THE MUNICIPALITY OF COMPOSTELA, CEBU, PLAINTIFF-APPELLEE, VS. THE NATIONAL WATERWORKS AND SEWERAGE AUTHORITY, DEFENDANT-APPELLANT.

Appeal by the National Waterworks and Sewerage authority — hereinafter
referred to as NAWASA — from a decision of the Court of First Instance of Cebu,
the dispositive part of which reads:

“IN VIEW OF ALL THE FOREGOING CONSIDERATIONS, judgment is hereby
rendered:

(1) Declaring the plaintiff Municipality of Compostela the true, lawful and
exclusive owner and possessor of the waterworks system in question, with the
concomittant legal attributes of ownership, such as possession, administration,
jurisdiction, supervision, operation and control over the same;

(2) Ordering the defendant Authority to restore to the plaintiff Municipality
of Compostela the ownership, supervision, jurisdiction, administration,
possession, operation and control of the waterworks system in question upon
payment to the latter of the amount of P8,000.00, representing the value of the
necessary and useful improvements introduced in the aforesaid waterworks system
from the time that defendant Authority took possession and adminis- tration
thereof;

(3) Ordering the herein plaintiff Municipality of Compostela to pay to the
herein defendant Authority the sum of P8,000.00, representing the value of the
necessary and useful improvements that it has introduced in the waterworks
system in question.”

Sometime in 1940, plaintiff herein, the Municipality of Compostela, Province
of Cebu, secured a P30,000 loan from the National Markets and Waterworks Fund,
for the construction of a waterworks system within said municipality, pursuant
to Commonwealth Act No. 403. The construction was completed in December, 1940,
and the system began to operate since January, 1941. As of the year 1953, the
municipality had paid, on said pre-war loan, the sum of P8,889.29, as interest,
and P192.10, as principal, thereby leaving a balance of P29,607.90, payment of
which was later assumed by the National Government.

In March, 1956, the NAWASA, purporting to act pursuant to Republic Act No.
1383, approved on June 18, 1955, assumed the administration, operation and
maintenance of said waterworks system, without the consent of plaintiff, which
instituted the present action on October 25, 1960, to recover the ownership,
possession, operation, jurisdiction, supervision and control over the
aforementioned system, with the result adverted to above. Hence, this appeal by
the NAWASA.

Appellant maintains that the waterworks system in question belongs to the
National Government, because funds thereof had been used in the construction of
the system. Said funds had been lent, however, to the plaintiff, which thereby
became the owner tiereof and, hence, of the system constructed therewith,
subject to the corresponding obligation to pay the National Government. Surely,
no such obligation would have existed had the system belonged, at the time of
its construction, to the National Government. Although the municipality was,
later, relieved of said obligation, this was due to its condonation by the
National Government. Indeed, this condonation necessarily implied that the
National Government was plaintiff’s creditor, a legal relation which could not
have possibly existed had the system belonged,since its establishment in 1940,
to the National Government.

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 or other property, either of the National Government/of other municipal
corporations, in such a way as to permit the use of the property or income
belonging to one of such corporations,^[1]
for the benefit of another municipal corporation or of the State
itself.^[2]

Appellant, likewise, questions plaintiff’s authority to fix and collect fees
for the water supplied by its waterworks system, but such authority is clearly
deducible from Sections 2317 and 2308(f) of the Revised Administrative Code, as
well as from Section 2 of Republic Act No. 2264.^[3]

WHEREFORE, the decision appealed from should be, as it is hereby
affirmed, with costs against apellant NAWASA.

IT IS SO ORDERED.

Reyes, J.B.L., Barrera, Dizon, Regala,
Makalintal, Bengzon, J.P., Zaldivar and Sanchez, JJ.,
concur.
Ruiz Castro, J., took no part.

^[2] 37 Am. Jur. p. 700; 62 C.J.S. p. 348; 38
Am. Jur. pp. 97-98; 103 A.L.R. p. 579.

[3] “Municipal waterworks. – A
municipal council shall have authority to acquire, construct, and maintain
waterworks for the purpose of supplying the inhabitants of the municipality with
water; to regulate the supply and use of water therefrom; and to fix and collect
rents for water thus supplied.” (Sec. 2317, Rev. Adm.
Code.)
“Miscellaneous Revenue. – The following species of revenues
shall accrue to the respective municipalities:
X X X X
“(f) Proceeds on
income from the sale, use, or management of any property lawfully held by the
municipality.” (Sec. 2308(f), Rev. Adm. Code.)
“SEC. 2. Taxation. –
Any provision of law to the contrary notwithstanding, all chartered cities, muni
cipalities and municipal districts shall have author ity to impose municipal
license taxes or fees upon persons engaged in any occupation or business, or
exer- cising privileges in chartered cities, municipalities or municipal
districts by requiring them to secure licenses at rates fixed by the municipal
board or city council of the city, the municipal council of the municipality, or
the municipal district council of the municipal district; to collect fees and
charges for services rendered by the city, municipality or municipal district, x
x x”. (Rep. Act No. 2264.)