Case Digest: Tawang v. La Trinidad

G.R. No. 166741 : March 22, 2011

TAWANG MULTI-PURPOSE COOPERATIVE, Petitioner, v. LA TRINIDAD WATER DISTRICT, Respondent.

FACTS:

On 9 October 2000, Tawang Multi-Purpose Cooperative (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. La Trinidad Water District (LTWD), a local water utility, opposed TMPC's application. LTWD claimed that, under Section 47 of PD No. 198, as amended, its franchise is exclusive.

The NWRB approved TMPC's application for a CPC. In its 15 August 2002 Decision, 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. The RTC set aside the NWRB's decision and cancelled TMPC's CPC, stating that "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."

ISSUE: Whether or not an exclusive franchise is allowed

HELD:

The petition is meritorious.

POLITICAL LAW: Nature of franchise grants.

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 (the latter in Section 11, Article XII) expressly and clearly prohibit the creation of franchises that are exclusive in character.When the law is clear, there is nothing for the courts to do but to apply it. In Republic of the Philippines v. Express Telecommunications Co., Inc., and other cases,the Court held that, "The Constitution is quite emphatic that the operation of a public utility shall not be exclusive."

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 states that, "No franchise shall be granted to any other person or agency xxxunless and except to the extent that the board of directors consents thereto xxx subject to review by the Administration." Section 47 creates a glaring exception to the absolute prohibition in the Constitution. Clearly, it is patently unconstitutional.

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.

Petition is GRANTED.

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