PECO SCORES BIG VS MORE POWER: Court voids 2 sections of power distribution franchise law

Panay Electric Co., the sole power distributor in Iloilo City for the past 95 years, has vowed exhaust all legal remedies to protect its assets. Though its franchise expired in January this year, it has been allowed to operate by the Energy Regulatory Commission via a Certificate of Public Convenience and Necessity. PECO’s office is on General Luna Street, Iloilo City. IAN PAUL CORDERO/PN
Panay Electric Co., the sole power distributor in Iloilo City for the past 95 years, has vowed exhaust all legal remedies to protect its assets. Though its franchise expired in January this year, it has been allowed to operate by the Energy Regulatory Commission via a Certificate of Public Convenience and Necessity. PECO’s office is on General Luna Street, Iloilo City. IAN PAUL CORDERO/PN

ILOILO City – More Electric and Power Corp.  (MORE Power) suffered a legal setback in its fight against Panay Electric Co. (PECO) to distribute power in this city. Two sections of its franchise law were “void and unconstitutional”, according to the Regional Trial Court (RTC) Branch 209 in Mandaluyong City.

In a decision dated July 1, Judge Monique A. Quisumbing-Ignacio ruled that Section 10 (Right of Eminent Domain) and Section 17 (Transition of Operations) of MORE Power’s Republic Act (RA) No. 11212 infringed on PECO’s right to due process and equal protection of the law.

The court further made permanent the temporary restraining order it issued on March 14, 2019 enjoining MORE Power, the Department of Energy and Energy Regulation Commission from enforcing RA 11212, including but not limited to commencing or pursuing expropriation proceedings against PECO.

President Rodrigo Duterte signed MORE Power’s RA 11212 in February this year about a month after PECO’s franchise expired.

In its bid to hold on to power distribution in Iloilo City, PECO on March 6 filed a petition for declaratory relief at RTC Mandaluyong with application for a temporary restraining order and/or a writ of preliminary injunction.

MORE Power answered this by filing on March 11 a petition at the RTC of Iloilo City for the expropriation of PECO’s power distribution assets.

‘NOT ABSOLUTE’

According to RTC Mandaluyong, the only tangible effect of the exercise of eminent domain in MORE Power’s franchise law would be to replace PECO with MORE Power as the owner of the existing electric power distribution system in Iloilo City.

“In other words, a corporate takeover.  To achieve this end, the States should not intervene. This should be a private matter between PECO and MORE Power,” RTC Mandaluyong pointed out.

Explaining its ruling, the court stated that the Supreme Court, in a long line of cases, defined “the power of eminent domain” as the power of the State to acquire private property for some public purpose, and that although the power partakes of a sovereign character, it is by no means absolute.

It also noted that the high court laid down the following valid exercise of the power of eminent domain:

* the property taken must be private property

* there must be genuine necessity to take the private property

* the taking must be for public use

* there must be payment of just compensation

* the taking must comply with due process of law

In Manoscar vs Court of Appeals, according to RTC Mandaluyong, the Supreme Court ruled that the term “public use” must be considered in its “general concept of meeting a public need or a public exigency.”

“Bearing in mind the aforementioned jurisprudence, the Court finds the requisite of ‘public use’ wanting in this case,” ruled Quisumbing-Ignacio.

She stressed: “The power of eminent domain was never intended to be used as a tool to take private property already being devoted to public use from one person and transfer the same to another person to be used for the same public purpose. It does not achieve the ultimate end of eminent domain which, to repeat, is to meet a public need or public exigency.”

In the case of PECO’s properties, RTC Mandaluyong noted that these were already being devoted to public use.

The court ruling affirms that one cannot legislate the illegal takeover of a private company in the guise of expropriation, says Marcelo Cacho, administrative manager of Panay Electric Co. that for 95 years has been the sole power distributor in Iloilo City. “We are committed to defend our rights under the Constitution,” he tells journalists. IAN PAUL CORDERO/PN
The court ruling affirms that one cannot legislate the illegal takeover of a private company in the guise of expropriation, says Marcelo Cacho, administrative manager of Panay Electric Co. that for 95 years has been the sole power distributor in Iloilo City. “We are committed to defend our rights under the Constitution,” he tells journalists. IAN PAUL CORDERO/PN

‘EQUAL PROTECTION’

RTC Mandaluyong also ruled that sections 10 and 17 of RA 11212 violated the equal protection clause of the Constitution.

It said the equal protection clause means that “no person or class of persons shall be deprived of the same protection of laws enjoyed by other persons, or other protection of the laws is not violated by a legislation based on a reasonable classification.”

The equal protection clause, therefore, it stressed, “does not preclude classification of individuals who may be accorded different treatment under the law as long as the classification is reasonable and not arbitrary.”

In the case at hand, the court said, “There is no substantial distinction between MORE, on one hand, and all other distribution utilities, on the other. And yet the assailed provisions granted it more, albeit, unwarranted benefits than other distribution utilities.”

It further noted that sections 10 and 17 of RA 11212 granted MORE Power the “power (not right) of eminent domain insofar as it may be reasonably necessary for the establishment, improvement, upgrading, rehabilitation, maintenance and operations of its services.”

The discriminatory and confiscatory effect of the assailed provisions cannot be denied, according to the court.

Simply put, it said, the sections gave MORE the “power to take over the entire distribution utility…even PECO’s employees were expected to be hired by MORE as Section 17 contains provisions granting preference to hiring PECO’s employees and for those not hired, to give them separation or retirement pay.”

PECO THANKFUL

Marcelo Cacho, PECO’s administrative manager, said their company and shareholders are thankful that “the rule of law and the supremacy of the Constitution prevailed.”

It was Cacho who announced in a press conference held yesterday at PECO’s corporate office on General Lune Street here the RTC Mandaluyong decision.

The ruling, he said, affirmed that one cannot legislate the illegal takeover of a private company in the guise of expropriation. 

“We know that this decision will not stop our adversary but we are committed to keep the fight up and defend our rights under the Constitution,” said Cacho. 

He also reaffirmed PECO’s commitment not to abandon Iloilo City and that the company would continue its modernization program.

Cacho also vowed to reduce PECO’s rates further while still maintaining reliable electricity distribution.

“We share our new city mayor’s objective of providing stable power supply at lower power rates. We have also been in talks with battery storage companies to help us fully maximize our current contracts to further reduce rates. Our smart metering program will continue to ensure that we give our consumers the most accurate billings possible,” said Cacho./PN

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