The inauguration of the National Grid Corporation of the Philippines Mariveles-Hermosa-San Jose 500kV transmission line in Barangay Balsik, Hermosa, Bataan on July 12, 2024. Niño Jesus Orbeta, PPA pool/File

MANILA -- Lawmakers raised supposed violations of the National Grid Corporation of the Philippines (NGCP) at the House Committee on Legislative Franchises hearing on Tuesday.

Among the issues brought up include alleged foreign ownership, ties to Chinese corporations and compliance with franchise tax liabilities.  

During the House panel hearing, Cagayan de Oro 2nd District Rep. Rufus Rodriguez questioned the need for the motu propio investigation on NGCP's franchise.

"The BIR in hearing of the Ways and Means has clearly stated that NGCP has paid all the tax liabilities of the company by Mr. Romeo Lumagi, the BIR chief," he said.

Energy Regulatory Commission (ERC) chairperson Monalisa Dimalanta likewise said the NGCP complied with its tax liabilities.

"In another hearing po, we confirm that what we have seen from our records is compliance with the 3 percent franchise tax," she said in response to Rodriguez.

In the House Committee on Ways and Means hearing last week, at least two congressmen called on NGCP to refund the franchise tax it passed on to consumers prior to the ERC's resolution on the matter. 

Since the ERC resolution, the Bureau of Internal Revenue said the NGCP has been regularly paying its taxes since 2018, amounting to about P1.3 to P1.5 billion annually.

"Precisely that was the issue. NGCP has complied. BIR said it has complied. Then why are we here?" Rodriguez asked. 

"Are we trying to dissolve the 50 year franchise of the NGCP? Is that the reason Mr. Chairman?" he added. 

Marikina Rep. Stella Quimbo maintained the NGCP was not compliant from 2011 to 2022 with respect to the non-passing of the franchise tax to consumers.

Surigao del Norte Rep. Robert Ace Barbers highlighted the need to find out who controls NGCP, given its ties to Chinese companies. He said this will be answered through the submission of the shareholders' agreement.

Meanwhile, House panel chairperson Parañaque Rep. Gus Tambunting emphasized the purpose of the hearing was to find out why projects are delayed and prices remain high.

House Deputy Speaker Quezon Rep. David Suarez said if there were objections to the motion on the motu propio investigation, it should have been submitted in writing.

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DISPERSAL OF OWNERSHIP

Santa Rosa, Laguna Rep. Dan Fernandez questioned the NGCP if it complied with Section 8 of Republic Act No. 9511 or the dispersal of ownership. 

The law provides for the listing and make a public offering of its shares representing at least 20% of its outstanding capital stock within 10 years of the start of operations.

"Did NGCP meet the legal requirement of an IPO within 10 years from the grant of  its franchise?" he asked.

"Our legal position is yes… NGCP was given six months from receipt of the order to complete the public listing process on or before November 10, 2021. Inorder rin kami to submit a monthly compliance report," NGCP assistant general counsel Atty. Lally Mallari said, citing the two ways for full compliance. 

ERC Commissioner Catherine Maceda confirmed the commission denied the NGCP's petition for approval of extension of the public listing of its shares of stock.

It also denied the motion for reconsideration, ordering NGCP to proceed with the IPO.

"The NGCP filed for clarification. We wanted to be clarified if we will be allowed the alternative mode under RA 9511," Mallari explained.

The alternative is the PSE listing of any company which directly or indirectly owns or controls at least 30% of the outstanding shares of stock.

"We have specified IPO because it was NGCP that elected the first mode of compliance which is the public listing or IPO. Pinanghawakan namin yung sinabi nila na mag-IIPO kami," ERC Commissioner Alexis Lumbatan said. 

"If we elected IPO, are we prohibited to choose an alternative? The majority decision of the ERC was that by earlier electing to pursue IPO you did not necessarily abandon the alternative mode of compliance. You may utilize the alternative mode," he added.

Fernandez maintained the NGCP's move is not compliant to the law and there was no mention of the supposed share swap, which he believes is not a public offering.

Dimalanta reiterated that the majority of the ERC approved the mode of dispersal and this has not been questioned before any court.

FOREIGN OWNERSHIP ISSUES

Batangas 2nd District Rep. Gerville Luistro asked NGCP legal counsel Atty. Pia San Diego regarding its compliance with constitutional provisions on foreign ownership and management structure of public utilities.

San Diego answered yes when asked if the NGCP followed the provision on ownership stating companies must be 60% Filipino-owned and 40% foreign-owned.

"The second important constitutional provision Mr. Chair is that the executive and managerial officers should be Filipino citizens. NGCP, did you comply with this constitutional provision, yes or no?" Luistro asked and San Diego replied in the affirmative. 

However, Luistro showed information revealing NGCP has officials who are Chinese nationals, including the individual supposedly listed as its chairman.

"Having said so, because the same is indicated in your document, do you maintain your position that the executive and managerial officers are Filipino citizens?" Luistro said.

"Your Honor, based on our general information sheet… the chairman of our board is Mr. Zhu Guangchao," San Diego answered. 

Mallari explained that the chairman merely presides over board meetings and has no influence.

"Your Honor, Mr. Zhu Guangchao is chairman of the board of directors, but our executive officials and officers are all Filipino," San Diego said.

The SEC was asked for its position on the issue of NGCP's chairmanship.

"An alien national can assume chairmanship of a board but shall be limited to presiding over a board meeting. If his role involves managerial roles, that is already violative of the constitution," Atty. Abigail Tria of the SEC said. 

Suarez argued that the chairmanship of the board should still be held by a Filipino.

"Sixty percent Filipino owned yan, mas gugustuhin ko na yung chairman ko Pilipino. Bakit ko ibibigay sa dayuhan yan? Eh 40% lang yung kanilang hawak," Suarez said.

ERC said it will evaluate the NGCP's management structure and will add it in its report.

Before the end of the hearing, Rodriguez once again laid down the arguments on why he believes the NGCP did not commit any violations.

House Committee on Ways and Means chairperson Rep. Joey Salceda earlier called for a probe on the ownership of NGCP to find out if it violated the Anti-Dummy Law.

This prohibits foreigners from intervening in the management, administration, or control of any nationalized activity.

The House panel approved the motion giving the NGCP within one week to submit the shareholders' agreement, which lawmakers believe is crucial to the investigation.