Republic
Act No. 6038
AN ACT DECLARING A
NATIONAL POLICY OBJECTIVE FOR THE TOTAL ELECTRIFICATION OF THE PHILIPPINES ON
AN AREA COVERAGE SERVICE BASIS, PROVIDING FOR THE ORGANIZATION OF THE
NATIONAL ELECTRIFICATION ADMINISTRATION, THE
ORGANIZATION, PROMOTION AND DEVELOPMENT OF ELECTRIC COOPERATIVES TO ATTAIN THE
OBJECTIVE, PRESCRIBING TERMS AND CONDITIONS FOR THEIR OPERATION, THE REPEAL OF
R.A. NO. 2717, AND FOR OTHER PURPOSES
CHAPTER I
POLICY AND DEFINITIONS
SECTION 1. Title. – This Act shall be
referred to as the “National Electrification Administration Act.”
SEC. 2. Declaration of National Policy.
– The total electrification of the Philippines on an area coverage basis
being vital to the welfare of its people and the sound development of the Nation,
it is hereby declared to be the policy of the State to pursue and foster, in an
orderly and vigorous manner, the attainment of this objective. For this purpose, the State shall promote,
encourage and assist all public service entities engaged in supplying electric
service, particularly electric cooperatives, which are willing diligently to
pursue this objective.
Because of their non-profit nature, cooperative character and the heavy
financial burdens that they must sustain to become effectively established and
operationally viable, electric cooperatives particularly shall be given every
tenable support and assistance by the National Government, its
instrumentalities and agencies to the fullest extent of which they are capable;
and, being by their nature substantially self-regulating and the Congress
having, by the enactment of this Act, substantially covered all phases of their
organization and operation requiring or justifying regulation, and in order to
further encourage and promote their development, they should be subject to
minimal regulation by other administrative agencies.
SEC. 3. Definitions. – As used in
this Act, the following words or terms shall have the following meanings,
unless a different meaning clearly appears from the context:
(a) “NEA” shall mean the
National Electrification Administration,
“Board of Administrators” shall mean the Board of Administrators, and
“Administrator” shall mean the Administrator, provided for in this Act.
(b) “Cooperative”
shall mean a corporation organized under this Act or a cooperative supplying or
empowered to supply service which has heretofore been organized under the Philippine Non-Agricultural Co-operative Act,
whether converted under this Act or not.
(c) “Public
service entities” shall mean (1) a cooperative and (2) any local government or
(3) other privately-owned public service entities in operation which supply and
are empowered to supply service and are subject to regulation by the Public
Service Commission.
(d) “Person”
shall mean any natural person, firm, association, cooperative, corporation,
business trust, partnership, the National Government or any political
subdivision, agency or instrumentality thereof.
(e) “Service”
shall mean electric service, either at wholesale or retail, including the furnishing
of any auxiliary or related service.
(f) “Dependable
and adequate service” shall mean service that, consistent with normal standards
and levels of service based upon good utility management and operating
practices, is sufficient in quantity, having regard for the demands for service
currently existing and reasonably anticipated within the foreseeable future,
and that is accessible on a constant and continuous basis except for outages
occasioned by the need for normal repair, maintenance, construction or
renovation work or by acts beyond the reasonable ability of the public service
entity to prevent or control.
(g) “Area”
shall mean the geographic area franchised to a public service entity or any
lesser geographic area for service to which the public service entity has
borrowed or may borrow funds for the acquisition or construction and operation,
maintenance or renovation of service facilities.
(h) “Area
coverage” shall mean dependable and adequate service that, on the basis of
reasonable and standard extension and service policies, rates, charges and
other terms and conditions, will be or is being made available to all persons
within the affected area as above defined who request such service and are able
and willing to abide by and comply with all such reasonable and standard terms
and conditions, regardless of the relative location of such persons within the
affected area or of their proximity to existing or proposed service facilities: Provided,
That the financial feasibility of the public service entity’s entire operation
is not thereby impaired.
(i) “Interest
rate per centum per annum” shall mean an interest rate that is accrued solely
upon the unpaid balance of any loan principal which has actually been advanced
to a borrower and upon any interest payment which has become due or been
deferred and has not been paid by the borrower, computed on an annual basis.
(j) “Loan”
shall mean a loan the total principal amount of which, as and when required for
application to the purposes thereof, is, at the time of the making thereof,
assured from funds that are or will become available therefore.
(k) “GSIS”, “SSS”,
“DBP”, “NEC”, “NEC-FS”
and “NPC” shall mean, respectively,
Government Service Insurance System,
Social Security System,
Development Bank of the Philippines,
National Economic Council,
National Economic Council-Foreign Source and
National Power Corporation.
(l) “Average
interest rate” shall mean that average which is determined by dividing (a) the
sum of the yearly interest payment applying to all outstanding borrowed
indebtedness and of the yearly interest payment that will apply to the new
borrowed indebtedness being proposed (but excluding interest that will or may
be paid on deferred or overdue interest payments) by (b) the sum of all
outstanding borrowed indebtedness and the new borrowed indebtedness being
proposed.
(m) “Non-profit”
shall mean that a cooperative shall not engage in business for the purpose of
making a profit for itself or its patrons, but it shall not mean that a
cooperative may not account on a patronage basis to its patrons for any
receipts in excess of its expenses in relation to its operations in serving
such patrons or in relation to investments of any of its surplus funds pending
their use by the cooperative or their refund to patrons; nor shall it mean that
such excess receipts may not be refunded to its patrons, or may not be
converted into patron-furnished capital subject to later redemption and
retirement by the cooperative.
(n) “Board”
shall mean the board of directors of a cooperative.
CHAPTER II
THE
NATIONAL ELECTRIFICATION ADMINISTRATION
SEC. 4.
National Electrification
Administration. Board of
Administrators. – For the purpose of
administering the provisions of this Act there is hereby established an agency
to be known as the National Electrification Administration, the powers of which
shall be vested in and exercised by a Board of Administrators composed of a
Chairman and four members, one of whom shall be the Administrator, as
ex-officio member. The Chairman and the
three other members shall be appointed by the President of the Philippines with
the consent of the Commission on Appointments to serve for a term of six years: Provided,
That the terms of the first appointees shall be six years for the Chairman and
one member and three years for two members, respectively, and that the term of
the ex-officio member shall be co-terminus with his term as the
Administrator. All vacancies, except
through expiration of the term, shall be filed for the unexpired term
only. The Chairman and every member of
the Board of Administrators shall serve without compensation and any form of
allowances but, unless he is a public official or employee, shall be entitled
to a per diem of not more than fifty
pesos for each meeting actually attended by him: Provided,
That the total of such per diems
shall not exceed five hundred pesos per month per member.
The Board of Administrators shall meet regularly at least twice a month and as
often as the exigencies of the
NEA’s
affairs demand. The presence of at least
three members shall constitute a quorum which shall be necessary for the
transaction of any business. The
affirmative vote of a majority of the members present shall be necessary for
the approval of any resolution, decision or order of the Board. In the absence of the Chairman at a Board
meeting duly called, the Administrator, as ex-officio
member shall preside over the meeting.
The Board of Administrators is hereby authorized to carry out the provisions
and purposes of this Act, and, subject to the approval of the President, to
promulgate rules and regulations to govern its proceedings and the exercise of
the
NEA’s authority, to organize,
reorganize and determine the
NEA’s
personnel and its staffing pattern, and to define their powers and duties.
The Board of Administrators shall have under its control and supervision an
Administrator who shall serve as the Chief Executive Officer of the
NEA responsible for carrying out its purposes
and programs under the direction of the Board of Administrators, exercise such
power and authority as the Board may delegate to him, and perform such acts as
he is under this Act authorized and directed and as the Board may authorize
and/or direct him so to do. The
Administrator shall be a person of known integrity, competence and experience
in technical and executive fields related to the purposes of this Act. He shall be appointed by the President of the
SEC. 5. Authorities, Powers and Directives.
– The Board of Administrators is hereby authorized, empowered and
directed to promote, encourage and assist public service entities, particularly
cooperatives, to the end of achieving the objective of making service available
throughout the nation on an area coverage basis as rapidly as possible; and for
such purpose it is hereby, without limiting the generality of the foregoing and
in addition to other authorizations, powers and directives established by this
Act, specifically authorized, empowered and directed:
(a) To
make loans to public service entities, with preference to cooperatives for the
construction or acquisition of generating, transmission and distribution
facilities and all related properties, equipment, machinery, fixtures, and
materials for the purpose of supplying area coverage service and thereafter to
make loans for the restoration, improvement or enlargement of such facilities: Provided,
That the public service entity applying for a loan, if neither a cooperative
nor a local government, must be in operation at the time of application;
(b) To
assist public service entities, with preference to cooperatives, in planning,
developing, coordinating, establishing, operating, maintaining, repairing and
renovating facilities and systems for supplying area coverage service, and for
such purpose to furnish, to the extent possible from the
NEA technical staff and otherwise but without
charge therefore, technical and professional assistance and guidance,
information, data and the results of any investigations, studies or reports
conducted or made by the
NEA;
(c) When
sufficient funds therefore are not available from the revolving fund
hereinafter established, to serve, without charge for such service, as the
agent of public serve entities which are cooperatives or local governments in
securing loans directly to such entities from any other source for the same
purposes for which
NEA loans are
authorized in subparagraph (a) of this section; and to approve or disapprove
any other loans to cooperatives as provided for in section 11 of this Act;
(d) To
receive from cooperatives all articles of incorporation, amendment,
consolidation, merger, conversion and dissolution, and all certificates of
changes in the location of principal offices and of elections to dissolve, and,
upon determining that such are in conformity with this Act, to certify the
same, to file them in the records of the
NEA,
and to maintain a registry of such filing:
Provided, That the duties
specified in this subsection shall be performed by the Administrator under the
supervision of the Board of Administrators;
(e) To
so cooperate and coordinate the
NEA’s
administration with, to exchange such information, studies and reports with,
and to seek such cooperation and coordination from, other departments, agencies
and instrumentalities of the National Government, including the
National Power Corporation, as will most
effectively conduce to the achievement of the purposes of this Act; and
(f) At
least annually, not later than January 31st, to report to the President and the
Congress on the status of electrification of the Philippines, including a
comprehensive reporting of loans made, loan funds advanced, loans secured from
other sources and the advances thereof, the names and locations of the
borrowers, the number of services contemplated by such loans, the number
actually receiving service as a result of such loans, the number of electrified
and the remaining number of unelectrified premises throughout the Nation, the
amounts of usage by consumers, loan and other activities programmed for the
ensuing year, and all such other information and data as will accurately reveal
the progress being made toward achievement of the purposes of this Act; and to
publish such report for dissemination to and use by other interested
departments, agencies and instrumentalities of the National Government and by
borrowers under this Act.
SEC. 6. Loans from
GSIS,
SSS and
DBP. – The
GSIS,
SSS and
DBP are hereby authorized, empowered
and directed to make loans directly to public service entities for the same
purposes for which
NEA loans are
authorized in subparagraph (a) of section five.
Any other provision of law to the contrary notwithstanding, such a loan
shall be made by any of the foregoing three whenever:
(a) Application
for such loan has been made to it on behalf of such entity by the
Administrator, accompanied by his determination and certification that (1)
sufficient funds for such a loan are not available out of the revolving fund
hereinafter established; (2) such loan is necessary to enable the borrower to
accomplish the loan purposes established in subparagraph (a) of section five;
(3) in his judgment the loan will be repaid with interest on schedule and will
not result in any diminution of the security of, or of the ability of the
borrower to repay, any outstanding indebtedness of the borrower to the
NEA or any other lending source below than
level of such security and ability were such additional borrowing not being
undertaken; (4) no lender other than the
NEA
or if such be the case the lender being applied to, then holds or has the right
to secure a first lien on the properties of the borrower to be financed by such
loan; and (5) his willingness in relation to the properties to be financed by
such loan, (A) to release any after-acquired property clause in any lien the
NEA already has on the borrower’s properties
to, or (B) to share any such lien on a co-equal basis in proportion to their
respective loans with, or (C) to subordinate any such lien in favor of, the
lender; and
(b) The
NEC determines and certifies to the
lender: (1) that the funds of such
lender, having regard for the amount, term, interest charge, repayment schedule
and security of such loan, are sufficient and available for such purpose; (2)
that such loan will not impair or unduly deter the achievement of the primary
purposes for which the lender has accumulated such funds; (3) the loan term,
which shall not exceed thirty-five years; (4) the repayment schedule, which
shall not cause payments of principal or interest to come due more often than
every quarter; (5) the interest rate, which shall not exceed (A) the lowest
interest rate being then received by the lender on loans of ten-or-more-year
terms made by the lender during the preceding twelve months (or, if no such
loans have been made during the preceding twelve months, on such loans made by
the lender during the preceding five years; or, if no such loans have been made
during the preceding five years, on the longest-term loan made by the lender
during the preceding three years), or (B) six per centum per annum, whichever
is the lesser: Provided, That if six per centum per annum is lesser, the
NEC may, but shall not be required to, fix
the interest rate to be not in excess of (i) such higher rate as will result in
an average interest rate to the borrower of not in excess of six per centum per
annum or (ii) the lowest interest rate determined under (A) above, whichever is
the lesser; and (B) the other terms and conditions of the loan;
(c) Such
loan, when added to the outstanding principal indebtedness to such lender for
any other loans made pursuant to this section, will not aggregate in excess of
one hundred million pesos; and
(d) The
borrower executes such documents as shall be necessary to effectuate such
borrowing and give the lender as security therefor an exclusive or shared first
lien on the properties being financed by the loan, and the Administrator
executes such instruments as shall be necessary to release to the lender any
after-acquired property clause of, or to share with or subordinate in favor of
the lender, any such lien the
NEA then
already has upon such borrower’s properties, whichever the
NEC shall require.
The beginning schedule of repayment of the principal of such loans, of the
interest charges thereon, or both, may be deferred for a period not to exceed
seven years from the advance of such principal, upon the Administrator’s
request and if the
NEC certifies to the
lender its approval thereof, in which event provision for such deferment shall
be incorporated into the loan agreement and interest shall accrue and be
payable on any interest payments so deferred.
Advances to the borrower of loans made pursuant to this section, and advances
to a cooperative borrower form any other non-NEA
source, shall be made directly to the borrower by the lender at such time or
times in such amount or amounts as the Administrator approves; and the
Administrator, with respect to such loans, advances, application by the
borrower of such advances to their purposes, repayments by the borrower of the
principal of and interest upon such loans, and all operations of the borrower
affecting the loan security and the borrower’s conformity with loan agreements,
shall establish and implement the same procedures and requirements affecting
the borrower as though such loan had been made by the
NEA.
Annually, and at any time a borrower’s condition indicates that it may
default in its loan agreement, or whenever so requested by such a lender or by
the
NEC, the
NEA shall furnish a current and comprehensive
report of the status and operations of the borrower relating to its ability to
conform with its loan agreement and to its financial and operating conditions
in general. To the extent that a loan
made pursuant to this section has not been advanced to the borrower within five
years after the effective date of the loan agreement, the same shall be
rescinded unless the lender and borrower, upon the
NEA’s approval, agree otherwise, which
agreement shall be executed by all three in writing and become a part of the
loan agreement.
This section shall not constitute a limitation on the right and ability
otherwise lawfully possessed by such a lender to make such loans to such public
service entities on terms and conditions more favorable to such entities than
herein prescribed.
SEC. 7. Revolving Fund. – A
revolving fund, out of which the Board of Administrators is hereby authorized,
empowered and directed to make loans to public service entities for the
purposes set forth in subparagraph (a) of section 5, is hereby established to
consist of the following:
(a) Any
portion of the twenty-five million pesos heretofore appropriated pursuant to
Section 6 of
Republic Act 2717 that has not already been
loaned or, if loaned, that has not already been advanced and for lawful reason
will not be advanced;
(b) The
following sums, which are hereby appropriated:
twenty million pesos for the fiscal year 1970 and the same amount each
year for the next nine fiscal years: Provided, That the Congress shall not be
limited as to the amount it may further appropriate in any year for this
purpose;
(c) Any
fund or physical asset which
NEC-FS may
make available to the
NEA for such loan
purposes;
(d) Any
fund or physical asset which the President, pursuant to Section six of
Republic Act Numbered Twenty-seven hundred seventeen, may
have already made, or, as he is hereby authorized and empowered so to do, may
hereafter make available to the
NEA for
such loan purposes from any sum or assets received from or out of Japanese
reparations including proceeds from the sale thereof or loans obtained under
the Japanese Reparations Treaty;
(e) All
moneys not already expended which have heretofore been received by the
Electrification Administration from payments
to it of the principal of and interest upon any loans it has heretofore made
pursuant to
Republic Act Numbered Twenty-seven hundred
seventeen, except to the extent such moneys may have already been allocated
to the
EA for administrative or other
purposes, and all moneys hereafter received by the
NEA from payments to it of the principal of
and interest upon any loans heretofore made under
Republic
Act Numbered Twenty-seven hundred seventeen or hereafter made under this
Act;
(f) The
sum of two million dollars worth of goods and services from Japanese
Reparations for the fourteenth year schedule and the same amount each year for
the next four year schedules, which are hereby allocated to the revolving fund
of the
NEA;
(g) The
sum of two million pesos for the fiscal year 1970 and the same amount each year
for the next four fiscal years, which are hereby allocated to the revolving
fund of the
NEA out of the proceeds of the
sale of Japanese Reparations Goods; and
(h) The
proceeds corresponding to the share of the National Government in all franchise
taxes paid by electric service entities, which are hereby appropriated for the
purpose of augmenting the revolving fund.
No portion of the revolving fund shall, without the prior approval of the
Congress, be expended by the
NEA for any
purpose other than the loans herein and in section nine authorized and the
acquisition authorized in section eleven.
The Board of Administrators shall annually, not later than January
thirty-first, report to the Congress and the President the current status and
amount of the revolving fund and the anticipated status and amount thereof in
the ensuing year.
SEC. 8. Loan Standards. – In making
a loan authorized in section 7, the Board of Administrators is hereby
authorized, empowered and directed:
(a) Before
making such loans, to determine and certify that (1) the project or projects
being financed thereby are financially feasible for the purpose of, and will
result in, area coverage in the area or areas to be affected thereby; (2) funds
are or will be available for the total advance of such loan to the borrower on
the schedule contemplated by the loan agreement, subject only to the borrower’s
compliance with the loan agreement; and (3) in the
NEA’s judgment the security for such loan is
reasonably adequate and the principal of and interest upon such loan will be
repaid on schedule and within the time agreed;
(b) To
require that such loan be self-liquidating within a term to be fixed by the
NEA of not in excess of thirty-five years
and, unless the borrower requests a shorter term, of not less than twenty-five
years;
(c) To
impose upon the loan principal an interest charge to be fixed by the
NEA at not in excess of three per centum per annum;
(d) To
fix the schedule for repayment of the principal of and the interest upon such
loan in installments recurring not more often than every quarter, which
installments may be in unequal amounts and larger in the later years of the
loan term than in the earlier years;
(e) To
require in the loan agreement that the borrower’s rates, charges, rules and
regulations, policies and all other terms and conditions affecting its
extension and furnishing of service shall be such as to assure achievement of
the loan purposes, and that the same shall be filed with and for such purpose
approved by the Board of Administrators before being put into effect or changed
by the borrower; and
(f) Subject
to the foregoing, to establish and require compliance with such procedures,
rules and regulations as the Board of Administrators may determine to be
necessary or appropriate to assure that the purposes of such loan will be
timely achieved and that the loan agreement and the provisions of this Act will
be complied with.
Notwithstanding the foregoing provisions of this section, the Board of
Administrators may fix any higher interest rate or any shorter or longer term
for loans made from funds or physical assets made available from sources stated
in subparagraphs (c) and (d) of section 7, but only if and not to exceed the
extent to which such is required by, or otherwise is made a condition of the availability
of such funds or assets from, such sources:
Provided, That the Board of
Administrators may, unless the conditions attaching to the availability of such
funds require otherwise, combine such funds with the other funds in the
revolving fund and fix a blended interest charge on loans made generally
therefrom at not in excess of the rate which will assure repayment to the
revolving fund of interest at three per
centum per annum on that portion of funds not derived from such sources and
of such higher interest per centum per annum as is required on that portion of
funds that is derived from such sources.
SEC. 9. Loans for Electric-Related Purposes. – The Board of Administrators is hereby
authorized, empowered and directed to make loans, out of the revolving fund,
for the purpose of financing the wiring of premises of persons served or to be
served as a result of loans made under Section 7, and for the acquisition and
installation by such persons of electrically-powered appliances, equipment, fixtures
and machinery of all kinds for commercial, agricultural and industrial
uses. Such loans may be made directly
(a) to public service entities which have received loans under section 7, which
entities shall relend such funds to persons served or to be served by them, or
(b) to any person served or to be served by such an entity. Such loans shall be made for such terms,
shall bear interest at such rate not to exceed six per centum per annum, and
shall be subject to such other terms and conditions as the Board of
Administrators shall determine to be necessary and appropriate to assure
repayment thereof within the time agreed:
Provided, however, That
at no time shall the total of loans made for the purposes stated under this
section exceed ten per centum of the total of the revolving fund nor shall any
such loan to any borrower exceed ten per centum of the total loan to such
borrower from the revolving fund.
SEC. 10. Authority to Extend Loans and Release or Subordinate Securities. – Whenever in its judgment such is necessary
or desirable to achieve the purposes of this Act, and particularly if such is
necessary to make or keep a project operationally viable, the Board of
Administrators is hereby authorized and empowered (a) by agreement with the borrower,
to extend the time of payment of principal or interest, or both, beyond the
loan agreement term of any loan made by the
NEA
under this Act, or to defer, for not in excess of seven years, the time when
the repayment schedule for principal or interest, or both, shall begin, or to
re-schedule payments of principal or interest, or both, or when none of the
foregoing is sufficient, to compromise and amount owing by a borrower to the
NEA subject to provisions of existing laws;
and (b) upon the
NEA’s determination that
such is necessary or desirable for the purpose of enabling a borrower to
accomplish the purposes for which it has already received an
NEA loan and that such will not result in any
diminution of the security of, or of the ability of the borrower to repay, any
outstanding indebtedness of the borrower below the level of such security and
ability were additional borrowings from another lender not undertaken, to
release any after-acquired property clause contained in any lien the
NEA holds on a borrower’s properties to, or
to share any such lien on a co-equal basis in proportion to their respective
loans with, or to subordinate any such lien in favor of, any other lender of
funds to a public service entity for the purposes for which loans are authorized
under this Act.
SEC/
11. Enforcement
Powers. – If any public service
entity which has borrowed funds from the
NEA,
or from any other lender through the services of the
NEA as its agent, or from any other lender
with the
NEA’s lawfully required prior
approval, shall default in its principal or interest payments, or shall fail,
after notice from the
NEA, to comply with
any other term or condition of a loan agreement or of any rule or regulation
promulgated by the
NEA in administering
the provisions of this Act, the Board of Administrators is hereby authorized
and empowered in its discretion to do any or any combination of the following:
(a) Refuse
to make, secure as agent, or give any lawfully required approval to, any new
loan to the borrower;
(b) Withhold
without limitation the
NEA’s advancement,
or withhold its approval for any other lender with respect to which the
NEA has such approving power to make
advancement, of funds pursuant to any loan already made to the borrower;
(c) Withhold
any technical or professional assistance otherwise being furnished or that
might be furnished to the borrower;
(d)
Foreclose
any mortgage or deed of trust or other security held by the
NEA on the properties of such borrower, in
connection with which the
NEA may, subject
to any superior or co-equal rights in such lien held by any other lender, (1)
bid for and purchase or otherwise acquire such properties, (2) pay the purchase
price thereof and any costs and expenses incurred in connection therewith out
of the revolving fund, (3) accept title to such properties in the name of the
Republic of the Philippines, and (4) operate or lease such properties for such
period, not exceeding five years, and in such manner as may be deemed necessary
or advisable to protect the investment therein, including the improvement,
maintenance and rehabilitation of foreclosed systems, but the NEA shall, within
five years after acquiring such properties, sell the same for such
consideration as it determines to be reasonable and upon such terms and
conditions as it determines most conducive to the achievement of the purposes
of this Act; or
(e) Take
any other remedial measure for which the loan agreement may provide.
In
addition to the foregoing, the Board of Administrators may, at its own instance
and in the name of the
NEA, petition any
court having jurisdiction for such purpose or any administrative agency
possessing regulatory powers for such purpose (including the Public Service
Commission) to issue such order and afford such lawful relief as may be necessary.
No borrower shall, without the approval of the Board of Administrators and of
any other lender holding or sharing a lien on such borrower’s properties, sell
or dispose of the property, rights, franchises, permits or any other assets
acquired and/or mortgaged under the provisions of this Act until all
outstanding indebtedness to the
NEA and
any other such lender, including all interest owing thereon, shall have been
repaid: Provided, That the
NEA may by
appropriate rule or regulation grant general permission to borrowers to dispose
of incidental properties (excluding real property), rights, franchises, permits
or other assets no longer deemed necessary or useful in conducting the
borrower’s operations.
No cooperative shall borrow money from any source without the Board of
Administrators’ prior approval: Provided, That the Board of
Administrators may, by appropriate rule or regulation, grant general permission
to cooperatives to secure short-term loans not requiring the encumbering of
their real properties or of a substantial portion of their other properties or
assets.
SEC. 12. Staff. – To enable the
NEA to implement more effectively the
provisions of this Act, the Board of Administrators shall have and provide for
a technical staff and such other staffs or personnel is it may deem
proper. The Administrator shall appoint
the personnel of the
NEA, subject to the
approval of the Board of Administrators and the requirements of existing
law. He shall, furthermore, have control
and supervision over them.
SEC. 13. Execution of Public Works Acts.
– The
NEA shall execute all
electrification projects that may be authorized in any Public Works Acts; and for this purpose it may call for assistance
and cooperation consistently with section 5(e).
SEC. 14. Administrative Expenses. –
The
NEA’s administrative expenses shall be
appropriated annually by the Congress.
SEC. 15. Conflict of Interest. – (a)
No member, officer, attorney, agent, or employee of the
NEA shall in any manner, directly or
indirectly, participate in the determination of any question affecting any
association or corporation in which he is directly or indirectly interested or
any person to whom he is related within the third degree of affinity or
consanguinity. Any person violating the
provisions of this subsection shall be removed from office and shall upon
conviction be punished by a fine not to exceed ten thousand pesos or
imprisonment not to exceed five years, or both.
(b) No
officer or employee of the
NEA or any government
official who may exercise executive or supervisory authority over the
NEA, either directly or indirectly, for
himself or as the representative or agent of others, shall become a guarantor,
endorser, or surety for loans from the
NEA
to others, or in any manner be an obligor for money borrowed from the
NEA.
Any such officer or employee who violates the provisions of this
subsection shall be punished by a fine of not less than one thousand pesos nor
more than five thousand pesos, or imprisonment for not less than one year nor
more than five years, or both.
(c) No
loan shall be granted by the NEA to any person related to any member of the
Board of Administrators or to the Administrator within the third degree of
consanguinity or affinity, or to any corporation, partnership, or company
wherein any member of the Board of Administrators or the Administrator is a
shareholder: Provided, That the foregoing prohibition shall not apply to a
cooperative of which any member of the Board of Administrators or the Administrator
or any such relative is a member.
Violation by any member of the Board of Administrators or the
Administrator of the provisions of this subsection is sufficient cause for his
removal by the President of the
(d) No
fee, commission, gift, or charge of any kind shall be exacted, demanded, or
paid for obtaining loans from the
NEA. Any officer, employee or agent of the
NEA or the Government exacting, demanding or
receiving any fee, commission, gift or charge of any kind for service in
obtaining a loan shall be punished by a fine of not less than one thousand nor
more than three thousand pesos, or imprisonment for not less than one year nor
more than three years, or both.
(e) Any
person who, for the purpose of obtaining, renewing, or increasing a loan or the
extension of the period thereof, on his own or another’s behalf, shall give any
false information or cause through his intrigue or machination the existence
and production of any false information with regard to the identity, situation,
productivity or value of security, or with regard to a point which might affect
the granting or denial of the loan, whether the latter has been consummated or
not, and every officer or employee of the
NEA
who through connivance shall allow by action or omission such false information
to pass unnoticed, thereby causing damage to the
NEA or exposing the latter to the danger of
suffering such damage, shall be punished by a fine of not less than the amount
of the loan obtained or applied for nor more than three times such amount, or
imprisonment for not less than three months nor more than three years, or both.
(f) Any
officer or employee of the
NEA who
violates, or causes or permits another person to violate, and (2) any other
person who violates or aids or abets the violation of, any provision of this
Act not specifically punishable in the preceding subsections shall be punished
by a fine not exceeding two thousand pesos, or imprisonment not exceeding one
year, or both.
SEC. 16. Supervision over
NEA; Power
Development Council. – The
NEA shall be under the supervision of the
Office of the President of the
In order to achieve coordination and cooperation among different agencies and
sectors having to do with electrification and power development, there is
hereby created a Power Development Council whose Chairman shall be a person or
official designated by the President of the Philippines, and its members shall
be the manager of the
NPC, the
NEA Administrator, the
Chairman of the NEC or a representative
designated by him, the Chairman of the Presidential Economic Staff or a
representative designated by him, a representative of electric cooperatives to
be chosen by a national association of electric cooperatives, and a
representative of the
Philippine Electric
Plant Owners Association to be designated by its board. The council shall meet at least once a month
and shall adopt an integrated plan of electrification and power development,
coordinate the activities and operations of all sectors involved in
electrification, conduct relevant studies and researches, and recommend such
policies and measures to the proper authorities and parties concerned as it may
deem necessary to achieve the total electrification objective declared in this
Act.
CHAPTER III
ELECTRIC COOPERATIVES
SEC. 17. Organization and Purpose. –
Cooperative non-stock, non-profit membership corporations may be organized, and
electric cooperative corporations heretofore formed or registered under the
Philippines Non-Agricultural Co-operative Act may as hereinafter provided be
converted, under this Act for the purpose of supplying, and of promoting and
encouraging the fullest use of, service on an area coverage basis at the lowest
cost consistent with sound economy and the prudent management of the business
of such corporations.
SEC. 18. Powers. – A cooperative is
hereby vested with all power necessary or convenient for the accomplishment of
its corporate purpose and capable of being delegated by the Congress; and no
enumeration of particular powers hereby granted shall be construed to impair
any general grant of power herein contained, nor to limit any such grant to a
power or powers of the same class as those so enumerated. Such powers shall include, but not be limited
to, the power:
(a) To
sue and be sued in its corporate name;
(b) To
have existence for a period of fifty years;
(c) To
adopt a corporate seal and alter the same;
(d) To
generate, manufacture, purchase, acquire, accumulate and transmit electric
power and energy, and to distribute, sell, supply and dispose of electric
energy to persons who are its members and to other persons not in excess of ten
per centum of the number of its members:
Provided, however, That
a cooperative may furnish electric cold storage or processing plant service to
non-members without limitation; and Provided,
further, That a cooperative which acquires existing electric facilities may
continue service from such facilities without requiring such persons to become
members, but such persons may become members upon such terms as may be
prescribed in the cooperative’s by-laws;
(e) To
assist persons to whom service is or will be supplied by the cooperative in
wiring their premises and in acquiring and installing electrically-powered
appliances, equipment, fixtures and machinery for agricultural, commercial and
industrial uses by the financing thereof or otherwise, and in connection
therewith to wire, or cause to be wired, such premises, and to purchase,
acquire, lease as lessor or lessee, sell, distribute, install and repair such
electrically-powered appliances, equipment, fixtures and machinery;
(f) To
assist persons to whom service is or will be supplied by the cooperative in
constructing, equipping, maintaining and operating electric cold storage or
processing plants, by the financing thereof or otherwise;
(g) To
construct, purchase, lease as lessee, or otherwise acquire, and to equip,
maintain, and operate, and to sell, assign, convey, lease as lessor, mortgage,
pledge, or otherwise dispose of or encumber, electric transmission and
distribution lines or systems, electric generating plants, lands, buildings,
structures, dams, plants and equipment, and any other real or personal
property, tangible or intangible, which shall be deemed necessary, convenient
or appropriate to accomplish the purpose for which the cooperative is
organized;
(h) To
purchase, lease as lessee, or otherwise acquire, and to use, and exercise and
to sell, assign, convey, mortgage, pledge or otherwise dispose of or encumber
franchises, rights, privileges, licenses and easements;
(i) To
borrow money and otherwise contract indebtedness, and to issue notes, bonds,
and other evidence of indebtedness, and to secure the payment thereof by
mortgage, pledge, or deed of trust of, or any other encumbrance upon, any or
all of its then owned or after-acquired real or personal property, assets,
franchises, or revenues: Provided, That any borrowing from, or
any encumbering of its properties as security in favor of, any lending sources
other than the
NEA shall require the prior
approval of the
NEA Administrator and his
certification that such is in furtherance of the purposes and is consistent
with the provisions of this Act, and that such borrowing and/or encumbering
will not diminish the security of, or of the ability of the cooperative to
repay, and then-outstanding indebtedness of the cooperative to the
NEA or any other lending source below the
level of such security and ability were such additional borrowing not being
undertaken;
(j) To
construct, maintain and operate electric transmission and distribution lines
along, upon, under and across publicly owned lands and public thoroughfares,
including, without limitation, all roads, highways, streets, alleys, bridges
and causeways: Provided, That such shall not prevent or unduly impair the primary
public uses to which such lands and thoroughfares are otherwise devoted;
(k) To
exercise the power of eminent domain in the manner provided by law for the
exercise of such power by other corporations constructing or operating electric
generating plants and electric transmission and distribution lines or systems;
(l) To
become a member of other cooperatives or corporations or to own stock therein,
provided such cooperatives or corporations are engaged in a business or
activities germane to or having a reasonable bearing on the business or
activities of the cooperative, its members, its directors, or its employees;
(m) To
conduct its business and exercise its powers within or without the province or
provinces in which it supplies service;
(n) To
adopt, amend and repeal by-laws;
(o) To
fix, maintain, implement and collect rates, fees, rents, tolls and other
charges and terms and conditions for service:
Provided, That by appropriate
rules and regulations the
NEA shall
require that such shall be in furtherance of the purposes and in conformity
with the provisions of this Act; and
(p)
To
do and perform any other acts and things, and to have and exercise any other
powers which may be necessary, convenient or appropriate to accomplish the
purpose for which the cooperative is organized.
SEC. 19. Name. – The name of a
cooperative shall include the words “Electric” and “Cooperative”, and the
abbreviation “Inc.”. The name of a
cooperative organized under this Act shall be distinct from the name of any
other cooperative already organized or converted under this Act. The foregoing requirement shall not apply to
any cooperative which becomes subject to this Act by complying with the
provisions of section 34.
SEC. 20. Incorporators. – Five or
more persons, including cooperatives, may organize a cooperative in the manner
hereinafter provided.
SEC. 21. Articles of
Incorporation. – The articles of
incorporation of a cooperative shall recite that they are executed pursuant to
this Act and shall state: (a) the name
of the cooperative; (b) the address of its principal office; (c) the names and
addresses of the incorporators; and (d) the names and addresses of its original
directors, who shall constitute the board until the first election of the board
by the members; and may contain any other provisions not inconsistent with this
Act that are deemed necessary or advisable for the conduct of its business. Such articles shall be signed by each
incorporator and acknowledged by at least two of the incorporators (or on their
behalf, if they are cooperatives).t shall not be necessary to recite in the
articles of incorporation the purpose for which the cooperative is organized or
any of its corporate powers.
SEC. 22. By-Laws. – Unless reserved
to the members in the articles of incorporation, the power to adopt and
thereafter to amend or repeal by-laws shall vest in and be exercised by the
board, the affirmative votes of a clear majority of all directors in office,
after due notice to all directors, being requisite for such purpose. The by-laws shall set forth the basic rights
and duties of members and directors and may contain any other provisions for the
regulation and management of the affairs of the cooperative not inconsistent
with its articles of incorporation or this Act.
SEC. 23. Members. – Each incorporator
of a cooperative shall be a member thereof, but no other person may become a
member thereof unless such other person agrees to use services furnished by the
cooperative when made available by it.
Membership in a cooperative shall not be transferable, except as
provided in the by-laws. The by-laws may
prescribe additional qualifications and limitations in respect of
membership.
The provisions of any law or regulation to the contrary notwithstanding, an
officer or employee of the government shall be eligible for membership in any
cooperative if he meets the qualifications therefore and he shall not be
precluded from being elected to or holding any position therein, or from
receiving such compensation or fee in relation thereto as may be authorized by
the by-laws: Provided, That elective officers of the government, except barrio
captains and councilors, shall be ineligible to become officers and/or
directors of any cooperative. For this
purpose, individual permission need not be obtained from the proper head of
office: Provided, however, That this authority shall not be construed as a
permit to the government officer or employee concerned to devote official time
to the affairs of the cooperative.
SEC. 24. Meetings of Members. – (a)
An annual meeting of the members of a cooperative shall be held at such time
and place as shall be provided in the by-laws.
(b)
Special
meetings of the members may be called by the President, by the board, by any
three directors or, unless a smaller number or percentage be prescribed in the
by-laws, by not less than 100 members or five per centum of all members, whichever shall be the lesser.
(c) Except
as otherwise provided in this Act and unless otherwise provided for in the
by-laws, written or printed notice stating the time and place of each meeting
of the members and, in the case of a special meeting, the purpose or purposes
for which the meeting is called, shall be given to each member, either
personally or by mail, not less than ten days nor more than twenty-five days
before the date of the meeting. If
mailed, such notice shall be deemed to be given when deposited in the
Philippine mail with postage prepaid, addressed to the member at his address as
it appears on the records of the cooperative.
(d) Unless
the by-laws prescribe the presence of a greater or lesser percentage or number
of the members for such purpose, a quorum for the transaction of business at
all meetings of the members of a cooperative having not more than 1,000 members
shall be five per centum of all members, present in person, and of a
cooperative having more than 1,000 members shall be five per centum of all
members or 100, whichever is lesser, present in person. If less than a quorum is present at any
meeting, a majority of those present in person may adjourn the meeting from
time to time without further notice.
(e) Each
member shall be entitled to one vote on each matter submitted to a vote at a
meeting of the members. Voting shall be
non-cumulative and in person, but, if the by-laws so provide, may also be by
mail or by proxy.
SEC. 25. Waiver of Notice. – Any
person entitled to notice of a meeting may waive such notice in writing either
before or after such meeting. If any
such person shall attend such meeting, such attendance shall constitute a
waiver of notice of such meeting, unless such person participates herein solely
to object to the transaction of any business because the meeting has not been
legally called or convened.
SEC. 26. Board of Directors. – (a)
The business of a cooperative shall be managed by a board of not less than five
directors, each of whom shall be a member of the cooperative or of another
which is a member thereof. The by-laws
shall prescribe the number of directors, their qualifications other than those
prescribed in this Act, the manner of holding meetings of the board and of
electing successors to directors who shall resign, die or otherwise be
incapable of acting. The by-laws may
also provide for the removal of directors from office and for the election of
their successors. Directors shall not
receive any salaries for their services as such and, except in emergencies,
shall not receive any salaries for their services to the cooperative in any
other capacity without the approval of the members. The by-laws may, however, prescribe a fixed
fee for attendance at each meeting of the board and may provide for
reimbursement of actual expenses of such attendance and of any other actual
expenses incurred in the due performance of a director’s duties.
(b) The
directors of a cooperative named in any articles of incorporation,
consolidation, merger or conversion shall hold office until the next annual
meeting of the members and until their successors are elected and qualify. At each annual meeting or, in case of failure
to hold the annual meeting as specified in the by-laws, at a special meeting
called for that purpose, the members shall elect directors to hold office until
the next annual meeting of the members, except as otherwise provided in this
Act. Each director shall hold office for
the term for which he is elected and until his successor is elected and
qualifies.
(c)
Instead
of electing all the directors annually, the by-laws may provide that each year
half of them or one third of them, or a number as near thereto as possible,
shall be elected on a staggered term basis to serve two-year terms or three-year
terms, as the case may be.
(d) A
majority of the board of directors in office shall constitute a quorum.
(e) The
board shall exercise all of the powers of a cooperative not conferred upon or
reserved to the members by this Act or by its articles of incorporation or
by-laws.
SEC. 27. Districts. – The by-laws may
provide for the division of the territory served or to be served by a
cooperative into two or more districts for any purpose, including, without
limitation, the nomination and election of directors. The by-laws shall prescribe the boundaries of
the districts, or the manner of establishing such boundaries, the manner of
changing such boundaries, and the manner in which such districts shall
function.
SEC. 28. Officers. – The officers of
a cooperative shall consist of a president, vice-president, secretary and
treasurer, who shall be elected annually by and from the board. When a person holding any such office ceases
to be a director, he shall ipso facto cease to hold such office. The offices of secretary and of treasurer may
be held by the same person. The board
may also elect or appoint such other officers, agents, or employees as it deems
necessary or advisable and shall prescribe their powers and duties. Any officer may be removed from office and
his successor elected in the manner prescribed in the by-laws.
SEC. 29. Amendment of Articles of Incorporation. – A cooperative may amend its articles of
incorporation by complying with the following requirements: Provided,
however, That a change of location of principal office may be effected in
the manner set forth in section 30. The
proposed amendment shall be presented to a meeting of the members, the notice
of which shall set forth or have attached thereto the proposed amendment or an
accurate summary thereof. If the
proposed amendment, with any changes, is approved by the affirmative vote of
not less than two-thirds of the total votes cast thereof at such meeting,
articles of amendment shall be executed and acknowledged on behalf of the
cooperative by its president or vice-president and its seal shall be affixed
thereto and attested by its secretary.
The articles of amendment shall recite that they are executed pursuant
to this Act and shall state: (1) the
name of the cooperative; (2) the address of its principal office; and (3) the
amendment to its articles of incorporation.
The president or vice-president executing such articles of amendment
shall make and annex thereto an affidavit stating that the provisions of this
section in respect of the amendment set forth in such articles were duly
complied with.
SEC. 30. Change of Location of Principal Office. – A cooperative may, upon authorization of
its board or members, change the location of its principal office by filing a
certificate reciting such change of principal office, executed and acknowledged
by its president or vice-president under its seal attested by its secretary, in
the place provided for in section 36.
SEC. 31. Consolidation. – Any two or more cooperatives (each of which
is hereinafter designated a “consolidating cooperative”) may consolidate into a
new cooperative (hereinafter designated the “new cooperative”), by complying
with the following requirements:
(a) The
proposition for the consolidation of the consolidating cooperatives into the
new cooperative and proposed articles of consolidation to give effect thereto
shall be submitted to a meeting of the members of each consolidating
cooperative, the notice of which shall have attached thereto a copy of the proposed
articles of consolidation or an accurate summary thereof.
(b) If
the proposed consolidation and the proposed articles of consolidation, with any
amendments, are approved by the affirmative vote of not less than two-thirds of
the total votes cast thereon by each consolidating cooperative voting thereon
at each such meeting, articles of consolidation in the form approved shall be
executed and acknowledged on behalf of each consolidating cooperative by its
president or vice-president and its seal shall be affixed thereto and attested
by its secretary. The articles of
consolidation shall recite that they are executed pursuant to this Act and
shall state: (1) the name of each
consolidating cooperative and the address of its principal office; (2) the name
of the new cooperative and the address of its principal office; (3) a statement
that each consolidating cooperative agrees to the consolidation; (4) the names
and addresses of the directors of the new cooperative; and (5) the terms and
conditions of the consolidation and the mode of carrying the same into effect,
including the manner in which members of the consolidating cooperatives may or
shall become members of the new cooperative; and may contain any other
provisions not inconsistent with this Act that are deemed necessary or
advisable for the conduct of the business of the new cooperative. The president or vice-president of each
consolidating cooperative executing such articles of consolidation shall make
and annex thereto an affidavit stating that the provisions of this section in
respect of such articles were duly complied with by such cooperative.
SEC. 32. Merger. – Any one or more
cooperatives (each of which is hereinafter designated a “merging cooperative”)
may merge into another cooperative (hereinafter designated the “surviving
cooperative”) by complying with the following requirements:
(a) The
proposition for the merger of the merging cooperatives into the surviving
cooperative and proposed articles of merger to give effect thereto shall be submitted
to a meeting of the members of each merging cooperative and of the surviving,
cooperative, the notice of which shall have attached thereto a copy of the
proposed articles of merger or an accurate summary thereof.
(b) If
the proposed merger and the proposed articles of merger, with any amendments,
are approved by the affirmative vote of not less than two-thirds of the total
votes cast thereon by each cooperative voting thereon at each such meeting,
articles of merger in the form approved shall be executed and acknowledged on
behalf of each such cooperative by its president or vice-president and its seal
affixed thereto and attested by its secretary.
The articles of merger shall recite that they are executed pursuant to
this Act and shall state; (1) the name of each merging cooperative and the
address of its principal office; (2) the name of the surviving cooperative and
the address of its principal office; (3) a statement that each merging
cooperative and the surviving cooperative agree to the merger; (4) the names
and addresses of the directors of the surviving cooperative; and (5) the terms
and conditions of the merger and the mode of carrying the same into effect,
including the manner in which members of the merging cooperatives may or shall
become members of the surviving cooperatives and may contain any other
provisions not inconsistent with this Act that are deemed necessary or
advisable for the conduct of the business of the surviving cooperative. The president or vice-president of each
cooperative executing such articles of merger shall make and annex thereto an
affidavit stating that the provisions of this section in respect of such
articles were duly complied with by such cooperative.
SEC. 33. Effect of Consolidation or Merger.
– (a) In the case of a consolidation, the existence of the consolidating
cooperative shall cease and the articles of consolidation shall be deemed to be
the articles of incorporation of the new cooperative; and in the case of a
merger, the separate existence of the merging cooperatives shall cease and the
articles of incorporation of the surviving cooperative shall be deemed to be
amended to the extent, if any, that changes therein are provided for in the
articles of merger;
(b) All
the rights, privileges, immunities and franchises and all property, real and
personal, including without limitation applications for membership, all debts
due on whatever account and all other choses in action of each of the
consolidating or merging cooperatives shall be deemed to be transferred to and
vested in the new or surviving cooperative without further act or deed;
(c) The
new or surviving cooperative shall be responsible and liable for all the
liabilities and obligations of each of the consolidating or merging
cooperatives, and any claim existing or action or proceeding pending by or
against any of the consolidating or merging cooperatives may be prosecuted as
if the consolidation or merger had not taken place, but the new or surviving
cooperatives shall be substituted in its place; and
(d) Neither
the rights of creditors nor any liens upon the property of any such
cooperatives shall be impaired by such consolidation or merger.
SEC. 34. Conversion of Existing Corporations. – Any corporation heretofore organized or
registered under the Philippine
Non-Agricultural Co-operative Act and supplying or having the corporate
power to supply electric energy may convert itself into a cooperative under
this Act by complying with the following requirements, and shall thereupon
become subject to this Act with the same effect as if originally organized
hereunder:
(a) The
proposition for the conversion of such corporation and proposed articles of
conversion to give effect thereto shall be submitted to a meeting of the
members or stockholders of such corporation, the notice of which shall have
attached thereto a copy of the proposed articles of conversion or an accurate
summary thereof.
(b) If
the proposition for the conversion and the proposed articles of conversion,
with any amendments, are approved by the affirmative vote of not less than
two-thirds of the total votes cast thereon by members at such meeting, and/or,
if such corporation is a stock corporation or has both members and voting
stockholders, by the affirmative vote of the holders of not less than two-thirds
of those shares of the capital stock of such corporation represented at such
meeting and voting thereon, articles of conversion in the form approved shall
be executed and acknowledged on behalf of such corporation by its president or
vice-president and its seal shall be affixed thereto and attested by its
secretary. The articles of conversion
shall recite that they are executed pursuant to this Act and shall state: (1) the name of the corporation and the
address of its principal office prior to its conversion into a cooperative; (2)
a statement that such corporation elects to become a cooperative, non-profit,
membership corporation subject to this Act; (3) its name as a cooperative; (4)
the address of the principal office of the cooperative; (5) the names and
addresses of the directors of the cooperative, and (6) the manner in which
members or stockholders of such corporation may or shall become members of the
cooperative; and may contain any other provisions not inconsistent with this
Act that are deemed necessary or advisable for the conduct of the business of
the cooperative. The president or
vice-president executing such articles of conversion shall make and annex
thereto an affidavit stating that the provisions of this section were duly
complied with in respect of such articles.
The articles of conversion shall be deemed to be the articles of
incorporation of the cooperative.
SEC. 35. Dissolution. – A cooperative
may be dissolved in the following manner:
The proposition to dissolve shall be submitted to the members of the
cooperative at any annual or special meeting, the notice of which shall set
forth such proposition. The members at
any such meeting shall approve, by the affirmative vote of not less than a
majority of all members of the cooperative, the proposition that the
cooperative be dissolved. Upon such
approval, a certificate of election to dissolve (hereinafter designated the
“certificate”) shall be executed and acknowledged on behalf of the cooperative
by its president or vice-president under its seal, attested by its secretary,
stating: (1) the name of the
cooperative; (2) the address of its principal office; and (3) that the members
of the cooperative have duly voted that the cooperative be dissolved. Also, an affidavit, made by its president or
vice-president executing the certificate, shall state that the statements in
the certificate are true. Upon the
filing of the certificate and affidavit as provided for in section 36, the cooperative
shall cease to carry on its business except to the extent necessary for the
winding up thereof, but its corporate existence shall continue until articles
of dissolution have been filed. The
board shall immediately cause notice of the dissolution proceedings to be
mailed to each known creditor of and claimant against the cooperative and to be
published once a week for two successive weeks in a newspaper of general
circulation in the territory in which the principal office of the cooperative
is located. The board shall wind up and
settle the affairs of the cooperative, collect sums owing to it, liquidate its
property and assets, pay and discharge its debts, obligations and liabilities,
other than those to patrons arising by reason of their patronage, and do all
other things required to wind up its business; and, after paying or discharging
or adequately providing for the payment or discharge of all its debts,
obligations and liabilities, other than those to patrons arising by reason of
their patronage, shall distribute any remaining sums and/or unliquidated
assets, first, to patrons for the pro rata return of all amounts standing to
their credit by reason of their patronage; second, to members for the pro rata
repayment of membership fees; and third, to patrons for the amounts of any
outstanding contributions in aid of construction they have made. Any sums and/or unliquidated assets then
remaining shall be distributed in such manner as provided in the cooperative’s
articles of incorporation or by-laws, which may provide for distribution of such
sums or assets on a patronage basis to persons who were members in one or more
prior years or for transfer thereof to a new cooperative to succeed the one
being dissolved. The board shall
thereupon authorize the execution of articles of dissolution, which shall be
executed and acknowledged on behalf of the cooperative by its president or
vice-president, and its seal shall be affixed thereto and attested by its
secretary. The articles of dissolution
shall recite that they are executed pursuant to this Act and shall state: (1) the name of the cooperative; (2) the
address of its principal office; (3) the date on which the certificate of
election to dissolve was filed; (4) that there are no actions or suits pending
against the cooperative; (5) that all debts, obligations and liabilities of the
cooperative have been paid and discharged or that provision to the extent
possible has been made therefore; and (6) that the provisions of this section
have been duly complied with. The
president or vice-president executing the articles of dissolution shall make
and annex thereto an affidavit stating that the statements made therein are
true.
SEC. 36. Filing of Articles and Certificates. – Articles of incorporation, amendment,
consolidation, merger, conversion, or dissolution and certificates of changes
in the location of principal offices and of elections to dissolve, when
executed and acknowledged and accompanied by such affidavits as may be required
by applicable provisions of this Act, shall be presented to the Administrator
for filing in the records of his office.
If he shall find that such conform to the requirements of this Act, he
shall so certify and shall file such in the records of his office. Upon such certification and filing, the
incorporation, amendment, consolidation, merger, conversion, dissolution or
certificate provided for therein shall be in effect.
SEC. 37. Non-profit, Non-discriminatory, Area Coverage Operation and Service. – A cooperative shall be operated on a
non-profit basis for the mutual benefit of its members and patrons; shall, as
to rates and services make or grant no unreasonable preference or advantage to
any member or patron nor subject any member or patron to any unreasonable
prejudice or disadvantage; shall not establish or maintain any unreasonable
difference as to rates or services either as between localities or as between
classes of service; shall not give, pay, or receive any rebate or bonus,
directly or indirectly, or mislead its members in any manner as to rates charged
for its services; and shall furnish service on an area coverage basis: Provided,
That, for any extension of service which if treated on the basis of standard
terms and conditions is so costly as to jeopardize the financial feasibility of
the cooperative’s entire operation, the cooperative may require such
contribution in aid of construction, such facilities extension deposit, such
guarantee of minimum usage for a minimum term, or such other reasonable
commitment on the part of the person to be served as may be necessary and
appropriate to remove such jeopardy, but no difference in standard rates for
use of service shall be imposed for such purpose.
The by-laws of a cooperative or its contracts with members and patrons shall
contain such reasonable terms and conditions respecting membership, the
furnishing of service and the disposition of revenues and receipts as may be
necessary and appropriate to establish and maintain its non-profit, cooperative
character and to assure compliance with this section. No bona
fide applicant for membership or non-member patronage who is able and
willing to satisfy and abide by all such terms and conditions shall be denied
arbitrarily, capriciously or without good cause.
SEC. 38. Disposition of Property. –
(a) The board of a cooperative shall have full power and authority, without
authorization by the members thereof, to authorize the execution and delivery
of a mortgage or a deed of trust, on the pledging or encumbering otherwise, of
any or all of the property, assets, rights, privileges, licenses, franchises
and permits of the cooperative, whether acquired or to be acquired, and
wherever situated, as well as the revenues therefrom, all upon such terms and
conditions as the board shall determine, to secure any borrowing by or
indebtedness of the cooperative.
(b) A
cooperative may not otherwise sell, lease or except by consolidation or merger,
otherwise dispose of its property (other than merchandise and property which
shall represent not in excess of ten per centum of the value of the
cooperative’s total assets, or which in the judgment of the board are not
necessary or useful in operating the cooperative) unless such sale, lease or,
except in the case of consolidation or merger, other disposition is (1)
authorized by the affirmative vote of not less than a majority of all the
members of the cooperative and (2) consented to by the
NEA and any other lending source which then
holds a lien on any of the cooperative’s properties.
SEC. 39. Non-liability of Members for Debts of Cooperative. – No member shall be liable or responsible
for any debts of the cooperative and the property of the members shall not be
subject to execution therefore.
SEC. 40. Limitation of Actions. – No
action or suit may be brought against a cooperative, or against any agent,
servant or employee thereof, by reason of the maintenance of electric
transmission or distribution lines, or any related equipment, facilities or
machinery, on any real property after the expiration of a period of five years
of continuous maintenance of such lines or related equipment facilities or
machinery.
SEC. 41. Assistance to Cooperatives; Exemption from Taxes, Imposts, Duties,
Fees; Assistance from the
National Power
Corporation; Protection of Franchise.
– Pursuant to the national policy declared in section 2, the Congress
hereby finds and declares that the following assistance to cooperatives is
necessary and appropriate:
(a) Provided
that it operates in conformity with the purposes and provisions of this Act, a
cooperative (1) shall be permanently exempt from paying income taxes, and (2)
for a period ending on December 31 of the thirtieth full calendar year after
the date of a cooperative’s organization or conversion hereunder, or until it
shall become completely free of indebtedness incurred by borrowing, whichever
first occurs, shall be exempt from the payment (A) of all National Government,
local government and municipal taxes and fees, including any franchise, filing,
recordation, license or permit fees or taxes and any fees, charges or costs
involved in any court or administrative proceeding in which it may be a party,
and (B) of all duties or imposts on foreign goods acquired for its operations,
the period of such exemption for a new cooperative formed by consolidation, as
provided for in section 31, to begin from as of the date of the beginning of
such period for the constituent consolidating cooperative which was most
recently organized or converted under this Act:
Provided, That the Board of
Administrators shall, after consultation with the Bureau of Internal Revenue,
promulgate rules and regulations provided for in this Act.
(b) The
National Power Corporation shall,
except with respect to the National Government, give preference in the sale of
its power and energy to cooperatives, and shall otherwise provide the maximum
support of and assistance to cooperatives of which it is capable, including
assistance in developing dependable and reliable arrangements for their
supplies of bulk power, either from itself or from other sources. In pursuance of the foregoing policy, the
National Power Corporation shall not,
except upon prior written agreement approved by the cooperative’s board,
compete in the sale of power and energy which, without regard to the location
of the point of delivery thereof, will be utilized and consumed within any area
franchise to a cooperative.
(c) No
franchise for service shall be granted to any other person within any area or
portion for which a cooperative holds a franchise unless and except to the
extent that (1) the cooperative’s board consents thereto by resolution duly
adopted or (2) the Public Service Commission determines that the cooperative is
unable within a reasonable time, or is unwilling, to supply service therein in
accordance with the provisions of section 37.
SEC. 42. Regulation by the Public Service Commission and
Securities and Exchange Commission. – Pursuant to the national policy declaration
in section 2, the Congress hereby establishes that:
(a) To
the extent that the Public Service Commission now is or may hereafter be
authorized and empowered to do so with respect to other electric public
services, the Commission is hereby authorized and empowered:
(1) To
grant, condition, restrict or cancel a cooperative’s franchise, or to determine
whether a cooperative is qualified to receive a franchise;
(2) To
require a cooperative to extend or improve service upon the Commission’s
determination that such should be done in furtherance of the public convenience
and necessity and that such may reasonably be done consistently with the
purposes and provisions of this Act;
(3) To
require a cooperative to cease any discriminatory practice which the Commission
finds to be in effect in violation of section 37; and, in connection with such
authority, to require a cooperative to file with the Commission for information
purposes, and to make accessible to any person upon request therefore, copies
of all rates, charges, contract forms, fee or deposit schedules, by-laws, rules
and regulations; and
(4) To require a cooperative to interconnect its facilities with, and through such interconnection to sell or exchange electric energy to or with, other electric public services or the National Power Corporation if the National Power Corporation so requests or consents thereto:
(5) Other than an order to require information filings, as provided in (3) of this
subsection, the Commission shall issue no order in the exercise of the
foregoing powers without affording the cooperative and any other interested
person who requests it an opportunity to be heard. Except as provided in this subsection, a
cooperative shall be exempt from regulation or control by the Public Service
Commission.
(b) The
provisions of the Securities Act
shall not apply to any note, bond or other evidence of indebtedness issued by
any cooperative or to any mortgage, deed of trust or other instrument executed
to secure the same. The provisions of
said Act shall not apply to the issuance of membership certificates or any
other evidence of member or patron interest by a cooperative.
CHAPTER IV
TRANSITORY PROVISIONS
SEC. 43. The Electrification Administration.
–
Republic Act Numbered Twenty seven hundred
seventeen is hereby repealed and the
Electrification
Administration created under it is hereby dissolved in the manner
hereinafter provided:
(a) The
incumbent Administrator and Two Deputy Administrators of the Electrification
Administration shall continue to serve the balance of the unserved portion of
their respective terms of office;
(b) Any
reference to the
Electrification Administration
in any existing law or in any executive order, administrative order or
proclamation of the President shall, with respect to any duty or function
assumed by the
NEA created in this Act, be
deemed hereafter to have reference to the
NEA;
(c) The
properties, assets, rights, chooses in action, obligations, liabilities,
records and contracts of the
Electrification
Administration are hereby transferred to, and are vested in, and assumed by
the
NEA;
(d) The
personnel of the
Electrification Administration
who are occupying civil service positions shall be absorbed and transferred to
the latter without demotion in rank nor reduction in salary: Provided,
That those employees who shall be separated from the service and those not absorbed
by the
NEA shall be given by the said
office at least one month gratuity for every year of service and, or other
benefits in accordance with existing laws and regulations chargeable to the
corresponding fund and, or any available fund under paragraph (a), section
seven of this Act; and
(e) All
on-going projects and/or approved loans under the
Electrification Administration shall be
reviewed and, insofar as found to be economically feasible in accordance with
sound management engineering and technological standards, shall be continued
and completed on a priority basis: Provided, that steps shall be taken to
place them on an area coverage basis.
SEC. 44. Separability of Provisions.
– If any provisions of this Act, or the application of such provision to
any person or circumstance, is declared invalid, the remainder of the Act or
the application of such provision to other persons or circumstances shall not
be affected by such declaration.
SEC. 45. Effect on Other Acts. – All
Acts or parts of Acts inconsistent herewith are repealed or modified
accordingly.
SEC. 46. Effectivity. – This Act
shall take effect upon its approval.
Approved, July 28, 1969
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