G.R. No. 248061 & G.R. No. 249406, September 15, 2020
MORE ELECTRIC AND POWER CORPORATION, PETITIONER, VS. PANAY ELECTRIC COMPANY, INC., RESPONDENT. REPUBLIC OF THE PHILIPPINES, PETITIONER-OPPOSITOR, MORE ELECTRIC AND POWER CORPORATION, PETITIONER, VS. PANAY ELECTRIC COMPANY, INC., RESPONDENT.

FACTS

The consolidated cases involve a constitutional challenge against Sections 10 and 17 of Republic Act No. 11212, which granted a legislative franchise to MORE Electric and Power Corporation (MORE) to operate an electric power distribution system in Iloilo City. Section 10 expressly authorizes MORE to exercise the power of eminent domain, specifically allowing it to expropriate private property “actually necessary” for its operations, including assets “previously, currently or actually used, or intended to be used” for a distribution system within the franchise area. This provision is directly aimed at the existing distribution assets of the previous franchise holder, Panay Electric Company, Inc. (PECO). Section 17 provides for a transition period of up to two years, during which PECO is authorized to operate the existing system until MORE can establish its own, while also stating that this interim authority does not prevent MORE from exercising its right of eminent domain.
PECO assailed these provisions as unconstitutional, arguing that the delegated power of eminent domain amounts to a confiscatory and ill-disguised takeover of its private corporate assets, violating its constitutional rights to due process and equal protection. PECO contended that the law effectively permits the transfer of its private property to a competitor for the same public use it already serves.

ISSUE

Whether Sections 10 and 17 of R.A. 11212, which authorize MORE to expropriate PECO’s existing distribution assets, are unconstitutional for violating due process and equal protection.

RULING

The Court, through the ponencia and as concurred with in the Separate Opinion of Justice Caguioa, upheld the constitutionality of the challenged provisions. The legal logic is anchored on the nature of the power of eminent domain. This power, inherently legislative, may be validly delegated to public utilities like MORE, a distribution utility. The delegation in Section 10 is not an invalid abdication of legislative power, as it is exercised under the strict conditions and limitations set by the law itself and the Constitution.
The constitutional limitations on eminent domain are that the taking must be for public use and that just compensation must be paid. The purpose of establishing, operating, and maintaining an electricity distribution system is indisputably a public use. The law does not sanction a mere transfer of assets from one private entity to another; it facilitates the transfer to a new franchise grantee tasked with a public service obligation for the benefit of the consumers in Iloilo City. The fact that the property was previously used for the same public purpose by PECO does not negate the public-use character of the taking by MORE, the new franchise holder. Furthermore, the law explicitly requires the institution of proper expropriation proceedings and the payment of just compensation, thereby satisfying the second constitutional requisite. The determination of just compensation remains a judicial function. Therefore, the provisions provide a valid framework for the exercise of eminent domain and a structured transition to ensure uninterrupted electric service, passing constitutional muster.