President Ferdinand R. Marcos Jr. has vetoed House Bill (HB) 10554 or An Act Expanding the Franchise Area of Davao Light and Power Company Inc. (DLPC).
According to the Philippine Rural Electric Cooperatives Association (PHILRECA), a letter addressed to the Senate and House of Representatives stated that the President recognizes the intent of the bill to further improve and develop access to electricity within the captive market of the expanded franchise area. However, he is “constrained to veto the bill due to the susceptibility of the proposed expansion of the franchise area of Davao Light and Power Company, Inc. to legal and/or constitutional challenge due to the apparent overlap and possible infringement into the subsisting franchise, permits, and contracts previously granted to North Davao Electric Cooperative Inc. (NORDECO).”
Davao Light is the third largest privately owned electric utility in the Philippines and is owned by Aboitiz Power Corp. (AboitizPower).
“We received the information that Malacanang vetoed HB 10554, which is meant to expand the franchise area of Aboitiz Power subsidiary Davao Light to Davao del Norte. Rest assured that we will cooperate with the relevant authorities and respond to their directions,” said AboitizPower President Emmanuel Rubio.
NORDECO has existing franchises in the expanded franchise area that will subsist until 2028 and until 2033. The bill, said the President, runs counter to the provisions of Section 27 of Republic Act (RA) 9136 or the Electric Power Industry Reform Act (EPIRA) mandating that all existing franchises shall be allowed in its full term.
“Likewise, the resulting repeal of North Davao Electric Cooperative Inc.’s franchise over the expanded franchise area will violate the non-impairment clause as provided in Section 10, Article III of the 1987 Constitution,” the President added in his letter.
The President also said HB 10554 “is a prohibited collateral attach on North Davao Electric Cooperative Inc. franchise” and such bill “is contrary to a jurisprudentially settled doctrine that a franchise cannot be subjected to a ‘collateral attack’.”
During public hearings in the House of Representatives and the Senate, PHILRECA, the association of electric cooperatives operating nationwide, has unequivocally opposed HB 10554 due to similar reasons.
“NORDECO was granted a franchise by virtue of Certificates No. 017 and 103 issued by the National Electrification Administration for a period of 50 years from 1978 and 1983, respectively, which means the existing franchise of NORDECO, will only expire in 2033,” said Janeene Depay-Colingan, PHILRECA’s Executive Director in a position paper the group submitted to the Office of the President.
“In addition to the protection categorically guaranteed by RA 9136 or the EPIRA and non-impairment clause of the Constitution, RA 6038 is very clear that no franchise for service shall be granted to any other person within any area or portion for which a cooperative holds a franchise,” PHILRECA stated in its letter to the President.
“We thank the President for acting positively on the Movement’s plight against takeover of ECs by private for-profit corporation and oligarchs like Davao Light and Power Company,” said Colingan on the President’s veto of HB 10554.
She added that “electric cooperatives should remain to be owned and operated by the people, not by the oligarchs, not by the few elites,” and that the organization and all its member-electric cooperatives appreciate the President’s recognition of the vital role of the sector in national development.
‘Not a collateral attack’
Senator Grace Poe, chairman of the Senate committee on public services, said the proposed expansion of DLPC’s franchise area is not a collateral attack “but is actually a response to the appeal of Nordeco customers for better power service.”
“The argument of ‘collateral attack’ on franchises may only apply in court or administrative proceedings where parties may otherwise attempt to strike down a law that is legally presumed to be valid. This does not apply in the exercise of legislative functions by Congress especially in the context of Section 11, Article XII of the Constitution,” she said.
Poe also said Congress made sure in the measure that the franchise expansion would not be violative of existing laws including the EPIRA and any Constitutional or case law.
“As the Constitution allows, the franchise expansion falls squarely under the ‘amendment, alteration or repeal by Congress when the common good requires’,” she said.
“There is also no violation of the non-impairment clause of the Constitution as this does not apply to franchises. It is settled that police power subordinates the non-impairment clause in the ‘interest of public health, safety, morals and general welfare.’”