. ;esolution No. '+' datedCune <+, 199( #e deferred in the meantime pending clarification from the !upreme ourt are regards its conflicting decisions in the cases of #an&ay 'ater Distri t v. !a%aton   and    )etro Iloilo 'ater Distri t v. *ational La%or Relations Commission.  &p. <, Rollo )5n the meanwhile, there e*ists a divergence of opinions #etween % on one hand, and the &LW0%), on the other hand, with respect to the authorit$ of % to audit the different water districts.% opined that the audit of the water districts is simpl$ an actof discharging the visitorial power vested in them #$ law &letter of % to LW0% dated %ugust 1, 198', pp. <9-(, Rollo ).n the other hand, LW0% maintained that onl$ those water districts with su#sidies from the government fall within the %s 7urisdiction and onl$ to the e*tent of the amount of such su#sidies, pursuant to the provision of the :overnment  %uditing ode of the Phils.5t is to #e o#served that 7ust lie the Buestion of whether the emplo$ees of the water districts falls under the coverage of theivil !ervice Law, the conflict #etween the water districts and the % is also dependent on the final determination of whether or not water districts are government-owned or controlled corporations with srcinal charter. he reason #ehindthis is !ec. <&1), %rticle 5>-D of the 198+ constitution which reads=  !ec. <&1) he ommission on %udit shall have the power, authorit$, and dut$ to e*amine, audit, and settle all accounts pertaining to the revenue and receipts of, and e*penditures or uses of funds and propert$, ownedor held in trust #$, or pertaining to the :overnment, or an$ of its su#divisions, agencies or instrumentalities, in luding government-o+ned or ontrolled orporations+it srcinal arters , and on a post audit #asis. &emphasis supplied)Petitioners main argument is that the$ are private corporationswithout srcinal charter, hence the$ are outside the 7urisdiction of respondents ! and %. ;eliance is made on the 4etro 5loilo case which declared petitioners as Buasi-pu#lic corporations created #$ virtue of PD 198, a general legislation which cannot #e considered as the charter itself creating the water districts. Aolding on to this ruling, petitioners contend that the$ are private corporations which are onl$ regarded as Buasi-pu#lic or semi-pu#lic #ecause the$ serve pu#lic interest and convenience and that since PD 198 is a general legislation, the operative act which created a water district is not the said decree #ut the resolution of the sanggunian concerned. %fter a fair consideration of the parties arguments coupled witha careful stud$ of the applica#le laws as well as the constitutional provisions involved, We rule against the petitioners and reiterate ur ruling in an7a$ case declaring water districts government-owned or controlled corporations with srcinal charter. %s earl$ as aguio 'ater Distri t v. #ra&ano, et al., &:.;. No. '<8, 2e#ruar$ <(, 198, 1<+ !;% +(), We alread$ ruled that a water district is a corporation created pursuant to a special law E P.D. No. 198, as amended, and as such its officers and emplo$ees are covered #$ the ivil !ervice Law.5n another case &Aagono$ Water District v. NL;, :.;. No. 819(, %ugust 1, 1988, 1' !;% <+<), We ruled once againthat local water districts are Buasi-pu#lic corporations whose emplo$ees #elong to the ivil !ervice. he ourts pronoucement in this case, as e*tensivel$ Buoted in the #an&ay  case, supra,  partl$ reads=/he onl$ Buestion here is whether or not local water districts are government owned or controlled corporations whose emplo$ees are su#7ect to the provisions of the ivil !ervice Law. he La#or %r#iter asserted  7urisdiction over the alleged illegal dismissal of private respondent @illanueva #$ rel$ing on !ection <' of Presidential decree No. 198, nown as the Provincial Water 0tilities  %ct of 19+/ which went onto effect in <' 4a$ 19+, and which provides as follows= Eemption from Civil Servi e . E he district and its emplo$ees, #eing engaged in a proprietar$ function, are here#$ e*empt from the provisions of the ivil !ervice Law. ollective ?argaining shall #e availa#le onl$ to personnel #elow supervisor$ levels= rovided, o+ever  , hat the total of all salaries, wages emoluments, #enefits or other compensation paid to all emplo$ees in an$ month shall not e*ceed fift$ percent &'(F) of average net month$ revenue. !aid net revenue representing income from water sales and sewerage service charges, less pro-rata share of de#t service and e*penses for fuel or energ$for pumping during the preceding fiscal $ear.he La#or %r#iter failed to tae into accout the provisions of Presidential Decree No. 1+9, which wentinto effect on 11 Cune 19+8, P.D. No. 1+9, wiped awa$!ection <' of PD 198 Buoted a#ove, and !ection < of PD 198 was renum#ered as !ection <' in the followingmanner=!ection < of the same decree PD 198 is here#$ amended to read as !ection <' as follows= !ection <'.  /utori$ation . E he district ma$ e*ercise all the powers which are e*pressl$ granted #$ this itle or which are necessaril$ implied from or incidental to the powers and purposes herein stated. 2or the purpose of carr$ing out the o#7ectives of this %ct, a district is here#$ granted the power of eminent domain,the e*ercise thereof shall, however, #e su#7ect to review #$ the %dministration.hus, !ection <' of PD 198 e*empting the emplo$ees of water districts from the application of the ivil !ervice Law was removed from the statute #oos=*** *** ***We grant the petition for the following reasons=1. !ection <' of PD No. 198 was repealed #$ !ection  of PD No. 1+9G !ection < of PD No. 198 was amended ro read as !ec. <' #$ !ec.  of PD No. 1+9. he amendator$ decree too effect on Cune 11, 19+8.*** *** ***. he ?WD is a corporation created pursuant to a special law E PD No. 198, as amended. %s such its officers and emplo$ees are part of the ivil !ervice &!ec. 1, %rt. >55-?, H19+I onstitutionG PD No. 88). %scertained from a consideration of the whole statute, PD 198 is a special law applica#le onl$ to the different water districts created pursuant thereto. 5n all its essential terms, it is o#vious that it pertains to a special purpose which is intended to meet aparticular set of conditions and cirmcumstances. he fact that said decree generall$ applies to all water districts throughout the countr$ does not change the fact that PD 198 is a special law. %ccordingl$, this ourts resolution in 4etro 5loilo case declaring PD 198 as a general legislation is here#$ a#andoned.?$ /government-owned or controlled corporation with srcinal charter,/ We mean government owned or controlled corporation created #$ a special law and not under the orporation ode of the Philippines. hus, in the case of Lumanta v. *LRC   &:.;. No. 8<819, 2e#ruar$ 8, 1989, 1+( !;% +9, 8<), We held=he ourt, in *ational Servi e Corporation 0*/SEC12 v. *ational La%or Relations Commission , :.;. No 98+(, promulgated on <9 Novem#er 1988, Buoting e*tensivel$ from the deli#erations of 198 onstitutional ommission in respect of the intent and meaning of the new phrase /with srcinal character,/ in effect held that government-o+ned and ontrolled orporations +it srcinal arter refer to orporations artered %y spe ial la+ as distinguised from orporations organi$ed under our general in orporation statute 3 te Corporations Code . 5n N%!3, the compan$ involved had #een organi6ed under the general incorporation statute and was a  s#usidiar$ of the National 5nvestment Development orporation &N5D) which in turn was a su#sidiar$ of the Philippine National ?an, a #an chartered #$ a specialstatute. hus, government-owned or controlled corporations lie N%!3 are effectivel$, e*cluded from the scope of the ivil !ervice. &emphasis supplied)2rom the foregoing pronouncement, it is clear that what has #een e*cluded from the coverage of the ! are those corporations created pursuant to the orporation ode. !ignificantl$, petitioners are not created under the said code, #ut on the contrar$, the$ were created pursuant to a special law and are governed primaril$ #$ its provision.No consideration ma$ thus #e given to petitioners contention that the operative act which created the water districts are the resolutions of the respective local sanggunians and that conseBuentl$, PD 198, as amended, cannot #e considered as their charter.5t is to #e noted that PD 198, as amended is the source of authori6ation and power to form and maintain a district. !ection of said decree provides=!ec. . Formation of Distri t  . E his %ct is the source of authori6ation and power to form and maintain a district. nce formed, a district is su#7ect to the provisions of this %ct and not under the 7urisdiction of an$ political su#division, . . . .4oreover, it must #e o#served that PD 198, contains all the essential terms necessar$ to constitute a charter creating a  7uridical person. 2or e*ample, !ection &a) provides for the name that will #e used #$ a water district, thus=!ec. . . . . o form a district, the legislative #od$ of an$ cit$, municipalit$ or province shall enact a resolution containing the following=a) he name of the local water district, whichshall include the name of the cit$, municipalit$, or province, or region thereof, served #$ said s$stem, followed #$ the words /Water District./5t also prescri#es for the num#ers and Bualifications of the mem#ers of the ?oard of Directors=!ec. 8. *um%er and 4ualifi ation . E he ?oard of Directors of a district shall #e composed of five citi6ens of the Philippines who are of voting age and residents within the district. ne mem#er shall #e a representative of civic-oriented service clu#s, one mem#er of representative of professional associations, one mem#er a representative of #usiness, commercial or financial organi6ations, one mem#er a representative of educational institutions and one mem#er a representative of womens organi6ation. No pu#lic official shall serve as director. rovided, o+ever  , that if the district has availed of the financial assistance of the %dministration, the  %dministration ma$ appoint an$ of its personnel to sit in the #oard of directors with all the rights and privileges appertaining to a regular mem#er for such period as the inde#tedness remains unpaid in which case 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 #e appointed #$ the appointing authorit$. !aid appointments shall #e made from a list of nominees, if an$, su#mitted pursuant to !ection 1(. 5f no nominations are su#mitted, the appointing authorit$ shall appoint an$ Bualified person of the categor$ to the vacant positionG!ec.1(. *ominations . E n or #efore cto#er 1 of each even num#ered $ear, the secretar$ of the districtshall contact each nown organi6ation, association, or institution #eing represented #$ the director whose term will e*pire on Decem#er 1 and solicit nominations from these organi6ations to fill the position 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 of such $ear= his list of nominees shall #e transmitted #$ the !ecretar$ of the district to the office of the appointing authorit$ on or #efore Novem#er 1' of such $ear and he shall mae his appointment from the list su#mitted on or #efore Decem#er 1'. 5n the event the appointing authorit$ fails to mae his appointments on or #efore Decem#er 1', selection shall #e made from said list of nominees #$ ma7orit$ vote of the seated directors of the district constituting a 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 resolution forming the district. hirt$ da$s thereafter, a list of nominees shall #e su#mitted to the provincial governor in the event the resolution forming the district is #$ a provincial #oard, or the ma$or of the cit$ or municipalit$ in the event the resolution forming the adoption of the district is #$ the cit$ or municipal #oard of councilors, who shall select the initial directors therefrom within 1' da$s after receipt of such nominationsGtheir terms of office=!ec. 11. #erm of 1ffi e . E f the five initial directors of each newl$ formed district, two shall #e appointed for a ma*imum term of two $ears, two for a ma*imum term of four $ears, and one for a ma*imum term of si*$ears. erms of office of all directors in a given district shall #e such that the term of at least one director, #utnot more then two, shall e*pire on Decem#er 1 of each even-num#ered $ear. ;egular terms of office after the initial terms shall #e for si* $ears commencing on Canuar$ 1 of odd-num#ered $ears. Directors ma$ #e removed for cause onl$, su#7ect to review and approval of the %dministrationG &as amended #$ PD +8).the manner of filling up vacancies=!ec. 1<. 5a an ies . E 5n the event of a vacanc$ in the #oard of directors occurring more than si* months #efore e*piration of an$ directors term, the remaining directors shall within ( da$s, serve notice to or reBuest the secretar$ of the district for nominations andwithin ( da$s, thereafter a list of nominees shall #e su#mitted to the appointing authorit$ for his appointment of a replacement director from the list of nominees. 5n the a#sence of such nominations, the appointing authorit$ shall mae such appointment. 5f within ( da$s after su#mission to him of a list of nominees the appointing authorit$ fails to mae an appointment, the vacanc$ shall #e filled from such list #$ a ma7orit$ vote of the remaining mem#ers of the ?oard of Directors constituting a Buorum. @acancies occurring within the last si* months of an une*pired term shall also #e filled #$ the ?oard in the a#ove  manner. he director thus appointed shall serve the une*pired term onl$G &as amended #$ PD +8).and the compensation and personal lia#ilit$ of the mem#ers of the ?oard of Directors=!ec. 1. Compensation . E 3ach director shall receivea per diem, to #e determined #$ the #oard, for each meeting of the #oard actuall$ attended #$ him, #ut no director shag receive per diems in an$ given month in e*cess of the eBuivalent of the total per diems of four meetings in an$ given month. No director shall receive other compensation for services to the district. %n$ per diem in e*cess of P'(.(( shall #e su#7ect to approval 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$, the a#ove Buoted provisions of PD 198, as amended, are similar to those which are actuall$ contained in other corporate charters. he conclusion is inescapa#le that the said decree is in truth and in fact the charter of the differentwater districts for it clearl$ defines the latters primar$ purpose and its #asic organi6ational set-up. 5n other words, PD 198, as amended, is the ver$ law which gives a water district 7uridical personalit$. While it is true that a resolution of a local sanggunian is still necessar$ for the final creation of a district, this ourt is of the opinion that said resolution cannot #e considered as its charter, the same #eing intended onl$ to implement the provisions of said decree. 5n passing a resolution forming a water district, the local sanggunian is entrusted with no authorit$ or discretion to grant a charter for the creation of a private corporation. 5t is merel$ given the authorit$ 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 important interest in the case at #ar is !ection , par. &#) of the same decree which reads=!ec. &#).  /ppointing autority  . E he person empowered to appoint the mem#ers of the ?oard of Directors of a local water district, depending upon the geographic coverage and population mae-up of the particular 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$ or municipalit$, the appointing authorit$ shall #e the ma$or of that cit$ or municipalit$, as the case ma$ #eG otherwise, the appointing authorit$ shall #e the governor of the province within which the district is located= rovided  , hat if the e*isting waterwors s$stem in the cit$ or municipalit$ esta#lished as a water district under this Decree is operated and managed #$ the province, initial appointment shall #e e*tended #$ the governor of the province. !u#seBuent appointments shall #e as specified herein.5f portions of more than one province are included within the #oundar$ of the district, and the appointing authorit$ is to #e the governors then the power to appoint shall rotate #etween the governors involved with the initial appointments made #$ the governor in whose province the greatest num#er of service connections e*ists &as amended #$ PD +8).he a#ove-Buoted section definitel$ sets to naught petitioners contention that the$ are private corporations. 5t is clear therefrom that the power to appoint the mem#ers who will comprise the ?oard of Directors #elongs to the local e*ecutivesof the local su#division units where such districts are located. 5n contrast, the mem#ers of the ?oard of Directors or trustees of a private corporation are elected from among the mem#ers and stocholders thereof. 5t would not #e amiss to emphasi6e at this point that a private corporation is created for the private purpose, #enefit, aim and end of its mem#ers or stocholders. Necessaril$, said mem#ers or stocholders should #e given a free hand to choose those who will compose the governing #od$ of their corporation. ?ut this is not the case here and this clearl$ indicates that petitioners are definitel$ not private corporations.he foregoing disBuisition notwithstanding, We are, however, not unaware of the serious repercussion this ma$ #ring to the thousands of water districts emplo$ees throughout the countr$ who stand to #e affected #ecause the$ do not have the necessar$ civil service eligi#ilities. %s these emplo$ees are eBuall$ protected #$ the constitutional guarantee to securit$ of tenure, We find it necessar$ to rule for the protection of such right which cannot #e impaired #$ a su#seBuent ruling of this ourt. hus, those emplo$ees who have alread$ acBuired their permanent emplo$ment status at the time of the promulgation of this decision cannot #e removed #$ the mere reason that the$ lac the necessar$ civil service eligi#ilities. %;D5N:LJ, the petition is here#$ D5!45!!3D. Petitionersare declared /government-owned or controlled corporations with srcinal charter/ which fall under the 7urisdiction of the pu#lic respondents ! and %.! ;D3;3D.
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