The Supreme Court ruled that Presidential Decree No. 198, specifically Section 3(b), is unconstitutional to the extent that it allows the provincial governor to appoint members of the Metro Cebu Water District (MCWD) board, infringing on the local autonomy of highly urbanized cities like Cebu City. This decision upholds the principle that local government units are best positioned to address the needs of their constituents, particularly in providing essential services such as water, free from undue interference by other governmental entities. The ruling ensures that Cebu City, with the majority of active water service connections in the MCWD, retains control over its water governance.

Water Rights and Local Rule: How Cebu City Regained Control Over Its Water District

The case revolves around a challenge to Presidential Decree (P.D.) No. 198, issued in 1973, which established local water districts and defined the appointing authority for their boards of directors. Section 3(b) of this decree stipulated that if more than 75% of a local water district’s active service connections were within a city or municipality, the mayor would be the appointing authority. Otherwise, the power would reside with the provincial governor. When Cebu City’s connections fell below this threshold, the provincial governor sought to appoint members to the Metro Cebu Water District (MCWD) board, a move contested by the city’s mayor.

This dispute reached the Supreme Court, with petitioners arguing that Section 3(b) violated the local autonomy of highly urbanized cities like Cebu City, as guaranteed by the 1987 Constitution and the Local Government Code. They contended that the provision was arbitrary and failed to account for Cebu City’s significant role in the MCWD’s creation and operation. The Court had to determine whether this century-old presidential decree meshed well with local government and what it truly meant to be autonomous.

The Supreme Court sided with Cebu City, declaring Section 3(b) of P.D. No. 198 unconstitutional to the extent that it applied to highly urbanized cities and component cities whose charters prevent their voters from voting for provincial officials. The Court underscored that local autonomy, enshrined in the Constitution, ensures these local government units have the power to manage their own affairs without undue interference. This decision recognized the importance of self-governance in addressing the unique needs and circumstances of each locality.

Building on this principle, the Court found that the 75% threshold in Section 3(b) was no longer reasonable, especially given Cebu City’s significant contribution to the MCWD and its status as a highly urbanized city. The Court emphasized that the provision had become unfair because it ignored the needs and circumstances of Cebu City as the local government unit accounting for the majority of the active water service connections. As such, the power to appoint members to the MCWD Board of Directors belonged to the Mayor of Cebu City.

In making this determination, the Supreme Court considered the constitutional guarantees of local autonomy as well as the requirements of substantive due process and equal protection. Substantive due process requires that laws are fair, reasonable, and just, while equal protection ensures that all individuals or groups are treated equally under the law. The Court found that Section 3(b), in its application to Cebu City, failed to meet these standards.

Central to the Court’s reasoning was the recognition that the MCWD was established without any investment or contribution from the Province of Cebu. This fact, coupled with Cebu City’s majority of water subscribers, weighed heavily in favor of the city retaining control over the MCWD’s board. This approach contrasts with a literal interpretation of Section 3(b), which would have shifted the appointing power to the governor based solely on a numerical threshold, regardless of the city’s actual stake in the water district.

The Supreme Court also noted that the purpose of P.D. No. 198 was to provide adequate, quality, and reliable water services to meet the needs of local communities. By allowing the provincial governor to appoint members of the MCWD board, Section 3(b) risked undermining this objective, as the governor may not be as attuned to the specific needs of Cebu City’s water consumers.

To fully appreciate the extent of this decision, the actual wording of the statute is essential. Section 3 of the P.D. 198 states:

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.

The Supreme Court effectively recognized that subsequent laws and the current constitution made the exercise of that power no longer valid.

Moreover, the Court emphasized that its decision aligned with the policies favoring local autonomy enshrined in the 1987 Constitution and implemented by the 1991 Local Government Code. These policies seek to empower local government units to address the needs of their constituents effectively, without undue interference from higher levels of government. This promotes efficiency, responsiveness, and accountability in governance.

FAQs

What was the key issue in this case?	The key issue was determining the proper appointing authority for the members of the Metro Cebu Water District (MCWD) Board of Directors, given the changing distribution of water service connections among the cities and municipalities served by the MCWD. At stake was the control by the Cebu City Mayor over MCWD’s board.
What did the Supreme Court rule?	The Supreme Court ruled that Section 3(b) of Presidential Decree No. 198 is unconstitutional to the extent that it applies to highly urbanized cities like Cebu City, violating their local autonomy. It declared that the Mayor of Cebu City is the proper appointing authority for the MCWD Board of Directors.
Why was Section 3(b) of P.D. No. 198 challenged?	Section 3(b) was challenged because it allowed the provincial governor to appoint the MCWD board members if no single city or municipality had at least 75% of the water connections. Petitioners argued this infringed on Cebu City’s local autonomy and proprietary rights, and was arbitrary.
What is local autonomy and why is it important?	Local autonomy is the power of local government units to manage their own affairs and make decisions for their communities without undue interference from higher levels of government. It is important for ensuring that local needs are addressed effectively and that governance is responsive and accountable.
How does this ruling affect other water districts in the Philippines?	This ruling sets a precedent for similar situations in other water districts, particularly those serving highly urbanized cities. It clarifies that local autonomy must be respected and that appointment powers should align with the actual stake and involvement of the local government unit.
What is substantive due process and how does it apply here?	Substantive due process requires that laws are fair, reasonable, and just, not merely procedural. The Court found Section 3(b) lacked substantive due process because it was unfair and unreasonable to give the provincial government the power to appoint based on a numerical threshold alone.
What is the Equal Protection Clause, and how does it relate to this case?	The Equal Protection Clause guarantees that all individuals or groups are treated equally under the law. The Court determined that Section 3(b) violated the Equal Protection Clause by giving the Province of Cebu unwarranted benefit despite Cebu City being independent from the Province.
Did the Province of Cebu contribute to the creation of MCWD?	No, the MCWD was established from the Osmeña Waterworks Systems (OWS) without any investment or contribution of funds and material from the Province of Cebu. The City of Cebu had been operating and maintaining OWS.

In conclusion, the Supreme Court’s decision in Rama v. Moises affirms the constitutional principle of local autonomy and ensures that highly urbanized cities retain control over essential services like water governance. By striking down Section 3(b) of P.D. No. 198, the Court has reinforced the importance of self-governance and the ability of local government units to address the specific needs of their constituents. This ruling has significant implications for water districts throughout the Philippines, particularly those serving highly urbanized areas.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: HON. MICHAEL L. RAMA, ET AL. VS. HON. GILBERT P. MOISES, ET AL., G.R. No. 197146, December 06, 2016