CA JUNKS PECO’s PLEA VS EXPRO CASE

By: Francis Allan L. Angelo

THE 18^th division of the Court of Appeals (CA) in Cebu City denied the petition of Panay Electric Co. (PECO) to suspend or stop the expropriation case filed by rival firm MORE Electric and Power Corp. (MORE).

In a resolution promulgated on Oct 3, 2019 in CA G.R. SP No. 12900, the CA 18^th division junked PECO’s applications for a temporary restraining order and writ of preliminary injunction (TRO/WPI) against MORE’s expropriation case and application for a writ of possession (WOP).

The appellate court said it has no jurisdiction to restrain and/or enjoin the expropriation case. It also junked PECO’s contention that its rights were being violated in the expropriation case and that Iloilo City will suffer if MORE takes over the power distribution services.

To recall, MORE filed the expropriation case against PECO on March 11, 2019 after securing its congressional franchise to distribute electricity in Iloilo City via Republic Act 11212 which President Rodrigo Duterte signed into law on Feb 14, 2019.

MORE based the case on Section 23 of RA 9136 (Electric Power Industry Reform Act of 2001) and Section 10 of RA 11212 which granted the power of eminent domain to distribution utilities.

The expropriation case is part of MORE’s effort to take over PECO assets, upon payment of just compensation of more than P400 million, so that it can start distributing power in Iloilo City. In compliance with the requirements of the expropriation case, the Razon-led firm deposited the more than P400 million in a government depository bank.

The case was raffled to the Regional Trial Court Branch 37 presided by Judge Marie Yvette Go. Judge Victor Gelvezon also took part in the case as pairing judge of RTC Branch 37.

 

SUSPENSION

PECO countered MORE’s expropriation case by filing a Petition for Declaratory Relief against its rival firm and Iloilo RTC Branch 37 before the Mandaluyong City RTC Branch 209 in Metro Manila.

On July 11, 2019, RTC Mandaluyong eventually ruled in favor of PECO by declaring as void and unconstitutional Sections 10 and 17 of RA 11212 “for infringing PECO’s rights to due process and equal protection of the law.”

Section 10 authorizes MORE to exercise the power of eminent domain and acquire such private property as is actually necessary for the realization of the purpose for which the franchise is granted.

Section 17 states the power of MORE, as grantee, to effectively acquire power distribution assets. The distribution assets that exist within the franchise area could only refer to those of PECO.

While the Mandaluyong RTC case was pending, PECO asked Iloilo RTC Branch 37 to suspend the hearings in the meantime and even sought the inhibition of Judges Go and Gelvezon from the case for perceived bias and partiality.

Despite PECO’s motion to inhibit, Judges Gelvezon and Go went on with the hearings, with the latter approving MORE’s application for a writ of possession (WOP) against PECO’s assets.

Seeing the futility of its moves against the Iloilo RTC judges, PECO elevated its case to CA Cebu in CA G.R. SP Nos. 12900 and 12913. The two cases were eventually consolidated in SP 12900.

But on Aug 15, 2019, Go eventually inhibited from the case which was raffled to RTC Branch 35 presided by Judge Daniel Antonio Gerardo S. Amular.

In reaction to the Mandaluyong RTC ruling, MORE filed on July 23, 2019 a declaratory relief case with the Supreme Court via a Petition for Review on Certiorari docketed as GR. No. 248061.

 

RULING

In its ruling, the CA’s 18^th Division cited that MORE’s legislative franchise under RA 11212 is pursuant to Sections 22 and 27 of the EPIRA Law or RA 9136.

“Considering that the passage of RA 11212 was done to carry out the EPIRA, MORE’s exercise of the powers granted to it under its Legislative Franchise, which includes the power of eminent domain, is also considered an implementation of the EPIRA. Otherwise stated, the expropriation case and the incidents thereon, particularly the application for the issuance of the WOP (writ of possession), were meant to carry out the EPIRA,” the ruling read.

The CA also noted that Section 78 of the EPIRA Law prohibits other courts outside the Supreme Court fro issuing injunctions and restraining orders against provisions of the said law.

“The jurisdiction of the Supreme Court under Section 78 of the EPIRA contemplates not only the enforcement of the provisions of the EPIRA itself, but also encompasses subjects that involve questions pertaining to the enforcement of the said statute.”

Citing “Power Generation Employees Association—NPC vs National Power Corp,” the CA said the “Supreme Court took cognizance of a Petition seeking to enjoin the implementation of an Agreement between National Power Corporation and Power Sector Assets and Liabilities Management, saying that the Agreement involved is a contract that preserves the implementation of EPIRA; hence, Section 78 of the said law is applicable.”

“In light of the foregoing, this Court, therefore, has no jurisdiction to restrain and/or enjoin the expropriation case, including MORE’s application for WOP, or any other incident in the proceedings,” the appellate court ruled.

Even if it is allowed by law to take cognizance of PECO’s application for TRO/WPI, the CA said “PECO failed to satisfy the necessary requisites to warrant the grant of preliminary injunctive reliefs.”

The CA said the issuance of a writ of preliminary injunction must be based on the following:

-the existence of a Clear and unmistakable right that must be protected; and

-an urgent and paramount necessity for the writ to prevent serious damage.

Thus, “the right to be protected and the violation against that right must be shown in order for the supplicant to be entitled to an injunctive writ.”

In its case before the CA, PECO contends that it has “clear and unmistakable rights to be protected against an unconstitutional law, to have a fair and impartial trial, and to an orderly judicial procedure.

It also insisted on the suspension of the proceedings until the issue on the validity of RA 11212 is ascertained and the Petition for Transfer of Venue before the Supreme Court is resolved.

But the CA was unconvinced by PECO’s stand:

“The Judgment of the RTC Mandaluyong declaring Sections 10 and 17 of RA 11212 unconstitutional does not accord PECO a clear and unmistakable right. It has to be emphasized that the said Judgment is not yet final: the SolGen (Office of the Solicitor General) still has a pending motion for reconsideration thereon and MORE has a pending Petition for Review on Certiorari with the Supreme Court questioning the same.”

Even if Sections 10 and 17 of RA 1121 would be voided with finality, the CA ruled that “the nullification does not involve the whole statute, and pursuant to the separability clause therein, all other provisions that are not affected will remain valid.”

“MORE, therefore, will retain its status as a DU (distribution utility). And as long as MORE has a valid Legislative Franchise as a DU, it may exercise the power of eminent domain as provided for under Section 23 of the EPIRA which states that ‘distribution utilities may exercise the power of eminent domain subject to the requirements of the Constitution and existing laws’.”

“With or without Sections 10 and 17 of RA 11212, MORE can exercise the power of eminent domain. The viability of the expropriation case will not depend solely on the constitutionality of the sections assailed in the Declaratory Relief case,” the CA ruling added.

Also, PECO cannot seek judicial relief like TROs and injunctions on mere suspicions.

“PECO’s perception of bias on the part of the court a quo (Iloilo RTC Branch 37) does not also give it a clear and unmistakable right to have the proceedings suspended until the SC resolves the Petition for Transfer of Venue. The grant of a preliminary injunctive writ cannot be based on suspicion. At any rate, the presiding judge already inhibited from the case which is now under a different magistrate. This Court does not also see an urgent and paramount necessity for the preliminary injunctive writ to prevent serious damage.”

 

NO DAMAGE

The CA also retorted PECO’ argument that “grave and irreparable damage in these cases” will occur:

-its demise, as it will effectively close the business should the expropriation proceed and the WOP be issued; and

– plunging the entire City of Iloilo into darkness by transferring PECO’s assets to MORE.

“PECO’S arguments contradict the established facts on record. PECO itself admitted that its application for the renewal of its franchise had not been acted upon by Congress and its current operation is pursuant to a Provisional Certificate of Public Convenience and Necessity (Provisional CPCN) granted by the Energy Regulatory Commission.”

The CA said the Provisional CPCN granted by the ERC “shall not be construed as extending the franchise of PECO after its expiration on January 18, 2019 and it shall not prevent MORE from exercising the right of eminent domain over the distribution assets existing at the franchise area.”

“The foregoing shows that PECO’s apprehension of its closing business is not actually attributable to the expropriation proceedings or the issuance of a WOP in MORE’s favor, but instead, to the non-renewal of its franchise. As for PECO’S fear of having Iloilo City plunged into darkness, suffice it to say that MORE is actually averting the same by pursuing its obligations as the grantee of a Legislative Franchise to operate as a DU in the area.”