Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

TWENTIETH CONGRESS
First Regular Session

HOUSE BILL NO. 358

Introduced by REPRESENTATIVE JOSEPH KIM C. YU
1* District, Zamboanga del Sur

EXPLANATORY NOTE

Zamboanga del Sur | Electric Cooperative, Inc. (ZAMSURECO-|) was organized and registered
‘on August 25, 1972, pursuant to the provisions of Presidential Decree No. 269, as amended, and
under the supervisory authority of the National Electrification Administration (NEA). Pursuant to
‘Section 27 of the Republic Act No. 9136, otherwise known as the Electric Power Industry Reform
Act (EPIRA), the power to grant franchises shall be vested exclusively in the Congress of the
Philippines; hence, this bill seeks to grant congressional franchise to ZAMSURECO-! to provide
an electric power distribution system to the people of the 23 Municipalities and one City of the
Province of Zamboanga del Sur, as well as one Municipality in Misamis Occidental, namely:
Tambullg, Molave, Mahayag, Dumingag, Josefina, Ramon Magsaysay, Sominot, Midsallp,
Aurora, Tukuran, Labangan, Dumalinao, Guipos, San Pablo, Tigbao, Lapuyan,
Margosatublg, San Miguel, Vincenzo Sagun, Dimataling, Dinas, Pitogo, Tabina, Pagadian
City in Zamboanga del Sur and Don Victoriano in Misamis Occidental.

‘ZAMSURECO-| has played a crucial role in the economic growth and development of the Province
of Zamboanga del Sur and Pagadian City. From its establishment in 1972, ZAMSURECO-1 has
served as the primary electricity provider in its franchise coverage. It is classified as a Mega Large
electric cooperative serving a total of 624 barangays, with 624 of them being energized since
2010. Additionally, there are 3,430 sitios, with 2,946 of them being energized.

The Cooperative has consistently maintained the highest category level, AAA, as designated by
the National Electrification Administration (NEA). This top category level has been sustained for
an impressive 17 years, demonstrating ZAMSURECO-I's exceptional performance and
commitment to excellence.

The enactment of this bill will ensure the continuous delivery of electricity from ZAMSURECO-| to
the mentioned Municipalities and one City in the Province of Zamboanga del Sur and Municipality
in Misamis Occidental. Likewise, it will be in line with the policy of the State as provided for in
EPIRA, to ensure and accelerate the total electrification of the country; and to ensure the quality,
reliability, security, and affordability of the supply of electric power

In view of the foregoing, approval of this bill is earnestly sought.

whe Yu


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

TWENTIETH CONGRESS

First Regular Sessi
HOUSE BILL NO. 358

Introduced by REPRESENTATIVE JOSEPH KIM C. YU
1™ District, Zamboanga del Sur

AN ACT EXTENDING THE EXISTING FRANCHISE OF ZAMBOANGA DEL SUR | ELECTRIC
COOPERATIVE, INC. (ZAMSURECO-I) TO CONSTRUCT, INSTALL, ESTABLISH, OPERATE,
OWN, MANAGE AND MAINTAIN DISTRIBUTION SYSTEMS FOR THE CONVEYANCE OF
ELECTRIC POWER TO THE END USERS IN THE MUNICIPALITIES OF TAMBULIG, MOLAVE,
MAHAYAG, DUMINGAG, JOSEFINA, RAMON MAGSAYSAY, SOMINOT, MIDSALIP,
AURORA, TUKURAN, LABANGAN, DUMALINAO, GUIPOS, SAN PABLO, TIGBAO, LAPUYAN,
MARGOSATUBIG, SAN MIGUEL, VINCENZO SAGUN, DIMATALING, DINAS, PITOGO,
TABINA, PAGADIAN CITY IN ZAMBOANGA DEL SUR AND DON VICTORIANO IN MISAMIS
OCCIDENTAL.

Be it enacted by the Senate and House of Representatives of the Philippines in the Congress
assembled:

SECTION 1. Nature and Scope of Franchise. - Subject to the provisions of the Constitution and
applicable laws, rules and regulations, there is hereby granted to the ZAMBOANGA DEL SUR |
ELECTRIC COOPERATIVE, INC. (ZAMSURECO-I), hereunder referred to as the grantee, its
‘successors or assigns a franchise to construct, install, establish, operate, own, manage and
maintain in the public interest and commercial purposes, a distribution system for the conveyance
of electric power to the end users in the following areas:

| Zamboanga Del Sur: Tambulig, Molave, Mahayag, Dumingag, Josefina, Ramon
Magsaysay, Sominot, Midsalip, Aurora, Tukuran, Labangan, Dumalinao, Guipos, San
Pablo, Tigao, Lapuyan, Margosatubig, San Miguel, Vincenzo Sagun, Dimataling, Dinas,
Pitogo, Tabina, Pagadian City

+ Misamis Occidental: Don Victoriano

SECTION 2. Manner of Operation of Facilities. - All electric distribution facilities, lines, and systems
for electric services installed, owned, operated, managed or maintained by the grantee, its
‘successors or assigns shall be operated or maintained at all times in a superior manner, and it
shall be the duty of the grantee, its successors or assigns, whenever required to do so by the
Energy Regulatory Commission, hereinafter referred to as the ERC, or its legal successor, or the
Department of Energy, hereinafter referred to as the DOE, or its legal successor, or the National
Electrification Administration (NEA) or its legal successor, or any other government agency
concemed to modify, improve and change such facilities or systems in such manner and to such
‘extent as the progress in science or technology and improvements or innovations in the electric
power service industry may render reasonable and proper.

Whenever practicable, and for purposes of maintaining order. safety and aesthetics along
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 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 in case of dispute or disagreement between the
parties.

SECTION 3. Authority of the Energy Regulatory Commission (ERC). - The grantee shall secure
from the ERC or any government agency having jurisdiction over their operations, the certificate


of public convenience and necessity and any other license, permit or authority indispensable for
the construction and operation of the electric power distribution system. The ERC or any
government agency vested with jurisdiction over the operations, may allow the grantee to expand
to surrounding areas, which are not covered by the franchise granted, whenever public interest
so requires.

SECTION 4. Ingress and Egress. - For the purpose of erecting and maintaining the poles or other
supports for said facilities, wires or other conductors for the purpose of laying and maintaining
said facilities, wires, cables, or other conductors, it shall be lawful for the grantee, its successors,
or assignees, with the prior approval of the Department of Public Works and Highways (DPWH)
or the local government unit concerned, as may be appropriate, to make excavations or lay
conduits in any of the public places, highways, roads, streets, lanes, alleys, avenues, sidewalks,
or bridges of said province and city: Provided, however, That a public place, highway, road, street,
lane, alley, avenue, sidewalk, or bridge disturbed, altered, or changed by reason of erection of
Poles or other supports or the underground laying of wires, other conductors or conduits, shall be
repaired 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 local government unit
concemed. Should the grantee, its successors or assignees, after the ten (10)-day notice from
the grant authority, fail, refuse or neglect to repair or replace any part of public place, highway,
road, street, lane, alley, avenue, sidewalk or bridge altered, changed, or disturbed by the said
grantee, its successors or assignees, then the DPWH or the local government unit concerned shall
have the right to have the same repaired or replaced in good order and condition at double
‘expense to be charged against the grantee, its successors or assignees.

SECTION 5. Responsibility to the Public. - The grantee shall supply electricity to its captive market
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 reduced
electricity costs. The grantee shall charge reasonable and just power rates for its services to all
types of consumers within its franchised areas in order that businesses and industries shall be
able to compete.

The grantee shall have the obligation to provide open and nondiscriminatory 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”.
The grantee shall not engage in any activity that will constitute an abuse of market power, such
as unfair trade practices, monopolistic schemes, and other activities that will hinder the
‘competitiveness of the business and industries.

SECTION 6. Rates for Services. - The retail rates and charges for the distribution of electric power
by the grantee to its end-users 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, unless otherwise amended. Such rates charged
by the grantee to the end-users shall be made public and transparent. The grantee shall
implement a lifeline rate to marginalized end-users as mandated under Republic Act No. 9136.

SECTION 7. Protection of Consumer Interests. To ensure the well-being of its consumers, the
grantee has a fundamental responsibilty to provide the following: reliable and affordable electricity
to its captive market, transparent and clearly communicated rates subject to ERC approval, a
lifeline rate for marginalized end-users in accordance with Republic Act No. 9136, and a consumer
welfare desk for addressing complaints and protecting consumer interests.

SECTION 8, Right of the Government. - 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 stations or facilities of the grantee; to
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 of the


government, upon due compensation to the grantee, for the use of the stations or facilities during
the period when these shall be so operated.

SECTION 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 maintenance and operation of services. The grantee 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 property of the
Government of the Philippines, its branches, or any of its instrumentalities. The grantee may
acquire such private property as is actually necessary for the realization of the purposes for which
this franchise is granted: Provided, That proper expropriation proceedings shall have been
instituted and just compensation paid.

‘SECTION 10. Terms of Franchise. - Unless sooner cancelled, the franchise extension shall be in
effect for a period of twenty-five (25) years from the year of expiration of its existing franchise,
This franchise shall be deemed ipso facto revoked in the event that the grantee fails to operate
continuously for two (2) years.

SECTION 11. Acceptance of the Franchise. - Acceptance of the terms of this franchise shall be
in writing 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, within sixty
(60) days from the effectivity of this Act. Upon such acceptance, the grantee shall exercise the
privileges granted under this Act. Non-acceptance shall render the franchise void.

‘SECTION 12. Warranty in Favor of National and Local Governments. - The grantee shall hold the
national, provincial, city, and municipal governments of the Philippines free from all claims,
accounts, demands, or actions arising out of accidents or injuries, whether to property or to
Persons, caused by the construction, installation, operation, and maintenance of the distribution
system of the grantee.

SECTION 13. Liability for Damages. - The grantee shall be liable for any injury and damage arising
from or caused by accident to persons and property by reason of any defective construction under
this franchise or of any neglect or omission to keep its poles and wires in safe condition.

SECTION 14. Income Tax and Minimum Corporate Income Tax (MCIT) - The grantee shall be
permanently exempt from the payment of income tax and Minimum Corporate Income Tax or
cit.

SECTION 15. Sale, Lease, Transfer, Usufruct, or Assignment of Franchise. - The grantee shall not
sell, lease, transfer, grant the usufruct of, nor 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 part, and whether simuttaneously or contemporaneously, to
any such person, firm, company, corporation or entity without the prior approval of the Congress
of the Philippines: 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 the
said transaction: Provided further, That any such transfer, sale, or assignment is in accordance
with 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.

SECTION 16. Reportorial Requirement. - The grantee shall submit an annual report to the
Congress of the Philippines, through the Committee on Legislative Franchises of the House of
Representatives and the Committee of 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
during the term of the franchise. The reportorial compliance certificate issued by Congress shall
be required before any application for a permit or certificate is accepted by the ERC.


SECTION 17. Fine. - The failure of the grantee to submit the requisite annual report to Congress
shall be penalized by a fine in the amount of five hundred pesos (500.00) per working day of
noncompliance. The fine shall be collected by the ERC from the delinquent franchise grantee,
separate from the reportorial penalties imposed by the ERC. All proceeds from the fines or
penalties shall accrue to the monitoring fund of the ERC in line with its supervisory and regulatory
functions.

SECTION 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 territory covered by the franchise, the life span for the
franchise 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 of assignment of legislative franchises
with prior congressional approval.

SECTION 19. Applicability of Existing Laws. - The grantee shall comply with and be subject to the
provisions of Commonwealth Act No. 146, as amended, otherwise known as the “Public Service
Act” and Republic Act No. 9136, otherwise known as the “Electric Power industry Reform Act of
2001".

SECTION 20. Repealability and Non-Exclusivity Clause. ~ This franchise shall be subject to
amendment, alteration, or repeal by the Congress of the Philippines when the public interest so
requires and shall not be interpreted as an exclusive grant of the privileges herein provided for.

SECTION 21. Separability Clause. - If any of the sections or provisions of this Act is held invalid,
all other provisions not affected thereby shall remain valid.

SECTION 22. Repealing Clause. - All laws, presidential decrees, executive orders, letters of
instruction, administrative rules and regulations, or parts thereof which are contrary to or
inconsistent with the provisions of this Act are hereby repealed or modified accordingly.

SECTION 23. Existing Powers. - Existing mandates, powers, functions, and privileges granted to
Electric Cooperatives under existing laws, including Section 10 of Republic Act No. 10531, shall
remain valid and effective, unless expressly repealed by succeeding laws.

SECTION 23. Effectivity Clause. - This Act shall take effect fifteen (15) days after its publication
either in at least two (2) newspapers of general circulation.

Approved,