Franchise for COTELCO-PPALMA electric distribution

Franchise grant and covered service area

Section 1 grants COTELCO-PPALMA, its successors or assignees, a franchise for public interest to construct, install, establish, operate and maintain a distribution system for electric power conveyance.
The franchise authorizes service to end users within the specified municipalities in Cotabato and their neighboring suburbs.
The grant is subject to the Constitution and applicable laws, rules and regulations.

Operation standards and facility modifications

Section 2 requires that all electric distribution facilities, lines, and systems owned, maintained, operated, or managed by the grantee be operated and maintained at all times in the best manner.
The grantee must modify, improve, or change facilities or systems whenever required by the Energy Regulatory Commission (ERC) or its legal successor, the Department of Energy (DOE) or its legal successor, the National Electrification Administration (NEA) or its legal successor, or any other concerned government agency—to the extent and manner rendered reasonable and proper by progress and improvements in the industry.
Section 2 allows the grantee, whenever practicable, to permit interested parties to use its poles, facilities, or easements upon reasonable compensation, for purposes of maintaining order, safety, and aesthetics along highways, roads, streets, alleys, or easements.
The ERC or NEA resolves disputes or disagreements between parties.

Regulatory permits and public-works coordination

Section 3 requires the grantee to secure from the ERC or NEA, or any other jurisdictional government agency, the necessary certificate of public convenience and necessity and other appropriate permits and licenses for construction and operation.
Section 4 authorizes the grantee to make excavations or lay conduits in public places for erecting and maintaining poles/supports and for laying/maintaining underground wires, cables, pipes, or other conductors.
Excavations or conduits under Section 4 are subject to prior approval of the Department of Public Works and Highways (DPWH) or the local government units (LGUs) concerned.
The grantee must repair or replace disturbed or altered public places, roads, highways, streets, lanes, alleys, avenues, sidewalks, or bridges in a workmanlike manner at the grantee’s expense, in accordance with DPWH or LGU standards.
Section 4 provides that after a ten (10)-day notice and if the grantee fails to repair or replace, the DPWH or LGU may repair or replace and charge the grantee at double the costs and expenses for such repair or replacement.

Public responsibility, open access, and conduct limits

Section 5 requires the grantee to supply electricity to its captive market in the least costly manner.
When required by the ERC, the grantee must modify, improve, or change facilities, poles, lines, systems, and equipment to provide efficient and reliable service and reduced electricity costs.
Section 5 requires the grantee to charge reasonable and just power rates for all types of consumers within its franchised areas.
Section 5 obligates the grantee to provide open and nondiscriminatory access to its distribution system and services to any end user within its franchise area, consistent with Republic Act No. 9136 (the Electric Power Industry Reform Act of 2001).
Section 5 prohibits the grantee from engaging in activity that constitutes abuse of market power, including unfair trade practices, monopolistic schemes, or other activities that hinder competitiveness of business and industry.

Rates, bill itemization, and consumer protections

Section 6 provides that retail rates and charges for distribution of electric power are regulated by and subject to the approval of the ERC (or its legal successor).
Section 6 requires the grantee to identify and itemize in the electricity bill the components of the retail rate pursuant to Republic Act No. 9136.
Section 6 requires retail rates charged to end users to be made public and transparent.
Section 6 requires implementation of lifeline rates to marginalized end users as mandated under Republic Act No. 9136.
Section 7 requires establishment of a consumer desk to handle consumer complaints and ensure adequate protection of consumer interests.
Section 7 requires the grantee to act with dispatch on complaints brought before it.

Employment commitment

Section 8 requires the grantee to create employment opportunities and allow on-the-job trainings in franchise operations.
Section 8 requires prioritization for residents where the principal office is located.
Section 8 requires compliance with applicable labor standards and allowance-entitlement under existing labor laws, rules and regulations, and similar issuances.
Section 8 requires that employment opportunities/jobs created be reflected in the General Information Sheet (GIS) submitted to the Securities and Exchange Commission annually.

Government takeover and eminent domain

Section 9 reserves to the President of the Philippines, in times of war, rebellion, public peril, calamity, emergency, disaster or disturbance of peace and order, the special right to:
- temporarily take over and operate the distribution system;
- temporarily suspend operation of any station or facility in the interest of public safety, security, and public welfare; or
- authorize a temporary use and operation by any government agency,
- upon due compensation to the grantee.
Section 10 authorizes the grantee to exercise the right of eminent domain insofar as reasonably necessary for efficient maintenance and operation.
Section 10 authorizes installation and maintenance of poles, wires, and other facilities over and across public property, including streets, highways, forest reserves, and similar government properties.
Section 10 authorizes acquisition of private property actually necessary for the franchise purposes, subject to proper condemnation proceedings and just compensation paid.

Term, acceptance, and government protections

Section 11 sets the franchise term at twenty-five (25) years from the date of effectivity of the Act, unless sooner cancelled.
Section 11 provides that the franchise is ipso facto revoked if the grantee fails to operate continuously for two (2) years.
Section 12 requires written acceptance of the franchise to the Committee on Legislative Franchises of the House of Representatives and the Committee on Public Services of the Philippine Senate within sixty (60) days after effectivity.
Section 12 provides that upon acceptance, the grantee shall exercise franchise privileges; nonacceptance renders the franchise void.
Section 13 requires the grantee to hold the national, provincial, city, and municipal governments free from all claims, liabilities, demands, or actions arising from accidents causing injury or property damage during construction, installation, operation, and maintenance.

Civil liability, transfer restrictions, and oversight

Section 14 makes the grantee liable for injury to persons and damage to property arising from accidents due to defective construction or neglect or omission to keep poles and wires in safe condition.
Section 15 prohibits the grantee from selling, leasing, transferring, granting usufruct of, or assigning the franchise or rights/privileges, merging with another entity, or transferring controlling interest to another entity without prior approval of Congress.
Section 15 requires Congress to be informed of any such transaction or transfer of controlling interest within sixty (60) days after completion.
Section 15 provides that failure to report such change of ownership results in ipso facto revocation of the franchise.
Section 15 provides that any person or entity to which the franchise is sold, transferred, or assigned becomes subject to the same conditions, terms, restrictions, and limitations of the Act.
Section 16 requires an annual report to Congress through the Committee on Legislative Franchises of the House of Representatives and the Committee of Public Services of the Philippine Senate on compliance with franchise terms and on operations.
Section 16 requires submission on or before April 30 of the succeeding year.

Rates equality, applicable laws, fines, and clauses

Section 17 mandates that, except for taxes and customs duties, any advantage, favor, privilege, exemption, or immunity granted under existing franchises or later granted shall, upon prior review and approval of Congress, become part of previously granted power distribution franchises and be accorded immediately and unconditionally to their grantees.
Section 17 restricts the operation of the equality rule so it does not affect provisions concerning territory covered, term, or the type of service authorized by the franchise.
Section 17 provides that the equality rule does not apply to the sale, lease, transfer, grant of usufruct, or assignment of a legislative franchise with prior congressional approval.
Section 18 requires compliance with Commonwealth Act No. 148 (the Public Service Act, as amended), Republic Act No. 9136, and Republic Act No. 10531 (the National Electrification Administration Reform Act of 2018).
Section 19 imposes a fine of Five hundred pesos (P500.00) per working day for failure to submit the annual report to Congress.
Section 19 provides that the fine is collected separately by the ERG distinct from penalties imposed for noncompliance with the ERG’s own reportorial requirements.
Section 20 subjects the franchise to amendment, alteration, or repeal by Congress when public interest so requires and states the franchise is not an exclusive grant of the provided privileges.
Section 21 provides separability: if any section or provision is held invalid, the remaining provisions not affected remain valid.