AMENDING CERTAIN SECTIONS OF REPUBLIC ACT NUMBERED SIXTY-THREE HUNDRED NINETY-FIVE, ENTITLED “AN ACT REVISING THE CHARTER OF THE NATIONAL POWER CORPORATION”

WHEREAS, under Republic Act No. 6395, it has been declared
that: (1) the comprehensive development, utilization and conservation of
Philippine water resources for all beneficial uses, including power
generation, and (2) the total electrification of the Philippines through
the development of power from all sources to meet the needs of
industrial development and dispersal and the needs of rural
electrification are primary objectives of the nation which shall be
pursued coordinately and supported by all instrumentalities and agencies
of the Government, including its financial institutions;

WHEREAS, under Presidential Decree No. 40, dated November 7,
1972, certain basic policies for the attainment of the objectives for
the speedy electrification of the country, more particularly the rural
areas, have been established;

WHEREAS, under the basic policies for the electric power
industry established under Presidential Decree No. 40, the National
Power Corporation (NPC) is also given the responsibility for the setting
up of transmission line grids and the construction of associated
generation facilities in Luzon, Mindanao, and major islands of the
country, including the Visayas, and to own and operate as a single
integrated system all generating facilities supplying electric power to
the entire area embraced by any grid set up by the NPC;

WHEREAS, the additional responsibilities and expanded
activities of NPC under Presidential Decree No. 40 will more than treble
the capital requirements needed for the expansion of generation and
transmission facilities, in addition to the funds necessary for the
acquisition of existing generation facilities in areas embraced by grids
set up by NPC; and

WHEREAS, in order to attain expeditiously the declared
objectives of total electrification of the country and to implement the
basic policies established under Presidential Decree No. 40, certain
sections of Republic Act Numbered Sixty-Three Hundred Ninety-Five should
be amended;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers in me vested by the Constitution as
Commander-in-Chief of all the Armed Forces of the Philippines, and
pursuant to Proclamation No. 1081, dated September 21, 1972, and General
Order No. 1, dated September 22, 1972, do hereby amend certain sections
or provisions of the Charter of the National Power Corporation,
Republic Act Numbered Sixty-Three Hundred Ninety-Five, to wit:

SECTION 1. Section 3(g) of the Charter of the National Power
Corporation, Republic Act Numbered Sixty-Three Hundred Ninety-Five, is
hereby amended to read as follows:

“(g) To construct, operate and maintain power plants, auxiliary
plants, dams, reservoirs, pipes, mains, transmission lines, power
stations and substations, and other works for the purpose of developing
hydraulic power from any river, creek, lake, spring and waterfall in the
Philippines and supplying such power to the inhabitants thereof; to
acquire, construct, install, maintain, operate, and improve gas, oil or
steam engines, and/or other prime movers, generators and machinery in
plants and/or auxiliary plants for the production of electric power; to
establish, develop, operate, maintain and administer power and lighting
system for the transmission and utilization of its power generation; to
sell electric power in bulk to (1) industrial enterprises, (2) city,
municipal or provincial systems and other government institutions, (3)
electric cooperatives, (4) franchise holders, and (5) real estate
subdivisions: Provided, That the sale of power in bulk to
industrial enterprises and real estate subdivisions may be undertaken by
the Corporation when the power requirement of such enterprises or real
estate subdivisions is not less than 100 kilowatts, when in the judgment
of the Board of Power and Waterworks the cooperative supplying electric
power or franchise holder of the area is not in a position by itself,
or fails or refuses to adequately supply such power requirement, unless
the electric cooperative or franchise holder consents thereto: Provided,
further, That no restriction shall apply to sale of power in bulk
to enterprises registered with the Board of Investments, wherein the
cost of power, based on the Corporation’s then prevail-tariffs, is more
than ten percent (10%) of the total production cost of the goods or
commodities produced: Provided, finally, That the Corporation
shall continue to sell electricity to industrial enterprises under
existing contracts, and provide for the collection of charges for any
service rendered.”

SEC. 2. Section 3(i) of the Charter of the National Power
Corporation, Republic Act Numbered Sixty-Three Hundred Ninety-Five, is
hereby amended to read as follows:

“(i) To construct works across, or otherwise, any stream,
watercourse, canal, ditch, flume, street, avenue, highway or railway of
private and public ownership, as the location of said works may require:
Provided, That said works be constructed in such a manner as
not to endanger life or property: And provided, further, That
the stream, watercourse, canal, ditch, flume, street, avenue, highway or
railway so crossed or intersected be restored as near as possible to
their former state, or in a manner not to impair unnecessarily their
usefulness. Every person or entity whose right of way or properly is
lawfully crossed or intersected by said works shall not obstruct any
such crossings or intersection and shall grant the Corporation or its
representative, the proper authority for the execution of such work. The
Corporation is hereby given the right of way to locate, construct, and
maintain such works over and throughout the lands owned by the Republic
of the Philippines or any of its branches and political subdivisions.
The Corporation or its representative may also enter upon private
property in the lawful performance or prosecution of its business or
purposes, including the construction of the transmission lines thereon: Provided,
That the owner of such private property shall be compensated as
follows:

“(a) In case only an easement of right of way for a
transmission line is acquired, then only a nominal easement fee shall be
paid which shall be in an amount equivalent to not more that ten per
cent of the value of the land or portion thereof required for the right
of way of the line, based on the tax declaration that is valid and
effective at the time of the filing of the complaint for eminent domain
or actual entry into the property by the Corporation, whichever is
earlier;
“(b) In case the land shall be acquired by purchase, the fair market
value thereof, which shall he the value of the land based on the tax
declaration that is valid and effective at the time of the filing of the
complaint for eminent domain, or the taking of said land by the
Corporation, whichever is earlier: and
“(c) In addition, the owner shall be compensated for the improvements,
such as houses, buildings, structures and/or agricultural crops and the
like, actually damaged during the construction, operation, and
maintenance of such works on the land, in amounts based on the value of
such improvements appearing on the tax declaration that is valid and
effective and/or the prevailing valuation of such agricultural crops and
the like made by the appropriate appraisal body authorized by law at
the time of filing of the complaint for eminent domain or taking of said
improvements by the Corporation, whichever is earlier: Provided,
further. That any action for compensation and/or damages, under
(a), (b), and (c) above, is filed within five years after the rights of
way, transmission lines, substations, plants or other facilities shall
have been established: Provided, finally, That after the said
period no suit shall be brought to question the said rights of way,
transmission lines, substations, plants or other facilities nor the
amounts of compensation and/or damages involved.” SEC. 3. Section
3, paragraphs (1), (m) and (o) of the Charter of the National Power
Corporation, Republic Act Numbered Sixty-Three Hundred Ninety-Five, is
hereby amended to read as follows:

“(l) To exercise such powers and do such things as may be
reasonably necessary to carry out the business and purposes for which it
was organized, or which, from time to time, may be declared by the
Board to be necessary, useful, incidental or auxiliary to accomplish the
said purpose, including the establishment of subsidiaries;
“(m) To cooperate with, and to coordinate its operations with those of
the Power Development Council, the National Electrification
Administration and public service entities;

x x x

“(o) In the prosecution and maintenance of its projects and plants, the
Corporation shall adopt measures to prevent environmental pollution and
enhance the conservation, development and maximum utilization of natural
resources, including the improvements and beautification of its
reservoirs and other areas to promote tourism and related purposes, and
to provide for the necessary corporate funds therefor.”

SEC. 4. Section 4, fourth paragraph of the Charter of the
National Power Corporation, Republic Act Numbered Sixty-Three Hundred
Ninety-Five, is hereby amended to read as follows:

“The Corporation shall charge in any interconnected system a
uniform schedule of rates for all its customers that fall within the
same classification. Towards this end, the Corporation shall prescribe a
standard form of contract and appropriate rules and regulations for the
sale of electricity, which shall be uniformly applied and become
effective on all power customers after they are duly notified or fifteen
days after their publication in newspapers of general circulation. All
subsisting power contracts are hereby considered revised to give
immediate effectivity to this provision.”

SEC. 5. Section 5 of the Charier of the National Power
Corporation, Republic Act Numbered Sixty-Three Hundred Ninety-Five, is
hereby amended to read as follows:

“SEC. 5. Capital Stock of the Corporation. — The
authorized capital stock of the Corporation is two billion pesos divided
into twenty million shares having a par value of one hundred pesos
each, which shares are not to be transferred, negotiated, pledged,
mortgaged or otherwise given as security for the payment of any
obligation. The sum of three hundred million pesos of said capital stock
has been subscribed and paid wholly by the Government of the
Philippines in accordance with the provisions of Republic Act Numbered
Four Thousand Eight Hundred Ninety-Seven.

“The remaining one billion seven hundred million pesos shall be
subscribed by the Government of the Philippines and shall be paid as
follows:

“(a) The sum of twenty-nine million two hundred sixty-seven
thousand six hundred pesos representing outstanding cost and interest of
reparations goods procured by the Corporation pursuant to the
provisions of Republic Act Numbered Seventeen Hundred Eighty-Nine, shall
be additional paid-in subscription of the Government of the Philippines
for two hundred ninety-two thousand six hundred seventy-six shares of
stock of said capital stock;

“(b) The balance of said subscription shall be paid by the
conversion into equity capital of the existing bonded indebtedness, cost
of reparations goods that may be allocated to the Corporation in the
future, and surpluses of the Corporation, and in the absence thereof,
from bond issue upon request of the Corporation for specific projects
duly approved from time to time by the President of the Philippines.”

SEC. 6. Section 6, sixth paragraph of the Charter of the
National Power Corporation, Republic Act Numbered Sixty-Three Hundred
Ninety-Five, is hereby amended to read as follows:

“The members of said Board shall receive a per diem of not to
exceed three hundred pesos for each regular meeting of the Board and one
hundred pesos for each special meeting actually attended by them: Provided,
That such per diems shall not exceed one thousand five hundred pesos
during any month for each member.”

SEC. 7. Section 6, paragraphs (b), (c), (d) and (e) of the
Charter of the National Power Corporation, Republic Act Numbered
Sixty-Three Hundred Ninety-Five, is hereby amended to read as follows:

“(b) To adopt an annual and supplemental budget of receipts and
expenditures of the Corporation according to its requirements, which may
include financial assistance of not more than ten thousand pesos each
to municipalities that are contiguous to watersheds, lakes or natural
sources which are proven to have suffered material damages due to the
harnessing of hydroelectric power being utilized by the Corporation,
subject to the approval of the Office of the President: Provided,
That copies of the budgets of receipts and expenditures herein referred
to shall be submitted to the National Assembly within fifteen (15) days
from the transmission thereof to the Office of the President;
“(c) Subject to the provisions of existing laws and regulations and upon
the recommendation of the General Manager, to organize, reorganize in a
manner other than what is provided for under this Act and Section 3 of
Republic Act No. 4177 and determine the Corporation’s staffing pattern
and the number of personnel, to fix their salaries and to define their
powers and duties subject to approval of higher authorities;
“(d) To appoint and fix the compensation of the General Manager,
Assistant General Manager, regional managers and department chiefs
subject to the approval of the President of the Philippines;
“(e) For cause to suspend or remove by a majority vote of all members,
with the approval of the President of the Philippines, the General
Manager, Assistant General Manager, regional managers and department
chiefs.”

SEC. 8. Section 8 (a), last paragraph of the Charter of the
National Power Corporation, Republic Act Numbered Sixty-Three Hundred
Ninety-Five, is hereby amended to read as follows:

“The total principal indebtedness of the Corporation under this
subsection, exclusive of interest, shall not at any time exceed three
billion pesos.”

SEC. 9. Section 8 (b) of the Charter of the National Power
Corporation, Republic Act Numbered Sixty-Three Hundred Ninety-Five, is
hereby amended to read as follows:

“(b) Foreign Loans. — The Corporation is hereby
authorized to contract loans, credits, any convertible foreign currency
or capital goods, and indebtedness from time to time from foreign
governments, or any international financial institutions or fund
sources, or to issue bonds, the total outstanding amount of which,
exclusive of interests, shall not exceed one billion United States
dollars or the equivalent thereof in other currencies, on such terms and
conditions as it shall deem appropriate for the accomplishment of its
purposes and to enter into and execute agreements and other documents
specifying such terms and conditions.

“The President of the Philippines, by himself, or through his
duly authorized representative, is hereby authorized to negotiate and
contract with foreign governments or any international financial
institutions or fund sources in the name and on behalf of the
Corporation, one or several loans, for the purpose of assisting in the
reconstruction, or promoting the development of the economy of the
country.

“The President of the Philippines, by himself, or through his
duly authorized representative, is hereby further authorized to
guarantee, absolutely and unconditionally, as primary obligor and not as
surety merely, in the name and on behalf of the Republic of the
Philippines, the payment of the loans, credits, indebtedness and bonds
issued up to the amount herein authorized, which shall be over and above
the amount which the President of the Philippines is authorized to
guarantee under Republic Act Numbered Sixty-One Hundred Forty-Two, as
amended, as well as the performance of all or any of the obligations
undertaken by the Corporation in the territory of the Republic of the
Philippines pursuant to loan agreements entered into with foreign
governments or any international financial institutions or fund sources.

“The loans, credits and indebtedness contracted under this
subsection and the payment of the principal, interest and other charges
thereon, as well as the importation of machinery, equipment, materials,
supplies and services, by the Corporation, paid from the proceeds of any
loan, credit or indebtedness incurred under this Act, shall also be
exempt from all direct and indirect taxes, fees, imposts, other charges
and restrictions, including import restrictions previously and presently
imposed, and to be imposed by the Republic of the Philippines, or any
of its agencies and political subdivisions.”

SEC. 10. Section 13, paragraphs (a) and (d), of the Charter
of the National Power Corporation, Republic Act Numbered Sixty-Three
Hundred Ninety-Five, is hereby amended to read as follows:

“(a) From the payment of all taxes, duties, fees, imposts,
charges and restrictions to the Republic of the Philippines, its
provinces, cities, municipalities and other government agencies and
instrumentalities, including the taxes, duties, fees, imposts and other
charges provided for under the Tariff and Customs Code of the
Philippines, Republic Act Numbered Nineteen Hundred Thirty-Seven, as
amended, and as further amended by Presidential Decree No. 34, dated
October 27, 1972, and Presidential Decree No. 69, dated November 24,
1972, and costs and service fees in any court or administrative
proceedings in which it may be a party;

x x x

“(d) From all taxes, duties, fees, imposts, and all other
charges imposed directly or indirectly by the Republic of the
Philippines, its provinces, cities, municipalities and other government
agencies and instrumentalities, on all petroleum products used by the
Corporation in the generation, transmission, utilization and sale of
electric power.”

SEC. 11. A new section shall be inserted to be known as
Section 15-A of the Charter of the National Power Corporation, Republic
Act Numbered Sixty-Three Hundred Ninety-Five, which provides as follows:

“SEC. 15-A. The Corporation shall be under the direct
supervision of the Office of the President and all legal matters shall
be handled by the Chief Legal Counsel of the Corporation: Provided,
That the Solicitor General’s Office shall have supervision in the
handling of court cases only of the Corporation.

“Considering that the operation of the business of the
Corporation affects public convenience and welfare, all industrial
disputes in the Corporation shall be settled by compulsory arbitration.”

SEC. 12. This Decree is hereby made part of the law of the
land and provisions of existing laws, executive and administrative
orders, or parts thereof, in conflict with this Decree are hereby
modified and repealed.

SEC. 13. This Decree shall take effect immediately.

Done in the City of Manila, this 22nd day of January, in the
year of Our Lord, nineteen hundred and seventy-four.