1. BATANGAS CATV, INC., v. THE COURT OF APPEALS, G.R. No. 138810, EN BANC, September 29, 2004

 FACTS: 

 Respondent Sangguniang Panlungsod enacted Resolution No. 210 granting petitioner a permit to construct, install, and operate a CATV system in Batangas City. Section 8 of the Resolution provides that petitioner is authorized to charge its subscribers the maximum rates specified therein, "provided, however, that any increase of rates shall be subject to the approval of the Sangguniang Panlungsod." Sometime in November 1993, petitioner increased its subscriber rates from ₱88.00 to ₱180.00 per month. As a result, respondent Mayor threaten to cancel its permit unless it secures the approval of respondent Sangguniang Panlungsod. 

 Petitioner then filed with the RTC a petition for injunction. It alleged that respondent Sangguniang Panlungsod has no authority to regulate the subscriber rates charged by CATV operators because under Executive Order No. 205, the National Telecommunications Commission (NTC) has the sole authority to regulate the CATV operation in the Philippines. 

 On October 29, 1995, the trial court decided in favor of petitioner. They elevated the case to the CA and it reverses the trial court’s decision. CA ruled that the regulation of businesses in the locality is expressly provided in the Local Government Code and that the fixing of service rates is lawful under the General Welfare Clause. 

 Petitioner then filed a motion for reconsideration but was denied. Hence, the instant petition for review on certiorari 

 ISSUES: 1. W/N the LGU has the power to exercise the regulatory function 2. W/N the court of appeals erred in reversing the decision appealed from and dismissing petitioner’s complaint. 

 RULING:

The CA erred in holding that the SP has the power under the LGC’s General Welfare Clause to exercise regulatory function such as fixing or approving service rates of CATV operations. 

E.O. No. 436 decrees that the "regulatory power" shall be vested "solely" in the NTC. The regulatory power comprises varied acts, such as "to fix, establish, or control; to adjust by rule, method or established mode; to direct by rule or restriction; or to subject to governing principles or laws. 

On the other hand, the LGUs under the general welfare clause may still regulate the operation of the CATV. This is primarily because the CATV system commits the indiscretion of crossing public properties. It uses public properties in order to reach subscribers. The physical realities of constructing CATV system – the use of public streets, rights of ways, the founding of structures, and the parceling of large regions – allow an LGU a certain degree of regulation over CATV operators. This is the same regulation that it exercises over all private enterprises within its territory. 

However, the court ruled that, while we recognize the LGUs’ power under the general welfare clause, Resolution No. 210 could not be sustained. Respondents strayed from the well-recognized limits of its power. LGU cannot regulate the fixing or approving service rates because it is a power vested solely to the NTC. To rule otherwise would constitute an ultra vires act on the part of the LGU. 2. Resolution No. 210 violates the mandate of existing laws and it violates the State’s deregulation policy over the CATV industry. 

The apparent defect in Resolution No. 210 is that it contravenes E.O. No. 205 and E.O. No. 436 insofar as it permits respondent Sangguniang Panlungsod to usurp a power exclusively vested in the NTC, i.e., the power to fix the subscriber rates charged by CATV operators. The fixing of subscriber rates is definitely one of the matters within the NTC’s exclusive domain. 

Since E.O. No. 205, a general law, mandates that the regulation of CATV operations shall be exercised by the NTC, an LGU cannot enact an ordinance or approve a resolution in violation of the said law. It is a fundamental principle that municipal ordinances are inferior in status and subordinate to the laws of the state. An ordinance in conflict with a state law of general character and statewide application is universally held to be invalid. 

 Secondly, the resolution violates the deregulation policy of the state over the CATV. In the field of telecommunications, it is recognized that many areas in the Philippines are still "unserved" or "underserved." Thus, to encourage private sectors to venture in this field and be partners of the government in stimulating the growth and development of telecommunications, the State promoted the policy of deregulation. 

 When the State declared a policy of deregulation, the LGUs are bound to follow. To rule otherwise is to render the State’s policy ineffective. Being mere creatures of the State, LGUs cannot defeat national policies through enactments of contrary measures. Verily, in the case at bar, petitioner may increase its subscriber rates without respondents’ approval. 

 There is no law specifically authorizing the LGUs to grant franchises to operate CATV system. Whatever authority the LGUs had before, the same had been withdrawn when President Marcos issued P.D. No. 1512 "terminating all franchises, permits or certificates for the operation of CATV system previously granted by local governments." Today, pursuant to Section 3 of E.O. No. 436, "only persons, associations, partnerships, corporations or cooperatives granted a Provisional Authority or Certificate of Authority by the NTC may install, operate and maintain a cable television system or render cable television service within a service area." It is clear that in the absence of constitutional or legislative authorization, municipalities have no power to grant franchises.

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