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. OSMEÑA, 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.

(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. (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. Osmeña jointly
appointed Atty. Adelino Sitoy and Leo Pacaña to fill the vacancies. 4 However, 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 Osmeña 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 Osmeña 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 Osmeña 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 Osmeña, the MCWD, and Yu as defendants.
In his answer, Mayor Osmeña 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, Osmeña 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 Osmeña 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 Osmeña 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,25 as follows:
cralawred

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:
MALACAÑANG
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
from Cebu 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 25 29 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 Osmeña 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 Code and 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