G.R. No. 165641 - Feliciano vs. Aranez

Procedural and Contextual Background
The petition for review on certiorari was filed by Engr. Ranulfo C. Feliciano, General Manager of the Leyte Metropolitan Water District (LMWD), challenging the July 14, 2004 decision of the Court of Appeals (CA) which affirmed the Court of Tax Appeals’ (CTA) dismissal of LMWD’s petition on the ground of lack of jurisdiction.
Napoleon G. Aranez, acting in his capacity as President and Chairman of the “No Tax, No Impairment of Contracts Coalition, Inc.,” intervened by filing a motion to admit a complaint-petition in intervention. The Coalition claims to represent water district concessionaires nationwide.

Factual Background of the Dispute
LMWD initiated the tax case by requesting that certain water supply equipment and a Toyota Hi-Lux pick-up truck, which were acquired through a grant from the Japanese Government for typhoon rehabilitation, be granted tax exemption.
The Department of Finance (DOF) granted the exemption on the water supply equipment but disallowed the exemption for the vehicle.
On June 9, 2000, LMWD moved for reconsideration regarding the disallowance; however, then Undersecretary Cornelio C. Gison denied the request on the basis that tax exemption privileges for government agencies and GOCCs had been withdrawn by Executive Order No. 93.
LMWD consequently appealed to the CTA, which, after hearing the evidence, determined that LMWD was a government-owned or controlled corporation (GOCC) with an original charter, and therefore dismissed its appeal for lack of jurisdiction.
The CTA’s resolution allowed for the possibility of refiling the case in the appropriate forum, but LMWD instead elevated the matter by filing a petition for review with the CA, challenging both the CTA’s jurisdictional determination and the legal classification of LMWD.

Legal Arguments and Contentions Presented
LMWD contended that water districts, including itself, are private corporations created under a general law (specifically, Presidential Decree [P.D.] No. 198) rather than GOCCs with original charter.
LMWD argued that P.D. No. 198 functions similarly to the Corporation Code in creating private corporations through a process comparable to the filing of articles of incorporation and resolution formation by local sanggunian.
The petitioner maintained that, since water districts are private in nature, they should enjoy certain tax exemptions and should not automatically fall within the scope of government auditing applicable to GOCCs.
The petition-in-intervention by the Coalition advanced similar arguments, and further emphasized that classifying water districts as GOCCs could trigger constitutional issues (such as the “non-impairment of contracts” clause) and potentially lead to nationwide social and economic repercussions.

Prior Jurisprudence and Procedural History
LMWD had previously raised identical questions regarding its corporate classification in Feliciano v. Commission on Audit (COA), where the Court ruled against its position by categorically holding that local water districts are GOCCs with special charters.
The current petition and petition-in-intervention seek to revive and reevaluate issues that have been conclusively addressed in earlier rulings, including those in Davao City Water District v. Civil Service Commission and De Jesus v. COA.

Whether the Leyte Metropolitan Water District (LMWD) qualifies as a government-owned or controlled corporation (GOCC) with an original charter or as a private corporation formed under a general law.
Whether P.D. No. 198, which authorizes the formation of water districts, should be interpreted as a general law creating private corporations (akin to the Corporation Code) or as a special statute providing a special charter to GOCCs.
Whether the legal issues and factual determinations previously adjudicated in Feliciano v. COA and related cases bind the present controversy through the doctrine of res judicata.
Whether the intervention arguments raised by the Coalition—concerning potential breaches of constitutional non-impairment of contracts and risks of social unrest—warrant revisiting settled jurisprudence regarding the corporate status of water districts.