THE Supreme Court ruled that exclusive electric cooperatives franchises were illegal.
In a July 30 decision made public on Thursday, the Supreme Court en banc dismissed the petition of Iloilo Electric Cooperative Inc. 1, 2, and 3 (Ileco) challenging the validity of Republic Act 11918.
Ileco owns franchise certificates to operate electric light and power services in various municipalities in the province of Iloilo and in Passi City.
The company made the petition after another electricity provider, MORE Electric and Power Corp. (MORE), expanded its operation within Ileco’s coverage areas.
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.
Citing the present case, the Supreme Court said Congress enacted Republic Act 11918 to make electricity more affordable for the people of Iloilo province. Hence, Congress determined that expanding MORE’s franchise would promote healthy competition since MORE was capable of offering lower energy rates.
It added that without competition, Ileco can easily dictate the price of electricity.
Allowing the entry of another player thus benefits consumers, who no longer have to wait until Ileco’s franchises expire in 2029, 2039 and 2053. This, the Court said, is in accordance with the Electric Power Industry Reform Act, which encourages competition in the electricity industry.
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