Question & AnswerQ&A (Republic Act No. 9511)
Republic Act No. 9511 grants the National Grid Corporation of the Philippines (NGCP) a franchise to operate, manage, and maintain the national transmission system for conveying or transmitting electricity through high voltage backbone systems and related facilities nationwide.
The franchise is granted for a term of fifty (50) years from the date of effectivity of the Act.
At least sixty percent (60%) of the capital of the NGCP must be owned by citizens of the Philippines, in compliance with the Constitution and applicable laws related to foreign ownership and management of public utilities.
The NGCP is authorized to exercise the right of eminent domain to acquire private property reasonably necessary for the construction, expansion, maintenance, and efficient operation of transmission and subtransmission systems, provided that applicable legal procedures are observed, including just compensation.
In times of war, rebellion, public peril, calamity, emergency, disaster, or disturbance of peace and order, the President may temporarily take over and operate the transmission system or suspend its operation in the interest of public safety, security, and welfare, with due compensation to the NGCP.
No, the NGCP cannot lease, transfer, grant usufruct, or sell its franchise or controlling interest without prior approval of Congress, with exceptions related to stock issuance in compliance with ownership dispersal requirements and transfers at the corporate stockholder level that comply with constitutional limitations.
The NGCP, its stockholders, officers, or their relatives up to the fourth civil degree cannot hold shares in any Power Industry Player, and vice versa, to avoid anti-competitive behavior such as cross-subsidization or market manipulation. There are limited exceptions involving minimal share ownership in publicly listed companies.
A Power Industry Player refers to a generation company, distribution utility or its subsidiaries or affiliates, or other entities engaged in generating and supplying electricity as defined by the Energy Regulatory Commission (ERC).
The NGCP must pay a franchise tax equivalent to three percent (3%) of all gross receipts from its operations under the franchise, which is in lieu of income tax and other taxes on its franchise, rights, properties, and revenues. However, it still pays taxes on real estate, buildings, and personal property, excluding the franchise itself.
NGCP is required to submit an annual report on its finances and operations to the Congress of the Philippines.