Title
Franchise to COTELCO-PPALMA for Electric Power Distribution
Law
Republic Act No. 11322
Decision Date
Apr 17, 2019
Republic Act No. 11322 grants Cotabato Electric Cooperative, Inc.-PPALMA the franchise to distribute electric power in Pikit, Pigcawayan, Aleosan, Libungan, Midsayap, and Alamada, Province of Cotabato, subject to regulation and compliance with applicable laws and regulations.
granting
franchise
electric power distribution

Franchise grant and covered territory

  • Section 1 grants COTABATO ELECTRIC COOPERATIVE, INC.-PPALMA (COTELCO-PPALMA), referred to as the grantee, its successors or assignees, a franchise “for public interest.”
  • The franchise covers the right to construct, install, establish, operate and maintain a distribution system for the conveyance of electric power to end users.
  • The distribution system is for the municipalities of Pikit, Pigcawayan, Aleosan, Libungan, Midsayap and Alamada, Province of Cotabato, and its neighboring suburbs (Section 1).
  • The grant is subject to the Constitution and applicable laws, rules and regulations (Section 1).

Manner of operation and facility management

  • The grantee must operate and maintain all electric distribution facilities, lines, and systems in the best manner at all times (Section 2).
  • When 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, the grantee must modify, improve and change its facilities or systems to a reasonable extent based on progress in science and industry improvements (Section 2).
  • For highways, roads, streets, alleys, or easements, the grantee may allow interested parties to use its poles, facilities, or easements for reasonable compensation whenever practicable and for purposes of maintaining order, safety and aesthetics (Section 2).
  • The ERC or the NEA resolves cases of dispute or disagreement between parties (Section 2).

Regulatory approvals and permits

  • The grantee must secure from the ERC or NEA (or any other government agency with jurisdiction) a certificate of public convenience and necessity and other appropriate permits and licenses for the construction and operation of its electric distribution system (Section 3).

Excavation, restoration, and restoration cost recovery

  • For erecting and maintaining poles and other supports for wires or conductors, and for laying/maintaining underground wires, cables, pipes, or other conductors, the grantee is authorized to make excavations or lay conduits in public places and public infrastructure (including roads, highways, streets, lanes, alleys, avenues, sidewalks, and bridges) in the province, cities, and/or municipalities (Section 4).
  • Such excavation or conduit-laying is subject to prior approval of the Department of Public Works and Highways (DPWH) or the local government units (LGUs) concerned (Section 4).
  • Any disturbed or altered public place/road/highway/street/lane/alley/avenue/sidewalk/bridge must be repaired or replaced in a workmanlike manner at the expense of the grantee in accordance with DPWH or LGU standards (Section 4).
  • If the grantee fails, refuses, or neglects to repair or replace within ten (10) days after notice, DPWH or the LGU may repair or replace and then charge the grantee double the costs and expenses for such repair or replacement (Section 4).

Public service obligations and non-discrimination

  • The grantee must supply electricity to its captive market in the least costly manner (Section 5).
  • For the public good and as far as feasible, and whenever required by the ERC, the grantee must modify, improve or change its facilities, poles, lines, systems, and equipment to provide efficient and reliable service and reduced electricity costs (Section 5).
  • The grantee must charge reasonable and just power rates for all types of consumers within its franchised areas (Section 5).
  • 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 activity constituting abuse of market power, including unfair trade practices, monopolistic schemes, and other activities that hinder competitiveness of business and industry (Section 5).

Rates, bill transparency, and lifeline rates

  • The retail rates and charges for the distribution of electric power are regulated and subject to ERC approval or its legal successor (Section 6).
  • The grantee must identify and itemize in the electricity bill the components of the retail rate consistent with Republic Act No. 9136 (Section 6).
  • The rates charged to end users must be made public and transparent (Section 6).
  • The grantee must implement lifeline rate for marginalized end users as mandated under Republic Act No. 9136 (Section 6).

Consumer protection and dispute handling

  • The grantee must establish a consumer desk to handle consumer complaints and ensure adequate protection of consumer interests (Section 7).
  • The grantee must act with dispatch on all complaints brought before it (Section 7).

Employment and training commitments

  • The grantee must create employment opportunities and allow on-the-job trainings in its franchise operation (Section 8).
  • Priority must be accorded to residents where the grantee’s principal office is located (Section 8).
  • The grantee must follow applicable labor standards and allowance-entitlement under existing labor laws, rules and regulations, and similar issuances (Section 8).
  • Employment opportunities created must be reflected in the General Information Sheet (GIS) submitted to the Securities and Exchange Commission annually (Section 8).

Government takeover and public interest rights

  • The President of the Philippines, in times of war, rebellion, public peril, calamity, emergency, disaster, or disturbance of peace and order, may:
    • temporarily take over and operate the grantee’s distribution system;
    • temporarily suspend the operation of any station or facility for public safety, security, and public welfare; or
    • authorize a government agency to temporarily use and operate the distribution system,
      upon due compensation to the grantee (Section 9).

Eminent domain authority and condemnation

  • Subject to the limitations and procedures prescribed by law, the grantee may exercise eminent domain insofar as it is reasonably necessary for efficient maintenance and operation of services (Section 10).
  • The grantee may install and maintain poles, wires, and other facilities over and across public property, including streets, highways, forest reserves, and other similar government properties and instrumentalities (Section 10).
  • The grantee may acquire private property actually necessary for purposes of the franchise, but only through proper condemnation proceedings and with just compensation paid (Section 10).

Franchise term, continuous operation rule, and cancellation

  • The franchise runs for twenty-five (25) years from the date of effectivity of the Act unless sooner cancelled (Section 11).
  • The franchise is ipso facto revoked if the grantee fails to operate continuously for two (2) years (Section 11).

Acceptance by Congress and franchise validity

  • Acceptance must be in writing 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 the Act’s effectivity (Section 12).
  • Upon giving acceptance, the grantee exercises the privileges granted in the Act (Section 12).
  • Nonacceptance renders the franchise void (Section 12).

Government warranty and liability for damages

  • The grantee must hold the national, provincial, city, and municipal governments free from claims, liabilities, demands, or actions arising from accidents that cause injury to persons and damage to properties during construction, installation, operation, and maintenance of the distribution system (Section 13).
  • The grantee is liable for injury to persons and damage to property arising from or caused by accident due to defective construction under the franchise or neglect/omission to keep poles and wires in safe condition (Section 14).

Restrictions on transfer or assignment

  • The grantee must not sell, lease, transfer, grant usufruct of, or assign the franchise or the rights and privileges acquired thereunder.
  • The grantee must not merge with another corporation/entity, and must not transfer controlling interest simultaneously or contemporaneously to another person, firm, company, corporation, or entity without prior approval of Congress (Section 15).
  • Congress must be informed within sixty (60) days after completion of any sale, lease, transfer, grant of usufruct, assignment, merger, or transfer of controlling interest (Section 15).
  • Failure to report to Congress such change of ownership results in ipso facto revocation (Section 15).
  • 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 15).

Reportorial requirement and penalties for non-filing

  • The grantee must submit 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 and operations on or before April 30 of the succeeding year (Section 16).
  • Failure to submit the annual report results in a fine of PHP 500.00 per working day of noncompliance (Section 19).
  • The fine is collected separately by the ERG distinct from penalties the ERG imposes for noncompliance of its own reportorial requirements (Section 19).

Equality clause and effect on other franchises

  • Except for taxes and customs duties, any advantage, favor, privilege, exemption, or immunity in existing franchises (or granted in the future) becomes part of previously granted power distribution franchises and must be accorded immediately and unconditionally to the grantees of such franchises after prior review and approval of Congress (Section 17).
  • The equality clause does not apply to provisions concerning territory covered, term, or the type of service authorized by the franchise (Section 17).
  • The equality clause does not apply to the sale, lease, transfer, grant of usufruct, or assignment of a legislative franchise that already requires prior congressional approval (Section 17).

Compliance with governing laws

  • The grantee must comply with and be subject to:
    • 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 18).

Amendment, repeals, and separability

  • The franchise is subject to amendment, alteration, or repeal by Congress when public interest so requires, and it is not an exclusive grant of the privileges provided (Section 20).
  • If any section or provision is held invalid, the remaining provisions not affected remain valid (Section 21).

Legal effect and publication requirement

  • The Act’s effectivity is governed by publication fifteen (15) days after publication in the Official Gazette or a newspaper of general circulation (Section 22).

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