EN BANC

March 22, 2011

G.R. No. 166471

Ponente: Associate Justice Antonio Carpio

TAWANG MULTI-PURPOSE COOPERATIVE, Petitioner vs LA TRINIDAD WATER DISTRICT, Respondent.

The Facts
Tawang Multi-Purpose Cooperative (TMPC) is a cooperative, registered with the Cooperative
Development Authority, and organized to provide domestic water services in Barangay Tawang, La
Trinidad, Benguet. La Trinidad Water District (LTWD) is a local water utility created under PD No. 198,
as amended. It is authorized to supply water for domestic, industrial and commercial purposes
within the municipality of La Trinidad, Benguet.
On 9 October 2000, TMPC filed with the National Water Resources Board (NWRB) an application for a
certificate of public convenience (CPC) to operate and maintain a waterworks system
in Barangay Tawang. LTWD opposed TMPCs application. LTWD claimed that, under Section 47 of PD
No. 198, as amended, its franchise is exclusive.
In its Resolution dated 23 July 2002, the NWRB approved TMPCs application for a CPC. In its 15
August 2002 Decision,4 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. Applicant is legally and financially qualified to operate and
maintain a waterworks system; that the said operation shall redound to the benefit of the
homeowners/residents of the subdivision, thereby, promoting public service in a proper and
suitable manner, the instant application for a Certificate of Public Convenience is, hereby,
GRANTED.
LTWD filed a motion for reconsideration. In its 18 Nov 2002 Resolution, the NWRB denied the
motion. Then LTWD appealed to the RTC.
The RTCs Ruling
In its 1 October 2004 Judgment, the RTC set aside the NWRBs 23 July 2002 Resolution and 15
August 2002 Decision and cancelled TMPCs CPC. The RTC held that Section 47 is valid.

TMPC filed a motion for reconsideration. In its 6 November 2004 Order, the RTC denied the
motion. Hence, the present petition.
Issue
TMPC raises as issue that the RTC erred in holding that Section 47 of PD No. 198, as amended, is
valid.
The Courts Ruling
What one cannot do directly, he cannot do indirectly. The President, Congress and the Court
cannot create directly franchises for the operation of a public utility that are exclusive in character.
The Section 8, Art 13 of 1935, Section 5, Art 14 1973 and Section 11, Art 12 1987 Constitutions expressly
and clearly prohibit the creation of franchises that are exclusive in character.
In Sec 47 PD No. 198, as amended by former President Marcos allows the BOD and the LWUA to
create directly franchises that are exclusive in character.
In Manila Prince Hotel v. GSIS the Court held that:
Under the doctrine of constitutional supremacy, if a law or contract violates any norm of the
constitution that law or contract whether promulgated by the legislative or by the executive
branch or entered into by private persons for private purposes is null and void and without any
force and effect. Thus, since the Constitution is the fundamental, paramount and supreme
law of the nation, it is deemed written in every statute and contract.
Section 47 creates a glaring exception to the absolute prohibition in the Constitution. Clearly, it is patently
unconstitutional. The BOD and the LWUA are not even legislative bodies. The BOD is not a
regulatory body but simply a management board of a water district. Indeed, neither the BOD nor the
LWUA can be granted the power to create any exception to the absolute prohibition in the
Constitution, a power that Congress itself cannot exercise.
The dissenting opinion declares Section 47 valid and constitutional. Stated differently, the dissenting
opinion holds that (1) President Marcos can violate indirectly the Constitution; (2) the BOD can
violate directly the Constitution; (3) the LWUA can violate directly the Constitution; and (4) the
Court should allow the violation of the Constitution.
The Constitution should never be violated by anyone. Right or wrong, the President, Congress,
the Court, the BOD and the LWUA have no choice but to follow the Constitution. Any act, however

noble its intentions, is void if it violates the Constitution. The three departments of government
have no choice but to yield obedience to the commands of the Constitution. Whatever limits it
imposes must be observed. Police power does not include the power to violate the Constitution. Police
power is the plenary power vested in Congress to make laws not repugnant to the Constitution.

WHEREFORE, we GRANT the petition. We DECLARE Section 47 of Presidential Decree No.

198 UNCONSTITUTIONAL. We SET ASIDE the 1 October 2004 Judgment and 6 November 2004 Order
of the Regional Trial Court, Judicial Region 1, Branch 62, La Trinidad, Benguet, in Civil Case No. 03-CV1878 and REINSTATE the 23 July 2002 Resolution (NWRB approved TMPCs application for a CPC)
and 15 Aug 2002 Decision of the National Water Resources Board. (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.)