G.R. No. 175417 & G.R. No. 198923, February 9, 2015
General Mariano Alvarez Services Cooperative, Inc. (GEMASCO), Petitioner, vs. National Housing Authority (NHA) and General Mariano Alvarez Water District (GMAWD), Respondents. / General Mariano Alvarez Water District (GMAWD), Petitioner, vs. Amina Catangay, et al.; National Housing Authority (NHA) and General Mariano Alvarez Services Cooperative, Inc., represented by Ernesto Flores, Respondents.

FACTS

1. On May 9, 1979, the Bureau of Public Works (BPW) turned over a completed water works system in General Mariano Alvarez, Cavite, to the National Housing Authority (NHA). The NHA was to subsequently turn it over to a cooperative water company.
2. On July 17, 1979, the NHA turned over the water system to San Gabriel Water Services Cooperative (SAGAWESECO), now GEMASCO, via a Memorandum of Agreement. The agreement stipulated that if GEMASCO’s management proved unsatisfactory after six months, the NHA would retake supervision.
3. In 1983, GEMASCO experienced internal conflicts with two rival Boards of Directors. Due to management instability, the NHA temporarily intervened and took over on September 18, 1986.
4. On January 10, 1992, the NHA executed a Deed of Transfer and Acceptance with GMAWD, transferring the operations and management of the water system (including six artesian deep wells, five water tanks, and pipe systems) from GEMASCO to GMAWD.
5. On February 17, 1992, GEMASCO filed a Complaint for Damages with Prayer for Preliminary Injunction and TRO against the NHA and GMAWD before the Quezon City RTC, assailing the Deed of Transfer.
6. On June 15, 1999, the RTC upheld the validity of the Deed. The Court of Appeals affirmed this decision on March 23, 2006. GEMASCO’s subsequent motion for reconsideration was denied, prompting it to file G.R. No. 175417 before the Supreme Court.
7. Separately, a labor case for illegal dismissal was filed against GEMASCO. The Labor Arbiter’s decision ordering payment of separation pay and backwages became final and executory. On August 17, 2007, a Writ of Execution was issued, leading to a Notice of Sale/Levy on Execution of personal property, which included three water tanks that were part of the disputed water system.
8. GEMASCO filed a petition before the CA to prohibit the auction, arguing ownership of the water tanks was pending in G.R. No. 175417. GMAWD agreed with GEMASCO. The CA dismissed the petition. GMAWD’s motion for reconsideration was denied, prompting it to file G.R. No. 198923 before the Supreme Court.

ISSUE

1. In G.R. No. 175417: Whether the Deed of Transfer and Acceptance executed by NHA and GMAWD, transferring the management and operation of the water system from GEMASCO to GMAWD, is valid.
2. In G.R. No. 198923: Whether the water tanks, as part of the water works system, can be subject to levy and auction sale under a Writ of Execution issued against GEMASCO to satisfy a labor judgment, considering the pending dispute over ownership and the nature of the property.

RULING

1. G.R. No. 175417: The petition is DENIED. The Supreme Court upheld the validity of the Deed of Transfer and Acceptance. The NHA, as the government agency with authority to award water system management, properly exercised its discretion in replacing GEMASCO with GMAWD after GEMASCO failed to satisfactorily manage the system as required by the original Memorandum of Agreement. The Court emphasized that administrative decisions are entitled to great weight and respect, and courts will not interfere in matters addressed to the sound discretion of a specialized agency, especially when the prime consideration is the public interest in basic water needs. Furthermore, GEMASCO raised issues that were factual in nature, which are not reviewable in a Rule 45 petition limited to questions of law.
2. G.R. No. 198923: The petition is GRANTED. The Supreme Court reversed the CA and ruled that the three water tanks and other facilities forming part of the water works system must be EXCLUDED from the Labor Arbiter’s Writ of Execution and attachment. The Court held that the water works system, including the tanks, is devoted to public use and is therefore property of public dominion. Properties of public dominion are not subject to levy, encumbrance, or disposition through public or private sale. Any such encumbrance or sale is void as contrary to public policy, as it would disrupt essential public services. Since GEMASCO is liable for the labor claims, any execution sale must be confined to properties it absolutely owns, excluding the public dominion water system assets.