RA 9511 — NGCP Franchise Act

Signed: December 1, 2008 Effective: December 16, 2008 (15 days after publication)

Contradiction note (effective-date): The source-summary ingest pass recorded effective-date: 2008-12-01 in its frontmatter — this is actually the signing date, not the effective date. The page’s original value, 2008-12-16 (15 days after publication, per standard effectivity clauses), is the better-supported figure and is used here.

RA 9511 grants the National Grid Corporation of the Philippines (NGCP) a legislative franchise to operate, manage, maintain, and expand the Philippines’ nationwide electricity transmission system. It is the legal basis for NGCP’s status as the private System Operator and transmission service provider for all three Philippine grids (Luzon, Visayas, Mindanao). Physical asset ownership remains with the government-owned TransCo under a concurrent Concession Agreement executed pursuant to EPIRA §21.

Section 1 — Franchise Scope

The franchise covers [RA 9511, §1, 2008]:

• Operating, managing, and maintaining the high-voltage backbone of interconnected transmission lines, substations, and related facilities
• System operations and all activities necessary to support safe and reliable transmission
• Constructing, installing, financing, improving, expanding, operating, maintaining, rehabilitating, repairing, and refurbishing the nationwide transmission system
• Operating and maintaining subtransmission systems not yet disposed by TRANSCO
• Ancillary businesses maximizing utilization of assets — explicitly including telecommunications systems

Scope: Nationwide, in accordance with the Transmission Development Plan (TDP) as approved by DOE.

Section 2 — Term and Filipino Ownership

• Term: 50 years from effectivity (i.e., until approximately 2058)
• Subject to amendment, alteration, or repeal by Congress when the common good so requires
• At least 60% of the Grantee’s capital must be owned by Filipino citizens at all times
• Must comply with constitutional and applicable laws on foreign ownership and management of public utilities [RA 9511, §2, 2008]

Note: RA 11659 (2022 Public Utilities Act, amending CA 146) redefined “public utility” and reclassified transmission — this affects the applicable foreign ownership ceiling for NGCP.

Section 3 — Standards

The transmission system must be operated and maintained at all times in accordance with industry standards. When required by ERC (or its legal successor), NGCP must modify, improve, and change its system or facilities as “the progress in science and improvements in the electric power services may reasonably require.” [RA 9511, §3, 2008]

Section 4 — Right of Eminent Domain

NGCP may exercise eminent domain insofar as reasonably necessary for construction, expansion, and efficient maintenance and operation of the transmission system and grid, and for subtransmission systems not yet disposed by TRANSCO. Applicable law on eminent domain (including prerequisites of possession and just compensation) must be observed. [RA 9511, §4, 2008]

Section 5 — Government Takeover Rights

The President may, in times of war, rebellion, public peril, calamity, emergency, disaster, or disturbance of peace and order:

• Temporarily take over and operate the transmission and subtransmission systems
• Temporarily suspend operations of any portion
• Authorize temporary use by any government agency

Due compensation is owed to NGCP for the period of government operation. [RA 9511, §5, 2008]

Section 6 — Transfer and Assignment Restrictions

NGCP may not lease, transfer, grant usufruct of, or sell the franchise or its rights and privileges, nor merge with any other company, nor transfer controlling interest in whole or in part — without prior approval of Congress. [RA 9511, §6, 2008]

Exceptions (Congressional approval not needed):

• Issuance of shares for the PSE listing dispersal requirement (§8)
• Issuance of new shares to foreign or local investors in connection with a capital stock increase that dilutes existing stockholdings
• Transfers at the level of corporate stockholders (not the Grantee itself) — subject to constitutional limitations
• Assignment of related business operations (e.g., telecom subsidiary)

Section 7 — Cross-Ownership Prohibition

NGCP or any of its stockholders, directors, officers, or their relatives within the 4th civil degree of consanguinity (and their spouses) may not hold any shares in any Power Industry Player. Conversely, a Power Industry Player (or its stockholders, directors, officers, relatives, or spouses) may not hold shares in NGCP. [RA 9511, §7, 2008]

“Power Industry Player” = a generation company, distribution utility, or their respective subsidiary or affiliate, or other entity engaged in generating and supplying electricity as specified by ERC.

Exceptions to cross-ownership ban:

• Ownership of ≤1% of PSE-listed Power Industry Player shares (passive portfolio investment only, with no employment/consultancy/commercial relationship)
• Ownership of ≤1% in a PSE-listed company that owns NGCP shares — provided the holder owns ≤1% in any Power Industry Player

Shares acquired in violation are void of voting rights and dividends during the prohibited cross-ownership period.

10-year bar on losing TRANSCO bidders: Losing bidders in the TRANSCO privatization, their principals, subsidiaries, affiliates, stockholders, directors, and officers may not be transferees or beneficial owners of NGCP shares — directly or indirectly — for 10 years from effectivity of this Act (i.e., until ~2018).

Section 8 — PSE Listing Requirement

NGCP must list and make a public offering of at least 20% of its outstanding capital stock on the Philippine Stock Exchange (PSE) within 10 years of commencement of operations. Alternative compliance: listing of a company that directly or indirectly owns ≥30% of NGCP’s outstanding shares is considered full compliance. ERC may grant extensions if market conditions are not suitable. [RA 9511, §8, 2008]

Section 9 — Tax Treatment

Franchise tax: 3% of all gross receipts from franchise operations — in lieu of income tax and all other national and local taxes, duties, fees, and charges on franchise, rights, privileges, receipts, revenues, profits, and properties used in the franchise. [RA 9511, §9, 2008]

Still subject to: Real estate, buildings, and personal property taxes (same as other corporations).

Concession fees to PSALM: Exempt from income tax and VAT.

Section 14 — Applicability of Public Service Act

NGCP must comply with and be subject to Commonwealth Act No. 146 (Public Service Act) as not otherwise modified or repealed by EPIRA (RA 9136). [RA 9511, §14, 2008]

Note: CA 146 was substantially amended by RA 11659 (2022), which reclassified transmission and redefined “public utility.” The interaction between RA 9511 §14 and RA 11659 affects NGCP’s regulatory status.

Full text: Cleaned copy