BY GEROME DALIPE IV
ILOILO City – The Supreme Court has upheld the validity of the franchise expansion of MORE Electric and Power Corporation (MORE Power) in Iloilo, saying that electric cooperatives do not have a constitutional right to an exclusive franchise within their coverage areas.
In an en banc decision dated July 30, the tribunal dismissed the petition of Iloilo Electric Cooperative, Inc. I, II, and III, which questioned the validity of Republic Act No. (RA) 11918, the law that allows MORE Power franchise into several towns in Iloilo province.
“A franchise, as a privilege granted by the state, is not the exclusive private property of the franchisee. Thus, it must yield to serve the common good, as determined by Congress,” read the SC decision penned by Associate Justice Rodil V. Zalameda.
The recent high court ruling means that MORE Power can now expand its service areas to the towns of Alimodian, Anilao, Banate, Barotac Nuevo, Dingle, Dueñas, Dumangas, Leganes, Leon, New Lucena, Pavia, San Enrique, San Miguel, Santa Barbara, Zarraga, and the component city of Passi.
These areas are currently being served by the Iloilo Electric Cooperative (ILECO) I, II, and III. ILECOs hold franchise certificates to operate electric light and power services in the above municipalities in the province of Iloilo and Passi City.
MORE Power initially held a franchise to operate in Iloilo City until the passage of RA 11918, which in effect, expanded its franchise to include 15 municipalities and one component city previously within ILECO’s exclusive franchise area.
ILECOs earlier filed a petition for certiorari and prohibition with prayer for the issuance of a temporary restraining order and writ of preliminary injunction before the Supreme Court.
They questioned the validity of Section 1 of RA 11918 for alleged violation of their rights to exclusive franchises, due process, non-impairment of contracts, and equal protection.
In dismissing the petition, the high court ruled that Section 11, Article XII of the Constitution prohibits exclusive franchises.
The tribunal stressed that a franchise, as a privilege granted by the state, is not the exclusive private property of the franchisee.
In the case of MORE Power, the high court pointed out that Congress enacted RA 11918 to make electricity more affordable for the people of Iloilo province.
Congress determined that expanding MORE’s franchise would promote healthy competition since MORE was capable of offering lower energy rates, the tribunal said.
“Without competition, ILECOs can easily dictate the price of electricity. Allowing the entry of another player thus benefits consumers, who no longer have to wait until ILECOs’ franchises expire in 2029, 2039, and 2053. This is under the Electric Power Industry Reform Act (EPIRA), which encourages competition in the electricity industry,” the SC said.
It added that contract rights must give way to the broader authority of the state’s police power when exercised for the general welfare, as in this case. In this case, the tribunal ruled that ILECOs failed to show how RA 11918 affected their contracts with their suppliers.
“Neither does RA 11918 give preferential treatment in favor of MORE. As a new franchise holder, MORE is not similarly situated with other utilities that already have existing and functioning distribution systems,” the SC held.
Hence, the high court added the powers granted to MORE Power are needed to ensure it can provide an uninterrupted supply of electricity to its covered areas.
During the passage of RA 11918, MORE Power President Roel Castro was quoted as saying that their expansion plans were already in place even before RA 11918 became law.
Castro said that MORE Power already extended their primary lines to the boundary of Iloilo City and Pavia town, the target jump-off point for the expansion.
The Megaworld substation in Mandurriao district will serve as the main supply point for Pavia due to its proximity to the town.
Castro projected the expansion would take four to five years before they could complete the expansion to all 15 towns. He noted their initial investments in the expansion between P2 billion and P2.5 billion.
He said they are willing to work with ILECO I, II, and III during the expansion “for the welfare of consumers” and would leave it to consumers to choose their preferred power distribution utility./PN
