GR 168914; (July, 2007) (Digest)
G.R. No. 168914 ; July 4, 2007
METROPOLITAN CEBU WATER DISTRICT (MCWD), Petitioner, vs. MARGARITA A. ADALA, Respondent.
FACTS
Respondent Margarita A. Adala applied with the National Water Resources Board (NWRB) for a Certificate of Public Convenience (CPC) to operate a waterworks system in specific sitios of Barangay Bulacao, Cebu City. Petitioner Metropolitan Cebu Water District (MCWD), a government-owned and controlled corporation created under P.D. No. 198, opposed the application. MCWD argued that its Board of Directors’ consent was a mandatory precondition under Section 47 of P.D. No. 198, that the proposed system would interfere with its water supply, and that it was already adequately serving the area. The NWRB granted Adala’s application, finding her legally and financially qualified and that the operation would benefit the public. The Regional Trial Court affirmed the NWRB decision. MCWD elevated the case via a petition for review, also contesting the authority of its General Manager to file the petition.
ISSUE
The core legal issues are: (1) Whether the consent of a water district’s board is indispensable for the NWRB to grant a CPC within the district’s service area under P.D. No. 198; and (2) Whether the term “franchise” in Section 47 of P.D. No. 198 refers only to a legislative franchise or also includes a CPC issued by the NWRB.
RULING
The Supreme Court denied the petition and affirmed the lower courts’ decisions. On the procedural issue, the Court held that the board resolution authorizing the General Manager to file “expropriation and other cases” was a valid general authorization, not a defective roving authority, and thus sufficient for the petition.
On the substantive issues, the Court ruled that the NWRB’s grant of a CPC to Adala was valid. The Court meticulously interpreted Section 47 of P.D. No. 198, which states that “no franchise shall be granted to any other person within [the water district’s] jurisdiction” without the district’s board consent. The Court distinguished between a “franchise” in the constitutional and public utility sense, which is a special privilege granted directly by the state through legislation, and a “certificate of public convenience,” which is a regulatory authorization issued by an administrative body like the NWRB to operate a public utility where a legislative franchise already exists. The Court clarified that P.D. No. 198 itself is the legislative franchise conferred upon water districts. Therefore, the “franchise” protected by Section 47 refers only to another legislative franchise, not a CPC. Consequently, the NWRB was not required to secure MCWD’s consent before issuing a CPC to Adala. The NWRB properly exercised its regulatory power under the Water Code to promote public service, provided the applicant is qualified and the service benefits the consumers.