6/6/2016

G.R.No.168914

ENBANC

METROPOLITAN
CEBU
WATERDISTRICT(MCWD),
Petitioner,

versus

MARGARITAA.ADALA,
Respondent.

G.R.No.168914

Present:

PUNO,C.J.,
QUISUMBING,*
YNARESSANTIAGO,

SANDOVALGUTIERREZ,**
CARPIO,
AUSTRIAMARTINEZ,
CORONA,
CARPIOMORALES,
AZCUNA,
TINGA,
CHICONAZARIO,
GARCIA,
VELASCO,JR.,and
NACHURA,JJ.
Promulgated:
July4,2007

xx

DECISION

http://sc.judiciary.gov.ph/jurisprudence/2007/july2007/168914.htm#_ftn3

1/16

6/6/2016

G.R.No.168914

CARPIOMORALES,J.:
TheDecisionoftheRegionalTrialCourt(RTC)ofCebudatedFebruary10,2005,whichaffirmedintototheDecision

oftheNationalWaterResourcesBoard(NWRB)datedSeptember22,2003infavorofMargaritaA.Adala,respondent,
isbeingchallengedinthepresentpetitionforreviewoncertiorari.

Respondent filed on October 24, 2002 an application with the NWRB for the issuance of a Certificate of Public
Convenience(CPC)tooperateandmaintainwaterworkssysteminsitiosSanVicente,Fatima,andSambaginBarangay
Bulacao,CebuCity.

AttheinitialhearingofDecember16,2002duringwhichrespondentsubmittedproofofcompliancewithjurisdictional
requirements of notice and publication, herein petitioner Metropolitan CebuWater District, a governmentowned and
[1]
controlledcorporationcreatedpursuanttoP.D.198 whichtookeffectuponitsissuancebythenPresidentMarcoson
May25,1973,asamended,appearedthroughitslawyerstoopposetheapplication.

Whilepetitionerfiledaformaloppositionbymail,acopythereofhadnot,onDecember16,2002,yetbeenreceivedby
the NWRB, the day of the hearing. Counsel for respondent, who received a copy of petitioners Opposition dated
[2]
December12,2002earlierthatmorning,volunteeredtogiveacopythereoftothehearingofficer.

InitsOpposition,petitionerprayedforthedenialofrespondentsapplicationonthefollowinggrounds:(1)petitioners
Board of Directors had not consented to the issuance of the franchise applied for, such consent being a mandatory
conditionpursuanttoP.D.198,(2)theproposedwaterworkswouldinterferewithpetitionerswatersupplywhichithas
the right to protect, and (3) the water needs of the residents in the subject area was already being well served by
petitioner.
http://sc.judiciary.gov.ph/jurisprudence/2007/july2007/168914.htm#_ftn3

2/16

6/6/2016

G.R.No.168914

After hearing and an ocular inspection of the area, the NWRB, by Decision dated September 22, 2003, dismissed
[3]
petitionersOppositionforlackofmeritand/orfailuretostatethecauseofaction andruledinfavorofrespondentas
follows:

PREMISESALLCONSIDERED,andfindingthatApplicantislegallyandfinanciallyqualifiedtooperateandmaintainthe
subjectwaterworkssystem,andthatsaidoperationshallredoundtothebenefitoftheofthe[sic]consumersofSitiosSan
Vicente,FatimaandSambagatBulacaoPardo,CebuCity,therebypromotingpublicserviceinaproperandsuitablemanner,
theinstantapplicationforaCertificateofPublicConvenience(CPC)is,hereby,GRANTEDforaperiodoffive(5)years
withauthoritytochargetheproposedrateshereinseteffectiveuponapprovalasfollows:

ConsumptionBlocks
ProposedRates

010cu.m.
P125.00(min.charge)
1120cu.m.
13.50percu.m.
2130cu.m.
14.50percu.m.
3140cu.m.
35.00percu.m.
4150cu.m.
37.00percu.m.
5160cu.m.
38.00percu.m.
6170cu.m.
40.00percu.m.
71100cu.m.
45.00percu.m.
Over100cu.m.
50.00percu.m.

TheRulesandRegulations,hereto,attachedfortheoperationofthewaterworkssystemshouldbestrictlycompliedwith.

Sincetheaverageproductionisbelowaveragedaydemand,itisrecommendedtoconstructanotherwellorincreasethewell
horsepowerfrom1.53.00Hptosatisfythewaterrequirementoftheconsumers.

Moreover,therateshereinapprovedshouldbepostedbyGRANTEEatconspicuousplaceswithintheareaservicedbyit,
withinseven(7)calendardaysfromnoticeofthisDecision.

[4]
SOORDERED.

http://sc.judiciary.gov.ph/jurisprudence/2007/july2007/168914.htm#_ftn3

3/16

6/6/2016

G.R.No.168914

ItsmotionforreconsiderationhavingbeendeniedbytheNWRBbyResolutionofMay17,2004,petitionerappealedthe
casetotheRTCofCebuCity.Asmentionedearlyon,theRTCdeniedtheappealandupheldtheDecisionoftheNWRB
byDecisiondatedFebruary10,2005.AndtheRTCdeniedtoopetitionersmotionforreconsiderationbyOrderofMay
13,2005.

Hence,thepresentpetitionforreviewraisingthefollowingquestionsoflaw:

i. WHETHER OR NOT THE CONSENT OF THE BOARD OF DIRECTORS OF THE WATER DISTRICT IS A
CONDITION SINE QUA NON TO THE GRANT OF CERTIFICATE OF PUBLIC CONVENIENCE BY THE
NATIONAL WATER RESOURCES BOARD UPON OPERATORS OF WATERWORKS WITHIN THE SERVICE
AREAOFTHEWATERDISTRICT?

ii.WHETHERTHETERMFRANCHISEASUSEDINSECTION47OFPRESIDENTIALDECREE198,ASAMENDED
MEANS A FRANCHISE GRANTED BY CONGRESS THROUGH LEGISLATION ONLY OR DOES IT ALSO
INCLUDE IN ITS MEANING A CERTIFICATE OF PUBLIC CONVENIENCE ISSUED BY THE NATIONAL
WATERRESOURCESBOARDFORTHEMAINTENANCEOFWATERWORKSSYSTEMORWATERSUPPLY
[5]
SERVICE?

Beforediscussingthesesubstantiveissues,aresolutionoftheproceduralgroundsraisedbyrespondentfortheoutright
denialofthepetitionisinorder.

Byrespondentsclaim,petitionersGeneralManager,EngineerArmandoH.Paredes,whofiledthepresentpetitionand
signedtheaccompanyingverificationandcertificationofnonforumshopping,wasnotspecificallyauthorizedforthat
purpose.RespondentcitesPremiumMarbleResourcesv.CourtofAppeals

[6]
wherethisCourtheldthat,intheabsence

ofaboardresolutionauthorizingapersontoactforandinbehalfofacorporation,theactionfiledinitsbehalfmustfail
sincethepowerofthecorporationtosueandbesuedinanycourtislodgedwiththeboardofdirectorsthatexercisesits
corporatepowers.
http://sc.judiciary.gov.ph/jurisprudence/2007/july2007/168914.htm#_ftn3

4/16

6/6/2016

G.R.No.168914

RespondentlikewisecitesABSCBNBroadcastingCorporationv.CourtofAppeals

[7]
wherethisCourtheldthat[f]or

suchofficerstobedeemedfullyclothedbythecorporationtoexerciseapoweroftheBoard,thelattermustspecially
authorizethemtodoso.(Emphasissuppliedbyrespondent)

That there is a board resolution authorizing Engineer Paredes to file cases in behalf of petitioner is not disputed.
AttachedtothepetitionispetitionersBoardofDirectorsResolutionNo.0152004,therelevantportionofwhichstates:

RESOLVE[D],ASITISHEREBYRESOLVED,toauthorizetheGeneralManager,ENGR.ARMANDOH.PAREDES, to
fileinbehalfoftheMetropolitanCebuWaterDistrictexpropriationandothercasesandtoaffirmandconfirmabove
statedauthoritywithrespecttopreviouscasesfiledbyMCWD.

[8]
xxxx (Emphasisandunderscoringsupplied)

Torespondent,however,theboardresolutionisinvalidandineffectiveforbeingarovingauthorityandnotaspecific
resolutionpursuanttotherulinginABSCBN.

That the subject board resolution does not authorize Engineer Paredes to file the instant petition in particular but
expropriationandothercasesdoesnot,byitself,rendertheauthorizationinvalidorineffective.

[9]
InBASavingsBankv.Sia, thethereinboardresolution,couchedinwordssimilartothequestionedresolution,
authorizedpersonstorepresentthecorporation,notforaspecificcase,butforageneralclassofcases.Significantly,the
Courtuphelditsvalidity:

Inthepresentcase,thecorporation'sboardofdirectorsissuedaResolutionspecificallyauthorizingitslawyers"toact
astheiragentsinanyactionorproceedingbeforetheSupremeCourt,theCourtofAppeals,oranyothertribunalor
http://sc.judiciary.gov.ph/jurisprudence/2007/july2007/168914.htm#_ftn3

5/16

6/6/2016

G.R.No.168914

agency[]andtosign,executeanddeliverinconnectiontherewiththenecessarypleadings,motions,verification,affidavitof
merit,certificateofnonforumshoppingandotherinstrumentsnecessaryforsuchactionandproceeding."TheResolution
wassufficienttovestsuchpersonswiththeauthoritytobindthecorporationandwasspecificenoughastotheacts
theywereempoweredtodo.(Emphasisandunderscoringsupplied,italicsintheoriginal)

Nonetheless,whilethequestionedresolutionsufficientlyidentifiesthekindofcaseswhichEngineerParedesmayfilein
petitionersbehalf,thesamedoesnotauthorizehimforthespecificactofsigningverificationsandcertificationsagainst
forum shopping. For it merely authorizes Engineer Paredes to file cases in behalf of the corporation. There is no
mentionofsigningverificationsandcertificationsagainstforumshopping,or,forthatmatter,anydocumentofwhatever
nature.

Aboardresolutionpurportingtoauthorizeapersontosigndocumentsinbehalfofthecorporationmustexplicitlyvest
[10]
suchauthority.BPILeasingCorporationv.CourtofAppeals
soinstructs:

CorporationshavenopowersexceptthoseexpresslyconferreduponthembytheCorporationCodeandthosethatareimplied
byorareincidentaltoitsexistence.Thesepowersareexercisedthroughtheirboardofdirectorsand/ordulyauthorized
officersandagents.Hence, physical acts, like the signing of documents, can be performed only by natural persons
dulyauthorizedforthepurposebycorporatebylawsorbyspecificactoftheboardofdirectors.

TherecordsarebereftoftheauthorityofBLC's[BPILeasingCorporation]counseltoinstitutethepresentpetition
and to sign the certification of nonforum shopping. While said counsel may be the counsel of record for BLC, the
representation does not vest upon him the authority to execute the certification on behalf of his client. There must be a
resolution issued by the board of directors that specifically authorizes him to institute the petition and execute the
certification,foritisonlythenthathisactionscanbelegallybindinguponBLC. (Emphasis,italicsandunderscoring
supplied)

Itbearsnoting,moreover,thatRule13Section2oftheRulesofCourtmerelydefinesfilingastheactofpresentingthe
pleadingorotherpapertotheclerkofcourt.Sincethesigningofverificationsandcertificationsagainstforumshopping
is not integral to the act of filing, this may not be deemed as necessarily included in an authorization merely to file
cases.
http://sc.judiciary.gov.ph/jurisprudence/2007/july2007/168914.htm#_ftn3

6/16

6/6/2016

G.R.No.168914

Engineer Paredes not having been specifically authorized to sign the verification and certification against forum
shoppinginpetitionersbehalf,theinstantpetitionmaybedismissedoutright.

Technicalityaside,thepetitionjustthesamemeritsdismissal.

InsupportofitscontentionthattheconsentofitsBoardofDirectorsisaconditionsinequanonforthegrantoftheCPC
[11]
appliedforbyrespondent,petitionercitesSection47ofP.D.198
whichstates:

Sec.47.ExclusiveFranchise.Nofranchiseshallbegrantedtoanyotherpersonoragencyfordomestic,industrialor
commercialwaterservicewithinthedistrictoranyportionthereofunlessandexcepttotheextentthattheboardofdirectors
of said district consents thereto by resolution duly adopted, such resolution, however, shall be subject to review by the
Administration.(Emphasisandunderscoringsupplied)

Therebeingnosuchconsentonthepartofitsboardofdirectors,petitionerconcludesthatrespondentsapplicationfor
CPCshouldbedenied.

Bothpartiesargumentscenter,inthemain,onthescopeofthewordfranchiseasusedintheabovequotedprovision.

Petitionercontendsthatfranchiseshouldbebroadlyinterpreted,suchthattheprohibitionagainstitsgranttoother
entities without the consent of the districts board of directors extends to the issuance of CPCs. A contrary reading,
petitioneradds,wouldresultinabsurdconsequences,foritwouldmeanthatCongresspowertograntfranchisesforthe
operationofwaterworkssystemscannotbeexercisedwithouttheconsentofwaterdistricts.

Respondent, on the other hand, proffers that the same prohibition only applies to franchises in the strict sense
http://sc.judiciary.gov.ph/jurisprudence/2007/july2007/168914.htm#_ftn3

7/16

6/6/2016

G.R.No.168914

thosegrantedbyCongressbymeansofstatuteanddoesnotextendtoCPCsgrantedbyagenciessuchastheNWRB.

RespondentquotestheNWRBResolutiondatedMay17,2004whichdistinguishedafranchisefromaCPC,thus:

ACPCisformalwrittenauthorityissuedbyquasijudicialbodiesfortheoperationandmaintenanceofapublicutilityfor
whichafranchiseisnotrequiredbylawandaCPCissuedbythisBoardisanauthoritytooperateandmaintainawaterworks
systemorwatersupplyservice.Ontheotherhand,afranchiseisprivilegeorauthoritytooperateappropriateprivateproperty
forpublicusevestedbyCongressthroughlegislation.Clearly,therefore,aCPCisdifferentfromafranchiseandSection
47ofPresidentialDecree198refersonlytofranchise.Accordingly,thepossessionoffranchisebyawaterdistrictdoes
not bar the issuance of a CPC for an area covered by the water district. (Emphasis and underscoring supplied by
respondent)

PetitionerspositionthatanoverlystrictconstructionofthetermfranchiseasusedinSection47ofP.D.198wouldlead
toanabsurdresultimpresses.If franchises, in this context, were strictly understood to mean an authorization issuing
directly from the legislature, it would follow that, while Congress cannot issue franchises for operating waterworks
systemswithoutthewaterdistrictsconsent,theNWRBmaykeeponissuingCPCsauthorizingtheverysameacteven
without such consent. In effect, not only would the NWRB be subject to less constraints than Congress in issuing
franchises.TheexclusivecharacterofthefranchiseprovidedforbySection47wouldbeillusory.

[12]
Moreover, this Court, in Philippine Airlines, Inc. v. Civil Aeronautics Board,
has construed the term franchise
broadly so as to include, not only authorizations issuing directly from Congress in the form of statute, but also those
grantedbyadministrativeagenciestowhichthepowertograntfranchiseshasbeendelegatedbyCongress,towit:

Congresshasgrantedcertainadministrativeagenciesthepowertograntlicensesfor,ortoauthorizetheoperationof
certain public utilities. With the growing complexity of modern life, the multiplication of the subjects of governmental
regulation, and the increased difficulty of administering the laws, there is a constantly growing tendency towards the
delegation of greater powers by the legislature, and towards the approval of the practice by the courts. It is generally
recognized that a franchise may be derived indirectly from the state through a duly designated agency, and to this
http://sc.judiciary.gov.ph/jurisprudence/2007/july2007/168914.htm#_ftn3

8/16

6/6/2016

G.R.No.168914

extent,thepowertograntfranchiseshasfrequentlybeendelegated,eventoagenciesotherthanthoseofalegislative
nature.Inpursuanceofthis,ithasbeenheldthatprivilegesconferredbygrantbylocalauthoritiesasagentsforthe
[13]
stateconstituteasmuchalegislativefranchiseasthoughthegranthadbeenmadebyanactoftheLegislature.

[14]
That the legislative authority in this instance, then President Marcos
intended to delegate its power to issue
franchisesinthecaseofwaterdistrictsisclearfromthefactthat,pursuanttotheprocedureoutlinedinP.D.198,itno
longerplaysadirectroleinauthorizingtheformationandmaintenanceofwaterdistricts,ithavingvestedthesameto
locallegislativebodiesandtheLocalWaterUtilitiesAdministration(LWUA).
Sections6and7ofP.D.198,asamended,state:

SECTION6.FormationofDistrict.ThisActisthesourceof authorizationandpowertoformandmaintainadistrict.
Onceformed,adistrictissubjecttotheprovisionsofthisActandnotunderthejurisdictionofanypoliticalsubdivision.For
purposes of thisAct, a district shall be considered as a quasipublic corporation performing public service and supplying
publicwants.Assuch,adistrictshallexercisethepowers,rightsandprivilegesgiventoprivatecorporationsunderexisting
laws,inadditiontothepowersgrantedin,andsubjecttosuchrestrictionsimposed,underthisAct.Toformadistrict,the
legislativebodyofanycity,municipalityorprovinceshallenactaresolutioncontainingthefollowing:

(a)Thenameofthelocalwaterdistrict,whichshallincludethenameofthecity,municipality,orprovince,orregionthereof,
servedbysaidsystem,followedbythewords"WaterDistrict".

(b)Adescriptionoftheboundaryofthedistrict.Inthecaseofacityormunicipality,suchboundarymayincludealllands
within the city or municipality.A district may include one or more municipalities, cities or provinces, or portions thereof:
Provided,Thatsuchmunicipalities,citiesorprovinces,orportionsthereof,coveracontiguousarea.

(c)Astatementcompletelytransferringanyandallwaterworksand/orseweragefacilitiesmanaged,operatedbyorunderthe
controlofsuchcity,municipalityorprovincetosuchdistrictuponthefilingofresolutionformingthedistrict.

(d) A statement identifying the purpose for which the district is formed, which shall include those purposes outlined in
Section5above.

(e)Thenamesoftheinitialdirectorsofthedistrictwiththedateofexpirationofthetermofofficeforeachwhichshallbeon
the31stofDecemberoffirst,second,orthirdevennumberedyearafterassumingoffice,assetforthinSection11hereof.

http://sc.judiciary.gov.ph/jurisprudence/2007/july2007/168914.htm#_ftn3

9/16

6/6/2016

G.R.No.168914

(f)AstatementthatthedistrictmayonlybedissolvedonthegroundsandundertheconditionssetforthinSection45ofthis
Title.

(g)Astatementacknowledgingthepowers,rightsandobligationsassetforthinSection25ofthisTitle.
Nothingintheresolutionofformationshallstateorinferthatthelocallegislativebodyhasthepowertodissolve,alteror
affectthedistrictbeyondthatspecificallyprovidedforinthisAct.

If two or more cities, municipalities or provinces, or any combination thereof, desire to form a single district, a similar
resolutionshallbeadoptedineachcity,municipalityandprovinceorthecity,municipalityorprovinceinwhich75%ofthe
total active service connections are situated shall pass an initial resolution to be concurred in by the other cities,
municipalitiesorprovinces.

SECTION7.FilingofResolution.Acertifiedcopyoftheresolutionorresolutionsformingadistrictshallbeforwarded
to the office of the Secretary ofAdministration. If found by theAdministration to conform to the requirements of
Section6andthepolicyobjectivesinSection2,theresolutionshallbedulyfiled.Thedistrict shallbe deemedduly
formed and existing upon the date of such filing. A certified copy of said resolution showing the stamp of the
Administration shall be maintained in the office of the district. Upon such filing, the local government or governments
concernedshallloseownership,supervisionandcontroloranyrightwhatsoeveroverthedistrictexceptasprovidedherein.
(Emphasisandunderscoringsupplied)

It bears noting that once a district is duly formed and existing after following the above procedure, it acquires the
exclusive franchise referred to in Section 47. Thus, P.D. 198 itself, in harmony with PhilippineAirlines, Inc. v. Civil
[15]
AeronauticsBoard,
givesthenamefranchisetoanauthorizationthatdoesnotproceeddirectlyfromthelegislature.

Itwouldthusbeincongruoustoadoptinthisinstancethestrictinterpretationprofferedbyrespondentandexclude
[16]
fromthescopeofthetermfranchisetheCPCsissuedbytheNWRB.
Nonetheless,whiletheprohibitioninSection47ofP.D.198appliestotheissuanceofCPCsforthereasons
discussed above, the same provision must be deemed void ab initio for being irreconcilable with Article XIV
Section5ofthe1973ConstitutionwhichwasratifiedonJanuary17,1973theconstitutioninforcewhenP.D.198was
issuedonMay25,1973.Thus,Section5ofArt.XIVofthe1973Constitutionreads:
http://sc.judiciary.gov.ph/jurisprudence/2007/july2007/168914.htm#_ftn3

10/16

6/6/2016

G.R.No.168914

SECTION5.Nofranchise,certificate,oranyotherformofauthorizationfortheoperationofapublicutilityshallbegranted
except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least
sixtypercentumofthecapitalofwhichisownedbysuchcitizens,norshallsuchfranchise,certificate,orauthorization
be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted
exceptundertheconditionthatitshallbesubjecttoamendment,alteration,orrepealbytheBatasangPambansawhenthe
public interest so requires. The State shall encourage equity participation in public utilities by the general public. The
participationofforeigninvestorsinthegoverningbodyofanypublicutilityenterpriseshallbelimitedtotheirproportionate
shareinthecapitalthereof.(Emphasisandunderscoringsupplied)

This provision has been substantially reproduced inArticle XII Section 11 of the 1987 Constitution, including the
[17]
prohibitionagainstexclusivefranchises.

[18]
Inviewofthepurposesforwhichtheyareestablished,
waterdistrictsfallunderthetermpublicutilityasdefinedin
[19]
thecaseofNationalPowerCorporationv.CourtofAppeals:

Apublicutilityisabusinessorserviceengagedinregularlysupplyingthepublicwithsomecommodityorserviceofpublic
consequencesuchaselectricity,gas,water,transportation,telephoneortelegraphservice.xxx(Emphasisandunderscoring
supplied)

Itbearsnoting,moreover,thatasearlyas1933,theCourtheldthataparticularwaterdistricttheMetropolitanWater
[20]
Districtisapublicutility.

[21]
TherulinginNationalWaterworksandSewerageAuthorityv.NWSAConsolidatedUnions
isalsoinstructive:

WeagreewithpetitionerthattheNAWASAisapublicutility becauseitsprimaryfunctionistoconstruct,maintainand
http://sc.judiciary.gov.ph/jurisprudence/2007/july2007/168914.htm#_ftn3

11/16

6/6/2016

G.R.No.168914

operatewaterreservoirsandwaterworksforthepurposeofsupplying
watertotheinhabitants,aswellasconsolidateandcentralizeallwatersuppliesanddrainagesystemsinthePhilippines.xx
x(Emphasissupplied)

Since Section 47 of P.D. 198, which vests an exclusive franchise upon publicutilities, is clearly repugnant toArticle
[22]
XIV,Section5ofthe1973Constitution,
itisunconstitutionalandmaynot,therefore,berelieduponbypetitioner
insupportofitsoppositionagainstrespondentsapplicationforCPCandthesubsequentgrantthereofbytheNWRB.

WHEREFORE,Section47ofP.D.198isunconstitutional.ThePetitionisthus,inlightoftheforegoingdiscussions,
DISMISSED.

SOORDERED.

CONCHITACARPIOMORALES
AssociateJustice

WECONCUR:

REYNATOS.PUNO
ChiefJustice

(ONOFFICIALLEAVE)
LEONARDOA.QUISUMBING
AssociateJustice

CONSUELOYNARESSANTIAGO
AssociateJustice

http://sc.judiciary.gov.ph/jurisprudence/2007/july2007/168914.htm#_ftn3

12/16

6/6/2016

G.R.No.168914

(ONLEAVE)
NGELINASANDOVALGUTIERREZ
AssociateJustice

ANTONIOT.CARPIO
AssociateJustice

MA.ALICIAAUSTRIAMARTINEZ
AssociateJustice

ADOLFOS.AZCUNA
AssociateJustice

MINITAV.CHICONAZARIO
AssociateJustice

PRESBITEROJ.VELASCO,JR.
AssociateJustice

http://sc.judiciary.gov.ph/jurisprudence/2007/july2007/168914.htm#_ftn3

RENATOC.CORONA
AssociateJustice

DANTEO.TINGA
AssociateJustice

CANCIOC.GARCIA
AssociateJustice

ANTONIOEDUARDOB.NACHURA
AssociateJustice

13/16

6/6/2016

G.R.No.168914

CERTIFICATION

PursuanttoSection13,ArticleVIIIoftheConstitution,itisherebycertifiedthattheconclusionsintheaboveDecision
werereachedinconsultationbeforethecasewasassignedtothewriteroftheopinionoftheCourt.

REYNATOS.PUNO
ChiefJustice
*OnOfficialLeave.
**OnLeave.
[1]
DECLARINGANATIONALPOLICYFAVORINGLOCALOPERATIONANDCONTROLOFWATERSYSTEMSAUTHORIZINGTHEFORMATIONOF
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
POWERSASARENECESSARYTOOPTIMIZEPUBLICSERVICEFROMWATERUTILITYOPERATION,ANDFOROTHERPURPOSES.
[2]
TSN,December16,2002,p.3.
[3]
Rollo,p.24.
[4]
Id.at25.
[5]
Id.at7.
[6]
G.R.No.96551,November4,1996,264SCRA11,17.
[7]
G.R.No.128690,January21,1999,301SCRA572,594.
[8]
Rollo,p.15.
[9]
391PHIL.370,377(2000).
[10]
G.R.No.127624,November18,2003,416SCRA4,1011.
[11]
AsamendedbyP.D.768andP.D.1479.

[12]
G.R.No.119528,March26,1997,270SCRA538.
http://sc.judiciary.gov.ph/jurisprudence/2007/july2007/168914.htm#_ftn3

14/16

6/6/2016

G.R.No.168914

[13]
Supraat549550.
[14]
P.D.198,whichwasissuedonMay25,1973afewmonthsaftertheratificationofthe1973ConstitutiononJanuary17,1973statesthatitwasissuedbyvirtueof
thepowersvestedin[PresidentMarcos]bytheConstitution,asCommanderinChiefofalltheArmedForcesofthePhilippines,andpursuanttoProclamationNo.
1081datedSeptember21,1972andGeneralOrderNo.1datedSeptember22,1972,asamended.ThelegislativepowerofthePresidentwasrecognizedbythe
CourtinAquino,Jr.v.COMELEC(G.R.No.L40004.January31,1975)asflowingfromhismartiallawpowersandfromArticleXVII,Section3(2)ofthe1973
Constitution.Thesamepowerwasonlybroughttoclearerreliefin1976byAmendmentNo.6tothesameConstitution.(BERNAS,THE1987CONSTITUTION
OFTHEREPUBLICOFTHEPHILIPPINES607[1996].)

[15]
Supra.
[16]
TheauthorityoftheNWRBtoissueCPCsproceedsfromP.D.1067,issuedonDecember31,1976andentitledADECREEINSTITUTINGAWATERCODE,
THEREBY REVISING AND CONSOLIDATING THE LAWS GOVERNING THE OWNERSHIP, APPROPRIATION, UTILIZATION, EXPLOITATION,
DEVELOPMENT,CONSERVATIONANDPROTECTIONOFWATERRESOURCES.Article3ofthisDecreechargestheNationalWaterResourcesCouncil,
laterrenamedtheNationalWaterResourcesBoardpursuanttoE.O.No.124AdatedJuly22,1987,withthefunctionofregulatingtheutilization,exploitation,
development,conservationandprotectionofwaterresources.Article16ofthesamelawprovides:
Anypersonwhodesirestoobtainawaterpermitshallfileanapplicationwiththe[NationalWaterResourcesCouncil]whoshallmakeknownsaid
applicationtothepublicforanyprotests.

Indeterminingwhethertograntordenyanapplication,theCouncilshallconsiderthefollowing:protestsfiled,ifanypriorpermitsgrantedthe
availabilityofwaterthewatersupplyneededforbeneficialusepossibleadverseeffectslanduseeconomicsandotherrelevantfactors

Uponapprovalofanapplication,awaterpermitshallbeissuedandrecorded.

[17]
SECTION11.Nofranchise,certificate,oranyotherformofauthorizationfortheoperationofapublicutilityshallbegrantedexcepttocitizensofthePhilippines
ortocorporationsorassociationsorganizedunderthelawsofthePhilippinesatleastsixtypercentumofwhosecapitalisownedbysuchcitizens,norshallsuch
franchise,certificate,orauthorizationbeexclusiveincharacterorforalongerperiodthanfiftyyears.Neithershallanysuchfranchiseorrightbegrantedexcept
undertheconditionthatitshallbesubjecttoamendment,alteration,orrepealbytheCongresswhenthecommongoodsorequires.TheStateshallencourage
equityparticipationinpublicutilitiesbythegeneralpublic.Theparticipationofforeigninvestorsinthegoverningbodyofanypublicutilityenterpriseshallbe
limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association must be citizens of the
Philippines.(Underscoringsupplied)

[18]

Sec.5ofP.D.198states:Purpose.LocalwaterdistrictsmaybeformedpursuanttothisTitleforthepurposesof(a)acquiring,installing,improving,maintaining

andoperatingwatersupplyanddistributionsystemsfordomestic,industrial,municipalandagriculturalusesforresidentsandlandswithintheboundariesofsuch
districts, (b) providing, maintaining and operating water collection, treatment and disposal facilities, and (c) conducting such other functions and operations
incidentaltowaterresourcedevelopment,utilizationanddisposalwithinsuchdistricts,asarenecessaryorincidentaltosaidpurpose.
[19]
G.R.No.112702,September26,1997279SCRA506,523
[20]
MetropolitanWaterDistrictv.PublicServiceCommission,58Phil.397,399(1933).
[21]
120Phil.736,745(1964).
http://sc.judiciary.gov.ph/jurisprudence/2007/july2007/168914.htm#_ftn3

15/16

6/6/2016

G.R.No.168914

[22]
Parenthetically,ArticleXIVSection8ofthe1935ConstitutionalreadycontainedthesameprohibitionagainstexclusivefranchisesfoundinArticleXIVSection
5ofthe1973Constitution.Thus,ArticleXIVSection8ofthe1935Constitutionstates:

SEC.8.Nofranchise,certificate,oranyotherformofauthorizationfortheoperationofapublicutilityshallbegrantedexcepttocitizensofthe
Philippines or to corporations or other entities organized under the laws of the Philippines sixty percentum of the capital of which is owned by
citizensofthePhilippines,norshallsuchfranchise,certificate,orauthorizationbeexclusiveincharacterorforalongerperiodthanfiftyyears. No
franchiseorrightshallbegrantedtoanyindividual,firm,orcorporation,exceptundertheconditionthatitshallbesubjecttoamendment,alteration,or
repealbytheCongresswhenthepublicinterestsorequires.(Emphasisandunderscoringsupplied)

http://sc.judiciary.gov.ph/jurisprudence/2007/july2007/168914.htm#_ftn3

16/16