By Sean Rafio
The Supreme Court upheld Republic Act No. (RA) 11918, which expanded the franchise of MORE Electric and Power Corporation (MORE) to include some areas in Iloilo Province.
In a decision penned by Associate Justice Rodil V. Zalameda and promulgated on July 30, 2024, the en banc dismissed the petition of Iloilo Electric Cooperative, Inc. I, II, and III (ILECOs) challenging the validity of RA 11918.
ILECOs hold franchise certificates to operate electric light and power services in various municipalities in Iloilo province and in Passi City.
MORE Power initially held a franchise to operate in Iloilo City until RA 11918 expanded its franchise to include 15 municipalities and one city previously within ILECOs’ exclusive franchise area.
The expansion was triggered by MORE Power’s better services and facilities in Iloilo City after it took over in 2020.
In 2022, Congressmen BJ Biron (4th district, Iloilo) and Michael Gorriceta (2nd district) filed resolutions seeking to amend MORE Power’s franchise (RA 11212) to expand to the province.
After the passage of the amendments, the electric cooperatives filed a petition for certiorari and prohibition, with a prayer for a temporary restraining order and writ of preliminary injunction, to invalidate Section 1 of RA 11918.
They argued that the law violated their rights to exclusive franchises, due process, non-impairment of contracts, and equal protection.
But in its decision, the Supreme Court stated that electric cooperatives “do not have a constitutional right to an exclusive franchise within their coverage areas.”
The high court cited Section 11, Article XII of the Constitution, which prohibits exclusive franchises.
“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.”
It noted 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.
“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 in accordance with the Electric Power Industry Reform Act (EPIRA), which encourages competition in the electricity industry,” the Supreme Court said.
The high court 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.
According to the Supreme Court, ILECOs failed to show how RA 11918 affected their contracts with their suppliers.
“As a new franchise holder, MORE is not similarly situated with other utilities which already have existing and functioning distribution systems. Thus, the added powers granted to MORE are needed to ensure it is able to provide an uninterrupted supply of electricity to its covered areas,” it concluded.
