GR 21763; (December, 1966) (Digest)
G.R. No. L-21763 December 17, 1966
Municipality of Compostela, Cebu, plaintiff-appellee, vs. The National Waterworks and Sewerage Authority, defendant-appellant.
FACTS
In 1940, the Municipality of Compostela secured a P30,000 loan from the National Markets and Waterworks Fund to construct a waterworks system under Commonwealth Act No. 403 . The system was completed in December 1940 and began operating in January 1941. By 1953, the municipality had paid P8,889.29 in interest and P192.10 in principal, leaving a balance of P29,807.90, which was later assumed by the National Government. In March 1956, the NAWASA, purporting to act under Republic Act No. 1383 , assumed the administration, operation, and maintenance of the waterworks system without the municipality’s consent. On October 25, 1960, the Municipality of Compostela filed an action to recover ownership, possession, operation, jurisdiction, supervision, and control over the system.
ISSUE
Whether the NAWASA lawfully assumed administration and control of the waterworks system owned by the Municipality of Compostela under Republic Act No. 1383 .
RULING
The Supreme Court affirmed the decision of the Court of First Instance of Cebu. The waterworks system belonged to the Municipality of Compostela. The funds used for construction were a loan to the municipality, making it the owner of the system, subject to its obligation to repay the National Government. The subsequent condonation of the debt by the National Government confirmed this creditor-debtor relationship. Republic Act No. 1383 cannot justify NAWASA’s action, as established in prior jurisprudence (City of Baguio vs. NAWASA, City of Cebu vs. NAWASA, Naguilian vs. NAWASA, La Carlota vs. NAWASA), which held that the National Government cannot appropriate patrimonial property of municipal corporations without just compensation and due process. Furthermore, the municipality has the authority to fix and collect water fees under Sections 2317 and 2308(f) of the Revised Administrative Code and Section 2 of Republic Act No. 2264 . The Court ordered NAWASA to restore the system to the municipality upon the latter’s payment of P8,000 for useful improvements introduced by NAWASA.