Case Digest: METROPOLITAN CEBU WATER DISTRICT (MCWD) v. M. ADALA 526 SCRA 465 (2007)

METROPOLITAN CEBU WATER DISTRICT (MCWD) v. M. ADALA 526 SCRA 465 (2007)

The Metropolitan Cebu Water District (MCWD), a public corporation, appealed the decision rendered in favor of Margarita A. Adala (Adala) by the National Water Resources Board (NWRB), granting her a franchise permit to supply water to three sitios in Bulacao. MCWD was the exclusive distributor of water in the district. MCWD contended that the proposed waterworks would interfere with their water supply which it has the right to protect, and the water needs of the residents in the subject area was already being well served by petitioner. They also contend that they were granted by Section 47 of Presidential Decree 198, granting exclusive franchise only to public utilities. Engineer Paredes, the general manager of MCWD, filed Certificate of Public Convenience by the National Water Resources Board (NWRB), which permitted the company to operate and maintain waterworks supply services. MCWD alleged that the Board of Directors of MCWD did not give consent to the issuance of the franchise applied for.

ISSUES:

Whether or not Section 47 of Presidential Decree 198 grants exclusive franchise to public utilities

HELD:

MWCD‘s position that an overly strict construction of the term ―franchise as used in Section 47 of P.D. 198 would lead to an absurd result impresses. 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 systems without the water district‘s consent, the NWRB may keep on issuing CPCs authorizing the very same act even without such consent. In effect, not only would the NWRB be subject to less constraints than Congress in issuing franchises. The exclusive character of the franchise provided for by Section 47 would be illusory. While the prohibition in Section 47 of P.D. 198 applies to the issuance of CPCs for the reasons discussed above, the same provision must be deemed void ab initio for being irreconcilable with Article XIV Section 5 of the 1973 Constitution which was ratified on January 17, 1973 – the constitution in force when P.D. 198 was issued on May 25, 1973. That the legislative authority – in this instance, then President Marcos – intended to delegate its power to issue franchises in the case of water districts is clear from the fact that, pursuant to the procedure outlined in P.D. 198, it no longer plays a direct role in authorizing the formation and maintenance of water districts, it having vested the same to local legislative bodies and the Local Water Utilities Administration (LWUA).

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