Title: DAVAO CITY WATER DISTRICT vs. CIVIL SERVICE COMMISSION

Citation: 201 SCRA 5! "#.R. No. 52!$%!&' Se(te)*e+ 1!' 11,

-onente: MEDIALDEA

FACTS:

• Petitioners are among the more than five hundred (500) water districts existing throughout the country formed

 ursuant to the rovisions of -D No. 1&! as amended "y P#s$ %&' and %*! otherwise +nown as the

-+ovin/ial Wate+ tilities A/t o 1$!, which was issued "y then President Ferdinand -$ .arcos "y virtue of

his /egis/ative ower$ t authori1ed the different /oca/ /egis/ative "odies to form and create their resective water

districts through a reso/ution they wi// ass su"2ect to the guide/ines! ru/es and regu/ations therein /aid down$ The

decree further created and formed the Lo/al Wate+ tilities A)inist+ation 3LWA4! a nationa/ agency

attached to the 3ationa/ -conomic and #eve/oment Authority (3-#A)! and granted with regu/atory ower

necessary to otimi1e u"/ic service from water uti/ities oerations$

• The resondents! on the other hand! are the Civi/ Service Commission (CSC) and the Commission on Audit

(C4A)! "oth government agencies and reresented in this case "y the So/icitor enera/$

• There exists a divergence of oinions "etween C4A on one hand! and the (678A)! on the other hand! with

resect to the authority of C4A to audit the different water districts$

• C4A oined that the audit of the water districts is sim/y an act of discharging the visitoria/ ower vested in them

 "y /aw $

• 4n the other hand! 678A maintained that on/y those water districts with su"sidies from the government fa//

within the C4A9s 2urisdiction and on/y to the extent of the amount of such su"sidies! ursuant to the rovision of

the overnment Auditing Code of the Phi/s$

• Petitioners9 main argument is that they are rivate cororations without origina/ charter! hence they are outside the

 2urisdiction of resondents CSC and C4A$

SS8-:

7hether or not the 6oca/ 7ater #istricts formed and created ursuant to the rovisions of Presidentia/ #ecree 3o$ *'! as

amended! are governmentowned or contro//ed cororations with origina/ charter fa//ing under the Civi/ Service 6aw

and;or covered "y the visitoria/ ower of the Commission on Audit

<-6#:

• After a fair consideration of the arties9 arguments cou/ed with a carefu/ study of the a/ica"/e /aws as we// as

the constitutiona/ rovisions invo/ved! We +le a6ainst t7e (etitione+s an +eite+ate O+ +lin6 in Tan8a9 /ase

e/la+in6 ate+ ist+i/ts 6ove+n)ent%one o+ /ont+olle /o+(o+ations it7 o+i6inal /7a+te+$

 

• Ascertained from a consideration of the who/e statute! -D 1& is a s(e/ial la a((li/a*le onl9 to t7e ie+ent

ate+ ist+i/ts /+eate (+sant t7e+eto. n a// its essentia/ terms! it is o"vious that it ertains to a secia/

 urose which is intended to meet a articu/ar set of conditions and circumstances$ The fact that said decree

genera//y a/ies to a// water districts throughout the country does not change the fact that P# *' is a secia/

/aw$

• =y >governmentowned or contro//ed cororation with origina/ charter!> 7e mean government owned or

contro//ed cororation created "y a secia/ /aw and not under the Cororation Code of the Phi/iines$

•  3o consideration may thus "e given to etitioners9 contention that the oerative act which created the water

districts are the reso/utions of the resective /oca/ sanggunians and that conse?uent/y! P# *'! as amended!

cannot "e considered as their charter$

• t is to "e noted that P# *'! as amended is the source of authori1ation and ower to form and maintain a district$

• It is /lea+ t7at 7at 7as *een e;/le +o) t7e /ove+a6e o t7e CSC a+e t7ose /o+(o+ations /+eate

(+sant to t7e Co+(o+ation Coe. Si6nii/antl9' (etitione+s a+e not /+eate ne+ t7e sai /oe' *t on t7e

/ont+a+9' t7e9 e+e /+eate (+sant to a s(e/ial la an a+e 6ove+ne (+i)a+il9 *9 its (+ovision.

• t is c/ear therefrom that the ower to aoint the mem"ers who wi// comrise the =oard of #irectors "e/ongs to

the /oca/ executives of the /oca/ su"division units where such districts are /ocated$ n contrast! the mem"ers of the

=oard of #irectors or trustees of a rivate cororation are e/ected from among the mem"ers and stoc+ho/ders

thereof$ t wou/d not "e amiss to emhasi1e at this oint that a rivate cororation is created for the rivate

 urose! "enefit! aim and end of its mem"ers or stoc+ho/ders$ 3ecessari/y! said mem"ers or stoc+ho/ders shou/d

 "e given a free hand to choose those who wi// comose the governing "ody of their cororation$ =ut this is not the

case here and this c/ear/y indicates that etitioners are definite/y not rivate cororations$

• T7e o+e6oin6 is<isition notit7stanin6' We a+e' 7oeve+' not naa+e o t7e se+ios +e(e+/ssion t7is

)a9 *+in6 to t7e t7osans o ate+ ist+i/ts= e)(lo9ees t7+o67ot t7e /ont+9 7o stan to *e ae/te

*e/ase t7e9 o not 7ave t7e ne/essa+9 /ivil se+vi/e eli6i*ilities. As t7ese e)(lo9ees a+e e<all9 (+ote/te

*9 t7e /onstittional 6a+antee to se/+it9 o ten+e' We in it ne/essa+9 to +le o+ t7e (+ote/tion o s/7

+i67t 7i/7 /annot *e i)(ai+e *9 a s*se<ent +lin6 o t7is Co+t. T7s' t7ose e)(lo9ees 7o 7ave

al+ea9 a/<i+e t7ei+ (e+)anent e)(lo9)ent stats at t7e ti)e o t7e (+o)l6ation o t7is e/ision

/annot *e +e)ove *9 t7e )e+e +eason t7at t7e9 la/> t7e ne/essa+9 /ivil se+vi/e eli6i*ilities.

• ACC4@#36! etitioners are dec/ared >governmentowned or contro//ed cororations with origina/ charter>

which fa// under the 2urisdiction of the u"/ic resondents CSC and C4A$