Republic of the Philippines
a©ouSe  of 3Reprcsetttatfrocs
Quezon City
NINETEENTH CONGRESS
First Regular Session
House.`:ifi iro.   5215
Ihtroduced by
Represeritatwe Ferdinand Mcutin G. ROTrunaldez
TINGOG Party-Iist Represen:toitve Yedda Marie K. Rom;uaidez
TINGOG Party-I,is± Represeutchve Jude A. Acidre
PHILRECA Pcutg-List Represer[to±ive Ftresley C. De Jesus
APEC Pcutg-I,ist Representative Sergio C. Dagooc
AN ACT
EXTENDING THE EXISTING FRANCHISE OF THE LEYTE 11 ELECTRIC
COOPERATIVE INC. |LEYECO 11) TO CONSTRUCT, INSTALL, ESTABLISH,
OPERATE, OWN, MANAGE AND MAINTAIN DISTRIBUTION SYSTEMS FOR
THE CONVEYANCE OF ELECTRIC POWER TO THE END-USERS IN THE
CITY OF TACLOBAN AND MUNICIPALITIES OF BABATNGON AND PALO,
PROVINCE 0F LEYTE
The LEYTE 11 ELECTRIC COOPERATIVE,  Inc.  (LEYECO 11) was organized
and  registered  pursuant to  the  provisions  of Presidential  Decree  No.  269,  as
amended,  and under the  supervisory authority of the  National Electrirication
Administration  (NEA)  with  a mandate  to  perform  electrification  in  the  City of
Tacloban and part of the Province of Leyte on an area coverage basis. Pursuant
to Section 27 of Republic Act No. 9136, otherwise known as the Electric Power
Industry  Refomi  Act  (EPIRA),  the  power  to  grant  franchises  shall  be  vested
exclusively in the Congress of the Philippines. Thus,  this bill seeks to grant a
congressional franchise to LEYECO 11 to provide an electric power distribution
system to the people of the ertg/ a/ Tzlczohart arid Jlfunzczpazftzes a/Bahatngon
&  Pa!o,  both  within  the  Province  of Leyte.  F`urthermore,  it  seeks  to  require


standards that the grantee must attain in order to secure an effective partnership
between  the  State  and  the  grantee,  as well as  to  set high  standards for the
provided facility.
The exceptional performance  of LEYECO  11 is gathered from the results
produced  since it was granted a franchise to operate electric light and power
services in the provinces of Babatngon, Tacloban & Palo. This covers two (2) out
of forty-two  (42)  municipalities  composing  the  Province  of I,eyte,  and  one  (1)
Highly Urbanized City. LEYECO 11 has energized one hundred percent ( 100°/o) of
the barangays within its franchise area. Notably, LEYECO has been consistently
categorized for several years as an "AAA" cooperative, the highest categorization
of an electric cooperative by the supervising government agency - the NEA.
The enactment of this bill will ensure the continuous delivery of electric
service from LEYECO 11 to the mentioned City and Municipalities and will create
the path towards progress in Leyte. 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, the approval of this bill is earnestly sought.
Represeritatiue,  1 st District, Leyte
RED
TING
MARIE K. ROMUALDEz        REp. ru
Repre seritc[tiue                  TI N GO
PRELEY C.
REP. :ERG#
Represeritedue
C. DAcOOC
•ILRECA Pcuty-list Represeritaitue               APEC Pcuty-test Represeritctive


Republic of the Philippines
aBouse ®t 3Represe"tattbcs
Quezon City
NINETEENTH CONGRESS
First Regular Session
House'a'ilfrio.    5215
Introduced by
Represeritafiue Ferdinand Marl:n G. ROT"ualdez
TINGOG Party-Iist Represeutatwe Yedda Marie K. ROTITualdez
TINGOG Pcutg-List Represeritcrfu]e Jude A. Acidre
PHILRECA Party-I,ist RepreseITtotwe Presley C. De Jesus,
APEC Pcutg-I,ist Represernd;flue Sergio C. Dagooc
JEN ACT
EXTENDING THE EXISTING FRANCHISE OF THE LEYTE 11 ELECTRIC
cOOpERATlvE INc. (LEyEcO 11) TO cONSTRuc'r, INSTALL, ESTABLlsH,
OpERATE, OWN, MA)rAGE AND MAINTAIN DlsTRIBUTloH sysTEMs FOR
THE CONVEYANCE OF ELECTRIC POWER TO THE END-USERS IN THE
CITY OF TACL0BA)I AND MUNICIPAIJITIES OF BABATNcON AND PAIO,
PROVINCE OF LEYTE
Be it enacted by the Senate and the House Of Represen±ckues Of the Repubtic Of
the Philippines in Congress assembled:
1                SECTION 1. Natlire and scope a/Franchise. -Subject to the provisions
2     of the Constitution and applicable laws, rules and regulations, there is hereby
3      granted to the Leyte ll Electric cooperative, Inc. (LEYECO II), hereunder referred
4     to  as  the  grantee,  its  successors  or assigns  a franchise  to  construct,  install,
5     establish,  operate,  own,  manage  and  maintain  in  the  public  interest  and
6     commercial purposes, a distribution system for the conveyance of electric power
7     to the end-users in the City of Tacloban and Municipalities of Babatngon and
8      Palo, Province ofLeyte.


1                As used in this Act, distribution system refers to the system of wires and
2     associated facilities including sub-transmission lines belonging to a franchised
3     distribution  utility  extending  between   the   delivery  point   on   the   national
4     transmission system or generating facility and the metering point/facility of the
5      end-users.
6                SECTION   2.   JITanrLer   a/  Operatior.s   a/  Facizfties.   -   All   electric
7     distribution  facilities,  lines and  systems for electric  services installed,  owned,
8     maintain, operated, managed or maintained by the grantee,  its successors or
9     assigns shall be operated or maintained at all times in a superior manner, and
10     it shall be the duty of the grantee, its successors or assigns, whenever required
11     to do so by the Energy Regulatory Commission, hereinafter referred to as the
12     ERG, or its legal successor, or the Department of Energy, hereinafter referred to
13     as the DOE, or its legal successor, or any other government agency concerned to
14     modify, improve and change such facilities or systems in such manner and to
15     such  extent  as  the  progress  in  science  or  technology  and  improvements  or
16     innovations in the electric power services may render reasonable and proper.
17                Whenever practicable, and for purposes of maintaining order, safety and
18     aesthetics along the highways, roads, streets, alleys or right-of-way, the grantee
19     may  allow  the  use  of free  spaces  in  its  poles,  facilities,    or  right-of-way  by
20     interested parties upon reasonable compensation to the grantee considering the
21     costs incurred to accommodate and administer the use of the grantee's facilities
22     by such parties. The ERC shall decide in case of dispute or disagreement between
23      theparties.
24               SECTI0IN 3. Authority of the Energy Regula:tory commlsston (BRC). -
25     The  grantee  shall  secure  from  the  ERC  or  any  government  agency  having
26     jurisdiction  over  their  operations,  the  certificate  of  public  convenience  and
27     necessity  and  any  other  license,  permit  or  authority  indispensable  for  the
28     construction and operation of the electric power distribution system. The ERC
29     or any government agency vested withjurisdiction over the operations, may allow
30     the  grantee  to  expand  to  surrounding  areas,  which  are  not  covered  by  the
31     franchise granted, whenever public interest so requires.
32                SECTION  4.  Ingress  and  Egress.  -  For  the  purpose  of erecting  and
33     maintaining  the  poles  or  other  supports  for  said  facilities,  wires  or  other
34     conductors or for the purpose of laying and maintaining said facilities, wires,
35     cables or other conductors, it shall be lawful for the grantce, its successors, or
36     assignees,  with  the  prior  approval  of  the  Department  of  Public  Works  and
37      Highways   (DPWH)   or   the   local   government   unit   concerned,   as   may   be


1     appropriate, to make excavations or lay conduits in any of the public places,
2     highways,  roads,  streets,  lines,  alleys,  avenues,  sidewalks,  or  bridges  of the
3     province and city:  Provided, however, That a public place, highway, road, street,
4     lane, alley, avenue, sidewalk, or bridge disturbed, altered, or changed by reason
5     of erection of poles or other supports or the underground laying of wires, other
6     conductors or conduits, shall be repaired and replaced in workmanlike manner
7     at the expense of the grantee, its successors or assignees, in accordance with
8     the standards set by the DPWH or the local government unit concerned. Should
9     the grantee, its successors or assignees, after the ten (10)-day notice from the
10     grant of authority, fall, refuse or neglect to repair or replace any part of public
11     place,  highway,  road,  street,  lane,  alley,  avenue,  sidewalk,  or bridge  altered,
12     changed, or disturbed by the said grantee, its successors or assignees, then the
13     DPWH or the local government unit concerned shall have the right to have the
14     same repaired and replaced in good order and condition at double expense to be
15     charged against the grantee, its successors or assignees.
16                SECTION 5.  Responsibi[itE/ to tJle ftibllc.  -The grantee shall supply
17     electricity to its captive market in the least costly manner. In the interest of the
18     public good and as far as feasible and whenever required by the ERG, the grantee
19      shall  modify,   improve,   or  change   its   facilities,   poles,   lines,   systems  and
20     equipment for the purpose of providing efricient and reliable service and reduced
21     electricity costs. The grantee shall charge reasonable andjust power rates for its
22     services  to  all  types  of consumers  within  its  franchised  areas  in  order  that
23     business and industries shall be able to compete.
24                The    grantee    shall    have    the    obligation    to    provide    open    and
25     nondiscriminatory access to its distribution system and services for any end-
26     user within its franchise area consistent with Republic Act No. 9136, otherwise
27      known as the "Electric Power Industry Reform Act of 2001". The grantee shall
28     not engage in any activity that will constitute an abuse of market power such as
29     unfair trade practices, monopolistic schemes, and other activities that will hinder
30     competitiveness of business and industries.
31                SECTION 6.  Rates /or Serulees.  -The retail rates and charges for the
32     distribution of electric power by the grantee to its end-users shall be regulated
33     by and subject to the approval of the ERG or its legal successor.
34                The grantee shall identify and segregate in its electricity bill to the end-
35     users  the  components  of the  retail rate  pursuant  to  Republic Act  No.  9136,
36     unless otherwise amended. Such rates charged by the grantee to the end-users


1     shall be made public and transparent. The grantee shall implement lifeline rate
2     to marginalized end-users as mandated under Republic Act No. 9136.
3               SECTION 7. Promotion a/Coris.imer Jntenests -The herein grantee shall
4     establish a consumer desk that will handle consumer complaints and ensure
5     adequate promotion of consumer interests. The grantee shall act with dispatch
6     on all complaints brought before it.
7                SECTION 8. Right a/the Gouemment -A special right is hereby reserved
8     to  the  President  of  the  Philippines,  in  times  of war,  rebellion,  public  peril,
9     calamity, emergency, disaster or disturbance of peace and order: to temporarily
10     take  over and  operate  the  stations or facilities of the  grantee;  to  temporarily
11     suspend the operation of any station or facility in the interest of public safety,
12     security and public welfare;  or to authorize the  temporary use and operation
13     thereof by any agency of the government, upon due compensation to the grantee,
14     for the use of the stations or facilities during the period when these shall be so
15      operated.
16                SECTION 9. Right o/Eminent Domain -Subject to the limitations and
17     procedures prescribed by law, the grantee is authorized to exercise the right of
18     eminent  domain  insofar  as  it  may  be  reasonably  necessary  for  the  efficient
19     maintenance and operation of services. The grantee is authorized to install and
20     maintain its poles, wires, and other facilities over and across public property,
21     including streets, highways,  forest reserves,  and other similar property of the
22     Government of the philippines, its branches, or any of its instrumentalities. The
23     grantee  may  acquire  such  private  property  as  is  actually  necessary  for  the
24      realization of the purposes for which this franchise is granted:  ProLn.czecz, That
25     proper   expropriation   proceedings    shall   have   been   instituted   and   just
26      compensation paid.
27                SECTION   10.  Term   a/  Fnc[nchtse. -Unless   sooner   cancelled,   the
28     franchise extension shall be in effect for a period of twenty-five (25) years from
29     the  year  of  expiration   of  its   existing  franchise.   This   franchise   shall   be
30     deemed I.pso/auto revoked in the event the grantee falls to operate continuously
31      fortwo (2)years.
32                SECTION   11.   Acceptance   and   Coap[€ance.   -   Acceptance   of  this
33     franchise shall be given in writing to the Congress of the Philippines, through
34     the committee on Legislative Franchises of the House of Representatives and the
35      Committee  on  Public  Services  of the  Senate  within  sixty  (60)  days  from  the


1     effectivity  of this  Act.  Upon  such  acceptance,  the  grantee  shall  exercise  the
2     privileges granted under this Act. Nonacceptance shall render the franchise void.
3                SECTION    12.    WamftrLt=/   in   Fouror   a/  the   J\fotioriaz   arid   locaz
4     Gouemments  -  The  grantee  shall  hold  the  national,  provincial,  city,  and
5     municipal  governments  of  the  Philippines  free  from  all  claims,  accounts,
6     demands, or actions arising out of accidents or injuries, whether to property or
7     to persons, caused by the construction, installation, operation, and maintenance
8     of the distribution system of the grantee.
9                SECTION 13. ££abilitg//or Damages -The grantee shall be liable for any
10     injury and damage arising from or caused by accident to persons and property
11     by reason of any defective construction under this franchise or of any neglect or
12     omission to keep its poles and wires in safe condition.
13                SECTION 14. Income rcaf and JIf[ndm«m coporate Jnco»'ie Touc qfGZT7
14     -The grantee shall be pemianently exempt from the payment of income tax and
15     Minimum corporate Income Tax or MCIT.
16               SECTION   15. Sale,  Irease,   The;nsifer,   Usufruct,  or  Asstgnment  Of
17     Fraiichise. -The grantee shall not sell, lease, transfer, grant the usufruct of, or
18     assign this franchise or the rights and privileges acquired thereunder to any
19     person, firm, company, corporation, or other commercial or legal entity, or merge
20     with any other corporation, or entity, or shall transfer the controlling interest of
21     the grantee, whether as a whole or in parts,  and whether simultaneously or
22     contemporaneously, to any such person, firm, company, corporation, or entity
23     without  the  prior  approval  of the  Congress  of the  Philippines: ftioz;idecz, That
24     Congress shall be informed of any lease, transfer, granting the usufruct of, sale,
25     or assignment of franchise or the rights and privileges acquired thereunder, or
26     of the merger, or sale of the controlling interest within sixty (60) days after the
27     completion of said transaction: Prolriczedjitrfher, That any such transfer, sale, or
28     assignment   is   in   accordance   with   the   constitutional   limitations: Proou.c!ed
29     jitrfhe7more, That fallure to report to Congress such change of ownership shall
30     render  the  franchise fpso /tzcto revoked: Prolrriczecz jinci!ky, That  any  person  or
31     entity to which this franchise is sold, transferred, or assigned, shall be subject
32     to the same, conditions, terms, restrictions, and limitations of this Act.
33                SECTION  16.  Reportoriaz Reqttirement.  -The grantee shall submit an
34     annual report to  the  Congress  of the  Philippines,  through  the  Committee  on
35     Legislative Franchises of the House of Representatives and the Committee on
36     Public Services of the Senate, on its compliance with the terms and conditions


1     of the franchise and on its operations on or before April 30 of every year during
2     the  term  of  the  franchise.  The  reportorial  compliance  certificate  issued  by
3     Congress  shall  be  required  before  any application  for permit or certificate  is
4     accepted bythe ERG.
5                SECTION  17. Hnc. - The  failure of the grantee  to  submit the  requisite
6     annual report to Congress shall be penalized by a fine in the amount of five
7     hundred pesos (P500.00) per working day of noncompliance. The fine shall be
8     collected by the ERG from the delinquent franchise grantee separate from the
9     reportorial penalties imposed by the ERG. All proceeds from the fines or penalties
10     shall accrue to the monitoring fund of the ERC in line with its supervisory and
11     regulatory functions.
12                 SECTION    18. JrtyuazztE/    Czduse. ~    Any    advantage,    favor,    privilege,
13     exemption,  or  immunity  granted  under  existing  franchises,  or  which  may
14     hereafter be granted, upon prior review and approval of congress, shall become
15     part of this franchise and shall be accorded immediately and unconditionally to
16     the herein grantee: Proiriczed, hotueuer, That the foregoing shall neither apply to
17     nor affect provisions concerning territory covered by the franchise, the life span
18     of the  franchise  or the  type  of service  authorized  by the  franchise: Prour.ded,
19     jit7ther, That the foregoing shall not apply to the sale, lease, transfer, grant of
20     usufruct,   or  assignment  of  legislative  franchises  with  prior  congressional
21      approval.
22                 SECTION  19. AppZ€cabi!€t!/ Chattsc. -The grantee shall comply with and
23     be  subject  to  the  provisions  of  Commonwealth  Act  No.   146,  as  amended,
24     otherwise  known  as  the  "Public  Service  Act"  and  Republic  Act  No.   9136,
25     otherwise known as the "Electric power Industry Reform Act of 2001".
26                 SECTION    20. Repeatabizifty    arid    AbrL-E]cczt.siutfty    Czattse. -This
27     franchise shall be subject to amendment, alteration, or repeal by the Congress
28     of  the  Philippines  when  the  public  interest  so  requires  and  shall  not  be
29     interpreted as an exclusive grant of the privileges herein provided for.
30                SECTION 21. Separabi[itE/ Chalise. -If any of the sections or provisions
31     of this Act is held invalid, all other provisions not affected thereby shall remain
32      valid.
33                 SECTION  22.   Repeazirig   Czattse.   -     All  laws,   presidential  decrees,
34     executive orders, letters of instmction, administrative rules and regulations or


1     parts thereof which are contrary to or inconsistent with the provisions of this Act
2     are hereby repealed or modified accordingly.
3                SECTION 23. Elc€sting Polliers. -Existing mandates, powers, functions,
4     and privileges granted to Electric Cooperatives under existing laws,  including
5      Secfron  JO of Repubzie Act IVo.  J0531,  shall remain valid and effective,  unless
6     expressly repealed by succeeding laws.
7                SECTION 24. Ejrectiutty chaltse. -This Act shall take effect fifteen (15)
8     days after its publication in at least two (2) newspapers of general circulation.
9                 Approved ,