Case Summary (G.R. No. 244544)
Nature of the Case
The legal action is a Petition for Certiorari and Prohibition under Rule 65, challenging the constitutionality of Section 1 of Republic Act No. 11918. The petitioners claim violations concerning their exclusive franchises, non-impairment of contracts, due process, and equal protection.
Factual Antecedents
Petitioners hold valid certificates of franchise to provide electricity in various municipalities in Iloilo, with expiration dates for ILECO I set for August 22, 2053, ILECO II on December 12, 2029, and ILECO III on August 10, 2039. Republic Act No. 11212, enacted on March 9, 2019, granted MORE Electric a franchise for electricity distribution in Iloilo City, subsequently amended by Republic Act No. 11918 on August 30, 2022. The latter expanded MORE's franchise area to include several municipalities overlapping with areas already under the petitioners’ franchises.
Issues Raised
The petitioners contend that:
- Section 1 of Republic Act No. 11918 lacks justification under Section 11, Article XII of the Constitution regarding common good.
- Petitioners were deprived of their right to due process as guaranteed by Section 1, Article III of the Constitution.
- The law violates the non-impairment of contracts clause in Section 10, Article III of the Constitution.
- It infringes upon their right to equal protection of laws under Section 1, Article III of the Constitution.
- The law violates their exclusive franchises under the National Electrification Administration (NEA) Act and the Electric Power Industry Reform Act (EPIRA).
Court's Ruling
The Supreme Court dismissed the petition, affirming that exclusive franchises are not constitutionally protected and that Congress possesses plenary power to amend or repeal them in the interest of common good. The Court emphasized that franchises are privileges granted by the state, subject to amendments as deemed necessary by Congress.
Exclusive Franchises and Legislative Authority
The Court expounded that no franchise granted by the government may be exclusive in nature as mandated by Article XII, Section 11 of the 1987 Constitution. The constitutional prohibition against exclusivity serves to promote competition and public welfare, superseding any claim to an exclusive franchise by the petitioners.
Procedural Due Process
The petitioners' argument regarding due process was found without merit. The Court reviewed legislative discussions and determined that Congress appropriately considered the implications of the expanded franchise, aligning with public interest and competition. The deliberative process undertaken by Congress met the necessary standard for procedural due process.
Non-impairment of Contracts
The Court elucidated that the non-impairment clause does not shield contracts from legislative amendments made in the exercise of police power. The alleged impairment on the petitioners’ contracts, specifically regarding take-or-pay provisions, did not constitute a legal change imposed by Republic Act No. 11918. Nonetheless, if the law had induced economic ramifications, the State's police power would still be paramount in promoting common good.
Denial of Motion to Intervene
The Philippine Rural Electric Cooperatives
...continue readingCase Syllabus (G.R. No. 244544)
Case Background and Petition Details
- Petitioners: ILOILO I ELECTRIC COOPERATIVE, INC. (ILECO I), ILOILO II ELECTRIC COOPERATIVE, INC. (ILECO II), and ILOILO III ELECTRIC COOPERATIVE, INC. (ILECO III).
- Respondents: Executive Secretary Lucas P. Bersamin, Energy Regulatory Commission Chairperson Hon. Monalisa C. Dimalanta, the House and Senate (components of Congress), and MORE Electric and Power Corporation.
- This is a Petition for Certiorari and Prohibition with Prayer for Temporary Restraining Order and Writ of Preliminary Injunction under Rule 65.
- The petition challenges the constitutionality of Section 1 of Republic Act No. 11918 (2022) on grounds of violation of exclusive franchises, non-impairment of contracts, due process, and equal protection clauses.
- Petitioners are holders of certificates of franchise for electricity distribution in Iloilo province and city of Passi, with franchise expiration dates ranging from 2029 to 2053.
- Republic Act No. 11212 (2019) granted MORE Electric a franchise in Iloilo City; RA No. 11918 (2022) expanded MORE’s franchise to include municipalities and city areas overlapping with petitioners’ franchise areas.
Factual Antecedents and Disputed Franchise Areas
- The contested Section 1 of RA No. 11918 expanded MORE Electric’s franchise area to 15 municipalities and one city previously under petitioners’ exclusive coverage.
- ILECO I’s overlapping areas: Alimodian, Leganes, Leon, Pavia, San Miguel, Santa Barbara.
- ILECO II’s overlapping areas: City of Passi, Barotac Nuevo, Dingle, DueAas, Dumangas, New Lucena, San Enrique, Zarraga.
- ILECO III’s overlapping areas: Anilao, Banate.
Issues Raised by Petitioners
- Whether petitioners hold exclusive franchises over their territories.
- Whether Section 1 of RA No. 11918 violates petitioners’ due process rights.
- Whether RA No. 11918 impairs petitioners’ existing supply contracts (non-impairment of contracts).
- Alleged infringement upon exclusive franchise rights under the NEA Decree and EPIRA.
- Violation of Section 41(c) of the NEA Act prohibiting franchises in areas covered by electric cooperatives without consent or commission determination.
- Allegation of violation of equal protection clause due to extraordinary benefits granted to MORE Electric.
Petitioners' Arguments
- Expansion of MORE’s franchise effectively amends, alters, or repeals petitioners’ respective franchises without a compelling common good.
- It will result in wasteful competition, infrastructure duplication, and increased electricity prices burdening consumers.
- Due process was violated because petitioners were not given prior opportunity to be heard before the grant of expanded franchise.
- Existing power supply contracts contain take-or-pay provisions obligating petitioners to pay contracted capacity regardless of consumption, risking stranded costs due to consumers switching to MORE.
- MORE Electric was uniquely granted extraordinary eminent domain powers which petitioners and other utilities do not possess.
Respondents' Position and Comments
- The petition raises a political question beyond justiciability and violates court hierarchy rules.
- Congress possesses plenary power to grant franchises and may pass laws impacting f