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July 2007 - Philippine Supreme Court Decisions/Resolutions

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Philippine Supreme Court Jurisprudence > Year 2007

> July 2007 Decisions > G.R. No. 168914 -
Metropolitan Cebu Water District v. Margarita A. Adala:

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G.R. No. 168914 - Metropolitan Cebu Water District v.
 Margarita A. Adala

EN BANC

[G.R. NO. 168914 : July 4, 2007]

METROPOLITAN CEBU WATER DISTRICT

(MCWD), Petitioner, v. MARGARITA A. ADALA,
Respondent.

DECISION

ChanRobles CPA
CARPIO MORALES, J.:
Review Online
The Decision of the Regional Trial Court (RTC) of Cebu
dated February 10, 2005, which affirmed in toto the
Decision of the National Water Resources Board
(NWRB) dated September 22, 2003 in favor of
Margarita A. Adala, respondent, is being challenged in
the present Petition for Review on Certiorari.

Respondent filed on October 24, 2002 an application

with the NWRB for the issuance of a Certificate of
Public Convenience (CPC) to operate and maintain
waterworks system in sitios San Vicente, Fatima, and
Sambag in Barangay Bulacao, Cebu City.

At the initial hearing of December 16, 2002 during

which respondent submitted proof of compliance with
ChanRobles Special
jurisdictional requirements of notice and publication,
Lecture Series
herein petitioner Metropolitan Cebu Water District, a
government-owned and controlled corporation created

pursuant to P.D. 198 1 which took effect upon its

issuance by then President Marcos on May 25, 1973,
as amended, appeared through its lawyers to oppose
the application.
 While petitioner filed a formal opposition by mail, a
copy thereof had not, on December 16, 2002, yet been
received by the NWRB, the day of the hearing. Counsel
for respondent, who received a copy of petitioner's
Opposition dated December 12, 2002 earlier that
morning, volunteered to give a copy thereof to the

hearing officer. 2

In its Opposition, petitioner prayed for the denial of

respondent's application on the following grounds: (1)
petitioner's Board of Directors had not consented to
the issuance of the franchise applied for, such consent
being a mandatory condition pursuant to P.D. 198, (2)
the proposed waterworks would interfere with
petitioner's water supply which it has the right to
protect, and (3) the water needs of the residents in the
subject area was already being well served by
July-2007
petitioner.
Jurisprudence
After hearing and an ocular inspection of the area, the
NWRB, by Decision dated September 22, 2003,
A.C. No. 3944 - dismissed petitioner's Opposition "for lack of merit
Lea P. Payod v. Atty. and/or failure to state the cause of action" 3 and ruled
Romeo P. Metila in favor of respondent as follows:

A.C. No. 6573 - PREMISES ALL CONSIDERED, and finding that

People of the Phil v. Applicant is legally and financially qualified to operate

Orlando Ubina y and maintain the subject waterworks system, and that

Aggalut said operation shall redound to the benefit of the of the

[sic] consumers of Sitio's San Vicente, Fatima and

A.C. No. 6711 - Sambag at Bulacao Pardo, Cebu City, thereby

MA. LUISA HADJULA promoting public service in a proper and suitable

v. ATTY. ROCELES F. manner, the instant application for a Certificate of

MADIANDA Public Convenience (CPC) is, hereby, GRANTED for a

period of five (5) years with authority to charge the

A.M. No. 07-2-92- proposed rates herein set effective upon approval as

RTC - Re: Habitual follows:

absenteeism of Ms.
Eva Rowena J. Ypil Consumption Blocks Proposed Rates
etc.

0-10 cu. m. P125.00(min. charge)

A.M. No. 2005-09-
SC - Re: Complaints
Against Mr. Alexander 11-20 cu. m. 13.50 per cu. m.
R. Blanca etc.

A.M. No. 2007-09- 21-30 cu. m. 14.50 per cu. m.

SC - Re: Report on
the alleged theft of
31-40 cu. m. 35.00 per cu. m.
electrical wires.

A.M. No. MTJ-06- 41-50 cu. m. 37.00 per cu. m.

1653 - Formerly OCA
IPI No. 03-1498-MTJ
51-60 cu. m. 38.00 per cu. m.
- Eugenio Juan R.
Gonzalez v. Judge
Lizabeth G. Torres 61-70 cu. m. 40.00 per cu. m.
etc.

A.M. No. MTJ-06- 71-100 cu. m. 45.00 per cu. m.

1658 - Formerly OCA

IPI No. 01-1014-MTJ
Over 100 cu. m. 50.00 per cu. m.
- MIGUEL E.
COLORADO v. JUDGE
RICARDO M. The Rules and Regulations, hereto, attached for the

AGAPITO operation of the waterworks system should be strictly

complied with.

A.M. No. MTJ-07-

Since the average production is below average day
1672 - Formerly OCA
demand, it is recommended to construct another well
I.P.I. No. 04-1600-
or increase the well horsepower from 1.5 - 3.00 Hp to
MTJ - Capt. Salvador
satisfy the water requirement of the consumers.
Dernaldez (ret.) v.
Judge Henry B. Moreover, the rates herein approved should be posted
Avelino, et al by GRANTEE at conspicuous places within the area
serviced by it, within seven (7) calendar days from
 A.M. No. P-04- notice of this Decision.
1833 - Atty. Cesar A.
Enriquez v. Lucila M. SO ORDERED. 4

De Castro etc. Its motion for reconsideration having been denied by

the NWRB by Resolution of May 17, 2004, petitioner
A.M. No. P-04- appealed the case to the RTC of Cebu City. As
1893 - Formerly OCA mentioned early on, the RTC denied the appeal and
IPI No. 03-1581-P - upheld the Decision of the NWRB by Decision dated
Gopi Adtani v. Marites February 10, 2005. And the RTC denied too petitioner's
Manio etc. motion for reconsideration by Order of May 13, 2005.

A.M. No. P-04- Hence, the present Petition for Review raising the

1907 - Formerly OCA following questions of law:

I.P.I. No. 04-1872-P -

i. WHETHER OR NOT THE CONSENT OF THE
Ildefonso P. Jacinto v.
BOARD OF DIRECTORS OF THE WATER
Bernabe M. Castro
DISTRICT IS A CONDITION SINE QUA NON
etc.
TO THE GRANT OF CERTIFICATE OF PUBLIC
CONVENIENCE BY THE NATIONAL WATER
A.M. No. P-05-
RESOURCES BOARD UPON OPERATORS OF
1975 - Maricris A.
WATERWORKS WITHIN THE SERVICE AREA
Alenio et al. v. Eladia
OF THE WATER DISTRICT? cralaw library

T. Cunting et al.

ii. WHETHER THE TERM FRANCHISE AS

A.M. No. P-05- USED IN SECTION 47 OF PRESIDENTIAL
1984 - DAKILA C. DECREE 198, AS AMENDED MEANS A
MANALABE v. EVELYN FRANCHISE GRANTED BY CONGRESS
D. CABIE, ET AL. THROUGH LEGISLATION ONLY OR DOES IT
ALSO INCLUDE IN ITS MEANING A
A.M. No. P-05- CERTIFICATE OF PUBLIC CONVENIENCE
1985 - Formerly OCA ISSUED BY THE NATIONAL WATER
I.P.I. No. 05-2126-P - RESOURCES BOARD FOR THE
Civil Service MAINTENANCE OF WATERWORKS SYSTEM
Commission v. Santos
OR WATER SUPPLY SERVICE? 5
Enrie P. Perocho Jr.
Before discussing these substantive issues, a

A.M. No. P-05- resolution of the procedural grounds raised by

1990 - Benjamin T. respondent for the outright denial of the petition is in

Hofer v. Tyrone V. Tan order.
etc.
By respondent's claim, petitioner's General Manager,
Engineer Armando H. Paredes, who filed the present
A.M. No. P-06-
petition and signed the accompanying verification and
2122 - Formerly OCA
certification of non-forum shopping, was not
IPI No. 05-2202-P -
specifically authorized for that purpose. Respondent
Saula De Leon-Dela
Cruz v. Fernando P. cites Premium Marble Resources v. Court of Appeals 6

Recacho et al. where this Court held that, in the absence of a board
resolution authorizing a person to act for and in behalf

A.M. No. P-06- of a corporation, the action filed in its behalf must fail

2252 - Virginia D. since "the power of the corporation to sue and be sued

Seangio v. Julieta F. in any court is lodged with the board of directors that

Parce etc. exercises its corporate powers."

Respondent likewise cites ABS-CBN Broasting

A.M. No. P-07-
Corporation v. Court of Appeals 7 where this Court held
2326 - Formerly OCA
that "[f]or such officers to be deemed fully clothed by
IPI No. 04-2041-P -
the corporation to exercise a power of the Board, the
Reliways, Inc. etc v.
latter must specially authorize them to do so."
Melchorina P. Rosales
(Emphasis supplied by respondent)
etc.
That there is a board resolution authorizing Engineer
A.M. No. P-07- Paredes tofile cases in behalf of petitioner is not
2327 - Formerly OCA- disputed. Attached to the petition is petitioner's Board
I.P.I. No. 04-1934-P - of Director's Resolution No. 015-2004, the relevant
Nena Gimena Sol portion of which states:
Way v. Ariel R. P
RESOLVE[D], AS IT IS HEREBY RESOLVED, to
Ascasio et al.
authorize the General Manager, ENGR. ARMANDO H.
PAREDES, to file in behalf of the Metropolitan
A.M. No. P-07-
Cebu Water District expropriation and other
2340 - OCA-IPI No.
cases and to affirm and confirm above-stated
06-2388-P - Sharon
authority with respect to previous cases filed by
Rose O. Agustin v.
MCWD.
Noemi S. Mercado
etc. x x x x 8 (Emphasis and underscoring supplied) cralawlibrary

A.M. No. RTJ-04- To respondent, however, the board resolution is invalid

1870 - Formerly A.M. and ineffective for being a roving authority and not a
No. 04-7-388-RTC - specific resolution pursuant to the ruling in ABS-CBN.
OFFICE OF THE
That the subject board resolution does not authorize
COURT
Engineer Paredes to file the instant petition in
ADMINISTRATOR v.
particular but "expropriation and other cases" does
JUDGE CRISPIN C.
not, by itself, render the authorization invalid or
LARON
ineffective.

A.M. No. RTJ-06- In BA Savings Bank v. Sia, 9 the therein board

1974 (Formerly OCA resolution, couched in words similar to the questioned
I.P.I. No. 05-2226- resolution, authorized persons to represent the
RTJ) - Carmen P. corporation, not for a specific case, but for a general
Edano v. Judge class of cases. Significantly, the Court upheld its
Fatima G. Asdala et validity:
al.
In the present case, the corporation's board of

A.M. No. RTJ-07- directors issued a Resolution specifically

2047 (Formerly OCA authorizing its lawyers "to act as their agents in

I.P.I. No. 03-1786- any action or proceeding before the Supreme

RTJ) and A.M. No. Court, the Court of Appeals, or any other tribunal

RTJ-07-2048 or agency[;] and to sign, execute and deliver in

(Formerly OCA I.P.I. connection therewith the necessary pleadings,

No. 03-1798-RTJ) - motions, verification, affidavit of merit, certificate of

Russel Esteva non-forum shopping and other instruments necessary

Coronado v. Judge for such action and proceeding." The Resolution was

Eddie R. Rojas etc. sufficient to vest such persons with the authority
to bind the corporation and was specific enough

A.M. No. RTJ-99- as to the acts they were empowered to do.

1460, A.M. No. 99-7- (Emphasis and underscoring supplied, italics in the

273-RTC and A.M. original)

No. RTJ-06-1988 -
Nonetheless, while the questioned resolution
Office of the Court
sufficiently identifies the kind of cases which Engineer
Administrator v.
Paredes may file in petitioner's behalf, the same does
Judge Florentino V.
not authorize him for the specific act of signing
Floro, Jr./Resolution
verifications and certifications against forum shopping.
Dated 11 May 1999
For it merely authorizes Engineer Paredes to file cases
of Judge Florentino V.
in behalf of the corporation. There is no mention of
Floro, Jr./Luz Arriego signing verifications and certifications against forum
v. Judge F. Floro, Jr. shopping, or, for that matter, any document of
whatever nature.
G.R. No. 119716 -
A board resolution purporting to authorize a person to
Antonia J. Gutang v.
sign documents in behalf of the corporation must
the Deputy Sheriff, et
explicitly vest such authority. BPI Leasing Corporation
al.
v. Court of Appeals 10 so instructs:

G.R. No. 126890 - Corporations have no powers except those expressly

United Planters Sugar conferred upon them by the Corporation Code and
Milling Co., Inc. v. those that are implied by or are incidental to its
The Hon. Court of existence. These powers are exercised through
Appeals, et al. their board of directors and/or duly authorized
officers and agents. Hence, physical acts, like the
G.R. No. 130403 - signing of documents, can be performed only by
Francisco Gonzales v. natural persons duly authorized for the purpose
Severino C. Lim, et by corporate bylaws or by specific act of the
al. board of directors.

G.R. No. 131023, The records are bereft of the authority of BLC's

G.R. No. 131505 & [BPI Leasing Corporation] counsel to institute

G.R. No. 131768 - the present petition and to sign the certification

Heirs of the Late F. of non-forum shopping. While said counsel may be

Borres, et al. v. Hon. the counsel of record for BLC, the representation does

J. Abela, et al. / Atty. not vest upon him the authority to execute the

Villaruz v. Hon. Abela certification on behalf of his client. There must be a

et al./G.R. No. resolution issued by the board of directors that

131768 specifically authorizes him to institute the

petition and execute the certification, for it is

G.R. No. 133564 - only then that his actions can be legally binding

Sergio Barbosa, et al. upon BLC. (Emphasis, italics and underscoring

v. Pilar Hernandez, et supplied)

al.
It bears noting, moreover, that Rule 13 Section 2 of
the Rules of Court merely defines filing as "the act of
G.R. No. 135687
presenting the pleading or other paper to the clerk of
(Re: OMB-0-96-2643
court." Since the signing of verifications and
: Re: OMB-0-96-2644
certifications against forum shopping is not integral to
: Re: OMB-0-96-
2645) - Presidential
Ad Hoc Fact-Finding
Committee on Behest
Loans-PCGG, Et Al.,
v. Hon. Ombudsman
Aniano Desierto, Et
Al.
G.R. No. 135928 -
Berdin v. Mascari as
G.R. No. 140231 -
PRESIDENTIAL
the act of filing, this may not be deemed as necessarily
included in an authorization merely to file cases.
Engineer Paredes not having been specifically
authorized to sign the verification and certification
against forum shopping in petitioner's behalf, the
instant petition may be dismissed outright.
Technicality aside, the petition just the same merits
dismissal.
In support of its contention that the consent of its
Board of Directors is a condition sine qua non for the
grant of the CPC applied for by respondent, petitioner
cites Section 47 of P.D. 198 11 which states:

COMMISSION ON
Sec. 47. Exclusive Franchise. - No franchise shall
GOOD GOVERNMENT
be granted to any other person or agency for
v. HON. ANIANO A.
domestic, industrial or commercial water service within
DESIERTO, ET AL.
the district or any portion thereof unless and except to
the extent that the board of directors of said district
G.R. No. 141834 -
consents thereto by resolution duly adopted, such
Commissioner Rufus
resolution, however, shall be subject to review by the
B. Rodriguez, et al. v.
Administration. (Emphasis and underscoring supplied) cralawlibrary

Samuel A. Jardin

There being no such consent on the part of its board of

G.R. No. 142618 - directors, petitioner concludes that respondent's
PCI Leasing & application for CPC should be denied.
Finance InC. v.
Both parties' arguments center, in the main, on the
Giraffe-X Creative
scope of the word "franchise" as used in the above-
Imaging, Inc.
quoted provision.

G.R. No. 144568 - Petitioner contends that "franchise" should be broadly

Guillerma S. Sablas interpreted, such that the prohibition against its grant
etc. v. Esterlita S. to other entities without the consent of the district's
Sablas, et al. board of directors extends to the issuance of CPCs. A
contrary reading, petitioner adds, would result in
G.R. No. 146555 - absurd consequences, for it would mean that Congress'
Jose C. Cordova v. power to grant franchises for the operation of
Reyes Daway Lim waterworks systems cannot be exercised without the
Bernardo Lindo consent of water districts.
Rosales Law Office, et
Respondent, on the other hand, proffers that the same
al.
prohibition only applies to franchises in the strict sense
- those granted by Congress by means of statute - and
G.R. No. 147776 -
does not extend to CPCs granted by agencies such as
Sps. Guillermo
the NWRB.
Malison etc v. Hon.
Court of Appeals, et Respondent quotes the NWRB Resolution dated May
al. 17, 2004 which distinguished a franchise from a CPC,
thus:
G.R. No. 147939 -
A CPC is formal written authority issued by quasi-
THE HEIRS OF
judicial bodies for the operation and maintenance of a
CRISTETA DE LA
public utility for which a franchise is not required by
ROSA v. HON.
law and a CPC issued by this Board is an authority to
ADELINA CALDERON-
operate and maintain a waterworks system or water
BARGAS, ET AL.
supply service. On the other hand, a franchise is
privilege or authority to operate appropriate private
G.R. No. 148072 -
property for public use vested by Congress through
Francisco Magestrado
legislation. Clearly, therefore, a CPC is different
v. People of the
from a franchise and Section 47 of Presidential
Philippines et al.
Decree 198 refers only to franchise. Accordingly,
the possession of franchise by a water district
G.R. No. 148280 -
does not bar the issuance of a CPC for an area
Loreta Agustin Chong
covered by the water district. (Emphasis and
etc. v. The Hon. Court
underscoring supplied by respondent)
of Appeals, et al.

Petitioner's position that an overly strict construction of

G.R. No. 148938 - the term "franchise" as used in Section 47 of P.D. 198
Edgar L. Valdez v. would lead to an absurd result impresses. If franchises,
National in this context, were strictly understood to mean an
Electrification Adm., authorization issuing directly from the legislature, it
et al. would follow that, while Congress cannot issue
franchises for operating waterworks systems without
G.R. No. 148997 - the water district's consent, the NWRB may keep on
China Banking Corp. issuing CPCs authorizing the very same act even
v. Maria Victoria without such consent. In effect, not only would the
Igonia et al. NWRB be subject to less constraints than Congress in
issuing franchises. The exclusive character of the
G.R. No. 149040 - franchise provided for by Section 47 would be illusory.
EDGAR LEDONIO v.
Moreover, this Court, in Philippine Airlines, Inc. v. Civil
CAPITOL
Aeronautics Board, 12 has construed the term
DEVELOPMENT
"franchise" broadly so as to include, not only
CORPORATION
authorizations issuing directly from Congress in the
form of statute, but also those granted by
G.R. No. 149095 -
administrative agencies to which the power to grant
Sonny B. Manuel v.
franchises has been delegated by Congress, to wit:
Dept. of Agrarian
Reform Adjudication Congress has granted certain administrative
Board, et al. agencies the power to grant licenses for, or to
authorize the operation of certain public utilities.
G.R. No. 149122 - With the growing complexity of modern life, the
Heirs of Gregorio & multiplication of the subjects of governmental
Mary Venturanza v. regulation, and the increased difficulty of administering
Republic of the the laws, there is a constantly growing tendency
Philippines towards the delegation of greater powers by the
legislature, and towards the approval of the practice by
G.R. NOS. 149158- the courts. It is generally recognized that a
59 and G.R. No. franchise may be derived indirectly from the
156668 - Kimberly state through a duly designated agency, and to
Independent Labour this extent, the power to grant franchises has
Union for Solidarity, frequently been delegated, even to agencies
et al. v. the Hon. other than those of a legislative nature. In
Court of Appeals, et pursuance of this, it has been held that privileges
al/Kimberly-Clark Inc. conferred by grant by local authorities as agents
v. Sec. of Labor, et al. for the state constitute as much a legislative
franchise as though the grant had been made by
G.R. No. 149609 -
an act of the Legislature. 13
Heirs of Tama Tan
Buto etc. v. Ernesto That the legislative authority - in this instance, then
T. Luy President Marcos 14 - intended to delegate its power to
issue franchises in the case of water districts is clear
G.R. No. 150171 - from the fact that, pursuant to the procedure outlined
Acebedo Optical, et al in P.D. 198, it no longer plays a direct role in
v. NLRC, et al. authorizing the formation and maintenance of water
districts, it having vested the same to local legislative
G.R. No. 150537 - bodies and the Local Water Utilities Administration
Edgardo M. Oania (LWUA).
etc. v. People of the
Sections 6 and 7 of P.D. 198, as amended, state:
Philippines, et al.

SECTION 6. Formation of District. - This Act is the

G.R. No. 152072 source of authorization and power to form and
and G.R. No. 152104 maintain a district. Once formed, a district is subject
- Romeo Roxas, et al. to the provisions of this Act and not under the
v. Antonio De jurisdiction of any political subdivision. For purposes of
Zuzavarregui/Antonio this Act, a district shall be considered as a quasi-public
De Zuzavarregui, et corporation performing public service and supplying
al. v. National public wants. As such, a district shall exercise the
Housing Authority, et powers, rights and privileges given to private
al. corporations under existing laws, in addition to the
powers granted in, and subject to such restrictions
G.R. No. 152132 - imposed, under this Act. To form a district, the
Lordito Arrogante, et legislative body of any city, municipality or
al. v. Beethoven province shall enact a resolution containing the
Deliarte etc. following:

(a) The name of the local water district,

G.R. No. 152531 -
which shall include the name of the city,
Rodelia S. Fungo v.
municipality, or province, or region thereof,
Lourdes School of
served by said system, followed by the
Mandaluyong et al.
words "Water District".

G.R. No. 153914 - (b) A description of the boundary of the

Felipe Regis Jr. v. the district. In the case of a city or municipality,
Hon. Court of such boundary may include all lands within
Appeals, et al. the city or municipality. A district may
include one or more municipalities, cities or
G.R. No. 154200 - provinces, or portions thereof: Provided,
Nat. Electrification That such municipalities, cities or
ADM, et al. v. Danilo provinces, or portions thereof, cover a
Morales contiguous area.
 G.R. No. 154481 - (c) A statement completely transferring any
Dolores Granada v. and all waterworks and/or sewerage
Bormaheco Inc etc. facilities managed, operated by or under
the control of such city, municipality or
G.R. No. 154678 - province to such district upon the filing of
Corazon C. Balbastro resolution forming the district.
v. Nestor Junio, et al.
(d) A statement identifying the purpose for
which the district is formed, which shall
G.R. No. 154941 -
include those purposes outlined in Section 5
ERNESTO PIL-EY v.
above.
THE PEOPLE OF THE
PHILIPPINES (e) The names of the initial directors of the
district with the date of expiration of the
G.R. No. 155153 - term of office for each which shall be on the
SPO1 Loreto Nerpio v. 31st of December of first, second, or third
People of the even-numbered year after assuming office,
Philippines as set forth in Section 11 hereof.

(f) A statement that the district may only

G.R. No. 155299 -
be dissolved on the grounds and under the
China Banking Corp.
conditions set forth in Section 45 of this
Inc. v. Court of
Title.
Appeals, et al.

(g) A statement acknowledging the powers,

G.R. No. 155631 - rights and obligations as set forth in
Romeo T. Aquino v. Section 25 of this Title.
Jennifer Ng
Nothing in the resolution of formation shall state or

G.R. No. 156211 - infer that the local legislative body has the power to

Mega-Land Resources dissolve, alter or affect the district beyond that

& Devt. Corp. etc. v. specifically provided for in this Act.

C-E Construction
If two or more cities, municipalities or provinces, or
Corp., et al.
any combination thereof, desire to form a single
district, a similar resolution shall be adopted in each
G.R. No. 156878 -
city, municipality and province; or the city, municipality
Emiliana S. Dela Cruz
or province in which 75% of the total active service
v. Court of Appeals,
connections are situated shall pass an initial resolution
et al.
to be concurred in by the other cities, municipalities or
 provinces.
G.R. No. 156964 -
SECTION 7. Filing of Resolution. - A certified copy of
Magro Placement &
the resolution or resolutions forming a district
Gen. Services etc. v.
shall be forwarded to the office of the Secretary
Cresenciano E.
of Administration. If found by the Administration
Hernandez
to conform to the requirements of Section 6 and
the policy objectives in Section 2, the resolution
G.R. No. 157433 -
shall be duly filed. The district shall be deemed
Erlinda Asejo v.
duly formed and existing upon the date of such
People of the
filing. A certified copy of said resolution showing the
Philippines
stamp of the Administration shall be maintained in the
office of the district. Upon such filing, the local
G.R. No. 157439 -
government or governments concerned shall lose
Multi-Ventures
ownership, supervision and control or any right
Capital & Mgt. Corp.
whatsoever over the district except as provided herein.
v. Stalwart Mgt.
(Emphasis and underscoring supplied)
Services Corp., et al.
cralawlibrary

It bears noting that once a district is "duly formed and

G.R. No. 157766 -
Ernesto L. Salas v.
Sta. Mesa Market
Corp., et al.
G.R. No. 158132 -
Raycor Aircontrol
System Inc. v. Mario
San Pedro et al.
G.R. No. 158609 -
Sps. Marian B. Lintag
etc., et al. v. National
existing" after following the above procedure, it
acquires the "exclusive franchise" referred to in Section
47. Thus, P.D. 198 itself, in harmony with Philippine
Airlines, Inc. v. Civil Aeronautics Board, 15 gives the
name "franchise" to an authorization that does not
proceed directly from the legislature.
It would thus be incongruous to adopt in this instance
the strict interpretation proffered by respondent and
exclude from the scope of the term "franchise" the
CPCs issued by the NWRB. 16
Nonetheless, while the prohibition in Section 47

Power Corp. of P.D. 198 applies to the issuance of CPCs for

the reasons discussed above, the same provision

G.R. No. 159253 - must be deemed void ab initio for being

Isidro Anadon, et al. irreconcilable with Article XIV Section 5 of the

v. Miguelina Herrera, 1973 Constitution which was ratified on January 17,

et al. 1973 ' the constitution in force when P.D. 198 was
 issued on May 25, 1973. Thus, Section 5 of Art. XIV of
G.R. No. 159292 - the 1973 Constitution reads:
Sps. Richard B.
SECTION 5. No franchise, certificate, or any other form
Pascual etc. v. Sps
of authorization for the operation of a public utility
Reynaldo P. Coronel
shall be granted except to citizens of the Philippines or
etc.
to corporations or associations organized under the
laws of the Philippines at least sixty per centum of the
G.R. No. 159298 -
capital of which is owned by such citizens, nor shall
ARMANDO F. CHAN v.
such franchise, certificate, or authorization be
HON. SIMEON V.
exclusive in character or for a longer period than
MARCELO, ET AL.
fifty years. Neither shall any such franchise or right
be granted except under the condition that it shall be
G.R. No. 159372 -
subject to amendment, alteration, or repeal by the
Ronald Nicol, et al. v.
Batasang Pambansa when the public interest so
Footjoy Industrial
requires. The State shall encourage equity participation
Corp et al.
in public utilities by the general public. The
participation of foreign investors in the governing body
G.R. No. 159374 -
of any public utility enterprise shall be limited to their
Felipe N. Madrinan v.
proportionate share in the capital thereof. (Emphasis
Francisca R.
and underscoring supplied)
Madrinan
cralawlibrary

This provision has been substantially reproduced in

G.R. No. 159567 -
Article XII Section 11 of the 1987 Constitution,
Corazon Catalan, et
including the prohibition against exclusive
al. v. Jose Basa, et
franchises. 17
al.
In view of the purposes for which they are
G.R. No. 159648 - established, 18 water districts fall under the term
Fluor Daniel Inc-Phil. "public utility" as defined in the case of National Power
v. E.B. Villarosa &
Corporation v. Court of Appeals: 19 ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Partners Co. Ltd.

G.R. No. 159748 -
Sps. Virgilio & Digna
Anastacio-Calina v.
Development Bank of
A "public utility" is a business or service engaged in
regularly supplying the public with some commodity
or service of public consequence such as electricity,
gas, water, transportation, telephone or telegraph
service. x x x (Emphasis and underscoring supplied) cralawlibrary

the Philippines
 It bears noting, moreover, that as early as 1933, the
G.R. No. 159796 - Court held that a particular water district - the
Romeo P. Gerochi, et Metropolitan Water District - is a public utility. 20
al v. Dept of Energy,
The ruling in National Waterworks and Sewerage
et al.
Authority v. NWSA Consolidated Unions 21 is also

G.R. No. 160093 - instructive:

MALARIA EMPLOYEES
We agree with petitioner that the NAWASA is a public
AND WORKERS
utility because its primary function is to
ASSOCIATION OF
construct, maintain and operate water reservoirs
THE PHILIPPINES,
and waterworks for the purpose of supplying
INC., ET AL. v. THE
water to the inhabitants, as well as consolidate and
HONORABLE
centralize all water supplies and drainage systems in
EXECUTIVE
the Philippines. x x x (Emphasis supplied) cralawlibrary

SECRETARY ALBERTO
ROMULO, ET AL. Since Section 47 of P.D. 198, which vests an "exclusive
franchise" upon public utilities, is clearly repugnant to
G.R. No. 160729 -
Article XIV, Section 5 of the 1973 Constitution, 22 it is
Josefina Cogtong v.
unconstitutional and may not, therefore, be relied
Kyoritsu Int'l Inc. et
upon by petitioner in support of its opposition against
al.
respondent's application for CPC and the subsequent
grant thereof by the NWRB.
G.R. No. 161304 -
Sps. Arturo Condes & WHEREFORE, Section 47 of P.D. 198 is
Nora Condes v. The unconstitutional. The Petition is thus, in light of the
Hon Court of Appeals, foregoing discussions, DISMISSED.
et al.
SO ORDERED.

G.R. No. 161685 -

Ang Kek Chen v. Sps.
Endnotes:
Atty. Eleazar S.
Calasan, et al.
* On Official Leave.

G.R. No. 161871 -

** On Leave.
Incon Industry Corp.
v. Hon. Court of 1 "Declaring a National Policy Favoring
Appeals, et al.
Local Operation and Control of Water
 Systems; Authorizing The Formation of
G.R. No. 162112 - Local Water Districts and Providing for The
Domingo Lumayag, et Government and Administration of such
al. v. Heirs of Jacinto Districts; Chartering a National
Nemeno, et al. Administration to Facilitate Improvement of
Local Water Utilities; Granting said
G.R. No. 162215 - Administration such Powers as are
Office of the Necessary to Optimize Public Service from
Ombudsman v. Civil Water Utility Operation, and for Other
Service Commission Purposes."

2 TSN, December 16, 2002, p. 3.

G.R. No. 162419 -
PAUL V. SANTIAGO v. 3 Rollo, p. 24.
CF SHARP CREW
MANAGEMENT, INC. 4 Id. at 25.

5 Id. at 7.
G.R. No. 163352 -
WT Construction Inc.,
6 G.R. No. 96551, November 4, 1996, 264
et al. v. Dept. of
SCRA 11, 17.
Public Works &
Highways, et al. 7 G.R. No. 128690, January 21, 1999, 301

SCRA 572, 594.

G.R. No. 163561 -
Central Pangasinan 8 Rollo, p. 15.

Electric Cooperative
9 391 Phil. 370, 377 (2000).
Inc. v. NLRC, et al.

10 G.R. No. 127624, November 18, 2003,

G.R. No. 163705 -
416 SCRA 4, 10-11.
Nomer Ocampo v.
People of the 11 As amended by P.D. 768 and P.D. 1479.

Philippines
12 G.R. No. 119528, March 26, 1997, 270

G.R. No. 164159 - SCRA 538.

Honorio C. Bulos, Jr.
13 Supra at 549-550.
v. Koji Yasuma

14 P.D. 198, which was issued on May 25,

G.R. No. 164532 -
1973 - a few months after the ratification of
Phil. Daily Inquirer, the 1973 Constitution on January 17, 1973
Inc. v. Leon M. - states that it was issued "by virtue of the
Magtibay, Jr. et al. powers vested in [President Marcos] by the
Constitution, as Commander-in-Chief of all
G.R. No. 165962 - the Armed Forces of the Philippines, and
Virginia Perez Claudio pursuant to Proclamation No. 1081 dated
etc. v. Francisca September 21, 1972 and General Order No.
Quebral 1 dated September 22, 1972, as amended".
The legislative power of the President was
G.R. No. 166061 - recognized by the Court in Aquino, Jr. v.
Andy Quelnan y COMELEC (G.R. No. L-40004. January 31,
Quino v. People of the 1975) as flowing from his martial law
Philippines powers and from Article XVII, Section 3(2)
of the 1973 Constitution. The same power
G.R. No. 166544 - was only brought to clearer relief in 1976
People of the by Amendment No. 6 to the same
Philippines v. Ardel Constitution. (Bernas, The 1987
Canuto Constitution of the Republic of the
Philippines 607 [1996].)
G.R. No. 166617 -
15 Supra.
People of the
Philippines v. Agustin 16 The authority of the NWRB to issue CPCs
Abellera y Camana.
proceeds from P.D. 1067, issued on
December 31, 1976 and entitled "A Decree
G.R. No. 166777 -
Instituting a Water Code, Thereby Revising
LAND BANK OF THE
and Consolidating the Laws Governing the
PHILIPPINES v. SPS.
Ownership, Appropriation, Utilization,
VICENTE M.
Exploitation, Development, Conservation
ESTANISLAO, ET AL.
and Protection of Water Resources." Article
3 of this Decree charges the National Water
G.R. No. 166797 :
Resources Council, later renamed the
July 10, 2007 - JOSE
National Water Resources Board pursuant
M. GALARIO,
to E.O. No. 124-A dated July 22, 1987, with
Petitioner, v. OFFICE
the function of regulating the "utilization,
OF THE OMBUDSMAN
exploitation, development, conservation
(Mindanao) and RUTH
and protection of water resources." Article
P. PIANO,
16 of the same law provides:
Respondents. Any person who desires to
obtain a water permit shall file
G.R. No. 166875 - an application with the [National
DIGNA CONSUMIDO Water Resources Council] who
v. HON. REYNALDO shall make known said
G. ROS, ET AL. application to the public for any
protests.
G.R. No. 167324 -
In determining whether to grant
Tondo Medical Center
or deny an application, the
Employees Asso., et
Council shall consider the
al v. The Court of
following: protests filed, if any;
Appeals, et al.
prior permits granted; the
availability of water; the water
G.R. NOS. 167335
supply needed for beneficial
- 167337 and G.R.
use; possible adverse effects;
No. 173152 - Dr.
land-use economics; and other
Ulysses A. Brito v.
relevant factors
Office of the Deputy
Ombudsman for Upon approval of an application,
Luzon et al. : Dr. a water permit shall be issued
Ulysses A. Brito v. and recorded.
Court of Appeals, et
17 SECTION 11. No franchise, certificate, or
al.
any other form of authorization for the

G.R. No. 167533 - operation of a public utility shall be granted

Audi Ag v. Hon. Jules except to citizens of the Philippines or to

A. Mejia, et al. corporations or associations organized

under the laws of the Philippines at least

G.R. No. 167572 - sixty per centum of whose capital is owned

GSIS v. Melvin I. by such citizens, nor shall such franchise,

Palma certificate, or authorization be exclusive in

character or for a longer period than fifty

G.R. No. 167652 - years. Neither shall any such franchise or

Limcoma Multi- right be granted except under the condition

Purpose Corp. v. that it shall be subject to amendment,

Republic of the alteration, or repeal by the Congress when

Philippines the common good so requires. The State

 shall encourage equity participation in
G.R. No. 167727 - public utilities by the general public. The
Crayons Processing participation of foreign investors in the
Inc. v. Felipe Pula, et governing body of any public utility
al. enterprise shall be limited to their
proportionate share in its capital, and all
G.R. No. 167741 - the executive and managing officers of such
Republic of the corporation or association must be citizens
Philippines v. Maj. of the Philippines. (Underscoring supplied) cralawlibrary

Gen. Carlos Flores

18 Sec. 5 of P.D. 198 states: "Purpose. -
Garcia, et al.
Local water districts may be formed
G.R. No. 167910 - pursuant to this Title for the purposes of
Mustapha M. (a) acquiring, installing, improving,
Gandarosa v. Evaristo maintaining and operating water supply and
Flores, et al. distribution systems for domestic,
industrial, municipal and agricultural uses
G.R. No. 168079 - for residents and lands within the
Office of the boundaries of such districts, (b) providing,
Ombudsman v. Court maintaining and operating water collection,
of Appeals, et al. treatment and disposal facilities, and (c)
conducting such other functions and
G.R. No. 168475 - operations incidental to water resource
Emilio E. Diokno et development, utilization and disposal within
al. v. Hon Hans Leo J. such districts, as are necessary or
Cacdac, et al. incidental to said purpose."

19 G.R. No. 112702, September 26, 1997;

G.R. No. 168484 -
279 SCRA 506, 523
Leah M. Nazareno et
al. v. City of 20 Metropolitan Water District v. Public
Dumaguete et al. /
Service Commission, 58 Phil. 397, 399
Reginald Manolo
(1933).
Cordova et al,
Intervenors. 21 120 Phil. 736, 745 (1964).

22 Parenthetically, Article XIV Section 8 of

G.R. No. 168776 -
Phil. Computer the 1935 Constitution already contained the
Solutons, Inc. v. Hon. same prohibition against exclusive
Jose R. Hernandez, et franchises found in Article XIV Section 5 of
al. the 1973 Constitution. Thus, Article XIV
Section 8 of the 1935 Constitution states:
G.R. No. 168914 -
SEC. 8. No franchise, certificate,
Metropolitan Cebu
or any other form of
Water District v.
authorization for the operation
Margarita A. Adala
of a public utility shall be
granted except to citizens of the
G.R. No. 169494 -
Philippines or to corporations or
Cabalen Mgt. Co.
other entities organized under
Inc., et al. v. Jesus P.
the laws of the Philippines sixty
Quiambao
per centum of the capital of
which is owned by citizens of
G.R. No. 169534 -
the Philippines, nor shall such
Brigido B. Paredes v.
franchise, certificate, or
The Hon Court of
authorization be exclusive in
Appeals, et al.
character or for a longer period
than fifty years. No franchise or
G.R. No. 169747 -
right shall be granted to any
Ban Hua U. Flores, et
individual, firm, or corporation,
al v. UBS Marketing
except under the condition that
Corp., et al.
it shall be subject to
amendment, alteration, or
G.R. No. 169835 -
repeal by the Congress when
Hyatt Elevators &
the public interest so requires.
Escalators Corp. v. LG
(Emphasis and underscoring
Otis Elevator Co.
supplied) cralawlibrary

G.R. No. 169836 -

PHILIPPINE
FISHERIES
DEVELOPMENT
AUTHORITY v. COURT Back to Home | Back to Main

OF APPEALS, ET AL.

G.R. No. 169869 -

People of the
Philippines v. Pedro EL BUENASENSO WELL DRILLING
Delima, Jr.
EL BUENASENSO WELL DRILLING
We Are Trusted Well Drilling
G.R. No. 169874 -
Contractors Who Can Meet Your
People of the
Standards! Call Us.
Philippines v. Ramon
Canales Rayles

G.R. No. 169962 -

Formerly G.R. No.
157022 - People of
the Philippines v. Raul Directions Call
Cenahonon

G.R. No. 170102 -

Sps. Francisco &
Gloria Salcedo v.
Amelia Marino etc.

G.R. No. 170359 -

People of the
Philippines v. Philip
Dilao Y Castro

G.R. No. 170632 -

Eugenia D. Polido v.
Hon. CA et al.

G.R. No. 170924 -

IN THE MATTER OF
THE PETITION FOR
HABEAS CORPUS OF
CEZARI GONZALES,
ET AL.

G.R. No. 171048 -

Rudy A. Palecpec, Jr.
v. Hon. Corazon C.
Davis, etc.

G.R. No. 171131 -

New Sunrise Metal
Construction et al v.
Victor Pia, et al.

G.R. No. 171163 -

People of the
Philippines v. Meliton
Jalbuena y Tadiosa

G.R. No. 171250 -

Sps. Carlos & Eulalia
Raymund et al. v.
Sps. Dominador &
Rosalia Bandong

G.R. No. 171460 -

Lillian N. Mercado, et
al. v. Allied Banking
Corp.

G.R. No. 171698 -

Maria Sheila Almira T.
Viesca v. Hon.
Rebecca r. Mariano
Pres. Judge etc, et al.

G.R. No. 171989 -

FIRST CORPORATION
v. FORMER SIXTH
DIVISION OF THE
COURT OF APPEALS,
ET AL.
 G.R. No. 172051 &
173813 - Afgha Inc.
v. Hon. Court of Tax
Appeals, et al./Afgha
Inc. v. Hon. Court of
Tax Appeals, et al.

G.R. No. 172184 -

Nestor B. Decasa v.
The Hon. Court of
Appeals, et al.

G.R. No. 172467 -

People of the Phil v.
Boyet Sanchez y
Bundalian

G.R. No. 172555 -

Alegar Corp v. Emilio
Alvarez

G.R. No. 172674 -

Sps. Jorge Navarra et
al. v. Planters Devt.
Bank, et al.

G.R. No. 172799 -

Johnson & Johnson
(Phils), et al v.
Johnson Office &
Sales Union-FFW, et
al.

G.R. No. 173051 -

Formerly G.R. No.
161678 - THE
PEOPLE OF THE
PHILIPPINES v.
GERARDO ORTEZA

G.R. No. 173478 -

People of the
Philippines v.
Dominador D.
Surongon

G.R. No. 173479 -

People of the
Philippines v. Juan
Cabbab, Jr.

G.R. No. 173858 -

Ernesto Garces v.
People of the
Philippines

G.R. No. 174114 -

DMG Industries, Inc.
v. The Phil. American
Investments Corp.

G.R. No. 174485 -

Agnes Gamboa-
Hirsch v. Hon. CA et
al.

G.R. No. 175222 -

People of the
Philippines v. Ramon
Quiaoit Jr.

G.R. No. 175830 -

People of the Phil v.
Manuel 'Boy'
Hermocilla

G.R. No. 175880 -

Formerly G.R. No.
153217- The People
of the Philippines v.
Ricardo Comanda y
Camote

G.R. No. 176359 -

People of the Phil v.
Orlando Ubina y
Aggalut

G.R. No. 177721 -

KILOSBAYAN
FOUNDATION, ET AL.
v. EXECUTIVE
SECRETARY
EDUARDO R. ERMITA,
ET AL.

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