DECENTRALIZATION AND DEVOLUTION DISTINGUISHED 4. The RTC decided in favor of petitioner BCI, holding that Resolution No.
f petitioner BCI, holding that Resolution No. 210 violates the
GR No. 138810 – BATANGAS CATV INC. v. CA
Sandoval-Gutierrez, J.
Petitioner Batangas CATV Inc. (CATV = cable TV) increased its subscriber rates from P88
to P180 per month. The Mayor of Batangas wrote petitioner a letter threatening to cancel its
permit (granted by Sangguniang Panlungsod Resolution No. 210). Petitioner thus filed a
petition for injunction in the Batangas RTC, alleging that it is only the NTC which has the
sole authority to regulate CATV operations in the Philippines. The RTC granted their petition
but was reversed by the CA holding that the General Welfare Clause of the Local
Government Code (i.e. Section 457) vested the Sangguniang Panlungsod regulatory powers
which they can use to benefit their constituencies. On appeal, the SC reversed the CA and
reinstated the RTC ruling, holding that while the LGU does have regulatory powers, these
are general in nature and are only delegated by the national legislature. Hence, the national
legislature is still the LGU's principal and the latter cannot defy its will or modify or violate it.
The legislature specifically vested exclusive jurisdiction on the NTC over matters relating to
CATV operations and the LGU cannot negate this by the mere issuance of a resolution or
ordinance.
DOCTRINE
Where the state legislature has made provision for the regulation of conduct, it has
manifested its intention that the subject matter shall be fully covered by the statute,
and that a municipality, under its general powers, cannot regulate the same conduct.
A municipal ordinance is inferior in status to the laws of the state. Hence, an ordinance in
conflict of a state law of general character is universally held to be invalid. Such is the case
here. under a general grant of power, a municipal corporation cannot adopt ordinances
which infringe the spirit of a state law or repugnant to the general policy of the state. The
delegate cannot be superior to the principal or exercise powers higher than those of the
latter. It is a heresy to suggest that the local government units can undo the acts of Congress,
from which they have derived their power in the first place and negate by mere ordinance
the mandate of the statute.
To say that LGUs exercise the same regulatory power over matters which are peculiarly
within the NTC's competence is to promote a scenario of LGUs and the NTC locked in
constant clash over the appropriate regulatory measure on the same subject matter. LGUs
must recognize that technical matters concerning CATV operation are within the exclusive
regulatory power of the NTC.
FACTS
1. July 1986 – Batangas Sangguniang Panlungsod ("BSP") enacted Resolution No. 210
granting petitioner Batangas CATV Inc. ("BCI") a permit to construct, install and operate
a CATV system in Batangas City, PROVIDED, however, that "any increase of rates
shall be subject to the approval of the Sangguniang Panlungsod."
2. November 1993 – BCI increased its subscriber rates from PHP 88 to PHP 180 per
month. In response, respondent Batangas Mayor wrote BCI a letter threatening to
cancel its permit unless it secures the approval of the BSP pursuant to Resolution No.
210.
3. Aggrieved, BCI filed a petition for injunction in Batangas RTC Branch 7 alleging that the
BSP has no authority to regulate the subscriber rates charged by BCI because under
EO No. 205, it is the National Telecommunications Commission (NTC) that has the sole
authority to regulate the CATV operation in the Philippines.
State's policy of deregulation set forth by the NTC. The RTC also pointed out that the
sole agency of the government which can regulate CATV operations is the NTC and
the LGUs cannot exercise regulatory power over it without appropriate legislation.
5. Unsatisfied, respondents appealed to the CA which decided in their favor. The CA
reversed the RTC, ratiocinating as follows:
a. Though NTC is granted regulatory powers by EO 205, this does not preclude
the Sangguniang Panlungsod from regulating the CATV operations in their
locality under the powers vested by the Local Government Code ("LGC") [i.e.
Section 457 paragraph 3(ii) of RA 7160]
b. Under the General Welfare Clause (cited above) LGUs can perform any
power that will benefit their constituencies. They can exercises powers that
are:
i. Expressly granted
ii. Necessarily implied from power that is expressly granted
iii. Necessary, appropriate or incidental to efficient and effective
governance
iv. Essential to promotion of general welfare of their inhabitants
c. Thus, the regulation of businesses in the locality is provided for in the General
Welfare Clause of the LGC.
6. BCI filed an MR but was denied.
7. Hence this petition.
ISSUE with HOLDING
1. Whether or not a local government unit (LGU) can regulate the subscriber rates charged
by a cable tv provider within its territorial jurisdiction? – NO.
a. Petitioner: though the LGC extends to the LGU the general power to perform
acts which will benefit its constituents, it does not authorize them to regulate
CATV operation. Pursuant to EO 205, only the NTC has such authority.
b. Respondents: Resolution 210 was enacted pursuant to the General Welfare
Clause of the LGC which authorizes them to regulate businesses.
"Businesses" necessarily includes the CATV industry. Resolution 210 is also
of the nature of a contract between BCI and the Sanggunian. To hold that EO
205 amended such contract violates the non-impairment of contracts clause
of the Constitution.
c. Supreme Court:
i. Legislative History: PD 1512 issued by Marcos granted Sining
Makulay Inc an exclusive franchise (creating a monopoly) and
terminated all franchises, permits or certificates of CATV operators
in the Philippines. LOI 894 vested direct supervision over the
operations of Sining Makulay to the Board of Communications which
eventually became NTC. After the EDSA Revolution, Cory Aquino
issued an EO, opening the CATV industry to all Philippine citizens.
Ramos issued EO 436 vesting the regulation and supervision of the
CATV industry solely with the NTC.
ii. It is clear that the regulatory power stayed with NTC, based on
Ramos' EO. The logical conclusion is that in light of the
aforementioned laws, the NTC exercise regulatory power over
CATV operators to the exclusion of other bodies.
iii. This does not in anyway strip LGUs of their general power to
prescribe regulations. When EO 436 decrees that "regulatory
1
 power" be vested "solely" with the NTC, it pertains to the "regulatory
power" over matters peculiarly within the NTC's competence.
iv. The General Welfare Clause is the delegation in statutory form of
the police power of the State to the LGUs. CATV operation may be
regulated by LGUs under such clause, but Resolution 210 cannot
be sustained. The flaws in Resolution No. 210 are:
1. it violates the mandate of existing laws and
2. it violates the State's deregulation policy over the
CATV industry.
d. The SC also applied the requisites of a valid ordinance as laid down by the
accepted principles governing municipal corporations to check if Resolution
210 was valid.
i. In De la Cruz v. Paraz, the SC laid the general rule that "ordinances
passed by virtue of the implied power found in the general
welfare clause must be:
1. Reasonable
2. Consonant with the general powers and purposes of the
corporation; and
3. Not inconsistent with the laws or policy of the state.
ii. Resolution 210 clearly contravenes EO 205 and EO 436 as it
permits the Sangguniang Panlungsod to usurp a power exclusively
vested in the NTC (fixing subscriber rates).
iii. Where the state legislature has made provision for the regulation of
conduct, it has manifested its intention that the subject matter
shall be fully covered by the statute, and that a municipality,
under its general powers, cannot regulate the same conduct.
1. Keller v. State: "Where there is no express power in the
charter of a municipality authorizing it to adopt ordinances
regulating certain matters which are specifically covered
by a general statute, a municipal ordinance, insofar as it
attempts to regulate the subject which is completely
covered by a general statute of the legislature, may be
rendered invalid."
iv. A municipal ordinance is inferior in status to the laws of the state.
Hence, an ordinance in conflict of a state law of general character
is universally held to be invalid. Such is the case here. under a
general grant of power, a municipal corporation cannot adopt
ordinances which infringe the spirit of a state law or repugnant to
the general policy of the state.
v. Moreover, municipal governments are only agents of the national
government. Local councils exercise only delegated legislative
powers conferred on them by Congress as the national lawmaking
body. The delegate cannot be superior to the principal or
exercise powers higher than those of the latter. It is a heresy to
suggest that the local government units can undo the acts of
Congress, from which they have derived their power in the first
place, and negate by mere ordinance the mandate of the statute.
vi. Thus, the SC held that the NTC, has exclusive jurisdiction over
matters affecting CATV operation, including specifically the fixing of
subscriber rates, but nothing herein precludes LGUs from exercising
its general power, under R.A. No. 7160, to prescribe regulations to
promote the health, morals, peace, education, good order or safety
and general welfare of their constituents.
e. The argument of the respondents that EO 205 violates the non-impairment of
contracts clause (because Resolution 210 is a 'contract' granting a franchise
to BCI) is without merit. There is no law authorizing LGUs to grant franchises
to operate CATV systems. In the absence of constructional or legislative
authorization, municipalities have no power to grant franchises. Also, the non-
impairment of contracts clause does not extend to privileges franchises,
and grants given by a municipality in excess of its powers or ultra vires.
DISPOSITIVE PORTION
WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals
dated February 12, 1999 as well as its Resolution dated May 26, 1999 in CA-G.R. CV No.
52461, are hereby REVERSED. The RTC Decision in Civil Case No. 4254 is AFFIRMED.
No pronouncement as to costs.
OTHER NOTES
Matters which are peculiarly within the NTC's competence: (not an exhaustive list)
(1) determination of rates,
(2) issuance of "certificates of authority,
(3) establishment of areas of operation,
(4) examination and assessment of the legal, technical and financial qualifications of
applicant operators,
(5) granting of permits for the use of frequencies,
(6) regulation of ownership and operation,
(7) adjudication of issues arising from its functions, and
(8) other similar matters.
Section 457 paragraph 3(ii), RA 7160
Powers and Duties. — The Sangguniang Panlungsod shall:
a) Enact such ordinances as may be necessary to carry into effect and
discharge the responsibilities conferred upon it by law, and such as shall be necessary and
proper to provide for health and safety, comfort and convenience, maintain peace and order,
improve the morals, and promote the prosperity and general welfare of the community and
the inhabitants thereof, and the protection of property therein;
xxx xxx xxx
d) Regulate, fix the license fee for, and tax any business or profession being carried on and
exercised within the territorial jurisdiction of the city, except travel agencies, tourist guides,
tourist transports, hotels, resorts, de luxe restaurants, and tourist inns of international
standards which shall remain under the licensing and regulatory power of the Ministry of
Tourism which shall exercise such authority without infringement on the taxing and
regulatory powers of the city government;'
DIGESTER: