Question & AnswerQ&A (Republic Act No. 6038)
The title of the Act is the "National Electrification Administration Act."
The policy is the total electrification of the Philippines on an area coverage basis, which is vital to the welfare of its people and the sound development of the nation. The State shall promote, encourage, and assist all public service entities engaged in supplying electric service, particularly electric cooperatives.
A cooperative refers to a corporation organized under this Act or a cooperative supplying or empowered to supply electric service, including those previously organized under the Philippine Non-Agricultural Cooperative Act that have been converted or not.
The Board of Administrators is composed of a Chairman and four members, one of whom is the Administrator as an ex-officio member. The Chairman and three other members are appointed by the President with the consent of the Commission on Appointments to serve for six years. The Administrator's term is co-terminous with his term.
The Board is empowered to make loans, assist in planning and operating electrification projects, serve as an agent in securing loans from other sources, receive and certify incorporation documents of cooperatives, cooperate with other government agencies, and report annually to the President and Congress about electrification status.
Loans must finance financially feasible projects ensuring area coverage, have funds available, have reasonably adequate security, be self-liquidating within terms not exceeding 35 years, charge interest not exceeding three percent per annum, and require compliance with approved rates and service policies.
Violations such as participating in matters affecting entities they have interest in, or becoming guarantors for NEA loans, can lead to removal from office, fines up to ten thousand pesos, imprisonment up to five years, or both.
The cooperative's board must authorize the sale, then the sale must be approved by a majority of the members and consented to by the NEA and any other lender with a lien on the property. Exceptions apply to merchandise and minor properties not exceeding ten percent of total assets, or by consolidation or merger.
A cooperative operating in conformity with the Act is permanently exempt from paying income taxes and is exempt from all national and local government taxes, fees, and duties for a period ending on December 31 of the thirtieth calendar year after organization or loan-free status, whichever comes first.
The proposed amendment must be presented with proper notice to members, approved by a two-thirds affirmative vote of total votes cast, and articles of amendment must be executed, acknowledged, and filed with the NEA Administrator for certification.