Supreme Court upholds MORE Power's franchise expansion in Iloilo

The Supreme Court of the Philippines has dismissed a petition filed by three Iloilo electric cooperatives seeking to nullify the expansion of MORE Electric Power Corporation’s (MORE Power) franchise area, effectively allowing the company to compete in areas previously served exclusively by the cooperatives.

The Court’s decision, promulgated on 30 July 2024, upheld the validity of Republic Act No. 11212, which expanded MORE Power’s franchise to include 15 municipalities and one city in Iloilo province. This overlap challenged the exclusive franchise areas of Iloilo I Electric Cooperative, Inc. (ILECO I), Iloilo II Electric Cooperative, Inc. (ILECO II), and Iloilo III Electric Cooperative, Inc. (ILECO III).

The cooperatives argued that the expansion law violated constitutional provisions on non-impairment of contracts, due process, and equal protection, as well as existing laws safeguarding their exclusive rights under the National Electrification Administration (NEA) Decree and the Electric Power Industry Reform Act of 2001 (EPIRA).

However, the Supreme Court, in a decision penned by Associate Justice Rodil Zalameda, ruled that exclusive franchises are not constitutionally protected. The Court emphasized that public utilities must serve the public interest, and competition could improve services and lower electricity rates.

The decision reaffirmed the government’s authority to prioritize public welfare over contractual obligations, citing the principle of police power as superior to property rights. The Court referenced its ruling in Carlos Superdrug Corp. vs. Department of Social Welfare and Development, where it held that even constitutionally protected rights could be regulated in the interest of the common good.

The Court also denied the intervention of the Philippine Rural Electric Cooperatives Association (PHILRECA), which argued that the expansion undermined the exclusive rights of electric cooperatives. The Court found PHILRECA’s interest insufficiently direct to warrant intervention.

The ruling underscores the government’s commitment to fostering competition in the power sector, with lawmakers, including then-Senator Ralph Recto, advocating for competition as a means to address high electricity rates in Iloilo.

The decision solidifies MORE Power’s entry into the expanded franchise areas, setting a legal precedent on the limitations of exclusive franchises in the public utilities sector. It also mandates the ILECOs to continue serving their existing consumers under EPIRA.

This landmark ruling marks a shift toward greater competition in Iloilo’s power industry, with potential benefits for consumers, including improved services and reduced electricity costs.