Case Summary (G.R. No. 166471)
RTC Judgment
The RTC upheld Section 47 as constitutional, reasoning that the framers’ ban on franchises “exclusive in character” prevents only absolute state monopoly and does not bar an entity’s facially exclusive grant so long as the State retains ultimate power to amend or repeal.
Issue
Does Section 47 of PD 198, as amended, violate the 1987 Constitution’s ban on exclusive public utility franchises?
Supreme Court Ruling
The petition is meritorious. The Court reiterates the peremptory constitutional language forbidding any franchise “exclusive in character,” applies the legal maxim that prohibited direct grants cannot be achieved indirectly, and holds Section 47 unconstitutional for authorizing indirect exclusive franchises through a water district’s board and the LWUA.
Constitutional Prohibition on Exclusive Franchises
Article XII, Section 11 of the 1987 Constitution—consistent with previous charters—expressly states “nor shall such franchise … be exclusive in character ….” This absolute prohibition admits no exception.
Indirect Prohibition Principle
“What cannot be legally done directly cannot be done indirectly.” Allowing a water district’s board or the LWUA to consent to or withhold competing franchises effectively creates an exclusive grant, contravening the Constitution.
Supremacy of the Constitution
In case of conflict, the Constitution prevails over statutes. Section 47’s creation of a board-approved exception to the absolute ban on exclusive character renders it void ab initio.
Disposition
The Court GRANTS the petition, DECLARES Section 47 of PD 198 unconstitutional, SETS ASIDE the RTC’s
...continue readingCase Syllabus (G.R. No. 166471)
Procedural Posture
- Petition for review on certiorari under Rule 45 of the Rules of Court
- Challenges the RTC, Judicial Region 1, Branch 62, La Trinidad, Benguet:
• 1 October 2004 Judgment in Civil Case No. 03-CV-1878
• 6 November 2004 Order denying reconsideration
Facts
- Tawang Multi-Purpose Cooperative (TMPC)
• Registered with the Cooperative Development Authority
• Organized to provide domestic water services in Barangay Tawang, La Trinidad - La Trinidad Water District (LTWD)
• Local water utility created under Presidential Decree No. 198, as amended
• Authorized to supply water for domestic, industrial, and commercial purposes within La Trinidad - 9 October 2000: TMPC applies to the National Water Resources Board (NWRB) for a Certificate of Public Convenience (CPC)
- LTWD opposes, invoking Section 47 of PD 198 as an exclusive franchise provision
- 23 July 2002: NWRB Resolution No. 04-0702 approves TMPC’s application
- 15 August 2002: NWRB Decision holds LTWD’s franchise non-exclusive, grants TMPC a CPC
- 18 November 2002: NWRB denies LTWD’s motion for reconsideration
- LTWD files appeal with the RTC
RTC Decision
- 1 October 2004 Judgment
• Sets aside the NWRB’s Resolution and Decision
• Cancels TMPC’s CPC
• Upholds Section 47 of PD 198 as constitutional, interpreting “exclusive in character” literally but subject to state control - 6 November 2004 Order denies TMPC’s motion for reconsideration
Issue
- Did the RTC err in holding Section 47 of Presi