Noting the daunting task of bringing electricity to the countryside even in missionary or economically unviable areas, the Supreme Court (SC) affirmed the constitutionality of the 2013 law that enhanced the supervision and control of all electric cooperatives (ECs) registered under the National Electrification Administration (NEA).

Declared constitutional was Republic Act No. 10531, the NEA Reform Act of 2013, that was signed into law by the late former president Benigno S. Aquino III on May 7, 2013. Also affirmed were the law’s Implementing Rules and Regulations (IRR).

RA 10531 amended the old NEA law under Presidential Decree No. 269 issued on Aug. 6, 1973.

RA 10531 empowered the NEA to strengthen and financially stabilize the country's ECs by granting it regulatory and "step-in" rights to intervene, rehabilitate, or take over ailing cooperatives to ensure continuous and reliable rural electrification.

Nationwide, there are more than 120 ECs registered with NEA.

In a full court decision written by Associate Justice Maria Filomena D. Singh, the SC said: “It cannot be emphasized enough that the very nature of the business of electric cooperatives, being imbued with public interest, entails the necessity for the State to guard closely against abuse and inefficiency. The law treats electricity not just like any property, and electric cooperative not just like any property owner.”

With the decision that was made public last Thursday, June 18, the SC dismissed the petitions filed in 2013 by several ECs and the members of their board of directors who were led by the Philippine Federation of Electric Cooperatives (PHILFECO).

The petitioners told the SC that RA 10531 violates Article XII of the 1987 Constitution that guarantees the rights of cooperatives to broaden the base of their ownership; to own, establish and operate economic enterprise; and be under a government agency that promotes the growth of cooperatives for social justice and economic development.

They also challenged the constitutionality of NEA’s “step-in” rights in cases of ailing cooperatives, disciplinary powers, and the power to appoint independent board of directors under RA 10531.

At the same time, they claimed that RA 10531 violates the equal protection clause of the Constitution by treating ECs registered under the Cooperative Development Authority (CDA) the same as ECs registered under the NEA while treating private electricity distribution companies differently.

Thus, they alleged that RA 10531 is an invalid exercise of police power since its provisions under Section 10 and 11, which provide for qualifications and disqualifications of officers and board members of electric cooperatives, are “discriminatory.”

Named respondents in the petitions were former Executive Secretary Paquito Ochoa, former Energy Secretary Carlos Jericho Petilla, former Budget Secretary Florencio Abad, former NEA administrator Edita Bueno, former CDA chairman Emmanuel Santiaguel and former Securities and Exchange Commission (SEC) chairman Teresita Herbosa, and the leaders of Senate and House of Representatives during former President Aquino’s administration.

In resolving the petitions, the SC said that the petitioners alleged that the provisions of the new law are violative of the Constitution and threaten their constitutional rights as cooperatives, right to due process and equal protection of their officers and governing board members.

However, the SC said that “none of the petitioners have offered actual experience of these supposed harms or any allegation as to how the government has enforced the law to their detriment.”

Even in the petitioners’ memorandum submitted in 2023, they “still failed to cite specific instances, one full decade after the law was passed and their petitions were filed.”

Instead, the SC said, the petitioners merely reiterated the threat of injury to their rights because of the passage of RA 10531 and its IRR, “not sustained or actual, but only still perceived to be imminent.”

It pointed out that in constitutional litigation, petitioners must show how a law violated their rights. “Otherwise, the absence of an actual fact-rooted controversy emboldens the Court to do policy making on matters well within the police and plenary powers of Congress to determine, and that of the Executive Department, as may be validly delegated.”

The SC said: “In these cases, the petitioners involved are holders of legislative franchises. Considering that the petitioners operate under legislative franchises, their enterprises fall squarely under the regulation of the State.”

It also said: “A close reading of the powers of the NEA, provided under the law's Sections 5, 6, and 7, and the safeguards to the integrity and professionalism of electric cooperative officers under Sections 8, 10, 11 and 12, also reveal the intention of the legislature to invest the NEA with sufficient authority and power to closely supervise and monitor the operations of all electric cooperatives, whether registered with the NEA, CDA, or SEC” (Securities and Exchange Commission).

“Clearly, the NEA's powers under Republic Act No. 10531 and its IRR are necessary to address the problems that plague electric cooperatives, including but not limited to, financial woes, mismanagement, lack of competent officers, and delayed intervention by the government.

“The Court finds that these powers are not arbitrary, and are reflective of the government's expertise in dealing with various concerns involving electric cooperatives.

“Accordingly, the consolidated petitions are dismissed.”