PHILIPPINE LONG DISTANCE TELEPHONE COMPANY

G.R. No. L-23080            October 30, 1965
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, petitioner,
vs.
CITY OF DAVAO and the PUBLIC SERVICE COMMISSION, respondents,
ITT PHILIPPINES, INC., intervenor.

R E S O L U T I O N^*

BENGZON, J.P., J.:

The Philippine Legislature granted Philippine Long Distance Telephone Co., Inc. a special franchise to establish and operate a telephone system throughout the country. It wisely provided therein that the rights thereby granted shall not be exclusive.

Answering the clamor of the inhabitants of Davao City, the Davao City Council provided for a city-owned and operated telephone system.¹ Congress itself thereafter expressly authorized the establishment of such a telephone system therein.²

The executive, finding the legislation wisely taken, approved the same.

The Court, interpreting the broad powers granted to Davao City Council to legislate for the general welfare, gave meaning and reality to the Resolutions and laws above-mentioned, in its decision in this case promulgated September 20, 1965.

Petitioner filed a 53-page motion for reconsideration of said decision, presenting five propositions.

The first proposition of movant is that Davao City's telephone system is proprietary in nature and, therefore. cannot be undertaken under the general welfare clause. At the outset it is well to remember that as stated in Mendoza vs. De Leon, 33 Phil. 508, 515:

It often happens that the same agent or agency has both a governmental and a corporate character. Such, for instance, are a municipal water system designed both for protection against fire (a governmental function) and to supply water to the inhabitants for profit (a corporate function) (Omaha Water Co. vs. Omaha, 12 L.R.A., N.S., 736; 77 C.C.A. 267, 147 Fed. 1; Judson vs. Borough of Winsted, 80 Conn. 384; 15 L.R.A., N. S., 91) ; a municipal light plant both for righting the streets (a governmental function) and for furnishing light to the inhabitants at a profit (a corporate function) (Fisher vs. New Bern, 140 N. C. 506; 111 Am. St. Rep 857).

The same case recognized that: "The preservation of the health and peace of its inhabitants and fire protections afforded the property owner, are government functions." (Ibid., at 511-512.) Davao City's telephone system is designed to perform such functions; to secure and regulate the peace and order situation of one of the world's biggest cities; to safeguard the health and lives of its inhabitants; to afford reliable equipment for the fighting and control of fires, floods and epidemics; to assure these objectives by providing speedy and direct contact between Davao City's outlying districts and its poblacion or seat of government. Such ends are undoubtedly within the purview of the general welfare clause.

The fact that in thereby promoting the general welfare of its inhabitants, the means adopted by the city would likewise serve the public in a proprietary manner is no argument that the city is powerless to adopt said measure. For as stated, it frequently happens that from the same act both governmental and corporate functions arise. An interpretation that would totally limit the general welfare clause to such governmental functions only as are without proprietary aspects would thereby often cripple local governments in the face of the very evils that said clause intended them to remedy.

A restrictive view of the general welfare clause is not favored. The policy of Congress in this regard has been expressly stated in Section 12 of Republic Act 2264, the Local Autonomy Act:

The general welfare clause shall be liberally interpreted in case of doubt so as to give more power to local governments in promoting the economic condition, social welfare and material progress of the people in the community.

The view of the movant that the scope of police power, and therefore of the general welfare clause, has been fixed by traditional delineations is not quite accurate. Police power has not received a full and complete definition; it is elastic and must be responsive to various social conditions; it is not confined within the narrow circumscriptions of precedents resting on past conditions; it must follow the legal progress of a democratic way of life. Accordingly, the Court wisely said in Churchill vs. Rafferty, 32 Phil. 580, 603-605:

In Chamber vs. Greencastle (138 Ind. 339), it was said: "The police power of the State, so far, has not received a full and complete definition." ...

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In People vs. Brazee ([Mich., 1914], 149 N. W. 1053), it was said: "it [the police power] has for its object the improvement of social and economic conditions affecting the community at large and collectively with a view to bring about "the greatest good of the greatest number." Courts have consistently and wisely declined to set any fixed limitations upon subjects calling for the exercise of this power. It is elastic and is exercised from time to time as varying social conditions demand correction.

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Finally, the Supreme Court of the United States has said in Noble State Bank vs. Haskell (219 U.S. [1911] 575): "It may be said in a general way that the police power extends to all the great public needs. It may be put forth in aid of what is sanctioned by usage, or held by the prevailing morality or strong and preponderant opinion to be greatly and immediately necessary to the public welfare."

xxx           xxx           xxx

It was said in Com. vs. Alger (7 Cush. 53, 85), per Shaw, C.J., that: "It is much easier to perceive and realize the existence and sources of this police power than to mark its boundaries, or to prescribe limits to its exercise." ...

CORPUS JURIS SECUNDUM states:

... The police power of a municipal corporation must be responsive, in the interest of common welfare, to the changing conditions and developing needs of growing communities, and is not confined within the narrow circumscription of precedents resting on past conditions. That which may at one time be regarded as not within such power may, at another time, by reason of changed conditions, be recognized as a legitimate exercise for the exercise of the power. Also, that which may be regarded as within the police power of one municipal corporation may not be so regarded as to another. ...³

Speaking thru Mr. Justice Malcolm, this Court explicitly said in U.S. vs. Salaveria, 39 Phil. 102, 109:

... the general welfare clause, delegates in statutory form the police power to a municipality. As above stated, this clause has been given wide application by municipal authorities and has in its relation to the particular circumstances of the case been liberally construed by the courts. Such, it is well to recall, is the progressive view of Philippine jurisprudence.

Advancing its second proposition, movant would find in the specific power of Davao City to regulate telephone service (See. 14 (aa] of its Charter) an implied denial of power to operate the same. People vs. Esguerra, 81 Phil. 33 is the authority relied upon for this. Said case ruled that specific power to regulate implies withholding of power to prohibit. The reason therein given is that by prohibiting, nothing would be left to regulate, thereby rendering the power to regulate superfluous and nugatory. It is therefore different where, as in this case, there is no suppression or prohibition but, on the contrary, creation or giving existence to something that may be regulated. People vs. Esguerra, supra, is no authority against the latter.

Still movant would press the argument that at any rate the general welfare clause does not enlarge, but merely makes effectual, the specific powers granted. Suffice it to say that in U.S. vs. Salaveria, supra, at pp. 109-110, we ruled otherwise:

The general welfare clause has two branches. One branch attaches itself to the main trunk of municipal authority, and relates to such ordinances and regulations as may be necessary to carry into effect and discharge the powers and duties conferred upon the municipal council by law. With this class we are not here directly concerned. The second branch of the clause is much more independent of the specific functions of the council which are enumerated by law. It authorizes such ordinances "as shall seem necessary and proper to provide for the health and safety, promote the prosperity, improve the morals, peace, good order, comfort, and convenience of the municipality and the inhabitants thereof, and for the protection of property therein."

The general welfare clause suffices in proper cases to authorize public improvements serving governmental functions (Saunders vs. Mayor of Arlington, 147 Ga. 581, 94 SE 1022). Contrary to movant's view, presence of the words "any public improvement" in the general welfare clause is not indispensable for the purpose. Authorization in the clause, similar to that in Davao City's Charter, to act for the "safety, benefit, convenience and advantage" of the city (Frederick vs. Augusta, 5 Ga. 561) or "to do all things for the benefit of the city," (Heilbron vs. Cuthbert, 96 Ga. 312, 23 SE 206) was found sufficient for the purpose. As to the case of Hyatt vs. Williams, 148 Cal. 585, 84 P. 41, cited by movant as authoritative, the same did not involve a general welfare clause.

In its third proposition movant alleges that the interpretation we followed would rewrite the general welfare clause in all cities and municipalities into reservoirs of unlimited powers, superior even to that of the State under the Constitution. As to this it must again be emphasized that our decision was made in light of the special factual set-up obtaining in this case. For one thing, the size of Davao City alone renders its situation unique and apart from our other cities and municipalities. For another, as already pointed out, the scope of police power varies according to different conditions and what is within the police power of one municipal corporation may not be so regarded as to another. No "far-reaching", effects need therefore, be feared by movant. Finally, we see no point in the contention that the State under the Constitution would have lesser powers than we hold Davao City to have, for there is no doubt that under Section 6 of Article XIII of the Constitution, the State may also, in the interest of national welfare, establish and operate means of communication.⁴

Fourth of movant's propositions is that it has already installed facilities to take care of Davao City's telephone needs. It is still admitted, however, that movant's telephone system and its plan of expansion do not cover the outlying districts of the city. It cannot therefore be claimed that movant has provided for the aforementioned needs or shown an immediate plan to supply them adequately.

The fifth proposition is that any enabling provision in Davao City's Charter for the operation of a telephone system is not enough; that a special legislative franchise is still required. Since Congress has recently enacted Republic Act 4354 expressly providing that Davao City has power to operate and maintain a telephone system, movant now takes the extreme view that still another legislation, by way of a special franchise, is required. Such a view would render the enabling provision's in Davao City's Charter useless. It should be noted that such enabling provisions are granted as among the legislative powers of the Davao City Council. Accordingly, there has been a delegation to said Council of the legislative power to issue a franchise in favor of the City.

The Philippine Commission's Act No. 667, invoked by movant, is an instance of delegation of power to grant franchise. It provides that any person authorized to engage in operating a telephone service has to obtain a franchise from the municipal council of the municipality through which its lines will pass. Davao City does not have to follow the procedure in Act No. 667, for, as stated, it has been empowered under its charter to directly grant the franchise to itself. A contrary view would be absurd: Davao City would have to file with its City Council an application for a franchise after said Council had authorized it to operate the telephone system.

Finally, movant states that the competition between Davao City's telephone system and its own would be economically wasteful. Sometimes, however, it is good for the public service to provide room for a little competition. The fact that movant's own Charter, Act No. 3436, provides in Section 14 that its right to operate a telephone system shall not be exclusive and reserves the power to grant any other corporation, association or person franchise to operate a telephone system shows that public policy is not always in favor of monopoly in public utilities. In Benitez vs. Santos, L-12911-12 and Lopez vs. Santos, L- 13073-74, February 29, 1960, this Court had occasion to remark: "A monopolistic trend with its concomitant evils can only serve to prejudice public interest, stifling as it does enthusiasm and initiative on the part of those eager to learn. Prior experience, while itself useful, cannot create a vested right which could endanger the economy." Republic Act 4354, in effect authorizing competition in the telephone service in Davao City, conclusively shows the sense of Congress that under the prevailing conditions in Davao City, the same will best inure to the public welfare therein. The public interest and welfare should be paramount.

WHEREFORE, the motion for reconsideration is denied. So ordered.

Bengzon, C.J., Bautista Angelo, Dizon, Makalintal, and Zaldivar, JJ., concur.
Concepcion, J., concurs in the result.
Reyes, J.B.L., J., is on leave.
Regala, J., took no part.

Footnotes

^* See main decision in this volume.

¹ Resolutions Nos. 664 and 2015, August 7, 1963 and December 27, 1963, respectively.

² Republic Act 4354, effective June 19, 1965.

³ 62 C. J. S. 275.

⁴ See City of Baguio vs. National Waterworks & Sewerage Authority, L-