Policy and purpose standards
- The franchise operates “in the public interest and for commercial purposes” under the constitutional and legal framework of the Philippines.
- The grantee must operate and maintain its distribution facilities in a superior manner at all times.
- The grantee must supply electricity to its captive market in the least-cost manner while aiming for efficient, reliable service and reduced electricity costs.
- The franchise requires reasonable and just power rates to all types of consumers within the franchised areas to enable business and industry competitiveness.
- The franchise reserves consumer protection through a dedicated complaint-handling structure and dispatch in acting on complaints.
Duration, acceptance, and franchise termination
- The franchise term lasts for twenty-five (25) years from the date of effectivity of Republic Act No. 9968 (Section 2).
- The franchise is deemed ipso facto revoked if the grantee fails to operate continuously for two (2) years (Section 2).
- Written acceptance of the amendment and extension/renewal must be given within sixty (60) days from the date of effectivity of Republic Act No. 9968 (Section 3).
Authority, operational duties, and compliance
- The grantee must secure from the Energy Regulatory Commission (ERC), or the government agency having jurisdiction, the necessary certificate of public convenience and necessity and other permits and licenses for construction and operation (Section 3).
- The grantee must operate and maintain all electric distribution facilities, lines, and systems at all times in a superior manner (Section 2).
- When required by the ERC (or its legal successor), or the Department of Energy (DOE) (or its legal successor), or any other concerned government agency, the grantee must modify, improve and change its facilities in a manner and to an extent that science and improvements in electric power services make reasonable and proper (Section 2).
- The grantee must comply with Commonwealth Act No. 146, as amended (the Public Services Act), and Republic Act No. 9136 (the Electric Power Industry Reform Act of 2001) (Section 16).
Facilities access, highways, and dispute resolution
- The grantee may, with prior approval of the Department of Public Works and Highways (DPWH) or the concerned LGUs, make excavations or lay conduits in public places, highways, streets, lanes, alleys, avenues, sidewalks, or bridges for erecting and maintaining poles and other supports and for laying and maintaining wires, cables, or other conductors (Section 4).
- Any public place, highway, street, lane, alley, avenue, sidewalk, or bridge disturbed, altered, or changed must be immediately repaired and properly restored at the expense of the grantee, in accordance with DPWH and LGU standards (Section 4).
- Where parties disagree or dispute arising from the use and compensation for the grantee’s facilities, the ERC shall decide in case of dispute or disagreement (Section 2).
Public service obligations and market conduct
- The grantee must supply electricity to its captive market in the least-cost manner (Section 5).
- The grantee must modify, improve, or change its facilities, poles, lines, systems, and equipment as required by the ERC, to provide efficient and reliable service and reduced electricity costs (Section 5).
- The grantee must charge reasonable and just power rates to all types of consumers within its franchised areas (Section 5).
- The grantee must provide open and nondiscriminatory access to its distribution system and services for any end-user within its franchise area, consistent with Republic Act No. 9136 (Section 5).
- The grantee must not engage in activities that constitute abuse of market power, including unfair trade practices, monopolistic schemes, and other activities that hinder competitiveness of businesses and industries (Section 5).
Consumer interests and complaint handling
- The grantee must establish a consumer desk to handle consumer complaints and promote consumer interests (Section 7).
- The grantee must act with dispatch on all complaints brought before it (Section 7).
Rates regulation, billing transparency, and lifeline
- The retail rates to the captive market and the charges for distribution services to end-users are regulated and subject to ERC approval (Section 6).
- The grantee must identify and segregate in the electric bill the components of the retail rate pursuant to Republic Act No. 9136 unless otherwise amended (Section 6).
- The grantee must make the retail rates public and transparent (Section 6).
- The grantee must implement lifeline rate to marginalized end-users as mandated under Republic Act No. 9136 (Section 6).
Government takeover and special national power
- The President of the Philippines may, in times of war, rebellion, public peril, calamity, emergency, disaster, or disturbance of peace and order, take over and operate the grantee’s distribution system or authorize a government agency to temporarily use and operate it (Section 8).
- The government must provide due compensation to the grantee for use and operation during the period of such government operation (Section 8).
Taxation and payments
- In consideration of the franchise and rights granted, the grantee must pay a franchise tax equivalent to fifty percent (50%) of one percent (1%) of all revenues derived from its distribution wheeling services and captive market supply, excluding generation charge, transmission charge and system loss charge (Section 9).
- The franchise tax rate stated as “currently” applies and may be amended from time to time (Section 9).
- Nothing limits or repeals tax exemptions, incentives, or privileges granted under any relevant law (Section 9).
- The grantee must pay real property taxes only on its real estate and buildings, exclusive of this franchise, as required for other corporations under law (Section 9).
- The grantee must file the tax return with the city where its principal place of office is located and pay taxes due to the Commissioner of Internal Revenue (or duly authorized representative) under the National Internal Revenue Code (NIRC) (Section 9).
- Tax returns are subject to audit by the Bureau of Internal Revenue (Section 9).
Eminent domain and restoration obligations
- Subject to legal limitations and procedures, the grantee may exercise eminent domain insofar as it is reasonably necessary for efficient maintenance and operation (Section 10).
- The grantee may install and maintain poles, wires, and facilities over and across public property, including streets, highways, forest reserves, and other similar government property (Section 10).
- The grantee may acquire private property actually necessary for realizing the franchise purposes (Section 10).
- Proper condemnation proceedings must be instituted and just compensation must be paid (Section 10).
Liability, warranties, and public safety
- The grantee must hold national, provincial, and municipal governments harmless from 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 11).
- The grantee must be liable for injury and damage arising from accidents to persons and property caused by defective construction or by neglect or omission to keep poles and wires in a safe condition (Section 12).
Transfer, merger, and congressional approval
- The grantee must not lease, transfer, grant usufruct of, or sell the franchise or rights and privileges acquired under it (Section 13).
- The grantee must not merge with another corporation or entity (Section 13).
- The grantee must not transfer its controlling interest in whole or in part, whether simultaneously or contemporaneously, to any person or entity without prior approval of the Congress of the Philippines (Section 13).
- Any person or entity that buys, transfers, or assigns the franchise must be subject to the same conditions, terms, restrictions, and limitations in the Act (Section 13).
Equality clause for favorable franchise terms
- If a competing individual, partnership, or corporation receives a permit or franchise with terms and/or provisions more favorable than those granted here, those more favorable terms and/or provisions are deemed part of the Act and operate equally in favor of the grantee (Section 14).
- Terms and/or provisions granted here that are not contained in other franchises may be enjoyed by future grantees (Section 14).
- The equality clause does not apply to or affect the provisions concerning territory covered or the life span of the franchise (Section 14).
Reporting, amendment, and non-exclusivity
- The grantee must submit an annual report of finances and operations to the Congress of the Philippines (Section 15).
- The franchise is subject to amendment, alteration, or repeal by Congress when the public interest requires it, and the franchise is not interpreted as an exclusive grant of the privileges provided (Section 17).
Constitutionality, repeal of inconsistent laws, and effectivity
- If any section or provision is declared unconstitutional or invalid, the remaining parts not affected continue in full force and effect (Section 18).
- All laws, decrees, orders, resolutions, instructions, rules and regulations, or parts inconsistent with Republic Act No. 9968 are repealed or modified accordingly (Section 4 under the amendatory act provisions).
- Republic Act No. 9968 takes effect fifteen (15) days after its publication in at least two (2) newspapers of general circulation (Section 5).
Issuance history and legislative effect
- Republic Act No. 9968 was approved on February 06, 2010 and lapsed into law on FEB 06 2010 without the signature of the President, in accordance with Article VI, Section 27 (1) of the Constitution.
- Acceptance of the franchise amendment must be made in writing within sixty (60) days from the date of effectivity (Section 3).
- The franchise originated in the House of Representatives and was finally passed by the House and Senate on June 3, 2009 and November 16, 2009, respectively.