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DECENTRALIZATION AND DEVOLUTION DISTINGUISHED 4. The RTC decided in favor of petitioner BCI, holding that Resolution No.

f petitioner BCI, holding that Resolution No. 210 violates the


GR No. 138810 – BATANGAS CATV INC. v. CA State's policy of deregulation set forth by the NTC. The RTC also pointed out that the
Sandoval-Gutierrez, J. sole agency of the government which can regulate CATV operations is the NTC and
the LGUs cannot exercise regulatory power over it without appropriate legislation.
Petitioner Batangas CATV Inc. (CATV = cable TV) increased its subscriber rates from P88 5. Unsatisfied, respondents appealed to the CA which decided in their favor. The CA
to P180 per month. The Mayor of Batangas wrote petitioner a letter threatening to cancel its reversed the RTC, ratiocinating as follows:
permit (granted by Sangguniang Panlungsod Resolution No. 210). Petitioner thus filed a a. Though NTC is granted regulatory powers by EO 205, this does not preclude
petition for injunction in the Batangas RTC, alleging that it is only the NTC which has the the Sangguniang Panlungsod from regulating the CATV operations in their
sole authority to regulate CATV operations in the Philippines. The RTC granted their petition locality under the powers vested by the Local Government Code ("LGC") [i.e.
but was reversed by the CA holding that the General Welfare Clause of the Local Section 457 paragraph 3(ii) of RA 7160]
Government Code (i.e. Section 457) vested the Sangguniang Panlungsod regulatory powers b. Under the General Welfare Clause (cited above) LGUs can perform any
which they can use to benefit their constituencies. On appeal, the SC reversed the CA and power that will benefit their constituencies. They can exercises powers that
reinstated the RTC ruling, holding that while the LGU does have regulatory powers, these are:
are general in nature and are only delegated by the national legislature. Hence, the national i. Expressly granted
legislature is still the LGU's principal and the latter cannot defy its will or modify or violate it. ii. Necessarily implied from power that is expressly granted
The legislature specifically vested exclusive jurisdiction on the NTC over matters relating to iii. Necessary, appropriate or incidental to efficient and effective
CATV operations and the LGU cannot negate this by the mere issuance of a resolution or governance
ordinance. iv. Essential to promotion of general welfare of their inhabitants
c. Thus, the regulation of businesses in the locality is provided for in the General
DOCTRINE Welfare Clause of the LGC.
Where the state legislature has made provision for the regulation of conduct, it has 6. BCI filed an MR but was denied.
manifested its intention that the subject matter shall be fully covered by the statute, 7. Hence this petition.
and that a municipality, under its general powers, cannot regulate the same conduct.

A municipal ordinance is inferior in status to the laws of the state. Hence, an ordinance in ISSUE with HOLDING
conflict of a state law of general character is universally held to be invalid. Such is the case 1. Whether or not a local government unit (LGU) can regulate the subscriber rates charged
here. under a general grant of power, a municipal corporation cannot adopt ordinances by a cable tv provider within its territorial jurisdiction? – NO.
which infringe the spirit of a state law or repugnant to the general policy of the state. The a. Petitioner: though the LGC extends to the LGU the general power to perform
delegate cannot be superior to the principal or exercise powers higher than those of the acts which will benefit its constituents, it does not authorize them to regulate
latter. It is a heresy to suggest that the local government units can undo the acts of Congress, CATV operation. Pursuant to EO 205, only the NTC has such authority.
from which they have derived their power in the first place and negate by mere ordinance b. Respondents: Resolution 210 was enacted pursuant to the General Welfare
the mandate of the statute. Clause of the LGC which authorizes them to regulate businesses.
"Businesses" necessarily includes the CATV industry. Resolution 210 is also
To say that LGUs exercise the same regulatory power over matters which are peculiarly of the nature of a contract between BCI and the Sanggunian. To hold that EO
within the NTC's competence is to promote a scenario of LGUs and the NTC locked in 205 amended such contract violates the non-impairment of contracts clause
constant clash over the appropriate regulatory measure on the same subject matter. LGUs of the Constitution.
must recognize that technical matters concerning CATV operation are within the exclusive c. Supreme Court:
regulatory power of the NTC. i. Legislative History: PD 1512 issued by Marcos granted Sining
Makulay Inc an exclusive franchise (creating a monopoly) and
FACTS terminated all franchises, permits or certificates of CATV operators
1. July 1986 – Batangas Sangguniang Panlungsod ("BSP") enacted Resolution No. 210 in the Philippines. LOI 894 vested direct supervision over the
granting petitioner Batangas CATV Inc. ("BCI") a permit to construct, install and operate operations of Sining Makulay to the Board of Communications which
a CATV system in Batangas City, PROVIDED, however, that "any increase of rates eventually became NTC. After the EDSA Revolution, Cory Aquino
shall be subject to the approval of the Sangguniang Panlungsod." issued an EO, opening the CATV industry to all Philippine citizens.
2. November 1993 – BCI increased its subscriber rates from PHP 88 to PHP 180 per Ramos issued EO 436 vesting the regulation and supervision of the
month. In response, respondent Batangas Mayor wrote BCI a letter threatening to CATV industry solely with the NTC.
cancel its permit unless it secures the approval of the BSP pursuant to Resolution No. ii. It is clear that the regulatory power stayed with NTC, based on
210. Ramos' EO. The logical conclusion is that in light of the
3. Aggrieved, BCI filed a petition for injunction in Batangas RTC Branch 7 alleging that the aforementioned laws, the NTC exercise regulatory power over
BSP has no authority to regulate the subscriber rates charged by BCI because under CATV operators to the exclusion of other bodies.
EO No. 205, it is the National Telecommunications Commission (NTC) that has the sole iii. This does not in anyway strip LGUs of their general power to
authority to regulate the CATV operation in the Philippines. prescribe regulations. When EO 436 decrees that "regulatory

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power" be vested "solely" with the NTC, it pertains to the "regulatory
power" over matters peculiarly within the NTC's competence. e. The argument of the respondents that EO 205 violates the non-impairment of
iv. The General Welfare Clause is the delegation in statutory form of contracts clause (because Resolution 210 is a 'contract' granting a franchise
the police power of the State to the LGUs. CATV operation may be to BCI) is without merit. There is no law authorizing LGUs to grant franchises
regulated by LGUs under such clause, but Resolution 210 cannot to operate CATV systems. In the absence of constructional or legislative
be sustained. The flaws in Resolution No. 210 are: authorization, municipalities have no power to grant franchises. Also, the non-
1. it violates the mandate of existing laws and impairment of contracts clause does not extend to privileges franchises,
2. it violates the State's deregulation policy over the and grants given by a municipality in excess of its powers or ultra vires.
CATV industry.
d. The SC also applied the requisites of a valid ordinance as laid down by the DISPOSITIVE PORTION
accepted principles governing municipal corporations to check if Resolution WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals
210 was valid. dated February 12, 1999 as well as its Resolution dated May 26, 1999 in CA-G.R. CV No.
i. In De la Cruz v. Paraz, the SC laid the general rule that "ordinances 52461, are hereby REVERSED. The RTC Decision in Civil Case No. 4254 is AFFIRMED.
passed by virtue of the implied power found in the general No pronouncement as to costs.
welfare clause must be:
1. Reasonable OTHER NOTES
2. Consonant with the general powers and purposes of the
corporation; and Matters which are peculiarly within the NTC's competence: (not an exhaustive list)
3. Not inconsistent with the laws or policy of the state.
ii. Resolution 210 clearly contravenes EO 205 and EO 436 as it (1) determination of rates,
permits the Sangguniang Panlungsod to usurp a power exclusively (2) issuance of "certificates of authority,
vested in the NTC (fixing subscriber rates). (3) establishment of areas of operation,
iii. Where the state legislature has made provision for the regulation of (4) examination and assessment of the legal, technical and financial qualifications of
conduct, it has manifested its intention that the subject matter applicant operators,
shall be fully covered by the statute, and that a municipality, (5) granting of permits for the use of frequencies,
under its general powers, cannot regulate the same conduct. (6) regulation of ownership and operation,
1. Keller v. State: "Where there is no express power in the (7) adjudication of issues arising from its functions, and
charter of a municipality authorizing it to adopt ordinances (8) other similar matters.
regulating certain matters which are specifically covered
by a general statute, a municipal ordinance, insofar as it
attempts to regulate the subject which is completely Section 457 paragraph 3(ii), RA 7160
covered by a general statute of the legislature, may be
rendered invalid." Powers and Duties. — The Sangguniang Panlungsod shall:
iv. A municipal ordinance is inferior in status to the laws of the state.
Hence, an ordinance in conflict of a state law of general character a) Enact such ordinances as may be necessary to carry into effect and
is universally held to be invalid. Such is the case here. under a discharge the responsibilities conferred upon it by law, and such as shall be necessary and
general grant of power, a municipal corporation cannot adopt proper to provide for health and safety, comfort and convenience, maintain peace and order,
ordinances which infringe the spirit of a state law or repugnant to improve the morals, and promote the prosperity and general welfare of the community and
the general policy of the state. the inhabitants thereof, and the protection of property therein;
v. Moreover, municipal governments are only agents of the national
government. Local councils exercise only delegated legislative xxx xxx xxx
powers conferred on them by Congress as the national lawmaking
body. The delegate cannot be superior to the principal or d) Regulate, fix the license fee for, and tax any business or profession being carried on and
exercise powers higher than those of the latter. It is a heresy to exercised within the territorial jurisdiction of the city, except travel agencies, tourist guides,
suggest that the local government units can undo the acts of tourist transports, hotels, resorts, de luxe restaurants, and tourist inns of international
Congress, from which they have derived their power in the first standards which shall remain under the licensing and regulatory power of the Ministry of
place, and negate by mere ordinance the mandate of the statute. Tourism which shall exercise such authority without infringement on the taxing and
vi. Thus, the SC held that the NTC, has exclusive jurisdiction over regulatory powers of the city government;'
matters affecting CATV operation, including specifically the fixing of
subscriber rates, but nothing herein precludes LGUs from exercising
its general power, under R.A. No. 7160, to prescribe regulations to
promote the health, morals, peace, education, good order or safety DIGESTER:
and general welfare of their constituents.