AN ACT GRANTING COTABATO LIGHT AND POWER COMPANY

Case Overview and Summary

Summary of Republic Act No. 10637

Nature and Scope of Franchise (Section 1):
- Grants Cotabato Light and Power Company (the grantee) a franchise to construct, install, establish, operate and maintain a distribution system for conveying electric power to end-users in Cotabato City and portions of Datu Odin Sinsuat and Sultan Kudarat municipalities in Maguindanao.

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

Authority of the ERC (Section 3):
- The grantee shall secure from the ERC or other relevant agencies the necessary permits and licenses for constructing and operating its electric distribution system.

Excavation and Restoration Works (Section 4):
- The grantee may make excavations or lay conduits in public places with prior approval from the Department of Public Works and Highways (DPWH) or local government unit (LGU).
- The grantee shall repair and replace any public place disturbed by its works at its own expense, following standards set by the DPWH or LGU.
- If the grantee fails to repair after a 10-day notice, the DPWH or LGU may repair at double expense charged to the grantee.

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

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

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

Right of the Government (Section 8):
- The President may temporarily take over, suspend operations, or authorize temporary use of the grantee's stations or facilities during times of war, rebellion, public peril, calamity, emergency, disaster or disturbance of peace and order, with due compensation to the grantee.

Right of Eminent Domain (Section 9):
- The grantee is authorized to exercise the right of eminent domain as reasonably necessary for efficient maintenance and operation of services.
- The grantee may install and maintain its facilities over public property, including streets, highways, and forest reserves.
- The grantee may acquire private property necessary for its purposes through proper condemnation proceedings and payment of just compensation.

Warranty in Favor of National and Local Governments (Section 10):
- The grantee shall hold the national, provincial, city and municipal governments free from claims, accounts, demands or actions arising out of accidents or injuries caused by the construction, installation, operation and maintenance of its distribution system.

Liability to Damages (Section 11):
- The grantee shall be liable for any injury and damage arising from accidents to persons and property due to defective construction, neglect or omission to keep its poles and wires in safe condition.

Sale, Lease, Transfer, Usufruct or Assignment of Franchise (Section 12):
- The grantee shall not sell, lease, transfer, grant usufruct, assign the franchise or rights, or merge with another entity without prior approval of Congress.
- Congress shall be informed within 60 days after any such transaction.
- Failure to report such change of ownership shall render the franchise revoked.
- Any entity to which the franchise is transferred shall be subject to the same conditions and limitations.

Equality Clause (Section 13):
- Any advantage, favor, privilege, exemption or immunity granted to other franchises shall also apply to this grantee, except for provisions on territory, life span or type of service.
- The equality clause shall not apply to the sale, lease, transfer, grant of usufruct or assignment of legislative franchises with prior congressional approval.

Term of Franchise (Section 14):
- The franchise shall be in effect for 25 years from the expiration of the grantee's previous franchise under Commonwealth Act No. 487, unless sooner cancelled.
- The franchise shall be deemed revoked if the grantee fails to operate continuously for 2 years.

Dispersal of Ownership (Section 15):
- The grantee shall offer at least 30% of its outstanding capital stock to Filipino citizens in a securities exchange within 5 years from commencement of operations.
- If public offer is not applicable, the grantee shall implement other methods of encouraging public participation as required by Republic Act No. 9136.
- Non-compliance shall render the franchise revoked.

Applicability Clause (Section 16):
- The grantee shall comply with the provisions of Commonwealth Act No. 146 (Public Service Act) and Republic Act No. 9136 (Electric Power Industry Reform Act of 2001).

Reportorial Requirement (Section 17):
- The grantee shall submit an annual report to Congress on its compliance with the franchise terms and conditions and its operations on or before April 30 of the succeeding year.

Penalty Clause (Section 18):
- Failure to submit the annual report shall be fined P500 per working day of non-compliance, collected by the ERC from the grantee.
- The fines shall accrue to the ERC's monitoring fund.
- A reportorial compliance certificate from Congress shall be required before the ERC accepts any application from the grantee.

Acceptance and Compliance (Section 19):
- The grantee shall give written acceptance of the franchise to Congress within 60 days from the effectivity of the Act.
- Upon acceptance, the grantee shall exercise the privileges granted.
- Non-acceptance shall render the franchise void.

Separability Clause (Section 20):
- If any section or provision is held invalid, the other provisions not affected shall remain valid.

Repealability and Non-exclusivity Clause (Section 21):
- The franchise shall be subject to amendment, alteration or repeal by Congress when the public interest requires.
- The franchise shall not be interpreted as an exclusive grant of privileges.

Publication (Section 22):
- The Act shall be published by the grantee 15 days after being signed by the President or lapsing into law.

Repealing Clause (Section 23):
- All laws, decrees, orders, resolutions, instructions, rules and regulations inconsistent with the Act are repealed or modified accordingly.

Effectivity Clause (Section 24):
- The Act shall take effect 15 days from its publication in at least two newspapers of general circulation.