Franchise to Cotabato Light and Power Co.

Franchise grant and service territory

Subject to the 1987 Philippine Constitution and applicable laws, rules, and regulations, Section 1 grants Cotabato Light and Power Company (the grantee, including its successors or assigns) a franchise to construct, install, establish, operate, and maintain for commercial purposes and in the public interest a distribution system for the conveyance of electric power to end-users.
The franchise covers the City of Cotabato and portions of the municipalities of Datu Odin Sinsuat and Sultan Kudarat, both in the Province of Maguindanao (Section 1).
The franchise is granted for the conveyance of electric power to end-users within the franchised areas (Section 5).

ERC/DOE permits and superior operations

The grantee must secure from the Energy Regulatory Commission (ERC) (or any other government agency with jurisdiction) the necessary certificate of public convenience and necessity and other appropriate permits and licenses for construction and operation (Section 3).
The grantee’s distribution facilities, lines, and systems must be operated and maintained at all times in a superior manner (Section 2).
Whenever required by the ERC (or its legal successor) or the Department of Energy (DOE) (or its legal successor) or other concerned government agency, the grantee must modify, improve, and change its facilities or systems to a reasonable extent consistent with progress in science and improvements in electric power services (Section 2).

Pole space, disputes, and public access

The grantee may allow interested parties to use free spaces in its poles, facilities, or right-of-way for highway/roadway order, safety, and aesthetics, upon reasonable compensation that considers cost incurred to accommodate and administer such use (Section 2).
The ERC decides in case of dispute or disagreement between parties regarding the use described under Section 2 (Section 2).
The grantee must 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 (Section 5).
The grantee must not engage in activities constituting abuse of market power, including unfair trade practices, monopolistic schemes, or other activities that hinder business competitiveness and industries (Section 5).

Facilities, excavation, and restoration rules

The grantee may, with prior approval of the Department of Public Works and Highways (DPWH) or the local government unit (LGU) concerned, make excavations or lay conduits in public places, highways, roads, streets, lanes, alleys, avenues, sidewalks, or bridges in the covered province, cities, and/or municipalities for erection and maintenance of poles, pipes, and other supports and for laying/maintaining wires, cables, pipes, or other conductors (Section 4).
Any public place or infrastructure disturbed, altered, or changed must be repaired and replaced in workmanlike manner at the expense of the grantee according to DPWH or LGU standards (Section 4).
After ten (10) days’ notice from the authority, if the grantee fails or refuses to repair or replace, the DPWH or LGU may repair and place the disturbed area in good order and condition at double expense, which shall be charged against the grantee (Section 4).

Service obligations and consumer protection

The grantee must supply electricity to its captive market in the least costly manner (Section 5).
The grantee must modify, improve, or change its facilities, poles, lines, systems, and equipment—when required by the ERC and as far as feasible—to provide efficient and reliable service and reasonable electricity costs (Section 5).
The grantee must charge reasonable and just power rates to all types of consumers within the franchised areas so that business and industries can compete (Section 5).
The grantee must establish a consumer desk to handle consumer complaints and to ensure adequate promotion of consumer interests (Section 7).
The grantee must act with dispatch on all complaints brought before it (Section 7).

Rates, billing transparency, and lifeline rates

Retail rates and charges for distribution by the grantee to end-users must be regulated and are subject to ERC approval (Section 6).
The grantee must identify and segregate in each electricity bill the components of the retail rate pursuant to Republic Act No. 9136, unless otherwise amended (Section 6).
Rates charged must be made public and transparent (Section 6).
The grantee must implement lifeline rates to marginalized end-users as mandated under Republic Act No. 9136 (Section 6).

Government takeover and eminent domain

In times of war, rebellion, public peril, calamity, emergency, disaster, or disturbance of peace and order, a special right is reserved for the President to:
- temporarily take over and operate the grantee’s stations or facilities; or
- temporarily suspend operations of any station or facility for public safety, security, and public welfare; or
- authorize temporary use and operation by any government agency,
  subject to due compensation to the grantee (Section 8).
The grantee is authorized to exercise the right of eminent domain insofar as it is reasonably necessary for efficient maintenance and operation of services (Section 9).
The grantee may install and maintain poles, wires, and other facilities over and across public property, including streets, highways, forest reserves, and other similar property of the Government of the Philippines and its branches or instrumentalities (Section 9).
The grantee may acquire private property that is actually necessary for purposes of the franchise, but only through proper condemnation proceedings with just compensation paid (Section 9).

Government immunity, damages liability, and safety

The grantee must hold national, provincial, city, and municipal governments free from all claims, accounts, demands, or actions arising from accidents or injuries (to property or persons) caused by construction, installation, operation, and maintenance of the distribution system (Section 10).
The grantee must be liable for injury and damage arising from or caused by accident to persons and property due to defective construction under the franchise or any neglect or omission to keep its poles and wires in safe condition (Section 11).

Franchise assignment controls and equality clause

The grantee may not sell, lease, transfer, grant the usufruct of, or assign the franchise or its rights and privileges, merge with another corporation or entity, or transfer controlling interest (in whole or in parts, whether simultaneously or contemporaneously) to any person, firm, company, corporation, or other commercial or legal entity without prior approval of the Congress of the Philippines (Section 12).
Congress must be informed of any lease, transfer, grant of usufruct, sale, or assignment of franchise or rights within sixty (60) days after completion of the transaction (Section 12).
Any such transfer, sale, assignment, or related change must be in accordance with constitutional limitations (Section 12).
Failure to report the change of ownership to Congress renders the franchise ipso facto revoked (Section 12).
Any person or entity that buys, transfers, or receives the franchise is subject to the same conditions, terms, restrictions, and limitations of the Act (Section 12).
Section 13 provides an equality clause: any advantage, favor, privilege, exemption, or immunity granted under existing franchise or later granted upon prior review and approval of Congress becomes part of the grantee’s franchise and must be accorded immediately and unconditionally.
The equality clause does not apply to provisions concerning territory, the life span of the franchise, or the type of service authorized, and does not apply to sale, lease, transfer, grant of usufruct, or assignment of legislative franchises with prior congressional approval (Section 13).

Term, continuous operation, and ownership dispersal

The franchise term is twenty-five (25) years from the date of expiration of the grantee’s franchise under Commonwealth Act No. 487, as amended, unless sooner cancelled (Section 14).
The franchise is ipso facto revoked if the grantee fails to operate continuously for two (2) years (Section 14).
The grantee must offer Filipino citizens at least thirty percent (30%) of its outstanding capital stock (or a higher percentage if later required by law) in a securities exchange in the Philippines within five (5) years from commencement of operations (Section 15).
If public share offering is not applicable, the grantee must establish cooperatives and other methods to encourage public participation, including compliance with requirements under Section 28 of Republic Act No. 9136 (Section 15).
Noncompliance with these dispersal requirements renders the franchise ipso facto revoked (Section 15).

Applicable laws, reports, acceptance, penalties

The grantee must comply with and be subject to Commonwealth Act No. 146 (Public Service Act), as amended, and Republic Act No. 9136 (Electric Power Industry Reform Act of 2001) (Section 16).
The grantee must submit an annual report to Congress through the Committee on Legislative Franchises of the House of Representatives and the Committee on Public Services of the Senate, on compliance with the franchise terms and conditions and on its operations, on or before April 30 of the succeeding year (Section 17).
Failure to submit the requisite Annual Report imposes a fine of PHP 500.00 per working day of noncompliance (Section 18).
The ERC collects the fine from the delinquent franchise grantee separately from reportorial penalties imposed by the ERC (Section 18).
Proceeds from such fines or penalties accrue to the monitoring fund of the ERC for its supervisory and regulatory functions (Section 18).
A reportorial compliance certificate issued by Congress is required before any ERC application for permit or certificate is accepted (Section 18).
Acceptance of the franchise must be in writing to Congress through the Committee on Legislative Franchises of the House and the Committee on Public Services of the Senate within sixty (60) days from effectivity; upon acceptance, the grantee must exercise the privileges granted (Section 19).
Nonacceptance renders the franchise void (Section 19).

Separability, amendment/repeal, and publication

If any section or provision is held invalid, the remaining provisions not affected remain valid (Section 20).
The franchise is subject to amendment, alteration, or repeal by Congress when public interest requires and is not interpreted as an exclusive grant of privileges (Section 21).
Publication is required through the grantee initiative fifteen (15) days after the Act is signed or has lapsed into law (Section 22).
All inconsistent laws, decrees, orders, resolutions, instructions, and rules and regulations or parts thereof are deemed repealed or modified accordingly (Section 23).