National Waterworks and Sewerage Authority v. Dator
REITERATIONFacts
The Antecedents: This case stems from a dispute over the ownership and operation of the Lucban Waterworks System, known as the "Apolinario de la Cruz Waterworks System." A prior Supreme Court decision (G.R. No. L-15525) had affirmed the municipality of Lucban as the owner of the system, but subjected it to the jurisdiction, control, and supervision of the National Waterworks and Sewerage Authority (NAWASA). The Court ordered NAWASA to account for revenues collected from the system's operation. Procedural History: Following the final and executory decision in G.R. No. L-15525, the Municipal Mayor of Lucban, Hobart Dator, issued a memorandum directing the Municipal Treasurer to collect water rentals and a proclamation enjoining the public to pay these fees to the municipal treasurer's office. NAWASA subsequently filed a petition with the Court of First Instance of Quezon, seeking to have the mayor held in contempt for allegedly defying the prior Supreme Court ruling. The lower court dismissed NAWASA's petition, ruling that the collection of water fees and the appointment of personnel for the system were matters of internal management, not falling under NAWASA's supervisory powers. The Petition: NAWASA appeals the dismissal of its contempt petition. The appellant argues that the mayor's order to collect water bills on behalf of the municipality constitutes contempt of court because it infringes upon NAWASA's declared supervisory power over the municipal waterworks system, as established in the previous Supreme Court decision. NAWASA contends that this action encroaches upon its authority and is a defiance of the Court's prior judgment.
Issue(s)
Whether the Municipal Mayor's order for the Municipal Treasurer to collect water fees from users of the municipal waterworks system constitutes contempt of court for allegedly encroaching upon the supervisory powers of the National Waterworks and Sewerage Authority (NAWASA). Whether the collection of water fees and the appointment of personnel for the waterworks system are acts relating to internal management and proprietary functions of the municipality, or if they fall under the regulatory and supervisory powers of NAWASA.
Ruling
The Supreme Court affirmed the order of the lower court dismissing the petition for contempt. It held that the municipality, as the owner of the waterworks system, has the inherent authority to fix and collect water rents, and that such acts are part of its proprietary functions and internal management, not an infringement upon NAWASA's supervisory powers.
Ratio Decidendi
On the issue of contempt and encroachment on supervisory powers: The Court ruled that the Municipal Mayor's order for the collection of water fees did not constitute contempt of court. The Court clarified that while NAWASA has jurisdiction, control, and supervision over municipal waterworks systems, this authority does not divest the municipality, as the owner, of its proprietary right to collect fees for water supplied. The collection of water fees is an act relating to the internal management of the municipality and an exercise of its ownership rights over its patrimonial property. The Court emphasized that ownership is meaningless without the inherent rights of possession, control, and enjoyment, which include the right to use the property for revenue purposes. Therefore, the municipality's act of collecting fees from its waterworks system was justified and did not violate the previous Supreme Court decision. On the nature of municipal waterworks operations: The Court held that the authority of a municipality to fix and collect rents for water supplied by its waterworks system is expressly granted by law, citing Section 2317 of the Revised Administrative Code and Section 2 of Republic Act No. 2264. Even without these express provisions, such authority is justified by the municipality's inherent power to administer what it privately owns. The operation of a waterworks system by a municipality is considered a business venture, and the fees collected are its income. The Court reiterated the principle that the National Government cannot appropriate patrimonial property of municipal corporations without just compensation and due process, nor can it assume the power of administration of such property if it infringes upon the municipality's right to enjoy the income derived from its operation. The municipality acts in its proprietary capacity when operating its waterworks system, enjoying the attributes of ownership under the New Civil Code.
Main Doctrine
The Supreme Court affirmed that municipalities, as owners of their waterworks systems, retain the proprietary right to fix and collect water rents. While the National Waterworks and Sewerage Authority (NAWASA) exercises jurisdiction, control, and supervision over such systems, this does not divest the municipality of its inherent power to manage its patrimonial property and derive income therefrom. The collection of water fees is considered an act relating to internal management and the exercise of proprietary rights, not an infringement upon NAWASA's supervisory functions.