More Electric and Power Corporation v. Panay Electric Company, Inc.
REITERATIONFacts
1. The Antecedents: Republic Act No. 11212, enacted on July 23, 2018, granted More Electric and Power Corporation (MORE) a franchise to operate an electric power distribution system in Iloilo City. This law includes Section 10, empowering MORE with eminent domain, and Section 17, allowing MORE to acquire the existing distribution system owned by Panay Electric Company, Inc. (PECO) during an interim period. PECO, the long-standing franchise holder since 1922, saw its franchise expire on January 18, 2019, without renewal. The distribution system in question comprises substantial infrastructure, including substations, lines, poles, transformers, and meters, all owned by PECO. Despite PECO's franchise expiration, Section 17 of RA 11212 permits PECO to continue operating the system temporarily until MORE establishes its own or acquires the existing one, ensuring uninterrupted service. 2. Procedural History: PECO challenged the constitutionality of Sections 10 and 17 of RA 11212 through a Petition for Declaratory Relief, arguing violations of due process and equal protection. PECO contended that the provisions allowed arbitrary and oppressive expropriation of its assets without public use. Concurrently, MORE filed a Complaint for Expropriation. The Regional Trial Court (RTC) initially issued a Temporary Restraining Order and later, on PECO's motion, rendered a Judgment declaring Sections 10 and 17 void and unconstitutional, permanently enjoining the expropriation and takeover. The RTC found the taking not for public use and that MORE was granted unwarranted benefits, violating equal protection. MORE appealed this decision to the Supreme Court (SC) via a Petition for Review on Certiorari (G.R. No. 248061), questioning the RTC's ruling. The Republic of the Philippines, through the OSG, also filed a separate petition (G.R. No. 249406), supporting the constitutionality of the provisions. These petitions were consolidated. 3. The Petition: In its Motion for Reconsideration, PECO argued that the SC erred in its September 15, 2020 Decision, which declared Sections 10 and 17 of RA 11212 constitutional. PECO reiterated its claims that the expropriation was not for a genuine public purpose, that the law unfairly singled it out, and that the taking violated its rights to due process and equal protection. PECO specifically argued that the power of eminent domain, as granted, could only be exercised by the government, not private entities like MORE, and that the assessed value for compensation was insufficient. MORE countered that PECO's assets were regulated and burdened by public use, and that requiring MORE to build a new system would be anti-consumer. The SC, in its Resolution, denied PECO's Motion for Reconsideration, upholding its earlier decision that the provisions were constitutional, finding that the expropriation served a public interest and complied with due process and equal protection guarantees. The Court emphasized that the power of eminent domain could be delegated to private enterprises performing public services and that the legislative determination of necessity and public use was within Congress's purview.
Issue(s)
Whether Sections 10 and 17 of Republic Act No. 11212 are unconstitutional for violating the rights to due process and equal protection of the laws.
Ruling
WHEREFORE, the Motion for Reconsideration is DENIED.
Ratio Decidendi
On the constitutionality of Sections 10 and 17 of R.A. No. 11212: The Court held that the assailed provisions are constitutional because the power to grant franchises is a plenary power of Congress, including the delegation of eminent domain to private enterprises performing public services, such as MORE. The expropriation of PECO's distribution system serves a valid public use, which now encompasses public interest, benefit, and convenience. This taking serves both the general public interest of conveying electricity in Iloilo City and the specific public interest of ensuring uninterrupted supply during the transition from an old to a new franchisee. The necessity was determined by the legislature, a determination courts generally respect. There was no violation of the equal protection clause, as PECO was not arbitrarily singled out but was the natural subject as the sole prior franchise holder. Granting a new franchisee the power to expropriate the assets of a former one is not unique to MORE, as similar provisions exist in other legislative franchises.
Main Doctrine
The power of eminent domain may be validly delegated by Congress to a private entity operating a public utility. The expropriation of the assets of a former franchise holder by a new one, for the same public purpose of electricity distribution, constitutes a valid exercise of this delegated power. The concept of 'public use' is not confined to actual use by the public but is synonymous with 'public interest,' 'public benefit,' and 'public convenience,' which includes the paramount need to ensure the continuous and uninterrupted supply of an essential public utility during a franchise transition.