Section 5. Jurisdiction of family Courts.

- The Family Courts shall have exclusive original

jurisdiction to hear and decide the following cases:

a) Criminal cases where one or more of the accused is below eighteen (18) years of age but
not less than nine (9) years of age but not less than nine (9) years of age or where one or
more of the victims is a minor at the time of the commission of the offense: Provided, That if
the minor is found guilty, the court shall promulgate sentence and ascertain any civil liability
which the accused may have incurred.

The sentence, however, shall be suspended without need of application pursuant to

Presidential Decree No. 603, otherwise known as the "Child and Youth Welfare Code";

b) Petitions for guardianship, custody of children, habeas corpus in relation to the latter;

c) Petitions for adoption of children and the revocation thereof;

d) Complaints for annulment of marriage, declaration of nullity of marriage and those relating
to marital status and property relations of husband and wife or those living together under
different status and agreements, and petitions for dissolution of conjugal partnership of
gains;

e) Petitions for support and/or acknowledgment;

f) Summary judicial proceedings brought under the provisions of Executive Order No. 209,
otherwise known as the "Family Code of the Philippines";

g) Petitions for declaration of status of children as abandoned, dependent o neglected

children, petitions for voluntary or involuntary commitment of children; the suspension,
termination, or restoration of parental authority and other cases cognizable under
Presidential Decree No. 603, Executive Order No. 56, (Series of 1986), and other related
laws;

h) Petitions for the constitution of the family home;

i) Cases against minors cognizable under the Dangerous Drugs Act, as amended;

j) Violations of Republic Act No. 7610, otherwise known as the "Special Protection of
Children Against Child Abuse, Exploitation and Discrimination Act," as amended by Republic
Act No. 7658; and

k) Cases of domestic violence against:

1) Women - which are acts of gender based violence that results, or are likely to
result in physical, sexual or psychological harm or suffering to women; and other
forms of physical abuse such as battering or threats and coercion which violate a
woman's personhood, integrity and freedom movement; and
 2) Children - which include the commission of all forms of abuse, neglect, cruelty,
exploitation, violence, and discrimination and all other conditions prejudicial to their
development.

If an act constitutes a criminal offense, the accused or batterer shall be subject to criminal
proceedings and the corresponding penalties.

If any question involving any of the above matters should arise as an incident in any case pending in
the regular courts, said incident shall be determined in that court.

SEC. 5. Powers and Functions of the Commission.- 5.1. The Commission shall act
with transparency and shall have the powers and functions provided by this Code,
Presidential Decree No. 902-A, the Corporation Code, the Investment Houses Law,
the Financing Company Act and other existing laws. Pursuant thereto the
Commission shall have, among others, the following powers and functions:
(a) Have jurisdiction and supervision over all corporations, partnerships or
associations who are the grantees of primary franchises and/or a license
or permit issued by the Government;
(b) Formulate policies and recommendations on issues concerning the securities
market, advise Congress and other government agencies on all aspects of the
securities market and propose legislation and amendments thereto;
(c) Approve, reject, suspend, revoke or require amendments to registration
statements, and registration and licensing applications;
(d) Regulate, investigate or supervise the activities of persons to ensure
compliance;
(e) Supervise, monitor, suspend or take over the activities of exchanges, clearing
agencies and other SROs;
(f) Impose sanctions for the violation of laws and the rules, regulations
and orders issued pursuant thereto;
(g) Prepare, approve, amend or repeal rules, regulations and orders, and issue
opinions and provide guidance on and supervise compliance with such rules,
regulations and orders;
(h) Enlist the aid and support of and/or deputize any and all enforcement agencies
of the Government, civil or military as well as any private institution, corporation,
firm, association or person in the implementation of its powers and functions under
this Code;
(i) Issue cease and desist orders to prevent fraud or injury to the investing public;
(j) Punish for contempt of the Commission, both direct and indirect, in
accordance with the pertinent provisions of and penalties prescribed by
the Rules of Court;
(k) Compel the officers of any registered corporation or association to call meetings
of stockholders or members thereof under its supervision;
(l) Issue subpoena duces tecum and summon witnesses to appear in any
proceedings of the Commission and in appropriate cases, order the
examination, search and seizure of all documents, papers, files and
records, tax returns, and books of accounts of any entity or person under
investigation as may be necessary for the proper disposition of the cases
before it, subject to the provisions of existing laws;
(m) Suspend, or revoke, after proper notice and hearing the franchise or certificate
of registration of corporations, partnerships or associations, upon any of the
grounds provided by law; and
(n) Exercise such other powers as may be provided by law as well as those which
may be implied from, or which are necessary or incidental to the carrying out of, the
express powers granted the Commission to achieve the objectives and purposes of
these laws.

Chapter I
CREATION AND COMPOSITION

Article 213. National Labor Relations Commission. There shall be a National Labor Relations
Commission which shall be attached to the Department of Labor and Employment for program and
policy coordination only, composed of a Chairman and fourteen (14) Members.

Five (5) members each shall be chosen from among the nominees of the workers and
employers organizations, respectively. The Chairman and the four (4) remaining members
shall come from the public sector, with the latter to be chosen from among the
recommendees of the Secretary of Labor and Employment.

Upon assumption into office, the members nominated by the workers and employers organizations
shall divest themselves of any affiliation with or interest in the federation or association to which they
belong.

The Commission may sit en banc or in five (5) divisions, each composed of three (3) members.
Subject to the penultimate sentence of this paragraph, the Commission shall sit en banc only for
purposes of promulgating rules and regulations governing the hearing and disposition of cases
before any of its divisions and regional branches, and formulating policies affecting its administration
and operations. The Commission shall exercise its adjudicatory and all other powers, functions, and
duties through its divisions. Of the five (5) divisions, the first, second and third divisions shall handle
cases coming from the National Capital Region and the parts of Luzon; and the fourth and fifth
divisions, cases from the Visayas and Mindanao, respectively; Provided that the Commission sitting
en banc may, on temporary or emergency basis, allow cases within the jurisdiction of any division to
be heard and decided by any other division whose docket allows the additional workload and such
transfer will not expose litigants to unnecessary additional expense. The divisions of the Commission
shall have exclusive appellate jurisdiction over cases within their respective territorial jurisdictions.
[As amended by Republic Act No. 7700].

The concurrence of two (2) Commissioners of a division shall be necessary for the
pronouncement of judgment or resolution. Whenever the required membership in a division is
not complete and the concurrence of two (2) commissioners to arrive at a judgment or resolution
cannot be obtained, the Chairman shall designate such number of additional Commissioners from
the other divisions as may be necessary.

The conclusions of a division on any case submitted to it for decision shall be reached in
consultation before the case is assigned to a member for the writing of the opinion. It shall be
mandatory for the division to meet for purposes of the consultation ordained herein. A certification to
this effect signed by the Presiding Commissioner of the division shall be issued and a copy thereof
attached to the record of the case and served upon the parties.

The Chairman shall be the Presiding Commissioner of the first division and the four (4) other
members from the public sector shall be the Presiding Commissioners of the second, third, fourth
and fifth divisions, respectively. In case of the effective absence or incapacity of the Chairman, the
Presiding Commissioner of the second division shall be the Acting Chairman.

The Chairman, aided by the Executive Clerk of the Commission, shall have administrative
supervision over the Commission and its regional branches and all its personnel, including the
Executive Labor Arbiters and Labor Arbiters.

The Commission, when sitting en banc shall be assisted by the same Executive Clerk and, when
acting thru its Divisions, by said Executive Clerks for the second, third, fourth and fifth Divisions,
respectively, in the performance of such similar or equivalent functions and duties as are discharged
by the Clerk of Court and Deputy Clerks of Court of the Court of Appeals. (As amended by Section 5,
Republic Act No. 6715, March 21, 1989)

Article 214. Headquarters, Branches and Provincial Extension Units. The Commission and its First,
Second and Third divisions shall have their main offices in Metropolitan Manila, and the Fourth
and Fifth divisions in the Cities of Cebu and Cagayan de Oro, respectively. The Commission
shall establish as many regional branches as there are regional offices of the Department of
Labor and Employment, sub-regional branches or provincial extension units. There shall be as many
Labor Arbiters as may be necessary for the effective and efficient operation of the
Commission. Each regional branch shall be headed by an Executive Labor Arbiter. (As
amended by Section 6, Republic Act No. 6715, March 21, 1989)

Article 215. Appointment and Qualifications. The Chairman and other Commissioners shall be
members of the Philippine Bar and must have engaged in the practice of law in the
Philippines for at least fifteen (15) years, with at least five (5) years experience or exposure in
the field of labor-management relations, and shall preferably be residents of the region where
they are to hold office. The Executive Labor Arbiters and Labor Arbiters shall likewise be
members of the Philippine Bar and must have been engaged in the practice of law in the
Philippines for at least seven (7) years, with at least three (3) years experience or exposure in
the field of labor-management relations: Provided, However, that incumbent Executive Labor
Arbiters and Labor Arbiters who have been engaged in the practice of law for at least five (5)
years may be considered as already qualified for purposes of reappointment as such under this
Act. The Chairman and the other Commissioners, the Executive Labor Arbiters and Labor Arbiters
shall hold office during good behavior until they reach the age of sixty-five years, unless sooner
removed for cause as provided by law or become incapacitated to discharge the duties of their
office.

The Chairman, the division Presiding Commissioners and other Commissioners shall be
appointed by the President, subject to confirmation by the Commission on Appointments.
Appointment to any vacancy shall come from the nominees of the sector which nominated the
predecessor. The Executive Labor Arbiters and Labor Arbiters shall also be appointed by the
President, upon recommendation of the Secretary of Labor and Employment and shall be subject to
the Civil Service Law, rules and regulations.

The Secretary of Labor and Employment shall, in consultation with the Chairman of the Commission,
appoint the staff and employees of the Commission and its regional branches as the needs of the
service may require, subject to the Civil Service Law, rules and regulations, and upgrade their
current salaries, benefits and other emoluments in accordance with law. (As amended by Section 7,
Republic Act No. 6715, March 21, 1989)

Article 216. Salaries, benefits and other emoluments. The Chairman and members of the
Commission shall receive an annual salary at least equivalent to, and be entitled to the same
allowances and benefits as those of the Presiding Justice and Associate Justices of the Court of
Appeals, respectively. The Executive Labor Arbiters shall receive an annual salary at least equivalent
to that of an Assistant Regional Director of the Department of Labor and Employment and shall be
entitled to the same allowances and benefits as that of a Regional Director of said Department. The
Labor Arbiters shall receive an annual salary at least equivalent to, and be entitled to the same
allowances and benefits as that of an Assistant Regional Director of the Department of Labor and
Employment. In no case, however, shall the provision of this Article result in the diminution of
existing salaries, allowances and benefits of the aforementioned officials. (As amended by Section 8,
Republic Act No. 6715, March 21, 1989)

Chapter II
POWERS AND DUTIES

Article 217. Jurisdiction of the Labor Arbiters and the Commission.

Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive
jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the
case by the parties for decision without extension, even in the absence of stenographic
notes, the following cases involving all workers, whether agricultural or non-agricultural:

Unfair labor practice cases;

Termination disputes;

If accompanied with a claim for reinstatement, those cases that workers may file involving
wages, rates of pay, hours of work and other terms and conditions of employment;
Claims for actual, moral, exemplary and other forms of damages arising from the employer-
employee relations;

Cases arising from any violation of Article 264 of this Code, including questions involving the
legality of strikes and lockouts; and

Except claims for Employees Compensation, Social Security, Medicare and maternity
benefits, all other claims arising from employer-employee relations, including those of
persons in domestic or household service, involving an amount exceeding five thousand
pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.

The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor
Arbiters.

Cases arising from the interpretation or implementation of collective bargaining agreements

and those arising from the interpretation or enforcement of company personnel policies shall
be disposed of by the Labor Arbiter by referring the same to the grievance machinery and
voluntary arbitration as may be provided in said agreements. (As amended by Section 9,
Republic Act No. 6715, March 21, 1989)

Article 218. Powers of the Commission. The Commission shall have the power and authority:

To promulgate rules and regulations governing the hearing and disposition of cases before it
and its regional branches, as well as those pertaining to its internal functions and such rules
and regulations as may be necessary to carry out the purposes of this Code; (As amended by
Section 10, Republic Act No. 6715, March 21, 1989)

To administer oaths, summon the parties to a controversy, issue subpoenas requiring the attendance
and testimony of witnesses or the production of such books, papers, contracts, records, statement of
accounts, agreements, and others as may be material to a just determination of the matter under
investigation, and to testify in any investigation or hearing conducted in pursuance of this Code;

To conduct investigation for the determination of a question, matter or controversy within its
jurisdiction, proceed to hear and determine the disputes in the absence of any party thereto who has
been summoned or served with notice to appear, conduct its proceedings or any part thereof in
public or in private, adjourn its hearings to any time and place, refer technical matters or accounts to
an expert and to accept his report as evidence after hearing of the parties upon due notice, direct
parties to be joined in or excluded from the proceedings, correct, amend, or waive any error, defect
or irregularity whether in substance or in form, give all such directions as it may deem necessary or
expedient in the determination of the dispute before it, and dismiss any matter or refrain from further
hearing or from determining the dispute or part thereof, where it is trivial or where further
proceedings by the Commission are not necessary or desirable; and

To hold any person in contempt directly or indirectly and impose appropriate penalties therefor in
accordance with law.

A person guilty of misbehavior in the presence of or so near the Chairman or any member of the
Commission or any Labor Arbiter as to obstruct or interrupt the proceedings before the same,
including disrespect toward said officials, offensive personalities toward others, or refusal to be
sworn, or to answer as a witness or to subscribe an affidavit or deposition when lawfully required to
do so, may be summarily adjudged in direct contempt by said officials and punished by fine not
exceeding five hundred pesos (P500) or imprisonment not exceeding five (5) days, or both, if it be
the Commission, or a member thereof, or by a fine not exceeding one hundred pesos (P100) or
imprisonment not exceeding one (1) day, or both, if it be a Labor Arbiter.

The person adjudged in direct contempt by a Labor Arbiter may appeal to the Commission and the
execution of the judgment shall be suspended pending the resolution of the appeal upon the filing by
such person of a bond on condition that he will abide by and perform the judgment of the
Commission should the appeal be decided against him. Judgment of the Commission on direct
contempt is immediately executory and unappealable. Indirect contempt shall be dealt with by the
Commission or Labor Arbiter in the manner prescribed under Rule 71 of the Revised Rules of Court;
and (As amended by Section 10, Republic Act No. 6715, March 21, 1989)

To enjoin or restrain any actual or threatened commission of any or all prohibited or unlawful acts or
to require the performance of a particular act in any labor dispute which, if not restrained or
performed forthwith, may cause grave or irreparable damage to any party or render ineffectual any
decision in favor of such party: Provided, That no temporary or permanent injunction in any case
involving or growing out of a labor dispute as defined in this Code shall be issued except after
hearing the testimony of witnesses, with opportunity for cross-examination, in support of the
allegations of a complaint made under oath, and testimony in opposition thereto, if offered, and only
after a finding of fact by the Commission, to the effect:

That prohibited or unlawful acts have been threatened and will be committed and will be continued
unless restrained, but no injunction or temporary restraining order shall be issued on account of any
threat, prohibited or unlawful act, except against the person or persons, association or organization
making the threat or committing the prohibited or unlawful act or actually authorizing or ratifying the
same after actual knowledge thereof;

That substantial and irreparable injury to complainants property will follow;

That as to each item of relief to be granted, greater injury will be inflicted upon complainant by the
denial of relief than will be inflicted upon defendants by the granting of relief;

That complainant has no adequate remedy at law; and

That the public officers charged with the duty to protect complainants property are unable or
unwilling to furnish adequate protection.

Such hearing shall be held after due and personal notice thereof has been served, in such manner
as the Commission shall direct, to all known persons against whom relief is sought, and also to the
Chief Executive and other public officials of the province or city within which the unlawful acts have
been threatened or committed, charged with the duty to protect complainants property: Provided,
however, that if a complainant shall also allege that, unless a temporary restraining order shall be
issued without notice, a substantial and irreparable injury to complainants property will be
unavoidable, such a temporary restraining order may be issued upon testimony under oath,
sufficient, if sustained, to justify the Commission in issuing a temporary injunction upon hearing after
notice. Such a temporary restraining order shall be effective for no longer than twenty (20) days and
shall become void at the expiration of said twenty (20) days. No such temporary restraining order or
temporary injunction shall be issued except on condition that complainant shall first file an
undertaking with adequate security in an amount to be fixed by the Commission sufficient to
recompense those enjoined for any loss, expense or damage caused by the improvident or
erroneous issuance of such order or injunction, including all reasonable costs, together with a
reasonable attorneys fee, and expense of defense against the order or against the granting of any
injunctive relief sought in the same proceeding and subsequently denied by the Commission.

The undertaking herein mentioned shall be understood to constitute an agreement entered into by
the complainant and the surety upon which an order may be rendered in the same suit or proceeding
against said complainant and surety, upon a hearing to assess damages, of which hearing,
complainant and surety shall have reasonable notice, the said complainant and surety submitting
themselves to the jurisdiction of the Commission for that purpose. But nothing herein contained shall
deprive any party having a claim or cause of action under or upon such undertaking from electing to
pursue his ordinary remedy by suit at law or in equity: Provided, further, That the reception of
evidence for the application of a writ of injunction may be delegated by the Commission to any of its
Labor Arbiters who shall conduct such hearings in such places as he may determine to be
accessible to the parties and their witnesses and shall submit thereafter his recommendation to the
Commission. (As amended by Section 10, Republic Act No. 6715, March 21, 1989)

Article 219. Ocular inspection. The Chairman, any Commissioner, Labor Arbiter or their duly
authorized representatives, may, at any time during working hours, conduct an ocular inspection on
any establishment, building, ship or vessel, place or premises, including any work, material,
implement, machinery, appliance or any object therein, and ask any employee, laborer, or any
person, as the case may be, for any information or data concerning any matter or question relative to
the object of the investigation.

Article 220. Compulsory arbitration. The Commission or any Labor Arbiter shall have the power to
ask the assistance of other government officials and qualified private citizens to act as compulsory
arbitrators on cases referred to them and to fix and assess the fees of such compulsory arbitrators,
taking into account the nature of the case, the time consumed in hearing the case, the professional
standing of the arbitrators, the financial capacity of the parties, and the fees provided in the Rules of
Court.] (Repealed by Section 16, Batas Pambansa Bilang 130, August 21, 1981)

Article 221. Technical rules not binding and prior resort to amicable settlement. In any proceeding
before the Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts of law
or equity shall not be controlling and it is the spirit and intention of this Code that the Commission
and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the
facts in each case speedily and objectively and without regard to technicalities of law or procedure,
all in the interest of due process. In any proceeding before the Commission or any Labor Arbiter, the
parties may be represented by legal counsel but it shall be the duty of the Chairman, any Presiding
Commissioner or Commissioner or any Labor Arbiter to exercise complete control of the proceedings
at all stages.

Any provision of law to the contrary notwithstanding, the Labor Arbiter shall exert all efforts towards
the amicable settlement of a labor dispute within his jurisdiction on or before the first hearing. The
same rule shall apply to the Commission in the exercise of its original jurisdiction. (As amended by
Section 11, Republic Act No. 6715, March 21, 1989)

Article 222. Appearances and Fees.

Non-lawyers may appear before the Commission or any Labor Arbiter only:

If they represent themselves; or

If they represent their organization or members thereof.

No attorneys fees, negotiation fees or similar charges of any kind arising from any collective
bargaining agreement shall be imposed on any individual member of the contracting union:
Provided, However, that attorneys fees may be charged against union funds in an amount to be
agreed upon by the parties. Any contract, agreement or arrangement of any sort to the contrary shall
be null and void. (As amended by Presidential Decree No. 1691, May 1, 1980)

Chapter III
APPEAL

Article 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless
appealed to the Commission by any or both parties within ten (10) calendar days from receipt of
such decisions, awards, or orders. Such appeal may be entertained only on any of the following
grounds:

If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter;

If the decision, order or award was secured through fraud or coercion, including graft and corruption;

If made purely on questions of law; and

If serious errors in the findings of facts are raised which would cause grave or irreparable damage or
injury to the appellant.

In case of a judgment involving a monetary award, an appeal by the employer may be perfected only
upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited
by the Commission in the amount equivalent to the monetary award in the judgment appealed from.

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee,
insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending
appeal. The employee shall either be admitted back to work under the same terms and conditions
prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in
the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement
provided herein.

To discourage frivolous or dilatory appeals, the Commission or the Labor Arbiter shall impose
reasonable penalty, including fines or censures, upon the erring parties.

In all cases, the appellant shall furnish a copy of the memorandum of appeal to the other party who
shall file an answer not later than ten (10) calendar days from receipt thereof.
The Commission shall decide all cases within twenty (20) calendar days from receipt of the answer
of the appellee. The decision of the Commission shall be final and executory after ten (10) calendar
days from receipt thereof by the parties.

Any law enforcement agency may be deputized by the Secretary of Labor and Employment or the
Commission in the enforcement of decisions, awards or orders. (As amended by Section 12,
Republic Act No. 6715, March 21, 1989)

Article 224. Execution of decisions, orders or awards.

The Secretary of Labor and Employment or any Regional Director, the Commission or any Labor
Arbiter, or Med-Arbiter or Voluntary Arbitrator may, motu proprio or on motion of any interested party,
issue a writ of execution on a judgment within five (5) years from the date it becomes final and
executory, requiring a sheriff or a duly deputized officer to execute or enforce final decisions, orders
or awards of the Secretary of Labor and Employment or regional director, the Commission, the Labor
Arbiter or med-arbiter, or voluntary arbitrators. In any case, it shall be the duty of the responsible
officer to separately furnish immediately the counsels of record and the parties with copies of said
decisions, orders or awards. Failure to comply with the duty prescribed herein shall subject such
responsible officer to appropriate administrative sanctions.

The Secretary of Labor and Employment, and the Chairman of the Commission may designate
special sheriffs and take any measure under existing laws to ensure compliance with their decisions,
orders or awards and those of the Labor Arbiters and voluntary arbitrators, including the imposition
of administrative fines which shall not be less than P500.00 nor more than P10,000.00. (As
amended by Section 13, Republic Act No. 6715, March 21, 1989)

Article 225. Contempt powers of the Secretary of Labor. In the exercise of his powers under this
Code, the Secretary of Labor may hold any person in direct or indirect contempt and impose the
appropriate penalties therefor.

Title 1
ADMINISTRATIVE AND ADJUDICATORY POWERS

Section 414. The Insurance Commissioner shall have the duty to see that all laws relating to
insurance, insurance companies and other insurance matters, mutual benefit associations, and
trusts for charitable uses are faithfully executed and to perform the duties imposed upon him by this
Code, and shall, notwithstanding any existing laws to the contrary, have sole and exclusive authority
to regulate the issuance and sale of variable contracts as defined in section two hundred thirty-two
and to provide for the licensing of persons selling such contracts, and to issue such reasonable rules
and regulations governing the same.

The Commissioner may issue such ruling, instructions, circulars, orders and decision as he may
deem necessary to secure the enforcement of the provisions of this Code, subject to the approval of
the Secretary of Finance. Except as otherwise specified, decisions made by the Commissioner shall
be appealable to the Secretary of Finance.
Section 415. In addition to the administrative sanctions provided elsewhere in this Code, the
Insurance Commissioner is hereby authorized, at his discretion, to impose upon the insurance
companies, their directors and/or officers and/or agents, for any willful failure or refusal to comply
with, or violation of any provision of this Code, or any order, instruction, regulation, or ruling of the
Insurance Commissioner, or any commission or irregularities, and/or conducting business in an
unsafe or unsound manner as may be determined by the Insurance Commissioner, the following:

(a) fines not in excess of five hundred pesos a day; and

(b) suspension, or after due hearing, removal of directors and/or officers and/or agents.

Section 416. The Commissioner shall have the power to adjudicate claims and complaints involving
any loss, damage or liability for which in insurer may be answerable under any kind of policy or
contract of insurance, or for which such insurer may be liable under a contract of suretyship, or for
which a reinsurer may be sued under any contract of reinsurance it may have entered into; or for
which a mutual benefit association may be held liable under the membership certificates it has
issued to its members, where the amount of any such loss, damage or liability, excluding interest,
cost and attorney's fees, being claimed or sued upon any kind of insurance, bond, reinsurance
contract, or membership certificate does not exceed in any single claim one hundred thousand
pesos.

The insurer or surety may, in the same action file a counterclaim against the insured or the obligee.

The insurer or surety may also file a cross-claim against a party for any claim arising out of the
transaction or occurrence that is the subject matter of the original action or of a counterclaim therein.

With leave of the Commissioner, an insurer or surety may file a third-party complaint against its
reinsurers for indemnification, contribution, subrogation or any other relief, in respect of the
transaction that is the subject matter of the original action filed with the Commissioner.

The party filing an action pursuant to the provisions of this section thereby submits his person to the
jurisdiction of the Commissioner. The Commissioner shall acquire jurisdiction over the person of the
impleaded party or parties in accordance with and pursuant to the provisions of the Rules of Court.

The authority to adjudicate granted to the Commissioner under this section shall be concurrent with
that of the civil courts, but the filing of a complaint with the Commissioner shall preclude the civil
courts from taking cognizance of a suit involving the same subject matter.

Any decision, order or ruling rendered by the Commissioner after a hearing shall have the force and
effect of a judgment. Any party may appeal from a final order, ruling or decision of the Commissioner
by filing with the Commissioner within thirty days from receipt of copy of such order, ruling or
decision a notice of appeal and with the Supreme Court twelve printed or mimeographed copies of a
petition for certiorari or review of such order, ruling or decision, as the case may be. A copy of the
petition shall be served upon the Commissioner and upon the adverse party, and proof of service
thereof attached to the original of the petition.

As soon as a decision, order or ruling has become final and executory, the Commissioner shall motu
propio or on motion of the interested party, issue a writ of execution required the sheriff or the proper
officer to whom it is directed to execute said decision, order or award, pursuant to Rule thirty-nine of
the Rules of Court.

For the purpose of any proceeding under this section, the Commissioner, or any officer thereof
designated by him, empowered to administer oaths and affirmation, subpoena witnesses, compel
their attendance, take evidence, and require the production of any books, papers, documents, or
contracts or other records which are relevant or material to the inquiry. In case of contumacy by, or
refusal to obey a subpoena issued to any person, the Commissioner may invoke the aid of any court
of first instance within the jurisdiction of which such proceeding is carried on, where such person
resides or carries on his own business, in requiring the attendance and testimony of witnesses and
the production of books, papers, documents, contracts or other records. And such court may issue
an order requiring such person to appear before the Commissioner, or officer designated by the
Commissioner, there to produce records, if so ordered or to give testimony touching the matter in
question. Any failure to obey such order of the court may be published by such court as a contempt
thereof.

A full and complete record shall be kept of all proceedings had before the commissioner, or the
officers thereof designated by him, and all testimony shall be taken down and transcribed by a
stenographer appointed by the Commissioner.

A transcribed copy of the evidence and proceeding, or any specific part thereof, of any hearing taken
by a stenographer appointed by the Commissioner, being certified by such stenographer to be a true
and correct transcript of the testimony on this hearing of a particular witness, or of a specific proof
thereof, carefully compared by him from his original notes, and to be a correct statement of evidence
and proceeding had in such hearing so purporting to be taken and subscribed, may be received as
evidence by the Commissioner and by any court with the same effect as if such stenographer were
present and testified to the facts so certified. (As amended by Presidential Decree No. 1455)

SEC. 38. Creation of the Energy Regulatory Commission. There is hereby created an
independent, quasi-judicial regulatory body to be named the Energy Regulatory
Commissions (ERC). For this purpose, the existing Energy Regulatory Board (ERB)
created under Executive Order No. 172, as amended, is hereby abolished.
The Commission shall be composed of a Chairman and four (4) members to be
appointed by the President of the Philippines. The Chairman and the members of
the Commission shall be natural-born citizens and residents of the Philippines,
persons of good moral character, at least thirty-five (35) years of age, and of
recognized competence in any of the following fields: energy, law, economics,
finance, commerce, or engineering, with at least three (3) years actual and
distinguished experience in their respective fields of expertise: Provided, That out of
the four (4) members of the Commission, at least one (1) shall be a member of the
Philippine Bar with at least ten (10) years experience in the active practice of law,
and one (1) shall be a certified public accountant with at least ten (10) years
experience in active practice.
Within three (3) months from the creation of the ERC, the Chairman shall submit for
the approval by the President of the Philippines the new organizational structure
and plantilla positions necessary to carry out the powers and functions of the ERC.
The Chairman of the Commission, who shall be a member of the Philippine Bar, shall
act as the Chief Executive Officer of the Commission.
All members of the Commission shall have a term of seven (7) years: Provided, That
for the first appointees, the Chairman shall hold office for seven (7) years, two (2)
members shall hold office for five (5) years and the other two (2) members shall
hold office for three (3) years; Provided, further, That appointment to any future
vacancy shall only be for the unexpired term of the predecessor: Provided, finally,
That there shall be no reappointment and in no case shall any member serve for
more than seven (7) years in the Commission.
The Chairman and members of the Commission shall assume office of the beginning
of their terms: Provided, That, if upon the effectivity of this Act, the Commission has
not been constituted and the new staffing pattern and plantilla positions have not
been approved and filled-up, the current Board and existing personnel of ERB shall
continue to hold office.
The existing personnel of the ERB, if qualified, shall be given preference in the filling
up of plantilla positions created in the ERC, subject to existing civil service rules and
regulations.
Members of the Commission shall enjoy security of tenure and shall not be
suspended or removed from office except for just cause as specified by law.
The Chairman and members of the Commission or any of their relatives within the
fourth civil degree of consanguinity or affinity, legitimate or common law, shall be
prohibited from holding any interest whatsoever, either as investor, stockholder,
officer or director, in any company or entity engaged in the business of transmitting,
generating, supplying or distributing any form of energy and must, therefore, divest
through sale or legal disposition of any and all interests in the energy sector upon
assumption of office.
The presence of at least three (3) members of the Commission shall constitute a
quorum and the majority vote of two (2) members in a meeting where a quorum is
present shall be necessary for the adoption of any rule, ruling, order, resolution,
decision, or other act of the Commission in the exercise of its quasi-judicial
functions: Provided, That in fixing rates and tariffs, an affirmative vote of three (3)
members shall be required.

SEC. 41. Promotion of Consumer Interests. The ERC shall handle consumer
complaints and ensure the adequate promotion of consumer interests.
SEC. 43. Functions of the ERC. The ERC shall promote competition, encourage
market development, ensure customer choice and penalize abuse of market power
in the restructured electricity industry. In appropriate cases, the ERC is authorized to
issue cease and desist order after due notice and hearing. Towards this end, it shall
be responsible for the following key functions in the restuctured industry:
(a) Enforce the implementing rules and regulations of this Act;
(b) Within six (6) months from the effectivity of this Act, promulgate and enforce, in
accordance with law, a National Grid Code and a Distribution Code which shall
include, but not limited to, the following:
(i) Performance standards for TRANSCO O & M Concessionaire, distribution utilities
and suppliers: Provided, That in the establishment of the performance standards,
the nature and function of the entities shall be considered; and
(ii) Financial capability standards for the generating companies, the TRANSCO,
distribution utilities and suppliers: Provided, further, That such standards are set to
ensure that the electric power industry participants meet the minimum financial
standards to protect the public interest. Determine, fix, and approve, after due
notice and public hearings the universal charge, to be imposed on all electricity
end-users pursuant to Section 34 hereof.
(c) Enforce the rules and regulations governing the operations of the electricity spot
market and the activities of the spot market operator and other participants in the
spot market, for the purpose of ensuring a greater supply and rational pricing of
electricity;
(d) Determine the level of cross subsidies in the existing retail rate until the same is
removed pursuant to Section 74 hereof;
(e) Amend or revoke, after due notice and hearing, the authority to operate of any
person or entity which fails to comply with the provisions hereof, the IRR or any
order or resolution of the ERC. In the event a divestment is required, the ERC shall
allow the affected party sufficient time to remedy the infraction or for an orderly
disposal, but in no case exceed twelve (12) months from the issuance of the order;
(f) In the public interest, establish and enforce a methodology for setting
transmission and distribution wheeling rates and retail rates for the captive market
of a distribution utility, taking intro account all relevant considerations, including the
efficiency or inefficiency of the regulated entities. The rates must be such as to
allow the recovery of just and reasonable costs and a reasonable return on rate
base (RORB) to enable the entity to operate viably. The ERC may adopt alternative
forms of internationally-accepted rate-setting methodology as it may deem
appropriate. The rate-setting methodology so adopted and applied must ensure a
reasonable price of electricity. The rates prescribed shall be non-discriminatory. To
achieve this objective and to ensure the complete removal of cross subsidies, the
cap on the recoverable rate of system losses prescribed in Section 10 of Republic
Act No. 7832, is hereby amended and shall be replaced by caps which shall be
determined by the ERC based on load density, sales mix, cost of service, delivery
voltage and other technical considerations it may promulgate. The ERC shall
determine such form or rate-setting methodology, which shall promote efficiency. In
case the rate setting methodology used is RORB, it shall be subject to the following
guidelines:
(i) For purposes of determining the rate base, the TRANSCO or any distribution
utility may be allowed to revalue its eligible assets not more than once every three
(3) years by an independent appraisal company: Provided, however, That ERC may
give an exemption in case of unusual devaluation: Provided, further, That the ERC
shall exert efforts to minimize price shocks in order to protect the consumers;
(ii) Interest expenses are not allowable deductions from permissible return on rate
base;
(iii) In determining eligible cost of services that will be passed on to the end-users,
the ERC shall establish minimum efficiency performance standards for the TRANSCO
and distribution utilities including systems losses, interruption frequency rates, and
collection efficiency;
(iv) Further, in determining rate base, the TRANSCO or any distribution utility shall
not be allowed to include management inefficiencies like cost of project delays not
excused by force majeure, penalties and related interest during construction
applicable to these unexcused delays; and (v) Any significant operating costs or
project investments of the TRANSCO and distribution utilities which shall become
part of the rate base shall be subject to verification by the ERC to ensure that the
contracting and procurement of the equipment, assets and services have been
subjected to transparent and accepted industry procurement and purchasing
practices to protect the public interest.
(g) Three (3) years after the imposition of the universal charge, ensure that the
charges of the TRANSCO or any distribution utility shall bear no cross subsidies
between grids, within grids, or between classes of customers, except as provided
herein;
(h) Review and approve any changes on the terms and conditions of service of the
TRANSCO or any distribution utility;
(i) Allow the TRANSCO to charge user fees for ancillary services to all electric power
industry participants or self-generating entities connected to the grid. Such fees
shall be fixed by the ERC after due notice and public hearing;
(j) Set a lifeline rate for the marginalized end-users;
(k) Monitor and take measures in accordance with this Act to penalize abuse of
market power, cartelization, and anti-competitive or discriminatory behavior by any
electric power industry participant;
(l) Impose fines or penalties for any non-compliance with or breach of this Act, the
IRR of this Act and the rules and regulations which it promulgates or administers;
(m) Take any other action delegated to it pursuant to this Act;
(n) Before the end of April of each year, submit to the Office of the President of the
Philippines and Congress, copy furnished the DOE, an annual report containing such
matters or cases which have been filed before or referred to it during the preceding
year, the actions and proceedings undertaken and its decision or resolution in each
case. The ERC shall make copies of such reports available to any interested party
upon payment of a charge which reflects the printing costs. The ERC shall publish all
its decisions involving rates and anticompetitive cases in at least one (1) newspaper
of general circulation, and/or post electronically and circulate to all interested
electric power industry participants copies of its resolutions to ensure fair and
impartial treatment;
(o) Monitor the activities in the generation and supply of the electric power industry
with the end in view of promoting free market competition and ensuring that the
allocation or pass through of bulk purchase cost by distributors is transparent, non-
discriminatory and that any existing subsidies shall be divided pro-rata among all
retail suppliers;
(p) Act on applications for or modifications of certificates of public convenience
and/or necessity, licenses or permits of franchised electric utilities in accordance
with law and revoke, review and modify such certificates, licenses or permits in
appropriate cases, such as in cases of violations of the Grid Code, Distribution Code
and other rules and regulations issued by the ERC in accordance with law;
(q) Act on applications for cost recovery and return on demand side management
projects;
(r) In the exercise of its investigative and quasi-judicial powers, act against any
participant or player in the energy sector for violations of any law, rule and
regulation governing the same, including the rules on cross-ownership, anti-
competitive practices, abuse of market positions and similar or related acts by any
participant in the energy sector or by any person, as may be provided by law, and
require any person or entity to submit any report or data relative to any
investigation or hearing conducted pursuant to this Act;
(s) Inspect, on its own or through duly authorized representatives, the premises,
books of accounts and records of any person or entity at any time, in the exercise of
its quasi-judicial power for purposes of determining the existence of any anti-
competitive behavior and/or market power abuse and any violation of rules and
regulations issued by the ERC;
(t) Perform such other regulatory functions as are appropriate and necessary in
order to ensure the successful restructuring and modernization of the electric power
industry, such as, but not limited to, the rules and guidelines under which
generation companies, distribution utilities which are not publicly listed shall offer
and sell to the public a portion not less than fifteen percent (15%) of their common
shares of stocks: Provided, however, That generation companies, distribution
utilities or their respective holding companies that are already listed in the PSE are
deemed in compliance. For existing companies, such public offering shall be
implemented not later than five (5) years from the effectivity of this Act. New
companies shall implement their respective public offerings not later than five (5)
years from the issuance of their certificate of compliance; and
(u) The ERC shall have the original and exclusive jurisdiction over all cases
contesting rates, fees, fines and penalties imposed by the ERC in the exercise of the
above mentioned powers, functions and responsibilities and over all cases involving
disputes between and among participants or players in the energy sector.
All notices of hearings to be conducted by the ERC for the purpose of fixing rates or
fees shall be published at least twice for two successive weeks in two (2)
newspapers of nationwide circulation.

SEC. 44. Transfer of Powers and Functions. The powers and functions of the Energy
Regulatory Board not inconsistent with the provisions of this Act are hereby
transferred to the ERC. The foregoing transfer of powers and functions shall include
all applicable funds and appropriations, records, equipment, property and personnel
as may be necessary.

SEC. 45. Cross Ownership, Market Power Abuse and Anti-Competitive Behavior. No
participant in the electricity industry or any other person may engage in any anti-
competitive behavior including, but not limited to, cross-subsidization, price or
market manipulation, or other unfair trade practices detrimental to the
encouragement and protection of contestable markets.
No generation company, distribution utility, or its respective subsidiary or affiliate or
stockholder or official of a generation company or distribution utility, or other entity
engaged in generating and supplying electricity specified by ERC within the fourth
civil degree of consanguinity or affinity, shall be allowed to hold any interest,
directly or indirectly, in TRANSCO or its concessionaire. Likewise, the TRANSCO, or
its concessionaire or any of its stockholders or officials or any of their relatives
within the fourth civil degree of consanguinity or affinity, shall not hold any interest,
whether directly or indirectly, in any generation company or distribution utility.
Except for ex officio government-appointed representatives, no person who is an
officer or director of the TRANSCO or its concessionaire shall be an officer or director
of any generation company, distribution utility or supplier.
An affiliate means any person which, alone or together with any other person,
directly or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with another person. As used herein, control shall
mean the power to direct or cause the direction of the management policies of a
person by contract, agency or otherwise.
To promote true market competition and prevent harmful monopoly and market
power abuse, the ERC shall enforce the following safeguards:
(a) No company or related group can own, operate or control more than thirty
percent (30%) of the installed generating capacity of a grid and/or twenty-five
percent (25%) of the national installed generating capacity. Related group
includes a persons business interests, including its subsidiaries, affiliates, directors
or officers or any of their relatives by consanguinity or affinity, legitimate or
common law, within the fourth civil degree;
(b) Distribution utilities may enter into bilateral power supply contracts subject to
review by the ERC: Provided, That such review shall only be required for distribution
utilities whose markets have not reached household demand level. For the purpose
of preventing market power abuse between associated firms engaged in generation
and distribution, no distribution utility shall be allowed to source from bilateral
power supply contracts more than fifty percent (50%) of its total demand from an
associated firm engaged in generation but such limitation, however, shall not
prejudice contracts entered into prior to the effectivity of this Act. An associated
firm with respect to another entity refers to any person which, alone or together
with any other person, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such entity; and
(c) For the first five (5) years from the establishment of the wholesale electricity
spot market, no distribution utility shall source more than ninety percent (90%) of
its total demand from bilateral power supply contracts.
For purposes of this Section, the grid basis shall consist of three (3) separate grids,
namely Luzon, Visayas and Mindanao. The ERC shall have the authority to modify or
amend this definition of a grid when two or more of the three separate grids
become sufficiently interconnected to constitute a single grid or as conditions may
otherwise permit.
Exceptions from these limitations shall be allowed for isolated grids that are not
connected to the high voltage transmission system. Except as otherwise provided
for in this Section, any restriction on ownership and/or control between or within
sectors of the electricity industry may be imposed by ERC only insofar as the
enforcement of the provisions of this Section is concerned.
The ERC shall, within one (1) year from the effectivity of this Act., promulgate rules
and regulations to ensure and promote competition, encourage market
development and customer choice and discourage/penalize abuse of market power,
cartelization and any anti-competitive or discriminatory behavior, in order to further
the intent of this Act and protect the public interest. Such rules and regulations shall
define the following:
(a) the relevant markets for purposes of establishing abuse or misuse of monopoly
or market position;
(b) areas of isolated grids; and
(c) the periodic reportorial requirements of electric power industry participants as
may be necessary to enforce the provisions of this Section.
The ERC shall, motu proprio, monitor and penalize any market power abuse or anti-
competitive or discriminatory act or behavior by any participant in the electric
power industry. Upon finding that a market participant has engaged in such act or
behavior, the ERC shall stop and redress the same. Such remedies shall, without
limitation, include the imposition of price controls, issuance of injunctions,
requirement of divestment or disgorgement of excess profits and imposition of fines
and penalties pursuant to this Act.
The ERC shall, within one (1) year from the effectivity of this Act, promulgate rules
and regulations providing for a complaint procedure that, without limitation,
provides the accused party with notice and an opportunity to be heard.

SEC. 46. Fines and Penalties. The fines and penalties that shall be imposed by the
ERC for any violation of or non-compliance with this Act or the IRR shall range from
a minimum of fifty thousand pesos (P50,000.00) to a maximum of Fifty million pesos
(P50,000,000.00).
Any person who is found guilty of any of the prohibited acts pursuant to Section 45
hereof shall suffer the penalty of prision mayor and fine ranging from Ten thousand
pesos (P10,000.00) to Ten million pesos (P10,000,000.00), or both, at the discretion
of the court.
The members of the Board of Directors of the juridical companies participating in or
covered in the generation companies, the distribution utilities, the TRANSCO or its
concessionaire or supplier who violate the provisions of this Act may be fined by an
amount not exceeding double the amount of damages caused by the offender or by
imprisonment of one (1) year or two (2) years or both at the discretion of the court.
This rule shall apply to the members of the Board who knowingly or by neglect
allows the commission or omission under the law.
If the offender is a government official or employee, he shall, in addition, be
dismissed from the government service with prejudice to reinstatement and with
perpetual or temporary disqualification from holding any elective or appointive
office.
If the offender is an alien, he may, in addition to the penalties prescribed, be
deported without further proceedings after service of sentence.
Any case which involves question of fact shall be appealable to the Court of Appeals
and those which involve question of law shall be directly appealable to the Supreme
Court.
The administrative sanction that may be imposed by the ERC shall be without
prejudice to the filing of a criminal action, if warranted.
To ensure compliance with this Act, the penalty of prision correccional or a fine
ranging from Five thousand pesos (P5,000.00) to Five million pesos (P5,000,000.00),
or both, at the discretion of the court, shall be imposed on any person, including but
not limited to the president, member of the Board, Chief Executive Officer or Chief
Operating Officer of the corporation, partnership, or any other entity involved, found
guilty of violating or refusing to comply with any provision of this Act or its IRR,
other than those provided herein.
Any party to an administrative proceeding may, at any time, make an offer to the
ERC, conditionally or otherwise, for a consented decree, voluntary compliance or
desistance and other settlement of the case. The offer and any or all of the ultimate
facts upon which the offer is based shall be considered for settlement purposes only
and shall not be used as evidence against any party for any other purpose and shall
not constitute an admission by the party making the offer of any violation of the
laws, rules, regulations, orders and resolutions of the ERC, nor as a waiver to file
any warranted criminal actions.
In addition, Congress may, upon recommendation of the DOE and/or ERC, revoke
such franchise or privilege granted to the party who violated the provisions of this
Act.