SC declares provisions allowing MORE takeover of PECO assets valid

Mike Navallo, ABS-CBN News

Posted at Sep 16 2020 01:57 PM | Updated as of Sep 16 2020 02:04 PM

MANILA - In a closely-contested vote, the Supreme Court ruled Tuesday in favor of MORE Electric and Power Corp. against rival Panay Electric Company (PECO) in declaring the takeover provisions of its franchise valid, said SC spokesperson Brian Keith Hosaka.

Voting 8-6, SC magistrates reversed the July 2019 ruling of a Mandaluyong court which declared sections 10 and 17 of the Republic Act 11212 unconstitutional “for infringing on PECO’s rights to due process and equal protection of the law.”

Sections 10 and 17 of the law allow MORE to expropriate PECO’s private assets, including poles, wires, cables, transformers, switching equipment, stations and buildings, machinery and equipment, currently being used for distributing electricity in the province.

Section 10 also allows MORE to immediately possess and operate PECO’s assets upon filing of a petition for expropriation in court and depositing in a bank the full amount of the assessed value of PECO’s properties.

PECO, which operated as Iloilo’s power distributor for 95 years, accused MORE of not having the assets, facilities or equipment for power distribution and yet will become the new owner of an entire distribution system owned by its competitor by virtue of the takeover provisions.

Mandaluyong Regional Trial Court Branch 209 Judge Monique Quisumbing-Ignacio ruled that PECO has no obligation to sell and MORE has no right to expropriate PECO’s assets under Sections 10 and 17 of RA No. 11212 and PECO’s rights to its properties are protected against arbitrary and confiscatory taking.

“The power of eminent domain had never been intended to be used as a tool to take private property already being devoted to public use for the same public purpose,” she said.

But MORE was able to secure a temporary restraining order (TRO) from the Supreme Court in December 2019, which paved the way for an Iloilo court to give the go-signal for MORE’s takeover of PECO’s assets beginning in February this year.

In March, the Energy Regulatory Commission granted a provisional authority to MORE, effectively revoking the certificate of public convenience and necessity given the PECO.

The Iloilo City government revoked PECO’s business permit in May.

The SC’s reversal of the Mandaluyong court's ruling cements MORE’s takeover of PECO’s assets.

In a statement, PECO’s lawyer Estrella Elamparo said they are “saddened” by the decision.

“It was a close vote on a novel issue that had never been raised before our Highest Court, but will certainly have reverberating consequences that open the power of expropriation to abuse. The tight vote lends support to our position that the takeover of PECO’s properties is not the exercise of eminent domain contemplated by our laws, but a violation of constitutional rights,” she said.

"Although this is a massive hurdle, we will not give up on our fight and we will continue to pursue the available legal remedies to defend PECO’s constitutional rights. Despite this temporary setback, we remain optimistic that we will ultimately be vindicated not just for PECO but for the people of Iloilo,” Elamparo added.

PECO’s franchise expired on January 18, 2019 and efforts to extend it in Congress have not prospered.

In contrast, MORE filed its bill in August 2018 and was immediately acted upon by the House and the Senate, with President Rodrigo Duterte signing it into law in February 2019.

ABS-CBN's sister company, First Philippine Holdings, is a minority stakeholder in PECO.