G.R. No. 166471 March 22, 2011
TAWANG MULTI-PURPOSE COOPERATIVE Petitioner,
vs.
LA TRINIDAD WATER DISTRICT, Respondent.
ANTONIO T. CARPIO
Associate Justice
WE CONCUR:
Chief Justice
Footnotes
1 Rollo, pp. 9-19.
2 Id. at 22-40. Penned by Judge Fernando P. Cabato.
3 Id. at 41-44.
4 Id. at 45-49.
5 Id. at 47-49.
6 Id. at 50-52.
7 Id. at 35.
8 G.R. Nos. 162243, 164516 and 171875, 3 December 2009, 606 SCRA 444.
9 Id. at 485.
10 G.R. No. 170516, 16 July 2008, 558 SCRA 468.
11 450 Phil. 744 (2003).
12 Supra note 10 at 540.
13 487 Phil. 531 (2004).
14 Id. at 579.
15 G.R. No. 113926, 23 October 1996, 263 SCRA 483.
16 Id. at 488.
17 424 Phil. 372 (2002).
18 Id. at 400.
19 457 Phil. 101 (2003).
20 Id. at 117.
21 345 Phil. 9 (1997).
22 Id. at 34.
23 234 Phil. 443 (1987).
24 Id. at 451.
25 G.R. Nos. 157870, 158633 and 161658, 3 November 2008, 570 SCRA 410.
26 Id. at 422-423.
27 G.R. No. 174340, 17 October 2006, 504 SCRA 704.
28 Id. at 731.
29 453 Phil. 586 (2003).
30 Id. at 631.
31 335 Phil. 82 (1997).
32 Id. at 101.
33 G.R. No. 168914, 4 July 2007, 526 SCRA 465.
34 Id. at 479-482.
35 Id. at 13.
36 Id.
37 Supra note 25.
38 Id. at 423.
39 Supra note 27.
40 Id. at 731.
41 G.R. No. 103524, 15 April 1992, 208 SCRA 133.
42 Id. at 142.
43 146 Phil. 798 (1970).
44 Id. at 806.
45 G.R. Nos. 170656 and 170657, 15 August 2007, 530 SCRA 341.
46 Id. at 362.
47 G.R. No. 166494, 29 June 2007, 526 SCRA 130.
48 Id. at 144.
49 496 Phil. 83 (2005)
50 Id. at 91-92.
51 Supra note 27.
52 Id. at 730.
53 G.R. Nos. 178158 and 180428, 4 December 2009, 607 SCRA 413.
54 Id. at 528.
55 Supra note 41.
56 Id. at 142.
57 Supra note 43.
58 Id. at 806-807.
The Lawphil Project - Arellano Law Foundation
I dissent.
Associate Justice
Footnotes
4 Sec. 5, Art. XIV of the 1973 Constitution provides:
5 Ponencia, p. 11.
6 Ponencia, p. 8.
7 Supra note 1.
13 Engr. Feliciano v. Commission on Audit, supra note 10, at 462-463.
14 Section 49 of P.D. No. 198.
15 CONSTITUTION, Article VII, Section 1.
(1) LWUA conducts preliminary talks and consultation with interested local government entities.
(2) The local government conducts public hearings to arrive at a consensus on whether to form a water district or not.
(5) The Mayor or Governor appoints the directors.
17 Engr. Feliciano v. Commission on Audit, supra note 10, at 462-463.
18 Ibid.
19 Section 50 of P.D. 198.
20 Sections 76 and 77 of P.D. No. 198.
22 G.R. No. 168914, July 4, 2007, 526 SCRA 465.
23 Ibid.
27 G.R. No. 177548, Resolution dated May 10, 2007.
28 Supra note 24.
29 358 Phil. 896 (1998).
30 Justice Abad’s Dissenting Opinion, p. 2.
31 320 Phil. 171, 181-182 (1995).
32 8 Wall. 603 (1869).
33 12 Wall. 457 (1871).
34 Supra note 30. The Court declared that:
The Lawphil Project - Arellano Law Foundation
ROBERTO A. ABAD
Associate Justice
Footnotes
TAWANG MULTI-PURPOSE COOPERATIVE Petitioner,
vs.
LA TRINIDAD WATER DISTRICT, Respondent.
D E C I S I O N
CARPIO, J.:
The Case
This is a petition for review on certiorari under Rule 45 of the Rules of Court. The petition1 challenges the 1 October 2004 Judgment2 and 6 November 2004 Order3 of the Regional Trial Court (RTC), Judicial Region 1, Branch 62, La Trinidad, Benguet, in Civil Case No. 03-CV-1878.
The Facts
Tawang Multi-Purpose Cooperative (TMPC) is a
cooperative, registered with the Cooperative Development Authority, and
organized to provide domestic water services in Barangay Tawang, La
Trinidad, Benguet.
La Trinidad Water District (LTWD) is a local water
utility created under Presidential Decree (PD) No. 198, as amended. It
is authorized to supply water for domestic, industrial and commercial
purposes within the municipality of La Trinidad, Benguet.
On 9 October 2000, TMPC filed with the National Water
Resources Board (NWRB) an application for a certificate of public
convenience (CPC) to operate and maintain a waterworks system in
Barangay Tawang. LTWD opposed TMPC’s application. LTWD claimed that,
under Section 47 of PD No. 198, as amended, its franchise is exclusive.
Section 47 states that:
Sec. 47. Exclusive Franchise. No franchise
shall be granted to any other person or agency for domestic, industrial
or commercial water service within the district or any portion thereof
unless and except to the extent that the board of directors of said
district consents thereto by resolution duly adopted, such resolution,
however, shall be subject to review by the Administration.
In its Resolution No. 04-0702 dated 23 July 2002, the
NWRB approved TMPC’s application for a CPC. In its 15 August 2002
Decision,4
the NWRB held that LTWD’s franchise cannot be exclusive since exclusive
franchises are unconstitutional and found that TMPC is legally and
financially qualified to operate and maintain a waterworks system. NWRB
stated that:
With respect to LTWD’s opposition, this Board observes that:
1. It is a substantial reproduction of its opposition
to the application for water permits previously filed by this same CPC
applicant, under WUC No. 98-17 and 98-62 which was decided upon by this
Board on April 27, 2000. The issues being raised by Oppositor had been
already resolved when this Board said in pertinent portions of its
decision:
"The authority granted to LTWD by virtue of P.D. 198
is not Exclusive. While Barangay Tawang is within their territorial
jurisdiction, this does not mean that all others are excluded in
engaging in such service, especially, if the district is not capable of
supplying water within the area. This Board has time and again ruled
that the "Exclusive Franchise" provision under P.D. 198 has misled most
water districts to believe that it likewise extends to be [sic] the
waters within their territorial boundaries. Such ideological adherence
collides head on with the constitutional provision that "ALL WATERS AND
NATURAL RESOURCES BELONG TO THE STATE". (Sec. 2, Art. XII) and that "No
franchise, certificate or authorization for the operation of public
[sic] shall be exclusive in character".
x x x x
All the foregoing premises all considered, and
finding that Applicant is legally and financially qualified to operate
and maintain a waterworks system; that the said operation shall redound
to the benefit of the homeowners/residents of the subdivision, thereby,
promoting public service in a proper and suitable manner, the instant
application for a Certificate of Public Convenience is, hereby, GRANTED.5
LTWD filed a motion for reconsideration. In its 18 November 2002 Resolution,6 the NWRB denied the motion.
LTWD appealed to the RTC.
The RTC’s Ruling
In its 1 October 2004 Judgment, the RTC set aside the
NWRB’s 23 July 2002 Resolution and 15 August 2002 Decision and
cancelled TMPC’s CPC. The RTC held that Section 47 is valid. The RTC
stated that:
The Constitution uses the term "exclusive in
character". To give effect to this provision, a reasonable, practical
and logical interpretation should be adopted without disregard to the
ultimate purpose of the Constitution. What is this ultimate purpose? It
is for the state, through its authorized agencies or instrumentalities,
to be able to keep and maintain ultimate control and supervision over
the operation of public utilities. Essential part of this control and
supervision is the authority to grant a franchise for the operation of a
public utility to any person or entity, and to amend or repeal an
existing franchise to serve the requirements of public interest. Thus,
what is repugnant to the Constitution is a grant of franchise "exclusive
in character" so as to preclude the State itself from granting a
franchise to any other person or entity than the present grantee when
public interest so requires. In other words, no franchise of whatever
nature can preclude the State, through its duly authorized agencies or
instrumentalities, from granting franchise to any person or entity, or
to repeal or amend a franchise already granted. Consequently, the
Constitution does not necessarily prohibit a franchise that is exclusive
on its face, meaning, that the grantee shall be allowed to exercise
this present right or privilege to the exclusion of all others.
Nonetheless, the grantee cannot set up its exclusive franchise against
the ultimate authority of the State.7
TMPC filed a motion for reconsideration. In its 6 November 2004 Order, the RTC denied the motion. Hence, the present petition.
Issue
TMPC raises as issue that the RTC erred in holding that Section 47 of PD No. 198, as amended, is valid.
The Court’s Ruling
The petition is meritorious.
What cannot be legally done directly cannot be done
indirectly. This rule is basic and, to a reasonable mind, does not need
explanation. Indeed, if acts that cannot be legally done directly can be
done indirectly, then all laws would be illusory.
In Alvarez v. PICOP Resources, Inc.,8 the Court held that, "What one cannot do directly, he cannot do indirectly."9 In Akbayan Citizens Action Party v. Aquino,10 quoting Agan, Jr. v. Philippine International Air Terminals Co., Inc.,11
the Court held that, "This Court has long and consistently adhered to
the legal maxim that those that cannot be done directly cannot be done
indirectly."12 In Central Bank Employees Association, Inc. v. Bangko Sentral ng Pilipinas,13 the Court held that, "No one is allowed to do indirectly what he is prohibited to do directly."14
The President, Congress and the Court cannot create
directly franchises for the operation of a public utility that are
exclusive in character. The 1935, 1973 and 1987 Constitutions expressly
and clearly prohibit the creation of franchises that are exclusive in
character. Section 8, Article XIII of the 1935 Constitution states that:
No franchise, certificate, or any other form of
authorization for the operation of a public utility shall be granted
except to citizens of the Philippines or to corporations or other
entities organized under the laws of the Philippines, sixty per centum
of the capital of which is owned by citizens of the Philippines, nor shall such franchise, certificate or authorization be exclusive in character or for a longer period than fifty years. (Empahsis supplied)
Section 5, Article XIV of the 1973 Constitution states that:
No franchise, certificate, or any other form of
authorization for the operation of a public utility shall be granted
except to citizens of the Philippines or to corporations or associations
organized under the laws of the Philippines at least sixty per centum
of the capital of which is owned by such citizens, nor shall such franchise, certificate or authorization be exclusive in character or for a longer period than fifty years. (Emphasis supplied)
Section 11, Article XII of the 1987 Constitution states that:
No franchise, certificate, or any other form of
authorization for the operation of a public utility shall be granted
except to citizens of the Philippines or to corporations or associations
organized under the laws of the Philippines, at least sixty per centum
of whose capital is owned by such citizens, nor shall such franchise, certificate or authorization be exclusive in character or for a longer period than fifty years. (Emphasis supplied)
Plain words do not require explanation. The 1935,
1973 and 1987 Constitutions are clear — franchises for the operation of a
public utility cannot be exclusive in character. The 1935, 1973 and
1987 Constitutions expressly and clearly state that, "nor shall such franchise x x x be exclusive in character." There is no exception.
When the law is clear, there is nothing for the
courts to do but to apply it. The duty of the Court is to apply the law
the way it is worded. In Security Bank and Trust Company v. Regional Trial Court of Makati, Branch 61,15 the Court held that:
Basic is the rule of statutory construction that when
the law is clear and unambiguous, the court is left with no alternative
but to apply the same according to its clear language. As we have held in the case of Quijano v. Development Bank of the Philippines:
"x x x We cannot see any room for interpretation or
construction in the clear and unambiguous language of the above-quoted
provision of law. This Court had steadfastly adhered to the doctrine
that its first and fundamental duty is the application of the law
according to its express terms, interpretation being called for only
when such literal application is impossible. No process of
interpretation or construction need be resorted to where a provision of
law peremptorily calls for application. Where a requirement or
condition is made in explicit and unambiguous terms, no discretion is
left to the judiciary. It must see to it that its mandate is obeyed."16 (Emphasis supplied)
In Republic of the Philippines v. Express Telecommunications Co., Inc.,17 the Court held that, "The Constitution is quite emphatic that the operation of a public utility shall not be exclusive."18 In Pilipino Telephone Corporation v. National Telecommunications Commission,19
the Court held that, "Neither Congress nor the NTC can grant an
exclusive ‘franchise, certificate, or any other form of authorization’
to operate a public utility."20 In National Power Corp. v. Court of Appeals,21
the Court held that, "Exclusivity of any public franchise has not been
favored by this Court such that in most, if not all, grants by the
government to private corporations, the interpretation of rights,
privileges or franchises is taken against the grantee."22 In Radio Communications of the Philippines, Inc. v. National Telecommunications Commission,23 the Court held that, "The Constitution mandates that a franchise cannot be exclusive in nature."24
Indeed, the President, Congress and the Court cannot
create directly franchises that are exclusive in character. What the
President, Congress and the Court cannot legally do directly they cannot
do indirectly. Thus, the President, Congress and the Court cannot
create indirectly franchises that are exclusive in character by allowing
the Board of Directors (BOD) of a water district and the Local Water
Utilities Administration (LWUA) to create franchises that are exclusive
in character.
In PD No. 198, as amended, former President Ferdinand
E. Marcos (President Marcos) created indirectly franchises that are
exclusive in character by allowing the BOD of LTWD and the LWUA to
create directly franchises that are exclusive in character. Section 47
of PD No. 198, as amended, allows the BOD and the LWUA to create
directly franchises that are exclusive in character. Section 47 states:
Sec. 47. Exclusive Franchise. No franchise shall be granted to any other person or agency for domestic, industrial or commercial water service within the district or any portion thereof unless
and except to the extent that the board of directors of said district
consents thereto by resolution duly adopted, such resolution, however,
shall be subject to review by the Administration. (Emphasis supplied)
In case of conflict between the Constitution and a
statute, the Constitution always prevails because the Constitution is
the basic law to which all other laws must conform to. The duty of the
Court is to uphold the Constitution and to declare void all laws that do
not conform to it.
In Social Justice Society v. Dangerous Drugs Board,25
the Court held that, "It is basic that if a law or an administrative
rule violates any norm of the Constitution, that issuance is null and
void and has no effect. The Constitution is the basic law to which all
laws must conform; no act shall be valid if it conflicts with the
Constitution."26 In Sabio v. Gordon,27
the Court held that, "the Constitution is the highest law of the land.
It is the ‘basic and paramount law to which all other laws must
conform.’"28 In Atty. Macalintal v. Commission on Elections,29
the Court held that, "The Constitution is the fundamental and paramount
law of the nation to which all other laws must conform and in
accordance with which all private rights must be determined and all
public authority administered. Laws that do not conform to the
Constitution shall be stricken down for being unconstitutional."30 In Manila Prince Hotel v. Government Service Insurance System,31 the Court held that:
Under the doctrine of constitutional supremacy, if a law or contract violates any norm of the constitution that law or contract whether promulgated by the legislative or by the executive branch or entered into by private persons for private purposes is null and void and without any force and effect. Thus, since the Constitution is the fundamental, paramount and supreme law of the nation, it is deemed written in every statute and contract."32 (Emphasis supplied)
To reiterate, the 1935, 1973 and 1987 Constitutions
expressly prohibit the creation of franchises that are exclusive in
character. They uniformly command that "nor shall such franchise x x x be exclusive in character."
This constitutional prohibition is absolute and accepts no exception.
On the other hand, PD No. 198, as amended, allows the BOD of LTWD and
LWUA to create franchises that are exclusive in character. Section 47
states that, "No franchise shall be granted to any other person or
agency x x x unless and except to the extent that the board of directors consents thereto x x x subject to review by the Administration."
Section 47 creates a glaring exception to the absolute prohibition in
the Constitution. Clearly, it is patently unconstitutional.
Section 47 gives the BOD and the LWUA the authority
to make an exception to the absolute prohibition in the Constitution. In
short, the BOD and the LWUA are given the discretion to create
franchises that are exclusive in character. The BOD and the LWUA are not
even legislative bodies. The BOD is not a regulatory body but simply a
management board of a water district. Indeed, neither the BOD nor the
LWUA can be granted the power to create any exception to the absolute
prohibition in the Constitution, a power that Congress itself cannot
exercise.
In Metropolitan Cebu Water District v. Adala,33 the Court categorically declared Section 47 void. The Court held that:
Nonetheless, while the prohibition in Section 47 of P.D. 198 applies to the issuance of CPCs for the reasons discussed above, the same provision must be deemed void ab initio for being irreconcilable with Article XIV, Section 5 of the 1973 Constitution which was ratified on January 17, 1973 — the constitution in force when P.D. 198 was issued on May 25, 1973. Thus, Section 5 of Art. XIV of the 1973 Constitution reads:
"SECTION 5. No franchise, certificate, or any other
form of authorization for the operation of a public utility shall be
granted except to citizens of the Philippines or to corporations or
associations organized under the laws of the Philippines at least sixty
per centum of the capital of which is owned by such citizens, nor shall such franchise, certificate, or authorization be exclusive in character
or for a longer period than fifty years. Neither shall any such
franchise or right be granted except under the condition that it shall
be subject to amendment, alteration, or repeal by the Batasang Pambansa
when the public interest so requires. The State shall encourage equity
participation in public utiltities by the general public. The
participation of foreign investors in the governing body of any public
utility enterprise shall be limited to their proportionate share in the
capital thereof."
This provision has been substantially reproduced in
Article XII Section 11 of the 1987 Constitution, including the
prohibition against exclusive franchises.
x x x x
Since Section 47 of P.D. 198, which vests an
"exclusive franchise" upon public utilities, is clearly repugnant to
Article XIV, Section 5 of the 1973 Constitution, it is unconstitutional
and may not, therefore, be relied upon by petitioner in support of its
opposition against respondent’s application for CPC and the subsequent
grant thereof by the NWRB.
WHEREFORE, Section 47 of P.D. 198 is unconstitutional.34 (Emphasis supplied)
The dissenting opinion declares Section 47 valid and
constitutional. In effect, the dissenting opinion holds that (1)
President Marcos can create indirectly franchises that are exclusive in
character; (2) the BOD can create directly franchises that are exclusive
in character; (3) the LWUA can create directly franchises that are
exclusive in character; and (4) the Court should allow the creation of
franchises that are exclusive in character.
Stated differently, the dissenting opinion holds that
(1) President Marcos can violate indirectly the Constitution; (2) the
BOD can violate directly the Constitution; (3) the LWUA can violate
directly the Constitution; and (4) the Court should allow the violation
of the Constitution.
The dissenting opinion states that the BOD and the
LWUA can create franchises that are exclusive in character "based on
reasonable and legitimate grounds," and such creation "should not be
construed as a violation of the constitutional mandate on the
non-exclusivity of a franchise" because it "merely refers to regulation"
which is part of "the government’s inherent right to exercise police
power in regulating public utilities" and that their violation of the
Constitution "would carry with it the legal presumption that public
officers regularly perform their official functions." The dissenting
opinion states that:
To begin with, a government agency’s refusal to grant
a franchise to another entity, based on reasonable and legitimate
grounds, should not be construed as a violation of the constitutional
mandate on the non-exclusivity of a franchise; this merely refers to
regulation, which the Constitution does not prohibit. To say that a
legal provision is unconstitutional simply because it enables a
government instrumentality to determine the propriety of granting a
franchise is contrary to the government’s inherent right to exercise
police power in regulating public utilities for the protection of the
public and the utilities themselves. The refusal of the local water
district or the LWUA to consent to the grant of other franchises would
carry with it the legal presumption that public officers regularly
perform their official functions.
The dissenting opinion states two "reasonable and
legitimate grounds" for the creation of exclusive franchise: (1)
protection of "the government’s investment,"35
and (2) avoidance of "a situation where ruinous competition could
compromise the supply of public utilities in poor and remote areas."36
There is no "reasonable and legitimate" ground to
violate the Constitution. The Constitution should never be violated by
anyone. Right or wrong, the President, Congress, the Court, the BOD and
the LWUA have no choice but to follow the Constitution. Any act, however
noble its intentions, is void if it violates the Constitution. This
rule is basic.
In Social Justice Society,37 the Court held that, "In the discharge of their defined functions, the
three departments of government have no choice but to yield obedience
to the commands of the Constitution. Whatever limits it imposes must be
observed."38 In Sabio,39 the Court held that, "the Constitution is the highest law of the land. It is ‘the basic and paramount law to which x x x all
persons, including the highest officials of the land, must defer. No
act shall be valid, however noble its intentions, if it conflicts with
the Constitution.’"40 In Bengzon v. Drilon,41
the Court held that, "the three branches of government must discharge
their respective functions within the limits of authority conferred by
the Constitution."42 In Mutuc v. Commission on Elections,43 the Court held that, "The three departments of government in the discharge of the functions with which it is [sic] entrusted have no choice but to yield obedience to [the Constitution’s] commands. Whatever limits it imposes must be observed."44
Police power does not include the power to violate
the Constitution. Police power is the plenary power vested in Congress
to make laws not repugnant to the Constitution. This rule is basic.
In Metropolitan Manila Development Authority v. Viron Transportation Co., Inc.,45
the Court held that, "Police power is the plenary power vested in the
legislature to make, ordain, and establish wholesome and reasonable
laws, statutes and ordinances, not repugnant to the Constitution."46 In Carlos Superdrug Corp. v. Department of Social Welfare and Development,47
the Court held that, police power "is ‘the power vested in the
legislature by the constitution to make, ordain, and establish all
manner of wholesome and reasonable laws, statutes, and ordinances x x x not repugnant to the constitution.’"48 In Metropolitan Manila Development Authority v. Garin,49
the Court held that, "police power, as an inherent attribute of
sovereignty, is the power vested by the Constitution in the legislature
to make, ordain, and establish all manner of wholesome and reasonable
laws, statutes and ordinances x x x not repugnant to the Constitution."50
There is no question that the effect of Section 47 is
the creation of franchises that are exclusive in character. Section 47
expressly allows the BOD and the LWUA to create franchises that are
exclusive in character.
The dissenting opinion explains why the BOD and the
LWUA should be allowed to create franchises that are exclusive in
character — to protect "the government’s investment" and to avoid "a
situation where ruinous competition could compromise the supply of
public utilities in poor and remote areas." The dissenting opinion
declares that these are "reasonable and legitimate grounds." The
dissenting opinion also states that, "The refusal of the local water
district or the LWUA to consent to the grant of other franchises would
carry with it the legal presumption that public officers regularly
perform their official functions."
When the effect of a law is unconstitutional, it is void. In Sabio,51 the Court held that, "A statute may be declared unconstitutional because
it is not within the legislative power to enact; or it creates or
establishes methods or forms that infringe constitutional principles; or
its purpose or effect violates the Constitution or its basic principles."52 The effect of Section 47 violates the Constitution, thus, it is void.
In Strategic Alliance Development Corporation v. Radstock Securities Limited,53 the Court held that, "This Court must perform its duty to defend and uphold the Constitution."54 In Bengzon,55 the Court held that, "The Constitution expressly confers on the judiciary the power to maintain inviolate what it decrees."56 In Mutuc,57 the Court held that:
The concept of the Constitution as the fundamental
law, setting forth the criterion for the validity of any public act
whether proceeding from the highest official or the lowest functionary,
is a postulate of our system of government. That is to manifest fealty
to the rule of law, with priority accorded to that which occupies the
topmost rung in the legal hierarchy. The three departments of government
in the discharge of the functions with which it is [sic] entrusted have
no choice but to yield obedience to its commands. Whatever limits it
imposes must be observed. Congress in the enactment of statutes must
ever be on guard lest the restrictions on its authority, whether
substantive or formal, be transcended. The Presidency in the execution
of the laws cannot ignore or disregard what it ordains. In its task of
applying the law to the facts as found in deciding cases, the judiciary
is called upon to maintain inviolate what is decreed by the fundamental
law. Even its power of judicial review to pass upon the validity of the
acts of the coordinate branches in the course of adjudication is a
logical corollary of this basic principle that the Constitution is
paramount. It overrides any governmental measure that fails to live up
to its mandates. Thereby there is a recognition of its being the supreme
law.58
Sustaining the RTC’s ruling would make a dangerous
precedent. It will allow Congress to do indirectly what it cannot do
directly. In order to circumvent the constitutional prohibition on
franchises that are exclusive in character, all Congress has to do is to
create a law allowing the BOD and the LWUA to create franchises that
are exclusive in character, as in the present case.
WHEREFORE, we GRANT the petition. We DECLARE Section 47 of Presidential Decree No. 198 UNCONSTITUTIONAL. We SET ASIDE
the 1 October 2004 Judgment and 6 November 2004 Order of the Regional
Trial Court, Judicial Region 1, Branch 62, La Trinidad, Benguet, in
Civil Case No. 03-CV-1878 and REINSTATE the 23 July 2002 Resolution and 15 August 2002 Decision of the National Water Resources Board.
SO ORDERED.ANTONIO T. CARPIO
Associate Justice
WE CONCUR:
RENATO C. CORONA
Chief Justice
Chief Justice
| CONCHITA CARPIO MORALES Associate Justice |
PRESBITERO J. VELASCO, JR. Associate Justice |
| ANTONIO EDUARDO B. NACHURA Associate Justice |
TERESITA J. LEONARDO-DE CASTRO Associate Justice |
| ARTURO D. BRION Associate Justice |
DIOSDADO M. PERALTA Associate Justice |
| LUCAS P. BERSAMIN Associate Justice |
MARIANO C. DEL CASTILLO Associate Justice |
| ROBERTO A. ABAD Associate Justice |
MARTIN S. VILLARAMA, JR. Associate Justice |
| JOSE PORTUGAL PEREZ Associate Justice |
JOSE C. MENDOZA Associate Justice |
MARIA LOURDES P. A. SERENO
Associate Justice
Associate Justice
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the
Constitution, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer
of the opinion of the Court.
RENATO C. CORONAChief Justice
Footnotes
2 Id. at 22-40. Penned by Judge Fernando P. Cabato.
3 Id. at 41-44.
4 Id. at 45-49.
5 Id. at 47-49.
6 Id. at 50-52.
7 Id. at 35.
8 G.R. Nos. 162243, 164516 and 171875, 3 December 2009, 606 SCRA 444.
9 Id. at 485.
10 G.R. No. 170516, 16 July 2008, 558 SCRA 468.
11 450 Phil. 744 (2003).
12 Supra note 10 at 540.
13 487 Phil. 531 (2004).
14 Id. at 579.
15 G.R. No. 113926, 23 October 1996, 263 SCRA 483.
16 Id. at 488.
17 424 Phil. 372 (2002).
18 Id. at 400.
19 457 Phil. 101 (2003).
20 Id. at 117.
21 345 Phil. 9 (1997).
22 Id. at 34.
23 234 Phil. 443 (1987).
24 Id. at 451.
25 G.R. Nos. 157870, 158633 and 161658, 3 November 2008, 570 SCRA 410.
26 Id. at 422-423.
27 G.R. No. 174340, 17 October 2006, 504 SCRA 704.
28 Id. at 731.
29 453 Phil. 586 (2003).
30 Id. at 631.
31 335 Phil. 82 (1997).
32 Id. at 101.
33 G.R. No. 168914, 4 July 2007, 526 SCRA 465.
34 Id. at 479-482.
35 Id. at 13.
36 Id.
37 Supra note 25.
38 Id. at 423.
39 Supra note 27.
40 Id. at 731.
41 G.R. No. 103524, 15 April 1992, 208 SCRA 133.
42 Id. at 142.
43 146 Phil. 798 (1970).
44 Id. at 806.
45 G.R. Nos. 170656 and 170657, 15 August 2007, 530 SCRA 341.
46 Id. at 362.
47 G.R. No. 166494, 29 June 2007, 526 SCRA 130.
48 Id. at 144.
49 496 Phil. 83 (2005)
50 Id. at 91-92.
51 Supra note 27.
52 Id. at 730.
53 G.R. Nos. 178158 and 180428, 4 December 2009, 607 SCRA 413.
54 Id. at 528.
55 Supra note 41.
56 Id. at 142.
57 Supra note 43.
58 Id. at 806-807.
The Lawphil Project - Arellano Law Foundation
DISSENTING OPINION
BRION, J.:I dissent.
Lest this Dissent be misunderstood, I shall clarify
at the outset that I do not dispute the majority position that an
exclusive franchise is forbidden by the Constitution. The prohibition is
in an express words of the Constitution and cannot be disputed.
My misgiving arises from the majority’s failure to
properly resolve the issue of whether or not Section 47 of P.D. No. 198
embodies a prohibited exclusive franchise. I believe that the Court must
carefully examine and analyze the application of the constitutional
command to Section 47 and explain the exact legal basis for its
conclusion. We must determine what an exclusive franchise really means
to avoid overextending the prohibition to unintended areas. In the
process, we must determine whether government –instead of the grant of
an exclusive franchise – can regulate the grant of subsequent
franchises. In the present case, I take the view that the law can so
allow in order to efficiently and effectively provide its citizens with
the most basic utility.
Respondent La Trinidad Water District (LTWD) is a local water utility created under Presidential Decree (P.D.) No. 198.1 It is a government-owned and controlled corporation2
authorized by law to supply water for domestic, industrial, and
commercial purposes within the Municipality of La Trinidad. On the other
hand, the petitioner Tawang Multi-Purpose Cooperative (TMPC) is an
applicant for a certificate of public convenience (CPC) to operate and
maintain a waterworks system in Barangay Tawang in the Municipality of
La Trinidad.
The RTC ruled that a CPC in favor of TMPC cannot be
issued without the latter having applied for the consent of the local
water district in accordance with Section 47 of P.D. No. 198. In effect,
the RTC ruled that Section 47 does not involve the grant of an
exclusive franchise. Thus, the TMPC filed the present petition for
review on certiorari under Rule 45 of the Rules of Court, questioning the validity of Section 47 of P.D. No. 198, which provides:
Sec. 47. Exclusive Franchise – No franchise
shall be granted to any other person or agency for domestic, industrial,
or commercial water service within the district or any portion thereof
unless and except to the extent that the board of directors of said
district consents thereto by resolution duly adopted, such resolution,
however, shall be subject to review by the Administration.3 [Emphasis supplied]
The invalidity of exclusive franchises is not in dispute
I reiterate that, contrary to the majority’s
statements, I do not dispute that both the 1973 and the 1987
Constitutions clearly mandate that no franchise certificate, or any
other form of authorization, for the operation of a public utility shall
be exclusive in character. I fully support the position that the
legislative entity that enacted Section 47 of P.D. 198 (in this case,
former President Ferdinand E. Marcos in the exercise of his martial law
legislative powers) must comply with Article XIV, Section 5 of the 1973
Constitution4
(the Constitution in force when P.D. No. 198 was enacted). This
constitutional provision has been carried over to the 1987 Constitution
as Article XII, Section 11 and states:
No franchise, certificate, or any other form of
authorization for the operation of a public utility shall be granted
except to citizens of the Philippines or to corporations or associations
organized under the laws of the Philippines, at least sixty per centum
of whose capital is owned by such citizens; nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years. Neither
shall any such franchise or right be granted except under the condition
that it shall be subject to amendment, alteration, or repeal by the
Congress when the common good so requires. The State shall encourage
equity participation in public utilities by the general public. The
participation of foreign investors in the governing body of any public
utility enterprise shall be limited to their proportionate share in its
capital, and all the executive and managing officers of such corporation
or association must be citizens of the Philippines.
For the majority to characterize the Dissent as an
argument for the grant of exclusive franchises by former President
Marcos, by the water district’s board of directors, by the LWUA, and by
this Court would be to misread the Dissent and blur the issues that it
raises.5
Section 47 of P.D. 198 does not violate Section 5, Article XIV of the 1973 Constitution
The majority insists that Section 47 of P.D. 198
indirectly grants an exclusive franchise in favor of local water
districts. In their reading, the law "allows the board of directors of a
water district and the Local Water Utilities Administrator (LWUA) to
create franchises that are exclusive in character."6
I disagree, as the majority opinion does not at all specify and is
unclear on how any franchise can be indirectly exclusive. What the law
allows is merely the regulation of the grant of subsequent franchises so
that the government – through government-owned and controlled
corporations – can protect itself and the general public it serves in
the operation of public utilities.
An exclusive franchise, in its plainest meaning,
signifies that no other entity, apart from the grantee, could be given a
franchise. Section 47 of P.D. No. 198, by its clear terms, does not
provide for an exclusive franchise in stating that:
Sec. 47. Exclusive Franchise – No franchise
shall be granted to any other person or agency for domestic, industrial,
or commercial water service within the district or any portion thereof
unless and except to the extent that the board of directors of said
district consents thereto by resolution duly adopted, such resolution,
however, shall be subject to review by the Administration.7
Despite its title, the assailed provision does not absolutely prohibit other franchises for water service from being granted to other persons or agencies.
It merely requires the consent of the local water district’s Board of
Directors before another franchise within the district is granted. Thus,
it is a regulation on the grant of any subsequent franchise where the
local water district, as original grantee, may grant or refuse its
consent. If it consents, the non-exclusive nature of its franchise
becomes only too clear. Should it refuse, its action does not remain
unchecked as the franchise applicant may ask the LWUA to review the
local water district’s refusal. It is thus the LWUA (on the Office of
the President in case of further appeal) that grants a subsequent
franchise if one will be allowed.
Under this arrangement, I submit that the prerogative
of the local water district’s board of directors or the LWUA to give or
refuse its consent to the application for a CPC cannot be considered as
a constitutional infringement. A government agency’s refusal to consent
to the grant of a franchise to another entity, based on reasonable and
legitimate grounds, should not be construed as a violation of the
constitutional mandate on the non-exclusivity of a franchise where the
standards for the grant or refusal are clearly spelled out in the law.
Effectively, what the law and the State (acting through its own agency
or a government-owned or controlled corporation) thereby undertake is
merely an act of regulation that the Constitution does not prohibit. To
say that a legal provision is unconstitutional simply because it enables
a grantee, a government instrumentality, to determine the soundness of
granting a subsequent franchise in its area is contrary to the
government’s inherent right to exercise police power in regulating
public utilities for the protection of the public and the utilities
themselves.8
It should also be noted that even after the Marcos
regime, constitutional experts have taken the view that the government
can and should take a strong active part in ensuring public access to
basic utilities. The deliberations of the Constitutional Commission for
the 1987 Constitution (which contains the same provision found in the
1973 Constitution on the non-exclusivity of public utility franchises)
regarding monopolies regulated by the state may guide, though not
necessarily bind, us:
MR. DAVIDE: If the idea is really to promote the private sector, may we not provide here that the government can, in no case, practice monopoly except in certain areas?
MR. VILLEGAS. No, because in the economic field,
there are definitely areas where the State can intervene and can
actually get involved in monopolies for the public good.
MR. DAVIDE. Yes, we have provisions here allowing such a monopoly in times of national emergency.
MR. VILLEGAS. Not even in emergency; for the continuing welfare of consumers.
MR. MONSOD. May we just make a distinction? As we
know, there are natural monopolies or what we call "structural
monopolies." Structural monopolies are monopolies not by the nature of
their activities, like electric power, for example, but by the nature of
the market. There may be instances when the market has not developed to
such extent that it will only allow, say, one steel company. Structural
monopoly is not by the nature of the business itself. It is possible
under these circumstances that the State may be the appropriate vehicle
for such a monopoly.9
If, indeed, the Constitutional Commission in
discussing the non-exclusivity clause had accepted the merits of
government monopolies, should this Court consider unconstitutional a
provision that allows a lesser degree of regulation—i.e., a government
agency giving its consent to the application of a CPC with the
protection of the viability of the government agency and public good as
the standards of its action?
Safeguards against abuse of authority by the water districts’ board of directors and the LWUA
The refusal of the local water district or the LWUA
to consent to other franchises would carry with it the legal presumption
that public officers regularly perform their official functions.10
If, on the other hand, the officers, directors or trustees of the local
water districts and the LWUA act arbitrarily and unjustifiably refuse
their consent to an applicant of a franchise, they may be held liable
for their actions. The local water districts11 and the LWUA12
are government-owned and controlled corporations (GOCCs). The directors
of the local water districts and the trustees of the LWUA are
government employees subject to civil service laws and anti-graft laws.13 Moreover, the LWUA is attached to the Office of the President14
which has the authority to review its acts. Should these acts in the
Executive Department constitute grave abuse of discretion, the Courts
may strike them down under its broad powers of review.15
Any abuse of authority that the local water districts
may be feared to commit is balanced by the control that the government
exerts in their creation and operations. The government creates and
organizes local water districts in accordance with a specific law, P.D.
No. 198.16
There is no private party involved as a co-owner in the creation of
local water districts. Prior to the local water districts’ creation, the
national or local government directly owns and controls all their
assets. The government’s control over them is further asserted through
their board of directors, who are appointed by the municipal or city
mayor or by the provincial governor. The directors are not co-owners of
the local water district but, like other water district personnel, are
government employees subject to civil service laws and anti-graft laws.17
Under this set-up, the control that exists over the grant of
franchises, which originally belongs to the State, simply remained and
is maintained with the State acting through the local government units
and the government-owned and controlled corporations under them.
Because of the government’s extensive financial
support to these entities, it is part of the law’s policy to scrutinize
their expenditures and outlays. Section 20 of P.D. No. 198 states that
the local water districts are subject to annual audits performed by
independent auditors and conducted by the LWUA.18
Section 41 of P.D. No. 198 even limits the authority of the board of
directors of local water districts in the manner in which it can dispose
of their income: (1) as payment for obligations and essential current
operating expenses; (2) as a reserve for debt service, and for
operations and maintenance to be used during periods of calamities,
force majeure or unforeseen events; and (3) as a reserve exclusively for
the expansion and improvement of their facilities. In this manner, the
law ensures that their officers or directors do not profit from local
water districts and that the operations thereof would be focused on
improving public service. The possibility that the officers would refuse
their consent to another franchise applicant for reasons of personal
gain is, thus, eliminated.
Public policy behind Section 47 of P.D. No. 198
Without a clear showing that the Constitution was
violated by the enactment of Section 47 of P.D. 198, the Court cannot
invalidate it without infringing on government policy, especially when
Congress had not seen fit to repeal the law and when the law appears to
be based on sound public policy. P.D. No. 198 requires an applicant to
first obtain the consent of the local water district and the LWUA for
important reasons. First, it aims to protect the government’s
investment. Second, it avoids a situation where ruinous competition
could compromise the supply of public utilities in poor and remote
areas.
A first reason the government seeks to prioritize
local water districts is the protection of its investments - it pours
its scarce financial resources into these water districts. The law
primarily establishes the LWUA as a specialized lending institution for
the promotion, development and financing of water utilities.19
Section 73 of P.D. No. 198 also authorizes the LWUA to contract loans
and credits, and incur indebtedness with foreign governments or
international financial institutions for the accomplishment of its
objectives. Moreover, the President of the Philippines is empowered not
only to negotiate or contract with foreign governments or international
financial institutions on behalf of the LWUA; he or she may also
absolutely and unconditionally guarantee, in the name of the Republic of
the Philippines, the payment of the loans. In addition, the law
provides that the General Appropriations Act shall include an outlay to
meet the financial requirements of non-viable local water districts or
the special projects of local water districts.20
The law also adopts a policy to keep the operations
of local water districts economically secure and viable. The "whereas"
clauses of the law explain the need to establish local water districts:
the lack of water utilities in provincial areas and the poor quality of
the water found in some areas. The law sought to solve these problems by
encouraging the creation of local water districts that the national
government would support through technical advisory services and
financing.21
These local water districts are heavily regulated and depend on
government support for their subsistence. If a private entity provides
stiff competition against a local water district, causes it to close
down and, thereafter, chooses to discontinue its business, the problem
of finding a replacement water supplier for a poor, remote area will
recur. Not only does the re-organization of a local water district drain
limited public funds; the residents of these far-flung areas would have
to endure the absence of water supply during the considerable time it
would take to find an alternative water supply.
Thus, as a matter of foresight, Section 47 of P.D.
No. 198 and other provisions within the law aim to avert the negative
effects of competition on the financial stability of local water
districts. These sections work hand in hand with Section 47 of P.D. No.
198. Section 31 of P.D. No. 198, which is very similar to Section 47 of
P.D. No. 198, directly prohibits persons from selling or disposing water
for public purposes within the service area of the local water
district:
Section 31. Protection of Waters and Facilities of District. – A district shall have the right to:
x x x x
(c) Prohibit any person, firm or corporation from
vending selling, or otherwise disposing of water for public purposes
within the service area of the district where district facilities are
available to provide such service, or fix terms and conditions by permit
for such sale or disposition of water.
Thus, Section 47 of P.D. No. 198 provides that before
a person or entity is allowed to provide water services where the local
water district’s facilities are already available, one must ask for the
consent of the board of directors of the local water district, whose
action on the matter may be reviewed by the LWUA.
Even after a CPC is granted and the entity becomes
qualified to provide water services, Section 39 of P.D. No. 198 still
allows a local water district to charge other entities producing water
for commercial or industrial uses with a production assessment, to
compensate for financial reverses brought about by the operations of the
water provider; failure to pay this assessment results in liability for
damages and/or the issuance of an order of injunction.
Section 39. Production Assessment.—In the event the
board of a district finds, after notice and hearing, that production of
ground water by other entities within the district for commercial or
industrial uses i[s] injuring or reducing the district’s financial
condition, the board may adopt and levy a ground water production
assessment to compensate for such loss. In connection therewith, the
district may require necessary reports by the operator of any commercial
or industrial well. Failure to pay said assessment shall constitute an
invasion of the waters of the district and shall entitle this district
to an injunction and damages pursuant to Section [31] of this Title.
From these, it can be seen that Article XIV, Section 5
of the 1973 Constitution and P.D. No. 198 share the same purpose of
seeking to ensure regular water supply to the whole country,
particularly to the remote areas. By requiring a prospective franchise
applicant to obtain the consent of the local water district or the LWUA,
the law does not thereby grant it an exclusive franchise; it simply
gives the water district the opportunity to have a say on the entry of a
competitor whose operations can adversely affect its viability and the
service it gives to consumers. This is far from an exclusive franchise
that allows no other entity, apart from the only grantee, to have a
franchise. Section 47 of P.D. No. 198 does not bar other franchise
applicants; it merely regulates the grant of subsequent franchises to
ensure that the market is not too saturated to the point of adversely
affecting existing government water suppliers, all with the end of
ensuring the public the water supply it needs.
Revisiting Metropolitan Cebu Water District (MCWD) v. Margarita A. Adala
Based on the foregoing discussion, I submit that there exists ample justification to reverse our ruling in Metropolitan Cebu Water District (MCWD) v. Margarita A. Adala.22
As in the present ponencia, there was no discussion in Metro Cebu Water
District of what constitutes a grant of an exclusive franchise as
opposed to a valid regulation of franchises by the government or how the
questioned provision violated the constitutional mandate against
exclusive franchises. It was simply presumed that there was a violation.
It is worth noting that the Court disposed of the issue in just one
paragraph that stated:
Since Section 47 of P.D. 198, which vests an "exclusive franchise"
upon public utilities, is clearly repugnant to Article XIV, Section 5
of the 1973 Constitution, it is unconstitutional and may not, therefore,
be relied upon by [MCWD] in support of its opposition against [Adala’s]
application for CPC and the subsequent grant thereof by the NWRB.23
In a legal system that rests heavily on precedents,
this manner of reasoning would not only be unfair to the parties; it
would also confuse and bewilder the legal community and the general
public regarding the interpretation of an important constitutional
provision. This kind of approach should always be subject to our
continuing review and examination.
In reversing a previous ruling issued by the Court,
we are not unmindful of the legal maxim stare decisis et non quieta
movere (literally, to stand by the decision and disturb not what is
settled). This maxim is a very convenient practice that the conclusion
reached in one case can be applied to subsequent cases where the facts
are substantially the same, even though the parties are different.
However, the doctrine is not set in stone; the Court may wisely set it
aside upon a showing that circumstances attendant in a particular case
override the benefits brought about by stare decisis.24
In our Resolution in de Castro v. Judicial and Bar Council,25 we explained why stare decisis is not considered inflexible with respect to this Court:
The Court, as the highest court of the land, may be
guided but is not controlled by precedent. Thus, the Court, especially
with a new membership, is not obliged to follow blindly a particular
decision that it determines, after re-examination, to call for a
rectification. The adherence to precedents is strict and rigid in a
common-law setting like the United Kingdom, where judges make law as
binding as an Act of Parliament. But ours is not a common law system;
hence judicial precedents are not always strictly and rigidly followed. A
judicial pronouncement in an earlier decision may be followed as a
precedent in subsequent case only when its reasoning and justification
are relevant, and the Court in the latter case accepts such reasoning
and justification to be applicable in the case. The application of the
precedent is for the sake of convenience and stability.
For the intervenors to insist that Valenzuela ought
not to be disobeyed, or abandoned, or reversed, and that its wisdom
should guide, if not control, the Court in this case is, therefore,
devoid of rationality and foundation. They seem to conveniently forget
that the Constitution itself recognizes the innate authority of the
Court en banc to modify or reverse a doctrine or principle of law laid
down in any decision rendered en banc or in division.
Thus, this Court had seen it fit to overturn or abandon the rulings set in its previous decisions. In Philippine Guardians Brotherhood, Inc. v. Commission on Elections,26 we reversed our earlier ruling in Philippine Mines Safety Environment Association v. Commission on Elections.27 And in De Castro,28 we re-examined our decision in In re appointments of Hon. Valenzuela and Hon. Vallarta29 although the re-examination failed for lack of the necessary supporting votes.
During the deliberations of the present case, a
respected colleague hesitated at the idea of overturning a former ruling
that has declared a law unconstitutional on the ground that this Court,
once it declares a law null, cannot breathe life into its already dead
provisions. It raises fears that the people and the other branches of
government will not treat the Court’s declarations of nullity of laws
seriously.30
We cannot hold that the Court is empowered to reverse
its established doctrines but is powerless to review laws that have
been declared void; no justification simply exists for such
distinctions. In reversing its decisions, this Court’s primary
consideration is to arrive at a just and judicious ruling and avoiding
the ill effects of a previous ruling. It is by pursuing such objectives
that this Court earns the respect of the people and the other branches
of government. Precisely, this Court has taken a contrary view in Kilosbayan, Inc. v. Morato,31 when it noted that the US Supreme Court declared the Legal Tender Acts void in Hepburn v. Griswold,32 but subsequently declared these statutes as valid in Knox v. Lee.33
We lauded the American jurists who voted for the validity of the Legal
Tender Acts, which had been formerly declared void, and noted that a
change of composition in the Court could prove the means of undoing an
erroneous decision.34
In all, Section 47 of P.D. No. 198 does not violate
the constitutional proscription against exclusive franchises as other
persons and entities may still obtain franchises for water utilities
within the district upon the consent of the local water district or upon
a favorable finding by the LWUA, which, in turn, is accountable to the
Office of the President. By granting this privilege to local water
districts, the law does not seek to favor private interests as these
districts are GOCCs whose profits are exclusively for public use and
whose expenditures the law subjects to the strictest scrutiny. The
restrictions applied to other private persons or entities are intended
to protect the government’s considerable investment in local water
districts and to promote its policy of prioritizing local water
districts as a means of providing water utilities throughout the
country. The protectionist approach that the law has taken towards local
water districts is not per se illegal as the Constitution does not
promote a total deregulation in the operation of public utilities and is
a proper exercise by the government of its police power.
Thus, the TMPC should have first sought the consent
of LTWD’s Board of Directors, as directed under Section 47 of P.D. No.
198. Had the Board of Directors refused to give its consent, this action
may still be reviewed by the LWUA, the entity most able to determine
the financial and technical capacity of LTWD in order to decide whether
another water service provider is needed in the municipality.
Accordingly, it is my view that TMPC’s CPC is invalid as it was issued
without notice to the LTWD’s Board of Directors.
ARTURO D. BRIONAssociate Justice
Footnotes
1 Entitled "Declaring
a National Policy Favoring Local Operation and Control of Water
Systems; Authorizing the Formation of Local Water Districts and
Providing for the Government and Administration of such Districts;
Chartering a National Administration to Facilitate Improvement of Local
Water Utilities; Granting said Administration such Powers as are
Necessary to Optimize Public Service from Water Utility Operations, and
for other Purposes," promulgated May 25, 1973, as amended by P.D. No. 1479.
2 Baguio Water District v. Trajano, GRN L-65428, February 20, 1984, 127 SCRA 730.
3 Supra note 1, at 28.4 Sec. 5, Art. XIV of the 1973 Constitution provides:
No franchise, certificate, or any other form of
authorization for the operation of a public utility shall be granted
except to citizens of the Philippines or to corporations or associations
organized under the laws of the Philippines at least sixty per centum
of the capital of which is owned by such citizens, nor shall such franchise, certificate or authorization be exclusive in character or
for a longer period than fifty years. Neither shall any such franchise
or right be granted except under the condition that it shall be subject
to amendment, alteration or repeal in by the Batasang Pambansa when the
public interest so requires. The State shall encourage equity
participation in public utilities by the general public. The
participation of foreign investors in the governing body of any public
utility enterprise shall be limited to their proportionate share in the
capital thereof.
6 Ponencia, p. 8.
7 Supra note 1.
8 Kilusang Mayo Uno Labor Center v. Garcia, Jr., G.R. No. 115381, December 23, 1994, 239 SCRA 386, 412.
9 Record of the Constitutional Commission, volume 3, 262-263,
10
First United Constructors Corporation v. Poro Point Management
Corporation (PPMC), G.R. No. 178799, January 19, 2009, 576 SCRA 311,
321; Gatmaitan v. Gonzales, G.R. No. 149226, June 26, 2006, 492 SCRA
591, 604; and PAMECA Wood Treatment Plant, Inc. v. Court of Appeals, 369
Phil. 544, 555 (1999).
11
Davao City Water District v. Civil Service Commission, G.R. Nos.
95237-38, September 13, 1991, 201 SCRA 593, 602; see also Feliciano v.
Commission on Audit, 464 Phil. 439, 453-464 (2004).
12 Section 49 of P.D. No. 198.13 Engr. Feliciano v. Commission on Audit, supra note 10, at 462-463.
14 Section 49 of P.D. No. 198.
15 CONSTITUTION, Article VII, Section 1.
16
Francisco, Pepito, "Provincial Water Utilities Act of 1973, as
amended," 2008 ed., pp. 25-26, citing the LWUA-Water District Primer.
The steps to be undertaken for the creation of a duly-organized water
districts are as follows:
(2) The local government conducts public hearings to arrive at a consensus on whether to form a water district or not.
(3) The local legislative body (the Sangguniang
Bayan/Lungsod or Sangguniang Panlalawigan, as the case may be) secures
nominations for candidates for the water district board of directors
from business, civic, professional, education and women sectors of the
community concerned.
(4) The Sanggunian secretary collates all nominations and forwards the same to the appointing authority.(5) The Mayor or Governor appoints the directors.
(6) The local legislative body deliberates and enacts
a resolution to form a water district stating therein the names and
terms of office of the duly appointed board of directors.
(7) Mayor or Governor approves the resolution, submits the same to LWUA.
(8) LWUA reviews the resolution to determine
compliance with Presidential Decree No. 198, as amended (Provincial
Water Utilities Act of 1973) and LWUA requirements.
18 Ibid.
19 Section 50 of P.D. 198.
20 Sections 76 and 77 of P.D. No. 198.
21
WHEREAS, domestic water systems and sanitary sewers are two of the most
basic and essential elements of local utility system, which, with a few
exceptions, do not exist in provincial areas in the Philippines;
WHEREAS, existing domestic water utilities are not
meeting the needs of the communities they serve; water quality is
unsatisfactory; pressure is inadequate; and reliability of service is
poor; in fact, many persons receive no piped water service whatsoever;
x x x x
WHEREAS, local water utilities should be
locally-controlled and managed, as well as have support on the national
level in the area of technical advisory services and financing[.]
23 Ibid.
24 Philippine Guardians Brotherhood, Inc. v. Commission on Elections, G.R. No. 190529, April 29, 2010.
25
G.R. Nos. 191002, 191032, 191057, 191149, 191342 and 191420, and A.M.
No. 10-2-5-SC, April 20, 2010, citing Limketkai Sons Milling, Inc. v.
Court of Appeals, G.R. No. 118509, September 5, 1996, 261 SCRA 464, 467.
26 Supra note 23.27 G.R. No. 177548, Resolution dated May 10, 2007.
28 Supra note 24.
29 358 Phil. 896 (1998).
30 Justice Abad’s Dissenting Opinion, p. 2.
31 320 Phil. 171, 181-182 (1995).
32 8 Wall. 603 (1869).
33 12 Wall. 457 (1871).
34 Supra note 30. The Court declared that:
History has vindicated the overruling of the Hepburn
case by the new majority. The Legal Tender Cases proved to be the
Court’s means of salvation from what Chief Justice Hughes later
described as one of the Court’s "self-inflicted wounds."
The Lawphil Project - Arellano Law Foundation
CONCURRING OPINION
ABAD, J.:
On October 9, 2000 petitioner Tawang Multi-Purpose
Cooperative (TMPC), a registered cooperative established by Barangay
Tawang, La Trinidad residents for the purpose of operating a domestic
drinking water service, applied with the National Water Resources Board
(the Board) for a Certificate of Public Convenience (CPC) to maintain
and operate a waterworks system within its barangay.
But respondent La Trinidad Water District (LTWD), a government-owned corporation1
that supplied water within La Trinidad for domestic, industrial, and
commercial purposes, opposed the application. LTWD claimed that its
franchise was exclusive in that its charter provides that no separate
franchise can be granted within its area of operation without its prior
written consent. Still, the Board granted TMPC’s application on July 23,
2002, resulting in the issuance of a five-year CPC in its favor.
LTWD contested the grant before the Regional Trial
Court (RTC) of La Trinidad which, after hearing, rendered judgment
setting aside the Board’s decision and canceling the CPC it issued to
TMPC. The RTC denied TMPC’s motion for reconsideration, prompting the
latter to come to this Court on petition for review.
The Court has previously held in Metropolitan Cebu Water District v. Adala2 that Section 473 of P.D. 198,4
is unconstitutional for being contrary to Article XIV, Section 5 of the
1973 Constitution and Article XII, Section 11 of the 1987 Constitution.
Some in the Court would, however, have its above ruling reexamined
based on the view that Section 47 does not actually provide for an
exclusive franchise which would violate the Constitution.
The Court’s conclusion and ruling in the Adala case read:
Since Section 47 of P.D. 198, which vests an
"exclusive franchise" upon public utilities, is clearly repugnant to
Article XIV, Section 5 of the 1973 Constitution, it is unconstitutional
and may not, therefore, be relied upon by petitioner in support of its
opposition against respondent’s application for CPC and the subsequent
grant thereof by the NWRB.
WHEREFORE, Section 47 of P.D. 198 is unconstitutional.
Paragraph 2, Article 7 of the New Civil Code provides
that "when the courts declared a law to be inconsistent with the
Constitution, the former shall be void and the latter shall govern."
Since the Court, exercising its Constitutional power
of judicial review, has declared Section 47 of P.D. 198 void and
unconstitutional, such section ceased to become law from the beginning.
The Supreme Court’s power of review does not permit it to rewrite P.D.
198 in a subsequent case and breathe life to its dead provisions. Only
Congress can.
Besides, such course of action is unwise. The Court
will be establishing a doctrine whereby people and the other branches of
government will not need to treat the Court’s declaration of nullity of
law too seriously. They can claim an excuse for continuing to enforce
such law since even the Court concedes that it can in another case
change its mind regarding its nullity.
I fully subscribe to the majority opinion, penned by
Justice Antonio T. Carpio that there exists no justification for
abandoning the Court’s previous ruling on the matter.
I vote to GRANT TMPC’s petition for review and SET ASIDE the decision of the trial court.ROBERTO A. ABAD
Associate Justice
Footnotes
1 Created pursuant to Presidential Decree (P.D.) 198, also known as the Provincial Water Utilities Act of 1973.
2 G.R. No. 168914, July 4, 2007, 526 SCRA 465.
3
Sec. 47. Exclusive Franchise. No franchise shall be granted to any
other person or agency for domestic, industrial or commercial water
service within the district or any portion thereof unless and except to
the extent that the board of directors of said district consents thereto
by resolution duly adopted, such resolution, however, shall be subject
to review by the Administration.
4
"Declaring a National Policy Favoring Local Operation and Control of
Water Systems; Authorizing the Formation of Local Water Districts and
Providing for the Government and Administration of such Districts;
Chartering a National Administration to Facilitate Improvement of Local
Water Utilities; Granting said Administration such Powers as Are
Necessary to Optimize Public Service from Water Utility Operations, and
for Other Purposes." This took effect upon its issuance by then Preside
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