AN ACT GRANTING THE MANILA ELECTRIC COMPANY A FRANCHISE TO CONSTRUCT

Case Overview and Summary

Summary of Republic Act No. 9209

Nature and Scope of Franchise (Section 1):
- Grants Manila Electric Company (MERALCO) a franchise to construct, operate and maintain a distribution system for conveying electric power to end-users in specified cities/municipalities of Metro Manila, Bulacan, Cavite, Rizal, Batangas, Laguna, Quezon, and Pampanga.
- Defines "distribution system" as the system of wires and associated 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):
- MERALCO must operate and maintain its electric distribution facilities in a superior manner.
- MERALCO must modify, improve and change its facilities as required by the Energy Regulatory Commission (ERC) for progress in science and improvement in electric power services.
- MERALCO may allow the use of free spaces in its poles, facilities or right-of-way by interested parties upon reasonable compensation, subject to ERC's decision in case of dispute.

Ingress and Egress (Section 3):
- MERALCO may, with prior approval from the Department of Public Works and Highways (DPWH) or local government units (LGUs), make excavations or lay conduits in public places for erecting and maintaining its facilities.
- MERALCO must immediately repair and restore any public place disturbed by its activities, in accordance with DPWH and LGU standards.

Responsibility to the Public (Section 4):
- MERALCO must supply electricity to its captive market in the least cost manner.
- MERALCO must modify, improve or change its facilities as required by the ERC for efficient and reliable service and reduced electricity costs.
- MERALCO must charge reasonable, just and competitive power rates to all consumers within its franchise area.
- MERALCO must provide open and non-discriminatory access to its distribution system and services for any end-user within its franchise area, consistent with the Electric Power Industry Reform Act of 2001.
- MERALCO must not engage in activities that constitute an abuse of market power, such as unfair trade practices, monopolistic schemes, and activities that hinder competitiveness.

Rates for Services (Section 5):
- MERALCO's retail rates to its captive market and charges for distribution of electric power to end-users shall be regulated and subject to approval by the ERC.
- MERALCO must identify and segregate the components of the retail rate in its bill to end-users, pursuant to the Electric Power Industry Reform Act of 2001.
- MERALCO's rates to end-users must be made public and transparent.
- MERALCO must implement lifeline rate to marginalized end-users as mandated under the Electric Power Industry Reform Act of 2001.

Promotion of Consumer Interests (Section 6):
- MERALCO must establish consumer desks to handle consumer complaints and ensure adequate promotion of consumer interests.
- MERALCO must act with dispatch on all complaints brought before it.

Right of the Government (Section 7):
- The President of the Philippines has a special right, in times of war, rebellion, public peril, calamity, emergency, disaster or disturbance of peace and order, to take over and operate MERALCO's distribution system or authorize its temporary use and operation by any government agency/department, upon due compensation to MERALCO.

Right of Eminent Domain (Section 8):
- MERALCO is authorized to exercise the right of eminent domain as reasonably necessary for the efficient maintenance and operation of services, subject to limitations and procedures prescribed by law.
- MERALCO is authorized to install and maintain its poles, wires and other facilities over and across public property, including streets, highways, forest reserves and other similar government property.
- MERALCO may acquire private property necessary for the realization of the purposes of this franchise, provided that proper condemnation proceedings are instituted and just compensation is paid.

Term of Franchise (Section 9):
- The franchise is granted for a term of twenty-five (25) years from the date of effectivity of this Act, unless sooner revoked or cancelled by Congress for any violation of the terms and/or provisions of the franchise.

Acceptance and Compliance (Section 10):
- Acceptance of this franchise must be given in writing within sixty (60) days after the effectivity of this Act.

Warranty in Favor of National and Local Government (Section 11):
- MERALCO must hold the national, provincial and municipal governments of the Philippines 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 12):
- MERALCO shall be liable for any injury and damage arising from or caused by accident to persons and property due to any defective construction under this franchise or any neglect or omission to keep its poles and wires in a safe condition.

Sale, Lease, Transfer, Usufruct, Etc. (Section 13):
- MERALCO 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 commercial or legal entity, nor merge with any other corporation or entity, nor shall the controlling interest of MERALCO be transferred, whether in whole or in part, and whether simultaneously or contemporaneously, to any such person, firm, company corporation or entity without the prior approval of the Congress of the Philippines, except to a wholly-owned subsidiary of MERALCO or where MERALCO is the surviving corporation.
- 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.

Reportorial Requirement (Section 14):
- MERALCO must submit an annual report of finances and operations to the Congress of the Philippines.

Equality Clause (Section 15):
- If any competing individual, partnership or corporation receives a similar permit or franchise with more favorable terms and/or provisions that tend to place MERALCO at any disadvantage, such terms and/or provisions shall be deemed part of this franchise and shall operate equally in favor of MERALCO.
- However, this shall not apply to nor affect the provisions concerning territory covered by the franchise and the life-span of the franchise.

Applicability Clause (Section 16):
- MERALCO must comply with and be subject to the provisions of the Public Services Act and the Electric Power Industry Reform Act of 2001.

Repealability and Nonexclusivity Clause (Section 17):
- 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.

Separability Clause (Section 18):
- 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.

Repealing Clause (Section 19):
- Acts 484 and 3648, as amended, Republic Act No. 3444 and all other 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 (Section 20):
- This Act shall take effect fifteen (15) days from the date of its publication, upon the initiative of MERALCO, in at least two (2) newspapers of general circulation in the Philippines.