midterm exam r.a. 10175, 9136 and 10354
TRANSCRIPT
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Republic of the Philippines
Congress of the Philippines
Metro Manila
Fifteenth Congress
Second Regular Session
Begun and held in Metro Manila, on Monday the Twenty-fifth day of July two thousand eleen!
[ Republic Act No. 10175 ]
AN ACT DEFINING CYBERCRIME, R!"IDING F!R T#E RE"ENTI!N, IN"E$TIGATI!N,
$%RE$$I!N AND T#E IM!$ITI!N !F ENA&TIE$ T#EREF!R AND F!R !T#ER
%R!$E$
Be it enacted by the Senate and "ouse of Representaties of the Philippines in Congress
asse#bled$
C#ATER I
RE&IMINARY R!"I$I!N$
S%CT&'( )! Title! * This +ct shall be nown as the Cybercri#e Preention +ct of ./).0!
S%C! .! 1eclaration of Policy! * The State recogni2es the ital role of infor#ation and
co##unications industries such as content production, teleco##unications, broadcasting
electronic co##erce, and data processing, in the nation3s oerall social and econo#ic
deelop#ent! The State also recogni2es the i#portance of proiding an eniron#ent conducie
to the deelop#ent, acceleration, and rational application and e4ploitation of infor#ation and
co##unications technology 5&CT6 to attain free, easy, and intelligible access to e4change and7or
deliery of infor#ation8 and the need to protect and safeguard the integrity of co#puter,
co#puter and co##unications syste#s, networs, and databases, and the confidentiality,
integrity, and aailability of infor#ation and data stored therein, fro# all for#s of #isuse, abuse,
and illegal access by #aing punishable under the law such conduct or conducts! &n this light,
the State shall adopt sufficient powers to effectiely preent and co#bat such offenses by
facilitating their detection, inestigation, and prosecution at both the do#estic and international
leels, and by proiding arrange#ents for fast and reliable international cooperation!
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S%C! 9! 1efinition of Ter#s! * For purposes of this +ct, the following ter#s are hereby defined
as follows$
5a6 +ccess refers to the instruction, co##unication with, storing data in, retrieing data fro#, or
otherwise #aing use of any resources of a co#puter syste# or co##unication networ!
5b6 +lteration refers to the #odification or change, in for# or substance, of an e4isting co#puter
data or progra#!
5c6 Co##unication refers to the trans#ission of infor#ation through &CT #edia, including oice,
ideo and other for#s of data!
5d6 Co#puter refers to an electronic, #agnetic, optical, electroche#ical, or other data
processing or co##unications deice, or grouping of such deices, capable of perfor#ing
logical, arith#etic, routing, or storage functions and which includes any storage facility or
e:uip#ent or co##unications facility or e:uip#ent directly related to or operating in con;unction
with such deice! &t coers any type of co#puter deice including deices with data processing
capabilities lie #obile phones, s#art phones, co#puter networs and other deices connectedto the internet!
5e6 Co#puter data refers to any representation of facts, infor#ation, or concepts in a for#
suitable for processing in a co#puter syste# including a progra# suitable to cause a co#puter
syste# to perfor# a function and includes electronic docu#ents and7or electronic data
#essages whether stored in local co#puter syste#s or online!
5f6 Co#puter progra# refers to a set of instructions e4ecuted by the co#puter to achiee
intended results!
5g6 Co#puter syste# refers to any deice or group of interconnected or related deices, one or #ore of which, pursuant to a progra#, perfor#s auto#ated processing of data! &t coers any
type of deice with data processing capabilities including, but not li#ited to, co#puters and
#obile phones! The deice consisting of hardware and software #ay include input, output and
storage co#ponents which #ay stand alone or be connected in a networ or other si#ilar
deices! &t also includes co#puter data storage deices or #edia!
5h6
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56 Cybersecurity refers to the collection of tools, policies, ris #anage#ent approaches,
actions, training, best practices, assurance and technologies that can be used to protect the
cyber eniron#ent and organi2ation and user3s assets!
5l6 1atabase refers to a representation of infor#ation, nowledge, facts, concepts, or
instructions which are being prepared, processed or stored or hae been prepared, processed
or stored in a for#ali2ed #anner and which are intended for use in a co#puter syste#!
5#6 &nterception refers to listening to, recording, #onitoring or sureillance of the content of
co##unications, including procuring of the content of data, either directly, through access and
use of a co#puter syste# or indirectly, through the use of electronic eaesdropping or tapping
deices, at the sa#e ti#e that the co##unication is occurring!
5n6 Serice proider refers to$
5)6 +ny public or priate entity that proides to users of its serice the ability to co##unicate by
#eans of a co#puter syste#8 and
5.6 +ny other entity that processes or stores co#puter data on behalf of such co##unication
serice or users of such serice!
5o6 Subscriber3s infor#ation refers to any infor#ation contained in the for# of co#puter data or
any other for# that is held by a serice proider, relating to subscribers of its serices other than
traffic or content data and by which identity can be established$
5)6 The type of co##unication serice used, the technical proisions taen thereto and the
period of serice8
5.6 The subscriber3s identity, postal or geographic address, telephone and other access
nu#bers, any assigned networ address, billing and pay#ent infor#ation, aailable on the basis
of the serice agree#ent or arrange#ent8 and
596 +ny other aailable infor#ation on the site of the installation of co##unication e:uip#ent,
aailable on the basis of the serice agree#ent or arrange#ent!
5p6 Traffic data or non-content data refers to any co#puter data other than the content of the
co##unication including, but not li#ited to, the co##unication3s origin, destination, route, ti#e,
date, si2e, duration, or type of underlying serice!
C#ATER II
%NI$#AB&E ACT$
S%C! =! Cybercri#e 'ffenses! * The following acts constitute the offense of cybercri#e
punishable under this +ct$
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5a6 'ffenses against the confidentiality, integrity and aailability of co#puter data and syste#s$
5)6 &llegal +ccess! > The access to the whole or any part of a co#puter syste# without right!
5.6 &llegal &nterception! > The interception #ade by technical #eans without right of any non-
public trans#ission of co#puter data to, fro#, or within a co#puter syste# including
electro#agnetic e#issions fro# a co#puter syste# carrying such co#puter data!
596 1ata &nterference! * The intentional or recless alteration, da#aging, deletion or
deterioration of co#puter data, electronic docu#ent, or electronic data #essage, without right,
including the introduction or trans#ission of iruses!
5=6 Syste# &nterference! * The intentional alteration or recless hindering or interference with
the functioning of a co#puter or co#puter networ by inputting, trans#itting, da#aging,
deleting, deteriorating, altering or suppressing co#puter data or progra#, electronic docu#ent,
or electronic data #essage, without right or authority, including the introduction or trans#ission
of iruses!
5?6 Misuse of 1eices!
5i6 The use, production, sale, procure#ent, i#portation, distribution, or otherwise #aing
aailable, without right, of$
5aa6 + deice, including a co#puter progra#, designed or adapted pri#arily for the purpose of
co##itting any of the offenses under this +ct8 or
5bb6 + co#puter password, access code, or si#ilar data by which the whole or any part of a
co#puter syste# is capable of being accessed with intent that it be used for the purpose of
co##itting any of the offenses under this +ct!
5ii6 The possession of an ite# referred to in paragraphs ?5i65aa6 or 5bb6 aboe with intent to use
said deices for the purpose of co##itting any of the offenses under this section!
5@6 Cyber-s:uatting! > The ac:uisition of a do#ain na#e oer the internet in bad faith to profit,
#islead, destroy reputation, and deprie others fro# registering the sa#e, if such a do#ain
na#e is$
5i6 Si#ilar, identical, or confusingly si#ilar to an e4isting trade#ar registered with the
appropriate goern#ent agency at the ti#e of the do#ain na#e registration$
5ii6 &dentical or in any way si#ilar with the na#e of a person other than the registrant, in case of
a personal na#e8 and
5iii6 +c:uired without right or with intellectual property interests in it!
5b6 Co#puter-related 'ffenses$
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5)6 Co#puter-related Forgery! *
5i6 The input, alteration, or deletion of any co#puter data without right resulting in inauthentic
data with the intent that it be considered or acted upon for legal purposes as if it were authentic,
regardless whether or not the data is directly readable and intelligible8 or
5ii6 The act of nowingly using co#puter data which is the product of co#puter-related forgery
as defined herein, for the purpose of perpetuating a fraudulent or dishonest design!
5.6 Co#puter-related Fraud! * The unauthori2ed input, alteration, or deletion of co#puter data
or progra# or interference in the functioning of a co#puter syste#, causing da#age thereby
with fraudulent intent$ Proided, That if no da#age has yet been caused, the penalty i#posable
shall be one 5)6 degree lower!
596 Co#puter-related &dentity Theft! > The intentional ac:uisition, use, #isuse, transfer,
possession, alteration or deletion of identifying infor#ation belonging to another, whether natural
or ;uridical, without right$ Proided, That if no da#age has yet been caused, the penalty
i#posable shall be one 5)6 degree lower!
5c6 Content-related 'ffenses$
5)6 Cyberse4! * The willful engage#ent, #aintenance, control, or operation, directly or
indirectly, of any lasciious e4hibition of se4ual organs or se4ual actiity, with the aid of a
co#puter syste#, for faor or consideration!
5.6 Child Pornography! * The unlawful or prohibited acts defined and punishable by Republic
+ct (o! A? or the +nti-Child Pornography +ct of .//A, co##itted through a co#puter syste#$
Proided, That the penalty to be i#posed shall be 5)6 one degree higher than that proided for
in Republic +ct (o! A?!
596 nsolicited Co##ercial Co##unications! * The trans#ission of co##ercial electronic
co##unication with the use of co#puter syste# which see to adertise, sell, or offer for sale
products and serices are prohibited unless$
5i6 There is prior affir#atie consent fro# the recipient8 or
5ii6 The pri#ary intent of the co##unication is for serice and7or ad#inistratie announce#ents
fro# the sender to its e4isting users, subscribers or custo#ers8 or
5iii6 The following conditions are present$
5aa6 The co##ercial electronic co##unication contains a si#ple, alid, and reliable way for the
recipient to re;ect! receipt of further co##ercial electronic #essages 5opt-out6 fro# the sa#e
source8
5bb6 The co##ercial electronic co##unication does not purposely disguise the source of the
electronic #essage8 and
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5cc6 The co##ercial electronic co##unication does not purposely include #isleading
infor#ation in any part of the #essage in order to induce the recipients to read the #essage!
5=6 Dibel! * The unlawful or prohibited acts of libel as defined in +rticle 9?? of the Reised
Penal Code, as a#ended, co##itted through a co#puter syste# or any other si#ilar #eans
which #ay be deised in the future!
S%C! ?! 'ther 'ffenses! * The following acts shall also constitute an offense$
5a6 +iding or +betting in the Co##ission of Cybercri#e! > +ny person who willfully abets or aids
in the co##ission of any of the offenses enu#erated in this +ct shall be held liable!
5b6 +tte#pt in the Co##ission of Cybercri#e! * +ny person who willfully atte#pts to co##it
any of the offenses enu#erated in this +ct shall be held liable!
S%C! @! +ll cri#es defined and penali2ed by the Reised Penal Code, as a#ended, and special
laws, if co##itted by, through and with the use of infor#ation and co##unications technologies
shall be coered by the releant proisions of this +ct$ Proided, That the penalty to be i#posedshall be one 5)6 degree higher than that proided for by the Reised Penal Code, as a#ended,
and special laws, as the case #ay be!
S%C! ! Diability under 'ther Daws! * + prosecution under this +ct shall be without pre;udice to
any liability for iolation of any proision of the Reised Penal Code, as a#ended, or special
laws!
C#ATER III
ENA&TIE$
S%C! E! Penalties! * +ny person found guilty of any of the punishable acts enu#erated in
Sections =5a6 and =5b6 of this +ct shall be punished with i#prison#ent of prision #ayor or a fine
of at least Two hundred thousand pesos 5PhP.//,///!//6 up to a #a4i#u# a#ount
co##ensurate to the da#age incurred or both!
+ny person found guilty of the punishable act under Section =5a65?6 shall be punished with
i#prison#ent of prision #ayor or a fine of not #ore than Fie hundred thousand pesos
5PhP?//,///!//6 or both!
&f punishable acts in Section =5a6 are co##itted against critical infrastructure, the penalty of
reclusion te#poral or a fine of at least Fie hundred thousand pesos 5PhP?//,///!//6 up to
#a4i#u# a#ount co##ensurate to the da#age incurred or both, shall be i#posed!
+ny person found guilty of any of the punishable acts enu#erated in Section =5c65)6 of this +ct
shall be punished with i#prison#ent of prision #ayor or a fine of at least Two hundred thousand
pesos 5PhP.//,///!//6 but not e4ceeding 'ne #illion pesos 5PhP),///,///!//6 or both!
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+ny person found guilty of any of the punishable acts enu#erated in Section =5c65.6 of this +ct
shall be punished with the penalties as enu#erated in Republic +ct (o! A? or the +nti-Child
Pornography +ct of .//A0$ Proided, That the penalty to be i#posed shall be one 5)6 degree
higher than that proided for in Republic +ct (o! A?, if co##itted through a co#puter syste#!
+ny person found guilty of any of the punishable acts enu#erated in Section =5c6596 shall be
punished with i#prison#ent of arresto #ayor or a fine of at least Fifty thousand pesos
5PhP?/,///!//6 but not e4ceeding Two hundred fifty thousand pesos 5PhP.?/,///!//6 or both!
+ny person found guilty of any of the punishable acts enu#erated in Section ? shall be
punished with i#prison#ent one 5)6 degree lower than that of the prescribed penalty for the
offense or a fine of at least 'ne hundred thousand pesos 5PhP)//,///!//6 but not e4ceeding
Fie hundred thousand pesos 5PhP?//,///!//6 or both!
S%C! A! Corporate Diability! *
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international cooperation, law enforce#ent authorities specifically the co#puter or technology
cri#e diisions or units responsible for the inestigation of cybercri#es are re:uired to sub#it
ti#ely and regular reports including pre-operation, post-operation and inestigation results and
such other docu#ents as #ay be re:uired to the 1epart#ent of Justice 51'J6 for reiew and
#onitoring!
S%C! ).! Real-Ti#e Collection of Traffic 1ata! * Daw enforce#ent authorities, with due cause,
shall be authori2ed to collect or record by technical or electronic #eans traffic data in real-ti#e
associated with specified co##unications trans#itted by #eans of a co#puter syste#!
Traffic data refer only to the co##unication3s origin, destination, route, ti#e, date, si2e,
duration, or type of underlying serice, but not content, nor identities!
+ll other data to be collected or sei2ed or disclosed will re:uire a court warrant!
Serice proiders are re:uired to cooperate and assist law enforce#ent authorities in the
collection or recording of the aboe-stated infor#ation!
The court warrant re:uired under this section shall only be issued or granted upon written
application and the e4a#ination under oath or affir#ation of the applicant and the witnesses he
#ay produce and the showing$ 5)6 that there are reasonable grounds to beliee that any of the
cri#es enu#erated hereinaboe has been co##itted, or is being co##itted, or is about to be
co##itted$ 5.6 that there are reasonable grounds to beliee that eidence that will be obtained
is essential to the coniction of any person for, or to the solution of, or to the preention of, any
such cri#es8 and 596 that there are no other #eans readily aailable for obtaining such
eidence!
S%C! )9! Preseration of Co#puter 1ata! * The integrity of traffic data and subscriber
infor#ation relating to co##unication serices proided by a serice proider shall bepresered for a #ini#u# period of si4 5@6 #onths fro# the date of the transaction! Content data
shall be si#ilarly presered for si4 5@6 #onths fro# the date of receipt of the order fro# law
enforce#ent authorities re:uiring its preseration!
Daw enforce#ent authorities #ay order a one-ti#e e4tension for another si4 5@6 #onths$
Proided, That once co#puter data presered, trans#itted or stored by a serice proider is
used as eidence in a case, the #ere furnishing to such serice proider of the trans#ittal
docu#ent to the 'ffice of the Prosecutor shall be dee#ed a notification to presere the
co#puter data until the ter#ination of the case!
The serice proider ordered to presere co#puter data shall eep confidential the order and its
co#pliance!
S%C! )=! 1isclosure of Co#puter 1ata! * Daw enforce#ent authorities, upon securing a court
warrant, shall issue an order re:uiring any person or serice proider to disclose or sub#it
subscriber3s infor#ation, traffic data or releant data in his7its possession or control within
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seenty-two 5.6 hours fro# receipt of the order in relation to a alid co#plaint officially
doceted and assigned for inestigation and the disclosure is necessary and releant for the
purpose of inestigation!
S%C! )?! Search, Sei2ure and %4a#ination of Co#puter 1ata! *
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S%C! )E! %4clusionary Rule! * +ny eidence procured without a alid warrant or beyond the
authority of the sa#e shall be inad#issible for any proceeding before any court or tribunal!
S%C! )A! Restricting or Blocing +ccess to Co#puter 1ata! *
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S%C .9! 1epart#ent of Justice 51'J6! * There is hereby created an 'ffice of Cybercri#e
within the 1'J designated as the central authority in all #atters related to international #utual
assistance and e4tradition!
S%C! .=! Cybercri#e &nestigation and Coordinating Center! * There is hereby created, within
thirty 59/6 days fro# the effectiity of this +ct, an inter-agency body to be nown as the
Cybercri#e &nestigation and Coordinating Center 5C&CC6, under the ad#inistratie superision
of the 'ffice of the President, for policy coordination a#ong concerned agencies and for the
for#ulation and enforce#ent of the national cybersecurity plan!
S%C! .?! Co#position! * The C&CC shall be headed by the %4ecutie 1irector of the
&nfor#ation and Co##unications Technology 'ffice under the 1epart#ent of Science and
Technology 5&CT'-1'ST6 as Chairperson with the 1irector of the (B& as ice Chairperson8 the
Chief of the P(P8 "ead of the 1'J 'ffice of Cybercri#e8 and one 5)6 representatie fro# the
priate sector and acade#e, as #e#bers! The C&CC shall be #anned by a secretariat of
selected e4isting personnel and representaties fro# the different participating agencies!
S%C! .@! Powers and Functions! * The C&CC shall hae the following powers and functions$
5a6 To for#ulate a national cybersecurity plan and e4tend i##ediate assistance for the
suppression of real-ti#e co##ission of cybercri#e offenses through a co#puter e#ergency
response tea# 5C%RT68
5b6 To coordinate the preparation of appropriate and effectie #easures to preent and
suppress cybercri#e actiities as proided for in this +ct8
5c6 To #onitor cybercri#e cases being bandied by participating law enforce#ent and
prosecution agencies8
5d6 To facilitate international cooperation on intelligence, inestigations, training and capacity
building related to cybercri#e preention, suppression and prosecution8
5e6 To coordinate the support and participation of the business sector, local goern#ent units
and nongoern#ent organi2ations in cybercri#e preention progra#s and other related
pro;ects8
5f6 To reco##end the enact#ent of appropriate laws, issuances, #easures and policies8
5g6 To call upon any goern#ent agency to render assistance in the acco#plish#ent of the
C&CC3s #andated tass and functions8 and
5h6 To perfor# all other #atters related to cybercri#e preention and suppression, including
capacity building and such other functions and duties as #ay be necessary for the proper
i#ple#entation of this +ct!
C#ATER "III
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FINA& R!"I$I!N$
S%C! .! +ppropriations! * The a#ount of Fifty #illion pesos 5PhP?/,///,///!//6 shall be
appropriated annually for the i#ple#entation of this +ct!
S%C! .E! ple#enting Rules and Regulations! * The &CT'-1'ST, the 1'J and the
1epart#ent of the &nterior and Docal Goern#ent 51&DG6 shall ;ointly for#ulate the necessary
rules and regulations within ninety 5A/6 days fro# approal of this +ct, for its effectie
i#ple#entation!
S%C! .A! Separability Clause * &f any proision of this +ct is held inalid, the other proisions
not affected shall re#ain in full force and effect!
S%C! 9/! Repealing Clause! * +ll laws, decrees or rules inconsistent with this +ct are hereby
repealed or #odified accordingly! Section 995a6 of Republic +ct (o! EA. or the %lectronic
Co##erce +ctH is hereby #odified accordingly!
S%C! 9)! %ffectiity! * This +ct shall tae effect fifteen 5)?6 days after the co#pletion of its
publication in the 'fficial Ga2ette or in at least two 5.6 newspapers of general circulation!
+pproed,
5Sgd!6 F%D&C&+(' B%DM'(T% JR!
Speaer of the "ouse
of Representaties
5Sgd!6 J+( P'(C% %(R&D%
President of the Senate
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This +ct which is a consolidation of Senate Bill (o! .A@ and "ouse Bill (o! ?E/E was finally
passed by the Senate and the "ouse of Representaties on June ?, ./). and June =, ./).,
respectiely!
5Sgd!6 M+R&DI( B! B+R+-I+P
Secretary General
"ouse of Representaties
5Sgd!6 %MM+ D&R&'-R%I%S
Secretary of the Senate
+pproed$ S%P ). ./).
5Sgd!6 B%(&G(' S! +&(' &&&
President of the Philippines
Congress of the Philippines
%leenth Congress
Third Regular Session
RE%B&IC ACT N!. (1)*
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AN ACT !RDAINING REF!RM$ IN T#E E&ECTRIC !+ER IND%$TRY, AMENDING F!R
T#E %R!$E CERTAIN &A+$ AND F!R !T#ER %R!$E$
Be it enacted by the Senate and the "ouse of Representaties of the Philippines in Congress
asse#bled$
C#ATER I
TIT&E AND DEC&ARATI!N !F !&ICY
Section )! Short Title! - This +ct shall be nown as the K%lectric Power &ndustry Refor# +ct of
.//)K! &t shall hereinafter be referred to as the +ct!
Section .! 1eclaration of Policy! - &t is hereby declared the policy of the State$
5a6 To ensure and accelerate the total electrification of the country8
5b6 To ensure the :uality, reliability, security and affordability of the supply of electric power8
5c6 To ensure transparent and reasonable prices of electricity in a regi#e of free and fair
co#petition and full public accountability to achiee greater operational and econo#ic efficiency
and enhance the co#petitieness of Philippine products in the global #aret8
5d6 To enhance the inflow of priate capital and broaden the ownership base of the power
generation, trans#ission and distribution sectors in order to #ini#i2e the financial ris e4posure
of the national goern#ent8
5e6 To ensure fair and non-discri#inatory treat#ent of public and priate sector entities in the
process of restructuring the electric power industry8
5f6 To protect the public interest as it is affected by the rates and serices of electric utilities and
other proiders of electric power8
5g6 To assure socially and eniron#entally co#patible energy sources and infrastructure8
5h6 To pro#ote the utili2ation of indigenous and new and renewable energy resources in power
generation in order to reduce dependence on i#ported energy8
5i6 To proide for an orderly and transparent priati2ation of the assets and liabilities of the
(ational Power Corporation 5(PC6!
5;6 To establish a strong and purely independent regulatory body and syste# to ensure
consu#er protection and enhance the co#petitie operation of the electricity #aret8 and
56 To encourage the efficient use of energy and other #odalities of de#and side #anage#ent!
Section 9! Scope! - This +ct shall proide a fra#ewor for the restructuring of the electric power
industry, including the priati2ation of the assets of (PC, the transition to the desired
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co#petitie structure, and the definition of the responsibilities of the arious goern#ent
agencies and priate entities!
Section =! 1efinition of Ter#s! -
5a6 K+ggregatorK refers to a person or entity, engaged in consolidating electric power de#and of
end-users in the contestable #aret, for the purpose of purchasing and reselling electricity on a
group basis8
5b6 K+ncillary SericesK refer to those serices that are necessary to support the trans#ission of
capacity and energy fro# resources to loads while #aintaining reliable operation of the
trans#ission syste# in accordance with good utility practice and the Grid Code to be adopted in
accordance with this +ct8
5c6 KCaptie #aretK refers to electricity end-users who do not hae the choice of a supplier of
electricity, as #ay be deter#ined by the %nergy Regulatory Co##ission 5%RC6 in accordance
with this +ct8
5d6 KCentral 1ispatchK refers to the process of scheduling and issuing direct instructions by the
grid operator to achiee the econo#ic operation and #aintenance of :uality, stability, reliability
and security of the trans#ission syste#8
5e6 KCo-generation FacilityK refers to a facility which produces electrical and7or #echanical
energy and for#s of useful ther#al energy such as heat or stea# which are used for industrial
co##ercial heating or cooling purposes through the se:uential use of energy
5f6 KCo##issionK refers to the decision-#aing body of the %RC co#posed of a Chair#an and
four 5=6 #e#bers as proided under Section 9E hereof8
5g6 KConcession ContractK refers to the award by the goern#ent to a :ualified priate entity of
the responsibility for financing, operating, e4panding, #aintaining and #anaging specific
Goern#ent-owned assets8
5h6 KContestable MaretK refers to the electricity end-users who hae a choice of a supplier of
electricity, as #ay be deter#ined by the %RC in accordance with this +ct8
5i6 K1epart#ent of %nergyK or K1'%K refers to the goern#ent agency created pursuant to
Republic +ct (o! @9E whose e4panded functions are proided herein8
5;6 K1epart#ent of FinanceK or K1'FK refers to the goern#ent agency created pursuant to
%4ecutie 'rder (o! ).8
56 K1istribution CodeK refers to a co#pilation of rules and regulations goerning electric utilities
in the operation and #aintenance of their distribution syste#s which includes, a#ong others,
the standards for serice and perfor#ance, and defines and establishes the relationship of the
distribution syste#s with the facilities or installations of the parties connected thereto8
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5l6 K1istribution of %lectricityK refers to the coneyance of electric power by a distribution utility
through its distribution syste# pursuant to the proisions of this +ct8
5#6 K1istribution Syste#K refers to the syste# of wires and associated facilities belonging to a
franchised distribution utility e4tending between the deliery points on the trans#ission or
subtrans#ission syste# or generator connection and the point of connection to the pre#ises of
the end-user8
5n6 K1istribution Retail
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5aa6 Kple#enting Rules and RegulationsK or K&RRK refers to the i#ple#enting rules and
regulations consistent with this +ct pro#ulgated by the 1'% in consultation with the electric
power industry participants and representaties of the business sector and approed by the
Joint Congressional Power Co##ission to i#ple#ent the proisions of this +ct8
5bb6 K&ndependent Power ProducerK or K&PPK refers to an e4isting power generating entity which
is not owned by the goern#ent8
5cc6 K&solated 1istribution Syste#K refers to the low or high oltage bacbone syste# of wires
and associated facilities not directly connected to the national trans#ission syste#8
5dd6 KDifeline RateK refers to the subsidi2ed rate gien to low-inco#e captie #aret end-users
who cannot afford to pay at full cost8
5ee6 K(ational %lectrification +d#inistrationK or K(%+K refers to the goern#ent agency created
under Presidential 1ecree (o! .@A, as a#ended, and whose additional #andate is further set
forth herein8
5ff6 K(ational Power CorporationK or K(PCK refers to the goern#ent corporation created under
Republic +ct (o! @9A?, as a#ended8
5gg6 K(ational Trans#ission CorporationK or KTR+(SC'K refers to the corporation organi2ed to
ac:uire all the trans#ission assets of the (PC pursuant to this +ct8
5hh6 K'pen +ccessK refers to the proision of allowing any :ualified user the use of trans#ission,
and7or distribution syste# and associated facilities sub;ect to the pay#ent of trans#ission
and7or distribution retail wheeling rates duly approed by the %RC8
5ii6 KPhilippine %nergy PlanK or KP%PK refers to the oerall energy progra# for#ulated and
updated yearly by the 1'% for sub#ission to Congress pursuant to Republic +ct (o! @9E8
5;;6 KPower 1eelop#ent Progra#K or KP1PK refers to the indicatie plan for #anaging electricity
de#and through energy-efficient progra#s and for the upgrading, e4pansion, rehabilitation,
repair and #aintenance of power generation and trans#ission facilities, for#ulated and updated
yearly by the 1'% in coordination with the generation, trans#ission and electric utility
co#panies8
56 KPower Sector +ssets and Diabilities Manage#ent CorporationK or KPS+DM Corp!K refers to
the corporation organi2ed pursuant to Section =A hereof8
5ll6 KPriati2ationK refers to the sale, disposition, change and transfer of ownership and control of assets and &PP contracts fro# the Goern#ent or a goern#ent corporation to a priate person
or entity8
5##6 KRenewable %nergy ResourcesK refers to energy resources that do not hae an upper li#it
on the total :uantity to be used! Such resources are renewable on a regular basis and the
renewable rate is rapid enough to consider aailability oer an indefinite ti#e! These include,
a#ong others, bio#ass, solar, wind, hydro and ocean energy8
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5nn6 KRestructuringK refers to the process of reorgani2ing the electric power industry in order to
introduce higher efficiency, greater innoation and end-user choice! &t shall be understood as
coering a range of alternaties enhancing e4posure of the industry to co#petitie #aret
forces8
5oo6 KS#all Power tilities GroupK or KSPGK refers to the functional unit of (PC created to
pursue #issionary electrification function8
5pp6 KStranded contract costs of (PC or distribution utilityK refer to the e4cess of the contracted
cost of electricity under eligible contracts oer the actual selling price of such contracts in the
#aret! Such contracts shall hae been accredited by the 1'% or (PC and approed by the
%RB as of the effectiity of this +ct8
5::6 KStranded 1ebts of (PCK refer to any unpaid financial obligations of (PC which hae not
been li:uidated by the proceeds fro# sales and priati2ation of (PC assets8
5rr6 KSubtrans#ission +ssetsK refer to the facilities related to the power deliery serice below
the trans#ission oltages and defined as facilities based on the functional assign#ent of assetsincluding, but not li#ited to, step-down transfor#ers solely used by load custo#ers, associated
switchyard7substation, control and protectie e:uip#ent, reactie co#pensation e:uip#ent to
i#proe custo#er power factor, oerhead lines, and the land where such facilities7e:uip#ent
are located, where applicable! These include (PC assets lining the trans#ission syste# and
the distribution syste# which are neither classified as generation nor trans#ission8
5ss6 KSupplierK refers to any person or entity authori2ed by the %RC to sell, broer, #aret or
aggregate electricity to the end-users8
5tt6 KSupply ChargeK refers to the charge i#posed by electricity suppliers for the sale of
electricity to end-users, e4cluding the charges for generation, trans#ission and distributionwheeling8
5uu6 KSupply of %lectricityK #eans the sale of electricity by persons or entities authori2ed
pursuant to this +ct8
56 KTrans#ission ChargeK refers to the regulated cost or charges for the use of a trans#ission
syste# which #ay include the aail#ent of ancillary serices
5ww6 KTrans#ission 1eelop#ent PlanK or KT1PK refers to the progra# for #anaging the
trans#ission syste# through efficient planning for the e4pansion, upgrading, rehabilitation,
repair and #aintenance, to be for#ulated by 1'% and i#ple#ented by the TR+(SC' pursuant
to this +ct8
5446 KTrans#ission of %lectricityK refers to the coneyance of electricity through the high oltage
bacbone syste#8 and
5yy6 Kniersal ChargeK refers to the charge, if any, i#posed for the recoery of the stranded
cost and other purposes!
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C#ATER II
!RGANIATI!N AND !ERATI!N !F T#E E&ECTRIC !+ER IND%$TRY
Section ?! 'rgani2ation! - The electric power industry shall be diided into four 5=6 sectors,
na#ely$ generation8 trans#ission8 distribution and supply!
Section @! Generation Sector! - Generation of electric power shall be co#petitie and open!
pon the effectiity of this +ct, any new generation co#pany shall, before it operates, secure
fro# the %nergy Regulatory Co##ission a certificate of co#pliance pursuant to the standards
set forth in this +ct, as well as health, safety and eniron#ental clearances fro# the appropriate
goern#ent agencies under e4isting laws!
+ny law to the contrary notwithstanding, power generation shall not be considered a public utility
operation! For this purpose, any person or entity engaged or which shall engage in power
generation and supply of electricity shall not be re:uired to secure a local or national franchise!
pon i#ple#entation of retail co#petition and open access, the prices charged by a generation
co#pany for supply of electricity shall not be sub;ect to regulation by the %RC e4cept as
otherwise proided in this +ct
Pursuant to the ob;ectie of lowering electricity rates to end-users, sales of generated power by
generation co#panies shall be alue added ta4 2ero-rated!
The %RC shall, in deter#ining the e4istence of #aret power abuse or anti-co#petitie
behaior, re:uire fro# generation co#panies the sub#ission of their indiidual pricing for#ulas
as well as their financial state#ents!
Section ! Trans#ission Sector! - The trans#ission of electric power shall be a regulatedco##on electricity carrier business, sub;ect to the rate#aing powers of the %RC!
The %RC shall set the standards of the oltage trans#ission that shall distinguish the
trans#ission fro# the subtrans#ission assets! Pending the issuance of such new standards,
the distinction between the trans#ission and subtrans#ission assets shall be as follows$ .9/
iloolts and aboe in the Du2on Grid, @A iloolts and aboe in the isayas and in the isolated
distribution syste#s, and )9E iloolts and aboe in the Mindanao Grid$ Proided, That for the
isayas and the isolated distribution syste#, should the @A iloolt line not for# part of the #ain
trans#ission grid and be directly connected to the substation of the distribution utility, it shall
for# part of the subtrans#ission syste#!
Section E! Creation of the (ational Trans#ission Co#pany! - There is hereby created a (ational
Trans#ission Corporation, hereinafter referred to as TR+(SC', which shall assu#e the
electrical trans#ission function of the (ational Power Corporation, and hae the powers and
functions hereinafter granted! The TR+(SC' shall assu#e the authority and responsibility of
(PC for the planning, construction and centrali2ed operation and #aintenance of its high
oltage trans#ission facilities, including grid interconnections and ancillary serices!
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Section A! Functions and Responsibilities! - pon the effectiity of this +ct, the TR+(SC' shall
hae the following functions and responsibilities$
5a6 +ct as the syste# operator of the nationwide electrical trans#ission and subtrans#ission
syste#, to be transferred to it by (PC8
5b6 Proide open, e:ual and non-discri#inatory access to its trans#ission syste# to all
electricity users8
5c6 %nsure and #aintain the reliability, ade:uacy, security, stability and integrity of the
nationwide electrical grid in accordance with the perfor#ance standards for the operation and
#aintenance of the grid, as set forth in a Grid Code to be adopted and pro#ulgated by the %RC
within si4 5@6 #onths fro# the effectiity of this +ct8
5d6 proe and e4pand its trans#ission facilities, consistent with the Grid Code and the
Trans#ission 1eelop#ent Plan 5T1P6 to be pro#ulgated pursuant to this +ct, to ade:uately
sere generation co#panies, distribution utilities and suppliers re:uiring trans#ission serice
and7or ancillary serices through the trans#ission syste#$ Proided, That TR+(SC' shallsub#it any plan for e4pansion or i#proe#ent of its facilities for approal by the %RC8
5e6 Sub;ect to technical constraints, the grid operator of the TR+(SC' shall proide central
dispatch of all generation facilities connected, directly or indirectly, to the trans#ission syste# in
accordance with the dispatch schedule sub#itted by the #aret operator, taing into account
outstanding bilateral contracts8 and
5f6 TR+(SC' shall undertae the preparation of the T1P! &n the preparation of the T1P,
TR+(SC' shall consult the other sectors of the power industry such as the generation
co#panies, distribution utilities, and the electricity end-users! The T1P shall be sub#itted to the
1'% for integration with the Power 1eelop#ent Progra# and the (ational %nergy Plan,proided for in Republic +ct (o! @9E otherwise nown as Kthe 1epart#ent of %nergy +ct of
)AA.K!
+ generation co#pany #ay deelop and own or operate dedicated point-to-point li#ited
trans#ission facilities that are consistent with the T1P$ Proided, That such facilities are
re:uired only for the purpose of connecting to the trans#ission syste#, and are used solely by
the generating facility, sub;ect to prior authori2ation by the %RC$ Proided, further, That in the
eent that such assets are re:uired for co#petitie purposes, ownership of the sa#e shall be
transferred to the TR+(SC' at a fair #aret price$ Proided, finally, That in case of
disagree#ent on the fair #aret price, the %RC shall deter#ine the fair #aret alue of the
asset!
Section )/! Corporate Powers of the TR+(SC'! - +s a corporate entity, TR+(SC' shall hae
the following corporate powers$
5a6 To hae continuous succession under its corporate na#e until otherwise proided by law8
5b6 To adopt and use a corporate seal and to change, alter or #odify the sa#e, if necessary8
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5c6 To sue and be sued8
5d6 To enter into a contract and e4ecute any instru#ent necessary or conenient for the purpose
for which it is created8
5e6 To borrow funds fro# any source, whether priate or public, foreign or do#estic, and issue
bonds and other eidence of indebtedness$ Proided, That in the case of the bond issues, it
shall be sub;ect to the approal of the President of the Philippines upon reco##endation of the
Secretary of Finance$ Proided, further, That foreign loans shall be obtained, for and in behalf of
TR+(SC', in accordance with law and the rules and regulations of the Bango Sentral ng
Pilipinas8
5f6 To #aintain a proident fund which consists of contributions #ade by both the TR+(SC'
and its officials and e#ployees and their earnings for the pay#ent of benefits to such officials
and e#ployees or their heirs under such ter#s and conditions as it #ay prescribe8
5g6 To do any act necessary or proper to carry out the purpose for which it is created, or which,
fro# ti#e to ti#e, #ay be declared by the TR+(SC' Board as necessary, useful, incidental or au4iliary to acco#plish its purposes and ob;ecties8 and,
5h6 Generally, to e4ercise all the powers of a corporation under the corporation law insofar as
they are not inconsistent with this +ct!
Section ))! TR+(SC' Board of 1irectors! - +ll the powers of the TR+(SC' shall be ested in
and e4ercised by a Board of 1irectors! The Board shall be co#posed of a Chair#an and si4 5@6
#e#bers! The Secretary of the 1epart#ent of Finance 51'F6 shall be the e4-officio Chair#an
of the Board! The other #e#bers of the TR+(SC' Board shall include the Secretary of the
1epart#ent of %nergy 51'%6, the Secretary of the 1epart#ent of %niron#ent and (atural
Resources 51%(R6, the President of TR+(SC', one #e#ber each representing Du2on,isayas and Mindanao!
The #e#bers of the Board shall be appointed by the President of the Philippines and shall
sere for a ter# of si4 5@6 years, e4cept that any person appointed to fill-in a acancy shall sere
only the une4pired ter# of his7her predecessor in office! +ll #e#bers of the Board shall be
professionals of recogni2ed co#petence and e4pertise in the fields of engineering, finance,
econo#ics, law or business #anage#ent! (o #e#ber of the Board or any of his relaties within
the fourth ciil degree of consanguinity or affinity shall hae any interest, either as inestor,
officer or director, in any generation co#pany or distribution utility or other entity engaged in
trans#itting, generating and supplying electricity specified by %RC!
Section ).! Powers and 1uties of the Board! - The following are the powers of the Board$
5a6 To proide strategic direction for TR+(SC', and for#ulate #ediu# and long-ter# strategies
pursuant to the ision, #ission, and ob;ecties of TR+(SC'8
5b6 To deelop and adopt policies and #easures for the efficient and effectie #anage#ent and
operation of TR+(SC'8
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5c6 To organi2e, re-organi2e, and deter#ine the organi2ational structure and staffing pattern of
TR+(SC'8 abolish and create offices and positions8 fi4 the nu#ber of its officers and
e#ployees8 transfer and re-align such officers and personnel8 fi4 their co#pensation, allowance,
and benefits8
5d6 To fi4 the co#pensation of the President of TR+(SC' and to appoint and fi4 the
co#pensation of other corporate officers8
5e6 For cause, to suspend or re#oe any corporate officer appointed by the Board8
5f6 To adopt and set guidelines for the e#ploy#ent of personnel on the basis of #erit, technical
co#petence, and #oral character8 and
5g6 +ny proisions of the law to the contrary notwithstanding, to write-off bad debts!
Section )9! Board Meetings! - The Board shall #eet as often as #ay be necessary upon the call
of the Chair#an of the Board or by a #a;ority of the Board #e#bers!
Section )=! Board Per 1ie#s and +llowances! - The #e#bers of the Board shall receie per
die# for each regular or special #eeting of the Board actually attended by the#, and, upon
approal of the Secretary of the 1epart#ent of Finance, such other allowances as the Board
#ay prescribe!
Section )?! uoru#! - The presence of at least four 5=6 #e#bers of the Board shall constitute a
:uoru#, which shall be necessary for the transaction of any business! The affir#atie ote of a
#a;ority of the #e#bers present in a :uoru# shall be ade:uate for the approal of any
resolution, decision or order e4cept when the Board shall agree that a greater ote is re:uired!
Section )@! Powers of the President of TR+(SC'! - The President of TR+(SC' shall be
appointed by the President of the Philippines! &n the absence of the Chair#an, the President
shall preside oer Board #eetings! The TR+(SC' President shall be the Chief %4ecutie
'fficer of TR+(SC'!
The President of TR+(SC' shall hae the following powers and duties$
5a6 To e4ecute and ad#inister the policies and #easures approed by the Board, and tae
responsibility for the efficient discharge of #anage#ent functions8
5b6 To oersee the preparation of the budget of TR+(SC'8
5c6 To direct and superise the operation and internal ad#inistration of TR+(SC' and, for this
purpose, #ay delegate so#e or any of his ad#inistratie responsibilities and duties to other
officers of TR+(SC'
5d6 Sub;ect to the guidelines and policies set up by the Board, to appoint and fi4 the nu#ber and
co#pensation of subordinate officials and e#ployees of TR+(SC'8 and for cause, to re#oe,
suspend, or otherwise discipline any subordinate e#ployee of TR+(SC'
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5e6 To sub#it an annual report to the Board on the actiities and achiee#ents of TR+(SC' at
the close of each fiscal year and upon approal thereof, sub#it a copy to the President of the
Philippines and to such other agencies as #ay be re:uired by law
5f6 To represent TR+(SC' in all dealings and transactions with other offices, agencies, and
instru#entalities of the Goern#ent and with all persons and other entities, priate or public,
do#estic or foreign8 and
5g6 To e4ercise such other powers and duties as #ay be ested in hi# by the Board fro# ti#e to
ti#e!
Section )! %4e#ption fro# the Salary Standardi2ation Daw! - The salaries and benefits of
e#ployees in the TR+(SC' shall be e4e#pt fro# Republic +ct (o! @?E and shall be fi4ed by
the TR+(SC' Board!
Section )E! Profits! - The net profit, if any, of TR+(SC' shall be re#itted to the PS+DM Corp!
not later than thirty 59/6 days after the i##ediately preceding :uarter!
Section )A! Trans#ission Charges! - The trans#ission charges of the TR+(SC' shall be filed
with and approed by the %RC pursuant to paragraph 5f6 of Section =9 hereof!
Section ./! TR+(SC' Related Businesses! - TR+(SC' #ay engage in any related business
which #a4i#i2es utili2ation of its assets$ Proided, That a portion of the net inco#e deried
fro# such undertaing utili2ing assets which for# part of the rate base shall be used to reduce
trans#ission wheeling rates as deter#ined by the %RC! Such portion of net inco#e used to
reduce the trans#ission wheeling rates shall not e4ceed fifty percent 5?/L6 of the net inco#e
deried fro# such undertaing!
Separate accounts shall be #aintained for each business undertaing to ensure that thetrans#ission business shall neither subsidi2e in any way such business undertaing nor
encu#ber its trans#ission assets in any way to support such business!
Section .)! TR+(SC' 'perations Maintenance 5'M6 Concessionaire! - The TR+(SC'
shall award, in open co#petitie bidding, a concession contract to a :ualified party for the
operation, #aintenance, i#proe#ent and e4pansion of its trans#ission assets and the
operation of any related business for a period of twenty-fie 5.?6 years, sub;ect to reiew and
renewal for a #a4i#u# period of another twenty-fie 5.?6 years! The contract shall include, but
not li#ited to, the proision for perfor#ance and financial guarantees or any other coenants
which #ay be re:uired in order to fulfill the obligations of the concession contract!
The TR+(SC' ' M Concessionaire shall co#ply with the Grid Code and the T1P as
approed! Failure to co#ply with such obligations shall result in the i#position of appropriate
sanctions or penalties by the %RC$ Proided, howeer, That in cases of #a;or or serious
econo#ic and7or technical reasons, TR+(SC' ' M Concessionaire #ay see authority fro#
the %RC to defer any e4pansion or i#proe#ent!
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The concessionaire shall be financially and technically capable, with proen do#estic and7or
international e4perience and e4pertise as a leading trans#ission syste# operator under a
co#petitie electric power industry structure! The e4perience of the strategic partner #ust be
with a trans#ission syste# of e:ual, if not greater, capacity and coerage as the Philippines!
Section ..! 1istribution Sector! - The distribution of electricity to end-users shall be a regulated
co##on carrier business re:uiring a franchise! 1istribution of electric power to all end-users
#ay be undertaen by priate distribution utilities, cooperaties, local goern#ent units
presently undertaing this function and other duly authori2ed entities, sub;ect to regulation by
the %RC!
Section .9! Functions of 1istribution tilities! - + distribution utility shall hae the obligation to
proide distribution serices and connections to its syste# for any end-user within its franchise
area consistent with the distribution code! +ny entity engaged therein shall proide open and
non-discri#inatory access to its distribution syste# to all users!
+ny distribution utility shall be entitled to i#pose and collect distribution retail wheeling charges
and connection fees fro# such end-users as approed by the %RC! + distribution utility shall
hae the obligation to supply electricity in the least cost #anner to its captie #aret, sub;ect to
the collection of distribution retail supply rate duly approed by the %RC!
To achiee econo#ies of scale in utility operations, distribution utilities #ay, after due notice and
public hearing, pursue structural and operational refor#s such as but not li#ited to, ;oint actions
between or a#ong the distribution utilities, sub;ect to the guidelines issued by the %RC! Such
;oint actions shall result in i#proed efficiencies, reliability of serice, reduction of costs and
co#pliance to the perfor#ance standards prescribed in the &RR of this +ct! 1istribution utilities
shall sub#it to the %RC a state#ent of their co#pliance with the technical specifications
prescribed in the 1istribution Code and the perfor#ance standards prescribed in the &RR of this
+ct! 1istribution utilities which do not co#ply with any of the prescribed technical specifications
and perfor#ance standards shall sub#it to the %RC a plan to co#ply, within three 596 years,
with said prescribed technical specifications and perfor#ance standards! The %RC shall, within
si4ty 5@/6 days upon receipt of such plan, ealuate the sa#e and notify the distribution utility
concerned of its action! Failure to sub#it a feasible and credible plan and7or failure to i#ple#ent
the sa#e shall sere as grounds for the i#position of appropriate sanctions, fines or penalties!
1istribution utilities shall prepare and sub#it to the 1'% their annual distribution deelop#ent
plans! &n the case of electric cooperaties, such plans shall also be sub#itted through the
(ational %lectrification +d#inistration!
1istribution utilities shall proide uniersal serice within their franchise, including uniable
areas, as part of their social obligations in a #anner that shall sustain the econo#ic iability of
the utility, sub;ect to the approal by the %RC in the case of priate or goern#ent-owned
utilities! +reas which a franchised distribution utility cannot or does not find iable #ay be
transferred to another distribution utility, if any is aailable, who will proide the serice, sub;ect
to approal by %RC! &n cases where franchise holders fail and7or refuse to serice any area
within their franchise territory and allowed another utility to serice the sa#e, then the status
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:uo shall be respected! To this end, distribution utilities shall sub#it to the 1'% their plans for
sering such areas as part of their distribution deelop#ent plans! &n cases of #a;or or serious
econo#ic and7or technical reasons, the distribution utility shall see prior authority fro# the %RC
to defer such e4pansion or i#proe#ent!
1istribution utilities #ay e4ercise the power of e#inent do#ain sub;ect to the re:uire#ents of
the constitution and e4isting laws!
Section .=! 1istribution Retail
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Stoc %4change 5PS%6$ Proided, That controlling stocholders of s#all distribution utilities are
re:uired to list in the PS% within fie 5?6 years fro# the enact#ent of this +ct if they already own
the stocs! (ew controlling stocholders shall undertae such listing within fie 5?6 years fro#
the ti#e they ac:uire ownership and control! + s#all distribution co#pany is one whose pea
de#and is 'ne hundred #egawatts 5)//M
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leel playing field to all electric power industry participants! The rules shall proide, a#ong
others, procedures for$
5a6 %stablishing the #erit order dispatch instructions for each ti#e period8
5b6 1eter#ining the #aret-clearing price for each ti#e period8
5c6 +d#inistering the #aret including criteria for ad#ission to and ter#ination fro# the #aret
which includes security or perfor#ance bond re:uire#ents, oting rights of the participants,
sureillance and assurance of co#pliance of the participants with the rules and the for#ation of
the wholesale electricity spot #aret goerning body8
5d6 Prescribing guidelines for the #aret operation in syste# e#ergencies8 and
5e6 +#ending the rules!
The wholesale electricity spot #aret shall be i#ple#ented by a #aret operator in accordance
with the wholesale electricity spot #aret rules! The #aret operator shall be an autono#ous
group, to be constituted by 1'%, with e:uitable representation fro# electric power industry
participants, initially under the ad#inistratie superision of the TR+(SC'! The #aret operator
shall undertae the preparatory wor and initial operation of the wholesale electricity spot
#aret! (ot later than one 5)6 year after the i#ple#entation of the wholesale electricity spot
#aret, an independent entity shall be for#ed and the functions, assets and liabilities of the
#aret operator shall be transferred to such entity with the ;oint endorse#ent of the 1'% and
the electric power industry participants! Thereafter, the ad#inistratie superision of the
TR+(SC' oer such entity shall cease!
Sub;ect to the co#pliance with the #e#bership criteria, all generating co#panies, distribution
utilities, suppliers, bul consu#ers7end-users and other si#ilar entities authori2ed by the %RCshall be eligible to beco#e #e#bers of the wholesale electricity spot #aret!
The %RC #ay authori2e other si#ilar entities to beco#e eligible as #e#bers of the wholesale
electricity spot #aret either directly or indirectly! +ll generating co#panies, distribution utilities,
suppliers, bul consu#ers7end-users and other si#ilar entities authori2ed by the %RC, whether
direct or indirect #e#bers of the wholesale electricity spot #aret, shall be bound by the
wholesale electricity spot #aret rules with respect to transactions in that #aret! (%+ #ay, in
e4change for ade:uate security and a guarantee fee, act as a guarantor for purchases of
electricity in the wholesale electricity spot #aret by any electric cooperatie or s#all
distribution utility to support their credit standing consistent with the proisions hereof! For this
purpose, the authori2ed capital stoc of (%+ is hereby increased to Ten billion pesos5P)/,///,///,///!//6!
+ll electric cooperaties which hae outstanding uncollected billings to any local goern#ent
unit shall report such billings to (%+ which shall, in turn, report the sa#e to the 1epart#ent of
Budget and Manage#ent 51BM6 for collection pursuant to %4ecutie 'rder )A/ issued on
1ece#ber .), )AAA!
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The cost of ad#inistering and operating the wholesale electricity spot #aret shall be recoered
by the #aret operator through a charge applied to all #aret #e#bers$ Proided, That such
charge shall be filed with and approed by the %RC!
&n cases of national and international security e#ergencies or natural cala#ities, the %RC is
hereby e#powered to suspend the operation of the wholesale electricity spot #aret or declare
a te#porary wholesale electricity spot #aret failure!
Section 9)! Retail Co#petition and 'pen +ccess! - Retail co#petition and open access on
distribution wires shall be i#ple#ented not later than three 596 years upon the effectiity of this
+ct sub;ect to co#pliance with the following conditions precedent$
5a6 %stablish#ent of the wholesale electricity spot #aret8
5b6 +pproal of unbundled trans#ission and distribution retail wheeling charges8
5c6 &nitial i#ple#entation of the cross subsidy re#oal sche#e8 and
5d6 Priati2ation of at least /L of the total capacity of generating assets of (PC and of the total
capacity of the power plants under contract with (PC in Du2on and isayas! pon the initial
i#ple#entation of open access, the %RC shall allow all electricity end-users located in Du2on
with a #a4i#u# de#and of at least two #egawatts 5.M
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The %RC shall erify the reasonable a#ounts and deter#ine the #anner and duration for the
full recoery of stranded debt and stranded contract costs as defined herein$ Proided, That the
duration for such recoery shall not be shorter than fifteen 5)?6 years nor longer than twenty-fie
5.?6 years! The %RC shall, at the end of the first year of the i#ple#entation of stranded cost
recoery and eery year thereafter, conduct a reiew to deter#ine whether there is under-
recoery or oer-recoery and ad;ust 5true-up6 the leel of stranded cost recoery chargeaccordingly!
The (PC and PS+DM shall hae the duty to #itigate all potential stranded contract costs of
(PC!
Section 99! 1istribution tilities Stranded Contract Costs Recoery! - Stranded contract costs of
distribution utilities shall refer to the e4cess of the contracted cost of electricity under eligible
contracts of such utilities oer the actual selling price of such contracts in the #aret! Such
contracts shall hae been accredited by the 1'% or (PC and approed by the %RB as of the
effectiity of this +ct!
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Section 9=! niersal Charge! -
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proiding each serice! &nter-grid and intra-grid cross subsidies for both the trans#ission and
the generation rates shall be re#oed in accordance with this +ct!
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5e6 Following the restructuring of the electricity sector, the 1'% shall, a#ong others$
5i6 %ncourage priate sector inest#ents in the electricity sector and pro#ote deelop#ent of
indigenous and renewable energy sources8
5ii6 Facilitate and encourage refor#s in the structure and operations of distribution utilities for
greater efficiency and lower costs8
5iii6 &n consultation with other goern#ent agencies, pro#ote a syste# of incenties to
encourage industry participants, including new generating co#panies and end-users to proide
ade:uate and reliable electric supply8 and
5i6 ndertae, in coordination with the %RC, (PC, (%+ and the Philippine &nfor#ation +gency
5P&+6, infor#ation ca#paign to educate the public on the restructuring of the electricity sector
and priati2ation of (PC assets8
5f6 Jointly with the electric power industry participants, establish the wholesale electricity spot
#aret and for#ulate the detailed rules goerning the operations thereof8
5g6 %stablish and ad#inister progra#s for the e4ploration, transportation, #areting, distribution,
utili2ation, conseration, stocpiling, and storage of energy resources of all for#s, whether
conentional or non-conentional8
5h6 %4ercise superision and control oer all goern#ent actiities relatie to energy pro;ects in
order to attain the goals e#bodied in Section . of R+ @9E8
5i6 1eelop policies and procedures and, as appropriate, pro#ote a syste# of energy
deelop#ent incenties to enable and encourage electric power industry participants to proide
ade:uate capacity to #eet de#and including, a#ong others, resere re:uire#ents8
5;6 Monitor priate sector actiities relatie to energy pro;ects in order to attain the goals of the
restructuring, priati2ation, and #oderni2ation of the power sector as proided for under e4isting
laws$ Proided, That the 1epart#ent shall endeaor to proide for an eniron#ent conducie to
free and actie priate sector participation and inest#ent in all energy actiities8
56 +ssess the re:uire#ents of, deter#ine priorities for, proide direction to, and disse#inate
infor#ation resulting fro# energy research and deelop#ent progra#s for the opti#al
deelop#ent of arious for#s of energy production and utili2ation technologies8 5l6 For#ulate
and i#ple#ent progra#s, including a syste# of proiding incenties and penalties, for the
;udicious and efficient use of energy in all energy-consu#ing sectors of the econo#y8
5#6 For#ulate and i#ple#ent a progra# for the accelerated deelop#ent of non-conentional
energy syste#s and the pro#otion and co##erciali2ation of its applications8
5n6 1eise ways and #eans of giing direct benefit to the proince, city, or #unicipality,
especially the co##unity and people affected, and e:uitable preferential benefit to the region
that hosts the energy resource and7or the energy-generating facility$ Proided, howeer, That
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the other proinces, cities, #unicipalities, or regions shall not be depried of their energy
re:uire#ents8
5o6 %ncourage priate enterprises engaged in energy pro;ects, including corporations,
cooperaties, and si#ilar collectie organi2ations, to broaden the base of their ownership and
thereby encourage the widest public ownership of energy-oriented corporations8
5p6 For#ulate such rules and regulations as #ay be necessary to i#ple#ent the ob;ecties of
this +ct8 and
5:6 %4ercise such other powers as #ay be necessary or incidental to attain the ob;ecties of this
+ct!K
C#ATER I"
REG%&ATI!N !F T#E E&ECTRIC !+ER IND%$TRY
Section 9E! Creation of the %nergy Regulatory Co##ission! - There is hereby created an
independent, :uasi-;udicial regulatory body to be na#ed the %nergy Regulatory Co##ission
5%RC6! For this purpose, the e4isting %nergy Regulatory Board 5%RB6 created under %4ecutie
'rder (o! )., as a#ended, is hereby abolished!
The Co##ission shall be co#posed of a Chair#an and four 5=6 #e#bers to be appointed by
the President of the Philippines! The Chair#an and the #e#bers of the Co##ission shall be
natural-born citi2ens and residents of the Philippines, persons of good #oral character, at least
thirty-fie 59?6 years of age, and of recogni2ed co#petence in any of the following fields$ energy,
law, econo#ics, finance, co##erce, or engineering, with at least three 596 years actual and
distinguished e4perience in their respectie fields of e4pertise$ Proided, That out of the four 5=6
#e#bers of the Co##ission at least one 5)6 shall be a #e#ber of the Philippine Bar with atleast ten 5)/6 years e4perience in the actie practice of law, and one 5)6 shall be a certified
public accountant with at least ten 5)/6 years e4perience in actie practice!
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constituted and the new staffing pattern and plantilla positions hae not been approed and
filled-up, the current Board and e4isting personnel of %RB shall continue to hold office!
The e4isting personnel of the %RB, if :ualified, shall be gien preference in the filling up of
plantilla positions created in the %RC, sub;ect to e4isting ciil serice rules and regulations!
Me#bers of the Co##ission shall en;oy security of tenure and shall not be suspended or
re#oed fro# office e4cept for ;ust cause as specified by law!
The Chair#an and #e#bers of the Co##ission or any of their relaties within the fourth ciil
degree of consanguinity or affinity, legiti#ate or co##on law, shall be prohibited fro# holding
any interest whatsoeer, either as inestor, stocholder, officer or director, in any co#pany or
entity engaged in the business of trans#itting, generating, supplying or distributing any for# of
energy and #ust, therefore, diest through sale or legal disposition of any and all interests in the
energy sector upon assu#ption of office!
The presence of at least three 596 #e#bers of the Co##ission shall constitute a :uoru# and
the #a;ority ote of two 5.6 #e#bers in a #eeting where a :uoru# is present shall be
necessary for the adoption of any rule, ruling, order, resolution, decision or other act of the
Co##ission in the e4ercise of its :uasi-;udicial functions$ Proided, That in fi4ing rates and
tariffs of trans#ission, and distribution retail wheeling charges and tariffs of franchise electric
utilities and all electric power rates, an affir#atie ote of three 596 #e#bers shall be re:uired!
Section 9A! Co#pensation and 'ther %#olu#ents for %RC Personnel! - The co#pensation and
other e#olu#ents for the Chair#an and #e#bers of the Co##ission and the %RC personnel
shall be e4e#pted fro# the coerage of Republic +ct (o! @?E, otherwise nown as the Salary
Standardi2ation +ct! For this purpose, the schedule of co#pensation of the %RC personnel,
e4cept for the initial salaries and co#pensation of the Chair#an and #e#bers of the
Co##ission, shall be sub#itted for approal by the President of the Philippines! The new
schedule of co#pensation shall be i#ple#ented within si4 5@6 #onths fro# the effectiity of this
+ct and #ay be upgraded by the President of the Philippines as the need arises$ Proided, That
in no case shall the rate be upgraded #ore than once a year!
The Chair#an and #e#bers of the Co##ission shall initially be entitled to the sa#e salaries,
allowances and benefits as those of the Presiding Justice and +ssociate Justices of the
Supre#e Court, respectiely! The Chair#an and the #e#bers of the Co##ission, upon
co#pletion of their ter# or upon beco#ing eligible for retire#ent under e4isting laws shall be
entitled to the sa#e retire#ent benefits and priileges proided for the Presiding Justice and
+ssociate Justices of the Court of +ppeals, respectiely!
Section =/! %nhance#ent of Technical Co#petence! - The %RC shall establish rigorous training
progra#s for its staff for the purpose of enhancing the technical co#petence of the %RC in the
following areas$ ealuation of technical perfor#ance and #onitor co#pliance with serice and
perfor#ance standards, perfor#ance-based rate-setting refor#, eniron#ental standards and
such other areas as will enable the %RC to ade:uately perfor# its duties and functions!
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Section =)! Pro#otion of Consu#er &nterests! - The %RC shall handle consu#er co#plaints and
ensure the ade:uate pro#otion of consu#er interests!
Section =.! Fiscal +utono#y of the %RC! - The %RC shall en;oy fiscal autono#y, sub;ect to
regular audits by the Co##ission on +udit! The a#ount of 'ne hundred fifty #illion pesos 5P"P
)?/,///,///!//6 is hereby allocated fro# the e4isting budget of the %RB for the initial operation
of the %RC! +ny balance shall initially be sourced fro# the 'ffice of the President of the
Philippines! Thereafter, the annual budget certified by the %RC, through its chair#an, as
necessary to defray its e4penses shall be proided for in the regular or special appropriations
and shall be released auto#atically and regularly!
Section =9! Functions of the %RC! - The %RC shall pro#ote co#petition, encourage #aret
deelop#ent, ensure custo#er choice and discourage7penali2e abuse of #aret power in the
restructured electricity industry! Towards this end, it shall be responsible for the following ey
functions in the restructured industry$
5a6 %nforce the i#ple#enting rules and regulations of this +ct8
5b6
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5g6 &n the public interest, establish and enforce a #ethodology for setting trans#ission and
distribution wheeling rates and retail rates for the captie #aret of a distribution utility, taing
into account all releant considerations, including the efficiency or inefficiency of the regulated
entities! The rates #ust be such as to allow the recoery of ;ust and reasonable costs and a
reasonable return on rate base 5R'RB6 to enable the entity to operate iably! The rate-setting
#ethodology so adopted and applied #ust ensure a reasonable price of electricity! The ratesprescribed shall be non-discri#inatory! To achiee this ob;ectie and to ensure the co#plete
re#oal of cross subsidies, the cap on the recoerable rate of syste# losses prescribed in
Section )/ of Republic +ct (o! E9., is hereby a#ended and shall be replaced by caps which
shall be deter#ined by the %RC based on load density, sales #i4, cost of serice, deliery
oltage and other technical considerations it #ay pro#ulgate! The %RC shall deter#ine such
for# of rate-setting #ethodology, which shall pro#ote efficiency! &n case the rate setting
#ethodology used is R'RB, it shall be sub;ect to the following guidelines$
5i6 For purposes of deter#ining the rate base, TR+(SC' or any distribution utility #ay be
allowed to realue its eligible assets not #ore than once eery three 596 years by an
independent appraisal co#pany$ Proided, howeer, That %RC #ay gie an e4e#ption in caseof unusual dealuation$ Proided, further, That the %RC shall e4ert efforts to #ini#i2e price
shocs in order to protect the consu#ers8
5ii6 &nterest e4penses are not allowable deductions fro# per#issible return on rate base8
5iii6 &n deter#ining eligible cost of serices that will be passed on to the end-users, the %RC
shall establish #ini#u# efficiency perfor#ance standards for TR+(SC' and distribution
utilities including syste#s losses, interruption fre:uency rates, and collection efficiency8
5i6 Further, in deter#ining rate base, TR+(SC' or any distribution utility shall not be allowed to
include #anage#ent inefficiencies lie cost of pro;ect delays not e4cused by force #a;eure,
penalties and related interest during construction applicable to these une4cused delays8 and
56 +ny significant operating costs or pro;ect inest#ents of TR+(SC' and distribution utilities
which shall beco#e part of the rate base shall be sub;ect to the erification of the %RC to
ensure that the contracting and procure#ent of the e:uip#ent, assets and serices hae been
sub;ected to transparent and accepted industry procure#ent and purchasing practices to protect
the public interest!
5h6 Three 596 years after the i#position of the uniersal charge, ensure that the charges of the
TR+(SC' or any distribution utility shall bear no cross subsidies between grids, within grids, or
between classes of custo#ers, e4cept as proided herein8
5i6 Reiew and approe any changes on the ter#s and conditions of serice of the TR+(SC' or
any distribution utility8
5;6 +llow TR+(SC' to charge user fees for ancillary serices to all electric power industry
participants or self-generating entities connected to the grid! Such fees shall be fi4ed by the
%RC after due notice and public hearing8
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56 Set a lifeline rate for the #arginali2ed end-users8
5l6 Monitor and tae re#edial #easures to penali2e abuse of #aret power, carteli2ation, and
anti-co#petitie or discri#inatory behaior by any electric power industry participant8
5#6 pose fines or penalties for any non-co#pliance with or breach of this +ct, the &RR of this
+ct and the rules and regulations which it pro#ulgates or ad#inisters8
5n6 Tae any other action delegated to it pursuant to this +ct8
5o6 Before the end of +pril of each year, sub#it to the 'ffice of the President of the Philippines
and Congress, copy furnished the 1'%, an annual report containing such #atters or cases
which hae been filed before or referred to it during the preceding year, the actions and
proceedings undertaen and its decision or resolution in each case! The %RC shall #ae copies
of such reports aailable to any interested party upon pay#ent of a charge which reflects the
printing costs! The %RC shall publish all its decisions inoling rates and anti-co#petitie cases
in at least one 5)6 newspaper of general circulation, and7or post electronically and circulate to all
interested electric power industry participants copies of its resolutions to ensure fair andi#partial treat#ent8
5p6 Monitor the actiities of the generation and supply of the electric power industry with the end
in iew of pro#oting free #aret co#petition and ensuring that the allocation or pass through of
bul purchase cost by distributors is transparent, non-discri#inatory and that any e4isting
subsidies shall be diided pro-rata a#ong all retail suppliers8
5:6 +ct on applications for or #odifications of certificates of public conenience and7or necessity,
licenses or per#its of franchised electric utilities in accordance with law and reoe, reiew and
#odify such certificates, licenses or per#its in appropriate cases, such as in cases of iolations
of the Grid Code, 1istribution Code and other rules and regulations issued by the %RC inaccordance with law8
5r6 +ct on applications for cost recoery and return on de#and side #anage#ent pro;ects8
5s6 &n the e4ercise of its inestigatie and :uasi-;udicial powers, act on any co#plaint by or
against any participant or player in the energy sector for iolations of any laws, rules and
regulations goerning the sa#e, including the rules on cross-ownership, anti-co#petitie
practices and other acts of abuse of #aret positions by any participant or player in the energy
sector, as #ay be proided by law, and re:uire any person or entity to sub#it any report or data
relatie to any inestigation or hearing conducted in accordance with this +ct8
5t6 &nspect, on its own or through duly authori2ed representaties, the pre#ises, boos of
accounts and records of any person or entity at any ti#e, in the e4ercise of its :uasi-;udicial
power for purposes of deter#ining the e4istence of any anti-co#petitie behaior and7or #aret
power abuse and any iolation of rules and regulations issued by the %RC8
5u6 Perfor# such other regulatory functions as are appropriate in order to ensure the successful
restructuring and #oderni2ation of the electric power industry, such as, but not li#ited to, the
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rules and guidelines under which generation co#panies, distribution utilities which are not
publicly listed shall offer and sell to the public a portion not less than fifteen percent 5)?L6 of
their co##on shares of stocs$ Proided, howeer, That generation co#panies, distribution
utilities or their respectie holding co#panies that are already listed in the PS% are dee#ed in
co#pliance! For e4isting co#panies, such public offering shall be i#ple#ented not later than
fie 5?6 years fro# the effectiity of this +ct! (ew co#panies shall i#ple#ent their respectiepublic offerings not later than fie 5?6 years fro# the issuance of their certificate of co#pliance!
56 The %RC shall hae the original and e4clusie ;urisdiction oer all cases contesting rates,
fees, fines and penalties i#posed by the %RC in the e4ercise of the aboe#entioned powers,
functions and responsibilities and oer all cases inoling disputes between and a#ong
participants or players in the energy sector! +ll notices of hearings to be conducted by the %RC
for the purpose of fi4ing rates or fees shall be published at least twice for two successie wees
in two 5.6 newspapers of nationwide circulation!
Section ==! Transfer of Powers and Functions! - The powers and functions of the %nergy
Regulatory Board not inconsistent with the proisions of this +ct are hereby transferred to the%RC! The foregoing transfer of powers and functions shall include all applicable funds and
appropriations, records, e:uip#ent, property and personnel as #ay be necessary!
Section =?! Cross 'wnership, Maret Power +buse +nd +nti-Co#petitie Behaior! - (o
participant in the electricity industry #ay engage in any anti-co#petitie behaior including, but
not li#ited to, cross-subsidi2ation, price or #aret #anipulation, or other unfair trade practices
detri#ental to the encourage#ent and protection of contestable #arets!
(o generation co#pany or distribution utility, or its respectie subsidiary or affiliate or
stocholder or official of a generation co#pany or distribution utility, or other entity engaged in
generating and supplying electricity specified by %RC shall be allowed to hold any interest,
direct or indirect, in TR+(SC' or its concessionaire! Diewise, the TR+(SC', or its
concessionaire or any of its stocholders or officials or any of their relaties within the fourth ciil
degree of consanguinity or affinity, shall not hold any interest, whether direct or indirect, in any
generation co#pany or distribution utility! %4cept for goern#ent-appointed representaties, no
person who is an officer or director of TR+(SC' or its concessionaire shall be an officer or
director of any generation co#pany, distribution utility or supplier!
To pro#ote true #aret co#petition and preent har#ful #onopoly and #aret power abuse,
the %RC shall enforce the following safeguards$
5a6 Starting not later than fie 5?6 years fro# the approal of this +ct and until such ti#e that the
%RC has reduced the threshold leel to one hundred ilowatts 5)//
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definition of a grid when two or #ore of the three separate grids beco#e sufficiently
interconnected to constitute a single grid or as conditions #ay otherwise per#it!
%4ceptions fro# these li#itations shall be allowed for isolated grids that are not connected to
the high oltage trans#ission syste#! %4cept as otherwise proided for in this Section, any
restriction on ownership and7or control between or within sectors of the electricity industry #ay
be i#posed by %RC only insofar as the enforce#ent of the proisions of this Section is
concerned!
The %RC shall, within one 5)6 year fro# the effectiity of this +ct, pro#ulgate rules and
regulations to pro#ote co#petition, encourage #aret deelop#ent and custo#er choice and
discourage7penali2e abuse of #aret power, carteli2ation and any anti-co#petitie or
discri#inatory behaior, in order to further the intent of this +ct and protect the public interest!
Such rules and regulations shall define the following$
5a6 the releant #arets for purposes of establishing abuse or #isuse of #onopoly or #aret
position8
5b6 areas of isolated grids8 and
5c6 the periodic reportorial re:uire#ents of electric power industry participants as #ay be
necessary to enforce the proisions of this Section!
The %RC shall, #otu propio, #onitor and penali2e any #aret power abuse or anti-co#petitie
or discri#inatory act or behaior by any participant in the electric power industry!
pon finding that a #aret participant has engaged in such act or behaior, the %RC shall stop
and redress the sa#e! Such re#edies shall, without li#itation, include the i#position of price
controls, issuance of in;unctions, re:uire#ent of diest#ent or disgorge#ent of e4cess profitsand i#position of fines and penalties pursuant to this +ct!
The %RC shall, within one 5)6 year fro# the effectiity of this +ct, pro#ulgate rules and
regulations proiding for a co#plaint procedure that, without li#itation, proides the accused
party with notice and an opportunity to be heard!
Section =@! Fines and Penalties! - The fines and penalties that shall be i#posed by the %RC for
any iolation of or non-co#pliance with this +ct or the &RR shall range fro# a #ini#u# of Fifty
thousand pesos 5P?/,///!//6 to a #a4i#u# of Fifty #illion pesos 5P?/,///,///!//6!
+ny person who is found guilty of any of the prohibited acts pursuant to Section =? hereof shall
suffer the penalty of prision #ayor and a fine ranging fro# Ten thousand pesos 5P)/,///!//6 toTen #illion pesos 5P)/,///,///!//6, or both, at the discretion of the court!
The #e#bers of the Board of 1irectors of the ;uridical co#panies participating in or coered in
the generation co#panies, the distribution utilities, the TR+(SC' or its concessionaire or
supplier who iolate the proisions of this +ct #ay be fined by an a#ount not e4ceeding double
the a#ount of da#ages caused by the offender or by i#prison#ent of one year or two years or
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both at the discretion of the court! This rule shall apply to the #e#bers of the Board who
nowingly or by neglect allows the co##ission or o#ission under the law!
&f the offender is a goern#ent official or e#ployee, he shall, in addition, be dis#issed fro# the
goern#ent serice with pre;udice to reinstate#ent and with perpetual or te#porary
dis:ualification fro# holding any electie or appointie office!
&f the offender is an alien he #ay, in addition to the penalties prescribed, be deported without
further proceedings after serice of sentence!
+ny case which inoles :uestion of fact shall be appealable to the Court of +ppeals and those
which inole :uestion of law shall be directly appealable to the Supre#e Court! The
ad#inistratie sanction that #ay be i#posed by the %RC shall be without pre;udice to the filing
of a cri#inal action, if warranted!
To ensure co#pliance with this +ct, the penalty of prision correccional or a fine ranging fro#
Fie thousand pesos 5P?,///!//6 to Fie #illion pesos 5P?,///,///!//6, or both, at the
discretion of the court, shall be i#posed on any person, including but not li#ited to thepresident, #e#ber of the Board, Chief %4ecutie 'fficer or Chief 'perating 'fficer of the
corporation, partnership, or any other entity inoled, found guilty of iolating or refusing to
co#ply with any proision of this +ct or its &RR, other than those proided herein!
+ny party to an ad#inistratie proceeding #ay, at any ti#e, #ae an offer to the %RC,
conditionally or otherwise for a consented decree, oluntary co#pliance or desistance and other
settle#ent of the case! The offer and any or all of the ulti#ate facts upon which the offer is
based shall be considered for settle#ent purposes only and shall not be used as eidence
against any party for any other purpose and shall not constitute an ad#ission by the party
#aing the offer of any iolation of the laws, rules, regulations, orders and res