Iloilo power row: Court stops Razon firm from seizing rival’s assets

ILOILO CITY, Iloilo, Philippines — The Regional Trial Court (RTC) in Mandaluyong City has barred a power company controlled by billionaire Enrique Razon Jr. from expropriating the distribution assets of rival Panay Electric Co. (Peco) of the Cacho family.

In a decision dated July 1, a copy of which was received by Peco on Monday, RTC Branch 209 made permanent a 20-day temporary restraining order it issued on March 14 against More Power Electric Co. (More Power).

But More Power lawyer Hector Teodosio said the court’s decision would not affect the proceedings of Iloilo RTC Branch 37, which is hearing its expropriation complaint against Peco.

“The Mandaluyong City RTC decision is not yet final and executory, and the power and authority of the two RTCs are equal and independent. It’s a decision which is not enforceable,” Teodosio told the Inquirer.

Only the Court of Appeals or the Supreme Court can stop the hearings of the Iloilo court, he said.

More Power has petitioned the Iloilo RTC to issue a writ of possession authorizing it to expropriate Peco’s distribution assets valued at least P481.84 million.

‘No obligation to sell’

Mandaluyong Judge Monique Quisumbing-Ignacio declared Section 10 (right of eminent domain) and Section 17 (transition of operations) of Republic Act (RA) No. 11212 as void and unconstitutional for infringing on Peco’s rights to due process and equal protection of the law.”

“Peco has no obligation to sell and (More Power) has no right to expropriate Peco’s assets,” Ignacio said in her decision.

RA 11212, which was signed by President Duterte on Feb. 14, granted a 25-year franchise to More Power as Iloilo City’s power distributor.

Peco’s franchise expired on Jan. 18, but the Energy Regulatory Commission (ERC) has granted the company a provisional certificate of public convenience and necessity (CPCN) to continue distributing power in Iloilo City to prevent the disruption of power supply to consumers amid the continuing legal dispute between Peco and More.

In May, ERC Chair Agnes Devanadera said the provisional CPCN “shall not be construed as extending the franchise of Peco which has expired.”

“More (Power), on the other hand, can exercise its right of eminent domain whereby it may acquire such private property that is actually necessary to enable it to perform its obligation to provide uninterrupted supply of electricity in Iloilo City,” Devanadera said.

Complaints, dividends

Errors in billing, overcharging of up to 1,000 percent, technical failures, poor customer service, high electricity rates, and constant power interruptions are among the complaints against Peco that prompted lawmakers not to renew its franchise.

Razon last year called Peco “a rent-seeking business run by the family who are multiplying and draining the resources and earnings of Peco through dividends for themselves.”

While recognizing the state’s power of eminent domain to acquire private property for public use, the Mandaluyong court noted that Peco’s distribution assets “are already being devoted to … electric power distribution.”

Corporate takeover

“The power of eminent domain was never intended to be used as a tool to take private property already being devoted to public use from one person and transfer the same to another person to be used for the same public purpose,” Judge Ignacio said.

“The only tangible effect of the exercise of eminent domain by virtue of the assailed provisions would be to replace Peco with More as the owner of the existing electric power distribution system of Iloilo City,” she said.

“In other words, a corporate takeover. To achieve this end, the state should not intervene. This should be a private matter between Peco and More,” according to her decision.

Ignacio said that what it deemed unconstitutional was not the granting of the franchise but the “transfer of all of Peco’s distribution assets existing at the franchise area by virtue of the exercise of the right of eminent domain…”

The court said the provisions also violated the equal protection clause of the Constitution because it granted additional “but unwarranted benefits” to More compared with other power distributors. It cited the provision that gave the Razon company the “power” (not right)” to eminent domain.

Confiscatory

“The discriminatory and confiscatory effect of the assailed provisions cannot be denied,” Ignacio said.

Peco welcomed the court ruling as it vowed to defend its rights.

“The (Mandaluyong City) RTC confirms that one cannot legislate the illegal takeover of a private company lock, stock, and barrel [completely] in the guise of expropriation,” said Marcelo Cacho, Peco administrative officer.

“We know the decision will not stop our adversary but we are committed to keep the fight up and defend our rights under the Constitution,” Cacho said in a press conference at the Peco office in Iloilo City on Tuesday.

Peco has been operating in Iloilo City since 1923, servicing some 55,000 consumers, including residences and offices. —With a report from Ronnel W. Domingo