MUNICIPALITY OF SAN JUAN, PLAINTIFF-APPELLEE, VS. NATIONAL WATERWORKS AND SEWERAGE AUTHORITY, DEFENDANT-APPELLANT.

Direct appeal, taken by the National Waterworks and Sewerage Authority
– hereinafter referred to as NAWASA ­from a decision of the Court of First
Instance of Lipa City, the dispositive
part of which reads:

“WHEREFORE, considering the foregoing circumstances, and
following the rulings held by our Supreme Court in the cases of the City of Baguio vs. Nawasa, G.R. No. L-12032; City of Cebu
vs. Nawasa, G.R. No. L-12892 and Municipal­ity of Lucban vs. Nawasa, G. R. No. L-15525,
judgment is hereby pronounced in favor of the plaintiff and against the
defendant, declaring the former as owner of the San Juan Waterworks System and
ordering the latter to render an ac­counting of the income derived by it from
Decem­ber 31, 1955, to the present, less the sum of P20,000.00, the cost of the
useful and necessary expenses introduced by it into the said system; or in the
alternative, the defendant may continue the ownership, possession, operation,
supervision and administration of the said waterworks system, after paying to
the plain­tiff the sum of P101,030.02, the value of the system, when it was
taken over by the defend­ant.  No cost is
hereby assessed.”

Plaintiff herein, the Municipality of San Juan, is a municipal
corporation, forming part of the Province of Batangas.  Prior to 1955, said plaintiff had constructed
its waterworks system, known as San Juan Waterworks, partly with insular aid
and partly with local and loan funds, and then operated it with a certificate
of public convenience granted by the Public Service Commission.  In December, 1955, when the System was worth
P101,030.02, more or less, the NAWASA, invoking the
provisions of Republic Act No. 1383,^[1]
assumed control over said waterworks, excluding therefrom
the plain­tiff.  Accordingly, the latter
commence the present action against NAWASA, to secure a declaration of unconstitutionali­ty
of said Act, upon the ground that it deprived plaintiff of its property,
without due process of law and without just compensation, as well as a judgment
sentencing NAWASA to re­linquish to plaintiff the possession, ownership,
control, supervision, operation and administration of the waterworks in
question and to render an account of the funds derived from its operation from
December 1955.  After appropriate
proceedings said court rendered the aforementioned decision, from which NAWASA
has taken the present appeal.

NAWASA does not question the wisdom of City of Baguio vs. NAWASA,^[2]
City of Cebu vs. NAWASA,^[3]
and Municipality of Lucban vs. NAWASA,^[4]
declaring Republic Act No. 1383 uncon­stitutional insofar as it provides for
the transfer to the Na­tional Government, through the NAWASA, of the ownership
of local waterworks system belonging to municipal corporations, without due
process of law.  It seeks, however, to
evade the effect of said decisions, by arguing that, as regards the waterworks
system involved in the case at bar, what has taken place is a transfer, not
of the ownership or title to said system, but merely, of its possession,
administration and control, and that such transfer of the latter is a valid
exercise of the police power of the State. 
However, this pretense had al­ready been rejected in previous cases of
similar nature.  In Municipality
of Naguilian
vs. NAWASA,^[5]
we declared: 

“This Court has already overruled appellant’s proposition that
Republic Act No. 1383, constitutes a valid exercise of police power.  As we have said (in the aforementioned three
cases, the issue raised by the instant appellant has been repeatedly decided by
this Court) the Act does not seek to merely trans­fer administration of the
property of a municipal corporation from one agency to another for purposes of
supervision and control; ownership and beneficial interest are also
conveyed.  It carries out a real transfer
of dominion over the waterworks to the new agency, the NAWASA.”

The language used in Municipality
of La Carlota vs. NAWASA^[6]
was:

“It is hard to conceive how the jurisdic­tion, supervision and
control of the appellee’s waterworks system may be
vested in the appel­lant without destroying the integrity of the appellee’s right of dominion.  Ownership is nothing without the inherent
rights of posses­sion, control and enjoyment. 
Where the owner is deprived of the ordinary and beneficial use of his
property or of its value by its being diverted to public use, there is taking
within the constitutional sense.  Tañada & Fernando, Constitution of the Philippines, 4th
ed., Vol. I, 215-216.  Such deprivation
would be the certain consequence if, as prayed for by the appellant, it should
be allowed to assume jurisdiction, supervision and control over the waterworks
sys­tem of the appellee.  That would be little less than an assumption
of ownership itself and not of mere administration.”

What is more, in Municipality
of Compostela
vs. NAWASA,^[7]
this Court went further and postulated that:

“The alleged sufficiency of Republic Act No. 1383 to justify
the action taken by the NAWASA has been overruled by this Court in City of Baguio vs. NAWASA (57 Off. Gaz. 1584), City of Cebu vs.
NAWASA, L-12892 (April 20, 1960), Naguilian vs.
NAWASA, L-18540 (November 29, 1963), and La Carlota vs. NAWASA, L-20232
(September 30, 1964), in which we held that the National Govern­ment can not
appropriate patrimonial property of municipal corporations without just
compensation and due process of law.  As
a consequence, neither may the National Government assume the power of
administration of patrimonial property of munici­pal corporations, if such
action is based upon the aforementioned appropriation of said property by the
State.  In fact, it may not, by operation
of law, assume such administration, without appropriating the title to the
property, if the same or the income derived from its operation will be comingled with other property, either of the National
Government or of other municipal corpora­tions, in such a way to permit the use
of the pro­perty or income belonging to one of such corpora­tions (because it
was derived from the operation of its patrimonial property), for the benefit of
another municipal corporation or of the State itself.  (37 Am. Jur. p.
700; 62 C.J.S., p. 348; 38 Am. Jur. pp. 97-98; 103
A.L.R. p. 579.)”

We note that the decision appealed from grants NAWASA the option
to retain the ownership, possession, operation, supervision and administration
of the waterworks system of San Juan
upon payment of the sum of P101,030.02.  Republic Act No. 1383 empowers the NAWASA to
purchase real and personal property, but, this authority is vested by section 3
of the Act in a Board of Directors, which does not appear to have chosen to
exercise it.  Moreover, the decision
appealed from does not fix the period within which the option may be availed
of.  As a consequence, said decision or
portion thereof may pursuant to the doctrine laid down in Ignacio vs. Hilario^[8] never
became final and executory.  Said decision should, therefore, specify the
time within which the option may be exercised by the proper organ of the
NAWASA, which, we feel, should be six (6) months from entry of Judgment in this
Court.

Thus modified, the decision appealed from is hereby
affirmed, in all other respects, with costs against the NAWASA.

Reyes, Dizon, Makalintal,
Bengzon, Zaldivar, Sanchez,
Castro, Angeles, and Fernando, JJ., concur.

^[1] Approved on June 18, 1955.

^[2]
L-12032, August 31, 1959.

^[3]
L-12892, April 30, 1960.

^[4]
L-15525, October 11, 1961.

^[5] L-18540,
November 29, 1963.

^[6] L-20232,
September 30, 1964.

^[7] L-21763,
December 17, 1966.

^[8] L-175,
April 30, 1946; 76 Phil.,
605, 608-609.