The legal counsel of the Northern Davao Electric Cooperative (NORDECO) warned of a possible constitutional crisis if four bills seeking to amend the franchise areas of electricity distributors in Mindanao are to be passed.
House Bill Nos. 5077, 6740, 6995, and 7047—all proposing to expand the franchise area of Davao Light and Power Company, Inc.(Davao Light)—was deliberated upon by lawmakers for its violations to the Constitution and the EPIRA (RA 9136).
“The constitution does not allow laws that impair contracts. With HBs 5077, 6740, 6995, and 7047, existing contracts of NORDECO will be substantially impaired. For example, Power supply contracts will be servicing a much smaller franchise area,” said Atty. Jeorge Rapista, legal counsel for NORDECO who was present at the session for the Committee on Legislative Franchises.
Congressmen APEC Partylist Rep. Sergio Dagooc and PHILRECA Partylist Rep. Presley De Jesus agreed with Rapista’s opinion.
The lawmakers cited the Non-Impairment Clause (Article III, Section 10) under the 1987 Constitution as a key challenge to the bills, as well as Section 27 of the landmark energy legislation Electric Power Industry Reform Act (EPIRA) or RA 9137 which provided that “all existing franchises be allowed to their full term.”
Should the measures pass into law, it would substantially amend the current franchises held by distributors such as the Northern Davao Electric Cooperative (NORDECO), which is currently serving most of the municipalities and cities that were proposed to be transferred to Davao Light.
In 2022, President Ferdinand “Bongbong” Marcos Jr. himself already vetoed an earlier version of the bill on the same grounds, pointing to the “apparent overlap and possible infringement into the subsisting franchise, permits, and contracts previously granted to [NORDECO],” and called it a “prohibited collateral attack” on its franchise.
“If these HBs are passed it would create a disastrous precedent that can be abused. It encourages cutthroat behavior among competitors for the same franchise areas. Essentially, it overwrites the due process required by the EPIRA law to suspend or revoke franchise rights,” Rapista concluded.
To address the legal challenges hounding the bills, lawmakers proposed a series of measures such as adopting the right administrative process to review the franchises in question, as well as an additional provision within the measures protecting the existing contracts of the concerned electric cooperatives.
