Marcos vetoes bill expanding the franchise area of Aboitiz-owned power firm

Contractors of Davao Light and Power Company fix a powerline in Davao City. MindaNews file photo

DAVAO CITY (MindaNews / 28 July) – President Ferdinand “Bongbong” Marcos Jr. vetoed Wednesday House Bill No. 10554 seeking to expand the franchise area of the Aboitiz-owned Davao Light and Power Company, Inc. (DLPC) to two cities and five municipalities of Davao del Norte.

Marcos, in his veto message, cited some constitutional and legal challenges that led him to reject the bill, which Congress passed last May 30.

“I am constrained to veto the bill due to the susceptibility of the proposed expansion of the franchise area of Davao Light and Power Company, Inc., to legal and/or constitutional challenge due to the apparent overlap and possible infringement into the subsisting franchise, permits, and contracts previously granted to North Davao Electric Cooperative Inc.,” he said.

HB 10554 sought to amend Republic Act 11515, extending for another 25 years the franchise granted to DLPC.
It would have placed Tagum City, Island Garden City of Samal, and the municipalities of Asuncion, Kapalong, New Corella, San Isidro, and Talaingod under the franchise area of DLPC.

These areas are currently serviced by the North Davao Electric Cooperative Inc. (Nordeco)
DLPC currently services Davao City, Panabo City, and the municipalities of Carmen, Dujali and Sto. Tomas in Davao del Norte.
Marcos said that Nordeco has an existing franchise for the mainland until 2028 and Samal until 2033.
He said the bill ran counter to Section 27 of Republic Act No. 9136 or the Electric Power Industry Reform Act, mandating that “all existing franchises shall be allowed to their full term.”
He said the resulting repeal of Nordeco’s franchise would violate the non-impairment clause under Section 10 of Article III of the 1987 Constitution which states that “No law impairing the obligation of contracts shall be passed.”
“As acknowledged by the bill, Nordeco Inc. has ‘existing power supply agreements with generation companies that are provisionally or finally approved by the Energy Regulatory Commission’ that will necessarily be terminated or impaired upon the resulting repeal of North Davao electric cooperative Inc.’s franchise over the expanded area,” he said.
He added the amendatory law also constitutes a “collateral attack” on the existing franchise of Nordeco.
“This is contrary to a jurisprudentially settled doctrine that a franchise cannot be subjected to a ‘collateral attack’,” he said.
In a press release posted on the Senate website last March 9, Senator Grace Poe, sponsor of the measure in the Senate, said the “proposed expansion of the service coverage was a response to calls for cheaper and better electric service in the region.”
She added power supply could not keep up with the growing demand amid “massive infrastructure and industry development across the region.” (Antonio L. Colina IV/MindaNews)