By Herbert Vego
“Sa paghahangad ng kagitna, isang salop ang nawala.”
The quoted Filipino adage may be literally translated, “In craving for a half, one ganta has disappeared.”
It reminds us of the fate of the once-mighty Panay Electric Co. (PECO) which, for 96 years, had lit up Iloilo City as sole energy purveyor until February 29 this year when More Electric and Power Corporation (MORE Power) took over in accordance with a court order.
But PECO would not give up, opting to fight all the way to the Supreme Court, even if the latter had already issued a temporary restraining order (TRO) against the decision of a Mandaluyong City regional trial court (RTC) declaring MORE Power’s takeover “unconstitutional”.
Last Wednesday (Sept. 15), the column I wrote for the following day’s issue of the Daily Guardian discerned, “PECO’s intransigence does not make sense at this time when the Supreme Court (SC) might have already decided on MORE Power’s petition to rule on the constitutionality of the franchise law (RA 11212).”
By a fluke of coincidence, the SC met en bank that same day and came up with a non-unanimous decision (8-6) reversing the judgment of the Mandaluyong City RTC (Branch 209) which had pinpointed Sections 10 and 17 of RA 11212 as “unconstitutional”.
On learning of the scoop, MORE Power’s spokesman Jonathan Cabrera, exclaimed, “Tapos na ang boksing.”
When we sought MORE President Roel Z. Castro for comment, he said, “Puede pa silang mag-MR,” referring to a possible motion for reconsideration that PECO may file before the SC.
But that leads us to a hypothetical question, “Supposing the SC ruled in PECO’s favor, would that not result in a literal power vacuum in Iloilo City?”
PECO’s franchise expired on January 18, 2019 yet and only managed to hold over for one year and one month because the Energy Regulatory Commission (ERC) had issued it a provisional certificate of public Convenience and Necessity (CPCN) in view of its pending court battles with MORE Power.
On the other hand, it’s MORE Power that now possesses the new 25-year legislative franchise. Under Article XI Section 11 of the 1987 Constitution, public utilities like PECO must secure a legislative franchise before it could operate.
Looking back, I remember that day when I heard PECO’s administrative officer Marcelo Cacho being interviewed by DyRI broadcaster Henry Lumawag as to whether billionaire Enrique Razon Jr. had offered to buy PECO for six billion (P6,000,000,000) pesos before the expiration of its franchise.
I could not remember Cacho’s exact words in Ilonggo, but he alluded to PECO as being worth much more than the aforesaid amount.
Alas, having lost its legal battle, Cacho could not expect Razon, as chairman of MORE Power, to be so magnanimous. As specified in RA 11212, MORE Power would only pay PECO a “just compensation” of P481,842,450, based on the latter’s tax declaration.
Did the incorporators of PECO really expect to grab back the distribution utility by questioning the constitutionality of two sections of the franchise law?
Probably not. If they knew they were legally right, they could have gone directly to the Supreme Court.
Probably they were buying time beyond the expiration of PECO’s franchise. A year or two of extended operation could net them millions or even billions of pesos of extra income.
Section 10 of RA 11212 provides that “the grantee is authorized to exercise the power of eminent domain in so far as it may be reasonably necessary for the efficient establishment, improvement, upgrading, rehabilitation, maintenance and operation of its services.”
Sec. 10 also authorizes MORE Power to sequester the distribution utility in exchange for a “just compensation” that MORE Power has offered to pay.
PECO argued that MORE Power has no right to confiscate PECO’s property.
But the franchise awarded to PECO is one of “eminent domain,” which refers to “the power of government to take, or to authorize the taking of, private property for public use without the owner’s consent, conditioned upon payment of just compensation.”
Under Republic Act No. 9136 or the “Electric Power Industry Reform Act” (EPIRA), “The costs for the acquisition, construction, and the establishment of the power distribution system were allowed to be recovered through the retail rate approved by the Energy Regulatory Commission (ERC), which retail rate covers full recovery of the costs/funds used to acquire, construct and establish these power distribution system assets.”
Section 17 of RA 11212 on transition is very specific: “Panay Electric Co. (PECO) shall in the interim be authorized to operate the existing distribution system within the franchise area… 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.”
Both the Court of Appeals (CA 18th Division) and the Supreme Court had much earlier restrained the Mandaluyong RTC from enforcing its decision favorable to PECO because it “has no jurisdiction to restrain and/or enjoin the expropriation case.”
Section 17 of RA 11212 on transition is very specific: “Panay Electric Co. (PECO) shall in the interim be authorized to operate the existing distribution system within the franchise area… 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.”
The transition phase is necessary because it would be impractical and impossible for the new franchisee to take over while building itself from scratch.
It is well-settled in expropriation proceedings – as in the conversion of private land into public road — that whenever vendor and vendee do not agree, government may step in to rule on “fair market value.”
There have been reports about MORE Power’s chairman Enrique Razon Jr. having offered to buy PECO for P6 billion even before its franchise expired, but this was denied by PECO administrative officer Marcelo Castro when interviewed by DyRI broadcaster Henry Lumawag, adding that the value of their company is much, much more than that.
Now all that’s left is for PECO to contest in court MORE Power’s offer of P481,842,450 as “just compensation.”
Sayang rin ‘yan kung pabayaan na lamang.
