Davao City Water District v. Civil Service Commission
REITERATIONFacts
1. The Antecedents: The core dispute revolves around whether Local Water Districts (LWDs), established under Presidential Decree No. 198 (as amended), are considered government-owned or controlled corporations with original charters. This classification is crucial for determining their coverage under Civil Service Law and the visitorial power of the Commission on Audit (COA). 2. Procedural History: The petitioners, numerous water districts across the Philippines, are challenging the jurisdiction of the Civil Service Commission (CSC) and the COA. This issue arose due to conflicting rulings within the Supreme Court itself: the Tanjay Water District case (G.R. No. 63742) held that LWDs, with PD 198 as their original charter, fall under Civil Service, leading the CSC to issue Resolution No. 90-575. However, a minute resolution in Metro Iloilo Water District (G.R. No. 85760) suggested PD 198 was a general law, not an original charter, causing the CSC to suspend its resolution via Resolution No. 90-770. Concurrently, a disagreement existed between COA and the Local Water Utilities Administration (LWUA) regarding COA's audit authority over LWDs, also hinging on their status as government-owned or controlled corporations with original charters. 3. The Petition: The petitioners seek clarification from the Supreme Court en banc on their status. They argue they are private corporations without original charters, relying on the Metro Iloilo ruling that PD 198 is a general law and that the operative act creating a water district is the local sanggunian's resolution. Consequently, they contend they are outside the jurisdiction of the CSC and COA. The petition essentially asks the Court to definitively rule on whether PD 198 constitutes an original charter for LWDs and, by extension, their classification for civil service and audit purposes.
Issue(s)
Whether Local Water Districts formed under PD 198, as amended, are government-owned or controlled corporations with original charters. Whether the employees of Local Water Districts are covered by the Civil Service Law. Whether the Commission on Audit has visitorial power over Local Water Districts.
Ruling
The petition is DISMISSED. Petitioners are declared "government-owned or controlled corporations with original charter" which fall under the jurisdiction of the public respondents CSC and COA.
Ratio Decidendi
On whether Local Water Districts are government-owned or controlled corporations with original charters: The Court reiterated its ruling in Tanjay Water District v. Gabaton, holding that Local Water Districts (LWDs) are government-owned or controlled corporations with original charters. This is because PD 198, as amended, is a special law that serves as their charter, defining their purpose, organizational structure, and powers. The Court emphasized that LWDs are not created under the Corporation Code but pursuant to this special law. The power to appoint the members of the Board of Directors by local executives further distinguishes them from private corporations, where such members are elected by stockholders. The Court explicitly abandoned its resolution in the Metro Iloilo Water District case, which had declared PD 198 as general legislation. On whether the employees of Local Water Districts are covered by the Civil Service Law: As LWDs are government-owned or controlled corporations with original charters, their employees are covered by the Civil Service Law. The Court noted that Section 25 of PD 198, which previously exempted employees from Civil Service coverage, was repealed by Section 3 of PD 1479. Therefore, the general rule of Civil Service coverage applies to LWD personnel. Recognizing the potential impact on employees who may lack civil service eligibility, the Court ruled that those who have already acquired permanent employment status at the time of the decision's promulgation cannot be removed solely for lacking the necessary civil service eligibilities. This is to protect their constitutional guarantee to security of tenure. On whether the Commission on Audit has visitorial power over Local Water Districts: Section 2(1), Article IX-D of the 1987 Constitution grants the Commission on Audit (COA) the power to examine, audit, and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property, owned or held in trust by, or pertaining to the Government, including government-owned or controlled corporations with original charters. Since the Court has established that LWDs are government-owned or controlled corporations with original charters, they fall within the COA's visitorial power. The COA's opinion that auditing LWDs is thus an exercise of its visitorial power is thus upheld.
Main Doctrine
Local Water Districts, formed pursuant to Presidential Decree No. 198, as amended, are government-owned or controlled corporations with original charters, and thus fall under the jurisdiction of the Civil Service Commission and the Commission on Audit.