Tawang Multi-Purpose Cooperative v.

La Trinidad Water
District
TAWANG MULTI-PURPOSE COOPERATIVE v. LA TRINIDAD WATER DISTRICT
G.R. No. 166471, March 22, 2011

FACTS:
 Petitioner Tawang Multi-Purpose Cooperative (TMPC) was organized to provide domestic
water services in Brgy. Twang, La Trinidad, Benguet. Respondent La Trinidad Water District (LTWD)
is a government owned and controlled corporation, a local water utility created under PD No. 198,
authorized to supply water for domestic, industrial and commercial purpose within municipality of La
Trinidad, Benguet.
 October 9, 2000, TMPC filed with National Water Resources Board an application for
Certificate of Public Convenience (CPC) to operate and maintain a waterworks system in Brgy.
Tawang LTWD claimed that under Sec. 47 of PD No. 198, as amended, its franchise is exclusive.
 August 15, 2002, the NWRB held that LTWD’s franchise cannot be exclusive since exclusive
franchises are unconstitutional under Sec. 2, Art. XII.
 October 1, 2004, upon appeal of LTWD to the RTC, the latter cancelled TMPC’s CPC and
held that Sec. 47 of PD No. 198 is valid; that the ultimate purpose of the Constitution is for the State,
through its authorized agencies or instrumentalities, to be able to keep and maintain ultimate control
and supervision over the operation of public utilities. What is repugnant to the Constitution is a grant
of franchise exclusive in character so as to preclude the State itself from granting a franchise to any
other person or entity than the present grantee when public interest so requires.
 November 6, 2004, RTC denied the motion for reconsideration filed by TMPC.

ISSUE:
 Whether RTC erred in holding that Sec. 47 of PD No. 198 is valid

HELD:
 Yes, the Supreme Court ruled in favor of petitioner. Quando aliquid prohibetur ex directo,
prohibetur et per obliquum – Those that cannot be done directly cannot be done indirectly. Under Sec.
2 and 11, Art. XII of the 1987 Constitution, The President, Congress, and Court cannot create
indirectly franchises that are exclusive in character by allowing the Board of Directors (BOD) of a
water district and Local Water Utilities Administration (LWUA) to create franchises that are exclusive
in character. Sec. 47 of PD no. 198 is in conflict with the above-mentioned provision of the
Constitution. And the rule is that in case of conflict between the Constitution and a statute, the former
prevails, because the constitution is the basic law to which all other laws must conform to.