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.

FACTS

The case involves a challenge to the constitutionality of Sections 10 and 17 of Republic Act No. 11212 , which granted MORE Electric and Power Corporation (MORE Power) a franchise to operate a distribution utility in Iloilo City. The law authorized MORE Power to exercise the power of eminent domain, specifically allowing it to expropriate the existing distribution assets of the previous franchise holder, Panay Electric Company, Inc. (PECO). The provision permitted immediate possession of the properties upon deposit of the assessed value, pending final determination of just compensation. PECO argued that this constituted an invalid delegation of eminent domain power and an unlawful taking of private property.

ISSUE

The core issue, as framed in the dissenting opinion, is whether Sections 10 and 17 of R.A. 11212 violate the constitutional guarantees of equal protection and due process by sanctioning a confiscatory taking of private property not for public use, but for the benefit of a private corporation.

RULING

In his dissenting opinion, Justice Leonen argued for striking down the provisions as unconstitutional. Applying the strict scrutiny test, he reasoned that the law infringes upon the fundamental right to property. He found that Section 10 constitutes invalid class legislation, arbitrarily favoring MORE Power and discriminating against PECO by allowing the taking of assets already devoted to public use, merely to transfer them to another private entity with no operational experience. The taking was deemed not for a genuine public purpose, as it did not create a new public utility but merely replaced one private monopoly with another. The mechanism for immediate possession upon deposit of the assessed value, which is typically lower than market value, was characterized as a confiscatory scheme violating due process. The dissent concluded that the law effectuated a legislative corporate takeover, not a true exercise of eminent domain for public use, and thus contravened Article III, Sections 1 and 9 of the Constitution.