FOURTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
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SENATE BILL NO. 2 2 6 3 
EXPLANATORY NOTE 
The enactment of Republic Act No. 9136, entitled An Act Ordaining Reforms in 
the Electric Power Industry and for other purposes, in 2001 signified the government's 
promise to ensure the quality, reliability and sustainability of the supply of electricity that 
would translate to lower consumption costs for the benefit of the end-users. The law 
provided for the privatization of the assets and liabilities of the National Power 
Corporation (NPC) with the end in view of achieving a high level of efficiency 
specifically in the transmission sub-sector of the energy industry. All transmission and 
sub-transmission facilities of NPC, therefore, were transferred to the National 
Transmission Corporation (TRANSCO). 
Recently, the Securities and Exchange Commission has approved the 
incorporation of the National Grid Corporation of the Philippines, a consortium of Monte 
Oro Grid Resources Corp., Calaca High Power Corp. and State Grid Hong Kong Ltd., 
which won the 25-year concession of TRANSCO to operate and maintain the power grid. 
Since TRANSCO is a public utility, a congressional franchise has first to be passed to 
allow the National Grid Corporation to construct, install, finance, manage, improve, 
expand, operate, maintain, rehabilitate, repair and refurbish the nationwide transmission 
system owned by TRANSCO. Hence, this bill. 
It is envisioned that once the National Grid Corporation commences its operation 
of the transmission grid, the facilities of the sub-sector shall then be upgraded and 
modernized to be able to ensure sustainability of our power supply and, at the same time, 
help achieve genuine reforms in the energy sector which will redound to the benefit of 
the consumers and end-users. 
In view of the foregoing, the immediate passage of the bill is earnestly sought. 


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FOURTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
) 
k4 MY -7 Pfl 361 
SENATE BILL NO. 2 2 6 
AN ACT 
GRANTING THE NATIONAL GRID CORPORATION OF THE PHILIPPINES A 
FRANCHISE TO CONSTRUCT, INSTALL, FINANCE, MANAGE, IMPROVE, 
EXPAND 
PERATE, MAINTAIN, REHABILITATE, REPAIR AND REFURBISH THE 
NATI 0 
,;WIDE TRANSMISSION 
SYSTEM IN 
THE 
REPUBLIC 
OF THE 
PHILIPPINES 
Be it enacted by the Senate and the House of Representatives of the Philippines in Congress 
amem bled: 
SECTION 1. Nature and Scope of Franchise. - Subject to the p d s ~ r n s  of the 
Constitution and applicable laws and pursuant to the terms and conditions of the concession 
agreement and other pertinent documents executed by the National Grid Corporation of the 
Philippines with the National Transmission Corporation (TRANSCO) and the Power Sector 
Assets & Liabilities Management Corporation (PSALM) by virtue of Section 21 of Republic Act 
No. 9136 which are not inconsistent herewith, there is hereby granted to the National Grid 
Corporation of the Phlippines, herein referred to as the Grantee, its successors or assigns a 
franchise to engage in the business of conveying or transmitting electricity through high voltage 
back-bone system of interconnected transmission lines, substations, and related facilities, and 
other activities that are necessary to support the safe and reliable operation of a transmission 
system and to construct, install, finance, manage, improve, expand, operate, maintain, 
rehabilitate, repair and refurbish the present nationwide transmission system of the Republic of 
the Phlippines. The Grantee shall likewise continue to operate and maintain the subtransmission 
systems which have not yet been disposed by TRANSCO. 
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SEC. 2. Terms of Franchise. - This franchise shall be for a term of fifty (50) 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 herein granted. 


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SEC. 3. Manner of Operation of System or Facilities. - The transmission system, grid 
and related facilities maintained, operated or managed by the Grantee, its successors or assigns 1, 
shall be operated and maintained at all times in accordance with industry standards, and it shall 
be the duty of the Grantee, its successors or assigns, whenever required to do so by the Energy 
Regulatory Commission (ERC), or its legal successor or any other govenrment agency 
concerned, to modify, improve'and change such system or facilities in such manner and to such 
extent as the progress in nctknce and improvements in the electric power services may reasonably 
require. 
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SEC. 4. 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 construction, expansion, and efficient maintenance and 
operation of the transmission system and the efficient operation and maintenance of the sub- 
transmission systems which have not yet been disposed by the National Transmission 
Commission. 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 
condemnation proceedings shall have been instituted and just compensation paid. 
SEC. 5. Right ofthe Government. - A special right is hereby reserved to the President 
of the Phlippines, in times of war, rebellion, public peril, calamity, emergency, disaster, or 
disturbance of peace and order, to temporarily take over and operate the transmission systm 
and/or the sub-transmission systems operated and maintained by the Grantee, to temporarily 
suspend the operation of any portion thereof or the 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 said 
transmission system and sub-transmission systems and any portion thereof during the period 
when they shall be so operated. 


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SEC. 6. Sale, Lease, Transfer, Usufruct, etc. - The Grantee shall not lease, transfer, 
grant the usufruct of or sell this franchise or the rights and privileges acquired hreunder to any 
person, firm, company or other commercial or legal entity, nor merge with any other company, 
nor shall the controlling interest of the Grantee be transferred whether in whole or in part, and 
whether simultaneously or contemporaneously, to any such person, firm, company or entity 
without the prior approval of the Congress of the Philippines: Provided, That the foregoing 
limitation shall not apply to: 
(1) any transfer or issuance of shares of stock in the 
implementation of the requirement for the Grantee’s dispersal of ownership pursuant to Section 8 
of this Act; (2) any transfer or sale of shares of stock to a foreign investor or investors; (3) any 
issuance of shares to any foreign or local investors pursuant to or in connection with any increase 
in the Grantee’s authorized capital stack which results in the dilution of the stockholdings of the 
Grantee’s then exising stockholders; (4) any combination thereof where such transfer, sale or 
issuance is effected in order to enable the Grantee to raise the necessary capital or financing for 
the provision of the services for which the Grantee has been incorporated or organized: 
Provided moreover, That the foregoing limitations shall not apply to any transfer, sale or 
issuance of shares of stock at the level of corporate stockholders of the Grantee: Provided, 
however, That any such transfer, sale or issuance at the level of the corporate stockholders of the 
Grantee is in accordance with applicable constitutional limitations: Provided, finally, that any 
person or entity to which this franchise is sold, transferred or assigned, under this Act shall be 
subject to the same conditions, terms, restrictions and limitations of this Act. f 
SEC. 7. Cross Ownership; Market Power Abuse and Anti-Competitive Behavior. - The 
Grantee shall not engage in any anti-competitive behavior including, but not limited to, cross- 
subsidization, price or market manipulation, or other unfair trade practices detrimental to the 
encouragement and protection of contestable markets. 
No generation company, distribution utility, or other entity engaged in generating and 
supplying electricity, its respective subsidiary or affiliate; or director, or officer, or stockholder 
owning more than 1% of the outstanding capital stock, of a generation company, distribution 


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utility, or other entity engaged in generating and supplying electricity, or any of their ascendants, 
descendants, brothers and sisters, whether of full or half blood, and their respective spouses, shall 
own or hold any shares of stock or equity interest in Grantee. Likewise, Grantee, or any of its 
directors, or officers, or stockholders owning more than 1% of the outstanding capital stock of 
Grnatee, their ascendants, descendants, brothers and sisters, whether of full or half blood, and 
theri respective spouses shall not hold any shares of stock or equity interest in any generation 
company, distribution utility or other entity enaged in generating and supplying electricity: 
Provided, That this prohibition on cross-ownership applies to direct ownership of shares of stock 
of Grantee and to ownership of shares of stock of a corporate stockholder of the Grantee, or to 
ownership of shares of stock or equity interest in a company which has controlling shareholdings 
or equity interest in a corporate stockholder of the Grantee. But it shall not apply to ownership 
of shares of stock in a company listed in the Philippine Stock Exchange which owns or controls 
shares of stock in Grantee: Provided, further, That such owner of shares of stock in the listed 
corporate stockholder of the Grantee shall not own more than 1% of the shares of stock or equity 
interest in generation company, distribution utility or other entity engaged in generating and 
supplying electricity. 
No shares of stock issued or acquired in violation hereof shall be allowed to vote or be 
entitled to representation at any stockholders’ meeting of the Grantee, nor shall the holder 
thereof be entitled to any of the rights of a stockholder of the Grantee, including the right t 
dividends, during the existence of such prohibited cross ownership. 
An ‘‘affiliate” means a person which, alone or together with any other person, directly or 
indirectly, through one or more intermediaries, controls, is controlled by, or is under common 
control; with another person. As used herein, “control” shall mean the power to direct or cause 
the direction of the management policies of a person by contact, agency, or otherwise. 
The provisions on cross-ownership under Republic Act No. 9136 which are inconsistent 
with this provision shall be deemed modified accordingly. 


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SEC. 8. Dispersal of Ownership. - The Grantee shall list, subject to the requirements of 
the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE), and 
make a public offering of the shares representing at least twenty per centum (20%) of its 
outstanding capital stock or a higher percentage that may hereafter be provided by law within 
five (5) years from the commencement of its operations: Provided that the listing in the PSE of 
any company which directly or indirectly owns or controls at least thirty per centum (30%) of the 
outstanding shares of stock of the Grantee shall be considered a full compliance of this listing 
requirement. Noncompliance therewith shall render the franchise @so facto revoked: Provided 
that the ERC may upon application of the Grantee, and after notice and hearing allow such 
reasonable extension of the period within which the Grantee should list its shares of stock, if the 
market condition is not suitable for such listing. 
SEC. 9. Tax Provisions. - The Grantee, its successors or assigns, shall be subject to all 
relevant taxes, duties, fees or changes and other impositions under the National Internal 
Revenue Code (NIRC) of 1997, as amended, and other applicable laws: Provided, That payment 
by Grantee of the concession fees due to PSLAM under the concession agreement shall not be 
subject to income tax and value-added-tax (VAT): Provided, further, That nothing herein shall 
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The Grantee shall file the return with, and pay the taxes due thereon to, the 
Commissioner on Internal Revenue or his duly authorized representatives in accordance with the 
NIRC of 1997, as amended 
SEC. 10. Acceptance and Compliance. - Acceptance of this franchise shall be given in 
writing by Grantee within sixty (60) days after the effectivity of this Act. 


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SEC. 11. Warranty in Favor of National and Local Government. - The Grantee shall 
hold the national, provincial and other local governments of the Philippines harmless from all 
claims, accounts, demands or actions arising out of accidents or injuries, whether to property or 
persons, caused by the construction, installation, operations and maintenance of the transmission 
system and the grid. 
SEC. 12. Zngress and Egress. - For the purpose of constructing and/or maintaining 
transmission and sub-transmission assets and other related support facilities, it shall be lawful for 
the Grantee, its successors and assigns, with the approval of the relevant national and local 
government agencies concerned, as may be appropriate, to make excavations or lay conduits in 
any of the public places, highways, streets, lanes, alleys, avenues, sidewalk or bridges within the 
Philippines: Provided, however, That any public place, highways, street, lane, avenue, sidewalk 
or bridge disturbed, altered or changed by reason of the construction and/or maintenance of 
transmission and sub-transmission assets and other related support facilities, shall be 
immediately repaired and properly restored at the expense of the Grantee, its successors and 
assigns, in accordance with the standards set by the relevant national and local government 
agencies concerned. 
SEC. 13. 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 
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Services Act,” Republic Act 9135 and its implementing rules and regulations, and such othe 
applicable laws, rules and regulations. 
SEC. 14. Repealing 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. 
SEC. 15. Reportorial Requirement. - The Grantee shall submit an annual report of 
finances and operations to the Congress of the Philippines. 


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SEC. 16. Separability Clause. - If for any reason, any of the sections or provisions of 
this Act is declared unconstitutional or invalid, the other parts or provisions hereof which are not 
affected thereby shall continue to be in full force and effect. 
SEC. 17. Ejfectivitj Clause. - This Act shall take effect fifteen (15) days from the date 
of its publication, upon the initiative of the Grantee, in at least two (2) papers of general 
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circulation in the Philippines. 
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Approved,