NEA Lauds PBBM’s Veto on the Expansion of DLPC Franchise Area

2022-07-28

President Ferdinand "Bongbong" Marcos, Jr. vetoed House Bill No. 10554 or anAct Expandingthe Franchise Area of Davao Light and Power Company, Inc.
In a letter addressed to the Senate, President Marcos said he is constrained to vetothebill duetothe susceptibility of the proposed expansion of the franchise area of Davao Light andPowerCompany, Inc. to legal and/or constitutional challenge due to the apparent overlapandpossibleinfringement into the subsisting franchise, permits and contracts previously grantedtoNorthDavao Electric Cooperative, Inc. "North Davao Electric Cooperative, Inc. has existing franchises in the expandedfranchiseareawhich will subsist until 2028 and until 2033. The bill runs counter to the provisions of Section27ofRepublic Act No. 9136 or the EPIRA mandating that "all existing franchises shall beallowedtotheir full term," the President wrote. The President also mentioned that “Echoing the declared national policy in Presidential DecreeNo.269, the total electrification of the Philippines remains vital to the welfare of our peopleandthesound development of the Nation. I remain committed to the pursuit and attainment ofthisobjective in a vigorous and systematic manner, with utmost respect for the concomitant rightsofthe public service entities engaged in supplying electric service, as well as the consumersthereof.”The National Electrification Administration (NEA), which vehemently opposes thebill, alsoasserted Section 27 of EPIRA on its position paper sent to the Committeeof LegislativeFranchises. NEA said that Tagum City, the Island Garden City of Samal, Asuncion, Kapalong,New Corella, San Isidro and Talaingod in Davao del Norte, and Maco in Davao deOrowill remainwith NORDECO as the cooperative has still 11 years before its franchise expires. Moreover, the President added in his veto message that "the resulting repeal of NorthDavaoElectric Cooperative, Inc.'s franchise over the expanded franchise area will violatethenonimpairment clause as provided in Section 10, Article III of the 1987 Constitution. As acknowledgedby the bill, North Davao Electric Cooperative Inc. has "existing power supply agreementswithgeneration companies that are provisionally or finally approved by the EnergyRegulatoryCommission" that will necessarily be terminated or impaired upon the resultingrepeal of NorthDavao Electric Cooperative Inc.'s franchise over the expanded area.” Furthermore, the bill, while on its face, amends the franchise of another entity over theexpandedarea, is prohibited collateral attack on North Davao Electric Cooperative, Inc. franchise. Thisiscontrary to a jurisprudentially settled doctrine that a franchise cannot be subjectedtoa"collateralattack.
NEA Administrator Emmanuel Juaneza expressed his gratitude to the President for thevetoofthebill. "We thank the President for upholding the existing NORDECO franchise," the Administratorsaid. NEA attended various public hearings in the House of Representatives and the SenatetoopposeHB 10554. The agency defended the franchise of NORDECO, a vital partner of NEAinachievingtotal electrification and sustainable rural development in the country."###