Batangas CATV, Inc. v. Court of Appeals (G.R. No.

138810, 29 September 2004)

FACTS:
On July 28, 1986, respondent Sangguniang Panlungsod enacted Resolution No. 210
granting petitioner a permit to construct, install, and operate a Community Antenna
Television (CATV) or Cable Television system in Batangas City. Section 8 of the
Resolution provides that petitioner is authorized to charge its subscribers the maximum
rates specified provided that any increase of rates shall be subject to the approval of the
Sangguniang Panlungsod.
Sometime in November 1993, petitioner increased its subscriber rates from P88.00 to
P180.00 per month. As a result, respondent Mayor wrote petitioner a letter threatening
to cancel its permit unless it secures the approval of respondent Sangguniang
Panlungsod, pursuant to Resolution No. 210.
Petitioner then filed with the RTC, Branch 7, Batangas City a petition alleging that
respondent Sangguniang Panlungsod has no authority to regulate the subscriber rates
charged by CATV operators because under Executive Order No. 205, the National
Telecommunications Commission (NTC) has the sole authority to regulate the CATV
operation in the Philippines. Also, the LGC extends to LGUs the general power to
perform any act that would benefit constituents but doesn’t authorize them to regulate
CATV operation. Respondent argues that the Resolution was enacted pursuant to Sec.
177(c) & (d) of BP 337 (LGC of 1983) which authorizes LGUs to regulate businesses
and is in the nature of a contract between petitioner and respondent.
ISSUE:
Whether or not a local government unit (LGU) may regulate the subscriber rates
charged by CATV operators within its territorial jurisdiction .
RATIO:
No, the resolution is an enactment of an LGU acting only as agent of the national
legislature. There is no law authorizing LGUs to grant franchises to operate CATV.
Whatever authority the LGUs had before, the same had been withdrawn when
President Marcos issued P.D. No. 1512 terminating all franchises, permits or certificates
for the operation of CATV system previously granted by local governments.
Pursuant to Section 3 of E.O. No. 436, only persons, associations, partnerships,
corporations or cooperatives granted a Provisional Authority or Certificate of Authority
by the NTC may install, operate and maintain a cable television system or render cable
television service within a service area. It is clear that in the absence of constitutional or
legislative authorization, municipalities have no power to grant franchises.
Therefore, is that in light of the above laws and E.O. No. 436, the NTC exercises
regulatory power over CATV operators to the exclusion of other bodies. Like any other
enterprise, CATV operation maybe regulated by LGUs under the general welfare
clause. But, while the Court recognizes the LGUs’ power under the general welfare
clause, it cannot sustain Resolution No. 210. The flaws in Resolution No. 210 are: it
violates the mandate of existing laws; and it violates the State’s deregulation policy over
the CATV industry.
LGUs must recognize that technical matters concerning CATV operation are within the
exclusive regulatory power of the NTC. Consequently, the protection of the
constitutional provision as to impairment of the obligation of a contract does not extend
to privileges, franchises and grants given by a municipality in excess of its powers, or
ultra vires.

NOTES:

The regulation and supervision of the cable television industry in the Philippines

shall remain vested solely with the National Telecommunications Commission
(NTC). No. 436, the NTC exercises regulatory power over CATV operators to the
exclusion of other bodies.

On the other hand, Sangguniang Panlungsod, like other local legislative bodies, has
been empowered to enact ordinances and approve resolutions under the general
welfare clause. R.A. No. 7160 (the Local Government Code of 1991) Every local
government unit shall exercise the powers expressly granted, those necessarily
implied therefrom, as well as powers necessary, appropriate, or incidental for its
efficient and effective governance, and those which are essential to the promotion of
the general welfare.
The general welfare clause is the delegation in statutory form of the police power
of the State to LGUs.

Resolution No. 210 is an enactment of an LGU acting only as agent of the national
legislature. Necessarily, its act must reflect and conform to the will of its principal.
Since E.O. No. 205, a general law, mandates that the regulation of CATV operations
shall be exercised by the NTC, an LGU cannot enact an ordinance or approve a
resolution in violation of the said law. It is a fundamental principle that municipal
ordinances are inferior in status and subordinate to the laws of the state. An
ordinance in conflict with a state law of general character and statewide application
is universally held to be invalid.
The devolution of powers to the LGUs, pursuant to the Constitutional mandate of
ensuring their autonomy, has bred jurisdictional tension between said LGUs and the
State. LGUs must be reminded that they merely form part of the whole. Thus, when
the Drafters of the 1987 Constitution enunciated the policy of ensuring the autonomy
of local governments,55 it was never their intention to create an imperium in
imperio and install an intra-sovereign political subdivision independent of a single
sovereign state.