8. Tawang Multi-Purpose Cooperative (TMPC) v.

La Trinidad Water District (LTWD), March 22, 2011 Non- exclusivity for the operation of a public utility.

FACTS: TMPC is a cooperative organized to provide domestic water services in Barangay Tawang, La Trinidad, Benguet. On the other hand, LTWD is a local water utility created under PD 198 which authorized to LTWD supply water for domestic, industrial and commercial purposes within the municipality of La Trinidad, Benguet. On 9 October 2000, TMPC filed with the NWRB an application for a certificate of public convenience to operate and maintain a waterworks system in Barangay Tawang. LTWD opposed TMPCs application claiming that under Section 47 of PD No. 198 its franchise is exclusive. In its Resolution No. 04-0702 dated 23 July 2002, the NWRB approved TMPCs application for a CPC. In its 15 August 2002 Decision, the NWRB held that LTWDs franchise cannot be exclusive since exclusive franchises are unconstitutional and found that TMPC is legally and financially qualified to operate and maintain a waterworks system.

ISSUE: Whether the authority granted to LTWD by virtue of P.D. 198 is exclusive.

RULING: NO. The constitution provides in Section 11, Article XII that: No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens, nor shall such franchise, certificate or authorization be exclusive in character or for a longer period than fifty years. The Constitution is clear that franchises for the operation of a public utility cannot be exclusive in character. This constitutional prohibition is absolute and accepts no exception. On the other hand, PD No. 198, as amended, allows the BOD of LTWD and LWUA to create franchises that are exclusive in character. Section 47 states that, "No franchise shall be granted to any other person or agency x x x unless and except to the extent that the board of directors consents thereto x x x subject to review by the Administration." Section 47 creates a glaring exception to the absolute prohibition in the Constitution. Clearly, it is patently unconstitutional.