Republic of the Philippines 7
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila /

SEVENTEENTH CONGRES:
First Regular Session

HOUSE BILL No. 0684

Introduced by: Rep. Salvio B. Fortuno

EXPLANATORY NOTE

This bill seeks to grant the Iriga Electric Company, Inc., a corporation duly
organized and existing under the laws of the Republic of the Philippines, a franchise to
establish, operate, lease, own, manage and maintain for commercial purposes and in the
public interest, distribution system for the conveyance of electric power to the end-users
anywhere in the City of Iriga and the six towns comprising the Fifth Congressional District
of Camarines Sur (Rinconada District for brevity).

Electricity is one of the greatest wonders ever invented that we cannot even dream
of living in the absence of electricity in this modern era. There is no walk of life in which it is
not used these days from time we wake up each day up to the time we sleep and wake up
again another day. Anything we need is practically functioning with the use of electricity.
The grave importance of electricity becomes noticeable in the Rinconada District where
rotating brownouts occur frequently, where the major cause is near bankruptcy of the
Camarines Sur III Electric Cooperative.

The economic growth and development of the Rinconada District depend on the
stability of power supply as no investor will ever infuse the much needed capital without
steady supply of electricity. Whatever economic growth Rinconada District has achieved
for the past years will be stunted or even pushed back if the consumers and the business
sector will not be given free choice where to get steady and dependable source of
electricity.

The Iriga Electric Company, Inc. aims to set up modern, dependable and efficient
power distribution system that will provide the residences, business establishments and
educational institutionswith alternative source of energy supplier in the spirit of free trade
competition that will pose a challenge to existing electricity supplier to make the services
efficient for the benefit of the consumers. This will also attract the infusion of capital that


will generate more job opportunities and will further propel the growth and development of
the Rinconada District.

The foregoing reasons warrant the approval of this bill.

Representative
Fifth Disffict, Camarines Sur


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SEVENTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 5684

Introduced by: Rep. Salvio B. Fortuno

AN ACT

GRANTING THE IRIGA ELECTRIC COMPANY, INC., A FRANCHISE TO CONSTRUCT,
INSTALL, ESTABLISH, OPERATE, OWN, MANAGE AND MAINTAIN A DISTRIBUTION
SYSTEM FOR THE CONVEYANCE OF ELECTRIC POWER TO THE END-USERS IN
THE ENTIRE FIFTH CONGRESSIONAL DISTRICT OF CAMARINES SUR.

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

SECTION 1.Nature and Scope of Franchise. — Subject to the provisions of the
1987 Philippine Constitution and applicable laws, rules and regulations, there is hereby
granted to the Iriga Electric Company, Inc., hereunder referred to as the grantee, its
successors or assigns, a franchise to construct, install, establish, operate and maintain for
commercial purposes and in the public interest, a distribution system for the conveyance of
electric power to the end-users in the entire 5" Congressional District of Camarines Sur.

As used in this Act, distribution system refers to the system of wires and associated
facilities including sub-transmission lines belonging to a franchised distribution utility
extending between the delivery point on the national transmission system or generating
facility and the metering pointfacility of the end-user.

SECTION 2.Manner of Operation of Facilities.—All electric distribution facilities,
lines and systems for electric services owned, maintained, operated or managed by the
grantee, its successors or assigns, shall be operated and 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
DOE, or its legal successor, or any other government agency concerned, to modify,
improve and change such facilities or systems in such a manner and to such extent as the


progress in science and improvements in the electric power services 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 cost 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 parties.

SECTION 3.Authority of the ERC/DOE.-The grantee shall secure from the
ERC/DOE or any other government agency which has jurisdiction over the operation of the
herein grantee, the necessary certificate of public convenience and necessity and other
appropriate permits and licenses for the construction and operation of its electric
distribution system.

SECTION 4.Excavation and Restoration Works. —For the purpose of erecting and
maintaining poles, pipes and other supports for said wires or other conductors for the
purpose of laying and maintaining said facilities, wires, cables, pipes or other conductors, it
shall be lawful for the grantee, its successors or assigns, 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 bridge of said city
and/or municipalities: 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 and replaced in workman like manner at the expense of the grantee, its
successors or assigns, in accordance with the standards set by DPWH or the LGU
concerned. Should the grantee, its successors or assigns, after the ten (10)-day notice
from the said authority, fail, refuse or neglect to repair or replace any part of public place,
highway, road, street, lane, alley, avenue, sidewalk or bridge disturbed, altered or changed
by the said grantee, its successors or assigns, then the DPWH or the LGU concerned shall
have the right to have the same repaired and placed in good order and condition at double
expense to be charged against the grantee, its successors or assigns.

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 business and industries shall be able to compete.

The grantee shall have the obligation to provide and non-discriminatory access to
its distribution system and services for any end-user within its franchise area consistent
with republic Act No. 9136, otherwise known as “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, but not limited to, unfair trade practices, monopolistic schemes and any
other activities that will hinder competitiveness of 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-user 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 lifeline rate to marginalized end-users as
mandated under Republic Act No. 9136.

SECTION 7 .Promotion of Consumer Interests — The herein grantee shall
establish a consumer desk that will handle consumer complaints and ensure adequate
promotion of consumer interests. The grantee shall act with dispatch on all complaints
brought before it.

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 said stations or facilities during the period
when they 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 private property as is actually necessary for the realization of the
purposes for which this franchise is granted: Provided, That proper condemnation
proceedings shall have been instituted and just compensation paid.

SECTION 10.Term of Franchise.— This franchise shall be in effect for a period of
twenty-five (25) years from the date of effectivity of this Act, unless sooner cancelled. This
franchise shall be deemed ipso facto revoked in the event the grantee fails to operate
continuously for two (2) years.

SECTION 11.Acceptance and Compliance.— Acceptance of this franchise shall be
given 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 giving such acceptance,
the grantee shall exercise the privileges granted under this Act. Non-acceptance shall
render the franchise void. ~ 7 en et ee

SECTION-12.Warranty-in-Favor-of the-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 to 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 pole
and wires in safe condition.

SECTION 14.Sale, Lease, Transfer, Usufruct, Etc. — The grantee shall not sell,
lease, transfer, grant the usufruct of, or 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 parts and whether simultaneously 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 or privileges acquired within sixty (60) days after the completion of said
transaction: Provided also, That any such transfer, sale or assignment is in accordance
with the constitutional limitations: Provided further, 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 15.Dispersal of ownership.— In accordance with the constitutional
provision to encourage public participation in public utilities, the grantee shall offer to
Filipino citizens at least thirty percentum (30%) of its outstanding capital stock or a higher
percentage that may hereafter be provided by law in any securities exchange in the
Philippines within five (5) years from the commencement of its operations: Provided, That
in cases where public offer of shares is not applicable, establishment of cooperatives and
other methods of encouraging public participation by citizens and corporations operating
public utilities must be implemented. Non-compliance therewith shall render the franchise
ipso facto revoked.

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 on 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 the succeeding year.


SECTION 17.Penalty Clause.— Any grantee who fails to submit the requisite
Annual Report to Congress shall be fined Five Hundred Pesos (P500.00) per working day
of non-compliance. The fine shall be collected by the ERC from said delinquent franchise
grantee separate from the reportorial penalties imposed by ERC. All proceeds from said
fines or penalties shall accrue to the monitoring fund of the ERC in line with its supervisory
and regulatory functions. The reportorial compliance certificate issued by Congress shall
be required before any application for permit or certificate is accepted by ERC.

SECTION 18.Equality Clause.— Any advantage, favor, privilege, exemption, or
immunity granted under existing franchise, 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 shalll neither apply to nor affect provisions concerning territory covered by the
franchise, the life span of 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 or
usufruct or assignment of legislative franchises with prior congressional approval.

SECTION 19.Applicability Clause. 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.Separability Clause.— |f any of the sections or provisions of this Act
is held invalid, all other provisions not affected thereby shall remain valid.

SECTION 21.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 22.Publication — This Act shall be published, through the initiative of the
grantee, fifteen (15) days after this Act is signed by the President of the Philippines or has
lapsed into law.

SECTION 23.Effectivity Clause.— This Act shall take effect fifteen (15) days after
its publication in the Official Gazette or in a newspaper of general circulation.

Approved,