Tawang Multi-Purpose Cooperative v.

La Trinidad Water District

TAWANG MULTI-PURPOSE COOPERATIVE v. LA TRINIDAD WATER DISTRICT

G.R. No. 166471, March 22, 2011

FACTS:

Petitioner Tawang Multi-Purpose Cooperative (TMPC) was organized to provide domestic water services
in Brgy. Twang, La Trinidad, Benguet. Respondent La Trinidad Water District (LTWD) is a government
owned and controlled corporation, a local water utility created under PD No. 198, authorized to supply
water for domestic, industrial and commercial purpose within municipality of La Trinidad, Benguet.

October 9, 2000, TMPC filed with National Water Resources Board an application for Certificate of Public
Convenience (CPC) to operate and maintain a waterworks system in Brgy. Tawang LTWD claimed that
under Sec. 47 of PD No. 198, as amended, its franchise is exclusive.

August 15, 2002, the NWRB held that LTWD’s franchise cannot be exclusive since exclusive franchises
are unconstitutional under Sec. 2, Art. XII.

October 1, 2004, upon appeal of LTWD to the RTC, the latter cancelled TMPC’s CPC and held that Sec. 47
of PD No. 198 is valid; that the ultimate purpose of the Constitution 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. 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.

November 6, 2004, RTC denied the motion for reconsideration filed by TMPC.

ISSUE:

Whether RTC erred in holding that Sec. 47 of PD No. 198 is valid

HELD:

Yes, the Supreme Court ruled in favor of petitioner. Quando aliquid prohibetur ex directo, prohibetur et
per obliquum – Those that cannot be done directly cannot be done indirectly. Under Sec. 2 and 11, Art.
XII of the 1987 Constitution, The President, Congress, and Court cannot create indirectly franchises that
are exclusive in character by allowing the Board of Directors (BOD) of a water district and Local Water
Utilities Administration (LWUA) to create franchises that are exclusive in character. Sec. 47 of PD no. 198
is in conflict with the above-mentioned provision of the Constitution. And the rule is that in case of
conflict between the Constitution and a statute, the former prevails, because the constitution is the
basic law to which all other laws must conform to.