GR L 18540; (November, 1963) (Digest)
G.R. No. L-18540. November 29, 1963.
MUNICIPALITY OF NAGUILIAN, plaintiff-appellee, vs. THE NATIONAL WATERWORKS AND SEWERAGE AUTHORITY, defendant-appellant.
FACTS
The Municipality of Naguilian, using its own funds, created, acquired, and maintained a waterworks system for its residents. In August 1956, the National Waterworks and Sewerage Authority (NAWASA), pursuant to Republic Act No. 1383 , took over the control and administration of this system. The delivery was involuntary, as the municipality did not voluntarily transfer the system despite the Act’s provisions and an implementing order from the President.
Consequently, the Municipality of Naguilian filed a special civil action for declaratory relief in the Court of First Instance of La Union. The parties submitted an agreed stipulation of facts, presenting a pure question of law. The lower court declared Republic Act No. 1383 unconstitutional insofar as it transferred ownership of the municipality’s water system to NAWASA without just compensation and affirmed the municipality’s ownership.
ISSUE
Whether Republic Act No. 1383 is constitutional in authorizing the transfer of the Naguilian Waterworks System to NAWASA without payment of just compensation.
RULING
The Supreme Court affirmed the lower court’s decision, holding the Act unconstitutional as applied. The Court ruled that the Naguilian Waterworks System is a patrimonial property of the municipality. As such, it is protected by the constitutional guarantee that private property shall not be taken for public use without just compensation. This principle extends to municipal corporations regarding their patrimonial assets. The Act effected a transfer of ownership and beneficial interest, not merely administrative control, and it failed to provide for effective payment of just compensation, rendering it violative of the Constitution.
NAWASA’s argument that the takeover was a valid exercise of police power—as the system is a public utility affecting health and sanitation—was rejected. The Court, citing precedents like City of Baguio v. NAWASA, clarified that the Act’s objective was not mere regulation or supervision but a real transfer of dominion. Police power cannot be invoked to justify the confiscation of patrimonial property without compensation. Therefore, the municipality rightfully retained ownership of its waterworks system.