AN ACT REVISING THE CHARTER OF THE NATIONAL POWER CORPORATION.

Case Overview and Summary

Summary of Republic Act No. 6395

Declaration of Policy
- Comprehensive development, utilization, and conservation of Philippine water resources for all beneficial uses, including power generation.
- Total electrification of the Philippines through power development from all sources to meet industrial and rural electrification needs. (Section 1)

National Power Corporation
- Continues to exist for 50 years from the expiration of its present corporate existence.
- Mandated to spread the benefits of its projects and operations to the greatest number of the population possible. (Section 2)

Powers and Functions of the Corporation
- Conduct investigations and surveys for water power development. (Section 3e)
- Take water from public streams, rivers, etc., and divert water flow upon payment of just compensation. (Section 3f)
- Construct, operate, and maintain power plants, dams, reservoirs, transmission lines, etc., for hydraulic power development and supply. (Section 3g)
- Acquire, promote, hold, transfer, sell, lease, mortgage, and dispose of property. (Section 3h)
- Construct works across streams, watercourses, streets, highways, etc. (Section 3i)
- Exercise the right of eminent domain. (Section 3j)
- Contract indebtedness and issue bonds subject to approval. (Section 3k)
- Exercise powers necessary to carry out its business and purposes. (Section 3l)
- Cooperate and coordinate with the National Electrification Administration and public service entities. (Section 3m)
- Exercise jurisdiction and control over watersheds surrounding its reservoirs and plants. (Section 3n)
- Adopt measures to prevent environmental pollution and promote conservation and utilization of natural resources. (Section 3o)
- Exercise powers of a corporation under the Corporation Law. (Section 3p)

Fixing of Rates and Review
- The Board shall fix rates to ensure a rate of return not more than 10% on a rate base composed of net assets in operation plus two months' operating capital. (Section 4)
- The Public Service Commission has exclusive original jurisdiction over cases contesting the rates. (Section 4)
- The Corporation shall charge a uniform schedule of rates for customers within the same classification in any interconnected system. (Section 4)
- Rates in Luzon, Visayas, and Mindanao shall be determined independently based on conditions in each region. (Section 4)

Capital Stock and Composition of the National Power Board
- Authorized capital stock of P300 million, fully subscribed and paid by the Philippine government. (Section 5)
- The National Power Board consists of 7 members appointed by the President, including regional representatives and labor and business sector representatives. (Section 6)
- The Board formulates policies, adopts budgets, organizes staffing, appoints and fixes compensation of key officers, and sets employment guidelines. (Section 6)

General Manager and Regional Managers
- The General Manager manages the Corporation, assisted by the Assistant General Manager and regional managers for Luzon, Visayas, and Mindanao. (Section 7)
- The General Manager executes policies, directs operations, appoints and removes subordinate officials and employees, and submits reports. (Section 7)
- Regional managers have autonomy in their respective regions, subject to conditions prescribed by the Board. (Section 7)

Authority to Incur Indebtedness and Issue Bonds
- The Corporation can incur domestic indebtedness and issue bonds up to P500 million, subject to conditions and approval. (Section 8a)
- The Corporation can contract foreign loans and indebtedness up to $200 million or equivalent, subject to conditions. (Section 8b)
- The President is authorized to negotiate and guarantee foreign loans on behalf of the Corporation. (Section 8b)
- Loans, imports, and payments related to foreign loans are exempt from taxes, fees, and charges. (Section 8b)

Construction of Power Projects
- The General Manager determines the feasibility of power projects and submits reports to the Board. (Section 9)
- The Board may designate a consulting board to review the project and decide whether to proceed with construction. (Section 9)

Construction and Repair Work
- Construction or repair work costing P75,000 or more shall be awarded through public bidding to the lowest responsible bidder. (Section 10)
- Emergency work may be undertaken by administration or contract with Board approval. (Section 10)
- Work costing less than P75,000 may be undertaken by administration or "pacquiao" contract after market canvass. (Section 10)

Penalties for Destroying or Interfering with Corporation's Projects
- Malicious destruction, injury, or interference with the Corporation's works, water supply, or personnel is punishable by fine and/or imprisonment. (Section 11)

Appropriation of Public Waters
- Unappropriated public waters for hydraulic power purposes shall be granted to the Corporation by the Secretary of Public Works and Communications, subject to domestic water supply needs. (Section 12)

Non-profit Character and Tax Exemptions
- The Corporation is non-profit and exempt from taxes, duties, fees, imposts, charges, and restrictions imposed by the government and its instrumentalities. (Section 13)

Contract with Franchise Holders
- The Corporation shall require franchise holders receiving at least 60% of power from the Corporation to have a rate of return not more than 12% on a rate base composed of net assets in operation plus two-month operating capital. (Section 14)
- The Corporation can cancel or revoke contracts with franchise holders upon judgment of the Public Service Commission for deliberate overloading or power deficiency. (Section 14)

Laws Governing Relations with Electric Cooperatives
- The Corporation's relations with electric cooperatives shall be governed by Republic Act No. 6038 and the cooperatives' legislative franchises. (Section 15)

Non-impairment of Collective Bargaining Agreements and Labor Rights
- The Act shall not impair existing collective bargaining agreements, the right of employees to organize and bargain collectively, or diminish labor rights under the Industrial Peace Act or other labor laws. (Section 16)

Separability Clause and Repealing Clause
- The provisions of the Act are separable, and any unconstitutional provisions shall not affect the validity of other provisions. (Section 17)
- All laws, executive and administrative orders, or parts thereof, inconsistent with the Act are repealed or modified accordingly. (Section 18)