SC upholds NEA Reform Act, rejects electric cooperatives’ challenge

MANILA, Philippines – The Supreme Court has upheld the constitutionality of the National Electrification Administration (NEA) Reform Act of 2013, rejecting a challenge by electric cooperatives that argued the law infringed on constitutional protections granted to cooperatives.

The SC en banc dismissed the consolidated petitions filed by electric cooperatives under the Philippine Federation of Electric Cooperatives (Philfeco) and members of their governing bodies seeking to block Republic Act No. 10531 and its implementing rules.

The SC, in a 45-page decision written by Associate Justice Maria Filomena Singh, ruled that the law and its implementing rules were a valid exercise of the state’s police power, and that electric cooperatives operate under legislative franchises and are therefore subject to government regulation. 

The High Tribunal added that the public nature of their services justified state oversight to guard against abuse and inefficiency.

The respondents included former executive secretary Paquito Ochoa, former Energy secretary Carlos Jericho Petilla, former Budget secretary Florencio Abad, former NEA administrator Edita Buena, former Cooperative Development Authority chairman Emmanuel Santiaguel, former Securities and Exchange Commission chairman Teresita Herbosa, and the former leaders of the Senate and House of Representatives during the administration of late president Benigno Aquino III.

It was Aquino who signed RA 10531 into law on May 7, 2013, expanding NEA’s oversight powers over electric cooperatives.

The petitioners had sought a writ of preliminary prohibitory injunction and/or a temporary restraining order (TRO), as well as a status quo ante order from the court even as they argued that the law violated Article XII of the 1987 Constitution. 

The constitutional provisions, they pointed out, promotes cooperatives and protects their right to broaden ownership, establish and operate economic enterprises, and be supervised by a government agency tasked with supporting cooperative development.

They had also challenged provisions allowing NEA to intervene in financially troubled cooperatives, exercise disciplinary authority, and appoint independent directors under Sections 5 and 6 of the law, saying these infringed on constitutional protections for cooperatives.

The petitioners had argued that the law violated the Constitution’s equal protection clause by treating electric cooperatives registered with the CDA the same as those registered with NEA while applying different rules to privately owned electricity distributors.

They had claimed Sections 10 and 11, which set qualifications and disqualifications for cooperative officers and board members, were discriminatory and therefore an invalid exercise of police power.

But the SC, ruling against the petition, stated: “In order to perform such mandate, it is reasonably necessary that the NEA exercise a certain degree of supervision and control over the operations of all electric cooperatives. The law precisely envisions a proactive government that pushes electric cooperatives to their highest possible operational fitness.” – Rappler.com