Supreme Court of the Philippines 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
661 Phil. 390
jurisdiction, this does not mean that all others are excluded in
EN BANC engaging in such service, especially, if the district is not capable of
supplying water within the area. This Board has time and again
G.R. No. 166471, March 22, 2011 ruled that the "Exclusive Franchise" provision under P.D. 198 has
misled most water districts to believe that it likewise extends to be
TAWANG MULTI-PURPOSE COOPERATIVE, PETITIONER, [sic] the waters within their territorial boundaries. Such ideological
VS. LA TRINIDAD WATER DISTRICT, RESPONDENT. adherence collides head on with the constitutional provision that
"ALL WATERS AND NATURAL RESOURCES BELONG TO THE
DECISION STATE". (Sec. 2, Art. XII) and that "No franchise, certificate or
CARPIO, J.: authorization for the operation of public [sic] shall be exclusive in
character".
The Case
xxxx

This is a petition for review on certiorari under Rule 45 of the All the foregoing premises all considered, and finding that
Rules of Court. The petition[1] challenges the 1 October 2004 Applicant is legally and financially qualified to operate and
Judgment[2] and 6 November 2004 Order[3] of the Regional Trial maintain a waterworks system; that the said operation shall
Court (RTC), Judicial Region 1, Branch 62, La Trinidad, Benguet, in redound to the benefit of the homeowners/residents of the
Civil Case No. 03-CV-1878. subdivision, thereby, promoting public service in a proper and
suitable manner, the instant application for a Certificate of Public
The Facts
Convenience is, hereby, GRANTED.[5]

Tawang Multi-Purpose Cooperative (TMPC) is a cooperative,

LTWD filed a motion for reconsideration. In its 18 November 2002
registered with the Cooperative Development Authority, and
Resolution,[6] the NWRB denied the motion.
organized to provide domestic water services in Barangay Tawang,
La Trinidad, Benguet.
LTWD appealed to the RTC.
La Trinidad Water District (LTWD) is a local water utility created The RTC's Ruling
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. In its 1 October 2004 Judgment, the RTC set aside the NWRB's 23
July 2002 Resolution and 15 August 2002 Decision and cancelled
On 9 October 2000, TMPC filed with the National Water Resources TMPC's CPC. The RTC held that Section 47 is valid. The RTC stated
Board (NWRB) an application for a certificate of public that:
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 The Constitution uses the term "exclusive in character". To give
franchise is exclusive. Section 47 states that: effect to this provision, a reasonable, practical and logical
interpretation should be adopted without disregard to the ultimate
Sec. 47. Exclusive Franchise. No franchise shall be granted to any purpose of the Constitution. What is this ultimate purpose? It is for
other person or agency for domestic, industrial or commercial the state, through its authorized agencies or instrumentalities, to
water service within the district or any portion thereof unless and be able to keep and maintain ultimate control and supervision over
except to the extent that the board of directors of said district the operation of public utilities. Essential part of this control and
consents thereto by resolution duly adopted, such resolution, supervision is the authority to grant a franchise for the operation
however, shall be subject to review by the Administration. 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
In its Resolution No. 04-0702 dated 23 July 2002, the NWRB "exclusive in character" so as to preclude the State itself from
approved TMPC's application for a CPC. In its 15 August 2002 granting a franchise to any other person or entity than the present
Decision,[4] the NWRB held that LTWD's franchise cannot be grantee when public interest so requires. In other words, no
exclusive since exclusive franchises are unconstitutional and found franchise of whatever nature can preclude the State, through its
that TMPC is legally and financially qualified to operate and duly authorized agencies or instrumentalities, from granting
maintain a waterworks system. NWRB stated that: franchise to any person or entity, or to repeal or amend a
franchise already granted. Consequently, the Constitution does not
With respect to LTWD's opposition, this Board observes that:
necessarily prohibit a franchise that is exclusive on its face,
meaning, that the grantee shall be allowed to exercise this present
1. It is a substantial reproduction of its opposition to the
right or privilege to the exclusion of all others. Nonetheless, the
application for water permits previously filed by this same CPC
grantee cannot set up its exclusive franchise against the ultimate
applicant, under WUC No. 98-17 and 98-62 which was decided
authority of the State.[7]
upon by this Board on April 27, 2000. The issues being raised by
Oppositor had been already resolved when this Board said in
TMPC filed a motion for reconsideration. In its 6 November 2004 Plain words do not require explanation. The 1935, 1973 and 1987
Order, the RTC denied the motion. Hence, the present petition. Constitutions are clear -- franchises for the operation of a public
utility cannot be exclusive in character. The 1935, 1973 and 1987
Issue Constitutions expressly and clearly state that, "nor shall such
franchise x x x be exclusive in character." There is no
exception.
TMPC raises as issue that the RTC erred in holding that Section 47
of PD No. 198, as amended, is valid.
When the law is clear, there is nothing for the courts to do but to
The Court's Ruling 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:
The petition is meritorious.
Basic is the rule of statutory construction that when the law is
What cannot be legally done directly cannot be done indirectly. clear and unambiguous, the court is left with no
This rule is basic and, to a reasonable mind, does not need alternative but to apply the same according to its clear
explanation. Indeed, if acts that cannot be legally done directly language. As we have held in the case of Quijano v.
can be done indirectly, then all laws would be illusory. Development Bank of the Philippines:

"x x x We cannot see any room for interpretation or construction

In Alvarez v. PICOP Resources, Inc.,[8] the Court held that, "What
in the clear and unambiguous language of the above-quoted
one cannot do directly, he cannot do indirectly." [9] In Akbayan
provision of law. This Court had steadfastly adhered to the
Citizens Action Party v. Aquino ,[10] quoting Agan, Jr. v. Philippine
doctrine that its first and fundamental duty is the
International Air Terminals Co., Inc.,[11] the Court held that, "This
application of the law according to its express terms,
Court has long and consistently adhered to the legal maxim that
interpretation being called for only when such literal application is
those that cannot be done directly cannot be done indirectly." [12] In
impossible. No process of interpretation or construction need be
Central Bank Employees Association, Inc. v. Bangko Sentral ng
resorted to where a provision of law peremptorily calls for
Pilipinas,[13] the Court held that, "No one is allowed to do indirectly
application. Where a requirement or condition is made in
what he is prohibited to do directly."[14]
explicit and unambiguous terms, no discretion is left to the
judiciary. It must see to it that its mandate is obeyed."[16]
The President, Congress and the Court cannot create directly
(Emphasis supplied)
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 In Republic of the Philippines v. Express Telecommunications Co.,
character. Section 8, Article XIII of the 1935 Constitution states Inc.,[17] the Court held that, "The Constitution is quite emphatic
that: that the operation of a public utility shall not be exclusive." [18] In
Pilipino Telephone Corporation v. National Telecommunications
No franchise, certificate, or any other form of authorization for the
Commission,[19] the Court held that, "Neither Congress nor the NTC
operation of a public utility shall be granted except to citizens of
can grant an exclusive `franchise, certificate, or any other form of
the Philippines or to corporations or other entities organized under
authorization' to operate a public utility." [20] In National Power
the laws of the Philippines, sixty per centum of the capital of which
Corp. v. Court of Appeals,[21] the Court held that, "Exclusivity of
is owned by citizens of the Philippines, nor shall such franchise,
any public franchise has not been favored by this Court such that
certificate or authorization be exclusive in character or for a
in most, if not all, grants by the government to private
longer period than fifty years. (Empahsis supplied)
corporations, the interpretation of rights, privileges or franchises is
taken against the grantee."[22] In Radio Communications of the
Section 5, Article XIV of the 1973 Constitution states that: Philippines, Inc. v. National Telecommunications Commission ,[23]
the Court held that, "The Constitution mandates that a franchise
No franchise, certificate, or any other form of authorization for the cannot be exclusive in nature."[24]
operation of a public utility shall be granted except to citizens of
the Philippines or to corporations or associations organized under Indeed, the President, Congress and the Court cannot create
the laws of the Philippines at least sixty per centum of the capital directly franchises that are exclusive in character. What the
of which is owned by such citizens, nor shall such franchise, President, Congress and the Court cannot legally do directly they
certificate or authorization be exclusive in character or for a cannot do indirectly. Thus, the President, Congress and the Court
longer period than fifty years. (Emphasis supplied) 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
Section 11, Article XII of the 1987 Constitution states that: franchises that are exclusive in character.
No franchise, certificate, or any other form of authorization for the
operation of a public utility shall be granted except to citizens of In PD No. 198, as amended, former President Ferdinand E. Marcos
the Philippines or to corporations or associations organized under (President Marcos) created indirectly franchises that are exclusive
the laws of the Philippines, at least sixty per centum of whose in character by allowing the BOD of LTWD and the LWUA to create
capital is owned by such citizens, nor shall such franchise, directly franchises that are exclusive in character. Section 47 of PD
certificate or authorization be exclusive in character or for a No. 198, as amended, allows the BOD and the LWUA to create
longer period than fifty years. (Emphasis supplied) directly franchises that are exclusive in character. Section 47
states:
Sec. 47. Exclusive Franchise. No franchise shall be granted to In Metropolitan Cebu Water District v. Adala,[33] the Court
any other person or agency for domestic, industrial or categorically declared Section 47 void. The Court held that:
commercial water service within the district or any portion thereof
unless and except to the extent that the board of directors Nonetheless, while the prohibition in Section 47 of P.D. 198
of said district consents thereto by resolution duly applies to the issuance of CPCs for the reasons discussed above,
adopted, such resolution, however, shall be subject to the same provision must be deemed void ab initio for being
review by the Administration. (Emphasis supplied) 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.
In case of conflict between the Constitution and a statute, the Thus, Section 5 of Art. XIV of the 1973 Constitution reads:
Constitution always prevails because the Constitution is the basic
law to which all other laws must conform to. The duty of the Court "SECTION 5. No franchise, certificate, or any other form of
is to uphold the Constitution and to declare void all laws that do authorization for the operation of a public utility shall be granted
not conform to it. except to citizens of the Philippines or to corporations or
associations organized under the laws of the Philippines at least
In Social Justice Society v. Dangerous Drugs Board,[25] the Court sixty per centum of the capital of which is owned by such citizens,
held that, "It is basic that if a law or an administrative rule violates nor shall such franchise, certificate, or authorization be
any norm of the Constitution, that issuance is null and void and exclusive in character or for a longer period than fifty years.
has no effect. The Constitution is the basic law to which all laws Neither shall any such franchise or right be granted except under
must conform; no act shall be valid if it conflicts with the the condition that it shall be subject to amendment, alteration, or
Constitution."[26] In Sabio v. Gordon,[27] the Court held that, "the repeal by the Batasang Pambansa when the public interest so
Constitution is the highest law of the land. It is the `basic and requires. The State shall encourage equity participation in public
paramount law to which all other laws must conform.'" [28] In Atty. utiltities by the general public. The participation of foreign
Macalintal v. Commission on Elections ,[29] the Court held that, "The investors in the governing body of any public utility enterprise shall
Constitution is the fundamental and paramount law of the nation be limited to their proportionate share in the capital thereof."
to which all other laws must conform and in accordance with
which all private rights must be determined and all public authority
This provision has been substantially reproduced in Article XII
administered. Laws that do not conform to the Constitution shall
Section 11 of the 1987 Constitution, including the prohibition
be stricken down for being unconstitutional." [30] In Manila Prince
against exclusive franchises.
Hotel v. Government Service Insurance System,[31] the Court held
that:
xxxx
Under the doctrine of constitutional supremacy, if a law or
contract violates any norm of the constitution that law or Since Section 47 of P.D. 198, which vests an "exclusive
contract whether promulgated by the legislative or by the franchise" upon public utilities, is clearly repugnant to
executive branch or entered into by private persons for private Article XIV, Section 5 of the 1973 Constitution, it is
purposes is null and void and without any force and effect. unconstitutional and may not, therefore, be relied upon by
Thus, since the Constitution is the fundamental, paramount petitioner in support of its opposition against respondent's
and supreme law of the nation, it is deemed written in application for CPC and the subsequent grant thereof by the
every statute and contract."[32] (Emphasis supplied) NWRB.

WHEREFORE, Section 47 of P.D. 198 is unconstitutional.[34]

To reiterate, the 1935, 1973 and 1987 Constitutions expressly (Emphasis supplied)
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 The dissenting opinion declares Section 47 valid and constitutional.
absolute and accepts no exception. On the other hand, PD No. In effect, the dissenting opinion holds that (1) President Marcos
198, as amended, allows the BOD of LTWD and LWUA to create can create indirectly franchises that are exclusive in character; (2)
franchises that are exclusive in character. Section 47 states that, the BOD can create directly franchises that are exclusive in
"No franchise shall be granted to any other person or agency x x x character; (3) the LWUA can create directly franchises that are
unless and except to the extent that the board of directors exclusive in character; and (4) the Court should allow the creation
consents thereto x x x subject to review by the of franchises that are exclusive in character.
Administration." Section 47 creates a glaring exception to the
absolute prohibition in the Constitution. Clearly, it is patently Stated differently, the dissenting opinion holds that (1) President
unconstitutional. Marcos can violate indirectly the Constitution; (2) the BOD can
violate directly the Constitution; (3) the LWUA can violate directly
Section 47 gives the BOD and the LWUA the authority to make an the Constitution; and (4) the Court should allow the violation of
exception to the absolute prohibition in the Constitution. In short, the Constitution.
the BOD and the LWUA are given the discretion to create
franchises that are exclusive in character. The BOD and the LWUA The dissenting opinion states that the BOD and the LWUA can
are not even legislative bodies. The BOD is not a regulatory body create franchises that are exclusive in character "based on
but simply a management board of a water district. Indeed, reasonable and legitimate grounds," and such creation "should not
neither the BOD nor the LWUA can be granted the power to create be construed as a violation of the constitutional mandate on the
any exception to the absolute prohibition in the Constitution, a non-exclusivity of a franchise" because it "merely refers to
power that Congress itself cannot exercise. 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 and ordinances x x x not repugnant to the constitution.'"[48] In
presumption that public officers regularly perform their official Metropolitan Manila Development Authority v. Garin,[49] the Court
functions." The dissenting opinion states that: held that, "police power, as an inherent attribute of sovereignty, is
the power vested by the Constitution in the legislature to make,
To begin with, a government agency's refusal to grant a franchise ordain, and establish all manner of wholesome and reasonable
to another entity, based on reasonable and legitimate grounds, laws, statutes and ordinances x x x not repugnant to the
should not be construed as a violation of the constitutional Constitution."[50]
mandate on the non-exclusivity of a franchise; this merely refers
to regulation, which the Constitution does not prohibit. To say that There is no question that the effect of Section 47 is the creation of
a legal provision is unconstitutional simply because it enables a franchises that are exclusive in character. Section 47 expressly
government instrumentality to determine the propriety of granting allows the BOD and the LWUA to create franchises that are
a franchise is contrary to the government's inherent right to exclusive in character.
exercise police power in regulating public utilities for the protection
of the public and the utilities themselves. The refusal of the local The dissenting opinion explains why the BOD and the LWUA
water district or the LWUA to consent to the grant of other should be allowed to create franchises that are exclusive in
franchises would carry with it the legal presumption that public character -- to protect "the government's investment" and to avoid
officers regularly perform their official functions. "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
The dissenting opinion states two "reasonable and legitimate
grounds." The dissenting opinion also states that, "The refusal of
grounds" for the creation of exclusive franchise: (1) protection of
the local water district or the LWUA to consent to the grant of
"the government's investment,"[35] and (2) avoidance of "a
other franchises would carry with it the legal presumption that
situation where ruinous competition could compromise the supply
public officers regularly perform their official functions."
of public utilities in poor and remote areas."[36]

When the effect of a law is unconstitutional, it is void. In Sabio,[51]

There is no "reasonable and legitimate" ground to violate the
the Court held that, "A statute may be declared
Constitution. The Constitution should never be violated by anyone.
unconstitutional because it is not within the legislative power
Right or wrong, the President, Congress, the Court, the BOD and
to enact; or it creates or establishes methods or forms that
the LWUA have no choice but to follow the Constitution. Any act,
infringe constitutional principles; or its purpose or effect violates
however noble its intentions, is void if it violates the Constitution.
the Constitution or its basic principles."[52] The effect of Section
This rule is basic.
47 violates the Constitution, thus, it is void.
In Social Justice Society,[37] the Court held that, "In the discharge
In Strategic Alliance Development Corporation v. Radstock
of their defined functions, the three departments of
Securities Limited,[53] the Court held that, "This Court must perform
government have no choice but to yield obedience to the
its duty to defend and uphold the Constitution." [54] In Bengzon,[55]
commands of the Constitution. Whatever limits it imposes
the Court held that, "The Constitution expressly confers on the
must be observed."[38] In Sabio,[39] the Court held that, "the
judiciary the power to maintain inviolate what it decrees."[56] In
Constitution is the highest law of the land. It is `the basic and
Mutuc,[57] the Court held that:
paramount law to which x x x all persons, including the
highest officials of the land, must defer. No act shall be The concept of the Constitution as the fundamental law, setting
valid, however noble its intentions, if it conflicts with the forth the criterion for the validity of any public act whether
Constitution.'"[40] In Bengzon v. Drilon,[41] the Court held that, proceeding from the highest official or the lowest functionary, is a
"the three branches of government must discharge their respective postulate of our system of government. That is to manifest fealty
functions within the limits of authority conferred by the to the rule of law, with priority accorded to that which occupies
Constitution."[42] In Mutuc v. Commission on Elections,[43] the Court the topmost rung in the legal hierarchy. The three departments of
held that, "The three departments of government in the government in the discharge of the functions with which it is [sic]
discharge of the functions with which it is [sic] entrusted entrusted have no choice but to yield obedience to its commands.
have no choice but to yield obedience to [the Whatever limits it imposes must be observed. Congress in the
Constitution's] commands. Whatever limits it imposes enactment of statutes must ever be on guard lest the restrictions
must be observed."[44] on its authority, whether substantive or formal, be transcended.
The Presidency in the execution of the laws cannot ignore or
Police power does not include the power to violate the disregard what it ordains. In its task of applying the law to the
Constitution. Police power is the plenary power vested in Congress facts as found in deciding cases, the judiciary is called upon to
to make laws not repugnant to the Constitution. This rule is maintain inviolate what is decreed by the fundamental law. Even
basic. 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
In Metropolitan Manila Development Authority v. Viron corollary of this basic principle that the Constitution is paramount.
Transportation Co., Inc.,[45] the Court held that, "Police power is It overrides any governmental measure that fails to live up to its
the plenary power vested in the legislature to make, ordain, and mandates. Thereby there is a recognition of its being the supreme
establish wholesome and reasonable laws, statutes and law.[58]
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 Sustaining the RTC's ruling would make a dangerous precedent. It
vested in the legislature by the constitution to make, ordain, and will allow Congress to do indirectly what it cannot do directly. In
establish all manner of wholesome and reasonable laws, statutes, order to circumvent the constitutional prohibition on franchises
that are exclusive in character, all Congress has to do is to create [20]
Id. at 117.
a law allowing the BOD and the LWUA to create franchises that
are exclusive in character, as in the present case. [21]
345 Phil. 9 (1997).

WHEREFORE, we GRANT the petition. We DECLARE Section 47 [22]

Id. at 34.
of Presidential Decree No. 198 UNCONSTITUTIONAL. We SET
ASIDE the 1 October 2004 Judgment and 6 November 2004 Order [23]
234 Phil. 443 (1987).
of the Regional Trial Court, Judicial Region 1, Branch 62, La
Trinidad, Benguet, in Civil Case No. 03-CV-1878 and REINSTATE [24]
Id. at 451.
the 23 July 2002 Resolution and 15 August 2002 Decision of the
National Water Resources Board. [25]
G.R. Nos. 157870, 158633 and 161658, 3 November 2008, 570
SCRA 410.
SO ORDERED.
[26]
Id. at 422-423.
Corona, C.J., Velasco, Jr., Nachura, Peralta, Bersamin, Del Castillo,
Villarama, Jr., Perez, and Sereno, JJ., concur. [27]
G.R. No. 174340, 17 October 2006, 504 SCRA 704.
Carpio Morales, J., consistent with my position in Metropolitan
Cebu.. v. Adala, I concur. [28]
Id. at 731.
Leonardo-De Castro, J., I join the dissent of J. Brion.
Brion,  J., I dissent: see opinion. [29]
453 Phil. 586 (2003).
Abad, J., see concurring opinion.
Mendoza, J., on official leave. [30]
Id. at 631.

[31]
335 Phil. 82 (1997).

[32]
Id. at 101.
[1]
Rollo, pp. 9-19.
[33]
G.R. No. 168914, 4 July 2007, 526 SCRA 465.
[2]
Id. at 22-40. Penned by Judge Fernando P. Cabato.
[34]
Id. at 479-482.
[3]
Id. at 41-44.
[35]
Id. at 13.
[4]
Id. at 45-49.
[36]
Id.
[5]
Id. at 47-49.
[37]
Supra note 25.
[6]
Id. at 50-52.
[38]
Id. at 423.
[7]
Id. at 35.
[39]
Supra note 27.
[8]
G.R. Nos. 162243, 164516 and 171875, 3 December 2009, 606
[40]
SCRA 444. Id. at 731.

[41]
[9]
Id. at 485. G.R. No. 103524, 15 April 1992, 208 SCRA 133.

[42]
[10]
G.R. No. 170516, 16 July 2008, 558 SCRA 468. Id. at 142.

[43]
[11]
450 Phil. 744 (2003). 146 Phil. 798 (1970).

[44]
[12]
Supra note 10 at 540. Id. at 806.

[45]
[13]
487 Phil. 531 (2004). G.R. Nos. 170656 and 170657, 15 August 2007, 530 SCRA 341.

[46]
[14]
Id. at 579. Id. at 362.

[47]
[15]
G.R. No. 113926, 23 October 1996, 263 SCRA 483. G.R. No. 166494, 29 June 2007, 526 SCRA 130.

[48]
[16]
Id. at 488. Id. at 144.

[49]
[17]
424 Phil. 372 (2002). 496 Phil. 83 (2005)

[50]
[18]
Id. at 400. Id. at 91-92.

[51]
[19]
457 Phil. 101 (2003). Supra note 27.
[52]
Id. at 730. Sec. 47. Exclusive Franchise - No franchise shall be granted to any
other person or agency for domestic, industrial, or commercial
[53]
G.R. Nos. 178158 and 180428, 4 December 2009, 607 SCRA water service within the district or any portion thereof unless and
413. except to the extent that the board of directors of said
district consents thereto by resolution duly adopted, such
[54]
Id. at 528. resolution, however, shall be subject to review by the
Administration.[3] [Emphasis supplied]
[55]
Supra note 41.

[56]
Id. at 142. The invalidity of exclusive franchises is not in dispute

[57]
Supra note 43. I reiterate that, contrary to the majority's statements, I do not
dispute that both the 1973 and the 1987 Constitutions clearly
[58]
Id. at 806-807. 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
Constitution[4] (the Constitution in force when P.D. No. 198 was
DISSENTING OPINION 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

BRION, J.: operation of a public utility shall be granted except to citizens of
the Philippines or to corporations or associations organized under
I dissent. the laws of the Philippines, at least sixty per centum of whose
capital is owned by such citizens; nor shall such franchise,
Lest this Dissent be misunderstood, I shall clarify at the outset that certificate, or authorization be exclusive in character or for
I do not dispute the majority position that an exclusive franchise is a longer period than fifty years. Neither shall any such franchise or
forbidden by the Constitution.  The prohibition is in an express right be granted except under the condition that it shall be subject
words of the Constitution and cannot be disputed. to amendment, alteration, or repeal by the Congress when the
common good so requires. The State shall encourage equity
My misgiving arises from the majority's failure to properly resolve participation in public utilities by the general public. The
the issue of whether or not Section 47 of P.D. No. 198 embodies a participation of foreign investors in the governing body of any
prohibited exclusive franchise.  I believe that the Court must public utility enterprise shall be limited to their proportionate share
carefully examine and analyze the application of the constitutional in its capital, and all the executive and managing officers of such
command to Section 47 and explain the exact legal basis for its corporation or association must be citizens of the Philippines.
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 For the majority to characterize the Dissent as an argument for the
of the grant of an exclusive franchise - can regulate the grant of grant of exclusive franchises by former President Marcos, by the
subsequent franchises.  In the present case, I take the view that water district's board of directors, by the LWUA, and by this Court
the law can so allow in order to efficiently and effectively provide would be to misread the Dissent and blur the issues that it raises.
[5]
its citizens with the most basic utility.

Respondent La Trinidad Water District (LTWD) is a local water Section 47 of P.D. 198 does not violate Section 5, Article XIV of
utility created under Presidential Decree ( P.D.) No. 198.[1] It is a the 1973 Constitution
government-owned and controlled corporation[2] authorized by law
to supply water for domestic, industrial, and commercial purposes The majority insists that Section 47 of P.D. 198 indirectly grants an
within the Municipality of La Trinidad.  On the other hand, the exclusive franchise in favor of local water districts.  In their
petitioner Tawang Multi-Purpose Cooperative (TMPC) is an reading, the law "allows the board of directors of a water district
applicant for a certificate of public convenience (CPC) to operate and the Local Water Utilities Administrator (LWUA) to create
and maintain a waterworks system in Barangay Tawang in the franchises that are exclusive in character."[6] I disagree, as the
Municipality of La Trinidad. majority opinion does not at all specify and is unclear on how any
franchise can be indirectly exclusive.  What the law allows is
The RTC ruled that a CPC in favor of TMPC cannot be issued merely the regulation of the grant of subsequent franchises so that
without the latter having applied for the consent of the local water the government - through government-owned and controlled
district in accordance with Section 47 of P.D. No. 198. In effect, corporations - can protect itself and the general public it serves in
the RTC ruled that Section 47 does not involve the grant of an the operation of public utilities.
exclusive franchise.   Thus, the TMPC filed the present petition for
review on certiorari under Rule 45 of the Rules of Court, An exclusive franchise, in its plainest meaning, signifies that no
questioning the validity of Section 47 of P.D. No. 198, which other entity, apart from the grantee, could be given a franchise. 
provides: 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 MR. MONSOD.  May we just make a distinction? As we know, there
other person or agency for domestic, industrial, or commercial are natural monopolies or what we call "structural monopolies." 
water service within the district or any portion thereof unless and Structural monopolies are monopolies not by the nature of their
except to the extent that the board of directors of said activities, like electric power, for example, but by the nature of the
district consents thereto by resolution duly adopted, such market.  There may be instances when the market has not
resolution, however, shall be subject to review by the developed to such extent that it will only allow, say, one steel
Administration.[7] 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
Despite its title, the assailed provision does not absolutely monopoly.[9]
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 If, indeed, the Constitutional Commission in discussing the non-
before another franchise within the district is granted. exclusivity clause had accepted the merits of government
Thus, it is a regulation on the grant of any subsequent franchise monopolies, should this Court consider unconstitutional a provision
where the local water district, as original grantee, may grant or that allows a lesser degree of regulation--i.e., a government
refuse its consent. If it consents, the non-exclusive nature of its agency giving its consent to the application of a CPC with the
franchise becomes only too clear.  Should it refuse, its action does protection of the viability of the government agency and public
not remain unchecked as the franchise applicant may ask the good as the standards of its action?
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) Safeguards against abuse of authority by
that grants a subsequent franchise if one will be allowed. the water districts' board of directors
and the LWUA
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 The refusal of the local water district or the LWUA to consent to
consent to the application for a CPC cannot be considered as a other franchises would carry with it the legal presumption that
constitutional infringement. A government agency's refusal to public officers regularly perform their official functions. [10] If, on
consent to the grant of a franchise to another entity, based on the other hand, the officers, directors or trustees of the local water
reasonable and legitimate grounds, should not be construed as a districts and the LWUA act arbitrarily and unjustifiably refuse their
violation of the constitutional mandate on the non-exclusivity of a consent to an applicant of a franchise, they may be held liable for
franchise where the standards for the grant or refusal are clearly their actions. The local water districts[11] and the LWUA[12] are
spelled out in the law. Effectively, what the law and the State government-owned and controlled corporations (GOCCs).  The
(acting through its own agency or a government-owned or directors of the local water districts and the trustees of the LWUA
controlled corporation) thereby undertake is merely an act of are government employees subject to civil service laws and anti-
regulation that the Constitution does not prohibit.  To say that a graft laws.[13]  Moreover, the LWUA is attached to the Office of the
legal provision is unconstitutional simply because it enables a President[14] which has the authority to review its acts. Should
grantee, a government instrumentality, to determine the these acts in the Executive Department constitute grave abuse of
soundness of granting a subsequent franchise in its area is discretion, the Courts may strike them down under its broad
contrary to the government's inherent right to exercise police powers of review.[15]
power in regulating public utilities for the protection of the public
and the utilities themselves. [8] Any abuse of authority that the local water districts may be feared
to commit is balanced by the control that the government exerts in
It should also be noted that even after the Marcos regime, their creation and operations. The government creates and
constitutional experts have taken the view that the government organizes local water districts in accordance with a specific law,
can and should take a strong active part in ensuring public access P.D. No. 198.[16]  There is no private party involved as a co-owner
to basic utilities. The deliberations of the Constitutional in the creation of local water districts .  Prior to the local water
Commission for the 1987 Constitution (which contains the same districts' creation, the national or local government directly owns
provision found in the 1973 Constitution on the non-exclusivity of and controls all their assets.  The government's control over them
public utility franchises) regarding monopolies regulated by the is further asserted through their board of directors, who are
state may guide, though not necessarily bind, us: appointed by the municipal or city mayor or by the provincial
governor.  The directors are not co-owners of the local water
MR. DAVIDE: If the idea is really to promote the private sector, district but, like other water district personnel, are government
may we not provide here that the government can, in no employees subject to civil service laws and anti-graft laws. [17]
case, practice monopoly except in certain areas? Under this set-up, the control that exists over the grant of
franchises, which originally belongs to the State, simply remained
MR. VILLEGAS. No, because in the economic field, there are and is maintained with the State acting through the local
definitely areas where the State can intervene and can government units and the government-owned and controlled
actually get involved in monopolies for the public good. corporations under them.

MR. DAVIDE. Yes, we have provisions here allowing such a Because of the government's extensive financial support to these
monopoly in times of national emergency. 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
MR. VILLEGAS. Not even in emergency; for the continuing welfare districts are subject to annual audits performed by independent
of consumers. 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 sections work hand in hand with Section 47 of P.D. No. 198. 
income: (1) as payment for obligations and essential current Section 31 of P.D. No. 198, which is very similar to Section 47
operating expenses; (2) as a reserve for debt service, and for of P.D. No. 198, directly prohibits persons from selling or disposing
operations and maintenance to be used during periods of water for public purposes within the service area of the local water
calamities, force majeure or unforeseen events; and (3) as a district:
reserve exclusively for the expansion and improvement of their
facilities. In this manner, the law ensures that their officers or Section 31.  Protection of Waters and Facilities of District. - A
directors do not profit from local water districts and that the district shall have the right to:
operations thereof would be focused on improving public service. 
x  x x  x
The possibility that the officers would refuse their consent to
another franchise applicant for reasons of personal gain is, thus,
eliminated. (c) Prohibit any person, firm or corporation from vending selling,
or otherwise disposing of water for public purposes within the
Public policy behind Section 47 of  P.D. No. 198  service area of the district where district facilities are available to
provide such service, or fix terms and conditions by permit for
Without a clear showing that the Constitution was violated by the such sale or disposition of water.
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 Thus, Section 47 of P.D. No. 198 provides that before a person or
based on sound public policy.  P.D. No. 198 requires an applicant entity is allowed to provide water services where the local water
to first obtain the consent of the local water district and the LWUA district's facilities are already available, one must ask for the
for important reasons.  First, it aims to protect the government's consent of the board of directors of the local water district, whose
investment.  Second, it avoids a situation where ruinous action on the matter may be reviewed by the LWUA.
competition could compromise the supply of public utilities in poor
and remote areas. 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
A first reason the government seeks to prioritize local water local water district to charge other entities producing water for
districts is the protection of its investments - it pours its scarce commercial or industrial uses with a production assessment, to
financial resources into these water districts. The law primarily compensate for financial reverses brought about by the operations
establishes the LWUA as a specialized lending institution for the of the water provider; failure to pay this assessment results in
promotion, development and financing of water utilities. [19]  Section liability for damages and/or the issuance of an order of injunction.
73 of P.D. No. 198 also authorizes the LWUA to contract loans and
credits, and incur indebtedness with foreign governments or Section 39.  Production Assessment.--In the event the board of a
international financial institutions for the accomplishment of its district finds, after notice and hearing, that production of ground
objectives.  Moreover, the President of the Philippines is water by other entities within the district for commercial or
empowered not only to negotiate or contract with foreign industrial uses i[s] injuring or reducing the district's financial
governments or international financial institutions on behalf of the condition, the board may adopt and levy a ground water
LWUA; he or she may also absolutely and unconditionally production assessment to compensate for such loss.  In
guarantee, in the name of the Republic of the Philippines, the connection therewith, the district may require necessary reports by
payment of the loans. In addition, the law provides that the the operator of any commercial or industrial well.  Failure to pay
General Appropriations Act shall include an outlay to meet the said assessment shall constitute an invasion of the waters of the
financial requirements of non-viable local water districts or the district and shall entitle this district to an injunction and damages
special projects of local water districts. [20] pursuant to Section [31] of this Title.

The law also adopts a policy to keep the operations of local water From these, it can be seen that Article XIV, Section 5 of
districts economically secure and viable.  The "whereas" clauses of the 1973 Constitution and P.D. No. 198 share the same
the law explain the need to establish local water districts: the lack purpose of seeking to ensure regular water supply to the
of water utilities in provincial areas and the poor quality of the whole country, particularly to the remote areas. By
water found in some areas.  The law sought to solve these requiring a prospective franchise applicant to obtain the consent of
problems by encouraging the creation of local water districts that the local water district or the LWUA, the law does not thereby
the national government would support through technical advisory grant it an exclusive franchise; it simply gives the water district the
services and financing.[21]   These local water districts are heavily opportunity to have a say on the entry of a competitor whose
regulated and depend on government support for their operations can adversely affect its viability and the service it gives
subsistence.  If a private entity provides stiff competition against a to consumers.  This is far from an exclusive franchise that allows
local water district, causes it to close down and, thereafter, no other entity, apart from the only grantee, to have a franchise.
chooses to discontinue its business, the problem of finding a Section 47 of P.D. No. 198 does not bar other franchise applicants;
replacement water supplier for a poor, remote area will recur.  Not it merely regulates the grant of subsequent franchises to ensure
only does the re-organization of a local water district drain limited that the market is not too saturated to the point of adversely
public funds; the residents of these far-flung areas would have to affecting existing government water suppliers, all with the end of
endure the absence of water supply during the considerable time it ensuring the public the water supply it needs.
would take to find an alternative water supply.
Revisiting Metropolitan Cebu Water
Thus, as a matter of foresight, Section 47 of P.D. No. 198 and District (MCWD) v. Margarita A. Adala
other provisions within the law aim to avert the negative effects of
competition on the financial stability of local water districts.   These
Based on the foregoing discussion, I submit that there exists
ample justification to reverse our ruling in Metropolitan Cebu Thus, this Court had seen it fit to overturn or abandon the rulings
Water District (MCWD) v. Margarita A. Adala.[22]  As in the present set in its previous decisions. In Philippine Guardians Brotherhood,
ponencia, there was no discussion in Metro Cebu Water District of Inc. v. Commission on Elections,[26] we reversed our earlier ruling
what constitutes a grant of an exclusive franchise as opposed to a in Philippine Mines Safety Environment Association v. Commission
valid regulation of franchises by the government or how the on Elections.[27]    And in De Castro,[28] we re-examined our
questioned provision violated the constitutional mandate against decision in In re appointments of Hon. Valenzuela and Hon.
exclusive franchises.  It was simply presumed that there was Vallarta[29] although the re-examination failed for lack of the
a violation. It is worth noting that the Court disposed of the necessary supporting votes.  
issue in just one paragraph that stated:
During the deliberations of the present case, a respected colleague
Since Section 47 of P.D. 198, which vests an "exclusive franchise" hesitated at the idea of overturning a former ruling that has
upon public utilities, is clearly repugnant to Article XIV, Section 5 declared a law unconstitutional on the ground that this Court, once
of the 1973 Constitution, it is unconstitutional and may not, it declares a law null, cannot breathe life into its already dead
therefore, be relied upon by [MCWD] in support of its opposition provisions.  It raises fears that the people and the other branches
against [Adala's] application for CPC and the subsequent grant of government will not treat the Court's declarations of nullity of
thereof by the NWRB.[23] laws seriously. [30]

We cannot hold that the Court is empowered to reverse its

In a legal system that rests heavily on precedents, this manner of
established doctrines but is powerless to review laws that
reasoning would not only be unfair to the parties; it would also
have been declared void; no justification simply exists for
confuse and bewilder the legal community and the general public
such distinctions.  In reversing its decisions, this Court's primary
regarding the interpretation of an important constitutional
consideration is to arrive at a just and judicious ruling and avoiding
provision.  This kind of approach should always be subject to our
the ill effects of a previous ruling.  It is by pursuing such objectives
continuing review and examination.
that this Court earns the respect of the people and the other
branches of government. Precisely, this Court has taken a contrary
In reversing a previous ruling issued by the Court, we are not
view in Kilosbayan, Inc. v. Morato,[31] when it noted that the US
unmindful of the legal maxim stare decisis et non quieta movere
Supreme Court declared the Legal Tender Acts void in Hepburn v.
(literally, to stand by the decision and disturb not what is settled).
Griswold,[32] but subsequently declared these statutes as valid in
This maxim is a very convenient practice that the conclusion
Knox v. Lee.[33]  We lauded the American jurists who voted for the
reached in one case can be applied to subsequent cases where the
validity of the Legal Tender Acts, which had been formerly
facts are substantially the same, even though the parties are
declared void, and noted that a change of composition in the Court
different.  However, the doctrine is not set in stone; the Court may
could prove the means of undoing an erroneous decision .[34]
wisely set it aside upon a showing that circumstances attendant in
a particular case override the benefits brought about by stare
In all, Section 47 of P.D. No. 198 does not violate the
decisis.[24]
constitutional proscription against exclusive franchises as other
persons and entities may still obtain franchises for water utilities
In our Resolution in de Castro v. Judicial and Bar Council,[25]  we
within the district upon the consent of the local water district or
explained why stare decisis is not considered inflexible with
upon a favorable finding by the LWUA, which, in turn, is
respect to this Court:
accountable to the Office of the President.   By granting this
The Court, as the highest court of the land, may be guided but is privilege to local water districts, the law does not seek to favor
not controlled by precedent.  Thus, the Court, especially with a private interests as these districts are GOCCs whose profits are
new membership, is not obliged to follow blindly a particular exclusively for public use and whose expenditures the law subjects
decision that it determines, after re-examination, to call for a to the strictest scrutiny. The restrictions applied to other private
rectification.  The adherence to precedents is strict and rigid in a persons or entities are intended to protect the government's
common-law setting like the United Kingdom, where judges make considerable investment in local water districts and to promote its
law as binding as an Act of Parliament.  But ours is not a common policy of prioritizing local water districts as a means of providing
law system; hence judicial precedents are not always strictly and water utilities throughout the country.  The protectionist approach
rigidly followed.  A judicial pronouncement in an earlier decision that the law has taken towards local water districts is not per se
may be followed as a precedent in subsequent case only when its illegal as the Constitution does not promote a total deregulation in
reasoning and justification are relevant, and the Court in the latter the operation of public utilities and is a proper exercise by the
case accepts such reasoning and justification to be applicable in government of its police power.
the case.  The application of the precedent is for the sake of
convenience and stability. 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. 
For the intervenors to insist that Valenzuela ought not to be Had the Board of Directors refused to give its consent, this action
disobeyed, or abandoned, or reversed, and that its wisdom should may still be reviewed by the LWUA, the entity most able to
guide, if not control, the Court in this case is, therefore, devoid of determine the financial and technical capacity of LTWD in order to
rationality and foundation.  They seem to conveniently forget that decide whether another water service provider is needed in the
the Constitution itself recognizes the innate authority of municipality.  Accordingly, it is my view that TMPC's CPC is invalid
the Court en banc to modify or reverse a doctrine or as it was issued without notice to the LTWD's Board of Directors.
principle of law laid down in any decision rendered en
banc or in division. ARTURO D. BRION
Associate Justice
[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
   Entitled "Declaring a National Policy Favoring Local Operation
[1]
Primer.  The steps to be undertaken for the creation of a duly-
and Control of Water Systems; Authorizing the Formation of Local organized water districts are as follows:
Water Districts and Providing for the Government and
Administration of such Districts; Chartering a National (1) LWUA conducts preliminary talks and consultation with
Administration to Facilitate Improvement of Local Water Utilities; interested local government entities.
Granting said Administration such Powers as are Necessary to
Optimize Public Service from Water Utility Operations, and for (2) The local government conducts public hearings to arrive at a
other Purposes," promulgated May 25, 1973, as amended by P.D. consensus on whether to form a water   district or not.
No. 1479.
(3) The local legislative body (the Sangguniang Bayan/Lungsod or
  Baguio Water District v. Trajano, GRN L-65428, February 20,
[2]
Sangguniang Panlalawigan, as the case may be) secures
1984, 127 SCRA 730. nominations for candidates for the water district board of directors
from business, civic, professional, education and women sectors of
[3]
Supra note 1, at 28. the community concerned.

[4]
Sec. 5, Art. XIV of the 1973 Constitution provides: (4) The Sanggunian secretary collates all nominations and
forwards the same to the appointing authority.
No franchise, certificate, or any other form of authorization for the
operation of a public utility shall be granted except to citizens of (5) The Mayor or Governor appoints the directors.
the Philippines or to corporations or associations organized under
the laws of the Philippines at least sixty per centum of the capital (6) The local legislative body deliberates and enacts a resolution to
of which is owned by such citizens, nor shall such franchise, form a water district stating therein the names and terms of office
certificate or authorization be exclusive in character or for of the duly appointed board of directors.
a longer period than fifty years. Neither shall any such franchise or
right be granted except under the condition that it shall be subject (7) Mayor or Governor approves the resolution, submits the same
to amendment, alteration or repeal in by the Batasang Pambansa to LWUA.
when the public interest so requires. The State shall encourage
equity participation in public utilities by the general public. The (8) LWUA reviews the resolution to determine compliance with
participation of foreign investors in the governing body of any Presidential Decree No. 198, as amended (Provincial Water Utilities
public utility enterprise shall be limited to their proportionate share Act of 1973) and LWUA requirements.
in the capital thereof.
Engr. Feliciano v. Commission on Audit, supra note 10, at 462-
[17]

[5]
  Ponencia, p. 11. 463.

[6]
  Ponencia, p. 8.
[18]
Ibid.

[19]
[7]
Supra note 1.   Section 50 of P.D. 198.

[20]
Kilusang Mayo Uno Labor Center v. Garcia, Jr., G.R. No. 115381,
[8]
Sections 76 and 77 of P.D. No. 198.
December 23, 1994, 239 SCRA 386, 412.
[21]
WHEREAS, domestic water systems and sanitary sewers are
[9]
Record of the Constitutional Commission, volume 3, 262-263, two of the most basic and essential elements of local utility
system, which, with a few exceptions, do not exist in provincial
First United Constructors Corporation v. Poro Point
[10]
areas in the Philippines;
Management Corporation (PPMC), G.R. No. 178799, January 19,
2009, 576 SCRA 311, 321; Gatmaitan v. Gonzales, G.R. No. WHEREAS, existing domestic water utilities are not meeting the
149226, June 26, 2006, 492 SCRA 591, 604; and PAMECA Wood needs of the communities they serve; water quality is
Treatment Plant, Inc. v. Court of Appeals, 369 Phil. 544, 555 unsatisfactory; pressure is inadequate; and reliability of service is
(1999). poor; in fact, many persons receive no piped water service
whatsoever;
[11]
Davao City Water District v. Civil Service Commission, G.R. Nos.
95237-38, September 13, 1991, 201 SCRA 593, 602; see also x  x  x  x
Feliciano v. Commission on Audit, 464 Phil. 439, 453-464 (2004).

[12]
WHEREAS, local water utilities should be locally-controlled and
Section 49 of P.D. No. 198. managed, as well as have support on the national level in the area
of technical advisory services and financing[.]
Engr. Feliciano v. Commission on Audit, supra note 10, at 462-
[13]

463. [22]
G.R. No. 168914, July 4, 2007, 526 SCRA 465.
[14]
Section 49 of P.D. No. 198.
[23]
Ibid. latter to come to this Court on petition for review.

Philippine Guardians Brotherhood, Inc. v. Commission on

[24]
The Court has previously held in Metropolitan Cebu Water District
Elections, G.R. No. 190529, April 29, 2010. v. Adala[2] that Section 47[3] of P.D. 198,[4] is unconstitutional for
being contrary to Article XIV, Section 5 of the 1973 Constitution
[25]
G.R. Nos. 191002, 191032, 191057, 191149, 191342 and and Article XII, Section 11 of the 1987 Constitution.  Some in the
191420, and A.M. No. 10-2-5-SC, April 20, 2010, citing Limketkai Court would, however, have its above ruling reexamined based on
Sons Milling, Inc. v. Court of Appeals, G.R. No. 118509, September the view that Section 47 does not actually provide for an exclusive
5, 1996, 261 SCRA 464, 467. franchise which would violate the Constitution.

[26]
Supra note 23. The Court's conclusion and ruling in the Adala case read:

[27]
G.R. No. 177548, Resolution dated May 10, 2007. Since Section 47 of P.D. 198, which vests an "exclusive
franchise" upon public utilities, is clearly repugnant to
[28]
Supra note 24. Article XIV, Section 5 of the 1973 Constitution, it is
unconstitutional and may not, therefore, be relied upon by
[29]
358 Phil. 896 (1998). petitioner in support of its opposition against respondent's
application for CPC and the subsequent grant thereof by
[30]
Justice Abad's Dissenting Opinion, p. 2. the NWRB.

[31]
320 Phil. 171, 181-182 (1995).   WHEREFORE, Section 47 of P.D. 198 is unconstitutional. 

[32]
8 Wall. 603 (1869).
Paragraph 2, Article 7 of the New Civil Code provides that "when
[33]
the courts declared a law to be inconsistent with the Constitution,
12 Wall. 457 (1871).
the former shall be void and the latter shall govern."
[34]
Supra note 30.  The Court declared that:
Since the Court, exercising its Constitutional power of judicial
review, has declared Section 47 of P.D. 198 void and
History has vindicated the overruling of the Hepburn case by the
unconstitutional, such section ceased to become law from the
new majority.  The Legal Tender Cases proved to be the Court's
beginning.   The Supreme Court's power of review does not permit
means of salvation from what Chief Justice Hughes later described
it to rewrite P.D. 198 in a subsequent case and breathe life to its
as one of the Court's "self-inflicted wounds."
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
CONCURRING OPINION 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

ABAD, J.: T. Carpio that there exists no justification for abandoning the
Court's previous ruling on the matter.
On October 9, 2000 petitioner Tawang Multi-Purpose Cooperative
(TMPC), a registered cooperative established by Barangay I vote to GRANT TMPC's petition for review and SET ASIDE the
Tawang, La Trinidad residents for the purpose of operating a decision of the trial court.
domestic drinking water service, applied with the National Water
Resources Board (the Board) for a Certificate of Public ROBERTO A. ABAD
Convenience (CPC) to maintain and operate a waterworks system Associate Justice
within its barangay.

But respondent La Trinidad Water District (LTWD), a government-

owned corporation[1] that supplied water within La Trinidad for
domestic, industrial, and commercial purposes, opposed the [1]
  Created pursuant to Presidential Decree (P.D.) 198, also known
application.  LTWD claimed that its franchise was exclusive in that as the Provincial Water Utilities Act of 1973.
its charter provides that no separate franchise can be granted
within its area of operation without its prior written consent.  Still, [2]
  G.R. No. 168914, July 4, 2007, 526 SCRA 465.
the Board granted TMPC's application on July 23, 2002, resulting
in the issuance of a five-year CPC in its favor. [3]
  Sec. 47.  Exclusive Franchise.  No franchise shall be granted to
any other person or agency for domestic, industrial or commercial
LTWD contested the grant before the Regional Trial Court (RTC) of water service within the district or any portion thereof unless and
La Trinidad which, after hearing, rendered judgment setting aside except to the extent that the board of directors of said district
the Board's decision and canceling the CPC it issued to TMPC.  The consents thereto by resolution duly adopted, such resolution,
RTC denied TMPC's motion for reconsideration, prompting the 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
President Marcos on May 25, 1973.

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