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884 Phil. 643

EN BANC

[ G.R. No. 248061, September 15, 2020 ]

MORE ELECTRIC AND POWER CORPORATION, PETITIONER, VS. PANAY ELECTRIC COMPANY, INC., RESPONDENT.

G.R. NO. 249406

REPUBLIC OF THE PHILIPPINES, PETITIONER-OPPOSITOR, MORE ELECTRIC AND POWER CORPORATION, PETITIONER, VS. PANAY ELECTRIC COMPANY, INC., RESPONDENT.

DECISION

REYES, J. JR., J.:

The constitutional question before the Court is whether Sections 10 and 17 of Republic Act (R.A.) No. 11212[1] violate the constitutional guarantee of due process and equal protection by providing that the power and electricity distribution system in Iloilo City which is owned by the previous franchise holder Panay Electric Company, Inc. (PECO) may be acquired by the current franchise holder MORE Electric and Power Corporation (MORE), through the exercise of the right of eminent domain, and applied to the same public purpose of power distribution in Iloilo City.

This constitutional question is raised in the Petition for Review on Certiorari, docketed as G.R. No. 248061, filed by MORE against PECO from the July 1, 2019 Judgment[2] of the Regional Trial Court of Mandaluyong City, Branch 209 (RTC) in Civil Case No. R-MND-19-00571-S, declaring that Sections 10 and 17 of R.A. No. 11212 are unconstitutional legislated corporate takeover of the private assets of respondent PECO by petitioner MORE. The same question is raised in a separate Petition for Review on Certiorari, docketed as G.R. No. 249406, filed by the Republic of the Philippines through the Office of the Solicitor General (OSG) from the same judgment and proceedings and involving the same facts and parties.

PECO filed a Motion for Consolidation of G.R. No. 248061 and G.R. No. 249406,[3] Thereafter, PECO filed an Urgent Omnibus Motion[4] urging the Court to consolidate the petitions and to resolve the same without further delay on the ground that the continuing dispute over possession of the distribution system twice plunged Iloilo City into darkness just when the city is struggling to deal with the current extreme public health emergency. Moreover, if the dispute will continue, electricity and power interruptions will recur to the prejudice of the health and safety of the residents of the city.

In view of the highest necessity to resolve the constitutional issue, the Court allows the consolidation of the two petitions and proceeds to resolve the same.

Antecedent Facts and Proceedings

R.A. No. 11212 grants to MORE a franchise to establish, operate and maintain an electric power distribution system in Iloilo City,[5] Under Section 10, MORE may "exercise the power of eminent domain" when necessary for the efficient establishment of its service. In particular, it may acquire a distribution system consisting of poles, wires, cables, transformers, switching equipment and stations, buildings, infrastructure, machineries and equipment previously, currently or actually used x x x for the conveyance of electric power to end-users in its franchise area.[6]

The distribution system which is currently and actually being used in Iloilo City consists of "5 sub-transmission line substations, 450 kilometers of electrical lines, 20,000 poles, 1,300 transformers and 64,000 electrical meters."[7] It is owned by PECO, the holder of the franchise since 1922.[8] PECO's franchise.expired on January 18, 2019,[9] and no new franchise has been issued to it since.[10] However, as MORE has yet to set up its service, Section 17 of R.A. No. 11212 allows PECO to operate the existing distribution system in the interim.  PECO presently operates the system under a Provisional Certificate of Public Convenience and Necessity (CPCN) issued by the Energy Regulatory Commission (ERC) on May 21, 2019.[11]

At the same time, Section 17 of R.A. No. 11212 expressly provides that, even as PECO is operating the distribution system, this interim. arrangement shall not prevent MORE from acquiring the system through the exercise of the right of eminent domain. Thus, after R.A. No. 11212 took effect on March 9, 2019, MORE filed on March 11, 2019 a Complaint for Expropriation with the RTC of Iloilo City, Branch 37, over the distribution system of PECO in Iloilo City.[12]

Earlier, PECO filed on March 6, 2019 with the RTC a Petition[13] for Declaratory Relief assailing the constitutionality of Sections 10 and 17 of R.A. No. 11212, on the ground that these provisions violate the constitutional guarantees of due process and equal protection. The RTC issued a Temporary Restraining Order[14] (TRO) on March 14, 2019 enjoining commencement of expropriation proceedings and takeover by MORE of PECO's distribution system in Iloilo City, as well as the issuance of a CPCN to MORE by the Department of Energy (DOE) and Energy Regulatory Commission (ERC). The RTC then rendered the assailed judgment on the pleadings, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered declaring Sections 10 and 17 of [R.A.I No. 11212 void and unconstitutional for infringing on PECO's right to due process and equal protection of the law. Consequently, PECO has no obligation to sell and respondent has no right to expropriate PECO's assets under Sections 10 and 17 of [R.A.] No. 11212; and PECO's rights to its properties are protected against arbitrary and confiscatory taking under the relevant portions of Sections 10 and 17 or [R.A.] No. 11212.

Finally, the Temporary Restraining Order dated 14 March 2019 insofar as it enjoins respondent MORE and/or any of its representatives from enforcing, implementing and exercising any of the rights and obligations set forth under [R.A. No.] 11212, including but not limited to commencing or pursuing the expropriation proceedings against petitioner PECO under the assailed provisions; and takeover by respondent MORE of petitioner PECO's distribution assets in the franchise area is hereby made permanent.

SO ORDERED.[15]
The RTC agreed with PECO that, by virtue of its provisional CPCN, PECO's distribution system is currently being devoted to the public use of electricity distribution; and that, as Sections 10 and 17 of R.A. No. 11212 provide that said distribution system will be expropriated by MORE and devoted to the very same public use, said law amounts to an unconstitutional legislated corporate takeover by MORE of the private property of PECO.[16] In effect, the expropriation will be nothing but a "corporate [takeover]" impelled by corporate greed rather than by public necessity.[17] Sections 10 and 17 violate the constitutional guarantees of due process by authorizing 18 expropriation proceedings that do not serve a genuine public necessity.[18]

The RTC further relied on PECO's argument that Sections 10 and 17 of R.A. No. 11212 violate the constitutional guarantee of equal protection in that under these provisions MORE may exercise the power of eminent domain even at the stage of establishing its service. In contrast, other legislative franchises grant electric distribution utilities merely the right of eminent domain as may be reasonably necessary for the efficient "maintenance and operation of [their] services."[19]

The issues and arguments revolving around the foregoing ruling and reasoning of the RTC are both substantive and procedural.

Issues and Arguments

As defined in G.R. No. 248061, the substantive issues are:
(1)
THE COURT A QUO HAS DECIDED A QUESTION OF SUBSTANCE, NOT THERETOFORE DETERMINED BY THE SUPREME COURT WHEN IT HELD THAT THERE IS NO "PUBLIC USE' IN THE EXPROPRIATION BY MORE OF THE DISTRIBUTION ASSETS IN ILOILO FROM PECO AS AUTHORIZED UNDER SECTIONS 10 AND 17 OF R.A. [No.] 11212.
 
(2)
THE COURT A QUO HAS DECIDED QUESTIONS OF SUBSTANCE NOT IN ACCORD WITH LAW AND THE APPLICABLE DECISIONS OF THE HONORABLE COURT AND/OR DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS WHEN IT DECLARED THAT THE DISTRIBUTION ASSETS IN ILOILO CITY CANNOT BE SUBJECT OF EXPROPRIATION BY MORE AS THE NEW FRANCHISE HOLDER BECAUSE IT IS "ALREADY BEING DEVOTED TO PUBLIC USE."
 
(3)
THE COURT A QUO HAS DECIDED QUESTIONS OF SUBSTANCE NOT IN ACCORD WITH LAW AND THE APPLICABLE DECISIONS OF THE HONORABLE COURT AND/OR DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS WHEN IT DECLARED UNCONSTITUTIONAL THE PROVISIONS OF R.A. [No.] 11212 ALLOWING THE TRANSFER OF THE "DISTRIBUTION ASSETS IN THE FRANCHISE AREA" TO MORE BY EXPROPRIATION.
 
(4)
THE COURT A QUO HAS DECIDED QUESTIONS OF SUBSTANCE NOT IN ACCORD WITH LAW AND THE APPLICABLE DECISIONS OF THE HONORABLE COURT AND/OR DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS WHEN IT HELD THAT THE IMPLEMENTATION OR ENFORCEMENT OF SECTIONS 10 AND 17 OF R.A. [No.] 11212 VIOLATES PECO'S RIGHT TO EQUAL PROTECTION UNDER THE LAW, DUE PROCESS, AND IS DISCRIMINATORY AND CONFISCATORY.[20]
The foregoing issues in G.R. No. 248061 are clearly related. MORE argues that, contrary to the views of the RTC and respondent PECO, expropriation under Sections 10 and 17 of R.A. No. 11212 serves the distinct emergency public purpose of ensuring the continuous and uninterrupted supply of electricity to Iloilo City, as the city transitions from the old franchise holder to the new franchise holder. There is no prohibition to the application of PECO's distribution system to such distinct emergency public purpose, even as the property is already devoted to a related, but ordinary public purpose, which is the provision of power and electricity to the city.[21]

Moreover, Sections 10 and 17 of R.A. No. 11212 recognize that MORE is differently situated from other distribution utilities. For one, within the franchise area of MORE, there is an existing distribution system that continues to burden public space — that is, this distribution continues to occupy streets, lands and properties owned by the government.

Finally, "Iloilo end-users have paid for" charges to enable PECO to recover its investments in said distribution system; thus, these end-users are entitled to have the system continuously applied to a public use.[22] However, the system is owned by PECO which no longer holds a franchise and is therefore unable to apply the system to the public purpose for which it is intended. Ideally, MORE should dismantle the system to unburden public space and make way for a new distribution system; however, as acknowledged by R.A. No. 11212, the ensuing transition will spell extreme inconvenience to the end-users and ruinous disruption to the local economy.  Thus, R.A. No. 11212 devised a means whereby MORE, as the new franchise holder, is authorized to take over the distribution system and apply the same to the service of the public, after expropriation and payment of just compensation to PECO.

As defined in G.R. No. 249406 the substantive issues are:

x x x x

III.

THE COURT A QUO GRAVELY ERRED WHEN IT DECLARED SECTIONS 10 AND 17 OF R.A. NO. 11212 UNCONSTITUTIONAL.
  1. THE POWER OF EMINENT DOMAIN WAS VALIDLY DELEGATED BY THE LEGISLATURE TO DISTRIBUTION UTILITIES, INCLUDING MORE.

  2. SECTIONS 10 AND 17 OF [R.A. NO.] 11212 SATISFY THE REQUISITES FOR VALID EXERCISE OF THE POWER OF EMINENT DOMAIN.

  1. THERE IS GENUINE NECESSITY FOR THE TAKING OF PRIVATE PROPERTY UNDER SECTIONS 10 AND 17 OF [R.A. NO.] 11212, AS REASONABLY AND ACTUALLY NECESSARY FOR THE REALIZATION OF THE PURPOSES FOR WHICH MORE'S FRANCHISE WAS GRANTED.

  2. THE TAKING OF PROPERTY AUTHORIZED UNDER SECTIONS 10 AND 17 OF [R.A. NO.] 11212 IS FOR PUBLIC USE.

  3. THE REQUIREMENTS OF DUE PROCESS AND EQUAL PROTECTION ARE COMPLIED WITH UNDER SECTIONS 10 AND 17 OF [R.A. NO.] 11212.


IV

THE COURT A QUO GRAVELY ERRED WHEN IT ENJOINED THE ENFORCEMENT, IMPLEMENTATION AND EXERCISE OF ANY OF THE RIGHTS AND OBLIGATIONS SET FORTH UNDER [R.A. NO.] 11212, DESPITE RULING VOID AND UNCONSTITUTIONAL ONLY SECTIONS 10 AND 17 THEREOF.[23]
The OSG argues that R.A. No. 9136[24] delegated to public utilities like MORE the power of eminent domain to enable them to exercise their public function.[25] Section 17 of R.A. No. 11212 highlighted a specific public need, which is to ease the transition of operations from PECO to MORE by expressly providing that the right of MORE to expropriate the distribution system of PECO for the public purpose of electricity and power distribution system, will not be prejudiced or hampered by the interim authority given to PECO to continue to operate the said system for the very same purpose of power distribution.[26]

To summarize, the common substantive issues raised by MORE and the OSG boil down to whether the RTC erred in ruling that Sections 10 and 17 of R.A. No. 11212 are unconstitutional in that these provisions authorize MORE to expropriate the existing distribution system of PECO and apply it to the very same public use for which it is already devoted.[27]

In its Comment in G.R. No. 248061, PECO argues that the lack of franchise does not diminish its constitutional right to due process and equal protection against an illegal expropriation of its distribution system.[28] It reiterates that "property of a private corporation that is already devoted to public use cannot be taken for the same use, because no public use or necessity can be served by such a taking"; rather, such taking would be nothing but a corporate takeover for private greed.[29] Concretely, the expropriation of its distribution system by MORE could only be intended to advance the latter's corporate interest rather than the public welfare.[30]

PECO further assails Sections 10 and 17 of R.A. No. 11212 for allowing MORE to exercise the power of eminent domain even at the stage of establishing its distribution system. Such authority is unprecedented in legislative franchises, and gives MORE an undue advantage in violation of the equal protection clause. What is more, the law even provides for immediate effect of the expropriation upon mere deposit of the assessed value, notwithstanding that issues about the legality of the expropriation might still be pending.[31]

To summarize, as defined by PECO, the substantive issue is whether the RTC correctly held that expropriation under Sections 10 and 17 of R.A. No. 11212 is nothing but an unconstitutional legislated takeover of the assets of PECO by MORE.[32]

Procedural issues also have been raised by the parties, and the Court addresses them here, but briefly.

MORE questions the decision of the RTC making permanent the "[TRO] dated 14 March 2019," even though this had long expired on April 4, 2019.[33] Respondent PECO clarified that this part of the judgment is meant to enjoin the very same acts that were restrained under the TRO.[34]

Indeed, it was careless of the RTC to describe the acts to be restrained by reference to a defunct TRO, when the RTC could just as easily have enumerated these acts. A TRO expires on its 20th day by sheer force of law.[35] There can be no extension of its life beyond 20 days by a mere order of the court granting a new TRO or even a decision declaring the old TRO permanent.[36]

The OSG also questioned the RTC's judgment on the pleadings without giving the OSG the opportunity to comment on the issue of the constitutionality of R.A. No. 11212.[37] Judgment on the pleadings was likewise improper as MORE's answer had tendered several legitimate issues.[38]

The Court considers the present petition of the OSG, G.R. No. 249406, as sufficient opportunity to be heard on the constitutional issue. Moreover, the issue on the propriety of the judgment on the pleadings can be resolved along with the merits of the petition.

On the part of respondent PECO, it sought the dismissal of the Petition, G.R. No. 248061, on the ground that MORE engaged in forum shopping by pursuing, simultaneously, a Petition before the Court, an expropriation proceeding in Iloilo City and a Motion for Reconsideration (through the OSG) before the RTC.[39]

The Court finds that this procedural point has been rendered moot by the Order[40] dated September 10, 2019 of the RTC denying the motion for reconsideration of the OSG, and the Order[41] dated November 18, 2019 of the court in Iloilo City suspending the expropriation proceedings.

The foregoing disposition of the procedural issues clears the way for the resolution of the substantive issues in these consolidated petitions. In the light of the foregoing arguments of the parties, the Court identifies the following underlying legal issues that must be resolved in order for the constitutional question to be addressed:
  1. Whether or not the distribution system of PECO in Iloilo City can be subjected to expropriation for the same public purpose.

  2. Whether or not expropriation of the distribution system under Sections 10 and 17 of R.A. No. 11212 is in accordance with the constitutional requirements of due process and equal protection.


The Court's Ruling

The Petitions are granted. The Decision dated July 1, 2019 of the RTC is reversed and set aside. Sections 10 and 17 of R.A. No. 11212 are declared constitutional.

Brief restatement of the general principle of law on the
valid exercise of the right of eminent domain


The Heirs of Suguitan v. City of Mandaluyong[42] provides the most precise formulation of the general principle of law on the valid exercise of the power or right of eminent domain.The power is inherent in a sovereign State whose mandate is to promote public welfare, and to which end private property might be condemned to serve. Though inherent, the power is not absolute, but subject to limitations set out in the Constitution, notably in Section 3, Article III, that no person shall be deprived of property without due process of law, and Section 9, that private property shall not be taken for public use without just compensation.[43]

These constitutional limitations have been strictly interpreted by the Court, given the risk of impairment to the right of the individual to private property that might result from the exercise by the State of the power of eminent domain.[44] Strict interpretation is warranted even more when a mere agent of the State, such as a public utility, exercises a delegated right of eminent domain.[45]

When the power of eminent domain is exercised by an agent of the State and by means of expropriation of real property,[46] farther limitations are imposed by law,[47] the rules of court[48] and jurisprudence.[49] In essence, these requirements are:

  1. A valid delegation to a public utility to exercise the power of eminent domain or pursue expropriation proceedings over a particular private property;

  2. An identified public use, purpose or welfare for which eminent domain or expropriation is exercised;

  3. Previous tender of a valid and definite offer to the owner of the property sought to be expropriated, but which offer is not accepted; and

  4. Payment of just compensation.[50]
The resolution of the present petition turns on the first and second requirements. The third and fourth requirements are not at issue.

The general rule is that private property which is already devoted to a public use can be burdened by expropriation with a different public purpose,[51] provided it is expressly authorized by law[52] or necessarily implied in the law.[53] The underlying reason for this is that the power of eminent domain is an attribute of sovereignty which is not exhausted by use; otherwise, the promotion of the public good, which is the purpose of sovereignty, would be frustrated.[54]

Although public use or necessity is defined by legislation, the courts have the power to review whether such use or necessity is of a genuine and public character.[55] For this purpose, the court applies as standards of review the constitutional requirements of due process and equal protection.[56]

Applying the principles to the issues at hand, the Court holds that:
  1. The legislative franchises of PECO declare its distribution system in Iloilo City as susceptible to expropriation for the same public purpose of power and electricity distribution.

  2. The expropriation by MORE of the distribution system of PECO pursuant to Sections 10 and 17 of R.A. No. 11212 is in accordance with the constitutional requirements of due process and equal protection.
Distribution system of PECO can be subjected
to expropriation for the same public purpose


To recall, the first legal issue is whether the distribution system of PECO can be subjected to expropriation for the same public purpose of power distribution. To address this issue, it is necessary to ascertain the nature of the distribution system of PECO in Iloilo City. To this end, the history of the legislative franchises governing the distribution system is examined below.

In 1921, Act No. 2983 granted a 50-year franchise to Esteban dela Rama to "install, lay, and maintain on all the streets, public thoroughfares, bridges, and public places within said limits, poles, conductors, interrupters, transformers, cables, wires, and other overhead appliances, and all other necessary apparatus and appurtenances" for the operation of an electric, light, heat and power generation and distribution system (distribution system) in the municipalities of Iloilo, La Paz, Jaro and Arevalo, Province of Iloilo, for a period of 20 years.[57]

As the text indicates, the rights that are dependent on the franchise include not just maintenance and operation, but the very establishment and installation of the distribution system. In effect, the distribution system co­exists with the franchise. This explains why under Section 11 of Act No. 2983, upon termination of the franchise, "all property of the grantee used in connection with this franchise shall become the property of the Insular Government." This particular text in Section 11 can be found in various other legislative franchises in electricity distribution issued from 1914 through 1929."[58] An analogous provision can be found in public market franchises, which provides that upon expiration of the franchise, the market building constructed by the franchise holder automatically becomes property of the government.[59] The toll facilities franchise of Construction and Development Corporation of the Philippines also provides that toll facilities and equipment built to carry out the franchise become government property upon expiration of the franchise.[60]

Moreover, Section 17 of Act No. 2983 provides that at any time after 20 years, the national government or a political subdivision "to which the right may be assigned, may purchase, and the grantee shall sell thereto all of his plant, poles, wires, buildings, real estate, and all other property used in the enjoyment of this franchise, at a valuation." This particular text on the government's right of expropriation during the life of the franchise (but after 20 years thereof) can be found in various other franchises from 1914 through 1953.[61]

In 1922, Act No. 3035 authorized Esteban dela Rama (Dela Rama) to "transfer ail rights and privileges to install, maintain, and operate an electric light, heat, and power plant" to PECO, subject to the terms and conditions of Act No. 2983, including Sections 11 and 17 thereof.[62] These terms and conditions were later amended by Act No. 3665, in that the franchise area was expanded to other areas beyond Iloilo, and the franchise period was extended to 50 years.[63] Act No. 3665 deleted the provision in Section 11 of Act No. 2983 on the transfer of the distribution system of PECO to the government upon termination of the franchise.[64] However, Act No. 3665 retained Section 17 of Act No. 2983 on the government's right to expropriate the distribution system, should it decide to take over the franchise.

Act No. 3665 also incorporated Act No. 3636,[65] which prescribes a template for legislative franchises in electric, light, heat and power generation and distribution.[66] Under Section 13 of Act No. 3636, upon termination or revocation of the franchise, all lands or right of use or occupation of lands and rights obtained by the grantee pursuant to the franchise shall revert to the national or local government that originally owned them. It is notable that Section 13 does not contain a provision similar to Section 11 of Act No. 2983 on the automatic transfer to the government of all properties of the franchise upon its expiration.

R.A. No. 5360 granted to PECO a franchise over Iloilo City and the municipalities of Santa Barbara and Pavia, Province of Iloilo, for a period of 25 years from the date of the law.[67] While R.A. No. 5360 expressly repealed Act No. 2983 and Act No. 3665[68] it retained the government's right of expropriation:
SEC, 4. It is expressly provided that in the event the Government should desire to operate and maintain for itself the system and enterprise herein authorized, the grantee shall surrender its franchise and will turn over to the government all equipment therein at fair market value.[69]
The foregoing text in Section 4 can be found in various other franchises issued from 1939 through 2000,[70] such as that of Davao Light and Power Company, Inc., which is valid up to 2025.[71]

Going back to the history of legislative franchises governing the distribution system in Iloilo City, the franchise of PECO under R.A. No. 5360 was extended for 25 years by virtue of a Decision dated January 19, 1994 of the National Electrification Commission.[72] No copy of this decision is available in the records. There is no evidence that the National Electrification Administration (NEA) Decision modified Section 4 of R.A. No. 5360.

While the particular provision in Act No. 2983, on outright government takeover of the distribution system, is no longer found in subsequent legislative franchises, there remained a provision on the right of the government to exercise eminent domain for the very same public purpose of electricity distribution. Under Section 17 of Act No. 2983, Act No. 3035 and Act No. 3665, the distribution system is susceptible to expropriation subject to the conditions that it is exercised 1) after the 21 year of the franchise; 2) by the national government or the local government to which the right has been assigned; and 3) upon payment of compensation. Section 4 of R.A. No. 5360 retained remnants of Section 17 of Act No. 2983 by providing that the government may exercise the right of expropriation should it "desire to operate and maintain" the system. In other words, under the foregoing legislative franchises, the distribution system of PECO in Iloilo City is susceptible to expropriation by the government for the very same public purpose of electricity distribution. There is no specific public necessity that can precipitate the exercise of eminent domain; mere desire to operate by the government or mere assignment of the right to operate to a local government or agency is sufficient. It is notable that, while these provisions can be found in PECO's own legislative franchises, PECO never questioned their constitutionality.

The foregoing history of the legislative franchise of PECO establishes that its distribution system in Iloilo City is no ordinary private property. To begin with, the very installation of the distribution system depends on a franchise. Section 1, Act No. 2983, Section 2, Act No. 3035, Section 1, Act No. 3665 and Section 1 of R.A. No, 5360 all provide that the right to construct, install and establish a distribution system on public space in Iloilo City must be based on a franchise. Ownership was co-existent with the franchise. Moreover, the distribution system is burdened with public use even after the termination of the franchise either by expiration or decision of the government. This is evident in the original franchise under Section 11 of Act No. 2983 and Act No. 3035, which provides that upon expiration of the franchise, the distribution system automatically becomes the property of the government, without mention of payment of compensation to Dela Rama or PECO. Moreover, even before expiration of the franchise of PECO, its distribution system may be taken over by the government and put to the very same public use.

Expropriation by MORE of the distribution
system of PECO is for a genuine public purpose


The next legal issue is whether expropriation by MORE of PECO's distribution asset under Sections 10 and 17 of P..A. No. 11212 is for a genuine public purpose. To reiterate, while it is the Congress that defines public necessity or purpose, the Court has the power to review whether such necessity is genuine and public in character, by applying as standards the constitutional requirements of due process and equal protection.[73]

In its assailed Decision, the RTC held that while R.A. No. 11212 authorizes MORE to expropriate the private property of PECO and to apply the same to the public purpose of power distribution, such identified public purpose is not genuine for ultimately it is the private interest of MORE that will be served by the expropriation. In other words, the expropriation is an ill-disguised corporate takeover.

The RTC relied on American jurisprudence, namely Cary Library v. Bliss[74] and West River Company v. Dix,[75] to hold that, no genuine and public necessity will be served when private property that is already devoted to public use is expropriated for the very same public use, as such expropriation will amount to taking private property from A and giving it to B without due process.[76]

These American cases law, however, has since been qualified, for at present, taking for the same public purpose in favor of a local government[77] and taking for a similar, but not identical public use[78] are valid. The most relevant development in the jurisprudence of that jurisdiction is Kelo v. City of New London[79] and Berman v. Parker[80] which upheld the expropriation of private property to pave the way for economic development, even when ultimately such development will benefit private business. Other jurisdictions have upheld expropriation of private property for redevelopment and subsequent transfer to private developers.[81]

Even without these developments in Western jurisprudence, the genuineness of the public purpose of the expropriation of the distribution system of PECO can be determined from R.A. No. 11212 itself.

Expropriation under Sections 10 and 17 of R.A. No. 11212 is not only for the general purpose of electricity distribution. A more distinct public purpose is emphasized: the protection of the public interest by ensuring the uninterrupted supply of electricity in the city during the transition from the old franchise to the new franchise. This distinct purpose has arisen because MORE is the new franchise holder in a city whose public space is already burdened by an existing distribution system, and that distribution system cannot continue to serve a public use for it is owned by the old franchise holder.

For purposes of clarity, the relevant portions of Sections 10 and 17 of R.A. No. 11212 are reproduced below:
SEC. 10. Right of Eminent Domain. — Subject to the limitations and procedures prescribed by law, the grantee is authorized to exercise the power of eminent domain insofar as it may be reasonably necessary for the efficient establishment, improvement, upgrading, rehabilitation, maintenance and operation of its services x x x The grantee may acquire such private property as is actually necessary for the realization of the purposes for which this franchise is granted, including, but not limited to poles, wires, cables, transformers, switching equipment and stations, buildings, infrastructure, machineries and equipment previously, currently or actually used, or intended to be used, or have been abandoned, unused or underutilized, or which obstructs its facilities, for the operation of a distribution system for the conveyance of electric power.

x x x x

SEC. 17. Transition of Operations. — In the public interest and to ensure uninterrupted supply of electricity, the current operator, Panay Electric Company, Inc. (PECO), shall in the [interim] be authorized to operate the existing distribution system within the franchise area, as well as implement its existing power supply agreements with generation companies that had been provisionally or finally approved by the ERC until the establishment or acquisition by the grantee of its own distribution system and its complete transition towards full operations as determined by the ERC, which period shall in no case exceed two (2) years from the grant of this legislative franchise.

x x x x

This provisional authority to operate during the transition period shall not be construed as extending the franchise of PECO after its expiration on January 18, 2019, and it shall not prevent the grantee from exercising the right of eminent domain over the distribution assets existing at the franchise area as provided in Section 10 of this Act.
The public necessity of ensuring uninterrupted electricity is implicit in Section 10 of R.A. No. 11212, which authorizes MORE to expropriate the existing distribution system to enable itself to efficiently establish its service. This distinct public necessity is reiterated in Section 17 of R.A. No. 11212 under which MORE may initiate expropriation proceedings even as PECO is provisionally operating the distribution system. In fact, this distinct public necessity of ensuring uninterrupted electricity is the very rationale of the ERC in granting PECO a provisional CPCN.[82] The provisional CPCN is the legal basis of PECO's continued operation of the distribution system. PECO cannot deny that such distinct necessity to ensure uninterrupted electricity supply is public and genuine.

Moreover, under R.A. No. 9136, one recognized public purpose is the protection of "public interest as it is affected by the rates and services of electric utilities and other providers of electric power."[83] The Court has sustained the taking of private property to ensure uninterrupted supply of electricity in National Electrification Administration v. Maguindanao Electric Cooperative, Inc.[84] It recognized this authority in NEA which, under Presidential Decree No. 269, may order the transfer of the distribution assets of Maguindanao Electric Cooperative, Inc. as the old franchise holder to Cotabato Electric Cooperative, Inc. as the new franchise holder.[85]

Furthermore, R.A. No. 11361[86] recently took effect declaring that the uninterrupted conveyance of electricity from generating plants to end-users is not just a matter of public interest, but already an elevated "matter of national security and is essential to sustaining the country's economic an development.[87] Without a doubt, the provision of uninterrupted supply of electricity is a public purpose which is distinct from the general purpose of electricity distribution. Such distinct purpose is both public and genuine.

Finally, MORE points out that the end-users in Iloilo have a stake in the uninterrupted operation of the distribution system, for the charges they have been paying PECO include the cost of recovery of its investment. While it is unfortunate that MORE did not substantiate this important point with data on the structure of the distribution charges and the extent to which payment of these charges by the end-users in Iloilo City have allowed PECO to recover its investment in the distribution system, it remains a valid expectation on the part of the end-users that they will enjoy uninterrupted supply of power and electricity during the transition from the old franchise holder to the new franchise holder. In sum, expropriation by MORE of the distribution system of PECO under Sections 10 and 17 of R.A. No. 11212 serves both the general public interest of conveying power and electricity in Iloilo City and the peculiar public interest and security of ensuring the uninterrupted supply of electricity. The RTC erred in declaring these provisions unconstitutional.

Justice Leonen dissents on two grounds. First, Section 10 of R.A. No. 11212 is unconstitutional for it simultaneously favors MORE with unwarranted benefits that are not enjoyed by other public utilities that are similarly situated, and discriminates against PECO by allowing expropriation of its assets upon payment of the assessed value rather than the fair market value.[88]

The Dissenting Opinion reiterates the argument of PECO that, unlike other public utilities, MORE is accorded by law the privilege of expropriating the existing distribution system in the franchise area and immediately taking over the same upon deposit of the full amount of the assessed value. Other public utilities that are similarly situated, namely Mactan Electric Company, Inc. (MECO), Tarlac Electric, Inc. and Angeles Electric Corporation, have the power of expropriation, but not the power of immediate takeover.[89]

The conceptual premise of the argument is flawed, for which reason the conclusion is faulty. While all are public utilities, MORE is not similarly situated as MECO, Tarlac Electric, Inc. and Angeles Electric Corporation. The latter public utilities are existing franchise holders with existing and functioning distribution systems. MORE is a new franchise holder that is virtually deprived of the option to set up a new distribution system, not only because the existing public space is burdened with the distribution system of the old franchise holder, but also because it must hit the ground running and ensure the uninterrupted and continuous supply of electricity to the city. MORE is therefore peculiarly and doubly burdened. It must not only supply electricity, it must also prevent any disruption that might arise from its takeover of the franchise.

The Dissenting Opinion adds that MORE is unusually favored with a monopolistic franchise even as it has no track record in the business of power distribution. The dismal performance of PECO as the old monopolistic franchise will not be undone by inflicting a novice public utility like MORE upon the residents of Iloilo City.[90] Unfortunately, the competence of this Court is limited to the determination of the constitutionality of R.A. No. 11212, and does not extend to the assessment of the expertise of MORE or any franchise holder. The ineptitude of the holder does not translate to the unconstitutionality of its franchise. The remedy for that is non-renewal or cancellation, not judicial review.

As compared to other franchise holders, PECO is not inordinately prejudiced. Its distribution system is no ordinary private property for it has been historically burdened with the public interest of electricity distribution. The distribution system was built on public spaces pursuant to the original franchise of Dela Rama, specifically Section 1 of Act 2983, as well as the transfer and continuation franchise of PECO, specifically Section 1 of R.A. No. 5360. Contrary to the Dissenting Opinion, the termination of the franchise of PECO did not mean that the public purpose for which the distribution system (including the public lands and spaces to which it is attached) was installed automatically ceased. Section 1 of R.A. No. 5360 granted to PECO "the right and privilege to install, lay and maintain on all streets, public thoroughfares, bridges and public places within said limits, poles, wires, transformers, capacitors, overhead protective devices, and pole line hardware, and other equipment necessary for the sale distribution of electric current to the public." Even maintaining possession of the distribution system must be for the original public purpose for which the privilege of installing it was granted.

In her Dissenting Opinion, Justice Lazaro-Javier extends the concept of bill of attainder to cover Sections 10 and 17 of R.A. No. 11212 in that these legislations purportedly single out PECO and subject the latter to punishment without the benefit of trial.[91] This conception that bills of attainder is problematic for, as correctly pointed out by Justice Leonen in his dissent, a legislative franchise is not a right, but a special privilege the grant, amendment, repeal or termination of which is granted to Congress by no less than the Constitution.[92] Consequently, the termination of a franchise by its expiration is not a deprivation of a right or property that amounts to punishment.[93] There is no question that the franchise of PECO was allowed to lapse because of its failure to render competent public service. No prior judicial trial of the performance of PECO is required before the Congress may decide not to renew PECO's franchise. The power of this Court to subject to judicial review the constitutionality of a franchise legislation does not include the power to choose the franchise holder. That is not our place in the constitutional scheme of things.

The grant to MORE of the authority to initiate expropriation of the distribution assets of PECO is within the power of Congress to make, subject to the requirements of a valid expropriation. That the assets of PECO will be the subject of expropriation does not signify that it is being singled out. Only PECO has had a franchise over the same area. There is no other previous franchise holder. Only its assets continue to burden public space in the franchise area. If and when other distribution assets are allowed to be installed and to operate in the same franchise area, their expropriation by MORE is not precluded by Sections 10 and 17 of R.A. No. 11212.

Going back to the Dissenting Opinion of Justice Leonen, it is correct that the government could have availed of Section 4 to expropriate the distribution system during the term of the franchise. That the government let the franchise lapse without initiating expropriation directly or through an agent does not mean that it is no longer able to do so. There is no shelf-life to the power to expropriate. There is no prohibition against the government initiating expropriation of the distribution system for as long as all the requirements of a valid expropriation are met. In fact, a month after the expiration of the franchise of PECO, the government, through R.A. No. 11212, set into motion the expropriation of the distribution asset by authorizing MORE as its agent.

The Dissenting Opinion echoes the respondent that the authorization given to MORE to take over the distribution system upon deposit of the assessed value is discriminatory. Both fail to see that Section 17 of R.A. No. 11212 still requires payment of just compensation, even as, for the purpose of immediate takeover, it allows mere deposit of the assessed value. Deposit of the assessed value is without prejudice of the determination of just compensation by the RTC in the expropriation case. To reiterate, immediate takeover is warranted by the public necessity for and heightened security interest in the continued and uninterrupted supply of electricity.

In sum, being peculiarly situated, MORE was validly granted by Section 10 with a unique power of expropriation. Moreover, given that its distribution system is imbued with public interest, PECO was not unusually prejudiced by the reservation in Section 10 of R.A. No. 11212 to expropriate the property. Section 10 is no class legislation. It is constitutional.

The second ground cited in the Dissenting Opinion of Justice Leonen is that Section 17 of R.A. No. 11212 is unconstitutional for it authorizes an expropriation that serve no distinct public purpose and, as such, amounts to a taking without due process.[94]

The Dissenting Opinion overlooks that there are two distinct public purposes to be served by the expropriation clause in R.A. No. 11212. One public purpose is power distribution as ordinarily carried out by public electric utility on a day-to-day basis. Another is the public purpose and security interest of preventing any disruption in the supply of electricity during the period of takeover by the new franchise holder from the old franchise holder. No less than PECO invoked this second distinct public purpose when it applied for and operated the distribution system under a provisional CPCN following the expiration of its franchise. To emphasize, when PECO operated the distribution system under the provisional CPCN it did so, not for the ordinary public purpose of power distribution (which it could no longer fulfill), but for the distinct public purpose of forestalling a power interruption during the transition. It is this second distinct public purpose which impels immediate expropriation and takeover of the distribution asset of PECO pursuant to Section 17 of R.A. No. 11212.

It is true that ultimately MORE will benefit from the expropriation, just as PECO benefited from the grant of the privilege to install the distribution system on public space. However, the benefit to MORE does not detract from the distinct public necessity to be served by the expropriation, as such step would prevent massive and prolonged economic disruption in the city, not to mention oppressive discomfort by its residents.

Justice Lazaro-Javier argues that Sections 10 and 17 of R.A. No. 11212 virtually enable MORE to piggyback on PECO in order to establish and operate its franchise. Every legislative franchise enables the franchise holder to expropriate with the view of building its distribution system. Even PECO obtained the franchise from Dela Rama along with the authority to use public spaces for the installation of its distribution system. MORE is authorized to acquire the assets of PECO and any other assets of any other entity that might be available as these are necessary for the discharge of its public franchise.

Finally, the Dissenting Opinion of Justice Leonen misunderstood the import of the discussion on Kelo v. City of London. It is to demonstrate that the RTC's reliance on Cary Library v. Bliss and West River Company v. Dix is misplaced for the jurisprudence in that foreign jurisdiction is still evolving. As summarized by the Court, the current state of that jurisprudence is that taking for the same public purpose, but in favor of a local government or for a similar, but not identical public purpose is valid. The Court need not borrow from this jurisprudence, as there is more than sufficient basis in the facts and law of this to uphold the constitutionality of Sections 10 and 17 of R.A, No. 11212.

WHEREFORE, the instant Petitions are GRANTED. The assailed Judgment dated July 1, 2019 is REVERSED and SET ASIDE. Sections 10 and 17 of Republic Act No. 11212 are DECLARED CONSTITUTIONAL.

SO ORDERED.

Peralta, C.J., Gesmundo, Hernando, Carandang and Delos Santos, JJ., concur.
Perlas-Bernabe and Caguioa, JJ., see separate opinion.
Leonen, J., dissents. see separate opinion.
Lazaro-Javier, J., please see dissenting opinion.
Inting, Zalameda, Lopez and Gaerlan, JJ., joins the dissent of J. Leonen.
Baltazar-Padilla, J., on sick leave.


[1] AN ACT GRAFTING MORE ELECTRIC AND POWER CORPORATION A FRANCHISE TO ESTABLISH, OPERATE, AND MAINTAIN, FOR COMMERCIAL PURPOSES AND IN THE PUBLIC INTEREST, A DISTRIBUTION SYSTEM FOR TUB CONVEYANCE OF ELECTRIC POWER TO THE END-USERS OF THE CITY OF ILOILO, PROVINCE OF ILOILO, AND ENSURING THE CONTINUOUS AND UNINTERRUPTED SUPPLY OF ELECTRICITY IN THE FRANCHISE AREA, approved on February 14, 2019.

[2] Penned by Judge Monique A. Quisumbing-Ignacio; rollo (G.R.No. 248061), pp. 39-46.

[3] Rollo (G.R. No. 249406), pp. 11-15.

[4] Filed on May 27, 2020 via electronic mail pursuant to Section 3(d) and Section 9, Rule 13 of the 2019 Amendments to the 1997 Rules on Civil Procedure (A.M. No. 19-10-20-SC), paragraph 8 of Supreme Court Administrative Circular No. 39-2020, due to the travel restrictions on account of COVID-19.

[5] Republic Act No. 11212 (2018), Sec. 1 and Sec. 11.

[6] Id. at Sec. 1.

[7] Comment, rollo, (G.R. No. 248061), p. 439.

[8] Act No. 3035 (1922), Sec. 2.

[9] Petition, rollo (G.R. No 248061), p. 7. It is noted that in ERC Order dated May 21, 2019, it stated that the PECO's franchise expired on January 19, 2019 (id. at 278).

[10] House Bill No. 6023, July 22, 2C17 and House Bill No. 4101, August 22, 2019, favored the grant of a new franchise to PECO, but these bills were not acted upon.

[11] Rollo (G.R. No. 248061), p. 288. It is noted that in its Urgent Omnibus Motion, PECO alleged that MORE has obtained a writ of possession by the Iloilo City court and a provisional franchise by the ERC, and that on the bases of these issuances MORE has taken possession of the distribution system.

[12] Id. at 334.

[13] Petition for Declaratory Relief, id at 630-95.

[14] Id. at 155-156.

[15] Id. at 146.

[16] Id. at 44.

[17] Id., citing Cary Library v. Bliss, 151 Mass. 364 (1890) < http://law.justia.com/cases/ massachusetts/supreme-court/volumes/151/151mass364.html/> (visited August 10, 2020) and West River Company v. Dix, 47 U.S. 507 (1848) < http://supreme.justia.coin/ cases/federal/us/47/507/> (visited August 10, 2020).

[18] See Petition for Declaratory Relief, rollo (G.R. No. 248061), pp. 79-82.

[19] Id. at 45, citing Republic Act Nos. 10890; 10795 and 9381; see Petition for Declaratory Relief, id. at 73-78.

[20] Petition, id at 13-14.

[21] Id. at 17-21. See also, Complaint for Expropriation, id. at 343.

[22] Id. at 4, 21-23.

[23] Petition, rollo (G.R. No. 249406), pp. 33-34.

[24] AN ACT ORDAINING REFORMS IN THE ELECTRIC POWER INDUSTRY, AMENDING FOR THE PURPOSE CERTAIN LAWS AND FOR OTHER PURPOSES, also known as the "ELECTRIC POWER INDUSTRY REFORM ACT OF 2001."

[25] Id. at Sec. 23.

[26] Rollo (G.R. No. 249406), pp. 43-50.

[27] Rollo (G.R. No. 248061), p. 5.

[28] Comment, id at 589-591.

[29] Id. at 593, 595-596, 597-598.

[30] Id. at 597-599.

[31] Id. at 597-609.

[32] Id. at 445-447.
 
[33] Petition, id. at 26.

[34] Comment, id. at 609-610; Opposition, id. at 661-662.

[35] Spouses Carbungco v. Court of Appeals, 260 Phil. 331, 333 (1990).

[36] Beso v. Aballe, 382 Phil. 862, 871 (2000).

[37] Rollo (G.R. No. 249406), pp. 34-36.

[38] Id. at 37-43.

[39] Rollo (G.R No. 248061), pp. 585-588. Petitioner MORE did not file a motion for reconsideration.

[40] Id. at 530-532.

[41] Manifestation, id. at 896-899.

[42] 384 Phil. 676 (2000).

[43] Republic v. Jose Gamir-Consuelo-Diaz Heirs Association, Inc., G.R. No. 218732, November 12, 2018.

[44] Id.

[45] Estate or Heirs of Ex-Justice Jose B. L. Reyes v. City of Manila, 467 Phil. 165, 188-189 (2004); Jesus is  Lord Christian School Foundation Inc. v. Municipality (now City) of Pasig, 503 Phil. 845,

[46] Other forms of the exercise of eminent domain include state infringement of intellectual property, such on a pharmaceutical product, for a public purpose. See 28 U.S. Code § 1498. Patent and copyright cases Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank, 521 U.S. 627, 644 (1999) (visited August 10, 2020).

[47] See Republic Act No. 8974 (2.000), Sec. 8, which requires an ecological impact assessment prior to expropriation.

[48] RULES OF COURT, Rule 67.

[49] National Power Corporation v. Posada, 755 Phil. 613, 623 (2015).

[50] City of Manila v. Prieto, G.R. No 221366, July 8, 2019.

[51] City of Manila v. Chinese Community of Manila, 40 Phil. 349, 373 (1919).

[52] Chavez v. Public Estates Authority, 451 Phil 1, 50 (2003).

[53] See Republic Act No. 3003 (1960), which states under Sec. 9 that the electricity distribution system of Rafael Censing may also be used for police telephone and alarm system.

[54] Heirs of Suguitan v. City of Mandaluyong, supra note 42, at 687.

[55] Lagcao v. Labra, 483 Phil. 303, 312 (2004).

[56] Id. at 310.

[57] Act No. 2983 (1921), Sec. 1 and Sec. 17.

[58] Act No. 2392 (1914), Sec. 11; Act No. 3643. (1929). Sec. 10.

[59] Pardo v. Municipality of Guinubatan, 56 Phil. 574, 583 (5932).

[60] Presidential Decree No. 1113 (1977), Sec. 2(e): Presidential Decree No. 1894 (1983), Sec. 4(b).

[61] Act No. 2393 (1914), Sec. 17; Republic Act No. 971 (1953), Sec. 15.

[62] Act No. 3035 (1922), Sec. 2. This was amended by Act No. 3061 (1963), to clarify that the franchise area covers the municipalities of Iloilo, La Paz, Jaro, and Arevalo, Province of Iloilo.

[63] Act No. 3665 (1929), Sec. 1.

[64] Id. at Sec. 5.

[65] Id. at Sec. 6,

[66] Act No. 3636 (1929), Sec. 1 Previously, Act No. 667 (1903), prescribed the provisions to be included in a legislative franchise.

[67] Id.

[68] Republic Act No. 5360 (1968), Sec. 6.

[69] Id. at Sec. 4.

[70] Commonwealth Act No. 437 (1939), Sec. 3; Republic Act No. 3245 (1961), Sec. 3; Republic Act No. 7606 (1992), Sec. 7.

[71] Republic Act No. 8960 (2000), Sec. 3

[72] Rollo (G.R. No. 248061). p. 63. No copy of this NEA Decision is available in the records.

[73] Lagcao v. Labra, supra note 55.

[74] 151 Mass, 364 (1890) (visited August 10, 2020).

[75] 47 U.S. 507 (1848) < http://supreme.justia.com/cases/federal/us/47/507/ > (visited August 10, 2020).

[76] Proprietors of Charles River Bridge v. Proprietors of Warren Bridge, 36 U.S. 420 (1837) < http://supreme.justia.com/cases/federal/us/36/420/#tab-opinion-1942465/ > (visited August 10, 2020

[77] Long Island Water Supply Co. v.. Brooklyn, , 166 U.S. 685 (1897) http://supreme.justia.com/cases/federal/us/:66/685/> (visited August 10, 2020).

[78] Eastern R. Co. v. Boston, R., 111 Mass. 125, 15 Am. Rep. 13.

[79] 545 U.S. 469 (2005), < http://supreme.justia.com/cases/federal/us/545/469/ > (visited August 10, 2020).

[80] 348 U.S. 26 (1954), < http://supreme.justia.corn/cases/federal/us/348/26/> (visited August 10, 2020)

[81] (U.K.) Alliance Spring Co Ltd. & On v. The First Secretary of State (2005) EWHC 18; (Singapore) Amendments to toe Land Titles Act.

[82] Rollo (G.R. No 248061), p. 288.

[83] Republic Act No. 9136 (2001), Sec. 2(f).

[84] G.R. Nos. 192595-96, April 11, 2018,861 SCRA 1.

[85] Presidential Decree No. 269 (1973). The pertinent provision reads:

Sec. 4. NEA Authorities, Powers and Directives. [The NEA is specifically authorized:] (m) To acquire, by purchase or otherwise (including the right of eminent domain, which is hereby granted to the NEA) x x x real and physical properties x x x whether or not the same be already devoted to the public use of generating, transmitting or distributing electric power and energy, upon NEA's determination that such acquisition is necessary to accomplish the purposes of this Decree and, if such properties be already devoted to the public use described in the foregoing, that such use will be better served and accomplished by such acquisition; Provided, That the power herein granted shall be exercised by the NEA solely as agent for and on behalf of one or more public service entities which shall timely receive, own and utilize or replace such properties for the purpose of furnishing adequate and dependable service on an area coverage basis, which entity or entities shall then be, or in connection with the acquisition shall become, borrowers from the NEA

[86] Approved on August 8, 2019.

[87] Id. at Sec. 2.

[88] Dissenting Opinion, Associate Justice Marvic M. V F. Leonen, p. 1.

[89] Id. at 4-5.

[90] Id. at 6.

[91] Dissenting Opinion, Associate Justice Amy C. Lazaro-Javier.

[92] Senator Jaworski v. Philippine Amusement and Gaming Corp., 464 Phil. 375, 385 (2004).

[93] See Anthony Dick, "The Substance of Punishment under the Bill of Attainder Clause," 63 Standford Law Review 1177.

[94] Dissenting Opinion, Associate Justice Marvic M. V. F. Leonen, supra note 88.






SEPARATE OPINION


PERLAS-BERNABE, J.:

I concur in the result.

At the onset, it must be highlighted that this case stemmed from a Petition for Declaratory Relief[1] assailing the constitutionality of Sections 10 and 17 of Republic Act No. (RA) 11212;[2] this is not an appeal from a ruling made by the trial court in the expropriation proceedings proper, wherein the propriety of the taking's public use will still be put at issue. In National Power Corporation v. Posada[3] (National Power Corp.), the Court described the two phases of expropriation proceedings as follows:
Expropriation, the procedure by which the government takes possession of private property, is outlined primarily in Rule 67 of the Rules of Court. It undergoes two phases. The first phase determines the propriety of the action. The second phase determines the compensation to be paid to the landowner, x x x
[In the first phase, the trial court] is concerned with the determination of the authority of the plaintiff to exercise the power of eminent domain and the propriety of its exercise in the context of the facts involved in the suit. It ends with an order, if not of dismissal of the action, "of condemnation declaring that the plaintiff has a lawful right to take the property sought to be condemned, for the public use or purpose described in the complaint x x x."

x x x x[4] (Emphases supplied)
Thus, it is not merely the amount of just compensation, but the propriety of the taking itself, which is up for judicial determination by the courts. Accordingly, the evaluation of the propriety of the taking is, in theory, a judicial function. As held in National Power Corp.:
The power of eminent domain is an inherent competence of the state. It is essential to a sovereign. Thus, the Constitution does not explicitly define this power but subjects it to a limitation: that it be exercised only for public use and with payment of just compensation. Whether the use is public or whether the compensation is constitutionally just will be determined finally by the courts.[5] (Emphasis and underscoring supplied)
Generally, the propriety of an eminent domain taking is hinged on its "public use." This is implicit from Section 9, Article III of the 1987 Constitution which states that "[p]rivate property shall not be taken for public use without just compensation." The Court, however, reckoned that the exercise of the power of eminent domain is also circumscribed by the due process clause of the Constitution, viz.:
In general, eminent domain is defined as "the power of the nation or a sovereign state to take, or to authorize the taking of, private property for a public use without the owner's consent, conditioned upon payment of just compensation." It is acknowledged as "an inherent political right, founded on a common necessity and interest of appropriating the property of individual members of the community to the great necessities of the whole community."

The exercise of the power of eminent domain is constrained by two constitutional provisions: (1) that private property shall not be taken for public use without just compensation under Article III (Bill of Rights), Section 9 and (2) that no person shall be deprived of his/her life, liberty, or property without due process of law under Art. III, Sec. 1.[6] (Emphasis supplied)
The term "public use" is undefined in the eminent domain clause of our Constitution. In this regard, the Court recognized that "there is no precise meaning of 'public use' and the term is susceptible of myriad meanings depending on diverse situations."[7]

Historically, there are two (2) views on this matter. The first is the narrow definition of public use – that is "[t]he limited meaning attached to 'public use' is 'use by the public' or 'public employment,' that 'a duty must devolve on the person or corporation holding property appropriated by right of eminent domain to furnish the public with the use intended, and that there must be a right on the part of the public, or some portion of it, or some public or quasi-public agency on behalf of the public, to use the property after it is condemned."[8] However, this narrow definition of "public use" being equivalent to the "use of the public" has been later superseded by a more expansive definition of the term equating "public use" to "public purpose."

In the United States, where we have patterned our own Constitution, the Supreme Court (SCOTUS), in Kelo v. New London[9] (Kelo), explained the evolution of the term "public use" as applied in eminent domain cases:
[T]his "Court long ago rejected any literal requirement that condemned property be put into use for the general public." Indeed, while many state courts in the mid-19th century endorsed "use by the public" as the proper definition of public use, that narrow view steadily eroded over time. Not only was the "use by the public" test difficult to administer (e.g., what proportion of the public need have access to the property? at what price?), but it proved to be impractical given the diverse and always evolving needs of society. Accordingly, when this Court began applying the Fifth Amendment to the States at the close of the 19th century, it embraced the broader and more natural interpretation of public use as "public purpose." Thus, in a case upholding a mining company's use of an aerial bucket line to transport ore over property it did not own, Justice Holmes' opinion for the Court stressed "the inadequacy of use by the general public as a universal test." Strickley v. Highland Boy Gold Mining Co., 200 U. S. 527, 531 (1906). We have repeatedly and consistently rejected that narrow test ever since.[10] (Emphasis supplied)
As stated in Kelo, the SCOTUS has embraced the broad interpretation of public use as "public purpose," reasoning that not only was the "use by the public" test difficult to administer, but it was also impractical "given the diverse and always evolving needs of society." Thus, the SCOTUS has "repeatedly and consistently rejected that narrow test ever since."

In our jurisdiction, this Court has acceded to "[t]he more generally accepted view [which] sees 'public use' as 'public advantage, convenience, or benefit, and that anything which tends to enlarge the resources, increase the industrial energies, and promote the productive power of any considerable number of the inhabitants of a section of the state, or which leads to the growth of towns and the creation of new resources for the employment of capital and labor, [which] contributes to the general welfare and the prosperity of the whole community.'"[11] In Manapat v. Court of Appeals,[12] this Court stated that "the 'public use' requisite for the valid exercise of the power of eminent domain is a flexible and evolving concept influenced by changing conditions. At present, it may not be amiss to state that whatever is beneficially employed for the general welfare satisfies the requirement of public use."[13]

However, it is well to point out that, at least in the United States, adherence to the expansive definition of "public use" as the standard for eminent domain takings has not gone without any strident dissent.

In the same case of Kelo, Justice Clarence Thomas (Justice Thomas) lamented that "[t]he Framers embodied that principle in the Constitution, allowing the government to take property not for 'public necessity,' but instead for 'public use.' Defying this understanding, the [SCOTUS] [has] replace[d] the Public Use Clause with a 'Public Purpose' Clause, (or perhaps the 'Diverse and Always Evolving Needs of Society' Clause) x x x."[14]

In addition to defying the "most natural reading of the clause," Justice Thomas also forewarned of the danger of the government taking one's private property and giving it to another private individual, whereby the taking may be legitimized because of "the incidental benefits that might accrue to the public from the private use," viz.:
The most natural reading of the Clause is that it allows the government to take property only if the government owns, or the public has a legal right to use, the property, as opposed to taking it for any public purpose or necessity whatsoever. At the time of the founding, dictionaries primarily defined the noun "use" as "[t]he act of employing any thing to any purpose." 2 S. Johnson, A Dictionary of the English Language 2194 (4th ed. 1773) (hereinafter Johnson). The term "use," moreover, "is from the Latin utor, which means 'to use, make use of, avail one's self of, employ, apply, enjoy, etc." J. Lewis, Law of Eminent Domain §165, p. 224, n. 4 (1888) (hereinafter Lewis). When the government takes property and gives it to a private individual, and the public has no right to use the property, it strains language to say that the public is "employing" the property, regardless of the incidental benefits that might accrue to the public from the private use. The term "public use," then, means that either the government or its citizens as a whole must actually "employ" the taken property. See id., at 223 (reviewing founding-era dictionaries).[15] (Emphases supplied)
Parenthetically, Justice Thomas reasoned that by defying the natural import of the term "public use," "we are afloat without any certain principle to guide us" since there is "no coherent principle limits what could constitute a valid public use x x x." In contrast, "[i]t is far easier to analyze whether the government owns or the public has a legal right to use the taken property than to ask whether the taking has a 'purely private purpose x x x.' Otherwise, "the Court [would] eliminate public use scrutiny of takings entirely."[16]

In the same vein, Justice Sandra Day O'Connor (Justice O'Connor), in Kelo, argued that by expanding the definition of "public use," the qualifying standard would lose any practical relevance since "nearly any lawful use of real private property can be said to generate some incidental benefit to the public."[17] Accordingly, there would be no more "constraint on the eminent domain power," viz.:
In moving away from our decisions sanctioning the condemnation of harmful property use, the Court today significantly expands the meaning of public use. It holds that the sovereign may take private property currently put to ordinary private use, and give it over for new, ordinary private use, so long as the new use is predicted to generate some secondary benefit for the public—such as increased tax revenue, more jobs, maybe even aesthetic pleasure. But nearly any lawful use of real private property can be said to generate some incidental benefit to the public. Thus, if predicted (or even guaranteed) positive side-effects are enough to render transfer from one private party to another constitutional, then the words "for public use" do not realistically exclude any takings, and thus do not exert any constraint on the eminent domain power.[18] (Emphasis supplied)
In this relation, Justice O'Connor cautioned that this broad interpretation of "public use" allows one's property to be taken in favor of those "with disproportionate influence and power in the political process, including large corporations and development firms."'[19] In the end, "the government now has license to transfer property from those with fewer resources to those with more."[20] This, to her, runs counter to the concept of a just government "which impartially secures to every man, whatever is his own," viz.:
Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms. As for the victims, the government now has license to transfer property from those with fewer resources to those with more. The Founders cannot have intended this perverse result. "[T]hat alone is a just government," wrote James Madison, "which impartially secures to every man, whatever is his own." For the National Gazette, Property, (Mar. 29, 1792), reprinted in 14 Papers of James Madison 266 (R. Rutland et al. eds. 1983).[21]
While SCOTUS rulings, much less, opinions of dissenting US Justices, are not binding in our jurisdiction, they are nonetheless persuasive in shaping our own doctrinal bearings. As previously mentioned, this Court has subscribed to the doctrine equating "public use" to mere public interest, public purpose, or public advantage. Thus, as long as the taking of private property subserves some form of general welfare, the public use requisite of the eminent domain clause in our Constitution is met, leaving the amount of just compensation as the only remaining issue.

Notably, while this Court has held that "[t]he number of people is not determinative of whether or not it constitutes public use, provided [that] the use is exercisable in common and is not limited to particular individuals,"[22] still, the discernible divide between a taking that subserves some public interest but at the same time, accommodates a clear private benefit, and which between the two in a particular case is a mere incidence, remain blurry subjects in our current body of jurisprudence.

In Vda. De Ouano v. Republic,[23] cited in the 2015 case of National Power Corp., the Court expressed that "the direct use by the state of its power to oblige landowners to renounce their productive possession to another citizen, who will use it predominantly for that citizen's own private gain, is offensive to our laws,"[24] viz.:
In esse, expropriation is forced private property taking, the landowner being really without a ghost of a chance to defeat the case of the expropriating agency. In other words, in expropriation, the private owner is deprived of property against his will. Withal, the mandatory requirement of due process ought to be strictly followed, such that the state must show, at the minimum, a genuine need, an exacting public purpose to take private property, the purpose to be specifically alleged or least reasonably deducible from the complaint.

Public use, as an eminent domain concept, has now acquired an expansive meaning to include any use that is of "usefulness, utility, or advantage, or what is productive of general benefit [of the public]." If the genuine public necessity—the very reason or condition as it were— allowing, at the first instance, the expropriation of a private land ceases or disappears, then there is no more cogent point for the government's retention of the expropriated land. The same legal situation should hold if the government devotes the property to another public use very much different from the original or deviates from the declared purpose to benefit another private person. It has been said that the direct use by the state of its power to oblige landowners to renounce their productive possession to another citizen, who will use it predominantly for that citizen's own private gain, is offensive to our laws.

A condemnor should commit to use the property pursuant to the purpose stated in the petition for expropriation, failing which it should file another petition for the new purpose. If not, then it behooves the condemnor to return the said property to its private owner, if the latter so desires. The government cannot plausibly keep the property it expropriated in any manner it pleases and, in the process, dishonor the judgment of expropriation. This is not in keeping with the idea of fair play.[25] (Emphasis supplied)
This notwithstanding, there is no clear and settled guidance in our cases so as to determine what is "predominant" use for another's own private gain. Rather, what is more compellingly abound in our jurisprudence is the doctrine that the public use requirement is satisfied by the taking being premised on some public advantage, convenience, or benefit.

However, it must be discerned that the grant of the authority to expropriate is different from the propriety of the expropriation itself. As initially mentioned, this case only concerns the issue of the constitutionality of Sections 10 and 17 of RA 11212, which provisions must be examined against the prevailing jurisprudential standard that public use is equal to "whatever is beneficially employed for the general welfare." In this regard, the propriety of the public use anent petitioner MORE Electric and Power Corporation's (MORE) taking of respondent Panay Electric Company, Inc.'s (PECO) specific properties is not yet at issue here. The assailed statutory provisions only accord eminent domain power in favor of MORE, but the actual exercise of such power is still subject to judicial scrutiny in the expropriation proceedings. Hence, perhaps in the proper case where the Court is called to examine the expansive/narrow scope of the public use concept in relation to a specific taking, the Court will be able to amply resolve this quandary. That case may well be the appeal to this Court from the expropriation proceedings involving PECO's properties.

Nonetheless, I already deem it proper to draw attention to the above divergence of opinions anent the interpretation of "public use" in order to magnify two points relevant to this case:

First, the broad definition of "public use" seems to create a practical conundrum as to whether or not the propriety of an exercise of eminent domain power, when delegated by the State to a franchisee, is still properly a judicial function, or just a matter of the judiciary confirming the determination already made by legislature.

To explain, implicit in the franchise grant is the advancement of public interest. Conceptually, franchisees are given statutory privileges to conduct the covered activities in their franchise for the benefit of the public. Thus, when a franchisee is concomitantly conferred with an eminent domain power to acquire private properties, any taking made under the legal cover of the grantee's franchise will theoretically satisfy the requirement of public use.

At this juncture, it may not be amiss to point out that while the statutory delegation of eminent domain power to franchisees does not dispense with the need of filing expropriation proceedings before the court, the practical effect, however, is that trial courts are put in an awkward position to defer to Congress' will, else it be accused of frustrating the pursuits of the franchisee who enjoys the imprimatur of the lawmaking body. In fact, it may also be argued that the franchisee's taking under the cover of its franchise will always carry some semblance of public benefit, regardless of the private benefit it will gain.

To note, this scenario wherein private entities have been delegated eminent domain powers in their respective franchises is not only attendant to MORE, but also to other public utilities. To illustrate, Section 10 of MORE's franchise reads:
SECTION 10. Right of Eminent Domain. - Subject to the limitations and procedures prescribed by law, the grantee is authorized to exercise the right of eminent domain insofar as it may be reasonably necessary for the efficient maintenance and operation of services. The grantee is authorized to install and maintain its poles, wires, and other facilities over and across public property, including streets, highways, forest reserves, and other similar property of the Government of the Philippines, its branches, or any of its instrumentalities. The grantee may acquire such private property as is actually necessary for the realization of the purposes for which this franchise is granted x x x: Provided, That proper condemnation proceedings shall have been instituted and just compensation paid[.]

x x x x (Emphases supplied)
To name a few, the above provision is akin to the following eminent domain provisions in favor of electric distribution utilities embedded in their respective franchises:

 

Law

Franchisee

Franchise purpose

Eminent domain delegation

RA 11322 (April 17, 2019)

Cotabato Electric Cooperative, Inc.-

PPALMA

SECTION 1. Nature and Scope of Franchise. - x x x to construct, install, establish, operate and maintain for public interest, a distribution system for the conveyance of electric power to the end users in the municipalities of Pikit, Pigcawayan, Aleosan, Libungan, Midsayap and Alamada, Province of Cotabato, and its neighboring suburbs.

SECTION 10. Right of Eminent Domain. - Subject to the limitations and procedures prescribed by law, the grantee is authorized to exercise the right of eminent domain insofar as it may be reasonably necessary for the efficient maintenance and operation of services. The grantee is authorized to install and maintain its poles, wires, and other facilities over and across public property, including streets, highways, forest reserves, and other similar property of the Government of the Philippines, its branches, or any of its instrumentalities. The grantee may acquire such private property as is actually necessary for the realization of the purposes for which this franchise is granted: Provided, That proper condemnation proceedings shall have been instituted and just compensation paid. (Emphases supplied)

RA 10637 (June 16, 2014) Cotabato Light and Power Company
SECTION 1. Nature and Scope of Franchise. - x x x to construct, install, establish, operate and maintain for commercial purposes and in the public interest, a distribution system for the conveyance of electric power to the end-users in the City of Cotabato and portions of the municipalities of Datu Odin Sinsuat and Sultan Kudarat, both in the Province of Maguindanao.
SECTION 9. Right of Eminent Domain. - Subject to the limitations and procedures prescribed by law, the grantee is authorized to exercise the right of eminent domain insofar as it may be reasonably necessary for the efficient maintenance and operation of services. The grantee is authorized to install and maintain its poles, wires and other facilities over and across public property, including streets, highways, forest reserves and other similar property of the Government of the Philippines, its branches or any of its instrumentalities. The grantee may acquire such private property as is actually necessary for the realization of the purposes for which this franchise is granted: Provided, That proper condemnation proceedings shall have been instituted and just compensation paid. (Emphases supplied)
RA 10891 (July 21, 2016) First Bay Power Corp.
SECTION 1. Nature and Scope of Franchise. - x x x to construct, install, establish, operate and maintain for commercial purposes and in the public interest, a distribution system for the conveyance of electric power to the end users in the Municipality of Bauan, Province of Batangas.
SECTION 9. Right of Eminent Domain. - Subject to the limitations and procedures prescribed by law, the grantee is authorized to exercise the right of eminent domain insofar as it may be reasonably necessary for the efficient maintenance and operation of services. The grantee is authorized to install and maintain its poles, wires and other facilities over and across public property, including streets, highways, forest reserves and other similar property of the Government of the Philippines, its branches or any of its instrumentalities. The grantee may acquire such private property as is actually necessary for the realization of the purposes for which this franchise is granted: Provided, That proper condemnation proceedings shall have been instituted and just compensation paid. (Emphases supplied)
RA 9381 (March 9, 2007) Angeles Electric Corporation
SECTION 1. Nature and Scope of Franchise. - x x x to construct, operate and maintain in the public interest and for commercial purposes, a distribution system for the conveyance of electric power to the end-users in the City of Angeles, Province of Pampanga.
SEC. 10. Right of Eminent Domain. - Subject to the limitations and procedures prescribed by law, the grantee is authorized to exercise the right of eminent domain insofar as it may be reasonably necessary for the efficient maintenance and operation of services. The grantee is authorized to install and maintain its poles, wires and other facilities over and across public property, including streets, highways, forest reserves and other similar property of the Government of the Philippines, its branches or any of its instrumentalities. The grantee may acquire such private property as is actually necessary for the realization of the purposes for which this franchise is granted: Provided, That proper condemnation proceedings shall have been instituted and just compensation paid. (Emphases supplied)
RA 10373 (March 1, 2013)

Olongapo Electricity Distribution Company, Inc.

SECTION 1. Nature and Scope of Franchise. - x x x to construct, install, establish, operate and maintain for commercial purposes and in the public interest, a distribution system for the conveyance of electric power to the end-users in the City of Olongapo and its suburbs
SECTION 9. Right of Eminent Domain. - Subject to the limitations and procedures prescribed by law, the grantee is authorized to exercise the right of eminent domain insofar as it may be reasonably necessary for the efficient maintenance and operation of services. The grantee is authorized to install and maintain its poles, wires and other facilities over and across public property, including streets, highways, forest reserves and other similar property of the Government of the Philippines, its branches or any of its instrumentalities. The grantee may acquire such private property as is actually necessary for the realization of the purposes for which this franchise is granted: Provided, That proper condemnation proceedings shall have been instituted and just compensation paid. (Emphases supplied)

To my mind, when the exercise of eminent domain is necessary to carry out the franchise, the taking is intermixed with the Congress' will.
As such, the judicial function of the courts in determining the propriety of expropriation is somewhat constrained by an attitude of legislative deference. In Kelo, Justice Thomas especially criticized the "almost insurmountable deference to legislative conclusions that a use serves a 'public use,'" viz.:
A second line of this Court's cases also deviated from the Public Use Clause's original meaning by allowing legislatures to define the scope of valid "public uses." United States v. Gettysburg Electric R. Co., 160 U. S. 668 (1896), involved the question whether Congress' decision to condemn certain private land for the purpose of building battlefield memorials at Gettysburg, Pennsylvania, was for a public use. Id., at 679-680. Since the Federal Government was to use the lands in question, id., at 682, there is no doubt that it was a public use under any reasonable standard. Nonetheless, the Court, speaking through Justice Peckham, declared that "when the legislature has declared the use or purpose to be a public one, its judgment will be respected by the courts, unless the use be palpably without reasonable foundation." Id., at 680. As it had with the "public purpose" dictum in Bradley, supra, the Court quickly incorporated this dictum into its Public Use Clause cases with little discussion. See, e.g., United States ex rel. TVA v. Welch, 327 U. S. 546, 552 (1946); Old Dominion Land Co. v. United States, 269 U. S. 55, 66 (1925).

There is no justification, however, for affording almost insurmountable deference to legislative conclusions that a use serves a "public use." To begin with, a court owes no deference to a legislature's judgment concerning the quintessentially legal question of whether the government owns, or the public has a legal right to use, the taken property. Even under the "public purpose" interpretation, moreover, it is most implausible that the Framers intended to defer to legislatures as to what satisfies the Public Use Clause, uniquely among all the express provisions of the Bill of Rights. We would not defer to a legislature's determination of the various circumstances that establish, for example, when a search of a home would be reasonable, see, e.g., Payton v. New York, 445 U. S. 573, 589-590 (1980), or when a convicted double-murderer may be shackled during a sentencing proceeding without on-the-record findings, see Deck v. Missouri, 544 U. S. ___ (2005), or when state law creates a property interest protected by the Due Process Clause, see, e.g., Castle Rock v. Gonzales, post, at _______; Board of Regents of State Colleges v. Roth, 408 U. S. 564, 576 (1972); Goldberg v. Kelly, 397 U. S. 254, 262-263 (1970).

Still worse, it is backwards to adopt a searching standard of constitutional review for nontraditional property interests, such as welfare benefits, see, e.g., Goldberg, supra, while deferring to the legislature's determination as to what constitutes a public use when it exercises the power of eminent domain, and thereby invades individuals' traditional rights in real property. The Court has elsewhere recognized "the overriding respect for the sanctity of the home that has been embedded in our traditions since the origins of the Republic," Payton, supra, at 601, when the issue is only whether the government may search a home. Yet today the Court tells us that we are not to "second-guess the City's considered judgments," ante, at 18, when the issue is, instead, whether the government may take the infinitely more intrusive step of tearing down petitioners' homes. Something has gone seriously awry with this Court's interpretation of the Constitution. Though citizens are safe from the government in their homes, the homes themselves are not. Once one accepts, as the Court at least nominally does, ante, at 6, that the Public Use Clause is a limit on the eminent domain power of the Federal Government and the States, there is no justification for the almost complete deference it grants to legislatures as to what satisfies it.[26] (Emphases and underscoring supplied)
As Justice Thomas pointed out, with the prevailing legal regime, "when the legislature has declared the use or purpose to be a public one, its judgment will be respected by the courts, unless the use be palpably without reasonable foundation."[27] However, with our expansive definition of public use, where - in Justice O'Connor's words - "nearly any lawful use of real property can be said to generate some incidental benefit to the public,"[28] it would be quite difficult to tag any taking done under the cover of a franchise as "unreasonable." Most probably, it would only be in extreme cases where the taking is completely and wantonly without any public purpose that our courts can validly rule against the propriety of a franchisee's taking of another's private property. In so doing, for as long as this wanton and complete unreasonableness does not exist, a taking may be done to advance private benefit.

This brings me to my second and final point: the expansive definition of public use as mere taking for some public interest, purpose or benefit appears to legitimize the regime of allowing franchisees to take private properties, irrespective of the franchisee's private gain. As I have discussed, this Court has yet to draw any clear delineation between the commingling of private interests with public purposes when it comes to eminent domain takings. Neither has our Court prohibited the delegation of eminent domain powers to franchise holders albeit being private entities. In fact, the Court recognizes that the power of eminent domain may be delegated "even to private enterprises performing public services."[29]

In this case, Associate Justices Marvic M.V.F. Leonen and Amy C. Lazaro-Javier strikingly present the background facts which show that MORE was intentionally benefited by Congress to the prejudice of PECO. PECO, despite being the longstanding franchise holder of electric distribution in Iloilo City for 96 years, has now been ousted from its statutory privilege to so operate. As to whether or not PECO deserves to continue its franchise or whether MORE is qualified as a new franchisee is clearly beyond the province of the Court as it is a pure political question left to the wisdom of Congress. However, more than the stripping of PECO's franchise, PECO - it is claimed - stands to lose its entire operation system, goodwill, and even employees through an explicit statutory enactment which not only recognizes a new franchisee but also enables the latter to practically take over PECO's business at the cost of paying the fair market value of its assets. To this point, it may be posited that while PECO may be able to realize "just" compensation, it is effectively left as a shell corporation. Further, despite receiving the "fail- market value" of its properties, PECO would get paid much less than if it openly deals with a buyer in the market. Unlike in judicial proceedings, business and trade acumen may be utilized when one sells assets in the open market. Also, it is pertinent to note that the "fair market value" of a former franchisee's assets may be diluted in value since some of them may prove to be un-utilizable by the owner considering that it had already been stripped of the franchise, and thus, diminishing their future utility. Hence, in the hands of the previous franchisee, the assets may be valued less at the time of the taking.

Nevertheless, in theory, PECO's precarious situation is actually legitimized by our prevailing framework on eminent domain. Hypothetically speaking, there is nothing legally prohibiting the government to delegate the eminent domain power to a private entity embedded in its franchise, and in so doing, allow the takeover of the properties of the previous franchisee upon the reason that the taking is - in the language of our numerous franchise laws - "actually necessary for the realization of the purposes for which this franchise is granted."

In fine, up until our current paradigm on "public use" completely or partially shifts, Section 10 - and its corollary provision,[30] Section 17[31] of RA 11212 - are in accord with subsisting doctrine, and hence, constitutional. This pronouncement, however, is without prejudice to the outcome of the expropriation proceedings where the propriety of MORE's actual taking of PECO's properties, in relation to the jurisprudential parameters of public use (which may or may not be revisited), may be raised.



[1] See ponencia, pp. 3-4.

[2] Entitled "AN ACT GRANTING MORE ELECTRIC AND POWER CORPORATION A FRANCHISE TO ESTABLISH, OPERATE, AND MAINTAIN, FOR COMMERCIAL PURPOSES AND IN THE PUBLIC INTEREST, A DISTRIBUTION SYSTEM FOR THE CONVEYANCE OF ELECTRIC POWER TO THE END USERS IN THE CITY OF ILOILO, PROVINCE OF ILOILO, AND ENSURING THE CONTINUOUS AND UNINTERRUPTED SUPPLY OF ELECTRICITY IN THE FRANCHISE AREA," approved on February 14, 2019.

[3] 755 Phil. 613 (2015).

[4] Id. at 624.

[5] Id. at 623.

[6] Barangay Sindalan, San Fernando Pampanga, rep. by Brgy. Capt. Gutierrez v. Court of Appeals, 547 Phil. 542, 551 (2007), citing 26 Am Jur 2d 638.

[7] Id.

[8] Id. at 551-552.

[9] 545 U.S. 469 (2005).

[10] See id.

[11] Barangay Sindalan, San Fernando Pampanga, rep. by Brgy. Capt. Gutierrez v. Court of Appeals, supra note 6 at 552.

[12] 562 Phil. 31 (2007).

[13] Id. at 53, citing Estate of Jimenez v. PEZA, 402 Phil. 271, 291 (2001).

[14] See Dissenting Opinion of Justice Thomas in Kelo v. New London, supra note 9.

[15] See Id.

[16] See Id.

[17] See Dissenting Opinion of Justice O'Connor in Kelo v. New London, supra note 9.

[18] See id.

[19] See id.

[20] See id.

[21] See id.

[22] Barangay Sindalan, San Fernando Pampanga, rep. by Brgy. Capt. Gutierrez v. Court of Appeals, supra note 6 at 552.

[23] 657 Phil. 391 (2011).

[24] Id. at 419, citing Heirs of Moreno v. Mactan-Cebu International Airport Authority, 503 Phil. 898, 912 (2005).

[25 ] Id. at 418-419; citations omitted.

[26] See Dissenting Opinion of Justice Thomas in Kelo v. New London, supra note 9.

[27] See id.

[28] See Dissenting Opinion of Justice O'Connor in Kelo v. New London, supra note 9.

[29] Manapat v. Court of Appeals, supra note 12, at 47.

[30] While Section 17 of RA 11212 is equally assailed in this petition, this provision merely provides for a transitory period for PECO to continue its operations so as to ensure the uninterrupted supply of electricity pending the takeover of MORE, as the new franchisee. To a certain extent, Section 17 is also an offshoot of Section 10 in that it expressly qualifies that the transitory period granted in favor of PECO "shall not prevent [MORE] from exercising the right of eminent domain over the distribution assets existing at the franchise area as provided in Section 10 of this Act."

[31] Section 17. Transition of Operations. - In the public interest and to ensure uninterrupted supply of electricity, the current operator, Panay Electric Company, Inc. (PECO), shall in the interim be authorized to operate the existing distribution system within the franchise area, as well as implement its existing power supply agreements with generation companies that had been provisionally or finally approved by the ERC until the establishment or acquisition by the grantee of its own distribution system and its complete transition towards full operations as determined by the ERC, which period shall in no case exceed two (2) years from the grant of this legislative franchise.

Upon compliance with its rules, the ERC shall grant PECO the necessary provisional certificate of public convenience and necessity (CPCN) covering such interim period. The applicable generation rate shall be the provisional or final rate approved by the ERC.

This provisional authority to operate during the transition period shall not be construed as extending the franchise of PECO after its expiration on January 18, 2019, and it shall not prevent the grantee from exercising the right of eminent domain over the distribution assets existing at the franchise area as provided in Section 10 of this Act. During such interim period, the ERC shall require PECO to settle the full amount which the ERC has directed to refund to its customers in connection with all the cases filed against it.

To reduce the length of the transition period, the ERC and all agencies issuing the requisite licenses shall prioritize all applications relevant to the establishment and operation of the distribution system under its franchise.

The grantee shall, as far as practicable and subject to required qualifications, accord preference to hiring former employees of PECO upon commencement of business operations.

An information dissemination campaign regarding public services and operations of the grantee shall be made to all end-users in the franchise area.

The grantee and PECO shall jointly ensure that employees not hired by the grantee shall receive all separation and/or retirement benefits they are entitled to in accordance with applicable laws.

The DOE shall, during the transition, ensure that there will be uninterrupted supply of electricity in the existing franchise area.






DISSENTING OPINION


LEONEN, J.:


I dissent.

Section 10 of Republic Act No. 11212,[1] which grants More Electric and Power Corporation (More Electric) the right of eminent domain, constitutes class legislation proscribed by the equal protection clause. Section 10 confers unwarranted benefits to a specific corporation, i.e., More Electric—benefits that are not conferred to other public utilities similarly situated to it. Equally, Section 10 burdens and discriminates against a specific corporation, Panay Electric Company, Inc. (Panay Electric Company), by deeming the latter's assets subject to expropriation and acquirable by the payment of the assessed value of the properties, a mere percentage of what could be the negotiated price payable to Panay Electric Company, had it and More Electric dealt in the open market.

Furthermore, the taking allowed under Section 10 is not for public use. Section 10 permits the taking of private property already devoted to the same public purpose by an entity with no experience whatsoever in electricity distribution, and who will be operating as a monopoly; therefore, there will be no benefit to the public. The taking serves nothing but private interests. Section 17 of Republic Act No. 11212, in turn, enables the application of Section 10 by legislatively mandating the corporate takeover of Panay Electric Company by More Electric. This is not a case of a true expropriation, but rather a confiscation of property and a shameless violation of Article III, Sections 1 and 9 of the Constitution. Sections 10 and 17 of Republic Act No. 11212 must be struck down.

I

The Constitution in Article III, Section 1 provides that "[n]o person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws." The equal protection clause mandates that "all persons under similar circumstances . . . must be treated in the same manner . . . both in the privileges conferred and the liabilities imposed."[2] Consequently, class legislation, or a law that discriminates against some, but favors others, is prohibited.[3]

The prohibition on class legislation does not mean that valid classifications cannot be created by law. However, to be valid, the classification must — at the very least—conform to the traditional standard of reasonableness. A reasonable classification is that which is: (1) "based on substantial distinctions;" (2) "germane to the purposes of the law;" (3) "[applies] equally to all the members of the class[;]' and (4) not "limited to existing conditions only[.]"[4]

The rational basis test—that a statute must reasonably relate to the purpose of the law—is said to be the least intensive of the three (3) levels of tests developed to decide equal protection cases. The rational basis test is applied if the case does not involve a classification historically characterized as suspect, such as race or nationality, or a fundamental right protected by the Constitution.[5]

If an equal protection case involves quasi-suspect classifications, such as sex or illegitimacy, the intermediate scrutiny test or the middle-tier judicial scrutiny is applied. To be a valid classification under the immediate scrutiny test, the classification "must serve important governmental objectives and must be substantially related to [the] achievement of those objectives."[6]

The most intensive of these levels of scrutiny is the strict scrutiny test, applied when the case involves a suspect classification, such as race or nationality, or a fundamental right protected by the Constitution.[7] It requires that the classification "serve a compelling state interest and is necessary to achieve such interest."[8]

Determining the right involved in this case determines what level of scrutiny this Court should apply. Here, the challenged provision is Section 10 of Republic Act No. 11212, which delegates to More Electric Power Corporation the right of eminent domain. Eminent domain, or the State's inherent power to forcibly acquire private property for public use upon payment of just compensation,[9] necessarily involves the right to property. In turn, the right to property is a fundamental right protected by the Constitution, specifically under Article III, Section 1, and Article III, Section 9, among others. Therefore, We must apply the strict scrutiny, or the compelling state interest test, in resolving the present case.

Section 10 of Republic Act No. 11212, particularly states:
SECTION 10. Right of Eminent Domain. — Subject to the limitations and procedures prescribed by law, the grantee is authorized to exercise the power of eminent domain insofar as it may be reasonably necessary for the efficient establishment, improvement, upgrading, rehabilitation, maintenance and operation of its services. The grantee is authorized to install and maintain its poles wires, and other facilities over, under, and across public property, including streets, highways, parks, and other similar property of the Government of the Philippines, its branches, or any of its instrumentalities. The grantee may acquire such private property as is actually necessary for the realization of the purposes for which this franchise is granted, including, but not limited to poles, wires, cables, transformers, switching equipment and stations, buildings, infrastructure, machineries and equipment previously, currently or actually used, or intended to be used, or have been abandoned, unused or underutilized, or which obstructs its facilities, for the operation of a distribution system for the conveyance of electric power to end users in its franchise area: Provided, That proper expropriation proceedings shall have been instituted and just compensation paid:

Provided, further, That upon the filing of the petition for expropriation, or at any time thereafter, and after due notice to the owner of the property to be expropriated and the deposit in a bank located in the franchise area of the full amount of the assessed value of the property or properties, the grantee shall be entitled to immediate possession, operation, control, use and disposition of the properties sought to be expropriated, including the power of demolition, if necessary, notwithstanding the pendency of other issues before the court, including the final determination of the amount of just compensation to be paid. The court may appoint a representative from the ERC as a trial commissioner in determining the amount of just compensation. The court may consider the tax declarations, current audited financial statements, and rate-setting applications of the owner or owners of the property or properties being expropriated in order to determine their assessed value. (Underscoring provided)
As worded in the provision, More Electric may:
[A]cquire such private property as is actually necessary for the realization of the purposes for which this franchise is granted, including, but not limited to poles, wires, cables, transformers, switching equipment and stations, buildings, infrastructure, machineries and equipment previously, currently or actually used, or intended to be used, or have been abandoned, unused or underutilized, or which obstructs its facilities, for the operation of a distribution system for the conveyance of electric power to end users in its franchise area[.]
Furthermore, upon notice to the owner of the properties and upon deposit of the full amount of their assessed value, the provision entitles More Electric to immediately take over the properties sought to be expropriated. While nowhere named in Section 10, Panay Electric Company is implicitly referred to in the provision, it being the owner of the private property "previously, currently or actually used" in the distribution of electricity in Iloilo.

To my mind, Section 10 grants unwarranted benefits to More Electric—benefits that are not granted to other public utilities similarly situated to it. Section 10 is an example of class legislation proscribed by the equal protection clause.

When read in isolation, Section 10 appears to be consistent with the Constitution, law, and judicial prerogatives. Section 10 requires that the provisional amount equivalent to the assessed value of the property be paid upon entry to the property sought to be expropriated, consistent with Rule 67, Section 2[10] of the Rules of Court on expropriation. Section 10 even speaks of a "final determination of the amount of just compensation to be paid[,]" again, seemingly consistent with Article III, Section 9[11] of the Constitution, and that the determination of just compensation is an exclusively judicial function as held in Export Processing Zone Authority v. Dulay[12] and National Power Corporation v. Spouses Zabala,[13] among others.

However, when read in conjunction with the legislative franchises of other public utilities, Section 10 clearly gives More Electric undue benefits.

Section 10 allows More Electric to immediately take possession, control, and even demolish, the properties expropriated upon payment of the assessed value of the properties. This amount is significantly lower than that payable to Panay Electric Company, had the government—during the 95-year effectivity of Panay Electric Company's franchise—chosen to expropriate the latter's properties. To recall, More Electric's franchise requires it to deposit an amount equivalent to the full amount of the assessed value of the properties sought to be expropriated.

In contrast, Panay Electric Company's legislative franchise, Republic Act No. 5360, provided that the government must pay Panay Electric Company the fair market value of its properties, had the government chosen to operate the electricity distribution system for itself. In other words, Panay Electric Company's franchise required that the full amount of just compensation required under the law be paid before the Government can take Panay Electric Company's properties.[14] Section 4 of Republic Act No. 5360 provided:
SECTION 4. It is expressly provided that in the event the Government should desire to operate and maintain for itself the system and enterprise herein authorized, the grantee shall surrender its franchise and will turn over to the government all equipment therein at fair market value.
By definition, the assessed value of a piece of property is that determined by a local government unit for purposes of real property taxation. It is a mere percentage[15] and therefore, necessarily lower, than the fair market value or "the price at which a property may be sold by a seller who is not compelled to sell and bought by a buyer who is not compelled to buy[.]"[16] This is a marked difference in the amount payable upon immediate taking, and is one clear economic benefit to More Electric; a grant that, in my view, serves no compelling state interest. That the government has delegated the power of eminent domain to other electric distribution utilities without the same benefit emphasizes that the benefits granted to More Electric Power are unwarranted.
Mactan Electric
  Company, Inc.
[Republic Act No.
10890 (2016)]
Tarlac Electric, Inc.
  [Republic Act No.
  10795 (2016)]
Angeles Electric
Corporation
[Republic Act No.
9381 (2007)]
SECTION 9. Right of Eminent Domain. — Subject to the limitations and procedures prescribed by law, the grantee is authorized to exercise the right of eminent domain insofar as it may be reasonably necessary for the efficient maintenance and operation of services. The grantee is authorized to install and maintain its poles, wires, and other facilities over and across public property, including streets, highways, forest reserves, and other similar property of the Government of the Philippines, its branches or any of its instrumentalities. The grantee may acquire such private property as is actually necessary for the realization of the purposes for which this franchise is granted: Provided, That proper expropriation proceedings shall have been instituted and just compensation paid.   the Philippines, its branches, or any of its instrumentalities. The grantee may acquire such private property as is actually necessary for the realization of the purposes for which this franchise is granted: Provided, That  proper expropriation proceedings shall have been instituted and        just compensation paid.
SECTION 9. Right of Eminent Domain. — Subject to the limitations and procedures prescribed by law, the grantee is authorized to exercise the right of eminent domain insofar as it may be reasonably necessary for the efficient maintenance and operation of services. The grantee is authorized to install and maintain its poles, wires, and other facilities over and across public property, including streets, highways, forest reserves, and other similar property of the Government of Philippines, its branches or any of its instrumentalities. The grantee may acquire such private property as is actually necessary for the realization of the purposes for which this franchise is granted: Provided, That proper condemnation proceedings shall have been instituted and just compensation paid.
SEC. 10. Right of Eminent Domain. — Subject to the limitations and procedures prescribed by law, the grantee is authorized to exercise the right of eminent domain insofar as it may be reasonably necessary for the efficient maintenance and operation of services. The grantee is authorized to install and maintain its poles, wires and other facilities over and across public property, including streets, highways, forest reserves and other similar property of the Government of the Philippines, its branches or any of its instrumentalities. The grantee may acquire such private property as is actually necessary for the realization of the purposes for which this franchise is granted: Provided, That proper condemnation proceedings shall have been instituted and just compensation paid.
Furthermore, the legislative franchises of other electricity distribution utilities similarly situated to More Electric do not contain a provision allowing it to hire the employees of a competitor. Indeed, More Electric Company will operate the electricity distribution system by acquiring the assets, even the workforce of Panay Electric Company, as shown by Section 17of Republic Act No. 11212.
SECTION 17. Transition of Operations. — In the public interest and to ensure uninterrupted supply of electricity, the current operator, Panay Electric Company, Inc. (PECO), shall in the interim be authorized to operate the existing distribution system within the franchise area, as well as implement its existing power supply agreements with generation companies that had been provisionally or finally approved by the ERC until the establishment or acquisition by the grantee of its own distribution system and its complete transition towards full operations as determined by the ERC, which period shall in no case exceed two (2) years from the grant of this legislative franchise.

Upon compliance with its rules, the ERC shall grant PECO the necessary provisional certificate of public convenience and necessity (CPCN) covering such interim period. The applicable generation rate shall be the provisional or final rate approved by the ERC.

This provisional authority to operate during the transition period shall not be construed as extending the franchise of PECO after its expiration on January 18, 2019, and it shall not prevent the grantee from exercising the right of eminent domain over the distribution assets existing at the franchise area as provided in Section 10 of this Act. During such interim period, the ERC shall require PECO to settle the full amount which the ERC has directed to refund to its customers in connection with all the cases filed against it.

To reduce the length of the transition period, the ERC and all agencies issuing the requisite licenses shall prioritize all applications relevant to the establishment and operation of the distribution system under its franchise.

The grantee shall, as far as practicable and subject to required qualifications, accord preference to hiring former employees of PECO upon commencement of business operations.

An information dissemination campaign regarding public services and operations of the grantee shall be made to all end-users in the franchise area.

The grantee and PECO shall jointly ensure that employees not hired by the grantee shall receive all separation and/or retirement benefits they are entitled to in accordance with applicable laws.

The DOE shall, during the transition, ensure that there will be uninterrupted supply of electricity in the existing franchise area.
However, it must be stressed that More Electric never ventured in electricity distribution. As alleged by Panay Electric Company, an allegation More Electric did not controvert, More Electric was originally named "MORE Minerals Corporation" and was engaged in mining activities.[17] More Electric's application to operate the power distribution utility in Iloilo was embodied in House Bill 6023, entitled "Granting MORE Minerals Corporation a Franchise to Establish, Operate and Maintain for Commercial Purposes and in the Public Interest, a Distribution System for the Conveyance of Electric Power to End Users in the City of Iloilo, Province of Iloilo.''[18] It was only during the pendency of its application to operate the electricity distribution system in Iloilo that More Electric changed its corporate name and amended its Articles of Incorporation to reflect electric power distribution as its primary corporate purpose.[19] Further, during the Senate hearings on its version of House Bill 6023, the following exchange transpired between Senator Francis Escudero and More Electric Representatives, Mr. Roel Castro and Atty. Silverio Benny J. Tan:

SEN. ESCUDERO: And that's what you intend to do if you are granted the franchise. You will file a case, deposit 15 percent of the assessed value of the poles, the wires and everything and take over.

MR. CASTRO: Yes, Your Honor, because that is provided by law.

SEN. ESCUDERO: Wala pang law. Hindi pa namin kayo binibigyan ng eminent domain.

MR. CASTRO: If ever, if ever.                                                                      

SEN. ESCUDERO: If you are given eminent domain. MR. CASTRO: Yes, sir.

SEN. ESCUDERO: If we do not give you the power of eminent domain, how will you go about it?

MR. TAN: Your Honor, sir, it cannot be done if there is no eminent domain unless [Panay Electric Company] agrees to sell to us. I'd like to say, sir, that eminent domain is an integral part of all franchises for distribution utilities. The only difference here is the specification that it will cover poles and the distribution assets.[20]
All these, to my mind, show that unwarranted privileges were given to a corporation that has never ventured in the business of electricity distribution.

Conversely, Section 10 of Republic Act No. 11212 violates the equal protection clause because it discriminates against a particular entity, i.e., Panay Electric Company. Nowhere does Section 10 mention Panay Electric Company, at least directly. However, the provision cannot be read in any other way except that More Electric will conduct its business at the expense of Panay Electric Company.

To recall, Section 10 enables More Electric to "acquire such private property as is actually necessary for the realization of the purposes for which this franchise is granted, including, but not limited to poles, wires, cables, transformers, switching equipment and stations, buildings, infrastructure, machineries and equipment previously, currently or actually used, or intended to be used, or have been abandoned, unused or underutilized."

Further, the owner of these distribution facilities "previously, currently or actually used" is no other than Panay Electric Company, it being the previous franchise holder that had exclusive authority to operate an electricity distribution facility in Iloilo City. While Section 10 seemingly allows More Electric to expropriate property other than those owned by Panay Electric Company, still, More Electric could operate an electricity distribution business and prevent further brownouts in Iloilo only by forcefully acquiring Panay Electric Company's assets.

In its Petition for Review on Certiorari, More Electric repeatedly averred that Panay Electric Company's franchise had already expired, and More Electric, being the current franchise holder, has the sole authority to operate the power distribution system in Iloilo.[21] It is true that a power distribution system is a public utility that may be operated only with a legislative franchise. Furthermore, there cannot be any vested right in the continued grant of a franchise, a franchise being a mere privilege that is always subject to amendment or even repeal by the State.[22]

Nevertheless, a franchise only relates to the privilege of operating a public utility,"[23] The ownership over the assets used to operate the public utility, on the other hand, is an entirely different matter. The assets of the private corporation operating a public utility are private property, and ownership over these assets remains with the former franchise holder, notwithstanding the expiration of the franchise.

The right of ownership is composed of a bundle of rights.[24] These rights include, firstly, the right to enjoy the thing owned, or jus utendi, which further includes the right to receive from the thing what it produces.

Second, the owner of a thing also has the right to consume it by its use, otherwise called jus abutendi.

Third, the right to dispose, or jus disponendi, is also included in this bundle of rights.

Finally, an owner has the right to exclude others from the possession of the thing or jus vindicandir.[25]

With the expiration of the franchise, what the former franchise holder surrenders is the right to use the property, and the right to enjoy income from it. What remains are: (1) the right to dispose of the property; as well as (2) the right to exclude others from its possession. Except, if as one of the terms of the grant of the franchise, the former franchise holder likewise surrendered these rights.

That a franchise holder owns the assets used to operate the public utility is precisely why there are eminent domain provisions in legislative franchises. Specifically for Panay Electric Company, among the terms of its franchise is that it surrender the equipment used for electricity distribution at fair market value, should the Government choose to operate and maintain for itself the electricity distribution system.[26] Panay Electric Company's franchise expired without the Government exercising the privilege in Section 4 of Republic Act No. 5360. Therefore, Panay Electric Company remains the owner of the electricity distribution system it had established in Iloilo, with the concomitant right to dispose of or exclude others from possessing the electricity distribution system.

Consequently, just because More Electric is the current franchise holder, it does not automatically mean that it can operate the power distribution system unquestionably owned by another private entity. More Electric assumed wrongly that only it can operate the distribution system in Iloilo owned by Panay Electric Company.

All these show that there is no compelling state interest in granting benefits to a company that has neither the experience nor the expertise in electricity distribution. I cannot see how the interests of the electricity consumers in Iloilo City will be served by putting an inexperienced entity as the electricity distributor in the City, not to mention that it will be operating as a monopoly and, therefore, has little incentive to operate efficiently.

All told, Sections 10 and 17 of Republic Act No. 11212 violate the equal protection clause.

II

Apart from being a form of class legislation, Section 10 of Republic Act No. 11212 violates Article III, Section 9 of the Constitution, which provides:
SECTION 9. Private property shall not be taken for public use without just compensation.
As it is worded, Article III, Section 9 is a restraint on the State's inherent and ultimate power of eminent domain,[27] consistent with the purpose of the Constitution: to promote the stability of ownership of private property.[28] Article III, Section 9 requires that the taking of private property be for public use; and that the owner of the private property sought to be expropriated be paid just compensation.

We deal here with the requirement of "public use." In its traditional and literal sense, "public use" means "public employment or the actual use by the public[29]" There is no question that the taking of private property for the building of roads, schools, or hospitals for the use of the public falls under this notion of actual use. "Public use," however, evolved to mean "public purpose[,]"[30] "public advantage or benefit[,]"[31] and even "public welfare."[32] It is under this expanded meaning of public use that expropriations for agrarian reform[33] and urban development[34] were allowed by this Court.

The State may delegate the exercise of the power of eminent domain to political units[35] or agencies[36] as well as public utilities,[37] However, considering that the power is merely delegated, "[t]he authority to condemn is to be strictly construed in favor of the owner and against the condemnor."[38] As explained in Jesus is Lord Christian School Foundation, Inc. v. Municipality (now city) of Pasig, Metro Manila:[39]
Strict Construction and Burden of Proof
The exercise of the right of eminent domain, whether directly by the State or by its authorized agents, is necessarily in derogation of private rights. It is one of the harshest proceedings known to the law. Consequently, when the sovereign delegates the power to a political unit or agency, a strict construction will be given against the agency asserting the power. The authority to condemn is to be strictly construed in favor of the owner and against the condemnor. When the power is granted, the extent to which it may be exercised is limited to the express terms or clear implication of the statute in which the grant is contained.

Corollarily . . . the condemnor, has the burden of proving all the essentials necessary to show the right of condemnation. It has the burden of proof to establish that it has complied with all the requirements provided by law for the valid exercise of the power of eminent domain.[40] (Citations omitted)
Considering that the power of eminent domain was merely delegated to More Electric, its authority to expropriate must be strictly construed against it.

It is settled that the business of electricity distribution is for a public purpose and is imbued with public interest.[41] It is for this reason that the operation of an electricity distribution system requires a national franchise from Congress.

However, if private property is taken for the same public use to which the property was originally devoted, how the expropriator will serve the public purpose better than the former owner should be examined. For if the public is not better off with the taking of the property, then there is no true expropriation. There is only a transfer of property from one entity to another. All the exercise of eminent domain results in is a change in the "application of the profits,"[42] directly serving proprietary interests. Any public benefit is only pretended or, at best, incidental.

Here, the taking is for the exact same use to which the property sought to be expropriated was originally devoted. Keeping in mind that the expropriator will be monopolistically operating the electricity distribution system, the taking is not for the benefit of the public, but for the private and sole benefit of the expropriator.

It is undisputed that More Electric will be distributing electricity in Iloilo City, the same public use for which Panay Electric Company (the owner of the properties More Electric sought to expropriate) operated the electricity distribution system. In addition, More Electric has no experience in electricity distribution and has no assets of its own to distribute electricity in Iloilo City. With mining being its business,[43] it was only during the pendency of its application for a franchise to operate an electricity distribution system in Iloilo City did it change its name from "MORE Minerals Corporation" to the present "More Electric Power Corporation."[44]

Moreover, its primary corporate purpose was only recently changed to electricity distribution.[45] On its application for a franchise to operate the electricity distribution system in Iloilo City—and as unabashedly admitted by its representatives during the Congressional hearings—More Electric will primarily rely, as it has begun to rely, on the eminent domain provisions of its franchise to operate Panay Electric Company's distribution system.[46]

Furthermore, like Panay Electric Company, More Electric would still be operating as a monopoly. Thus, the disadvantages of a monopoly, including having a captive market for electricity consumption and the disincentive to operate efficiently, will persist in Iloilo City. These show that the transfer of ownership over the electricity distribution assets from Panay Electric Company to More Electric Power is not for the benefit of the public. The transfer of ownership will only change who gets the profits from operating the electricity distribution system in Iloilo City.

With no effect on the welfare of the consumers of electricity in Iloilo City, coupled with the lack of experience and monopolistic operation of More Electric, the direct and only beneficiary of the transfer is no other than More Electric, the new entity who will be receiving the profits from the operation of the electricity distribution set up by Panay Electric Company.

Worse, More Electric unjustly enriches itself by illegally avoiding costs for constructing an electricity distribution infrastructure, as well as the costs of negotiations to buy the property in the open market. More Electric will only be paying the assessed value of these properties. Irrespective of the quality of service of Panay Electric Company through the years, it still owns the distribution facilities and made significant investments for its electricity distribution business. At the very least, Panay Electricity is entitled to the present value of the properties in which it had invested.

The present case is nothing like the exercise of eminent domain for the distribution of land to landless farmers in Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform[47] or for urban renewal and distribution of low-cost housing to the poor in Sumulong v. Hon. Guerrero.[48] The exercise of eminent domain in these cases were done to promote social justice and implement the following provisions of the Constitution:

ARTICLE XII
National Economy and Patrimony

SECTION 6. The use of property bears a social function, and all economic agents shall contribute to the common good. Individuals and private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish, and operate economic enterprises, subject to the duty of the State to promote distributive justice and to intervene when the common good so demands.

ARTICLE XIII

Social Justice and Human Rights

SECTION 1. The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic, and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good.

To this end, the State shall regulate the acquisition, ownership, use, and disposition of property and its increments.

Agrarian and Natural Resources Reform

SECTION 4. The State shall, by law, undertake an agrarian reform program founded on the right of farmers and regular farmworkers, who are landless, to own directly or collectively the lands they till or, in the case of other farmworkers, to receive a just share of the fruits thereof. To this end, the State shall encourage and undertake the just distribution of all agricultural lands, subject to such priorities and reasonable retention limits as the Congress may prescribe, taking into account ecological, developmental, or equity considerations, and subject to the payment of just compensation. In determining retention limits, the State shall respect the right of small landowners. The State shall further provide incentives for voluntary land-sharing.

. . . .

Urban Land Reform and Housing

SECTION 9. The State shall, by law, and for the common good, undertake, in cooperation with the public sector, a continuing program of urban land reform and housing which will make available at affordable cost decent housing and basic services to underprivileged and homeless citizens in urban centers and resettlements areas. It shall also promote adequate employment opportunities to such citizens. In the implementation of such program the State shall respect the rights of small property owners.
No social justice is achieved in More Electric expropriating the properties of Panay Electric Company. On the contrary, Section 10 of Republic Act No. 11212 enables the unjust enrichment of one private entity at the expense of another. Any benefit the public will obtain is only incidental, because the actual purpose of the transfer is to grant a private benefit.

The cases cited by More Electric to justify its exercise of eminent domain are inapplicable here. In City of Manila v. Chinese Community of Manila,[49] where this Court upheld the expropriation of parts of the Manila Chinese Cemetery, the expropriation was done to extend Rizal Avenue. This is a public purpose different from maintaining a public cemetery, unlike here where expropriation was resorted to for the exact same public use to which the properties were originally devoted.

In Municipality of Paete v. National Waterworks and Sewerage Authority,[50] the right of eminent domain was exercised by the National Waterworks and Sewerage Authority, an instrumentality of the national government, over the waterworks system owned by Municipality of Paete, a local government unit. In Municipality of Paete, the ownership over the waterworks system remained with the public, unlike in the present case where the transfer is from one private entity to another.

In Republic v. Mupas,[51] the transfer of the Ninoy Aquino International Airport-Terminal III was to the National Government, not to a private entity. Furthermore, the Ninoy Aquino International Airport-Terminal III was built under a build-operate-transfer scheme, which commanded a payment more than the assessed value of the property expropriated.

For its part, the majority cites the American cases of Long Island Water Supply Co. v. Brooklyn,[52] Eastern Railroad Company v. Boston and Maine Road,[53] and the highly criticized cases of Berman v. Parker[54] and Kelo v. City of New London[55] to rule that a taking for the same public purpose is valid.[56] The majority adds that expropriation of private property is valid, even if a private entity benefits, so long as it is for economic development.[57]

To say the least, these cases are foreign jurisprudence and are not binding in this jurisdiction. The facts of these cases are not even on all fours with the facts of the present case. These American cases, therefore, are inapplicable here.

Long Island Water Supply Co. v. Brooklyn,[58] decided in 1897, involved a water supply company organized by residents of New Lots in Long Island, New York. The State of New York then passed a statute annexing the town of New Lots to the City of Brooklyn. The same statute allowed the City of Brooklyn to expropriate the properties of the water company, specifically its water reservoir. Long Island Water Supply Co. questioned the expropriation, arguing that it impaired its contract with New Lots, which allowed the water company to collect a certain amount per water hydrant for 25 years. The United States Supreme Court then upheld the expropriation, ruling that the supply of water to a city is for public use.

Hence, Long Island Water Supply Co.[59] is inapplicable because ownership over the water reservoir went to the public, unlike here where the transfer of ownership would be from one private entity to another.

Eastern Railroad Company v. Boston & Maine Railroad[60] was decided by the Massachusetts Supreme Judicial Court in 1872. It involved the expropriation of a piece of land by Eastern Railroad Company for the statutory puipose of "increasing the terminal facilities and affording convenient access to the passenger depot[.]"[61] Boston and Maine Railroad, also a railroad company and the owner of the land sought to be expropriated, had been using it for the delivery of bricks under a contract. The Massachusetts Supreme Judicial Court upheld the expropriation of the land, ruling that the power of eminent domain is inherent and immense that it may be exercised to expropriate property devoted to a public use similar to which the property was originally devoted.

Further, in Eastern Railroad Company, the initial public use was for the delivery of bricks. Eastern Railroad Company expropriated the property for a similar but nonetheless different public use: to increase the facilities in its passenger depot, i.e., for the transport of passengers.

Like Long Island Water Supply Co., the case of Eastern Railroad Company cannot be applied here. As conceded by the majority in the ponencia, what Eastern Railroad Company allowed was the expropriation of private property for a "similar but not identical public use."[62] Here, Section 10 of Republic Act No. 11212 allows for the taking of private property for the exact same public use to which the property was originally devoted.

The 1954 case of Berman v. Parker[63] involved the redevelopment of a blighted portion of Washington, D.C. that required the expropriation of the properties located in the area. Among the properties sought to be condemned was a department store. Its owner then questioned the expropriation because: (1) the department store was not itself blighted; and (2) "to develop a better balanced, more attractive community" was not for public use.[64]

Rejecting the argument, the United States Supreme Court upheld the expropriation, deferring to the legislature as the "main guardian of the public needs to be served by social legislation."[65] Ultimately, it held that the department store may be validly expropriated because "[i]t is within the power of the legislature to determine that the community should be beautiful as well as healthy, spacious as well as clean, well-balanced as well as carefully patrolled.[66]

In 2005, the United States Supreme Court decided the now infamous Kelo v. The City of New London.[67] Kelo involved the expropriation of houses in Fort Trumbull, New London City, Connecticut for the area's redevelopment into a state park and Pfizer research facility. The New London Development Corporation, a private and nonprofit entity, undertook to facilitate the redevelopment project, which the city legislature expected "to create in excess of 1,000 jobs"[68] and would allegedly "increase tax and other revenues, and. . . revitalize [the] economically distressed city including its downtown and waterfront areas."[69]

The owners of the houses, including Susette Kelo, who had been living in her home since 1997, and Wilhelmina Dery, who was bom in her home in 1918 and had lived there all her life, questioned the purpose of the expropriation. They argued that the proposed use of the area does not satisfy the public use requirement under the Fifth Amendment.

In a 5-4 decision, the United States Supreme Court[70] upheld the expropriation, adopting the Berman ruling and deferring to the City's legislative judgment of public use. It was in Kelo where the United States Supreme Court held that private property may be taken for purposes of "economic development," the promotion of which "is a traditional and long accepted function" of government.[71]

Strong dissents were registered in Kelo. In Justice Sandra Day O'Connor's dissenting opinion, she decried that:
[u]nder the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded—i.e. given to an owner who will use it in a way that the legislature deems more beneficial to the public—in the process.[72]
Chief Justice William Rehnquist joined her in her dissent, along with Justices Antonin Scalia and Clarence Thomas.

Expounding further on why "economic development" is too vague to be considered as "public use" within the meaning of the Fifth Amendment, she said:
In moving away from our decisions sanctioning the condemnation of harmful property use, the Court today significantly expands the meaning of public use. It holds that the sovereign may take private property currently put to ordinary private use, and give it over for new, ordinary private use, so long as the new use is predicted to generate some secondary benefit for the public—such as increased tax revenue, more jobs, maybe even aesthetic pleasure. But nearly any lawful use of real private property can be said to generate some incidental benefit to the public. Thus, if predicted (or even guaranteed) positive side-effects are enough to render transfer from one private party to another constitutional, then the words "for public use" do not realistically exclude any takings, and thus do not exert any constraint on the eminent domain power.[73] (Emphasis in the original)
Justice O'Connor warned that under the Kelo ruling, only those with significant influence and power in the political process will be benefited by "economic development" takings:
Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms. As for the victims, the government now has license to transfer property from those with fewer resources to those with more. The Founders cannot have intended this perverse result. "[T]hat alone is a just government," wrote James Madison, "which impartially secures to every man, whatever is his own"[74] (Emphasis in the original)
Justice Thomas agreed with Justice O'Connor, but went further to say that the United States Supreme Court had unduly expanded the meaning of "public use." Thus, he recommended that "public use" be narrowly reinterpreted to mean "use by the public," the way the Framers of the Constitution of the United States had intended it to be.
"When we depart from the natural import of the term 'public use,' and substitute for the simple idea of a public possession and occupation, that of public utility, public interest, common benefit, general advantage or convenience. . . we are afloat without any certain principle to guide us." . . . Once one permits takings for public purposes in addition to public uses, no coherent principle limits what could constitute a valid public use. . . It is difficult to imagine how a court could find that a taking was purely private except by determining that the taking did not, in fact, rationally advance the public interest. . . The Court is therefore wrong to criticize the "actual use" test as "difficult to administer." ... It is far easier to analyze whether the government owns or the public has a legal right to use the taken property than to ask whether the taking has a "purely private purpose" - unless the Court means to eliminate public use scrutiny of takings entirely.[75]
Further, Justice Thomas said that the courts are not duty-bound to defer to legislative determinations of public use:
There is no justification, however, for affording almost insurmountable deference to legislative conclusions that a use serves a "public use." To begin with, a court owes no deference to a legislature's judgment concerning the quintessentially legal question of whether the government owns, or the public has a legal right to use, the taken property. Even under the "public purpose" interpretation, moreover, it is most implausible that the Framers intended to defer to legislatures as to what satisfies the Public Use Clause, uniquely among all the express provisions of the Bill of Rights.[76]
The foregoing discussions of Berman and Kelo show that the cases do not apply here. The properties were expropriated in Berman and Kelo for a public use different from that to which they were initially devoted to. Besides, More Electric sought to expropriate Panay Electric Company's properties, not for economic development, but supposedly for the uninterrupted supply of electricity in Iloilo.

Further, diametrically opposed to the rulings in Berman and Kelo, this Court's 1919 ruling in City of Manila v. Chinese Community of Manila[77] remains true: whether a taking under the power of eminent domain is for public use is a judicial question. In City of Manila v, Chinese Community of Manila:[78]
It is true that many decisions may be found asserting that what is a public use is a legislative question, and many other decisions declaring with equal emphasis that it is a judicial question. But, as long as there is a constitutional or statutory provision denying the right to take land for any use other than a public use, it occurs to us that the question that whether any particular use is a public one or not is ultimately, at least, a judicial question. The legislature may, it is true, in effect declare certain uses to be public, and, under the operation of the well-known rule that a statute will not be declared to be unconstitutional except in a case free, or comparatively free, from doubt, the courts will certainly sustain the action of the legislature, unless it appears that the particular use is clearly not of a public nature. The decisions must be understood with this limitation; for, certainly, no court of last resort will be willing to declare that any and every purpose which the legislature might happen to designate as a public use shall be conclusively held to be so, irrespective of the purpose in question and of its manifestly private character. Blackstone in his Commentaries on the English Law remarks that, so great is the regard of the law for private property that it will not authorize the least violation of it, even for the public good, unless there exists a very great necessity therefor.[79] (Emphasis in the original)
The present case is a classic example of abuse of eminent domain powers and a deprivation of property without due process of law. Under a semblance of legitimacy, a private entity is allowed to take private property for its own proprietary interests. A law was passed to mask a forced corporate takeover by a private entity. These practices should have no place in a fair and just society.

ACCORDINGLY, I vote to DENY the Petitions for Review on Certiorari. The July 1, 2019 Judgment of the Regional Trial Court, Branch 209, Mandaluyong City in Civil Case No. R-MND-19-00571 must be AFFIRMED. Sections 10 and 17 of Republic Act No. 11212 are UNCONSTITUTIONAL.



[1] An Act Granting MORE Electric and Power Corporation a Franchise to Establish, Operate, and Maintain, for Commercial Purposes and in the Public Interest, a Distribution System for the Conveyance of Electric Power to the End Users in the City of Iloilo, Province of Iloilo, and Ensuring the Continuous and Uninterrupted Supply of Electricity (2019).

[2] Lopez, Jr. v. Commission on Elections, 221 Phil. 321, 331(1985) [Per J. Fernando, En Banc].

[3] People v. Chan, 65 Phil. 611, 613 (1938) [Per J. Concepcion, First Division].

[4] British American Tobacco v. Camacho, 584 Phil. 489, 524-525 (2008) [Per J. Ynares-Santiago, En Banc].

[5] Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, 256 Phil. 777, 808 (1989) [Per J. Cruz, En Banc].

[6] Central Bank (now Bangko Sentral ng Pilipinas) Employees Association, Inc. v. Bangko Sentral ng Pilipinas, 487 Phil. 531, 586 (2004) [Per J. Puno, En Banc].

[7] Id.

[8] See J. Leonardo-De Castro's Concurring Opinion in Garcia v. Judge Drilon, et al., 712 Phil. 44, 124 (2013), citing Central Bank (now Bangko Sentral ng Pilipinas) Employees Association, Inc. v. Bangko Sentral ng Pilipinas, 487 Phil. 531, 583-584 (2004).

[9] Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, 256 Phil. 777, 809 (1989) [Per J. Cruz, En Banc].

[10] RULES OF COURT, Rule 67, Sec. 10 provides:

SECTION 2. Entry of Plaintiff Upon Depositing Value With Authorized Government Depositary. — Upon the filing of the complaint or at any time thereafter and after due notice to the defendant, the plaintiff shall have the right to take or enter upon the possession of the real property involved if he deposits with the authorized government depositary an amount equivalent to the assessed value of the property for purposes of taxation to be held by such bank subject to the orders of the court. Such deposit shall be in money, unless in lieu thereof the court authorizes the deposit of a certificate of deposit of a government bank of the Republic of the Philippines payable on demand to the authorized government depositary.

If personal property is involved, its value shall be provisionally ascertained and the amount to be deposited shall be promptly fixed by the court.

After such deposit is made the court shall order the sheriff or other proper officer to forthwith place the plaintiff in possession of the property involved and promptly submit a report thereof to the court with service of copies to the parties.

[11] CONST, Art. III, sec. 9 provides:

SECTION 9. Private property shall not be taken for public use without just compensation.

[12] In Export Processing Zone Authority v. Dulay, 233 Phil. 313, 326 (1987) [Per J. Gutierrez, Jr. En Banc], this Court said:

The determination of "just compensation" in eminent domain cases is a judicial function. The executive department or the legislature may make the initial determinations but when a party claims a violation of the guarantee in the Bill of Rights that private property may not be taken for public use without just compensation, no statute, decree, or executive order can mandate that its own determination shall prevail over the court's findings. Much less can the courts be precluded from looking into the "just-ness" of the decreed compensation.

[13] In National Power Corporation v. Spouses Zabala, 702 Phil. 491, 500 (2013) [Per J. Del Castillo, Second Division], this Court said:

The payment of just compensation for private property taken for public use is guaranteed no less by our Constitution and is included in the Bill of Rights. As such, no legislative enactments or executive issuances can prevent the courts from determining whether the right of the property owners to just compensation has been violated. It is a judicial function that cannot "be usurped by any other branch or official of the government." Thus, we have consistently ruled that statutes and executive issuances fixing or providing for the method of computing just compensation are not binding on courts and, at best, are treated as mere guidelines in ascertaining the amount thereof. (Citations omitted)

[14] See Association of Small Landowners v. Hon. Secretary of Agrarian Reform, 256 Phil. 777, 818 (1989) [Per J. Cruz, En Banc], where this Court equated just compensation to the fair market value of the property taken, thus:

In J.M. Tuason & Co. v. Land Tenure Administration, this Court held:

It is well-settled that just compensation means the equivalent for the value of the property at the time of its taking. Anything beyond that is more, and anything short of that is less, than just compensation. It means a fair and full equivalent for the loss sustained, which is the measure of the indemnity, not whatever gain would accrue to the expropriating entity. The market value of the land taken is the just compensation to which the owner of condemned property is entitled, the market value being that sum of money which a person desirous, but not compelled to buy, and an owner, willing, but not compelled to sell, would agree on as a price to be given and received for such property. (Citation omitted)

[15] LOC. GOV. CODE., sec. 199 (h) provides:

SECTION 199. Definition of Terms. - When used in this Title, the term:

(h) "Assessed Value" is the fair market value of the real property multiplied by the assessment level. It is synonymous to taxable value[.]

[16] LOC. GOV. CODE., sec. 199 (1).

[17] Rollo (G.R. No. 248061), p. 607. Comment.

[18] Id. at 578.

[19] Id. at 579.

[20] Id. at 603-604.

[21] Rollo (G.R. No. 248061), p. 15.

[22] CONST, art. XII, sec. 11 provides:

SECTION 11. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty per centum of whose capital is owned by such citizens, nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires. The State shall encourage equity participation in public utilities by the general public. The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association must be citizens of the Philippines.

See The Provincial Bus Operators Association of the Philippines v. Department of Labor and Employment, G.R. No. 202275, July 17, 2018, 872 SCRA 50 [Per J. Leonen, En Banc],

[23] CONST., Art. XII, sec. 11 provides:

SECTION 11. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty per centum of whose capital is owned by such citizens, nor shall such franchise, certificate or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires. The State shall encourage equity participation in public utilities by the general public. The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association must be citizens of the Philippines.

[24] Republic v. Ortigas and Company Limited Partnership, 728 Phil. 277, 291-292 (2014) [Per J. Leonen, Third Division].

[25] Id. See footnote 50 for the discussion on the bundle of rights.

[26] Republic Act No. 5360 (1968), sec. 4 provided:

SECTION 4. It is expressly provided that in the event the Government should desire to operate and maintain for itself the system and enterprise herein authorized, the grantee shall surrender its franchise and will turn over to the government all equipment therein at fair market value.

[27] Jesus is Lord Christian School Foundation, Inc. v. Municipality (now city) of Pasig, Metro Manila, 503 Phil. 845, 862 (2005) [Per J. Callejo, Sr., Second Division], citing Heirs of Alberto Sitguilan v. City of Mandaluyong, 384 Phil. 676 (2000) [Per J. Gonzaga-Reyes, Third Division].

[28] The Provincial Bus Operators Association of the Philippines v. Department of Labor and Employment, G.R. No. 202275, July 17, 2018, 872 SCRA50. 114 [Per J. Leonen, En Banc].

[29] Republic v. Court of Appeals, 433 Phil. 106, 119 (2002) [Per J. Vitug, First Division],

[30] Id.

[31] Id.

[32] Manosca v. Court of Appeals, 322 Phil. 442, 451 (1996) [Per J. Vitug, First Division],

[33] See Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, 256 Phil. 777 (1989) [Per J. Cruz, En Banc].

[34] See Sumulong v. Hon. Guerrero, 238 Phil. 462 (1987) [Per J. Cortes, En Banc].

[35] LOC. Gov. CODE, Book 1, Title 1, Chapter 1, sec. 19 provides:

SECTION 19. Eminent Domain. — A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose or welfare for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws: Provided, however, That the power of eminent domain may not be exercised unless a valid and definite offer has been previously made to the owner, and such offer was not accepted: Provided, further, That the local government unit may immediately take possession of the property upon the filing of the expropriation proceedings and upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market value of the property based on the current tax declaration of the property to be expropriated: Provided, finally, That, the amount to be paid for the expropriated property shall be determined by the proper court, based on the fair market value at the time of the taking of the property.

[36] See Jesus is Lord Christian School Foundation, Inc. v. Municipality (now city) of Pasig, Metro Manila, 503 Phil. 845 (2005) [Per J. Callejo, Sr., Second Division].

[37] See Jesus is Lord Christian School Foundation, Inc. v. Municipality (now city) of Pasig, Metro Manila, 503 Phil. 845, 874 (2005) [Per L Callejo, Sr., Second Division].

[38] See for instance Manila Electric Company v. Pineda, 283 Phil. 90 (1992) [Per J. Medialdea, First Division].

[39] Id.

[40] Id. at 862-863.

[41] Republic Act No. 9136 (2001), sec. 29 partly provides:

SECTION 29. Supply Sector. - The supply sector is a business affected with public interest. Except for distribution utilities and electric cooperatives with respect to their existing franchise areas, all suppliers of electricity to the contestable market shall require a license from the ERC.

[42] See Concurring Opinion of J. McLean in The West River Bridge Company v. Dix, et al., 47 U.S. 507, 537 (1848) [Per J. Daniel, Supreme Court of the United States].

[43] Rollo (G.R. No. 248061), p. 578. Comment.

[44] Id.

[45] Id. at 579.

[46] Id. at 603-604.

[47] 256 Phil. 777 (1989) [Per J. Cruz, En Banc].

[48] 238 Phil. 462 (1987) [Per J. Cortes, En Banc].

[49] 40 Phil. 349 (1919) [Per J. Johnson, First Division].

[50] 144 Phil. 180 (1970) [Per J. Dizon, En Banc].

[51] 769 Phil. 21 (2015) [Per J. Brion, En Banc].

[52] 166 U.S. 685 (1897) [Per J. Brewer, United States Supreme Court].

[53] 111 Mass. 125 (1872) [Per J. Colt, Massachusetts Supreme Judicial Court].

[54] 348 U.S. 26 (1954) [Per J. Douglas, United States Supreme Court].

[55] 545 U.S. 469 (2005) [Per J. Stevens, United States Supreme Court].

[56] Ponencia, p. 15.

[57] Id.

[58] 166 U.S. 685 (1897) [Per J. Brewer, United States Supreme Court].

[59] Id.

[60] 111 Mass. 125 (1872) [Per J. Colt, Massachusetts Supreme Judicial Court].

[61] Id. at 125.

[62] Ponencia, p. 15.

[63] 348 U.S. 26 (1954) [Per J. Douglas, United States Supreme Court].

[64] Id. at 31.

[65] Id. at 32.

[66] Id. at 33.

[67] 545 U.S. 469 (2005) [Per J. Stevens, United States Supreme Court].

[68] Slip opinion of Kelo v. The City of New London, p. 1, available at < https://www.law.cornell.edu/supct/pdf/04-108P.ZO > (Last visited on August 17, 2020).

[69] Id.

[70] Justice Stevens delivered the opinion of the Court and was joined by Justices Kennedy, Souter, Ginsburg, and Breyer.

[71] Slip opinion of Kelo v. The City of New London, p. 14, available at < https://www.law.cornell.edu/supct/pdf/04-108P.ZO > (Last visited on August 17, 2020).

[72] Slip opinion of J. O'Connor's Dissent in Kelo v. The City of New London, p. 1, Available at < https://www.law.cornell.edu/supct/pdf/04-108P.ZD > (Last visited on August 17, 2020).

[73] Id. at 8-9.

[74] Id. at 12-13.

[75] Slip opinion of J. Thomas' Dissent in Kelo v. The City of New London, pp. 16-17, Available at < https://www.law.cornell.edu/supct/pdf/04-108p.ZDI > (Last visited on August 17, 2020).

[76] Id. at 13-14.

[77] 40 Phil. 349 (1919) [Per J. Johnson, First Division].

[78] Id.

[79] Id. at 364-365.






SEPARATE OPINION 

                   
CAGUIOA, J.:

Assailed before the Court are Sections 10 and 17 of Republic Act No. (R.A.) 11212,[1] which provide:
SEC. 10. Right of Eminent Domain. - Subject to the limitations and procedures prescribed by law, the grantee is authorized to exercise the power of eminent domain insofar as it may be reasonably necessary for the efficient establishment, improvement, upgrading, rehabilitation, maintenance and operation of its services. The grantee is authorized to install and maintain its poles wires, and other facilities over, under, and across public property, including streets, highways, parks, and other similar property of the Government of the Philippines, its branches, or any of its instrumentalities. The grantee may acquire such private property as is actually necessary for the realization of the purposes for which this franchise is granted, including, but not limited to poles, wires, cables, transformers, switching equipment and stations, buildings, infrastructure, machineries and equipment previously, currently or actually used, or intended to be used, or have been abandoned, unused or underutilized, or which obstructs its facilities, for the operation of a distribution system for the conveyance of electric power to end users in its franchise area: Provided, That proper expropriation proceedings shall have been instituted and just compensation paid:

Provided, further, That upon the filing of the petition for expropriation, or at any time thereafter, and after due notice to the owner of the property to be expropriated and the deposit in a bank located in the franchise area of the full amount of the assessed value of the property or properties, the grantee shall be entitled to immediate possession, operation, control, use and disposition of the properties sought to be expropriated, including the power of demolition, if necessary, notwithstanding the pendency of other issues before the court, including the final determination of the amount of just compensation to be paid. The court may appoint a representative from the ERC as a trial commissioner in determining the amount of just compensation. The court may consider the tax declarations, current audited financial statements, and rate-setting applications of the owner or owners of the property or properties being expropriated in order to determine their assessed value.

x x x x

SEC. 17. Transition of Operations. — In the public interest and to ensure uninterrupted supply of electricity, the current operator, Panay Electric Company, Inc. (PECO), shall in the interim be authorized to operate the existing distribution system within the franchise area, as well as implement its existing power supply agreements with generation companies that had been provisionally or finally approved by the ERC until the establishment or acquisition by the grantee of its own distribution system and its complete transition towards full operations as determined by the ERC, which period shall in no case exceed two (2) years from the grant of this legislative franchise.

Upon compliance with its rules, the ERC shall grant PECO the necessary provisional certificate of public convenience and necessity (CPCN) covering such interim period. The applicable generation rate shall be the provisional or final rate approved by the ERC.

This provisional authority to operate during the transition period shall not be construed as extending the franchise of PECO after its expiration on January 18, 2019, and it shall not prevent the grantee from exercising the right of eminent domain over the distribution assets existing at the franchise area as provided in Section 10 of this Act. During such interim period, the ERC shall require PECO to settle the full amount which the ERC has directed to refund to its customers in connection with all the cases filed against it.

To reduce the length of the transition period, the ERC and all agencies issuing the requisite licenses shall prioritize all applications relevant to the establishment and operation of the distribution system under its franchise.

The grantee shall, as far as practicable and subject to required qualifications, accord preference to hiring former employees of PECO upon commencement of business operations.

An information dissemination campaign regarding public services and operations of the grantee shall be made to all end-users in the franchise area.

The grantee and PECO shall jointly ensure that employees not hired by the grantee shall receive all separation and/or retirement benefits they are entitled to in accordance with applicable laws.

The DOE shall, during the transition, ensure that there will be uninterrupted supply of electricity in the existing franchise area.
Panay Electric Company, Inc. (PECO) argues in the main that the power of eminent domain delegated to More Electric and Power Corporation

(MORE) amounts to a confiscatory, ill-disguised takeover of its corporate assets, and is therefore violative of PECO's constitutional rights to due process and equal protection.

I concur with the ponencia that this argument does not hold water. I furthermore agree with the ponencia's holding that the aforementioned provisions which authorize the grantee, MORE, to expropriate the existing distribution assets of PECO at the franchise area, and provide for transition of operations, respectively, pass constitutional muster.

The power of eminent domain, essentially legislative in nature, may be validly delegated to local government units, other public entities, and public utilities, such as MORE, an electric power distribution utility. The scope of this delegated legislative power is narrower than that of the delegating authority and may only be exercised in strict compliance with the terms of the delegating law.[2]

But for all its primacy and urgency, the power of expropriation is by no means absolute.[3] The limitation is found in Section 9, Article III of the 1987 Constitution, which provides that: "Private property shall not be taken for public use without just compensation." Clearly, the two essential limitations on the power of eminent domain are that: (1) the purpose of taking must be for public use; and (2) just compensation must be given to the owner of the private property.[4] These constitutional safeguards serve as a check on the possible abuse of this power and circumscribe the excessive encroachment on the property rights of the individual.

For this purpose, the Court has recognized that the term "public use," which traditionally was limited to actual use by the public, has evolved in this jurisdiction to include "whatever is beneficially employed for the community."[5] Conversely, when the taking is for a purely private purpose, such that there is no perceptible benefit flowing to the public, the taking ought to be struck down for being unconstitutional. It is repugnant to our laws to use the power of eminent domain over private property predominantly for purposes of another citizen's private gain.[6] The Court has hewed to this principle, which was first enunciated in the old American case of Charles River Bridge v. Warren Bridge,[7] that notwithstanding the inherent power of the State to expropriate all property, the Constitution does not sanction the taking of a private party for the sole purpose of transferring it to another private party, even when there is payment of just compensation.[8]

At the same time, the right to take private property for public purposes must necessarily originate from "the necessity" and the taking must be limited to such necessity.[9] The burden of proving the necessity is borne by the State, which takes precedence before resolving any issue involving just compensation.[10] The necessity need not be absolute but only a reasonable or practical necessity, such as would combine the greatest benefit to the public with the least inconvenience and expense to the condemning party and the property owner consistent with such benefit.[11] If genuine public necessity is absent or eventually ceases, the expropriation of the private property cannot continue.[12]

In this regard, it is my view that despite the enormous power of eminent domain, the constitutional limitations on its exercise is an explicit recognition of the protection accorded to one's right to property,[13] The power affects an individual's right to private property, a constitutionally-protected right necessary for the preservation and enhancement of personal dignity and intimately connected with the rights to life and liberty. As such, the need for a circumspect operation of this exercise cannot be overemphasized.[14] The Court, under its expanded power of judicial review, retains the authority to determine whether there is grave abuse of discretion in the exercise of the power of eminent domain. The Court's judicial function is not stymied by the expanded definition of public use, especially when the purported public use is merely incidental or pretextual, thereby serving as a guise to favor private interests.[15] In other words, the elements of public purpose and genuine necessity must be clearly shown. A bare invocation that the taking is for a public purpose or is attended with genuine necessity should never serve as an automatic and absolute guarantee to the Court that the taking is legal.

Taking all the foregoing limits on the exercise of the power of eminent domain in consideration, I agree with the ponencia that the assailed provisions of R.A. 11212 do not suffer from constitutional infirmities.

The authority granted to MORE under
Sections 10 and 17 of R.A. 11212 is
reasonably necessary for the exercise
of its franchise


A careful examination of the limits of the power of eminent domain under the peculiar factual circumstances of this case yields to the conclusion that the grant to MORE of the delegated power was imperative for the urgent and important public purpose that MORE was tasked to undertake under its franchise. Prior to the award of the legislative franchise to MORE, PECO was the lone electric power distribution utility in Iloilo City for 96 years, or close to a century. This rather distinct situation, in my view, was a crucial factor in the legislative decision to craft Sections 10 and 17 of R.A. 11212.

From 1923 until January 18, 2019, PECO was a holder of a franchise to establish, operate, and maintain a distribution system for the conveyance of electric power to end-users in Iloilo City. Since its franchise was granted, PECO established a distribution system consisting of 5 sub-transmission line substations, 450 kilometers of electrical lines, 20,000 poles, 1,300 transformers and 64,000 electrical meters. Personnel under its employ numbered to around 400.[16] For the longest time, the residents of Iloilo City were exclusively[17] serviced by PECO, the sole franchise holder for the operation of an electric power distribution utility.

Its position as the sole operator of the electric power distribution utility in Iloilo City is typical in the industry, as the energy distribution sector has always been a natural monopoly. Since the operation of an electric power distribution utility involves extremely high-fixed costs, it would be more efficient if only one producer services the community.[18] Hence, the assailed provisions, which purportedly granted MORE "unwarranted benefits" and "discriminate" against PECO,[19] should be appreciated in light of these unique factual circumstances. MORE, as a new player in the electric power distribution sector, naturally needs to establish, as opposed to merely maintain, its services.

In this regard, it is inaccurate to compare the franchise of MORE with other electric power distribution utilities, as Associate Justice Marvic Leonen would have it,[20] because these comparisons stand on unequal footing. The other electric power distribution utilities cited in the Dissenting Opinion of Justice Leonen have franchises which were renewed, extended, or granted due to their having previously operated in the area covered by their new franchises. Thus:
  1. Mactan Electric Company, Inc. started its initial operations in 1967. Per its website, it was issued a franchise to operate an electric light and power for 25 years from 1973 until 1991.[21] It obtained a congressional franchise in 2016 through R.A. 10890.[22]

  2. The franchise subject of R.A. 10795[23] clearly states in its title that it is an extension of the franchise of Tarlac Electric, Inc., previously covered by R.A. 7606.[24]

  3. R.A. 9381[25] also clearly states in its title that it is an extension of the franchise of Angeles Electric Corporation issued under R.A. 2341.[26]

  4. While COTELCO-PPALMA operates under a new franchise (i.e., R.A. 11322[27]), it appears from its website that it was operating under COTELCO's franchise even before it was granted its own franchise in 2019.[28]
To be sure, Congress should not be deprived of the authority to grant new franchise holders with the power to expropriate necessary assets. To hold otherwise would effectively constrain Congress to continuously renew the existing franchise of the current operator despite its sub-par service, until another prospective operator has built its own capital assets. However, given the high-fixed costs and other barriers to entry, few players, if any, will even attempt to enter the industry without first securing a franchise.

Neither is MORE given unwarranted benefits when Section 10 of R.A. 11212 granted it the authority to take possession of expropriated properties after the payment of a provisional amount based on their assessed value.[29] True, had the government proceeded to expropriate PECO's assets pursuant to its legislative franchise under R.A. 5360, the government is obliged to pay the fair market value of PECO's properties.[30] But textually, Section 4 of R.A. 5360 reveals that the provision contemplates a government takeover during the lifetime of PECO's franchise. By virtue of this provision, the government is granted the option to operate the electric power distribution system itself, cutting short PECO's franchise without requiring the prior deposit or payment of any provisional value before the government enters the property expropriated. Thus, the fair market value on which the payment of just compensation is based pertains to the final amount that the government would have paid had it proceeded to take over PECO's operations. In contrast, the assessed value referred to in Section 10 of R.A. 11212 is the provisional amount that MORE should deposit in order to immediately possess the property being expropriated.[31] It is not the final amount of compensation contemplated in Section 4 of R.A. 5360.

The payment of a provisional amount less than the fair market value, in order to possess the property expropriated, is also not a unique requirement applicable to MORE alone. The payment of the assessed value of the property is likewise provided in Section 2,[32] Rule 67 of the Rules of Court.[33] Upon the deposit of this provisional amount, the issuance of the writ of possession is a ministerial duty on the part of the trial court.[34] Also, under R.A. 7160[35] or the Local Government Code, the LGU may enter the property expropriated upon the deposit of 15% of the fair market value based on the current tax declaration of the property to be expropriated.[36] Clearly, MORE was not granted unwarranted economic benefits by Section 10.

At any rate, Section 10 does not, by any means, foreclose or limit the payment of just compensation on the basis of the assessed value as this is, again, merely a provisional amount. MORE is still liable for the full amount of just compensation to be determined during the expropriation proceedings on the basis of, among other things, the market value of the property.

Certainly, after MORE takes possession of the expropriated property belonging to PECO, PECO is entitled to the payment of the full amount of just compensation, which is the full and fair equivalent of the loss incurred by the affected owner.[37] In determining the amount of just compensation, the trial court is bound to consider the market value of the property and the current value of like property, among other things. In addition, interest would be awarded as an indispensable part of just compensation, in order "to ensure that the owner is fully placed in a position as whole as he was before the taking occurred."[38] In other words, in compliance with the constitutional mandate on eminent domain and as a basic measure of fairness,[39] the State would be required to pay interest to compensate PECO for the opportunity cost of immediately losing its property without receiving immediate full payment therefor.[40] As such, PECO would be entitled to receive the real, substantial, full and ample equivalent of the properties lost.[41]

In this light, Section 10 of R.A. 1 1212 does not serve to narrow the court's parameters in determining just compensation by limiting it to the assessed value only. It is therefore erroneous to compare the assessed value in Section 10 of R.A. 11212 on the one hand, and the fair market value in Section 4 of R.A. 5360 on the other, in order to arrive at a conclusion that MORE received an unusual economic benefit by virtue of its franchise.[42] Ultimately, the determination of just compensation in expropriation cases always factors in the fair market value of the property.

Given that proper expropriation proceedings would still be, as they have in fact already been, instituted,[43] as provided for under Section 10, there is likewise no merit to the observation of Associate Justice Amy Lazaro-Javier that the provision has effectively rendered judicial proceedings for the expropriation of PECO's properties as a mere ceremonial procedure.[44] Section 10 is a provision of delegation by Congress to the grantee, which merely gives it the authority to exercise the power of eminent domain. Section 10 relevantly and explicitly provides that the exercise would be subject to the limitations and procedures prescribed by law, that proper expropriation proceedings shall be instituted, and that just compensation shall be paid therefor.

As constructed, nothing in Section 10 shows that judicial proceedings for expropriation would be but an empty exercise. In fact, it sets out a restriction against expropriation to what may be reasonably necessary for the general purposes of the services of PECO. This includes the "efficient establishment, improvement, upgrading, rehabilitation, maintenance and operation of its services." For the specific purpose of "acquiring private property, such as poles, wires, cables, transformers, and other machinery and equipment," the language of the provision even shifts significantly from a mere reasonable necessity to one of being "actually necessary for the realization of the purpose for which [R.A. 11212] is granted." This, to my mind, provides a guide to and a standard for the court to follow during the trial for the expropriation proceedings that have been instituted. With this language, the safeguard afforded by the legislature against any abuse of the delegated right of eminent domain to MORE is, at once, evident.

In sum, while the exercise of the power of eminent domain over the electric power distribution facilities of PECO may garner benefits in favor of MORE, this would be but incidental. Notably, its duties as a public utility would nonetheless remain regulated by the government. At the end of the day, at the proper expropriation proceedings instituted for the purpose, the abiding reality would be for the court to be satisfied with evidence proffered by MORE — that its intended taking would invariably be for the good of the public, is actually necessary, and that there is just compensation therefor.

The authority granted to MORE under
Sections 10 and 17 is not meant to
punish PECO without a judicial trial


It must be borne in mind that this case involves the expiration of the exclusive franchise of a previous grantee and the subsequent act of Congress of granting a franchise to another applicant which has satisfactorily shown its capacity to carry the work, not only for commercial purposes, but for the public interest of ensuring the continuous and uninterrupted supply of electricity in the franchise area.[45] This is the proper context by which this case should only be viewed. As it stands, as well, the petition itself does not challenge either the legislative act of granting the franchise to MORE or the denial of PECO's application for extension.

Accordingly, R.A. 11212, particularly Sections 10 and 17, cannot be validly characterized as a bill of attainder, as Justice Lazaro-Javier advances in her Dissenting Opinion.[46] A bill of attainder is a legislative act which inflicts punishment on individuals or members of a particular group without judicial trial. For a law to be considered a bill of attainder, it must be shown to contain all of the following: (a) a specification of certain individuals or a group of individuals; (b) the imposition of a punishment, penal or otherwise, and (c) the lack of judicial trial.[47] For the second element, Justice Lazaro-Javier cites American jurisprudence in laying down the three factors in determining whether the statute was punitive: (a) whether it fell within the historical meaning of legislative punishment; (b) whether, viewed in terms of the type and severity of burdens imposed, it could reasonably be said to further non-punitive legislative purposes; and (c) whether it evinced an intent to punish.[48] None of these factors are evident here.

R.A. 11212 cannot be classified as a bill of attainder simply because Sections 10 and 11 do not constitute "punishments" in the sense of the bill of attainder clause as it has been interpreted. To suggest that R.A. 11212 was enacted for the purpose of punishing PECO is, to say the least, an overstretch and a diminution of the legitimate purpose and intent of Congress behind the enactment of the law. R.A. 11212 involves a grant of a franchise to MORE and nothing else. It bears stressing that the grant of a franchise is not a right but a mere privilege, and to construe the non-renewal of PECO's franchise as a punishment is wholly baseless and completely unwarranted.

Moreover, a review of the deliberations, as cited by Justice Lazaro- Javier, shows that Congress was not motivated by an intent to punish PECO. The explanatory note of House Bill No. (HB) 8132, the precursor bill to the legislative franchise of MORE, stated that the quality of service of PECO had been wanting over the years. Among the complaints against it were: overbilling or overcharging, poor customer relations, distributor-related power outages, inadequately maintained lines, inadequate investment in distribution facilities, and inordinate delay in the restoration of power services. The explanatory note stated further that PECO's historical abuse and inefficiency pose as obstructions to the economic growth of Iloilo City and to its people's welfare, health, and well-being. These findings were confirmed by a representative from the Energy Regulatory Commission during the legislative hearing for HB 8132, in addition to the findings on the dismal financial condition of PECO.[49] It has been repeatedly stated in these deliberations that the legislature's primary concern has been to secure the continuous and efficient supply of electricity in Iloilo City.

Consequently, the identification of PECO's shortcomings, which eventually led to the non-renewal of its franchise, was not meant to inflict any punishment against PECO so as to consider R.A. 11212 as a bill of attainder. Contrary to Justice Lazaro-Javier's claim, PECO was not being "singled out" for being "expressly identified as the wrongdoer."[50] Rather, it was simply part and parcel of the whole legislative process in the grant or renewal of franchises. Necessarily, as PECO was the previous franchise holder for close to a century and the issue concerned the renewal or grant of said franchise, there was a need to examine the performance of PECO. This was not done to punish PECO but to determine whether its franchise should be renewed. It was but natural and reasonable to expect that an evaluation of PECO's performance as the existing franchise holder would come into play.

Thus, given PECO's track record of inefficiency and shortcomings in providing public service to the residents of Iloilo City, the legislature found it wise to discontinue its franchise and to grant the authority instead to MORE. The expiration then of PECO's franchise, coupled with its distinct position as the only existing electric power distribution utility in Iloilo City, demonstrates that legitimate reasons impelled Congress to bestow on MORE the authority to expropriate distribution facilities existing in the franchise area and to provide for a smooth transition of PECO's operations.

In the same manner, the fact that MORE is a new player in the industry and that there is no guarantee that it will be able to serve the public better than the former owner is not enough reason to invalidate Section 10.[51] The Constitution does not require, for a valid exercise of the power of eminent domain, that the public is served in an "ideal" way. It suffices that the power is exercised for public use which, to reiterate, covers "whatever is beneficially employed for the community."

In fine, I remain convinced that Sections 10 and 17, viewed as integral parts of the grant of franchise in R.A. 11212, are constitutional. The rationale of these provisions cannot be overturned by potential unconstitutional effects resulting from a distrustful reading. It must be underscored that the grant of a franchise is constitutionally committed to the Legislative department. This has to be considered with the presumption of constitutionality "rooted in the doctrine of separation of powers which enjoins upon the three coordinate departments of the Government a becoming courtesy for each other's acts. The theory is that every law, being the joint act of the Legislature and the Executive, has passed careful scrutiny to ensure that it is in accord with the fundamental law."[52] The Court can go no further than to inquire whether Congress had the power to enact a law. It cannot delve into the wisdom of policies Congress adopts or into the adequacy under existing conditions of measures it enacts. The equal protection clause is not a license for the courts "to judge the wisdom, fairness, or logic of legislative choices."[53]

Consonant with this principle is another deep-rooted doctrine that on the side of every law lays the presumption of constitutionality.[54] This strong predilection for constitutionality takes its bearings on the idea that it is forbidden for one branch of the government to encroach upon the duties and powers of another. If there is any reasonable basis upon which the legislation may firmly rest, the courts must assume that the legislature is ever conscious of the borders and edges of its plenary powers, and has passed the law with full knowledge of the facts and for the purpose of promoting what is right and advancing the welfare of the majority.[55]

The presumption of constitutionality may, of course, be challenged. Challenges, however, shall only be sustained upon a clear and unequivocal showing of the bases for invalidating a law and not merely a doubtful, speculative, or argumentative one.[56] In other words, the grounds for nullity must be beyond reasonable doubt, for to doubt is to sustain.[57] In this regard, I find no invalidity or unreasonableness that appears on the face of the assailed provisions, or is established by proper evidence which could rebut the presumption.

Finally, the wisdom of the grant of franchise to MORE should not be determinative of the constitutionality of Sections 10 and 17.[58] The Court cannot look into allegations that R.A. 11212, specifically its Sections 10 and 17, was enacted solely to benefit MORE to the prejudice of PECO. The delegated power of eminent domain under Section 10 is authorized by Section 23[59] of the EPIRA.[60]  It is also not limited for the sole purpose of expropriating PECO's properties, and like any other franchise holder delegated with the power of eminent domain, its exercise is subject to constitutional and statutory requirements. On the other hand, Section 17 on the transition of operations between MORE and PECO can reasonably be read as impelled by public interest in preventing interruptions in the distribution of electric power in Iloilo City, and as a measure of social justice in favor of the displaced PECO employees. Both of these reasons are within the Legislative department's power to provide. Beyond these expressed purposes are speculations that the Court should not consider.

WHEREFORE, I concur with the majority decision to GRANT the petitions and to declare Sections 10 and 17 of Republic Act No. 11212 as NOT UNCONSTITUTIONAL




[1] AN ACT GRANTING MORE ELECTRIC AND POWER CORPORATION A FRANCHISE TO ESTABLISH, OPERATE, AND MAINTAIN, FOR COMMERCIAL PURPOSES AND IN THE PUBLIC INTEREST, A DISTRIBUTION SYSTEM FOR THE CONVEYANCE OF ELECTRIC POWER TO THE END USERS IN THE CITY OF ILOILO, PROVINCE OF ILOILO, AND ENSURING THE CONTINUOUS AND UNINTERRUPTED SUPPLY OF ELECTRICITY IN THE FRANCHISE AREA, February 14, 2019.

[2] See Heirs of Alberto Suguitan v. City of Mandaluyong, G.R. No. 135087, March 14, 2000, 328 SCRA 137, 145-146.

[3] Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, G.R. Nos. 78742, 79310, 79744 and 79777, July 14, 1989, 175 SCRA 343, 376."

[4] Apo Fruits Corporation, Inc. v. Landbank of the Philippines, G.R. No. 164195, October 12, 2010, 632 SCRA 727, 739.

[5] Manosca v. Court of Appeals, G.R. No. 106440, January 29, 1996, 252 SCRA 412, 421, citing Sena v. Manila Railroad Co., 42 Phil. 102, 105 (1921).

[6] See National Power Corporation v. Posada, G.R. No. 191945, March 11, 2015, 752 SCRA 550, 579, citing Vda. de Ouano v. Republic, G.R. Nos. 168770 & 168812, February 9, 2011, 642 SCRA 384, 409.

[7] 36 US 420 (1837) cited in Barangay Sindalan, San Fernando, Pampanga v. Court of Appeals, G.R. No. 150640, March 22, 2007, 518 SCRA 649, 665.

[8] See Kelo v. New London, 545 US 469 (2005).

[9] Masikip v. City of Pasig, G.R. No. 136349, January 23, 2006, 479 SCRA 391, 401.

[10] National Power Corporation v. Posada, supra note 6, at 579.

[11] Masikip v. City of Pasig, supra note 9, at 402.

[12] National Power Corporation v. Posada, supra note 6, at 579, citing Vda. de Ouano v. Republic, supra note 6, at 409.

[13] See Masikip v. City of Pasig, supra note 9, at 403.

[14] See Heirs of Alberto Suguitan v. City Mandaluyong, supra note 2, at 145.

[15] See Concurring Opinion of Justice Kennedy in Kelo v. New London, 545 US 469 (2005).

[16] Rollo (G.R. No. 248061), pp. 62-63; rollo (G.R. No. 249406), pp. 106-107.

[17] R.A. 5360, AN ACT GRANTING A FRANCHISE FOR AN ELECTRIC LIGHT, HEAT AND POWER SYSTEM TO PANAY ELECTRIC CO, INC., IN THE CITY OF ILOILO, and in the Municipalities of Santa Barbara and pavia, both in the Province of Iloilo, June 15, 1968. Section 2 reads: "In the event that the National Power Corporation shall have established its line in the areas adjacent to or over the territory covered by this franchise, the National Power Corporation may make available its power and heat only after negotiations with and through or with the authority and consent of the grantee, which shall be the exclusive distributor of whatever power the aforenamed corporation may make available adjacent to or within the territory covered by this franchise."

[18] [MR. GREG L. OFALSA (Director, Legal Service, Energy Regulatory Commission):]

We go now to scenario number three where PECO['s] franchise is renewed and [MORE] is granted a franchise covering the same franchise area as that of PECO. A DU is a natural monopoly. Allowing more than one DU within the same geographical area will result to a higher electricity rates (sic) for consumers within that geographical area.

A natural monopoly is a monopoly in an industry in which high infrastructural cost and other barriers to entry relative to the size of the market gives the largest suppliers in an industry[,] often the first supplier in the market[,] an overwhelming advantage over potential competitors, x x x

Let's assume that we have two distribution utilities, namely: Blue DU and Red DU. Blue DU is the old distribution utility while Red is the new distribution utility. Both DUs are operating [in] Color Cloud Town[.] Color Cloud Town has 50 electric consumers. All 50 electric consumers are originally consumers of Blue DU. Blue DU has a capital investment of 100. Blue's distribution charge is determined by dividing its capital with the number of its consumers as follows: 100 divided by 50 is equivalent to two. Number two represents the distribution charge for all 50 consumers of Blue at that time [as] the sole DU in Color Cloud Town. After some time, Red entered the electric distribution market and began building [its] own distribution facility. Red's initial capital is 30 and was able to convince 10 electric consumers in Color Cloud Town to change its electric distribution's service [provider]. Similar to Blue, Red['s] distribution [charge] is determined by dividing its capital with the number of its consumers as follows: 30[,] the investment[., divided by 10[,] the number of consumers[,] is equivalent to three. Three represents the distribution charge for the first 10 electric consumers of Red. On the other hand, as Blue's consumers decrease, its distribution charge is recomputed x x x by dividing its capital with the number of its consumers x x x [which] is equivalent to 2.5, the 2.5 represents the distribution charge for the remaining electric consumers x x x of Blue.

As provided in the above illustration, an increase in the number of DUs operating in the market, will ultimately result to higher distribution rates chargeable not only by the new DU by the previously existing DU because of the reduction in the number of consumers sharing the capital cost." (House of Representatives, Committee on Legislative Franchises, September 26, 2018 Hearing, pp. 14-15).

[19] Dissenting Opinion of Justice Marvic M.V.F. Leonen, p. 1.

[20] Id. at 5-6.

[21] Mactan Electric Company, Inc. About Us, Historical Profile, at < http:// www.mecomactan.coin/about/ > (last accessed on September 25, 2020).

[22] AN ACT GRANTING THE MACTAN ELECTRIC COMPANY, INC. (MECO) A FRANCHISE TO CONSTRUCT, INSTALL, ESTABLISH, OPERATE AND MAINTAIN A DISTRIBUTION SYSTEM FOR THE CONVEYANCE OF ELECTRIC POWER TO THE END USERS IN THE CITY OF LAPU-LAPU AND THE MUNICIPALITY OF CORDOVA, PROVINCE OF CEBU, July 17, 2016.

[23] AN ACT EXTENDING FOR A PERIOD OF TWENTY-FIVE (25) YEARS THE TERM OF THE FRANCHISE GRANTED TO TARLAC ELECTRIC, INC. (FORMERLY KNOWN AS TARLAC ENTERPRISES, INC.) TO CONSTRUCT, OPERATE, AND MAINTAIN AN ELECTRIC LIGHT, HEAT AND POWER SYSTEM IN THE CITY OF TARLAC, PROVINCE OF TARLAC, PROVIDED UNDER REPUBLIC ACT NO. 7606, May 10, 2016.

[24] AN ACT GRANTING TARLAC ENTERPRISES, INC. A FRANCHISE TO CONSTRUCT, OPERATE AND MAINTAIN AN ELECTRIC LIGHT, HEAT AND POWER SYSTEM IN THE MUNICIPALITY OF TARLAC, PROVINCE OF TARLAC, FOR A PERIOD OF TWENTY-FIVE (25) YEARS, AND FOR OTHER PURPOSES, June 4, 1992.

[25] AN ACT FURTHER AMENDING THE FRANCHISE OF ANGELES ELECTRIC CORPORATION GRANTED UNDER REPUBLIC ACT NO. 2341, AS AMENDED, TO CONSTRUCT, OPERATE AND MAINTAIN A DISTRIBUTION SYSTEM FOR THE CONVEYANCE OF ELECTRIC POWER TO THE END-USERS IN THE CITY OF ANGELES, PROVINCE OF PAMPANGA AND RENL-WINC/EXTENDING THE TERM OF THE FRANCHISE TO ANOTHER TWENTY-FIVE (25) YEARS FROM THE DATE OF APPROVAL OF THIS ACT, March 9, 2007.

[26] AN ACT GRANTING THE ANGELES ELECTRIC CORPORATION A FRANCHISE FOR AN ELECTRIC LIGHT, HEAT AND POWER SYSTEM IN THE MUNICIPALITY OF ANGELES, PROVINCE OF PAMPANGA, June 20, 1959.

[27] AN ACT GRANTING A LEGISLATIVE FRANCHISE TO COTABATO ELECTRIC COOPERATIVE, INC.-PPALMA (COTELCO-PPALMA)  TO  CONSTRUCT,   INSTALL,  ESTABLISH,  OPERATE  AND  MAINTAIN  A DISTRIBUTION SYSTEM FOR THE CONVEYANCE OF ELECTRIC POWER TO THE END USERS IN THE MUNICIPALITIES OF PIKIT, PIGCAWAYAN, ALEOSAN, LIBUNGAN, MIDSAYAP AND ALAMADA, PROVINCE OF COTABATO, AND ITS NEIGHBORING SUBURBS, April 17, 2019.

[28] Cotabato  Electric Cooperative,  Inc.-PPALMA,  About,  at < https://www.ppalmacotelco.com > (last accessed on September 25, 2020).

[29] Dissenting Opinion of Justice Marvic M.V.F. Leonen, pp. 4-5.

[30] R.A. 5360, Sec. 4, reads: "It is expressly provided that in the event the Government should desire to operate and maintain for itself the system and enterprise herein authorized, the grantee shali surrender its franchise and wiil turn over to the government all equipment therein at fair market value."

[31] In determining the assessed value, Section 10 provides that the court "may consider tax declarations, current audited financial statements, and rate-setting applications of the owner or owners of the property or properties being expropriated."

[32] SEC. 2. Entry of plaintiff upon depositing value with authorized government depositary. — Upon the filing of the complaint or at any time thereafter and after due notice to the defendant, the plaintiff shall have the right to take or enter upon the possession of the real property involved if he deposits with the authorized government depositary an amount equivalent to the assessed value of the property for purposes of taxation to be held by such bank subject to the orders of the court. Such deposit shall be in money, unless in lieu thereof the court authorizes the deposit of a certificate of deposit of a government bank of the Republic of the Philippines payable on demand to the authorized government depositary.

x x x x

[33] N.B. For national government infrastructure projects. Section 6 of R.A. 10752 (The Right-of-Way Act [March 7, 2016]) requires the implementing agency to immediately deposit 100% of the zonal value of the property.

[34] Biglang-Awa v. Bacalla, G.R. Nos. 139927 and 139936, November 22, 2000, 345 SCRA 562, 577.

[35] AN ACT PROVIDING FOR A LOCAL GOVERNMENT CODE OF 1991, October 10, 1991.

[36] R.A. 7160, Book I, Title I, Chapter 1, Sec. 19.

[37] See Republic v. Spouses Bimsay, G.R. No. 205473, December 10, 2019, p. 8.

[38] See J. Caguioa, Separate Opinion in National Power Corporation v. Serra Serra, G.R. No. 224324, January 22, 2020, p. 3, citing Republic v. Decena, G.R. No. 212786, July 30, 2018, 874 SCRA 408, 431. Emphasis omitted.

[39] See Secretary of the Department of Public Works and Highways v. Spouses Tecson, G.R. No. 179334, April 21, 2015, 756 SCRA 389, 422.

[40] See J. Caguioa, Separate Opinion in National Power Corporation v. Serra Serra, supra note 38, at 2.

[41] See Republic v. Spouses Bimsay, supra note 37, at 9.

[42] Dissenting Opinion of Associate Justice Marvic M.V. F. Leonen, pp. 4-5.

[43] Rollo (G.R. No. 248061), pp. 6, 288 and 331.

[44] Dissenting Opinion of Associate Justice Amy C. Lazaro-Javier, p. 19.

[45] Parenthetically, a new applicant for franchise application has to submit the following documentary requirements to the Committee on Legislative Franchises in Congress:
  1. Copy of the House Bill for the grant of franchise.
  2. Certificate of Registration from the Securities and Exchange Commission or Department of Trade and Industry.
  3. Articles of Incorporation and By-Laws of the applicant corporation.
  4. Articles of Incorporation and By-Laws of a holding company which owns the applicant, if any.
  5. Articles of Incorporation and By-Laws of the corporate stockholder of the applicant, if any.
  6. Latest General Information Sheet of the applicant and the corporate stockholder/holding company of the applicant, if any.
  7. Resume of major stockholders/officers of the applicant, including their income tax returns for the last three (3) years.
  8. Market feasibility study, five-year development plan, and plans and designs for the project.
There is no showing, much less any specific allegation, that MORE failed in the fulfillment of these requirements.

[46] Dissenting Opinion of Associate Justice Amy C. Lazaro-Javier, p. 1.

[47] Fuertes v. The Senate of the Philippines, G.R. No. 208162, January 7, 2020, pp. 29-30.

[48] Dissenting Opinion of Associate Justice Amy C. Lazaro-Javier, pp. 6-10.

[49] Congressional Records, Committee on Legislative Franchises, September 18, 2018.

[50] Dissenting Opinion of Associate Justice Amy C. Lazaro-Javier, p. 1.

[51] Dissenting Opinion of Associate Justice Marvic F. Leor.en, p. 11.

[52] Cawaling, Jr. v. Commission on Elections, G.R. Nos. 1463 19 & 146342, October 26, 2001, 368 SCRA 453, 456-457.

[53] J. Panganiban, Dissenting Opinion in Central Bank Employees Association, Inc. v. Bangko Sentral ng Filipinos, G.R. No. 148208, December 15, 2004,446 SCRA 299,445.

[54] Alvarez v. Guingona, Jr., G.R. No. 118303, January 31, 1996, 252 SCRA 695, 706.

[55] Estrada v. Sandiganbayan, G.R. No. 148560, November 19, 2001, 369 SCRA 394, 430-431.

[56] See  Barangay Association for National Advancement and Transparency (BANAT)  Party-List v. COMELEC, G.R. No. 177508, August 7, 2009, 595 SCRA 477, 487.

[57] Cawaling, Jr. v. Commission on Elections, supra note 52, at 457.

[58] See Lim v. Pacquing, G.R. Nos. 115044 & 117263, January 27, 1995, 240 SCRA 649.

The Court held in this case:
ADC questions the motive for the issuance of PD No. 771. Clearly, however, this Court cannot look into allegations that PD No. 771 was enacted to benefit a select group which was later given authority to operate the jai-alai under PD No. 810. The examination of legislative motivation is generally prohibited. (Palmer v. Thompson, 403 U.S. 217, 29 L. Ed. 2d 438 [1971], per Black, J.) There is, in the first place, absolute lack of evidence to support ADC's allegation of improper motivation in the issuance of PD No. 771. In the second place, as already averred, this Court cannot go behind the expressed and proclaimed purposes of PD No. 771, which are reasonable and even laudable.

It should also be remembered that PD No. 771 provides that the national government can subsequently grant franchises "upon proper application and verification of the qualifications of the applicant." ADC has not alleged that it filed an application for a franchise with the national government subsequent to the enactment of PD No. 771; thus, the allegations abovementioned (of preference to a select group) are based on conjectures, speculations and imagined biases which do not warrant the consideration of this Court. (Id. at 677-678.)
[59] SEC. 23. Functions of Distribution Utilities. - x x x
x x xx
Distribution utilities may exercise the power of eminent domain subject to the requirements of the Constitution and existing laws.

[60] R.A. 9136, AN ACT ORDAINING REFORMS IN THE ELECTRIC POWER INDUSTRY, AMENDING FOR THE PURPOSE CERTAIN LAWS AND TOR OTHER PURPOSES or the "Electric Power Industry Reform Act of 2001," June 8, 2001.





DISSENTING OPINION


LAZARO-JAVIER, J.:


Eminent Domain Wolves in Sheep's Clothing: Private Benefit Masquerading as Classic Public Use[1]

Today the Court abandons this long-held, basic limitation on government power. Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded—i.e., given to an owner who will use it in a way that the legislature deems more beneficial to the public—in the process. To reason, as the Court does, that the incidental public benefits resulting from the subsequent ordinary use of private property render economic development takings "for public use" is to wash out any distinction between private and public use of property—and thereby effectively to delete the words "for public use" from the Takings Clause of the Fifth Amendment. Accordingly, I respectfully dissent.

....

Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms. As for the victims, the government now has license to transfer property from those with fewer resources to those with more. The Founders cannot have intended this perverse result.[2]
I dissent.
Summary

First. Sections 10 and 17 of Republic Act No. 11212 (RA 11212) (2019) are unconstitutional on their face. These provisions constitute bills of attainder. The attainted person is PECO.

PECO is singled out. It is expressly identified as the wrongdoer. Upon it, legislative punishment as this was historically understood has been imposed. As well, the non-punitive legislative purpose has been far outweighed by the legislative intent to punish and the legislative punishment accordingly exacted. As clearly and succinctly recounted in the congressional deliberations, the non-punitive legislative purpose arose only from and was the result only of the punishment Sections 10 and 17 have envisioned to inflict.

The punishment is the legislative determination of what otherwise would have been a judicial function of the propriety of confiscating or expropriating PECO's properties resulting from the non-renewal of PECO's franchise and the propriety of allowing such confiscation or expropriation to favor the new franchise holder, MORE.

Second. Sections 10 and 17 violate the equal protection of the laws. They have been tailored to target and single out PECO and its properties. Sections 10 and 17 apply to no other entity but PECO and its facilities. Biraogo v. The Philippine Truth Commission of 2010[3] supports my claim.

Third. As my reply to Justice Caguioa's well-meaning Opinion will show, the assailed provisions betray a mere incidental and pretextual public use and necessity to the taking of PECO's properties.

I. Sections 10 and 17 are bills of attainder.

The challenged provisions read:
SECTION 10. Right of Eminent Domain. — Subject to the limitations and procedures prescribed by law, the grantee is authorized to exercise the power of eminent domain insofar as it may be reasonably necessary for the efficient establishment, improvement, upgrading, rehabilitation, maintenance and operation of its services. The grantee is authorized to install and maintain its poles wires, and other facilities over, under, and across public property, including streets, highways, parks, and other similar property of the Government of the Philippines, its branches, or any of its instrumentalities. The grantee may acquire such private property as is actually necessary for the realization of the purposes for which this franchise is granted, including, but not limited to poles, wires, cables, transformers, switching equipment and stations, buildings, infrastructure, machineries and equipment previously, currently or actually used, or intended to be used, or have been abandoned, unused or underutilized, or which obstructs its facilities, for the operation of a distribution system for the conveyance of electric power to end users in its franchise area: Provided, That proper expropriation proceedings shall have been instituted and just compensation paid:

Provided, further, That upon the filing of the petition for expropriation, or at any time thereafter, and after due notice to the owner of the property to be expropriated and the deposit in a bank located in the franchise area of the full amount of the assessed value of the property or properties, the grantee shall be entitled to immediate possession, operation, control, use and disposition of the properties sought to be expropriated, including the power of demolition, if necessary, notwithstanding the pendency of other issues before the court, including the final determination of the amount of just compensation to be paid. The court may appoint a representative from the ERC as a trial commissioner in determining the amount of just compensation. The court may consider the tax declarations, current audited financial statements, and rate-setting applications of the owner or owners of the property or properties being expropriated in order to determine their assessed value.

SECTION 17. Transition of Operations. — In the public interest and to ensure uninterrupted supply of electricity, the current operator, Panay Electric Company, Inc. (PECO), shall in the interim be authorized to operate the existing distribution system within the franchise area, as well as implement its existing power supply agreements with generation companies that had been provisionally or finally approved by the ERC until the establishment or acquisition by the grantee of its own distribution system and its complete transition towards full operations as determined by the ERC, which period shall in no case exceed two (2) years from the grant of this legislative franchise.

Upon compliance with its rules, the ERC shall grant PECO the necessary provisional certificate of public convenience and necessity (CPCN) covering such interim period. The applicable generation rate shall be the provisional or final rate approved by the ERC.

This provisional authority to operate during the transition period shall not be construed as extending the franchise of PECO after its expiration on January 18, 2019, and it shall not prevent the grantee from exercising the right of eminent domain over the distribution assets existing at the franchise area as provided in Section 10 of this Act. During such interim period, the ERC shall require PECO to settle the full amount which the ERC has directed to refund to its customers in connection with all the cases filed against it.

To reduce the length of the transition period, the ERC and all agencies issuing the requisite licenses shall prioritize all applications relevant to the establishment and operation of the distribution system under its franchise.

The grantee shall, as far as practicable and subject to required qualifications, accord preference to hiring former employees of PECO upon commencement of business operations.

An information dissemination campaign regarding public services and operations of the grantee shall be made to all end-users in the franchise area.

The grantee and PECO shall jointly ensure that employees not hired by the grantee shall receive all separation and/or retirement benefits they are entitled to in accordance with applicable laws.

The DOE shall, during the transition, ensure that there will be uninterrupted supply of electricity in the existing franchise area.
A. Essence of a bill of attainder

Bills of attainder have often been associated with criminal statutes. There is however no reason not to use the proscription against them to civil statutes that mirror what bills of attainder do in the criminal setting.

Functionally and traditionally, bills of attainder as well as ex post facto laws have been invoked to nullify civil statutes or regulations.[4]

The essence of a bill of attainder is the substitution of a legislative for a judicial determination of the legitimacy of a deprivation. The constitutional ban against bills of attainder serves to implement the principle of separation of powers by confining legislatures to rule-making and thereby forestalling legislative usurpation of the judicial function.

History in perspective, bills of attainder were employed to suppress government takings of life or property involving unpopular causes and political minorities, and it is against this evil that the constitutional prohibition is directed. Thus:
ON reviewing the U.S. Constitution, it is easy to assume that the document contained no takings protection language prior to the addition of the Fifth Amendment, as part of the Bill of Rights. In reality, however, a takings protection was inserted directly into the body of the Constitution in 1787. This was the ban on bills of attainder, found in Article I, Sections 9 and 10. A bill of attainder is an egregious taking of life or property by an arbitrary legislative act, and the ban on bills of attainder was primarily meant to protect the people from such arbitrary takings by the government. During the antebellum period, construing the ban on bills of attainder as a takings protection was well known, and lawyers and judges frequently referred to this ban. It was only after the Civil War that this commonly understood takings protection faded gradually into disuse, primarily because of the Fourteenth Amendment's incorporation doctrine. Today, this protection is all but forgotten.

Recognizing the ban on bills of attainder as a takings protection greatly aids in understanding several constitutional issues that have otherwise not been fully understood. For example, seeing the ban on bills of attainder as a takings protection helps in understanding why the Eleventh Amendment's passage was in large measure a reaction to potential attainder lawsuits against the states. We also better understand why the ban on ex post facto laws only needed to apply to criminal matters, and more clearly see how takings law/attainders were a driving force for separating governmental powers, particularly between the legislature and the judiciary. Finally, we can better understand why many of the founders - particularly James Madison - so greatly feared factions as the greatest threat to the new republic. In short, the ban on bills of attainder illuminates the early workings of the new constitutional republic in America.

This article mostly draws from the founders' comments at the Constitutional Convention and the antebellum case law that treats the ban on bills of attainder as a takings protection. The jurists' and practitioners' statements in these early cases - including comments from such luminaries as John Marshall and Daniel Webster - demonstrate their understanding of the ban on bills of attainder as a takings protection, independent of the Fifth Amendment or any other state takings language. Likewise, their statements about the ban on bills of attainder clarify the other constitutional doctrines discussed in this article.

Even though the antebellum era has long since passed, the concept that the ban on bills of attainder is a takings protection and its clarification of other constitutional doctrines has value for us today. There is no compelling reason why the antebellum understanding of bills of attainder is any less legitimate now than back then. To be sure, the Fifth Amendment protections now apply to state takings due to the Fourteenth Amendment's incorporation doctrine. But this application in no way negates the ongoing potential effectiveness of using the ban on bills of attainder in the Constitution as a takings protection. Indeed, there will be times that the ban on bills of attainder will be a better fit for a particular judicial problem than the Fifth or Fourteenth Amendments. Examples could include legislation targeting unpopular groups or groups holding property which the government wants. Accordingly, courts today should consider applying this provision of the Constitution as a takings protection, just as the courts formerly did. If they do, the courts will discover that it will not only serve to protect the innocent from arbitrary takings, but that it will also help clarify constitutional doctrines today as it did in former times. Indeed, this is one of the greatest benefits that can come from using the ban on bills of attainder as a takings protection, since many constitutional doctrines today are often confused and misunderstood.[5]
The provision against bills of attainder came about in this historical factual context - the American revolutionary war needed funding and legislation provided that funding by taking the property of named persons as wrongdoers.[6] The drafters of the American Constitution were aware that these legislations were "arbitrary and represented a dangerous power of government to take land, and wanted to ensure that such wholesale takings did not occur in the future. Hence, the Constitutional Convention adopted the ban on bills of attainder without dissent."[7]

The protection against bills of attainder primarily protected property rights, which had been greatly abused by such wartime enactments.[8] Individuals needed to be protected from egregious takings by the state - this protection was the ban on bills of attainder, which "restricted all legislative takings failing to meet the standards of due process, compensation, and public use."[9] This protection was conceived to be a judicial one, a protection coming from the courts.[10]

In the United States of America, bills of attainder, including bills of pains and penalties, are constitutionally prohibited under Article I, Sections 9 and 10 of its Constitution.

B. Elements of a Bill of Attainder

The elements of a bill of attainder are: (i) the singling out of a definite class, (ii) the imposition of a burden on it, without or far outweighing any non-punitive legislative purpose, and a legislative intent to do so, and (iii) the lack of judicial trial.[11] These elements stigmatize statute or any of its provisions as a bill of attainder.

i. Singling out of a definite class

If the statute sets forth a generally applicable rule decreeing that any person who commits certain acts or possesses certain characteristics shall not enjoy a right or a privilege, and leaves to courts the task of deciding what persons have committed the specified acts or possessed the specified characteristics, the statute is valid.

But if the statute designates in no uncertain terms the persons who possess the feared characteristics and therefore cannot enjoy the right or privilege, for example, members of the Communist Party, or here, respondent PECO, the legislative act, no matter what its form, that applies either to named individuals or easily ascertainable members of a group in such a way as to deprive these individuals or groups of any right, civil or political, without judicial trial, is a bill of attainder prohibited by the Constitution.

ii.     Imposition of a burden, without or far outweighing any non-punitive legislative purpose, and a legislative intent to do so

In Cummings v. Missouri,[12] the United States Supreme Court held that depriving or confiscating one's property has been understood historically as punishment.

Presently, in the United States, there is no longer a requirement for the legislature to convict a person of a specified crime or to inflict the historical punishments of pain and/or death in order for a statute to constitute a bill of attainder. American law has never precluded the possibility that new burdens and deprivations might be legislatively fashioned that are inconsistent with the bill of attainder guarantee; there is as well no more need for the offending statute to include any formal legislative pronouncement of moral blameworthiness or formal intent to punish the targeted individual, group, or corporation.[13] The question is whether the legislation has a punitive objective or a legitimate, non-punitive, legislative purpose. Where such legitimate legislative purposes do not appear or are far out-weighed by an intention to cause deprivation, it is reasonable to conclude that punishment of individuals disadvantaged by the enactment was the purpose of the decision makers.[14]

Consolidated Edison Co. of N.Y., Inc. v. Pataki[15] held that "[w]here such legitimate legislative purposes do not appear," it is already "reasonable to conclude that punishment of individuals disadvantaged by the enactment was the purpose of the decision makers," there are nonetheless several other tests set out in American jurisprudence for determining whether a statute is punitive or non-punitive. Therefore, if one follows American jurisprudence, one must also consider whether the provision could still be construed as amounting to a legislative determination of guilt and punishment.

In Consolidated Edison Co. of N.Y., Inc., a public utility wished to pass on the costs of a power outage to the consumers. A replacement generator had been purchased fifteen (15) years prior to the outage, but was not installed until the defective generator finally failed. A prior agreement was in place whereby Consolidated Edison could pass certain costs on to its ratepayers in the form of temporary rate increases subject to statutory review by the New York Public Service Commission. The Assembly and Senate, however passed a bill without amendment, thus:
§1. ...By continuing to operate steam generators known to be defective, and thereby increasing the risk of a radioactive release and/or an expensive plant outage, the Consolidated Edison Company failed to exercise reasonable care on behalf of the health, safety and economic interests of his customers. Therefore it would not be in the public interest for the company to recover from ratepayers any costs resulting from the February 15, 2000 outage at the Indian Point 2 Nuclear Facility.
The prohibition on recovering the cost extended to base rates "or any other rate recovery mechanism."

The appellate court stated that an indispensable element of a bill of attainder is the fact that it defines past conduct as wrongdoing and then imposes punishment on that past conduct. The court considered three (3) factors in determining whether the statute was punitive:
(1)    whether it fell within the historical meaning of legislative punishment,

(2)    whether, viewed in terms of the type and severity of burdens imposed, it could reasonably be said to further non-punitive legislative purposes, and

(3)    whether it evinced an intent to punish.
The court focused on the last two (2) criteria, finding that eliminating harm to innocent third parties is a purpose consistent with punishment, and that general and specific deterrence are traditional justifications for punishment. The court determined that a quite substantial proportion of the costs in question could have been passed on unchallenged in a routine generator replacement. Nothing but punishment could justify preventing Consolidated Edison from passing these costs on to ratepayers. The court also found that the legislative history clearly evinced an intent to punish.

Consolidated Edison is also remarkable in the clearly punitive intentions voiced by the legislators themselves and the inference which can be drawn from the language of the provision itself. Clearly, the court in that case was of the view that the legislature had concluded that the act of the public utility in failing to replace the generator was worthy of sanction, and viewed the legislation as imposing that sanction.

United States v. Lovett,[16] concerned a provision which decreed that no salary or other compensation was to be paid to certain employees of the Government, specified by name, unless they were again appointed by the President with the advice and consent of the Senate. The individuals in question allegedly had communist leanings. The court found that the purpose of the legislation was permanently to bar those individuals from government service because of what Congress thought about their political beliefs. The court further stated that the provision achieved the same purpose as would a statute which designated the conduct as criminal. The court, too, rejected the argument that the section did not provide for the dismissal of the individuals, but merely forbade governmental agencies to compensate them for any work.

Lovett is notable because the subjects of the provision were singled out from other government employees because of their political views, and were publicly blacklisted. There was sufficient evidence to conclude that the legislative intention was to punish the subjects for their beliefs and to make an example of them in order to deter others.

In the same vein, Acorn v. United States mentioned that the element of punishment involved the consideration of three (3) interdependent factors:
(1) whether the challenged statute falls within the historical meaning of legislative punishment (historical test of punishment); (2) whether the statute, "viewed in terms of the type and severity of burdens imposed, reasonably can be said to further nonpunitive legislative purposes" (functional test of punishment); and (3) whether the legislative record "evinces a [legislative] intent to punish" (motivational test of punishment). Selective Serv. Sys., 468 U.S. at 852, 104 S.Ct. 3348. All three factors need not be satisfied to prove that a law constitutes "punishment;" rather, "th[e] factors are the evidence that is weighed together in resolving a bill of attainder claim." Con. Edison, 292 F.3d at 350.
According to Acorn, "the Supreme Court has recognized that certain types of punishment are 'so disproportionately severe and so inappropriate to nonpunitive ends that they unquestionably have been held to fall within the proscription of the [Bill of Attainder Clause]'." Confiscation of one's property is one that has long been recognized as a type of punishment.

The functional test of punishment looks at the type and severity of the burdens imposed. Essentially, it answers the question, what will happen to the attainted entity, will it close shop and eventually be driven out of any business whatsoever and into bankruptcy? Thus:
"A grave imbalance or disproportion between the burden and the purported nonpunitive purpose suggests punitiveness, even where the statute bears some minimal relation to nonpunitive ends." Id.; accord Con. Edison, 292 F.3d at 350 ("Where a statute establishing a punishment declares and imposes that punishment on an identifiable party ... we look beyond simply a rational relationship of the statute to a legitimate public purpose for less burdensome alternatives by which the legislature could have achieved its legitimate nonpunitive objectives."
The motivational test of punishment examines the intent of the legislators in enacting the statute - upon the legislature's determination that the attainted entity was guilty of abusive and fraudulent practices. This test looks for the declaration of guilt of the attainted entity by the legislature during its deliberations or in the statute itself and a congressional trial to determine such guilt. The standard of proof is clear legislative intent to punish.

To summarize, the test of punishment involves two (2) steps. First, identify if the legislation looks at past conduct as a wrongdoing. Second, determine if the legislation imposes burdens or deprivations on that past conduct. To complete the second step in the test, consider the three (3) factors in resolving whether the statute is punitive: (a) whether it fell within the historical meaning of legislative punishment, (b) whether, viewed in terms of the type and severity of burdens imposed, it could reasonably be said to further non-punitive legislative purposes, and (c) whether it evinced an intent to punish.

Lastly, in Cummings v. Missouri,[17] it was held that a legislation is nonetheless a bill of attainder even if the persons or entities are singled out and punished only indirectly, that is, the punishment does not directly follow from the ascription of wrongdoing in the legislation. Thus:
If the clauses of the second article of the constitution of Missouri, to which we have referred, had in terms declared that Mr. Cummings was guilty, or should be held guilty, of having been in armed hostility to the United States, or of having entered that State to avoid being enrolled or drafted into the military service of the United States, and, therefore, should be deprived of the right to preach as a priest of the Catholic Church, or to teach in any institution of learning, there could be no question that the clauses would constitute a bill of attainder within the meaning of the Federal Constitution. If these clauses, instead of mentioning his name, had declared that all priests and clergymen within the State of Missouri were guilty of these acts, or should be held guilty of them, and hence be subjected to the like deprivation, the clauses would be equally open to objection. And, further, if these clauses had declared that all such priests and clergymen should be so held guilty, and be thus deprived, provided they did not, by a day designated, do certain specified acts, they would be no less within the inhibition of the Federal Constitution.

In all these cases there would be the legislative enactment creating the deprivation without any of the ordinary forms and guards provided for the security of the citizen in the administration of justice by the established tribunals.

The results which would follow from clauses of the character mentioned do follow from the clauses actually adopted. The difference between the last case supposed and the case actually presented is one of form only, and not of substance.

The existing clauses presume the guilt of the priests and clergymen, and adjudge the deprivation of their right to preach or teach unless the presumption be first removed by their expurgatory oath - in other words, they assume the guilt and adjudge the punishment conditionally. The clauses supposed differ only in that they declare the guilt instead of assuming it. The deprivation is effected with equal certainty in the one case as it would be in the other, but not with equal directness. The purpose of the lawmaker in the case supposed would be openly avowed; in the case existing it is only disguised. The legal result must be the same, for what cannot be done directly cannot be done indirectly. The Constitution deals with substance, not shadows. Its inhibition was levelled at the thing, not the name. It intended that the rights of the citizen should be secure against deprivation for past conduct by legislative enactment, under any form, however disguised. If the inhibition can be evaded by the form of the enactment, its insertion in the fundamental law was a vain and futile proceeding.

iii. Lack of judicial trial

To illustrate, the proper procedure for the taking of private property and the improper manner of doing it have been spelled out, as follows:
If a legislature or state agency wants to take property, the proper procedure entails designating the property to be taken, filing a lawsuit identifying the property and its owners, and allowing the owners to contest the compensation that the legislature or state agency offers. This procedure essentially refers the consummation of the taking to the judiciary. This process happens all the time today and is relatively well understood. Other than the initial designation of land to be taken, the entire procedure takes place in the judicial branch.

A bill of attainder seeks to bypass this procedure. It identifies the property to be taken, and then brazenly takes it, frequently with the excuse that the legislature is merely punishing an unworthy individual or group. No meaningful procedure is allowed for protest, and compensation is ignored. A structural check on legislative aggrandizement is the very heart and soul of the ban on bills of attainder and the essence of the separation of powers. As Justice Chase said in Calder v. Bull:

These acts [of attainder] were legislative judgments; and an exercise of judicial power ... The ground for the exercise of such legislative power was this, that the safety of the kingdom depended on the death, or other punishment, of the offender: as if traitors, when discovered, could be so formidable, or the government so insecure! With very few exceptions, the advocates of such laws were stimulated by ambition, or personal resentment, and vindictive malice. To prevent such, and similar, acts of violence and injustice, I believe, the Federal and State Legislatures, were prohibited from passing any bill of attainder.

Justice Chase's articulation corresponded with the understanding of his fellow jurists and practitioners during the antebellum period. Attorneys making arguments to the courts during this time often identified the ban on bills of attainder as a legislative intrusion into the judicial sphere, and as a takings protection.
C. Application of the Bill of Attainder test to Sections 10 and 17 of RA 11212

Here, we have exactly in the assailed provisions the objectionable bills of attainder.

First, the language of Sections 10 and 17 and legislative history of RA 11212 single out PECO as a wrongdoer for the confiscation of its properties by MORE for the latter's take-over and immediate benefit and use, despite the availability of other means and properties for this purpose and bypassing existing regulations that address concerns about allegedly mismanaged organizations.

Second, through Sections 10 and 17 and its deliberations, Congress has already determined:

(i)
the existence of all the elements justifying the expropriation of PECO's properties by MORE,
(ii)
as well as the propriety of MORE's take-over and immediate use of and benefit from these properties,
   
and thus, has made the judicial proceedings for expropriation by MORE against PECO a mere ceremonial procedure.

Third, the legislative confiscation of PECO's properties for MORE's take-over and immediate benefit and use is the punishment for PECO's alleged wrongdoings, which in turn is a direct outcome of the non-renewal of its franchise and the award of the franchise to MORE.

Fourth, the non-punitive legislative purpose for the legislative confiscation of PECO's properties for MORE's take-over, benefit and use is far-outweighed by the legislative intent to deprive PECO of its properties.

For one, the public purpose for the confiscation arose solely from the utter inability of MORE as the new franchise holder to provide the facilities and technical knowhow to establish, operate, and maintain its franchise requirements.

But for this utter inability of MORE, there would have been NO non-punitive legislative purpose for the legislative confiscation of PECO's properties for MORE's take-over, benefit, and use. The non-punitive legislative purpose was a created or manufactured need when Congress allowed a non-equipped and ill-prepared entity to take-over the franchise and authorized a business plan that plainly revolved around the take-over of the existing franchise holder's properties.

As a result, it is reasonable to conclude that the punishment of PECO as the entity disadvantaged by RA 11212 is the legislation's only preponderant purpose.[18]

Equally important, the condemnation of PECO's properties lock, stock, and barrel, is clearly overbroad in relation to the purported legitimate purpose of RA 11212 as it unnecessarily precludes PECO from using its properties for other business purposes.

Fifth, the congressional deliberations on the precursors of RA 11212 make it crystal clear that Sections 10 and 17 exhibit all the elements of a bill of attainder.

First, the language of
Sections 10 and 17 and legislative
history of RA 11212 single out
PECO as a wrongdoer for the
confiscation of its properties by
MORE for the latter's take-over
and immediate benefit and use.
The Explanatory Note for the precursor of RA 11212, House Bill No. 8132, identifies PECO as a wrongdoer in this manner:
The quality of service of PECO has been wanting. Among the complaints against PECO are: overbilling/overcharging, arrogant personnel/poor customer relations, distributor related outages, inadequately maintained lines, inadequate investment in distribution facilities, and inordinate delay in the restoration of power services, among others.
Section 10 refers to the institution of expropriation proceedings and does not expressly identify PECO as the object of the confiscation. That PECO however is the object of Section 10 is clarified by Section 17 when it referred to PECO and its facilities. Besides, Section 10's reference to MORE's franchise area means no other than PECO and its properties.

Quoted below extensively, the deliberations on RA 11212 make it clear as day that PECO's properties are the object of the legislated confiscation for MORE's take-over and immediate benefit and use.

Of late, Senator William Gatchalian's statements have confirmed the singling out of franchise holders for the imposition of penalties against them for alleged past infractions. He was quoted to have said:
In fact, he said, any legislator could seek a review of Meralco's franchise as part of Congress' oversight authority even before the power distributor could apply for an extension.

"Based on our experience with ABS-CBN, the sins of the past can come and haunt you. In other words, during the deliberations of its franchise, this type of violation can be a basis for the revocation or non- extension of (Meralco's) franchise," Gatchalian said.

"This could be a 'bad record' against (Meralco) ... It could be a hindrance (for securing a new franchise)," he cautioned.[19]
Second, through Sections 10 and
17 and its deliberations, Congress
has
already determined:

(i)
the existence of all the elements
 justifying the expropriation of
PECO's properties by MORE,


(ii)
as well as the propriety of
MORE's take-over and
immediate use of and benefit
from these properties,

and thus, has made the judicial
proceedings for expropriation by
MORE against PECO
a mere
ceremonial procedure.


The texts of Sections 10 and 17, together with the deliberations on these provisions, have already decreed the presence of all the elements for the valid expropriation of PECO's properties.

Congress has said that there is public use for the confiscation lock, stock and barrel of PECO's properties. The ponencia echoes this legislative determination. This contradicts the doctrine that the determination of whether a given use is a public use is a judicial function.[20]

This legislative determination disregards the crucial fact that the public use would NOT have come about, or would not have arisen or not have been created, but for the legislatively endorsed business plan of MORE as the new franchise holder simply to take over PECO's properties as it did not have the facilities to establish, operate, and maintain its franchise.

Would this type of public use legitimately fall within the rubric of public use for eminent domain purposes, when public use was brought about by bringing in a new franchise holder that can discharge the franchise only by taking over the assets of the immediately preceding franchise holder? The fact is that the courts have been boxed in and painted into a corner to acknowledge and affirm this type of public use because of the urgency to provide continuity in the provision of electricity to the people in the franchise area.

So far as the element of public use is concerned, the courts can no longer decide otherwise when Congress has resolved the presence of this element. The court proceedings for expropriation have become a fait accompli with the outcome already decided by legislative fiat.

The next element already resolved by Congress to exist is genuine public necessity. Section 10 expressly mentions that the taking of PECO's properties is actually necessary for the establishment, operation, and maintenance of MORE's franchise.

Section 10 lists PECO's "poles, wires, cables, transformers, switching equipment and stations, buildings, infrastructure, machineries and equipment," as being actually necessary for the alleged public use the franchise is supposed to realize. Section 17 reinforces this determination of genuine public necessity when it mentions PECO and authorizes the expropriation of properties within the franchise area that are actually necessary for the franchise, namely, those mentioned in Section 10.

So did the congressional deliberations quoted below, which confirmed that the only way for MORE to establish, operate, and maintain its franchise is for it to take over PECO's properties.

What is problematic about Section 10 and Section 17 is the preclusion of any debate on the genuine public necessity of expropriating PECO's "poles, wires, cables, transformers, switching equipment and stations, buildings, infrastructure, machineries and equipment." Section 10 is categorical - it mentions the foregoing properties as examples of those properties that are "actually necessary for the realization of the purposes for which this franchise is granted." Section 10 and Section 17 forestall a judicial determination as to the genuine public necessity for the taking of these properties.

In Vanhorne's Lessee v. Dorrance,[21] the public necessity warranting the transfer of properties from one private owner to another private owner, as in the present case, must be nothing short of "urgent cases, or cases of the first necessity." This type of condemnation cannot be likened "to the case of personal property taken or used in time of war or famine, or other extreme necessity[, or] to the temporary possession of land itself, on a pressing public emergency, or the spur of the occasion. In the latter case there is no change of property." Hence, condemnation of one's property ought to be a remedy of last resort.

De la Paz Masikip v. The City of Pasig[22] explains that the requisite of genuine public necessity is defeated by the existence of properties and remedies other than or alternative to expropriation:
In this case, petitioner contends that respondent City of Pasig failed to establish a genuine necessity which justifies the condemnation of her property. While she does not dispute the intended public purpose, nonetheless, she insists that there must be a genuine necessity for the proposed use and purposes. According to petitioner, there is already an established sports development and recreational activity center at Rainforest Park in Pasig City, fully operational and being utilized by its residents, including those from Barangay Caniogan. Respondent does not dispute this. Evidently, there is no "genuine necessity" to justify the expropriation.

The right to take private property for public purposes necessarily originates from "the necessity" and the taking must be limited to such necessity. In City of Manila v. Chinese Community of Manila, we held that the very foundation of the right to exercise eminent domain is a genuine necessity and that necessity must be of a public character. Moreover, the ascertainment of the necessity must precede or accompany and not follow, the taking of the land. In City of Manila v. Arellano Law College, we ruled that "necessity within the rule that the particular property to be expropriated must be necessary, does not mean an absolute but only a reasonable or practical necessity, such as would combine the greatest benefit to the public with the least inconvenience and expense to the condemning party and the property owner consistent with such benefit."

Applying this standard, we hold that respondent City of Pasig has failed to establish that there is a genuine necessity to expropriate petitioner's property. Our scrutiny of the records shows that the Certification issued by the Caniogan Barangay Council dated November 20, 1994, the basis for the passage of Ordinance No. 42 s. 1993 authorizing the expropriation, indicates that the intended beneficiary is the Melendres Compound Homeowners Association, a private, non-profit organization, not the residents of Caniogan. It can be gleaned that the members of the said Association are desirous of having their own private playground and recreational facility. Petitioner's lot is the nearest vacant space available. The purpose is, therefore, not clearly and categorically public. The necessity has not been shown, especially considering that there exists an alternative facility for sports development and community recreation in the area, which is the Rainforest Park, available to all residents of Pasig City, including those of Caniogan.

The right to own and possess property is one of the most cherished rights of men. It is so fundamental that it has been written into organic law of every nation where the rule of law prevails. Unless the requisite of genuine necessity for the expropriation of one's property is clearly established, it shall be the duty of the courts to protect the rights of individuals to their private property. Important as the power of eminent domain may be, the inviolable sanctity which the Constitution attaches to the property of the individual requires not only that the purpose for the taking of private property be specified. The genuine necessity for the taking, which must be of a public character, must also be shown to exist.
Sections 10 and 17 are all-encompassing in that they already a priori authorize the condemnation of "poles, wires, cables, transformers, switching equipment and stations, buildings, infrastructure, machineries and equipment" even during the transition period without any showing of a genuine public necessity in that there are no alternatives to taking them.

PECO's situation is akin to those early cases that litigated the ban against bills of attainder:
Daniel Webster was one of the most articulate critics in opposing legislative attempts to justify bills of attainder with the claim that whatever the legislature did satisfied due process or the law of the land. Webster gave his views on this issue in the cases involving Dartmouth College. Webster acted as counsel for the college in arguments before both the New Hampshire Supreme Court in 1817 and on appeal to the U.S. Supreme Court in 1819. As described in Trustees of Dartmouth College v. Woodward, the New Hampshire legislature passed a law that fundamentally altered the college's corporate form. It is significant that this was not a state college, but a wholly private one. The legislature expanded the number of trustees from 12 to 21, transferred college property to the new trustees, and authorized the treasurer to retain and hold college property against the will of the original trustees. Webster decried the legislation as unauthorized. He noted that in passing this bill, the legislature had targeted a single entity for improper treatment, passing sentence upon the college as if the legislature were a court promulgating a judgment. Webster alluded to Blackstone, noting that the New Hampshire acts "have no relation to the community in general, and which are rather sentences than laws."

In response to New Hampshire's claim that its acts satisfied due process because the legislature created the law of the land, Webster noted:

Everything which may pass under the form of an enactment, is not, therefore, to be considered the law of the land. If this were so, acts of attainder, bills of pains and penalties, acts of confiscation, acts reversing judgments, and acts directly transferring one man's estate to another, legislative judgments, decrees and forfeitures, in all possible forms, would be the law of the land. Such a strange construction would render constitutional provisions, of the highest importance, completely inoperative and void. It would tend directly to establish the union of all powers in the legislature.

Therefore, when the legislature acts in a judicial capacity and passes a bill of attainder taking private property, and then seeks to proclaim itself above challenge in doing so, the legislature denies due process and engages in the most egregious of takings. The ban on bills of attainder was designed specifically to protect private property from such an eventuality. For Webster, New Hampshire's actions in respect to the college and the taking of its property constituted a due process/law of the land violation, and defied the separation of powers precisely because the legislature exceeded its authority and acted as a judicial body.

The 1838 Maryland case Regents of the University of Maryland v. Williams forcefully restated this point. In this case, the court decried state legislation whereby the university's property was taken and given to a new board of trustees, just as in Dartmouth College. The court commented on the legislature's improper intrusions on judicial power in these words:

If the transferring one person's property to another, by a special and particular act of the legislature, is a [sic] depriving him of his property, by or according to the law of the land, then any legislative judgment or decree, in any possible form, would be according to the law of the land, although there existed at the time no law of the land upon the subject, and that too by a tribunal possessing no judicial power, and to which all such power is denied by the constitution. Such a construction would tend to the union of all the powers of the government in the legislature, and to impart the attribute of omnipotency to that department, contrary to the genius and spirit of all our institutions; and the office of courts would be not to declare the law or to administer the justice of the country, but to execute legislative judgments and decrees, not authorized by the constitution.[23]

In sum, the ban on bills of attainder is, in many ways, the quintessential declaration of the need for a separation of powers. If bills of attainder are allowed, then the legislature is supreme, and neither the judiciary nor any other body can question or set aside the legislature's acts. The ban on bills of attainder bridged the gap between the separation of powers embodied by the Constitution's framework and takings law as described in the Fifth Amendment. Bills of attainder are judicial acts by the legislature, in which the legislature defies takings law by taking property without following the proper method. A taking needs to be consummated in a certain way, and a bill of attainder is the wrong way. A legislature may not sit as a judicial body and declare whatever it does as satisfying due process or the law of the land. Hence, a proper understanding of the intent and scope of the ban on bills of attainder clarifies the separation of powers and increases an understanding of its true meaning as an unbreachable dividing line separating the reach of the different branches of government.[24]
There are existing alternatives for the properties already adjudged by RA 11212 as being "actually necessary." To be sure, MORE can obtain buildings other than PECO's to establish and run its franchise. This is also true for PECO's poles, wires, cables, transformers, switching equipment and stations, infrastructure, machineries and equipment. There is no conclusive showing of genuine public necessity to expropriate these items - yet Sections 10 and 17 have already determined that they are actually necessary for expropriation.

As MORE admitted during the Committee Hearings (see below for a more extensive treatment):
Well, the other option is definitely MORE Power is ready to build its own distribution assets, 'no. We can provide our own personnel and, well, again, as also mentioned during the last, I think, during the last two hearings, 'no, we were saying that personnel is not really that difficult to source, 'no, since it is readily available in the market."
MORE also acknowledged that it can allegedly build its facilities and operate the franchise in only a year's time: "... since I think capital is not a problem for us, if let's say, we're given at least a year, I mean I think we can ... we can actually come up with the system. Because like, let's say, substations, there are mobile standby substations that we can use immediately, deploy immediately while, let's say, building the permanent substations, 'no. So, I guess, again, I mean, since capital is not a problem for us then, I think at least a year would be more or less right... "

This shows the lack of genuine public necessity for the taking, which Sections 10 and 17 have unfortunately already adjudged to be present to justify the condemnation.

Mere convenience for MORE is not what is required by law as the basis of genuine public necessity. Even in the face of necessity, if it can be satisfied without expropriation, the same should not be imposed. The convenience of the condemning party has never been the gauge for the exercise of eminent domain.

The true standard for genuine public necessity is adequacy. Hence, when there is already an existing adequate alternatives, as in this case, even when the alternatives, for one reason or another, be inconvenient, the need to expropriate is entirely unjustified.

Lastly, Section 10 has as well determined a presumptive amount for the just compensation to be paid by MORE to PECO.

The deliberations have also pegged an amount for just compensation (see below).

Congress has to peg the amount of just compensation because this amount would be added to MORE's billings to its consumers as a means of reimbursing itself of such payment, and therefore, would ultimately impact on MORE's viability as a franchise.

Reducing the judicial
expropriation proceedings to a mere
ceremonial function


What is clear from both the language of Sections 10 and 17 and the legislative intent as expressed during the Committee Hearings is the singling out of PECO and the determination by legislative fiat of the presence of all the elements to validate the taking of its properties.

RA 11212 has resolved the elements of public use and genuine public necessity, and the presumptive quantum of just compensation. Thus, the statute has rendered any court proceeding on expropriation to be merely ceremonial.

Third, the legislative confiscation
of PECO's properties for
MORE's take-­
over and immediate benefit and use is
the
punishment for PECO's alleged
wrongdoings
, which in turn is a direc
t outcome of the non-renewal of its
franchise and the award of the franchise
to MORE.


To stress, the element of punishment in the bill of attainder test does not mean that the legislature has to convict a person of a specified crime or to exact punishments of pain or death.

Burdens and deprivations upon targeted persons or entities, without any formal legislative pronouncement of moral blameworthiness or formal intent to punish, may constitute punishment depending on this test - whether the legislation has a punitive objective or a legitimate non-punitive legislative purpose.

Where the legitimate legislative purpose is non-existent or is far out­weighed by an intention to cause deprivation, it is reasonable to conclude, that punishment of individuals disadvantaged by the enactment was the purpose of the legislators.

As stated, the test involves two (2) steps. First, identify if the legislation looks at past conduct as a wrongdoing. Second, determine if the legislation imposes burdens or deprivations upon that past conduct. To complete the second step in the test, consider the three (3) factors in resolving whether the statute is punitive:

(1)      whether it fell within the historical meaning of legislative punishment (historical test),

(2)     whether, viewed in terms of the type and severity of burdens imposed, it could reasonably be said to further non-punitive legislative puiposes (functional test), and

(3)   whether it evinced an intent to punish (motivational test).

Here, Sections 10 and 17 of RA 11212 originated from the alleged wrongdoings of PECO as a franchise holder. Upon this alleged past misconduct, burdens and deprivations are imposed: the non-renewal of PECO's franchise, the award of the franchise to MORE, and the latter's take-­over of PECO's properties through expropriation whose propriety Congress has already determined through the assailed provisions.

This fulfils the first step of the test.

As regards the second step, I first focus on the historical meaning of legislative punishment or the historical test of punishment. According to the congressional deliberations quoted below, the legislative confiscation of PECO's properties has been decreed to eliminate harm to innocent third parties and to the viability of MORE as the new franchise holder, i.e., the continuous supply of electricity to consumers by MORE. It may also be reasonably presumed that Congress wants to send a message via the legislated condemnation of properties to franchise holders to shape up or ship out, i.e., general and specific deterrence. Together with the protection of people and communities, deterrence is the traditional and historical justification for punishment.

As borne by the congressional deliberations (see below), routine expropriation clauses in franchise grants do not function as the principal and primary backbone for the establishment, operation, and maintenance of a franchise. This type of clause does not settle the propriety of expropriation and allows courts to determine the propriety of expropriation. But routine expropriation clauses are unlike Sections 10 and 17 of RA 11212 where Congress has already put the bind on courts to complete the expropriation of PECO's properties to ensure the supply of electricity in the franchise area. Nothing but punishment justifies the compulsion and urgency to expropriate PECO's properties.

I will also quote Senator William Gatchalian's statements which confirm the claim that PECO has been punished not only through the non­renewal of its franchise (which Congress admittedly has the constitutional authority) but also through the expropriation of PECO's properties via Sections 10 and 17. The Honorable Senator is quoted to have said:
As of March, Meralco had 6.4 million residential accounts, or 92 percent of the total in its franchise area in Metro Manila and neighboring provinces. Commercial customers accounted for 530,864 (8 percent) connections and industrial customers, 10,580 (0.2 percent).

"I'm pleased with the swift resolution (of the ERC) to impose a fine ... But the penalty of P19 million, for me, is just a drop in the bucket for Meralco," Gatchalian said.

"I think the almost P300 million in penalty is reasonable enough because their violation is nonconformity to the orders of the ERC," the senator said.

"If they still resist, I will advise ERC to mete out heftier fines and find other ways to penalize (Meralco)," he said in a separate radio interview.

No breakdown of charges

Gatchalian assailed Meralco and other power distributors for their continued failure to clearly explain to their customers the breakdown of monthly charges, such as the collection of environmental fee and feed-in- tariff allowance and a universal tax on all electric consumers.

He said the recent decision of the House of Representatives to deny ABS-CBN's application for a new franchise should be a lesson to all holders of legislative licenses.

In fact, he said, any legislator could seek a review of Meralco's franchise as part of Congress' oversight authority even before the power distributor could apply for an extension.

"Based on our experience with ABS-CBN, the sins of the past can come and haunt you. In other words, during the deliberations of its franchise, this type of violation can be a basis for the revocation or non- extension of (Meralco's) franchise," Gatchalian said.

"This could be a 'bad record' against (Meralco) ... It could be a hindrance (for securing a new franchise)," he cautioned.[25]
Fourth, the non-punitive legislative
purpose for the legislative confiscation of
PECO's properties for MORE's take-over,
benefit and use
is far-outweighed by the
legislative intent to deprive PECO of its
properties.


For one, the public purpose for the
confiscation arose solely from the utter
inability of MORE as the new franchise holder
to provide the facilities and technical
knowhow to establish, operate and maintain
its franchise requirements.


But for this utter inability of MORE,
there would have been NO non-punitive
legislative purpose for the legislative
confiscation of PECO's properties for MORE's
take-over, benefit and use
. The non-punitive
legislative purpose was a created or
manufactured need when Congress allowed a
non-equipped and ill-prepared entity to take­
over the franchise and authorized a business
plan that plainly revolved around the take­
over of the existing franchise holder's
properties.


As a result, it is reasonable to conclude
that the punishment of PECO as the entity
disadvantaged by RA 11212 is the
legislation's
only preponderant purpose
.[26]

Equally important, the condemnation of
all of PECO's properties lock, stock and
barrel, is clearly overbroad in relation to the
purported legitimate purpose of RA 11212 as
it unnecessarily precludes PECO from using
its properties for other business purposes.

I shift now to the functional test of punishment - whether, viewed in terms of the type and severity of burdens imposed, it could reasonably be said to further non-punitive legislative purposes.

The functional test of punishment balances the backdrop of the confiscatory nature of RA 11212 against its non-punitive purpose. The latter refers to the uninterrupted provision and distribution of electricity to consumers in the franchise area.

Less burdensome alternatives, however, could have been resorted to by Congress to achieve this non-punitive objective. For one, it could have required the winning franchisee to be ready with its own facilities; for another, it could have left the determination of the propriety of expropriation to the courts, without having to determine by itself that expropriation is the key to MORE's assumption as franchise-holder and that all the elements of expropriation are already present vis-a-vis PECO's properties.

Indeed, while I acknowledge that Congress has a legitimate interest in ensuring the uninterrupted supply of electricity in the franchise area -

(i)
the specificity of the affected party - PECO,


(ii)
the uniqueness of the congressional action - as admitted by the Energy Regulatory Commission during the congressional deliberations (see below), and


(iii)
the breadth of the restrictive action in this case - the wholesale condemnation of PECO's properties, since these properties are its only properties and will result in its bankruptcy as a business entity regardless of the nature of its subsequent business or businesses PECO engages in,

all these render Sections 10 and 17 disproportionately severe and thus punitive under the functional test of punishment.

Worse, the public use and necessity for the confiscation of PECO's properties arose solely from the utter inability of MORE as the new franchise holder to provide the facilities and technical knowhow to establish, operate, and maintain its franchise requirements. But for this utter inability of MORE, there would have been NO non-punitive legislative purpose for the legislative confiscation of PECO's properties for MORE's take-over, benefit, and use. The non-punitive legislative purpose was a created or manufactured need when Congress allowed a non-equipped and ill-prepared entity to take-over the franchise and authorized a business plan that plainly revolved around the take-over of the existing franchise holder's properties.

Thus, it is reasonable to conclude that the punishment of PECO as the entity disadvantaged by RA 11212 is the legislation's only preponderant purpose.

Equally troublesome, the condemnation of PECO's properties lock, stock, and barrel, is clearly overbroad in relation to the purported legitimate purpose of RA 11212. This legislated approach unnecessarily precludes PECO from dedicating and using its properties for business purposes other than the distribution of electricity in the franchise area.

Fifth, the congressional
deliberations on the precursors of RA
11212
make it crystal clear that
Sections 10 and 17 exhibit all the
elements of a bill of attainder.


The legislative intent to punish or the motivational test of punishment unearths Sections 10 and 17 as products of congressional deliberations which show the intent to single out PECO, adjudge it as guilty of wrongdoings, and confiscate its properties for MORE's convenient takeover.

The congressional deliberations revolved around MORE's business plan to take over the operations and properties of PECO - simply because MORE has none of the facilities AND personnel to establish, operate and maintain its franchise. The intent behind RA 11212 is to impose burdens and deprivations upon, and to make a sacrifice out of, PECO. Specifically:
  1. Takeover by MORE of PECO's facilities once franchise is granted to the former since MORE does not have the facilities to operate its franchise:
MR. CASTRO. Your Honor, well, what we are hoping is that if their franchise will not be granted or the extension will not be granted, we are hoping to—well, if granted the franchise- to operate and maintain the distribution system of their existing network, Your Honor.

REP. UYBARRETA_ So, on the assumption that on January 2019 the current franchise of PECO will not be renewed, then you will take over.

MR. CASTRO. Your Honor, that is the...

REP. UYBARRETA. Yeah, that is the premise because you are applying.

MR. CASTRO. Yes, Your Honor.

REP. UYBARRETA. And do you have the necessary infrastructures to supply the customer needs of Iloilo?

MR. CASTRO. At the moment, well, I would say we don't have it but if given the... granted the franchise and well, the existing franchise holder is also... Well; if the franchise is extended, well, we are considering to also put up our own infrastructure, Your Honor.

REP. UYBARRETA. What is the current growth as far as demand is concerned of Haila city?

MR. CASTRO. I am sorry, Your Honor, the current growth of?

REP. UYBARRETA. Demand, as far as power is...

(MS. AID A P. MOLINYAWE TOOK OVER)

REP. UYBARRETA You mentioned earlier iyong reduction of rates, iyong customer service, iyong upgrading of customer satisfaction, iyong pagbabawas natin ng brownout and instances. Well, these are all good for the consumers and gusto rin namin iyon. But here in our... the Committee, we would like to be assured that the... ultimately the customers of Iloilo City hindi mapre-prejudice. Iyon naman lang po ang gusto namin dito.

We are one with you as far as that aspect is concerned. Kasi mahirap na... alam mo po pag pinag-uusapan natin ang mahal na kuryente, madali tayong umangal. But ang hindi natin nare-realize ang pinakamahal na kuryente ay iyong walang kuryente. And we're talking about inflation here, mahal ang gastusin sa bigas, marami ang nagugutom. Pera pag dineprayb(deprive) ninya iyong mga kababayan natin from Iloilo na mapanood iyong Probinsiyano, patay tayong lahat diyan. That's the reason why we're trying to help you achieve your goals also. So, you mentioned wala kayong infrastructure right now. Wala kayong substation, wala kayong linya currently, and you intend to take... to supply them by year 2017... ah, 2019. Doon lang po ako may worry na ano. Kasi, well, you can contract although until such time that your amendments are approved the Securities and Exchange Commission, then you can contract with suppliers. But again iyong goal ninyo is to distribute and by distribution you need all these infrastructures and facilities. You need the substation na pagdadalahan n'yo, para icascade ninyo, ibaba ninyo, you need the 69 KB lines. You need secondary and collateral lines. You need all the transformers to bring it down to the consumers. Kaya sabi ko nga po sa inyo eh mahirap tayong hindi natin mabigyan iyong Iloilo ng kuryente. So, can you just enlighten this Representation and also this Committee on the exact plan as far as MORE Corporation is concerned?

MR. CASTRO. Yes, Your Honor. Thank you for that comment, Your Honor. Yeah. Again, our base case, I would say, is the... if the franchise of PECO will end and we may have... well, we will be granted the franchise, 'no, is, well, we will take over the assets of PECO, 'no. And, well, these are... Your Honor, that's correct that, well, depriving consumers of power, 'no, is... well, our primary... well, is not... well, may not be good. It's not really good. But what we have in mind, Your Honor, is that in the long term, 'no, when... if we are able because we are confident that we will be able to bring down the rates, 'no. I mean, given the basket of suppliers that they have now as was flashed earlier, they are not taking advantage. Or the consumers are not even taking advantage of the low power that is being provided by the... that is available in the open market, 'no. And... sorry.
  1. Because PECO's facilities are already sufficient to run the distribution of electricity within the franchise area, the legislative intent is to determine with finality the existence of public use and genuine public necessity, regardless of the presence of alternatives to avoid the manufactured public use and necessity of expropriation.
REP. UYBARRETA. (Continuing) ... kabisado. Ilan bang ... ilan ... do you have a manufacturing plant there, do you have a mall, do you have big factories?

MR. CASTRO. Your Honor, the customer profile ... well, Iloilo ... well, the franchise area is about 66,000 customers. And from the official records that we have seen that are publicly available, there is only one big customer, all the rest. .. well, I would say distributed between residential, commercial establishments, government offices, 'yun. So, it's a... well, definitely there are commercial, especially recently when Megawide or Megaworld, Ayala and all the others started to put up the malls the last two... well, three to four years. The... well, rather, the customer profile has already... well, for commercial has already increased but in terms of industrial, I would say it is on the low side, Your Honor.

REP. UYBARRETA. And these malls that you mentioned, are they sourcing their power sa current franchise holder or are they directly connected?

MR. CASTRO. Yes, Your Honor. They are sourcing their power from the current franchise holder, Your Honor.

REP. UYBARRETA. So it is, more or less, safe to presume that the bulk of the revenue comes from these three malls that you mentioned?

MR. CASTRO. Well, if we lump the commercial establishments together vis-a-vis the whole customer profile, well, I would say that, yes. I mean, it's a significant contribution coming from the commercial. .. what you call this, commercial portion, Your Honor.

REP. UYBARRETA. Given the franchise area that you are applying for and the customer mix and profile, in your estimate, how many substation do you need? Kasi part of the problem as far as outages are concerned is the lack of substation, so I think it's within your CapEx plan, so how many do you ...

MR. CASTRO. Your Honor, well, per our technical, the existing five actually are sufficient for now. But, I think, well, what we believed in is that there are improvements and upgrades that are needed in the substations. And may I pass, well, the floor to our chief technical officer, please, Mr. Chair?

THE CHAIRPERSON. Mr. Guevarra is recognized.

MR. AMADOR T. GUEVARRA (Chief Technical Officer, MORE Minerals Corporation). Mr. Chair, In the substations, we have five existing substations but for the growth we are thinking, we need to upgrade the 50 MVA substation there in order to cater and we can deliver more reliable power supply there in Iloilo. We need to upgrade the 50 MVA. That's what we saw in the existing substation there in PECO.

REP. UYBARRETA. So, you were talking about the existing.

MR. GUEVARRA. Yeah.


REP. UYBARRETA. We're not talking about new ones. We're just talking about existing. 'Yung sa PECO ba 50 'yung pinakamatass nila? Anong pinakamababa nila, 10?

MR. GUEVARRA. Ten, yeah. Ten MVA, Your Honor.

REP. UYBARRETA. Ang pinakamababa nila?

MR. GUEVARRA. Yeah.

REP. UYBARRETA. Ilan 'yung 10 nila? Han 'yung 50 nila?

MR. CASTRO. Sorry, Your Honor. Well, we don't have that data for now,

Your Honor.

  1. The legislative intent is to ascribe public use and genuine public necessity to the condemnation of PECO's properties and to peg the amount of just compensation, regardless of a court proceeding.
REP. UYBARRETA. Mr. Chair, over and above what they presented today and the business plan, can we also get from them a more technical report and plan regarding how they intend to distribute electricity to the franchise area that they are applying for. Kasi ganito lang po iyan, at the end of the day, we are answerable to the consumers of the franchise area that you are applying for, while they are saying that it's hard to reinvent the wheel, pero alam naman po natin and meron palang existing franchise ngayon doon and why fix something that is not broken. That's just my concern. But I also advance the concept that we... the customer is the boss. Ultimately, kung anong ikabubuti ng consumer, doon tayo and part of our oversight function here is to safeguard the interest of the consumers. We are... I am asking hard questions because, ultimately, si Chairman ko ang sisisihin kung sakaling maano tayo. So, Mr. Chair, if I may just be allowed a few more question, just for my satisfaction?
THE CHAIRPERSON. Please proceed.

REP. UYBARRETA. In the event, Boss, na you take over na ano, how do you intend to buyout the assets from the present franchise holder?

MR. CASTRO. Your Honor, well, based on the ...

REP. UYBARRETA. Kasi currently sila ang may-ari, hindi ba, Boss?

MR. CASTRO. Yes.

REP. UYBARRETA. So, ang ano na lang natin diyan is that pag wala na silang silbi, eh, sooner or later they have to sell it to someone and pinakamagandang bentahan, eh, kayo. Ang problema lang kung... eh, paano kung hindi ibenta sa inyo?

MR. CASTRO. Yes, Mr. Chair, Your Honor. Well, based on the financial statements that we've seen of PECO, the hard assets or... yeah, the hard assets out of that about three billion of total assets, the hard assets that's directly related to the business is about 460 or 480 million pesos.


REP. UYBARRETA. Four hundred sixty?

MR. CASTRO. If I'm not mistaken it's in the region of 460 to 480 million pesos, Your Honor. So, well, if there will be an offer, then, definitely, we can ... well, we will buy the assets and to the extent that we think would be justifiable. Because at the end of the day, well, whatever the price is, is a price to certain extent that would be reflected into the bills of the consumers, anyway.

REP. UYBARRETA. Yes. That's where I'm getting to.

MR. CASTRO. Yes, Your Honor.

REP. UYBARRETA. Kasi ang promise ninyo kanina is to lower the rates.

MR. CASTRO. Yes, Your Honor.

REP. UYBARRETA. But, again, your exposure and your expenditure will ... ipa-pass ... ano natin iyan, pass on iyan sa ganun. So, medyo balansehin natin.

MR. CASTRO. Yes, Your Honor. Definitely, we will... what do you call this, we will have to agree on what that price is because as I was mentioning earlier, Your Honor, well, if it's priced too much and it will be reflected in the rates, anyway, and it wouldn't help in bringing down the rates for the consumers, then we may have to opt for other... other option which is maybe through ... well, if we put up our own ...


REP. UYBARRETA. Yeah.

MR. CASTRO.... system.

REP. UYBARRETA. That's the only option that you have, actually.

MR. CASTRO. Yes, Your Honor.

REP. UYBARRETA. Kaya nga I'm concerned about the timeline kasi we know how... how long a distribution system is.

MR. CASTRO. Yes, Your Honor. We also recognize that.

REP. UYBARRETA. Do you know what I'm driving at?

MR. CASTRO. Yes, Your Honor.

REP. UYBARRETA. And secondly, alam ba natin kung ilan 'yung empleyado nung

PECO?

MR. CASTRO. Your Honor, if... well, based on the official records, it's says about 88 employees...

MR. CASTRO. (Continuing)... 88 employees, Your Honor.

  1. MORE has none of the technical people to run the franchise, hence, it was a fait accompli for MORE to condemn, as Section 10 and Section 17 condemn PECO's properties and decree the hiring of PECO's staff
REP. UYBARRETA. And currently, this MORE Minerals Corporation, how many ang staff ninyo ngayon?

MR. CASTRO. Well, Your Honor, for now since, well, it is only very recent that we've activated it and yeah, since the mining has never operated, so we actually don't have any people and staff under the current setup, Your Honor. So, right now, to answer your question, actually what we have are the technical people that are with us here and as I've mentioned in the last... during the Jast hearing, there are talents that are actually available in the market
, now whom we think are able to... would be able to help us in this corporation, Your Honor.

REP. UYBARRETA. Well, ito lang, in the event lang, we are not saying with absolute certainty pa naman dito, we are all under the ano, in the event na ano, are you open to absorbing employees coming from PECO?

MR. CASTRO. Your Honor, also in the event that if we will be given the franchise, granted the franchise, yes. I mean, you have our commitment that we will, we will absorb.

REP. TAMBUNTING. Thank you, Mr. Chair. I would like to ask this question sa ERC. Sabi ni Cong. Caloy na ang nagiging problema, what happens in a scenario wherein one has the franchise and the other one has the asset, anong magiging remedy ng ERC diyan? Anong ruling ninyo diyan? Paano ninyo didiskartehan iyan?


MR MAATUBANG. ML Chair, Your Honor, actually, we have submitted that in our position paper, Your Honor, and already discussed that during the previous hearing, Your Honor, that in the event that there are two DUs in one geographical location, there will be economies of scale, that problem. So, in the end, there will be a problem with the consumers. And in terms of assets, Your Honor, that's the problem, the other one has no assets on how it will be delivered their electricity and the other one has the assets.

REP. TAMBUNTING. In the event that only one will be given the franchise, ang isang assumption mo riyan sa statement mo,dalawa sila.

MR. MAATUBANG. Yes, Sir.

REP. TAMBUNTING. Ngayon, kung isa lang, paano?

MR. MAATUBANG. That's the problem, Your Honor. So that will be a problem in terms of regulation, in terms of prices because there will be economies of scales in terms of rate regulations, Your Honor. And at the same time, the one with no asset, Your Honor, basically they will... there's the option to tap the other one for the billing of the service which is being done right now, like for the sales in our electric cooperatives. That would also be a scenario, Your Honor.

REP. TAMBUNT1NG. So iyong mga... ang precedence niyan will be the winning franchise holder will have to negotiate with the one with the asset and acquire. Ganyan ang mangyayari diyan. Iyong. mga cooperatives na sinasabi mo kapag, may nananalong iba, siya ang bumibili nung asset nung natalo. Tama ba iyon? lyon ba ang precedence niyon?

MR. MAATUBANG. No, Your Honor. I am just only saying that in case there are two DUs, then one DU that has no assets, has to.,, has an option to wheel its power to the other one. So they will have to rent the distribution utility to deliver its power to its customers, Your Honor.

REP. GATCHALIAN. Mr. Chair, can we ask if that is allowable by law, what you are saying?

MR. MAATUBANG. Yes, right now it's open access, Your Honor. That is allowed, Your Honor.

REP. TAMBUNTING. You know, when we award a franchise, only Congress has the power to take it back because you cannot rise above sa source. Kung ang sinabi namin ikaw ang franchise holder, you cannot sublease your franchise and give it to somebody else without informing Congress because that's not transferable. So I don't think that is allowed. Your opinion, I think, is not really happening na ang prangkisa ha, prangkisa that emanates from Congress is being transferred to a different entity without the knowledge of Congress or permission from Congress.

MR. MAATUBANG. No, Your Honor, what I am saying is that in terms of access of electricity. For example, if an end-user wants to get power from other sources other than the DU, they can wheel that power to the host DU.

REP. GATCHALIAN. Mr. Chair, I think ERC has an attorney here, their legal. So maybe the question of Congressman Tambunting is better answered by Attorney Arjay.

MR. ARJAY LOUIE B. CUANAN (Attorney III, Energy Regulatory Commission). Yes, good morning, Mr. Chair. Good morning to the Members of the Committee. Actually, the question is if there is a precedent already, if the legislative franchise has been transferred or subleased to other cooperatives. Is that right?

REP. TAMBUNTING. Yes.

REP. GATCHALIAN. Is that allowable by law and is there a precedent already that happened before, for the appreciation of the Committee?

  1. The forced condemnation by legislation of PECO's properties to serve the business interests of MORE as the new franchisee is unprecedented and the first of its kind in franchise law-making and regulation.
MR. CUANAN. Yes. Regarding the first question, Your Honor, the law explicitly provides that it is not allowed to transfer or to lease the legislative franchise that has been granted by, Congress, without the permission or without the conscnt of the Congress itself, their granting power.

With respect to the second question, we actually don't have the idea yet if there is... if the said subleasing of legislative franchise has been happening because as what we've said, this is not... this is prohibited by law.

REP. TAMBUNTING. So can we go back to the first question which is, what happens if one has the franchise and the person, the incumbent whose franchise will lapse and has the assets but with no franchise, so one has the permission, the permit but the other one has the asset. What is now...how would ERC rule on this?

MR. CUANAN. Actually, Your Honor, as we speak today, we have not ruled on that particular, we have not encountered such particular issue so far, where there is a franchise holder and the other one has the asset. So probably, the existing franchise holder will take over or will buyout the assets of the old franchise holder.

REP. GATCHALIAN. So, if they will take over, through a corporate takeover, then hindi na ho nila kailangan humarap ngayong umaga dito, So they will take over the company...

REP. GATCHALIAN. (Continuing) ... the company if they want to, the corporate entity if they wanna take over the assets only without the corporate entity. And the corporate itself, the PECO, already has a franchise eh. So, why are you applying a new franchise here, if that's your intention, ha? We're just trying to understand.


MR. CUANAN. Sorry, Your Honor. I think PECO has a separate juridical entity. If they want to maintain, I mean they want to have a juridical... separate juridical personality from PECO, the existing franchise holder, so they need to secure a franchise.

REP. GATCHALIAN. So, hindi na ho applicable iyong sinagest(suggest) ni Engineer Maatubang and the question of the Honorable Tambunting about Company A who has the asset and Company B... but losing, 'no, and Company B who has the liquidity but wants to take over the asset. So, that's what we're trying to connect here and if that is allowable also by law, kayong ERC ang makakasagot diyan.

MR. CUANAN. Okay. For that, Your Honor, MORE Corporation has to secure legislative franchise. And if they will be given that franchise or granted that franchise then, probably, they can secure or buyout the assets of PECO, which is the existing franchise holder, if in case PECO will ... PECO's franchise will not be renewed. Okay, Mr. Chairman.

REP. GATCHALIAN. So, the asset only, not including the franchise. What if PECO's franchise was renewed?

MR. CUANAN. Actually, we have not encountered that, Your Honor. We have no precedent on that because... we have actually one which is Bicol Light which is already... which is still pending before the Senate. But we have not encountered a situation where there are two distribution utilities within the geographical area.

THE CHAIRPERSON. Okay, before that, the Chair would like to recognize Congressman Montoro.

I have just one additional question. Iyong pinaka... from what I understand iyong pinaka-question kasi, paano iyong transition period, for example nga sa scenario na ma- approve ang MORE? And then, let's say, hindi ma-renew kaagad iyong PECO since January mag-e-expire na, sino'ng magsu-supply ng kuryente, habang iyong MORE o iyong period na iyon na mag-expire ang PECO? Ano iyong MORE kunwari magse-set up pa nu'ng kanilang infra ng equipment, siyempre mag,.medyo may kakailanganin na time iyon eh especially if hindi naman bibilhin iyong assets na existing. So, sino'ng magsu-supply sa Panay? Like, iyong ERC ba nagbibigay ba kayo ng provisional authority na mag-operate muna sila until such time na ready na iyong MORE? Or, papaano ang magiging set-up? Hindi naman puwedeng mag-brownout iyong Panay.

REP. TEODORO G. MONTORO. Mr. Chair, can I?

REP. TAMBUNTING. I think... yes. So, is it. .. Attorney, I think the... to amend, 'no, the question really is, what if there is a standoff and they don't want to sale to the winning bidder? What... how would you rule? Would you give a PA to them pending the approval, the sale?

MR. CUANAN. Sir, may I just hand over the floor to Engineer Maatubang?

MR. MAATUBANG. Your Honor, if that is the case, Your Honor, there will be a problem in regulations in terms of how we will regulate the two distribution utilities, That's the... that's what our concern here that was submitted in this Honorable Commission.

REP. TAMBUNTING. I think very specific naman po iyong tanong. Iyong tanong is kung hindi sila magka". alam nating magkakaproblema kaya nga ho kami nagtatanong sa inyo, 'no. Alam namin may problema. Ngayon, ano hong magiging solusyon ho n'yo? Ano'ng magiging ruling n'yo diyan? Magbibigay ba kayo ng provisional permit? "O, sige, tuloy ka muna, PECO, habang nagtatayo iyong nanalong", winning franchise owner:'

MR. CUANAN. Sir, since we don't encounter yet this particular issue, can we refer this yet to the Committee, if ever, I mean, to the Commission, if ever? Give us an opportunity to confer the matter to the Commission. Because our existing policy is we grant Certificate of Public Convenience and Necessit... Necessity and Convenience to the distribution utility and that is based on the legi... or dependent on the legislative franchise being granted by the Congress. So, if the franchise is denied, so immediately ipso facto the CPCN is also denied.

REP. TAMBUNTING. Correct.

Mr. Chair, we are walking on very thin ice here, sabi nga ng ERC, this is the very first time that this is happening. Kasi nga po, ang distribution and transmission business is a natural monopoly, accepted po iyan in any country and all over the world that distribution and transmission is a natural monopoly kasi po sa laki ng gastos para mag set up ng facilities. I heard that MORE committed that they will be able to put up their facilities, their complete distribution facilities within one year, I don't want to debunk that or ano, I just wish them well. But we know for a fact that just to set up one substation entails a lot of years and months, that's just one substation. And during last hearing, it was stated that for one distribution utilities to be able to supply the need of the franchise area that we are referring to or we are discussing here, a minimum of five substations will be required. That is capital intensive. We are not even talking about the distribution lines. We are not even talking about 'yung mga capacitor, 'yung mga transformers, the meters, the new meters, the new lines that will be put in. Again, kaya I just appeal for us to be very, very careful in deciding this. I will go for any move to give better service to any given consumers. I'm all for that. But I'm also on the side of caution kasi nga ano eh, I have nothing against MORE, if they can promise better service, I'm all for that kasi at the end of the day, we are all here for the welfare of the consumers. But I just caution that kasi hindi natin napag-uusapan 'yung aspeto na 'yon that the signal that we will be ending to the lending institution and to the investors, kung ano man ang gagawin natin dito, will have repercussion on that. That's just my manifestation, Mr. Chair.

MR. OFALSA. (Continuing)...EPIRA po, RA 9136, may third party valuation po na isa- submit on the valuation of the assets. But for now po, when a... sa existing policy ng ERC in existing distribution utilities, we have guidelines using a standard on how we value the assets po. Katulad po sa electric cooperatives, we use the NEA guidelines on the valuation of the assets. For private utilities for purposes of performance-based regulated, we use po iyong SKM valuation namin. This is more on technical valuation of the existing assets of all distribution utilities po.

REP. TAMBUNTING. So, in previous take overs, this is the same formula that was used.

MR. OFALSA. Wala pa kasi kami, Sir, I do not recall of any take overs of distribution. Siguro, Sir, in the past, iyong mga maliliit, ano, iyong mga una...


REP. TAMBUNTING. Iyong hindi pa tayo ipinapanganak.

MR. OFALSA. Yes, opo, mayroon po sigurong ganoon. Pero in my experience po sa ERC, we did not encounter any take overs of existing franchise utility po.
  1. The expropriation of PECO's assets is the only means for MORE to be able to establish and operate its franchise. Congress has determined a priori, or prior to any court proceedings, that expropriation must take place so that MORE is able to establish and operate its franchise. Otherwise, without PECO's assets in MORE's hands, the people in the franchise area will have no electricity.
MR. CUANAN. So, the corporation cannot proceed with the distribution activity.

REP. TAMBUNTING. So, you're trying to say that the person with the franchise has the upper hand?

MR. CUANAN. Sorry, Sir?

REP. TAMBUNTING. In any area, the person with the franchise has the upper hand.

MR. CUANAN. Yes, Sir.

REP. TAMBUNTING. Now, question, is expropriation also a possibility?

MR. CUANAN. Expropriation for?

REP. TAMBUNTING. For the asset.

MR. CUANAN. You mean, the...

REP. TAMBUNTING. A winning franchise holder...

MR. CUANAN. A winning franchise holder will expropriate the...

REP. TAMBUNTING. Yes.

MR. CUANAN. We will, include that one, Sir, in the...

REP. TAMBUNTING. You don't have an answer. Thank you very much.

MR. CUANAN. Yes. We don't have an answer right now. Sorry.

REP. TAMBUNTING. Thank you very much, Mr. Chair. THE CHAIRPERSON. Congressman Montoro.

REP. MONTORO. Thank you, Mr. Chair. Magandang umaga po sa lahat. Just a point of clarification, Mr. Chair. To the applicant, have you tried... nakipag- usap ba kayo doon sa ano sa currently holder ngayon? Do they know na nag-submit kayo?

MR. CASTRO. Mr. Chair, Your Honor, well, we have not yet, well, gone formally to PECO regarding this, Your Honor.


REP. MONTORO. Exactly, Mr. Chair, magkakaroon tayo ng problema rito later on kasi wala pa silang communication or formal communication with that current holder. So, siguro in the meantime, I move for deferment muna dahil kailangan munang... we have to... for the next meeting, I move that the holder will be present here para magkaroon tayo ng ano. Baka magkaroon tayo ng problema later on. Mag-aano tayo tapos sila pa ang may hawak.[27]

x x x x

REP. UNABIA. So, Mr. Chair, I understand the franchise of PECO will expire on January, 2019? Can I ask MORE Minerals Corporation, if ever, Mr. Chair, if ever they will be granted a franchise, 'no, how long can you put up your, say, for example, DU or distribution to Iloilo, if ever?

MR. ROEL Z. CASTRO (President, MORE Minerals Corporation). Good morning, Honorable Committee and Honorable Chair. To the question of the Flonorable Unabia, if we were to put up our own system I think it would take about a year, more or less. But, again, I mean, we are still looking at the ... at the mode wherein we could ...we could take over the assets, of course, with just compensation to the existing franchise holder, Mr. Chair. Thank you.

REP. PANCHO. Ilang years po? Kasi ang sabi po nila ay it will take them at least a year to construct iyong mga bagong mga infrastructure nila. So, ilan po ang nakikita ninyo na ideal number of years na kailangan nating ibigay para doon sa winding period?

MS. GINES. Your Honors, ang isa pong alternative to them putting up is to, iyon na nga po, take over the current facilities but subject to the payment of just compensation. Kasi mayroon din naman pong portion of the cost of those facilities na equity ng PECO and then you also have the obligations. So, iyon po iyong isang alternative para ho dire-diretso iyong service po ng kuryente
. Pero iyon na nga po ang sinabi ko ho kanina, strictly speaking po. Kaya po sabi ko po kanina, strictly speaking, iyon po talaga iyong legal implication without a franchise. But I don't think na pagdating po ng alas onse... 11:59 ng gabi, eh, talagang magsha-shutoff. Hindi naman po. Hindi naman po siguro ganoon ang mangyayari.

REP. UYBARRETA. Just, actually, I will not be asking too much question already because except for the fact that I requested for a technical report which I got this morning. However, just to., for us as the Committee on Franchise, to have a wider perspective of what we are doing right now. Iyong sinabi kanina that both DUs will be operating at a loss, in layman's term, ang sinasabi doon is pahabaan ng pisi, kung sino 'yung makakatagal na lugi magpatakbo ng negosyo at mag-survive, iyon 'yung matitira. Mr. Chair, that's a very dangerous business practice. Mahirap po if we are enticing investors to come in in our country at sasabihin natin, "Pahabaan kayo ng pisi, eh anyway parehas kayong lugi eh." That's a very dangerous business concept for us. Now, just so that we will have a bigger picture also. I'm pretty sure because of my experience sa DUs and the electric cooperatives, I'm pretty sure that the existing franchise has existing loans, one hundred percent ako sure diyan, one hundred and ten percent sure ako diyan, they have existing loans because most of the time, when you upgrade or even repair your facilities, you take in loan and then you apply that sa capex application, ina-apply sa ERC and then the ERC would give them the proper rate and a time frame or a time table to recover. Naka-apply po. Now, assuming this thing will happen, ang bigger question natin is, ano ang mangyayari sa existing loans ng existing franchise holder? Are we giving a very bad signal to the investors and to the lending institutions that we have?

Mr. Chair, we are walking on very thin ice here, sabi nga ng ERC, this is the very first time that this is happening. Kasi nga po, ang distribution and transmission business is a natural monopoly, accepted po iyan in any country and all over the world that distribution and transmission is a natural monopoly kasi po sa laki ng gastos para mag set up ng facilities. I heard that MORE committed that they will be able to put up their facilities, their complete distribution facilities within one year, I don't want to debunk that or ano, I just wish them well. But we know for a fact that just to set up one substation entails a lot of years and months, that's just one substation. And during last hearing, it was stated that for one distribution utilities to be able to supply the need of the franchise area that we are referring to or we are discussing here, a minimum of five substations will be required. That is capital intensive. We are not even talking about the distribution lines. We are not even talking about 'yung mga capacitor, 'yung mga transformers, the meters, the new meters, the new lines that will be put in. Again, kaya I just appeal for us to be very, very careful in deciding this. I will go for any move to give better service to any given consumers. I'm all for that. But I'm also on the side of caution kasi nga ano eh, I have nothing against MORE, if they can promise better service, I'm all for that kasi at the end of the day, we are all here for the welfare of the consumers. But I just caution that kasi hindi natin napag-uusapan 'yung aspeto na 'yon that the signal that we will be ending to the lending institution and to the investors, kung ano man ang gagawin natin dito, will have repercussion on that. That's just my manifestation, Mr. Chair.

MR. OFALSA. (Continuing)...EPIRA po, RA 9136, may third party valuation po na isa- submit on the valuation of the assets. But for now po, when a... sa existing policy ng ERC in existing distribution utilities, we have guidelines using a standard on how we value the assets po. Katulad po sa electric cooperatives, we use the NEA guidelines on the valuation of the assets. For private utilities for purposes of performance-based regulated, we use po iyong SKM valuation namin. This is more on technical valuation of the existing assets of all distribution utilities po.

REP. TAMBUNTING. So, in previous take overs, this is the same formula that was used.

MR. OFALSA. Wala pa kasi kami, Sir, I do not recall of any take overs of distribution. Siguro, Sir, in the past, iyong mga maliliit, ano, iyong mga una...


REP. TAMBUNTING. Iyong hindi pa tayo ipinapanganak.

MR. OFALSA. Yes, opo, mayroon po sigurong ganoon. Pero in my experience po sa ERC, we did not encounter any take overs of existing franchise utility po.

REP. TAMBUNTING. Mr. Chair, may I ask the More representatives? Do you agree with the formula presented by ERC?

MR. CASTRO. Your Honors, yes, we agree with the formula. Now, however, still I think... well, when it comes... because there has been no experience 011 private company take over and... well, and let me just say that. ..just going back to that question... to the answer earlier that there has to be just compensation and I think this is related to that, Mr. Chair. The question is if, let's say, the asking price of the... well, of the existing asset owner is too high that would jeopardize the rate, ano, to the end consumer, still I think... well, an approach might not be totally acceptable because, at the end of the day, it's gonna be the consumers who will take it. So, that's why I think there has to be a deeper study on who actually owns really the assets, I mean, upon take over. Because as you correctly pointed out, part of it has already been recovered. In fact, if... well, from the distribution assets right now, if, let's say, there are assets that are fully recovered which means that consumers have already paid for it over a period of time, the question is does it still... make sure that it's still owned by PECO wherein...

REP. TAMBUNTING. Correct.

MR. CASTRO.... well, a company like us who would be negotiating for just compensation be included in the asset-based.[28]

X X X X

REP. TAMBUNTING. Thank you very much, Atty. Jan. For the transition plan which has been submitted to the ComSec, maybe we can ask Mr. Roel Castro to expound on this, with the permission of the Chair.

THE CHAIRPERSON. Mr. Castro, do you have a presentation or...

MR. ROEL Z. CASTRO (President, MORE Electric and Power Corporation). Good morning, Your Honors. Yes, we have a short presentation on the transition plan.

REP. TAMBUNTING. Please proceed.

MR. CASTRO. Next, please. So, upon granting of franchise, Monte Oro Power will negotiate with PECO for the purchase of its distribution assets. Assuming that there is... that it is positive then we will apply for the certificate of Public Convenience and Necessity and we will deploy technical personnel to conduct the operations improvement plan; develop the planning and control processes for operations and maintenance; deploy security; and conduct a total system and network audit. Should the negotiation be successful, as stated during the last hearing, we are... actually we are open and we would like to hire the existing personnel of PECO; develop a total distribution network development plan; implement the processes to determine the cost-effective capital investments, establish maintenance program; create the corporate planning group to establish and optimize management processes. Now, if there is a failure to reach an agreement, which means that PECO and MORE Power cannot... well, has no agreement on terms, MORE Power will file an expropriation case, 'no, the right to expropriate is integral part of the franchise if approved, and MORE Power will definitely pay just compensation to PECO as determined by the court.

Well, if we're still on the premise that there is a failure to reach an agreement, MORE Power will have a standby quick maintenance and response team which we are in the process of putting together that we can readily deploy in case there will be a need, in case of emergency situations where major installation like substations will be compromised. We are also in the process of already looking for a possible mobile standby substations that will be backed-up by the emergency response team. And these are facilities that are readily available. Now, for the technical and operational readiness, our... well, we're contemplating that the emergency response team which is made up of engineers, technicians, and specialists who will man important facilities/like substations are ready on call for a 24/7 deployment. Standby mobile substations in case of emergency, third-party line maintenance team and crew is also being ... we're in the process of already getting these team. The third party meter readers, as well as, we will make sure that the customer relations desk would be available 24/7 also in cooperation with the different media outlets to make sure that if there are questions or maybe any confusion ...

MR. CASTRO. (Continuing) ... confusion from the customer side, we will be able to respond to those queries. Well, the other option is definitely MORE Power is ready to build its own distribution assets, 'no. We can provide our own personnel and, well, again, as also mentioned during the last, I think, during the last two hearings, 'no, we were saying that personnel is not really that difficult to source, 'no, since it is readily available in the market. Now, on human resources, MORE Power will hire the services of the current employees who may be willing to work with us. MORE Power will hire a competent local HR Manager and, as we speak now, we actually already have applications from different... from a number of HR practitioners from Iloilo, 'no, to lay down the process of employment and among this, priority is really giving the training and development of its employees. Plans and programs-well, this is on the assumption that, well, the... we're able to come in which is... which has been laid down in the plans and programs that we've submitted to the Committee. We will make a thorough system audit. Prepare the necessary repair maintenance and even... well, from the audit, I think we'll be able to already find out if what are the improvements, immediate medium-term and long-term improvements, that will be needed. And immediately deploy the SCADA system throughout the franchise area. Well, on the distribution plan, well, I think these are some details already which we can move to the next. So, in conclusion, MORE Power will be prepared to implement the following from transition period and bring it to normal operations as soon as possible. Again, the smooth transition of normal operations including hiring of deserving employees, infusion of sufficient funding, develop and design the new distribution system, develop/implement new set of maintenance operating rules, the balance of energy, continuous training, improve responsiveness increase system, reliability and bring down the systems loss. With that, I'd like to thank the Committee for giving us the opportunity to present the transition plan. Thank you.

. . . .

REP. PADUANO. It's still pending in the Committee. Now, Mr. Chair, just an observation during the presentation of the MORE. Kasi nandun nakalagay, ongoing 'yung negotiation with the PECO para... to take over. So, ang tanong ko, Mr. Chair, ano na ngayon ang status ng negotiation? Kasi, Mr. Chair, 'pag binigyan natin ng prangkisa itong MORE, it follows dapat handa sila. Kasi the consumers in Panay Island, hindi puwedeng maghintay, hindi ba? Hindi puwedeng maghintay. 'Yung question nung expropriation, if we give them the franchise. But what if... what if. .. if we also renew the franchise, 'di ba? If we... if this Committee and this House will renew their franchise, it follows na mas nauna 'to, ang PECO, mas sila ang nagsisimula sa ngayon, 'di ba? Sa ngayon sila. Of course, it is allowed, it's a free competition. But 'yung point ko, 'yung sinasabi niyong negotiation in the presentation, siguro naman dapat malaman natin kung ano na ang status ng negotiation. And nandito rin pala 'yung mga taga-PECO. Kasi, Mr. Chair, 'yun 'yung sinasabi ko, eh, if we grant MORE because free competition natin, now... and we also grant the renewal, it follows 'yung PECO naghahanda pa. If negotiation between PE... no, 'yung MORE, if negotiation between PECO and MORE failed kung i-grant natin ang PECO and there is a pending bill in this Committee. So, Mr. Chair, I just want to be clarified about the ongoing negotiation. 'Wag muna tayo pumunta doon sa question nung granting of franchise kasi, what if it failed? I-expropriate niyo, eh, there's a pending application in this Committee, this House. So, medyo may problema tayo doon. Kaya 'yung position or proposal, 'yung negotiation, medyo may problema tayo if PECO will not negotiate with you. Walang compromise, walang agreement. Now, the question is, are you prepared?

Kung kompetisyon, okay. No problem with that. But 'yung sinasabi ko existing ... existing ngayon 'yung PECO and they are applying for renewal.' Yun lang 'yung... 'yun lang 'yung medyo mahirap kong intindihin, 'no. Hindi ko maintindihan na ongoing 'yung negotiation, nag-apply din sila, 'yung PECO, for renewal. So... Thank you, Mr. Chair.

MR. CASTRO. Well, next... sorry, Mr. Chair, next slide, please. Well, there was no mention that there is an ongoing negotiation, I mean, just to clarify. What we said is that, upon granting of the franchise, we will start... we will negotiate with PECO. So, there has been no statement about an ongoing negotiation.

Mr. Chair. Atty. Benny?

MR. TAN. Your Honor, we would prefer to negotiate so... we are not sure if we'll get our franchise so it would be presumptuous to negotiate now. Once it becomes clear that we will be able to get our franchise, we have to hurdle Senate pa. Then, we will negotiate with PECO. You mentioned the possibility that PECO will also get its franchise. Yeah, in that situation, it will be an open competition, so we will not be able to... to acquire their distribution assets. We will have to build our own distribution assets in such situation where there are two franchise holder for the same area, Your Honor.

. . .

MR. OFALSA. Okay. The letter is dated September 25, 2018, addressed to Honorable Franz E. Alvarez, Chairperson, Committee on Legislative Franchise. "During the House Representatives' Committee on Legislative Franchises hearing on House Bill No. 8132 last September 12, 2018, the Energy Regulatory Commission was directed to submit its supplemental position paper on the said bill. In compliance with the said directive, please find attached ERC's Supplemental Position Paper in response to the queries and additional information requested during the hearing. We hope that the Committee will consider the same during the deliberation of this piece of legislation. Thank you." Signed by Chairperson and CEO, Agnes V.S.T. Devanadera.

The letter... the title of this position is ERC's Supplemental Position Paper on House Bill No. 8132, AN ACT GRANTING THE MORE MINERALS CORPORATION A FRANCHISE TO ESTABLISH, OPERATE AND MAINTAIN FOR COMMERCIAL PURPOSES AND IN THE PUBLIC INTEREST A DISTRIBUTION SYSTEM FOR THE CONVEYANCE OF ELECTRIC POWER TO END-USERS IN THE CITY OF ILOILO, IN THE PROVINCE OF ILOILO.

During the Committee on Legislative Franchises' hearing on House Bill 8132 last September 18, 2018, legal issues and operational concerns on the occurrence of any of the following scenarios were raised, namely....

We go now to scenario number two - where franchise is granted to MMC and PECOs franchise is not renewed. PECO is the existing franchise electric utility with exclusive authority to operate and maintain a distribution system in Iloilo City. As such, PECO owns the only existing distribution assets in Iloilo City. In the event that PECO's franchise is not renewed and another entity that is MMC is given the franchise to operate and maintain a distribution system in Iloilo City, a question was raised on whether PECO will be allowed to operate the existing distribution system during the transition phase of MORE Minerals. As earlier pointed out in the supplemental position paper, an entity operating and maintaining a distribution system must first secure a franchise. In the case of PECO, once existing franchise expires, it may no longer engage in the business of distribution of electricity and ERC has no legal basis to issue any authority to PECO for the latter to operate its distribution system. As ERC has no authority over PECO after the expiration of the latter's franchise, the ERC will defer to the wisdom of the Congress on whether to grant PECO a legislative franchise that will allow PECO to continue operating its distribution system.

MR. INOCENCIO FERRER, JR. (Board Member, Panay Electric Company). Good morning, Mr. Chairman. Sorry but I have flu, 'no, so my voice is not very clear. I am Atty. Inocencio Ferrer, Jr. I represent PECO and the majority of the Board Members of PECO. Mr. Chairman, we have previously filed several letters opposing the House Bill of Congressman Gus Tambunting. And in answer directly to the question of whether or not PECO is amenable to selling its assets or the company to MORE, I can categorically say... state that after conferring with the majority owners of PECO, they are not amenable to sell their assets and they will contest and bring to court any move by MORE to use the government power to expropriate their assets and give it to a private entity. It is our position, Mr. Chairman, that based on the presentation of the President of MORE, he actually admitted that they don't have any assets on the electrical power distribution. He admitted that. In fact, his only plan is to buy us out and if we refuse to sell, then he will invoke the government... the government... he will use the government to expropriate our assets and award it to a private entity. Number two, the President of MORE admitted now, that's why I wanted him to admit it under oath that they don't have any personnel. They don't have any technicians, experts in the field of electric power distribution and their only plan is to hire our employees. Third, Your Honor, I don't think what he presented is a rollout plan. Usually, a rollout plan tells the Honorable Members the year-to-year activities of MORE to purchase equipment, to install equipment, to apply for permits on the barangay level, the city level to install their infrastructure. They should present that to the Chairman year- to-year. Every year how much assets they will buy. Every year, how many employees they will hire. Every year, how many equipment that they will purchase. But they have not submitted a rollout plan. Instead, what they are actually telling the public is they will invoke the power of the Constitution to expropriate our property and to award it to a private entity. I think, Your Honor, that will violate the Anti-Graft Law. Anyway, we will question that in the Supreme Court. Your Honor, may I, again, ask the Chairman to distribute the various opposition... the various opposition submitted to this Honorable Committee against... the opposition against... the very strong opposition against the application of MORE. In fact, the biggest association of power distributors, electric power distributors, in the Philippines submitted a very, very strong objection. They are the expert in the field and this association, PEPOA, they are called PEPOA, and PEPOA is a Private Electric Power Operators Association of the Philippines, the only expert association of private operator, strongly oppose the application of MORE because they don't have any assets. MORE does not have a single asset on the ground now in Iloilo City, nothing. Their only plan is just to expropriate our property and allow the government to pay us in court. Second, the Private Electric Power Operators Association, which represents all... all the private electric power distributors in the country, strongly supported the House Bill of Congressman Xavier Jesus Romualdo, House Bill 6023, in favor of PECO.... Finally, Your Honor, at that time that MORE filed its application on August 22, less than 40 days ago, MORE was a mining company. It was a mining company with only 2.5 million pesos capital and it did not have a single experience or track record in electric power distribution. Therefore, at that time they filed the application, they were not entitled. They were not qualified. And if they are now submitting the amendment of their Article, it merely states that they have... what? Two hundred fifty million pesos and they are going to try to takeover a multi- billion peso existing electric power distribution. That is incredible...

MR. CASTRO. Thank you very much, Your Honor. Well Just to reiterate, well, what we've stated during the first hearing. Yes, while we still don't have the... I would say, the... the full complement, but, well, at the officers' level, we actually have an experienced general manager of an electric cooperative which is about three times, at least three times bigger than PECO, with a customer base of over 200 thousand, and by experience, was able to bring down systems losses from double digit to single digit, 'no. We have another general manager of another electric coop who will be joining us very soon. Again, his experience is a customer base four times bigger than that of PECO. PECO is about 60 thousand. This another GM that we are-and I'm not yet in the position to name him-actually has been managing electric coop of another urbanized area of about 225 thousand customers, ano. And experience would show na in his management, he was able to bring down systems losses and was able to turn around the... the financials of this utility from barely negative to positive. Also together with us is a former Undersecretary of Energy and former NAPOCOR President, Cyril Del Callar, who is very much acquainted with the power industry from the very time he joined, well, his law profession in the power industry and up to this date. Well, on the... on the owner's side, Monte Oro was also ... we were part owner of the National Grid Corporation of the Philippine, when we privatized TransCo, 'no. And NGCP, we won the bid for 3.95 billion U.S. Dollars and we were able to ... well, we had... we have the capital, we had the we were able to comply with what was needed on the financial side, needed by the by the government that's why we were awarded that franchise for the National Grid Corporation of the Philippines. And as we had... we have the capital, we had the we were able to comply with what was needed on the financial side, needed by the by the government that's why we were awarded that franchise for the National Grid Corporation of the Philippines. And as we....

REP. A. M. BRAVO. Thank you very much, idol. Assuming that MORE is capable of putting up the infrastructure, questioning their capability maybe, well, not proper as of this present as made mentioned by the author that it requires first a franchise so that they will be able to build up the facilities. Assuming that they are capable of building up and maybe to ... after such build up they will be ready to propel the business in favor of the consumer it will take how many years do you think to do it?

MR. CASTRO. Well, in our...

REP. A. M. BRAVO. On an assumption that PECO will not sell.

MR. CASTRO. Mr. Chair, Honorable Chair, in our opinion, well, since I think capital is not a problem for us, if let's say, we're given at least a year, I mean I think we can ... we can actually come up with the system. Because like, let's say, substations, there are mobile standby substations that we can use immediately, deploy immediately while, let's say, building the permanent substations, 'no. So, I guess, again, I mean, since capital is not a problem for us then, I think at least a year would be more or less right, Mr. Chair. Thank you.

REP. ANICETO JOHN D. BERTIZ. Idol ko 'yun si Bravo, pero I'm so honored that I was called. Good morning po, good morning, Mr. Chair. Actually, my question is in line with the... just a follow-up question with Congressman Anthony Bravo. Of course, it is incumbent for us, for this Committee to know what are the transitory plans and I would like to ask more... no, I mean, I will not ask more but the MORE Mineral Corporation to know about what is your immediate plan because our worry is from now until January when PECO expires, what will be your immediate plan? Because you know, that's the only time you will start putting up your electric posts, whatsoever, power plant, et cetera, et cetera, clearances, right of way, issues, trees to be cut, DENR, et cetera, et cetera. So, ano 'yung mangyayari? Comes January, na ano ang mangyayari doon sa ilang libong consumers or users ng existing power plant? So I just would like to know what is your immediate "' because, you know, we cannot leave those thousands of families, you know, push them back to the dark ages especially in Iloilo. Thank you, Mr. Chair.

THE CHAIRPERSON. Mr. Castro.

MR. CASTRO. Your Honor, well, we presented earlier the transition plan when the hearing started, 'no, but just to summarize, it's well, once we are granted of franchise, in good faith we would negotiate with PECO on the purchase of their distribution assets. If there's a failure in that respect, well, there is the imbedded in the franchise, the expropriation. Well, the other option actually is that we can come up in well, as stated earlier, within a year, at least we can come up with our own facilities, Mr. Chair. That in essence are the three points that we've presented earlier. Thank you.[29]

I purposely quoted at length the congressional deliberations to prove that the business plan has all along been to take PECO's properties at all costs since these properties, as cleverly decreed in Section 10, are those properties "actually necessary" for the establishment and operation of MORE's franchise. It has to be that way because petitioner MORE has none of the facilities to distribute electricity to consumers.

Expropriation is a foregone conclusion; it is the only way by which MORE as the new franchisee can establish and operate the distribution of electricity; without expropriation, since PECO is not willing to sell its assets, Iloilo residents will suffer a black-out. The impact of Section 10 and Section 17, as their respective texts prove and as envisioned by the legislators, is to render the condemnation a fait accompli, and the provision on expropriation proceedings a ceremonial procedure.

That the legislative record reveals much concern about protecting the business of MORE by volunteering the taking of PECO's properties is nothing but consistent with House Bill 8132's conclusion that "[t]he quality of service of PECO has been wanting. Among the complaints against PECO are: overbilling/overcharging, arrogant personnel/poor customer relations, distributor related outages, inadequately maintained lines, inadequate investment in distribution facilities, and inordinate delay in the restoration of power sei~vices, among others. "

PECO's representative was even invited to give a statement on MORE's application for a franchise in what appeared to be a congressional trial of PECO's alleged failings. Apart from the non-renewal of its franchise and the award thereof to MORE, the takeover of PECO's properties by MORE is the legislative punishment for PECO's purported failings.

MORE's business plan and congressional intent are relevant to the conclusion that Sections 10 and 17 are indeed bills of attainder because they follow the template as to why bills of attainer are enacted and why they should be banned. The template has been elucidated as follows:
We have just seen the danger that arises when a legislature acts in a judicial capacity and enacts bills of attainder to take private property, while simultaneously asserting that its actions are consistent with the law of the land. That discussion was missing only one important ingredient - motive. This section discusses factions as the motive for legislative defiance of due process. Once again, the ban on bills of attainder is by far the best aid in understanding why factions are so dangerous.

Why would a legislature be tempted to defy due process, take property without compensation, and declare that its acts are above judicial review? What possible motive could elected officials have for such misguided behavior? Factions are the answer. For a surprisingly clear statement as to why this is so, we turn to governmental genius James Madison. If anyone understood the workings and dangers of government, he did. Madison directly linked property takings, governmental factions, and rogue legislatures acting in a judicial capacity.

The occasion for Madison's interweaving of these topics was The Federalist No. 10. This is perhaps the single most famous of the Federalist papers penned by Madison, Hamilton, and Jay, and is best known for discussing the dangers of factions. What is less known is that this essay also related directly to bills of attainder and eminent domain takings as well.

In the middle of The Federalist No. 10, Madison made the seemingly innocent comment that "no man is allowed to be a judge in his own cause." This seems self-evident. How can a man judge whether he is worthy of punishment? But Madison then took this simple concept one step further and applied it to the workings of government - more specifically, the legislature. He said: "[A] body of men are unfit to be both judges and parties at the same time; yet what are many of the most important acts of legislation, but so many judicial determinations, not indeed concerning the rights of single persons, but concerning the rights of large bodies of citizens?" In other words, Madison raised the very point discussed by Webster and Hamilton above. The legislature is tempted constantly to step into the judicial sphere, unless something prevents it from doing so. While Webster and Hamilton spoke in terms of individualized legislation, such as bills of attainder targeted at persons or small groups of people, Madison spread the canvas farther. Was not the same principle true when large groups were targeted for unfair treatment as well? Could not such far-reaching laws also be bills of attainder?

And just what were the groups that comprised opposing factions? Madison gave the answer in no uncertain terms: "The most common and durable source of factions has been the various and unequal distribution of property. Those who hold and those who are without property have ever formed distinct interests in society." Madison was no communist, however, and he was not in any way criticizing an unequal distribution of property or asserting that there should be a redistribution of the same to make everyone equal. For him, such a proposition would be impossible, since the acquisition of property was derived from the very unique personalities of individual men. He referred to this concept as "the diversity in the faculties of men, from which the rights of property originate." Then came his key point - that it was the government's job to protect and preserve such individual faculties, which in turn would forever preserve factions:

The protection of these faculties is the first object of government. From the protection of different and unequal faculties of acquiring property, the possession of different degrees and kinds of property immediately results; and from the influence of these on the sentiments and views of the respective proprietors, ensues a division of the society into different interests and parties.

What type of government would preserve property factions as necessary and unavoidable
elements of society, while at the same time preventing them from controlling the legislature and exceeding its powers through bills of attainder? A large republic, answered Madison in The Federalist No. 10 - a republic in which small groups of representatives from large and distant population centers would effectively hold each other in check.

Of course, Madison believed that the most effective way the Congress could accomplish this task was through a legislative veto, as he had originally proposed. This legislative veto, however, had been overturned and replaced with a judicial veto over unacceptable state acts, such as the ban on bills of attainder. Madison still hoped and believed that the structure of the federal republic, combined with the limits in Article I, Section 10, would provide the needed protection against factions. He stated in the Federalist No. 44:

Bills of attainder, ex-post-facto laws, and laws impairing the obligation of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation... Very properly, therefore, has the convention added this constitutional bulwark in favor of personal security and private rights ... The sober people of America are weary of the fluctuating policy which has directed the public councils. They have seen with regret and indignation that sudden changes and legislative interferences, in cases affecting personal rights, become jobs in the hands of enterprising and influential speculators ...

Madison was not the only one who said that the ban on bills of attainder was the chief vehicle to overcome the dangers of factions. Justice Iredell in Minge v. Gilmour said:

In times of violent faction or confusion of any kind, men are often prompted, if they can, to destroy their adversaries under the color of the law. The numerous acts of attainder in England, and other arbitrary parliamentary punishments, show how necessary it was for a wise people, forming a constitution for themselves, to guard against tyrannies like these.

In sum, the greatest fear of the founding generation was that the factions - which are always present in society, and which arise because of unavoidable differences in property ownership - would use the government itself to oppress their fellow citizens. The founders hoped that the nature of America's large republic would overcome this problem. But if the republic failed to do so fully, a very specific ban on egregious, faction- based takings legislation could also be used as a protection. This protection was the ban on bills of attainder.[30]
D. Conclusion

Admittedly, the use of the ban on bills of attainder as a takings protection has long faded. Nonetheless, it does not need to be that way. As has been said:
The ban on bills of attainder still stands as a bulwark of liberty to those whose property is arbitrarily taken by an unjustified legislative act. The provision itself has not changed, but only our understanding of it. The provision can protect both persons and groups who for a time are unpopular - such as those of Japanese descent in World War II, suspected communists in the 1950s, or suspected terrorists today - as well as persons or groups that own property the government wants, and then exerts pressure to obtain. Courts today should not be afraid to apply this unique and powerful tool as it was applied in the days of our early history. And when they do, courts will discover that it clarifies many other constitutional principles as well.[31]
II. Sections 10 and 17 violate the equal protection clause.

In Biraogo v. The Philippine Truth Commission of 2010,[32] the Court nullified then President Aquino's Executive Order No. 1 creating the Truth Commission and tasking it to investigate reported cases of graft and corruption allegedly committed during the presidency of President Macapagal-Arroyo. The Court held that this executive rule violated the equal protection clause, viz.:
The equal protection clause is aimed at all official state actions, not just those of the legislature. Its inhibitions cover all the departments of the government including the political and executive departments, and extend to all actions of a state denying equal protection of the laws, through whatever agency or whatever guise is taken.

It, however, does not require the universal application of the laws to all persons or things without distinction. What it simply requires is equality among equals as determined according to a valid classification. Indeed, the equal protection clause permits classification. Such classification, however, to be valid must pass the test of reasonableness. The test has four requisites: (1) The classification rests on substantial distinctions; (2) It is germane to the purpose of the law; (3) It is not limited to existing conditions only; and (4) It applies equally to all members of the same class. "Superficial differences do not make for a valid classification."

For a classification to meet the requirements of constitutionality, it must include or embrace all persons who naturally belong to the class....

The classification must not be based on existing circumstances only, or so constituted as to preclude addition to the number included in the class. It must be of such a nature as to embrace all those who may thereafter be in similar circumstances and conditions. It must not leave out or "under include" those that should otherwise fall into a certain classification....

Applying these precepts to this case, Executive Order No. 1 should be struck down as violative of the equal protection clause. The clear mandate of the envisioned truth commission is to investigate and find out the truth "concerning the reported cases of graft and corruption during the previous administration" only. The intent to single out the previous administration is plain, patent and manifest.

Mention of it has been made in at least three portions of the questioned executive order. Specifically, these are....

In this regard, it must be borne in mind that the Arroyo administration is but just a member of a class, that is, a class of past administrations. It is not a class of its own. Not to include past administrations similarly situated constitutes arbitrariness which the equal protection clause cannot sanction. Such discriminating differentiation clearly reverberates to label the commission as a vehicle for vindictiveness and selective retribution.

To reiterate, in order for a classification to meet the requirements of constitutionality, it must include or embrace all persons who naturally belong to the class. "Such a classification must not be based on existing circumstances only, or so constituted as to preclude additions to the number included within a class, but must be of such a nature as to embrace all those who may thereafter be in similar circumstances and conditions. Furthermore, all who are in situations and circumstances which are relative to the discriminatory legislation and which are indistinguishable from those of the members of the class must be brought under the influence of the law and treated by it in the same way as are the members of the class."
Here, Sections 10 and 17 are directed only against respondent PECO. While the language of these provisions may be construed to refer to property owners other than PECO, the congressional deliberations made it very clear and categorical that the take-over is solely with regard to PECO and its properties. The overriding intent is the legislated taking, condemnation of expropriation of PECO's assets and no other entity's properties, because this is petitioner MORE's business plan as it has none of the facilities to establish and operate the distribution of electricity within its franchise area. This is the same evil that Biraogo has railed against, the singling out of a person for the imposition of burdens that and whenever the singled out person is not willing to accept.

Indeed, what differentiates respondent PECO from other property owners? PECO is not the only entity that has "poles, wires, cables, transformers, switching equipment and stations, buildings, infrastructure, machineries and equipment. " As admitted by petitioner MORE,

Well, the other option is definitely MORE Power is ready to build its own distribution assets, 'no. We can provide our own personnel and, well, again, as also mentioned during the last, I think, during the last two hearings, 'no, we were saying that personnel is not really that difficult to source, 'no, since it is readily available in the market.

... since I think capital is not a problem for us, if let's say, we're given at least a year, I mean I think we can ... we can actually come up with the system. Because like, let's say, substations, there are mobile standby substations that we can use immediately, deploy immediately while, let's say, building the permanent substations, 'no. So, I guess, again, I mean, since capital is not a problem for us then, I think at least a year would be more or less right...

Hence, there is no basis for Sections 10 and 17 to single out PECO for the take-over and condemnation of its properties and to drive it altogether from doing other legitimate businesses as regards its assets.

III. Response to Key Points in the Ponencia.


With the kind indulgence of my friend, the revered ponente, Justice Reyes, Jr., may I politely reply.

The ponencia admits:

x x x x

At the same time, Section 17 expressly provides that, even as PECO is operating the distribution system, this interim arrangement shall not prevent MORE from acquiring the system through the exercise of the right of eminent domain. Thus, after R.A. No. 11212 took effect on March 9, 2019, MORE filed on March 11, 2019 a Complaint for Expropriation with the Regional Trial Court of Iloilo City, Branch 37 (Iloilo RTC), over the distribution system of PECO in Iloilo City.

x x x x

xxxx Ownership was co-existent with the franchise, xxxx
The reference to an expropriation proceeding now before the trial court strengthens the view that MORE has been true to its business plan of merely taking over PECO's properties to establish, operate and maintain its franchise. The ponencia's statement that "[ojwnership was co-existent with the franchise" further proves that the confiscation of PECO's properties is the Congress' primordial means of supporting MORE's franchise.
Expropriation by MORE of the distribution system of PECO is for a genuine public purpose

The next legal issue is whether expropriation by MORE of PECO's distribution asset under Section 10 and Section 17 of R.A. No. 11212 is for a genuine public purpose. To reiterate, while it is Congress that defines public necessity or purpose, the Court has the power to review whether such necessity is genuine and public in character, by applying as standards the constitutional requirements of due process and equal protection.

In its assailed decision, the RTC held that while R.A. No. 11212 authorizes MORE to expropriate the private property of PECO and to apply the same to the public purpose of power distribution, such identified public purpose is not genuine for ultimately it is the private interest of MORE that will be served by the expropriation. In other words, the expropriation is an ill-disguised corporate takeover.

x x x x

Even without these developments in Western jurisprudence, the genuineness of the public purpose of the expropriation of the distribution system of PECO can be determined from R.A. No. 11212 itself.

Expropriation under Section 10 and Section 17 of R.A. No. 11212 is not only for the general purpose of electricity distribution. A more distinct public purpose is emphasized: the protection of the public interest by ensuring the uninterrupted supply of electricity in the city during the transition from the old franchise to the new franchise. This distinct purpose has arisen because MORE is the new franchise holder in a city whose public space is already burdened by an existing distribution system, and that distribution system cannot continue to serve a public use for it is owned by the old franchise holder.

x x x x

The public necessity of ensuring uninterrupted electricity is implicit in Section 10, which authorizes MORE to expropriate the existing distribution system to enable itself to efficiently establish its service. This distinct public necessity is reiterated in Section 17 under which MORE may initiate expropriation proceedings even as PECO is provisionally operating the distribution system. In fact, this distinct public necessity of ensuring uninterrupted electricity is the very rationale of the ERC in granting PECO a provisional CPCN. The provisional CPCN is the legal basis of PECO's continued operation of the distribution system. PECO cannot deny that such distinct necessity to ensure uninterrupted electricity supply is public and genuine.

x x x x

x x x x In sum, expropriation by MORE of the distribution system of PECO under Sections 10 and 17 serves both the general public interest of conveying power and electricity in Iloilo City and the peculiar public interest and security of ensuring the interrupted supply of electricity. The RTC erred in declaring these provisions unconstitutional.
The discussion in the ponencia validates what I have been saying all along that Congress through Sections 10 and 17 has already determined and settled the issues inherent in an otherwise judicial expropriation proceeding. The court expropriation case has become and will be a fait accompli, a ceremonial figurehead.

Additionally, the public purpose for the expropriation did not arise because, to quote the ponencia, "MORE is the new franchise holder in a city whose public space is already burdened by an existing distribution system, and that distribution system cannot continue to serve a public use for it is owned by the old franchise holder."

Rather, the public use came about because MORE has had none of the facilities and the people to establish, operate and maintain the franchise. The fact that PECO has its facilities in the franchise area does not justify the expropriation, because there would have been no use for these facilities if only MORE has been equipped and skilled to perform the franchise it sought and was awarded.

It is unfair and out-of-line to turn the tables on PECO when it is MORE that has no equipment and people to make its franchise useful to the people it is intended to serve.

The ponencia claims that:
In her Dissenting Opinion, Justice Javier extends the concept of bill of attainder to cover Sec. 10 and Sec. 17 in that these legislations purportedly single out PECO and subject the latter to punishment without the benefit of trial. This conception bills of attainder is problematic for, as correctly pointed out by Justice Leonen in his dissent, a legislative franchise is not a right but a special privilege the grant, amendment, repeal or termination of which is granted to Congress by no less than the Constitution. Consequently, the termination of a franchise by its expiration is not a deprivation of a right or property that amounts to punishment. There is no question that the franchise of PECO was allowed to lapse because of its failure to render competent public service. No prior judicial trial of the performance of PECO is required before Congress may decide not to renew PECO's franchise. The power of this Court to subject to judicial review the constitutionality of a franchise legislation does not include the power to choose the franchise holder. That is not our place in the constitutional scheme of things.
With due respect, it is indeed problematic that the ponencia has completely misconstrued and misappreciated the point of my dissent. What I claim to be bills of attainder are Section 10 and Section 17 of MORE's franchise, and certainly not the denial of PECO's franchise. The latter is not the subject matter of this case and therefore I cannot have assailed or challenged it in my dissent. In any event, the grant or denial of a franchise begins and ends with Congress - that is a given.

What I point out as bills of attainder are Section 10 and Section 17 RA 11212, which have burdened PECO with the fait accompli expropriation or taking of its property in a manner that dispenses with the judicial trial on whether public use and public necessity are present in the take-over of PECO properties. Here, it was Congress itself that has become no only the initial but also the final arbiter of what essentially has always been a judicial function.

To be sure, the denial of PECO's franchise and the grant of franchise to MORE did not have to come with the added burden to PECO of a legislatively determined expropriation of PECO's assets. The two actions are actually separable from each other, and hence, a challenge on the latter does not amount to an attack on the former.

The ponencia also holds:
Justice Javier argues that Sec. 10 and Sec. 17 virtually enable MORE to piggyback on PECO in order to establish and operate its franchise. Every legislative franchise enables the franchise holder to expropriate with the view of building its distribution system. Even PECO obtained the franchise from De La Rama along with the authority to use public spaces for the installation of its distribution system. MORE is authorized to acquire the assets of PECO and any other assets of any other entity that might be available as these are be necessary for the discharge of its public franchise.
There is a huge difference between a consensual acquisition of another's property and a forcible or coercive take-over thereof. The latter is an exercise of State power that the Constitution restrains. While a legislation may authorize its exercise and initially determines the propriety of its exercise, it is a court decree that makes the ultimate lawfully binding determination on the basis of the existence of public use and public necessity and the payment of just compensation. In the case at bar, the process has been skewed because Section 10 and Section 17 of RA 11212 themselves, as confirmed by the legislative deliberations, have adjudged with finality the existence of the elements that should have been the court's prerogative to adjudicate. Even the Court, though it is not the expropriation court, has already found in the present case and on the basis or upon the lead of Section 10 and Section 17, that the take-over is for a public use and publicly necessary.

Thus, while I sincerely appreciate the ponencicCs discussion on the points I have raised, I still cannot find myself to agree with both the rationale and the conclusion it has reached. I maintain my dissent.

IV. Thoughts on Justice Caguioa's Opinion.

As always, my friend and senior colleague's thoughts have sharpened the points of discussion.

One. I agree with Justice Caguioa that "the power of expropriation is by no means absolute." But the power of eminent domain is not only limited by public use and just compensation; genuine public necessity and the proscription against bills of attainder similarly restrict the exercise of this State power.

Two. I disagree with the thought that "the Constitution does not sanction the taking of a private [property]" only if "the sole purpose" thereof is to transfer it to another private party. Sole means only, one and only, single, solitary, lone, unique. But, as the Opinion itself cites, even the confluence of private and public benefits, not solely the conferment of private benefits, may destroy the public use claim of an expropriation "when the purported public use is merely incidental or pretextual, thereby serving as a guise to favor private interests." Clearly, the fact that there is a gloss of public use to a taking does not end the debate simply because it is not the sole purpose of the taking to benefit a private party. The incidental or pretextual public use defense has been explained in this manner:
When determining the limits of the government's right to take private property, we will defer to the General [***36] Assembly's exercise of those powers. Id. at 543; SWIDA, 199 111. 2d at 236 ("Great deference should be afforded the legislature and its granting of eminent domain authority."). Under SWIDA, that deference evaporates when the public purpose behind the taking is a pretext, when a municipality uses eminent domain as a weapon to forcibly transfer property from one private owner to another. See SWIDA, 199 111. 2d at 240 ("While [SWIDA's] activities here were undertaken in the guise of carrying out its legislated mission, SWIDA's true intentions were not clothed in an independent, legitimate governmental decision to further a planned public use."); Kelo v. City of New London, Connecticut, 545 U.S. 469, 478, 125 S. Ct. 2655, 162 L. Ed. 2d 439 (2005) (noting government would not be allowed "to take property under the mere pretext of a public purpose, when its actual purpose was to bestow private benefit."); cf. Franco v. National Capital Revitalization Corp., 930 A.2d 160, 169 (D.C. 2007) (finding "pretext" to be valid affirmative defense to condemnation for economic redevelopment).

Recognizing the difference between a valid public use and a sham can be challenging. But a telling feature of sound public use in the context of economic redevelopment is the existence of a well-developed, publicly vetted, and thoughtful economic development plan. Such a plan was present in Kelo,545 U.S. at 483-84, and Gutknecht, 3 111. 2d at 542-43, but absent in SWIDA, 199 111. 2d at 240 ("SWIDA did not conduct or commission [***37] a thorough study of the parking situation at [the racetrack]. Nor did it formulate any economic plan requiring additional parking at the racetrack "). A taking will likely pass constitutional muster where done in furtherance of a sound economic development plan, rather than [****432] 1**522] the plan retroactively justifying the taking. Cf. Romeo v. Cranston Redevelopment Agency, 105 R.I. 651, 254 A.2d 426, 433 (R.I. 1969) ("governing bodies must either plan for the development or redevelopment of urban areas or permit them to become more congested, deteriorated, obsolescent, unhealthy, stagnant, inefficient and costly" (internal quotation marks omitted)).[33]
As has been copiously quoted and also explained at length, MORE's business plan from the beginning has been to take over PECO's properties. There was no well-developed, publicly vetted, and thoughtful plan as the idea was simply to take and justify this taking by retroactively referring to MORE's business plan of simply taking over PECO's properties.

In Southwestern III. Dev. Auth. v. Nat'I City Envtl, L.L.C.,[34] a government agency sought to expropriate private parcels of land to be conveyed to a private race track which would then build additional parking spaces for its clientele. The court ruled that the public benefits arising from the parking spaces were merely incidental and pretextual to the profit motivation of the private race track. Thus:
If this taking were allowed to stand, it may be true that spectators at Gateway would benefit greatly. Developing additional parking could benefit the members of the public who choose to attend events at the racetrack, as spectators may often have to wait in long lines of traffic to park their vehicles and again to depart the facility. We also acknowledge that a public use or purpose may be satisfied in light of public safety concerns. See Illinois Toll Highway Comm'n v. Eden Cemetery Ass'n, 16 111. 2d 539, 158 N.E.2d 766 (1959). The public is allowed to park on the property in exchange for the payment of a fee. Gateway's racetrack may be open to the public, but not "by right." Gaylord, 204 111. at 584. It is a private venture designed to [*239] result not in a public use, but in private profits. If this taking were permitted, lines to enter parking lots might be shortened and pedestrians might [***21] be able to cross from parking areas to event areas in a safer manner. However, we are unpersuaded that these facts alone are sufficient to satisfy the public use requirement, especially in light of evidence that Gateway could have built a parking garage structure on its existing property.

We have also recognized that economic development is an important public purpose. See People ex Pel. City of Canton v. Crouch, 79 111. 2d 356, 38 111. Dec. 154, 403 N.E.2d 242 (1980); People ex rel. City of Urbana v. Paley, 68 111. 2d 62, 11 111. Dec. 307, 368 N.E.2d 915 (1977); People ex rel City of Salem v. McMackin, 53 111. 2d 347, 291 N.E.2d 807 (1972). SWIDA presented extensive testimony that expanding Gateway's facilities through the taking of NCE's property would allow it to grow and prosper and contribute to positive economic growth in the region. However, "incidentally, every lawful business does this." Gaylord, 204 111. at 586. Moreover, nearly a century ago, Gaylord expressed the long­standing rule that "to constitute a public use, something more than a mere benefit to the public must flow from the contemplated improvement. [***22] " Gaylord, 204 111. at 584.

This case is strikingly similar to our earlier decision in Limits Industrial R.R. Co. v. American Spiral Pipe Works, 321 111. 101, 151 N.E. 567 (1926). In Limits Industrial, this court held that a railroad could not exercise eminent domain authority to acquire property for the purpose of expanding its facilities. Despite a certificate of convenience and necessity issued by the Illinois Commerce Commission, we found the proposed spur track and public [**10] [****250] freight house provided minimal public benefit and principally benefitted the railroad itself and a few other business entities. Limits Industrial, 321 111. at 109-10. Similarly, it is incumbent upon us to question SWIDA's findings as to the parking situation at Gateway and determine whether [*240] the true beneficiaries of this taking are private businesses and not the public.

We do not require a bright-line test to find that this taking bestows a purely private benefit and lacks a showing of a supporting legislative purpose. As was the case in Limits Industrial, members of the public are not the primary intended beneficiaries of this taking. Limits Industrial, 321 111. at 109-10. [***23] This condemnation clearly was intended to assist Gateway in accomplishing their goals in a swift, economical, and profitable manner.

Entities such as SWIDA must always be mindful of expediency, cost efficiency, and profitability while accepting the legislature's charge to promote development within their defined parameters. However, these goals must not be allowed to overshadow the constitutional principles that lie at the heart of the power with which SWIDA and similar entities have been entrusted. As Justice Kuehn stated in dissent in the appellate court, "If property ownership is to remain what our forefathers intended it to be, if it is to remain a part of the liberty we cherish, the economic by­products of a private capitalist's ability to develop land cannot justify a surrender of ownership to eminent domain." 304 111. App. 3d at 556 (Kuehn, J., specially concurring).

While the activities here were undertaken in the guise of carrying out its legislated mission, SWIDA's true intentions were not clothed in an independent, legitimate governmental decision to further a planned public use. SWIDA did not conduct or commission a thorough study of the parking situation [***24] at Gateway. Nor did it formulate any economic plan requiring additional parking at the racetrack. SWIDA advertised that, for a fee, it would condemn land at the request of "private developers" for the "private use" of developers. In addition, SWIDA entered into a contract with Gateway to condemn whatever land "may be desired *** by Gateway." Clearly, [*241] the foundation of this taking is rooted not in the economic and planning process with which SWIDA has been charged. Rather, this action was undertaken solely in response to Gateway's expansion goals and its failure to accomplish those goals through purchasing NCE's land at an acceptable negotiated price. It appears SWIDA's true intentions were to act as a default broker of land for Gateway's proposed parking plan.

This point is further emphasized by the fact that other options were available to Gateway that could have addressed many of the problems testified to by Pritchett, Ortbals and others. Gateway could have built a parking garage structure on its existing property rather than develop the land owned by NCE. However, when Gateway discovered that the cost of constructing a garage on land it already owned was substantially higher than [***25] using SWIDA as its agent to take NCE's property for open-field parking, Gateway chose the easier and less expensive avenue.

As a result of the acquisition of NCE's property, Gateway could realize an estimated increase of $ 13 to $ 14 million in projected revenue per year. While we do not deny that this expansion in revenue could potentially trickle down and bring corresponding revenue increases to the region, revenue expansion alone does not justify an improper and unacceptable expansion [* * 11 ] [* * * *251 ] of the eminent domain power of the government. Using the power of the government for purely private purposes to allow Gateway to avoid the open real estate market and expand its facilities in a more cost-efficient manner, and thus maximizing corporate profits, is a misuse of the power entrusted by the public.

The legislature intended that SWIDA actively foster economic development and expansion in Madison and St. Clair Counties. 70 ILCS 520/2(g), 5 (West 1998). However, the actions of SWIDA in this case blur the lines between [*242] a public use and a private purpose. A highway toll authority may justify the use of eminent domain to ensure that motorists have reasonable access [***26] to gas stations. Illinois Toll Highway Comm'n, 16 111. 2d at 546. Does the highway authority's power include the ability to use eminent domain authority to take additional land for a car wash, and then a lube shop? Could the authority then use its power to facilitate additional expansions for a motel, small retail shops, and entertainment centers? The initial, legitimate development of a public project does not justify condemnation for any and all related business expansions.

SWIDA contends that the "wisdom *** of the legislation and 'the means of executing the project' are beyond judicial scrutiny 'once the public purpose has been established.' It is that purpose which controls and not the 'means' or 'mechanics' of how the purpose is carried out." We disagree. The Constitution and the essential liberties we are sworn to protect control. In its wisdom, the legislature has given SWIDA the authority to use eminent domain power to encourage private enterprise and become involved in commercial projects that may benefit a specific region of this state. While we do not question the legislature's discretion in allowing for the exercise of eminent domain power, "the government [***27] does not have unlimited power to redefine property rights." Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 439, 73 L. Ed. 2d 868, 885, 102 S. Ct. 3164, 3178 (1982). The power of eminent domain is to be exercised with restraint, not abandon.
Here, Sections 10 and 17 have become the default broker for MORE. The latter could have discovered that the cost of building facilities for the distribution of electricity was substantially higher than using these assailed provisions as its agent to take PECO's properties. MORE chose the easier and less expensive avenue to exercise its franchise.

Three. It has been explained that:
Nor would the City be allowed to take property under the mere pretext of a public purpose, when its actual purpose was to bestow a private benefit. The takings before us, however, would be executed pursuant to a "carefully considered" development plan. 268 Conn., at 54, 843 A.2d, at 536. The trial judge and all the members of the Supreme Court of Connecticut agreed that there was no evidence of an illegitimate purpose in this case. Therefore, as was true of the statute challenged in Midkiff, 467 U.S., at 245, 81 L. Ed. 2d 186, 104 S. Ct. 2321, the City's development plan was not adopted "to benefit a particular class of identifiable individuals."[35]
Here, the actual purpose for the expropriation of PECO's properties has been to bestow a private benefit on MORE's exercise of its franchise that it could not have fulfilled otherwise. But for MORE's inability to provide the facilities and technical knowhow to establish and operate its franchise, and MORE's ultimate business plan to take-over and raid PECO's facilities, the expropriation of PECO's properties would not have come to pass and would not have been made necessary. Verily, Sections 10 and 17 have been meant to operationalize a business plan to benefit a particular class of identifiable individuals - MORE.

Four. On pages 4 to 5 of his Opinion, Justice Caguioa confirms that the expropriation of PECO's properties has its roots in the perceived shortfalls in PECO's services. His Opinion rounds up the expropriation provisions to facts associated with the non-renewal of PECO's franchise, the award of the franchise to MORE, and PECO's alleged poor services that gave birth to all its woes. In other words, PECO has been singled out with the expropriation of its properties without a judicial trial.

Five. Much like the ponencia, the Opinion echoes Sections 10 and 17 that the expropriation of PECO's properties - including, but not limited to its poles, wires, cables, transformers, switching equipment and stations, buildings, infrastructure, machineries and equipment - is intended for public use and demanded by public necessity. With this determination, what else are we to expect from the lower court hearing the expropriation proceedings? This confirms what I have been saying all along that PECO has been singled out and punished for its alleged poor services through the take-over of its properties whose validity and legitimacy have been settled by legislative fiat through Sections 10 and 17.

ACCORDINGLY, I vote to DISMISS the petitions and AFFIRM the trial court's Judgment dated July 1, 2019, declaring Sections 10 and 17 of Republic Act No. 11212 UNCONSTITUTIONAL for being bills of attainder and for being violative of the equal protection clause.



[1] This epigraph is from the title of a law journal article authored by Prof. Carol L. Zeiner and published in 28 Va. Envtl. L.J. 1 (2010).

[2] Dissent, Justice Sandra Day O'Connor, Kelo v. City of New London, 545 U.S. 469 (U.S. June 23, 2005).

[3] 651 Phil. 374 (2010).

[4] United States v. Certain Funds Contained in Account No. 600-306211-066, 1993 U.S. Dist. LEXIS 21006, *64-65 (E.D.N.Y. November 12, 1993): "The Constitution makes no civil or criminal distinction for determining the applicability of the Ex Post Facto Clauses. Further, an analysis of the historical background of the. Ex Post Facto Clauses suggests that the framers intended the clauses reach all retrospective laws, regardless of whether they were deemed purely criminal in nature. See Jane H. Aiken, Ex Post Facto in the Civil Context, 81 Ky. L.J. 323-32 (1993);" Notes and Comments: The Bounds of Legislative Specification: A Suggested Approach to the Bill of Attainder Clause, The Yale Law Journal (1962) 330; Ex Post Facto in the Civil Context: Unbridled Punishment, Jane H. Aiken, Kentucky Law Journal (1992) 323.

[5] Duane Ostler, "The Forgotten Constitutional Spotlight: How Viewing the Ban on Bills of Attainder as a Takings Protection Clarifies Constitutional Principles," 42 U. Tol. L. Rev. 395, 395 at Lexis Advance Singapore Research, https://advance.lexis.com/document/?pdmfid= 152247I&crid=c9e9433a-d581-4959-adc9-58aae2dl9815&pddocfullpath=%2Fshared%2Fdocument%2Fanalytical-materials%2Furn%3AcontentItem%3A53DS-K060-00CV-N0FX-00000-00&pdcontentcomponentid=12162&pdteaserkey=sr0&pdicsfeatureid= 151713 0&pditab=allpods&ecomp =gd3Jk&earg=sr0&prid=3548c525-b477-4a9b-9ela-6019ca35b64f.

[6] Ibid.

[7] Ibid.

[8] Ibid.

[9] Ibid.

[10] Ibid.

[11] Acorn v. United States, 618 F. 3d 125 (2010, CA 2nd circuit).

[12] 71 U.S., 277 (1867).

[13] Nixon v. Administrator of General Services et al., 433 U.S. 425, [1977] Singapore LEXIS 24 (U.S. June 28, 1977) at pp. 26, 29; Consolidated Edison Co. of N.Y., Inc. v. Pataki, 292 F. 3d 338, [2002] Singapore LEXIS 10762 (2nd Cir. June 5, 2002), at p. 10; United States v. Lovett, 328 U.S. 303, 1946 Singapore LEXIS 2280 (U.S. June 3, 1946), at pp. 2-3.

[14] Nixon, ibid at 26.

[15] 292 F. 3d 338, [2002] Singapore LEXIS 10762 (2nd Cir. June 5, 2002), at hn 15.

[16] 328 U.S. 303, 1946 Singapore LEXIS 2280 (U.S. June 3, 1946).

[17] Supra note 12.

[18] Consolidated Edison Co. of N.Y., Inc. v. Pataki, supra note 15.

[19] Philippine Daily Inquirer at Read more: https://newsinfo.inquirer.net/1329086/gatchalian-meralco-may-also-lose-franchise#ixzz6WeGn3oEg last accessed August 31, 2020.

[20] Southwestern I11. Dev. Auth. v. Nat'I City Envtl., L.L.C., 199 I11. 2d 225, 237, 768 N.E.2d 1, 8, 2002 I11. LEXIS 299, *17, 263 I11. Dec. 241, 248 (I11. April 4, 2002).

[21] 2 U.S. 304 (1795), 2 U.S. 304 (F Cas) 2 Dall. 304.

[22] 515 Phil. 364, 374-376 (2006).

[23] Duane Ostler, supra note 5 at 420-422.

[24] Id. at 423.

[25] Philippine Daily Inquirer, https://newsinfo.inquirer.net/1329086/gatchalian-meralco-may-also-lose-franchise#ixzz6WeIQ9nuC last accessed August 31, 2020.

[26] Consolidated Edison Co. of N.Y., Inc. v. Pataki, supra.

[27] Committee Hearing, Committee on Legislative Franchises, September 12, 2018.

[28] Committee Hearing, Committee on Legislative Franchises, September 18, 2018.

[29] Committee Hearing, Committee on Legislative Franchises, September 26, 2018.

[30] Id. at 423-425, 427.

[31] Id. at 428.

[32] 651 Phil. 374 (2010).

[33] City of Chicago v. Eychaner, 2015 I11 App(1st) 131833, P70-P71, 26 N.E.3d 501, 521-522, 2015 I11. App. LEXIS 37, *35-37, 389 I11. Dec. 411, 431-432 (I11. App. Ct. 1st Dist. January 21, 2015).

[34] 199 I11. 2d 225, 238-242, 768 N.E.2d 1,9-11, 2002 I11. LEXIS 299, *20-27, 263 111. Dec. 241, 249-251 (I11. April 4, 2002).

[35] Kelo, supra.

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