Visayan Electric Company. Inc. (Cebu)

CONGRESS OF THE PHILIPPINES TWENTIETH CONGRESS First Regular Session HOUSE OF REPRESENTATIVES H. No. 7639 BY REPRESENTATIVES RAMA, RODRIGUEZ (R.), RODRIGUEZ (M.), LAGON (S.), LAGON (D.), DEL MAR OUANO-DIZON, GULLAS, GALEOS, MADRONA, CAGAS, LAGDAMEO (M.Y.M.), LAGDAMEO (J.M.), BAUTISTA (J.M.), QUIMBO, GARCIA (J.A.), MARAÑON, CORVERA, ANGELES, GARCIA (K.H.), BELTRAN, SANTOS (M.A.), SALCEDA, ROMAN, ALMARIO (C.M.), ACOSTA, DE JESUS, AYON, FERRER (J.), VELOSO AND ROMUALDO AN ACT RENEWING FOR TWENTY-FIVE (25) YEARS THE FRANCHISE GRANTED TO VISAYAN ELECTRIC COMPANY, INC. UNDER REPUBLIC ACT NO. 9339, FOR THE CONVEYANCE OF ELECTRIC POWER TO THE END-USERS IN THE CITIES OF CEBU, MANDAUE, TALISAY, AND NAGA, AND THE MUNICIPALITIES OF MINGLANILLA, SAN FERNANDO, CONSOLACION, AND LILOAN, PROVINCE OF CEBU Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

SECTION 1. Nature and Scope of Franchise. - Subject to the provisions of the

Constitution and applicable laws, rules and regulations, the franchise granted to Visayan Electric Company, Inc., hereunder referred to as the Grantee, its successors or assignees, under Republic Act No. 9339 to construct operate and maintain in the public interest and commercial purposes a distribution system for the conveyance of electric power to the end-users in the cities of Cebu, Mandaue, Talisay, and Naga, and the municipalities of Minglanilla, San Fernando, Consolacion, and Liloan, Province of Cebu, is hereby renewed

As used in this Act, "distribution system" refers to the system of wires and associated facilities including sub-transmission lines belonging to a franchised distribution utility extending between the delivery point on the national transmission system or generating facility and the metering point or facility of the end-user.

SEC. 2. Manner of Operation of Facilities. - All electric distribution facilities, lines,

and systems for electric services owned, constructed, operated, and maintained by the Grantee, its successors, or assignees shall be operated and maintained at all times in a superior manner, and it shall be the duty of the Grantee, its successors, or assignees, 11| whenever required to do so by the Energy Regulatory Commission (ERC) or its legal successor, or the Department of Energy (DOE) or its legal successor, or any other government agency concerned, to modify, improve, and change the facilities or systems in such a manner and to such extent as the progress in science or technology and improvements or innovations in the electric power services may render reasonable and proper. Whenever practicable and for purposes of maintaining order, safety, and aesthetics along the highways, roads, streets, alleys, or right-of-way, the Grantee may allow the use of free spaces in its poles, facilities or right-of-way by interested parties upon the payment of reasonable compensation to the Grantee, considering the costs incurred to accommodate and administer the use of the Grantee's facilities by such parties. The ERC shall decide any dispute or disagreement between the parties concerned.

SEC. 3. Authority of the Energy Regulatory Commission. - The Grantee shall

secure from the ERC or any other government agency having jurisdiction over the operation of the herein Grantee, the necessary certificate of public convenience and necessity and other appropriate permits and licenses for the construction and operation of its electric distribution system.

SEC. 4. Excavation and Renovation Works. - For the purpose of erecting and

maintaining poles and other supports for the wires or other conductors, or for the purpose of laying and maintaining underground wires, cables, pipes, or other conductors, the Grantee, its successors, or assignees are authorized to make excavations or lay conduits in any of the public places, highways, roads, streets, lines, alleys, avenues, sidewalks, or bridges of the said province and cities and/or municipalities, subject to prior approval of the Department of Public Works and Highways (DPWH) or the local government unit (LGU) concerned: Provided, however, That a public place, highway, road, street, lane, alley, avenue, sidewalk, or bridge disturbed, altered, or changed by reason of the erection of poles or other supports or the underground laying of wires, other conductors or conduits, shall be repaired and/or replaced in workmanlike manner at the expense of the Grantee, its successors, or assignees, in accordance with the standards set by the DPWH or the relevant LGU concerned. Should the Grantee, its successors, or assignees, after ten (10) days from notice of the granting authority, fail, refuse, or neglect to begin repairing or replacing any part of public place, road, highway, street, lane, alley, avenue, sidewalk, or bridge that has been disturbed, altered, or changed by the said Grantee, its successors, or assignees, then the

DPWH or the LGU concerned shall have the right to have the same repaired and/or replaced in good order and condition and charge the Grantee, its successors, or assignees at double the amount of the costs and expenses for such repair or replacement.

SEC. 5. Responsibility to the Public. - The Grantee shall supply electricity to its

captive market in urban and rural portions of its franchise area, including unviable areas, in the least costly manner. In the interest of the public good and as far as feasible and whenever required by the ERC, the Grantee shall modify, improve, or change its facilities, poles, lines, systems, and equipment for the purpose of providing efficient and reliable service and reasonable electricity costs. The Grantee shall charge reasonable and just power rates for its services to all types of consumers within its franchise area as approved by the ERC. The Grantee shall have the obligation to provide open and non-discriminatory access to its distribution system and services for any end-user within its franchise area consistent with Republic Act No. 9136, otherwise known as the "Electric Power Industry Reform Act of 2001,° as amended. The Grantee shall not engage in any activity that will constitute an abuse of market position or anti-competitive behavior as defined under Republic Act No. 10667, otherwise known as the "Philippine Competition Act," such as but not limited to, unfair trade practices, monopolistic schemes, and other activities that will hinder competitiveness of businesses and industries.

SEC. 6. Rates for Services. - The retail rates to its captive market and charges for

the distribution of electric power by the Grantee to its end-user shall be regulated by and subject to the approval of the ERC or its legal successor. The Grantee shall identify and segregate in its electricity bill to the end-users the components of the retail rate pursuant to Republic Act No. 9136, as amended. Such rates charged by the Grantee to the end-users shall be made public and transparent. The Grantee shall likewise implement Republic Act No. 10150 or the Act extending the implementation of the lifeline rate under EPIRA, Republic Act No. 9994, otherwise known as the "Expanded Senior Citizens Act of 2010," and other relevant statutes as long as they are in effect.

SEC. 7. Promotion of Consumer Interests. - The herein Grantee shall establish a

platform to handle consumer concerns and complaints and ensure adequate promotion of consumer interests in accordance with applicable rules and regulations of the ERC, its successor, and other relevant regulatory agencies. The Grantee shall act with dispatch on and resolve all complaints brought before it within such period as may be determined by the ERC.

SEC. 8. Right of the Govemment. - A special right is hereby reserved to the

President of the Philippines in times of war, rebellion, public peril, calamity, emergency, disaster, or disturbance of peace and order to temporarily take over and operate the distribution system of the Grantee; temporarily suspend the operation of any station or facility in the interest of public safety, security, and public welfare; or to authorize the temporary use and operation thereof by any agency/department of the government upon

the payment of due compensation to the Grantee, its successors, or assignees, for the use of the said distribution system during the period when this shall be operated.

SEC. 9. Right of Eminent Domain. - Subject to the limitations and procedures

prescribed by law, the Grantee is authorized to exercise the right of eminent domain insofar as it may be reasonably necessary for the efficient establishment, improvement, upgrading, rehabilitation, maintenance, and operation of services. The Grantee is authorized to install and maintain its poles, wires, and other facilities over, under, and across public property, including streets, highways, and other similar property of the Goverment of the Philippines, its branches or any of its instrumentalities. The Grantee may acquire such private property necessary for the realization of the purposes of this franchise: Provided, That proper expropriation proceedings shall have been instituted and just compensation paid.

SEC. 10. Term of Franchise. - This franchise shall be for a term of twenty-five (25)

years from the expiration of the current franchise granted under Republic Act No. 9339. This franchise shall be deemed ipso facto revoked in the event that the Grantee fails to operate continuously for two (2) years.

SEC. 11. Warranty in Favor of National and Local Goverments. - The Grantee

shall hold the national, provincial, city, and municipal governments of the Philippines harmless from all claims, liabilities, demands, or actions arising from accidents that cause injury to persons and/or damage to property during the construction, installation, operation, and maintenance of the distribution system of the Grantee.

SEC. 12. Liability for Damages. - The Grantee shall be liable for any injury to

persons and/or damage to property arising from accidents by reason of any defective construction under this franchise or any neglect or omission to keep its poles and wires in a safe condition.

SEC. 13. Sale, Lease, Transfer, Usufruct, or Assignment of Franchise. - The

Grantee shall not sell, lease, transfer, grant the usufruct of, or assign this franchise or the rights and privileges acquired thereunder to any person, firm, company, corporation, or other commercial or legal entity, or merge with any other corporation, or entity, or shall transfer the controlling interest of the Grantee, whether as a whole or in parts, and whether simultaneously or contemporaneously, to any such person, firm, company, corporation, or entity without the prior approval of the Congress: Provided, That Congress shall be informed of any lease, transfer, granting the usufruct of, sale, or assignment of franchise or the rights and privileges acquired thereunder, or of the merger, or sale of the controlling interest within sixty (60) days after the completion of said transaction: Provided, further, That any such transfer, sale, or assignment is in accordance with the constitutional limitations: Provided, furthermore, That failure to report to Congress such change of ownership shall render the franchise ipso facto revoked: Provided, finally, That any person or entity to which this franchise is sold, transferred, or assigned shall be subject to the same conditions, terms, restrictions, and limitations of this Act.

SEC. 14. Dispersal of Ownership. - In accordance with the constitutional provision

encouraging public participation in public utilities and subject to Section 43(t) of Republic Act No. 9136, the Grantee shall offer to the public at least fifteen percent (15%) of its common shares of stock or a higher percentage that may hereafter be provided by law within five (5) years from the effectivity of this Act: Provided, That should the Grantee's holding company is already listed in the Philippine Stock Exchange, the Grantee shall be deemed in compliance therewith: Provided, further, That in cases where public offer of shares is not applicable, establishment of cooperatives and other methods of encouraging public participation by citizens and corporations operating public utilities must be implemented. Non-compliance therewith shall render the franchise ipso facto revoked.

SEC. 15. Commitment to Provide and Promote the Creation of Employment

Opportunities. - The Grantee shall create employment opportunities and shall allow on- the job training in their franchise operation: Provided, That priority shall be accorded to the residents of the franchise area: Provided, further, That the Grantee shall follow the applicable labor standards and allowance entitlement under existing labor laws, rules, and regulations and similar issuances.

SEC. 16. Reportorial Requirement. - The Grantee shall submit an annual report of

its finances and operations to the Congress of the Philippines, through the Committee on Legislative Franchises of the House of Representatives and the Committee on Public Services of the Senate, on its compliance with the terms and conditions of the franchise and on its operations on or before April 30 of every year after the effectivity of this Act. The annual report shall include: an update,on the rollout, development, operation, and/or expansion of the business; audited financial statements; latest General Information Sheet officially submitted to the Securities and Exchange Commission; certification from the ERC on the status of its permits and operations; and an update on the dispersal of ownership undertaking, if applicable. The reportorial compliance certificate issued by Congress shall be required before any application for permit or certificate is accepted by the ERC.

SEC. 17. Fine. - Failure of the Grantee to submit the requisite annual report to

Congress shall be penalized by a fine of Five hundred pesos (P500.00) per working day of non-compliance. The fine shall be collected by the ERC from the Grantee separate from the reportorial penalties imposed by the ERC and the same shall be remitted to the Bureau of the Treasury.

SEC. 18. Equality Clause. - Any advantage, favor, privilege, exemption, or

immunity granted under existing franchises, or which may hereafter be granted upon prior review and approval of Congress, shall become part of this franchise and shall be accorded immediately and unconditionally to the herein Grantee: Provided, however, That the foregoing shall neither apply to nor affect provisions concerning territorial coverage, the term, or the type of service authorized by the franchise: Provided, further, That the foregoing shall not apply to the sale, lease, transfer, grant of usufruct, or assignment of legislative franchises with prior congressional approval.

SEC. 19. Applicability of the Existing Laws. - The Grantee shall comply with and

be subject to the provisions of the Commonwealth Act. No. 146, or the "Public Service Act," as amended; Republic Act No. 9136, as amended; Republic Act No. 9513, or the "Renewable Energy Act of 2008"; Republic Act No. 11361, or the "Anti-Obstruction of Power Lines Act"; and other applicable laws.

SEC. 20. Repealability and Non-Exclusivity Clause. - This Franchise shall be

subject to amendment, alteration, or repeal by the Congress of the Philippines when public interest so requires and shali not be interpreted as an exclusive grant of the privileges herein provided for.

SEC. 21. separablity Clause. - any of the sections or provisions of this Act is

held invalid, all other provisions not affected thereby shali remain valid. nd rules and regulations or parts thereot, when are inconsistens here, are hereb deemed repealed or modified accordingly.

SEC. 23. Effectivity. - This Act shall take effect fifteen (15) days after its publication

in the Official Gazette or in any newspaper of general circulation in the Philippines. Approved,