GR L 22047; (August, 1967) (Digest)
G.R. No. L-22047 August 31, 1967
Municipality of San Juan, plaintiff-appellee, vs. National Waterworks and Sewerage Authority, defendant-appellant.
FACTS
The Municipality of San Juan, a municipal corporation in Batangas, had constructed and operated its own waterworks system, known as the San Juan Waterworks, using insular aid and local/loan funds, and held a certificate of public convenience from the Public Service Commission. In December 1955, the National Waterworks and Sewerage Authority (NAWASA), invoking Republic Act No. 1383 , assumed control over the waterworks system, which was then valued at approximately P101,030.02. The Municipality filed an action seeking a declaration of the unconstitutionality of Republic Act No. 1383 , arguing it deprived the municipality of its property without due process and just compensation, and demanded the return of the system and an accounting of its income from December 1955. The Court of First Instance of Lipa City ruled in favor of the Municipality, declaring it the owner of the system and ordering NAWASA to account for its income, less necessary expenses, or alternatively, to pay the value of the system if it wished to retain ownership and control. NAWASA appealed.
ISSUE
Whether Republic Act No. 1383 , as applied to the San Juan Waterworks System, constitutes a valid exercise of police power or an unconstitutional taking of municipal property without due process and just compensation.
RULING
The Supreme Court affirmed the lower court’s decision, with modification. Republic Act No. 1383 is unconstitutional insofar as it effects a transfer of ownership of a municipal waterworks system to NAWASA without due process and just compensation. The Court rejected NAWASA’s argument that the law merely transferred administration and control as a valid police power measure, reiterating its rulings in previous cases (City of Baguio v. NAWASA, City of Cebu v. NAWASA, Municipality of Lucban v. NAWASA, Municipality of Naguilian v. NAWASA, Municipality of La Carlota v. NAWASA, and Municipality of Compostela v. NAWASA) that the Act conveys ownership and beneficial interest, constituting a taking. The Court modified the decision by specifying that NAWASA’s option to retain ownership upon payment of P101,030.02 must be exercised by its Board of Directors within six (6) months from the entry of judgment; otherwise, the option clause would be void for indefiniteness. Costs were imposed on NAWASA.