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,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:
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 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 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