G.R. No. 248061 - MORE Electric and Power Corp. vs. Panay Electric Co., Inc.

Case Summary (G.R. No. 248061)

Factual Background

The contested legislation, R.A. No. 11212, granted MORE a legislative franchise to establish, operate and maintain an electric distribution system in Iloilo City and, in Section 10, authorized the grantee to exercise the power of eminent domain to acquire private property necessary for the franchise’s purposes; Section 17 provided for a transitory arrangement allowing PECO to operate the existing distribution system in the interim but expressly preserved MORE’s right to expropriate those assets.
PECO had been the franchise holder since the early twentieth century and its distribution system comprises five sub-transmission substations, approximately 450 kilometers of lines, twenty thousand poles, 1,300 transformers and 64,000 meters. PECO’s franchise expired in January 2019 and it operated under a provisional CPCN issued by the Energy Regulatory Commission on May 21, 2019. MORE had not yet established its own system when it filed an expropriation complaint in Iloilo City RTC on March 11, 2019.

Procedural History

PECO sought declaratory relief in the Mandaluyong RTC challenging the constitutionality of Sections 10 and 17 of R.A. No. 11212, and the trial court issued a Temporary Restraining Order on March 14, 2019. The Mandaluyong RTC later, by judgment dated July 1, 2019, declared those provisions void and unconstitutional and made the TRO permanent insofar as it restrained MORE and government agencies from implementing the challenged provisions. MORE and the Republic (through the OSG) filed separate petitions for review on certiorari to the Supreme Court (G.R. Nos. 248061 and 249406), which the Court consolidated and resolved together after motions for consolidation and an urgent omnibus motion citing continuing public inconvenience.

Issues Presented

The consolidated petitions presented principally whether Sections 10 and 17 of R.A. No. 11212 (1) validly delegate and permit the exercise of the power of eminent domain by MORE over distribution assets already devoted to the public use of electric distribution; (2) identify a genuine public use and public necessity that satisfy constitutional due process and equal protection standards when the taking would transfer assets from the old franchise holder to the new franchise holder for the same public purpose; and (3) whether procedural infirmities in the RTC’s ruling—permanent TRO beyond its statutory life and judgment on the pleadings—defeated the petitions.

Parties’ Contentions

MORE and the OSG contended that Congress validly delegated eminent domain authority and that the challenged provisions serve a distinct and genuine public purpose: ensuring continuous and uninterrupted supply of electricity during transition from the old to the new franchise holder. They emphasized MORE’s unique factual position as a new franchisee faced with an existing distribution system that occupies public space and cannot be reinstalled without imposing severe disruption. The OSG relied on R.A. No. 9136 to support legislative delegation. PECO argued that property already devoted to public use cannot be taken for the same use because such taking would effect a legislated corporate takeover that advances private rather than public interests, that MORE is differently situated and unduly favored, and that immediate possession upon deposit of assessed value violates equal protection and due process by enabling a confiscatory transfer.

Ruling of the Regional Trial Court

The Mandaluyong RTC declared Sections 10 and 17 of R.A. No. 11212 void and unconstitutional for infringing PECO’s rights to due process and equal protection. The trial court held that the statute authorized an expropriation of property already devoted to public use and thus amounted to a legislated corporate takeover rather than a genuine public necessity. The RTC enjoined MORE and relevant agencies from pursuing expropriation and taking over PECO’s assets.

Supreme Court Disposition

The Supreme Court granted the petitions, reversed and set aside the RTC judgment, and declared Sections 10 and 17 of R.A. No. 11212 constitutional. The Court consolidated the challenges, addressed procedural objections, and proceeded to decide the substantive constitutional questions.

General Principles on Eminent Domain Applied by the Court

The Court restated the established requisites whenever the power of eminent domain is exercised by an agent of the State: a valid delegation authorizing the agent to pursue expropriation; an identified public use or purpose; prior tender of a valid offer that was not accepted (where applicable); and payment of just compensation. The Court acknowledged that courts review legislative determinations of public use under the constitutional standards of due process and equal protection, and that private property already devoted to public use may nevertheless be subjected to expropriation for the same or a related public purpose when expressly authorized by law or necessarily implied therein.

Application to Sections 10 and 17

The Court found that the history of legislative franchises governing PECO’s distribution system supports the proposition that those assets were never ordinary private property unburdened by public purpose. Earlier franchises and statutory templates had envisaged government acquisition or transfer of distribution assets. Against that historical backdrop, Sections 10 and 17 validly delegated eminent domain authority to MORE insofar as that exercise is reasonably necessary or actually necessary for the realization of the franchise’s purposes, and the provisions identify a distinct public purpose beyond ordinary distribution: the protection of the public interest by ensuring uninterrupted electricity during the transition from the old to the new franchise holder.

Public Use, Public Necessity, and Judicial Review

The Court held that the expropriation authorized by Sections 10 and 17 serves both the general public purpose of conveying electricity and the particular public-security purpose of preventing disruption during the transition. The Court applied the constitutional standards of due process and equal protection to review Congress’s specified purposes and concluded that the distinct necessity emphasized in the statute—continuity of service in a franchise area already burdened by an existing system—was genuine and public in character. The Court underscored that the remedy of judicial expropriation proceedings remains available to determine just compensation and other particulars, and that deposit of assessed value is provisional and without prejudice to the trial court’s determination of just compensation.

Procedural Considerations

The Supreme Court addressed procedural objections succinctly. It allowed consolidation of the petitions and treated the OSG petition as providing the government opportunity to be heard on constitutional issues. It noted that a temporary restraining order expires by operation of law and that the RTC’s description of the acts restrained could have been clearer, but found no procedural defect that precluded adjudication of the substantive constitutional questions. The Court proceeded to resolve the merits notwithstanding criticisms of judgment on the pleadings and the lapse of the TRO.

Concurrences and Dissents

The Court’s decision carried a majority, with Justices Peralta, Gesmundo, Hernando, Carandang and Delos Santos concurring in the ponencia; Justices Perlas-Bernabe and Caguioa filed separate opinions; Associate Justice Leonen dissented, joined by several others, and Associate Justice Laz

Case Syllabus (G.R. No. 248061)

Parties and Procedural Posture

MORE Electric and Power Corporation filed a Petition for Review on Certiorari from the July 1, 2019 judgment of the Regional Trial Court, Mandaluyong City, Branch 209, in Civil Case No. R-MND-19-00571-S.
Panay Electric Company, Inc. (PECO) filed a Petition for Declaratory Relief and obtained a Temporary Restraining Order enjoining expropriation and takeover by MORE.
The Republic of the Philippines, through the Office of the Solicitor General, filed a separate Petition for Review on Certiorari raising the same constitutional question.
The Supreme Court consolidated G.R. Nos. 248061 and 249406 and proceeded to resolve the consolidated petitions due to the claimed public necessity of uninterrupted electricity supply.
The Supreme Court reversed the RTC judgment and declared Sections 10 and 17 of R.A. No. 11212 constitutional.

Key Factual Allegations

PECO had been the franchise holder for electricity distribution in Iloilo City since 1922 and owned an existing distribution system consisting of substations, lines, poles, transformers and meters.
PECO's legislative franchise expired on January 18, 2019 and it had not been granted a new franchise.
R.A. No. 11212 granted MORE a franchise for Iloilo City and, under Section 10, authorized the grantee to exercise the power of eminent domain to acquire distribution assets actually necessary for its franchise.
Section 17 of R.A. No. 11212 authorized a transition period during which PECO could operate provisionally while expressly preserving MORE’s right to expropriate the system.
MORE filed a Complaint for Expropriation on March 11, 2019, and PECO filed its constitutional challenge on March 6, 2019.

Statutory Framework

R.A. No. 11212, Secs. 10 and 17, were the provisions challenged as authorizing expropriation of an existing distribution system for the same public purpose.
The Court reviewed the power of eminent domain against the constitutional limitations referenced in the ponencia, including Section 3, Article III and Section 9, Article III of the Constitution as cited in the decision.
The Electric Power Industry Reform Act of 2001 (R.A. No. 9136) and Section 23 thereof were invoked as recognizing delegation of eminent domain to distribution utilities.
The Court relied on procedural norms for expropriation such as Rule 67, Rules of Court, including the deposit of assessed value under Section 2 of that rule.

Issues Presented

Whether the distribution system of PECO, which was already devoted to the public use of electricity distribution, could be subjected to expropriation by MORE for the same public purpose under Sections 10 and 17 of R.A. No. 11212.
Whether expropriation under Sections 10 and 17 complied with constitutional requirements of due process and equal protection.
Whether the delegation of the power of eminent domain to MORE constituted unconstitutional class legislation, a bill of attainder, or an undue legislative deprivation of property.

Contentions of the Parties

MORE and the OSG argued that Sections 10 and 17 serve a distinct and genuine public purpose of ensuring an uninterrupted electricity supply during the transition from old to new franchise holder and that MORE is peculiarly situated to require authority to acquire existing assets.
PECO contended that property already devoted to public use cannot be taken for the same public use and that the provisions amount to an unconstitutional legislated corporate takeover violating due process and equal protection.
PECO also argued that Section 10 unjustly favored MORE by permitting immediate possession upon deposit of assessed value and that Section 17 effectuated a punitive taking without judicial determination.

Trial Court Ruling

The RTC declared Sections 10 and 17 of R.A. No. 11212 void and unconstitutional for infringing PECO’s rights to due process and equal protection and made the Temporary Restraining Order of March 14, 2019 permanent.
The RTC reasoned that taking property already devoted to public use for the very same use in favor