G.R. No. 248061 , September 15, 2020
MORE ELECTRIC AND POWER CORPORATION, PETITIONER, VS. PANAY ELECTRIC COMPANY, INC., RESPONDENT. (Consolidated with G.R. No. 249406)

FACTS

This case originated from a Petition for Declaratory Relief filed by Panay Electric Company, Inc. (PECO) assailing the constitutionality of Sections 10 and 17 of Republic Act No. 11212 , the legislative franchise granted to MORE Electric and Power Corporation (MORE). Section 10 authorizes MORE to exercise the power of eminent domain to acquire PECO’s existing distribution assets within the franchise area. PECO’s franchise had expired. The core challenge was whether the expropriation of a private utility’s assets for transfer to another private entity, albeit a new franchise holder, constitutes a valid “public use” as required under the Constitution. The proceedings are at a declaratory relief stage, not an appeal from an actual expropriation case where the trial court would determine the propriety of the taking.

ISSUE

The principal issue is whether Sections 10 and 17 of R.A. 11212 are constitutional, specifically if the delegated power of eminent domain to a private franchise grantee for acquiring another private entity’s assets satisfies the constitutional requirement of “public use.”

RULING

The Separate Opinion concurs in the result of upholding the constitutionality of the assailed provisions. The legal logic clarifies that the determination of whether a specific expropriation serves a public use is a judicial function to be exercised by the courts during the first phase of expropriation proceedings proper, as outlined in Rule 67. This declaratory relief petition is not that proceeding; it only challenges the facial validity of the law. On the substantive point, the opinion adopts an expansive interpretation of “public use,” equating it with “public purpose,” as opposed to a narrow “use by the public” test. It cites the evolution of jurisprudence, including U.S. precedent like Kelo v. New London, which recognizes that changing societal needs make the broader “public purpose” standard more practical. The opinion posits that the law’s objective—ensuring uninterrupted and improved public utility service for Iloilo City—establishes a public purpose. The grant of eminent domain power to the new franchisee is a means to achieve this continuity and is thus a valid legislative determination of public use, subject to final judicial scrutiny in the actual expropriation case where the specific facts will be examined. Section 17, providing a transition period, is seen as ancillary to this public purpose, ensuring service continuity while the expropriation power is exercised.