Electric cooperatives do not have a constitutional right to an exclusive franchise within their service areas, the Supreme Court (SC) en banc ruled.
In a July 30, 2024 decision penned by Associate Justice Rodil Zalameda, the SC dismissed the petition of Iloilo Electric Cooperatives (ILECOs) I, II, and III challenging the validity of Republic Act No. (RA) 11918.
RA 11918 extended the franchise area of MORE Electric and Power Corporation (MORE Power) from Iloilo City to the second and fourth districts of Iloilo province.
ILECOs hold franchise certificates to operate electric light and power services in all 42 towns and the component city of Passi in the province.
The electric cooperatives filed before the Court a petition for certiorari and prohibition, with prayer for the issuance of a temporary restraining order and writ of preliminary injunction, to invalidate Section 1 of RA 11918 for violating their rights to exclusive franchises, due process, non-impairment of contracts, and equal protection.
“In dismissing the petition, the Court ruled that Section 11, Article XII of the Constitution 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,” the SC Public Information Office said.
“In the present case, 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,” it furthered.
The Court pointed out that ILECOs can easily dictate the price of electricity without competition.
“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, which encourages competition in the electricity industry,” it added.IMT
