STALEMATE: PECO scores legal win but MORE Power unperturbed

By: Francis Allan L. Angelo and Emme Rose Santiagudo

PANAY Electric Company (PECO) may have stymied the effort of MORE Electric and Power Co. (MORE Power) to take over the former’s distribution assets in Iloilo City by scoring a legal victory from the Regional Trial Court Branch 209 in Mandaluyong City.

But the Razon-led MORE Power is unperturbed saying that the court decision will not prevent the inevitable.

The RTC in Mandaluyong City declared as “void and unconstitutional” two provisions of Republic Act No. 11212, the law which gives the congressional franchise to MORE Electric and Power Co. (MORE Power) to distribute power in Iloilo City.

The decision is a major legal victory for the embattled Panay Electric Co. (PECO).

In an eight-page order promulgated on July 1, 2019, Presiding Judge Monique Quisumbing-Ignacio declared Sections 10 and 17 of Republic Act No. 11212 “void and unconstitutional for infringing on PECO’s rights to due process and equal protection of the law.”

On February 14, 2019, Pres. Rodrigo Duterte signed RA 11212 granting MORE Power the authority to establish, operate, and maintain, for commercial purposes and in the public interest, a distribution system for the conveyance of electric power to end users in the city of Iloilo.

Sec. 10 of RA 11212 authorizes MORE Power “to exercise the power of eminent domain in so far as it may be reasonable and necessary for the efficient establishment, improvement, upgrading, rehabilitation, maintenance and operation of services subject to limitations and procedures prescribed by law.”

Eminent domain refers to the power of the government to take private property and convert it into public use upon payment of just compensation to the property owners.

Meanwhile, Sec. 17 of RA 11212 allows PECO to operate the existing distribution system within the franchise area until MORE Power establishes its own distribution system and completes its transition period which shall not exceed two years from the grant of the franchise.

 

EMINENT DOMAIN

Based on the RTC Mandaluyong City decision, Judge Quisumbing-Ignacio found sufficient grounds to declare Sections 10 and 17 of RA 11212 (the assailed provisions) unconstitutional on the merit that the power of eminent domain was never intended to be used as a tool to take private property already being devoted to public use.

“For a valid exercise of the right of eminent domain, it is necessary that the property sought to be taken is not being devoted to the particular public use contemplated by the expropriating body. 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,” read part of the order.

Moreover, the Court stated that PECO’s properties are already being devoted to public use.

“PECO’s properties are already being devoted to public use, i.e., power distribution. The only tangible effect of the exercise of eminent domain by virtue of the assailed provisions would be to replace PECO with MORE as the owner of the existing electric power distribution in Iloilo City. In other words, a corporate take-over. To achieve this end, the State should never intervene. This should be a private matter between PECO and MORE,” the order said.

 

EQUAL PROTECTION CLAUSE

The court ruled that the assailed provisions (Sec. 10 and 17) violate the equal protection clause of the Constitution which means that “no person or class of persons shall be deprived of the same protection of laws which is 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 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. 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,” the decision said.

Considering the premises above, the Court ruled that PECO “has no obligation to sell and respondent has no right to expropriate PECO’s assets under Sections 10 and 17 of RA 11212; and PECO’s rights to its properties are protected against arbitrary and confiscatory taking under the relevant portions of Sections 10 and 17 of RA No. 11212”.

Moreover, the Temporary Restraining Order (TRO) initially filed by PECO on March 6, 2019 against the franchise of MORE Power was made “permanent”.

“The TRO dated March 14, 2019 in so far it enjoins respondent MORE and or/any of its representatives from enforcing, implementing and exercising any of the rights and obligations set forth under RA 11212, including but not limited to commencing or pursuing the expropriation proceedings against petitioner PECO under assailed provisions; and takeover by respondent MORE of petitioner PECO’s distribution assets in the franchise area is hereby made permanent,” the order said.

On the other hand, PECO Administrative Manager Marcelo Cacho said in a press conference on Tuesday that they will continue their fight with the assurance that their customers will be given utmost priority.

“The RTC confirms that one cannot legislate the illegal takeover of a private company lock, stock, and barrel in the guise of expropriation. We know that this decision will not stop our adversary but we are committed to keep up the fight up and defend our rights under the constitution. PECO reaffirms the commitment we have give time and time again never to abandon Iloilo City – even as we keep up the fight,” he said.

He added that PECO will re-file their franchise renewal application with the House of Representatives when it resumes its session on July 22, 2019.

PECO’s franchise expired on January 19, 2019 while its certificate of public convenience and necessity (CPCN) from the Energy Regulatory Commission (ERC) expired on May 25, 2019.

However, PECO has been granted provisional authority by the ERC to continue operating in Iloilo City while MORE Power sets up shop.

The next hearing on the writ of possession filed by MORE Power against PECO is on July 11, 2019.