[G.R. No. L-12032. August 31, 1959.]CITY OF BAGUIO, plaintiff-appellee, vs. THE NATIONAL WATERWORKS AND SEWERAGE AUTHORITY, defendant-appellant.

Facts: Plaintiff a municipal corporation filed a complaint for declaratory relief against defendant a public corporation, created under Act.1383. It contends that the said act does not include within its purview the Baguio Water Works system, assuming that it does, is unconstitutional because it deprives the plaintiff ownership, control and operation of said water works without just compensation and due process of law. The defendant filed a motion to dismiss on the ground that RA 1383 is a proper exercise of police power and eminent domain of the State. The court denied the motion and ordered the defendants to file an answer. The court holds that the water works system of Baguio belongs to the category of private property and cannot be expropriated without just compensation and that Sec. 8 of R.A.1383 provides for the exchange of the NAWASA assets for the value of the water works system of Baguio is unconstitutional for this is not just compensation. Defendants motion for reconsideration was denied hence this appeal.

Issues: Whether or Not there is a valid exercise of (1) police power and (2) eminent domain.

Held: (1 and 2)No. Republic Act No. 1383 does not constitute a valid exercise of police power. The Act does not confiscate, nor destroy, nor appropriate property belonging to appellee. It merely directs that all waterworks belonging to cities, municipalities and municipal districts in the Philippines be transferred to the NAWASA for the purpose of placing them under the control and supervision of one agency with a view to promoting their efficient management, but in so doing it does not confiscate them because it directs that they be paid with an equal value of the assets of the NAWASA.

Wherefore, the decision appealed from is affirmed, without pronouncement as to costs.

Section 6, Article XIII of our Constitution provides:"SEC. 6.The State may, in the interest of National Welfare and defense, establish and operate industries and means of transportation and communication, and, upon payment of just compensation, transfer to public ownership utilities and other private enterprises to be operated by the Government."Section 1 (2), Article III, of our Constitution provides:"(2)Private property shall not be taken for public use without just compensation".