AN ACT FURTHER AMENDING THE FRANCHISE OF VISAYAN ELECTRIC COMPANY INC.

Case Overview and Summary

Summary of Republic Act No. 9339

Nature and Scope of Franchise (Section 1):
- Grants Visayan Electric Company, Inc. (VECO) a franchise to construct, operate and maintain a distribution system for conveying electric power to end-users in Cebu City, Mandaue City, Talisay City, Minglanilla, Naga, San Fernando, Consolacion and Lilo-an in Cebu Province.
- Defines "distribution system" as the system of wires and facilities extending between the delivery point on the national transmission system or generating facility and the metering point/facility of the end-user.

Manner of Operations of Facilities (Section 2):
- VECO must operate and maintain its facilities in a superior manner.
- VECO must modify, improve and change facilities as required by the Energy Regulatory Commission (ERC), Department of Energy (DOE), or other concerned agencies.
- VECO may allow the use of its poles, facilities or right-of-way by interested parties upon reasonable compensation, subject to ERC's decision in case of disputes.

Authority of the Energy Regulatory Commission (Section 3):
- VECO must secure necessary certificates, permits and licenses from the ERC or other agencies with jurisdiction over its operations.

Ingress and Egress (Section 4):
- VECO may make excavations or lay conduits in public places, highways, streets, etc., with prior approval from the Department of Public Works and Highways (DPWH) or local government units (LGUs).
- VECO must immediately repair and restore any public property disturbed during its operations.

Responsibility to the Public (Section 5):
- VECO must supply electricity to its captive market in the least cost manner.
- VECO must modify, improve or change its facilities as required by the ERC for efficient service and reduced costs.
- VECO must charge reasonable and just power rates to allow businesses and industries to compete.
- VECO must provide open and non-discriminatory access to its distribution system and services, and not engage in activities that hinder competitiveness.

Rates for Services (Section 6):
- VECO's retail rates and charges for distribution of electric power to end-users shall be regulated and approved by the ERC.
- VECO must identify and segregate the components of the retail rate in its bill to end-users, pursuant to Republic Act No. 9136.
- VECO must implement lifeline rate to marginalized end-users as mandated under Republic Act No. 9136.

Promotion of Consumer Interests (Section 7):
- VECO must establish a consumer desk to handle complaints and ensure adequate promotion of consumer interests.
- VECO must act with dispatch on all complaints brought before it.

Right of the Government (Section 8):
- The President of the Philippines has the right to take over and operate VECO's distribution system or authorize its temporary use by any government agency during times of war, rebellion, public peril, calamity, emergency, disaster or disturbance of peace and order, with due compensation to VECO.

Tax Provisions (Section 9):
- VECO shall be subject to payment of all applicable taxes, duties, fees or charges under the National Internal Revenue Code, Local Government Code and other relevant laws.
- Specific tax exemptions, incentives or privileges granted under relevant laws shall not be construed as repealed.
- All rights, privileges, benefits and exemptions accorded to existing and future private electric utilities by their respective franchises shall likewise be extended to VECO.
- VECO must file tax returns and pay taxes in accordance with the National Internal Revenue Code.

Right of Eminent Domain (Section 10):
- VECO is authorized to exercise the right of eminent domain as reasonably necessary for efficient maintenance and operation of services.
- VECO may install and maintain its poles, wires and facilities over public property, including streets, highways, forest reserves and other government property.
- VECO may acquire private property necessary for the purposes of this franchise, subject to proper condemnation proceedings and payment of just compensation.

Acceptance and Compliance (Section 11):
- Acceptance of this franchise must be given in writing within 60 days after the effectivity of this Act.

Warranty in Favor of National and Local Governments (Section 12):
- VECO shall hold the national, provincial and municipal governments harmless from all claims, accounts, demands or actions arising out of accidents or injuries caused by the construction, installation, operation and maintenance of its distribution system.

Liability for Damages (Section 13):
- VECO shall be liable for any injury and damage arising from or caused by accidents to persons and property due to any defective construction under this franchise or neglect or omission to keep its poles and wires in a safe condition.

Sale, Lease, Transfer, Usufruct, etc. (Section 14):
- VECO shall not lease, transfer, grant the usufruct of or sell this franchise or the rights and privileges acquired thereunder to any person, firm, company, corporation or other entity, nor merge with any other corporation or entity, nor transfer the controlling interest, whether in whole or in part, without the prior approval of the Congress of the Philippines.
- Any entity to which this franchise is sold, transferred or assigned shall be subject to the same conditions, terms, restrictions and limitations of this Act.

Equality Clause (Section 15):
- If any competing individual, partnership or corporation receives a similar permit or franchise with more favorable terms or provisions that tend to place VECO at a disadvantage, such terms and provisions shall be deemed part of this Act and shall operate equally in favor of VECO.
- Any term or provision granted herein which is not contained in other franchises shall likewise be enjoyed by future grantees.
- The foregoing shall not apply to or affect the provisions concerning territory covered by the franchise and the life span of the franchise.

Separability Clause (Section 16):
- If any section or provision of this Act is declared unconstitutional or invalid, the other parts or provisions which are not affected shall continue to be in full force and effect.

Applicability Clause (Section 17):
- VECO shall comply with and be subject to the provisions of Commonwealth Act No. 146 (Public Services Act) and Republic Act No. 9136 (Electric Power Industry Reform Act of 2001).

Repealability and Non-exclusivity Clause (Section 18):
- This franchise shall be subject to amendment, alteration or repeal by the Congress of the Philippines when the public interest so requires.
- This franchise shall not be interpreted as an exclusive grant of the privileges provided herein.

Reportorial Requirement (Section 19):
- VECO shall submit an annual report of finances and operations to the Congress of the Philippines.

Renewal/Extension of the Term of Franchise (Section 2):
- This franchise shall be for a term of twenty-five (25) years from the date of effectivity of this Act.
- This franchise shall be deemed ipso facto revoked if VECO fails to operate continuously for two years.

Repealing Clause (Section 3):
- All laws, decrees, orders, resolutions, instructions and rules and regulations or parts thereof which are inconsistent with this Act are hereby deemed repealed or modified accordingly.

Effectivity Clause (Section 4):
- This Act shall take effect fifteen (15) days from the date of its publication, upon the initiative of the grantee, in at least two newspapers of general circulation in the Philippines.