GR 248061; (March, 2021) (Digest)
G.R. No. 248061 , March 9, 2021
MORE ELECTRIC AND POWER CORPORATION, PETITIONER, VS. PANAY ELECTRIC COMPANY, INC., RESPONDENT.
[G.R. No. 249406, March 9, 2021]
REPUBLIC OF THE PHILIPPINES, PETITIONER-OPPOSITOR, MORE ELECTRIC AND POWER CORPORATION, PETITIONER, VS. PANAY ELECTRIC COMPANY, INC., RESPONDENT.
FACTS
Republic Act (R.A.) No. 11212 was enacted on July 23, 2018, granting More Electric and Power Corporation (MORE) a franchise to establish, operate, and maintain an electric power distribution system in Iloilo City. Sections 10 and 17 of the law conferred upon MORE the authority to exercise the right of eminent domain over the existing distribution system in Iloilo City, which is owned by Panay Electric Company, Inc. (PECO). PECO’s franchise had expired on January 18, 2019, and no new franchise was issued to it. However, under Section 17, PECO was allowed to continue operating the system under a provisional Certificate of Public Convenience and Necessity pending MORE’s establishment of its service. On March 6, 2019, PECO filed a Petition for Declaratory Relief assailing the constitutionality of Sections 10 and 17 of R.A. No. 11212 , arguing that they violated its rights to due process and equal protection. PECO contended that the expropriation authorized a taking not for public use, was arbitrary, and granted MORE undue benefits not given to other distribution utilities. Meanwhile, MORE filed a Complaint for Expropriation. The Regional Trial Court (RTC) ruled in favor of PECO, declaring Sections 10 and 17 unconstitutional. MORE and the Republic of the Philippines, through the Office of the Solicitor General, filed petitions for review. The Supreme Court, in a Decision dated September 15, 2020, reversed the RTC and declared the provisions constitutional. PECO filed a Motion for Reconsideration.
ISSUE
Whether Sections 10 and 17 of Republic Act No. 11212 are constitutional, particularly in relation to the due process and equal protection clauses, and whether the expropriation of PECO’s distribution system by MORE serves a public purpose.
RULING
The Supreme Court DENIED the Motion for Reconsideration and AFFIRMED its Decision dated September 15, 2020. Sections 10 and 17 of R.A. No. 11212 are CONSTITUTIONAL.
The Court held that the expropriation of PECO’s distribution system by MORE serves a public purpose. The primary public purpose is the continuous and uninterrupted supply of electricity to Iloilo City. The expropriation ensures a smooth transition from the expired franchise holder (PECO) to the new franchise holder (MORE), preventing any disruption in essential public service. The Court emphasized that the assets, while privately owned by PECO, are devoted to public use and are imbued with public interest. The legislative history of the franchises governing Iloilo City’s distribution system established that these assets could be subjected to expropriation for the same public purpose of electricity distribution.
The Court further ruled that the provisions do not violate due process. The exercise of eminent domain under R.A. No. 11212 is a valid implementation of the State’s police power to ensure public welfare. The means employed—expropriation of the existing system—are reasonably necessary to achieve the urgent public purpose of uninterrupted service, especially given the imminent expiration of PECO’s franchise. The law also provides for the payment of just compensation, safeguarding PECO’s proprietary rights.
Regarding equal protection, the Court found that MORE is not similarly situated with other distribution utilities. The unique circumstance involves an existing distribution system owned by a franchise holder whose authorization has expired, necessitating a transition to a new franchisee to maintain service. This constitutes a substantial distinction that justifies the specific grant of expropriation authority to MORE under R.A. No. 11212 . The law does not single out PECO arbitrarily but addresses a specific and legitimate state concern.
The Court also noted that PECO’s own legislative franchise contemplated the possibility of the government taking over its system upon franchise termination. While PECO argued this power was reserved only for the government, the Court found that delegating this authority to a new franchisee like MORE, which performs a public function, is permissible to achieve the public purpose.