G.R. No. L-20232, September 30, 1964
Municipality of La Carlota, plaintiff-appellee, vs. National Waterworks and Sewerage Authority (NAWASA), defendant-appellant.

FACTS

The Municipality of La Carlota owned and operated its waterworks system. Upon the enactment of Republic Act No. 1383 on June 28, 1955, the NAWASA assumed ownership, administration, and control of the system, including the collection of water rentals. On April 5, 1960, the municipality filed an action for recovery and accounting. The Court of First Instance of Negros Occidental ruled in favor of the municipality, ordering NAWASA to restore dominion, title, possession, supervision, administration, and control of the water system and to render a detailed accounting of all collections.
NAWASA appealed, conceding that the statutory transfer of ownership was unconstitutional for lack of provision for just compensation, as established in prior cases like City of Baguio vs. NAWASA. However, NAWASA argued that, separate from ownership, Section 1 of RA 1383 authorized it to exercise “jurisdiction, supervision and control” over all government-owned waterworks systems. It prayed for the reversal of that part of the judgment ordering the return of operational control, seeking to retain administrative authority over the system.

ISSUE

Whether NAWASA can legally exercise jurisdiction, supervision, and control over the La Carlota waterworks system, absent a valid transfer of ownership and without payment of just compensation.

RULING

The Supreme Court affirmed the trial court’s judgment in full, denying NAWASA’s plea to retain administrative control. The Court held that the inherent rights of possession, control, and enjoyment are inseparable from the right of ownership. To vest jurisdiction, supervision, and control in NAWASA would effectively deprive the municipality of the ordinary and beneficial use of its property, constituting a “taking” within the constitutional sense that requires just compensation.
The Court distinguished the authorities cited by NAWASA, noting they involved mere transfers of administration where ownership and benefits were retained by the municipality, unlike RA 1383’s intent to effect a real transfer of ownership. It found that the exercise of such operational control would be “little less than an assumption of ownership itself and not of mere administration,” thereby destroying the integrity of the municipality’s dominion. Since the law effected an unconstitutional expropriation without compensation, no aspect of the transfer, including administrative control, could be sustained.