EIGHTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
®[firr o( 11)1' C j £
S E N A T E
'19 JUL 15 A8 57
Senate Bill No.
RECEIVLD 3V
Introduced by Senator FRANCIS N. PANGILINAN
AN ACT
AMENDING COMMONWEALTH ACT NO. 146, OTHERWISE KNOWN AS THE 
PUBLIC SERVICE ACT, AS AMENDED, AND FOR OTHER PURPOSES
EXPLANATORY NOTE
It is the responsibility of the State to ensure that the highest quality of public services 
at the most reasonable rates are provided to the Filipino consumers.
Commonwealth Act No. 146 or the Public Service Act, enacted in 1936, is the 
principal law governing public utilities and public services. The 82-year old law was then 
based on old statutes in the United States and in the Philippines. More than eight decades 
after its passage, substantial changes in the modes of delivery of public services and in 
ways of doing business have taken place. Technology and various innovations have also 
reshaped the delivery of services. In light of these, this representation submits that the 
amendment of the Public Service Act is long overdue.
This legislation seeks to improve the quality of public services and lower its costs 
by: 1) providing clarity to the definition of "public utility" in the law, limiting the term 
exclusively to public services that are natural monopolies; 2) making other forms of 
public services unbound by constitutional restrictions on foreign investment, thereby 
allowing more players and fostering free and fair competition; and 3) ensuring its 
effective enforcement through increased penalties; among others.
In view of the foregoing, the passage of this bill is earnestly sought.
FRANCl
PANGILINAN


EIGHTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
S E N A T E  
Senate Bill No. 419
r.- : |  
g s t.c ;*
■ 
of tiK 
: i ■
*19 JUL 15 A8-.58
RECEIVCD Br;
Introduced by Senator FRANCIS N. PANGILINAN
AN ACT
AMENDING COMMONWEALTH ACT NO. 146, OTHERWISE KNOWN AS THE 
PUBLIC SERVICE ACT, AS AMENDED, AND FOR OTHER PURPOSES
Be it enacted by the Senate and the House of Representatives of the Philippines in Congress 
assembled:
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SECTION 1. Short Title. - This Act shall be known as "The New Public Service Law
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of the Philippines."
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SEC. 2. Declaration of Policy. - It is a Constitutionally enshrined policy of the State
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to promote a just and dynamic social order that will free the people from poverty through
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measures that promote an improved quality of life for all.
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The State recognizes that public utilities are necessary to the public and are natural
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monopolies that must be regulated as required by public interest. It is the policy of the
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State to ensure that the consuming public's satisfaction and quality of life shall be the
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yardsticks for an effective regulation of public utility providers without compromising
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the reasonable rate of return of the latter. It is likewise the policy of the State to encourage
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private enterprise and provide incentives for needed investments.
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The above policies are fulfilled by ensuring: (a) effective regulation of public utilities
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and public services; (b) a reasonable rate of return to public utilities and public services;
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and (c) the lifting of foreign equity restrictions by clearly defining what are considered to
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be public utilities.
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SEC. 3. Definition of Terms. - For the purposes of this Act, the terms below shall
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be defined as follows:


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(a) 
Cost-of-Living Adjustment refers to the percentage by which the Philippine 
Statistics Authority (PSA) Consumer Price Index for the month of June of the 
calendar year preceding the adjustment that exceeds the PSA Consumer Price 
Index for the month of June of the calendar year in which the maximum 
amount of the fine was last set or adjusted pursuant to law;
(b) 
Disgorgement of Profits refers to the giving up or recapturing of profits traceable 
to a certain transaction or wrongdoing upon demands or by legal compulsion;
(c) 
Distribution of Electricity refers to the conveyance of electric power by a 
distribution utility through its distribution system pursuant to the provisions 
of RA 9136, pursuant to Section 4 (n) of said law;
(d) 
Transmission of Electricity refers to the conveyance of electricity through the 
high voltage backbone system, pursuant to Section 4 (ccc) of RA 9136;
(e) 
Treble Damages refers to an additional sum, depending on the discretion of the 
agency or court involved, which is thrice the amount of the monetary award 
granted; and
(f) 
Water Works and Sewerage Systems refers to the entire water systems to ensure 
an uninterrupted and adequate supply and distribution of portable water for 
domestic and other purposes and the proper operation and maintenance of 
sewerage systems as defined and referred to in RA 6234, as amended, and PD 
198, as amended.
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SEC. 4. Recognition of Previous Transfer of Jurisdiction to Various Administrative
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Agencies. - Since the enactment of Commonwealth Act No. 146, the jurisdiction over
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several public services had been transferred to various administrative agencies such as,
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but not limited to, the following:
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(a) 
Department of Transportation (DOTr);
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(b) 
Land Transportation Franchising Regulatory Board (LTFRB);
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(c) 
Land Transportation Office (LTO);


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(d) Civil Aeronautics Board (CAB);
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(e) Civil Aviation Authority of the Philippines (CAAP);
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(f) 
Philippine Ports Authority (PPA);
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(g) Maritime Industry Authority (MARINA);
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(h) Philippine Coast Guard (PCG);
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(i) 
Department of Information and Communications Technology (DICT);
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(j) 
National Telecommunications Commission (NTC);
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(k) Department of Energy (DOE);
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(1) 
Energy Regulatory Commission (ERC);
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(m) Department of Environment and Natural Resources (DENR);
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(n) 
League of Cities;
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(o) 
National Water Resources Board;
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(P) 
Local Water Utilities Administration; and
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(q) 
Philippine Competition Commission (PCC).
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For purposes of this Act, the term "Administrative Agencies" shall refer to existing
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agencies with which the powers and duties of the Public Service Commission were
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transferred, are hereby authorized and ordered to charge and collect from any public
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service or public utility or applicant, as the case may be, reasonable fees as reimbursement
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of its expenses in the exercise of it authorization, supervision, and regulation duties, and
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to impose appropriate penalties and dines as provided by law. These administrative
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Agencies are governed by their respective charters and relates statutes.
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SEC. 5. Public Utility. - A new Section 13 (d) of the Commonwealth Act No 146, as
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amended, is hereby inserted to read as follows:
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"(D) Public Utility. - A SUBSET OF PUBLIC SERVICE, IT REFERS 
TO 
THE 
DIRECT 
TRANSMISSION 
DISTRIBUTION, 
AND 
DELIVERING THROUGH A NETWORK, A COMMODITY OR
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SERVICE OF PUBLIC CONSEQUENCE AND IS A NATURAL


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MONOPOLY, THE OPERATION OF WHICH MUST BE RESTRICTED 
PURSUANT TO SECTION 11, ARTICLE XII OF THE 1987 
CONSTITUTION.
THE FOLLOWING SHALL BE AN EXCLUSIVE LIST OF PUBLIC 
UTILITIES:
1) 
TRANSMISSON OF ELECTRICITY;
2) 
DISTRIBUTION OF ELECTRICITY; AND
3) 
WATER WORKS AND SEWERAGE SYSTEMS.
NO OTHER BUSINESS OR SERVICE SHALL BE DEEMED A 
PUBLIC UTILITY OTHER THAN THOSE LISTED IN THIS SECTION 
UNLESS OTHERWISE SUBSEQUENTLY PROVIDED BY LAW UPON 
RECOMMENDATION 
BY 
THE 
NATIONAL 
ECONOMIC 
DEVELOPMENT AUTHORITY (NEDA), THROUGH ITS BOARD, IN 
CONSULTATION 
WITH 
THE 
PHILIPPINE 
COMPETITION 
COMMISSION (PCC), AND THE CONCERNED ADMINISTRATIVE 
AGENCIES, TAKING INTO CONSIDERATION SECTIONS 2 AND 4 
OF THIS ACT AND THE FOLLOWING CRITERIA:
1) 
THE PERSON OR JURIDICAL ENTITY REGULARLY 
SUPPLIES 
AND 
DIRECTLY 
TRANSMITS 
AND 
DISTRIBUTES TO THE PUBLIC THROUGH A NETWORK 
OF 
COMMODITY 
OR 
SERVICE 
OF 
PUBLIC 
CONSEQUENCE;
2) 
THE COMMODITY OR SERVICE IS NECESSARY TO THE 
PUBLIC AND A NATURAL MONOPOLY THAT NEEDS TO 
BE REGULATED WHEN THE COMMON GOOD SO 
REQUIRES;


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3) 
THE COMMODITY OR SERVICE IS NECESSARY FOR THE
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MAINTENANCE 
OF 
LIFE AND 
OCCUPATION 
OF
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RESIDENTS; AND
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4) 
THE COMMODITY OR SERVICE IS OBLIGATED TO
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PROVIDE ADEQUATE SERVICE TO THE 
PUBLIC ON
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DEMAND.
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THIS SECTION AND THIS ACT DO NOT HAVE ANY EFFECT
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ON THE EXISTING REGULATIONS OF PUBLIC SERVICES AND DO
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NOT, 
IN 
ANY 
WAY, 
DIMINISH 
THE 
CONSTITUTIONAL
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RESTRICTIONS PROVIDED UNDER SECTIONS 11 AND 17, ARTICLE
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XII AND SECTION 4, ARTICLE IX (PART C) OF THE CONSITUTION.
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NEITHER DOES THIS SECTION NOR THIS ACT REDEFINE
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'COMMON 
CARRIERS' 
AND 
ALTER 
THE 
EXISTING 
HIGH
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STANDARDS ACCORDED TO IT."
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SEC. 6. Authorization to Operate. - The first paragraph of Section 15 of
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Commonwealth Act No. 146, as amended, is hereby amended to read as follows:
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"With the exception of those enumerated in the preceding section, no
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public service shall operate in the Philippines without possessing a valid
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and 
subsisting 
FRANCHISE, 
certificate, 
OR 
ANY 
OTHER
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APPROPRIATE FORM OF AUTHORIZATION FOR THE OPERATION
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OF A PUBLIC SERVICE [from the Public Service-Commission known as
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"certificate of public convenience," or "certificate of- public convenience and
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necessity,"] as the case may be, FROM CONGRESS, THE SECURITIES
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AND EXCHANGE COMMISSION (SEC) AND/OR THE PROPER
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ADMINISTRATIVE AGENCY to the effect that the operation of said
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service and the authorization to do business will promote the public interest
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in a proper and suitable manner."


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SEC. 7. Issuance of Authorizations and Fixing of Rates, Tolls, and the like and 
Reasonable Rate of Return. - Section 16 (a) and (c) of Commonwealth Act No. 146, as 
amended, are hereby amended to read as follows;
"(a) To issue certificates [which shall be known as certificates of public 
convenience,] authorizing the operation of public service within the 
Philippines whenever the [Commission] ADMINISTRATIVE AGENCY 
finds that the operation of the public service proposed and the 
authorization to do business will promote the public interest in a proper 
and suitable manner. [Provided, That theroaftor, certificates of public 
eonvenience-necessity-will be granted only to citizens of the Philippines or 
of the United States-er- te-cor-porations, co partnerships, associations, or 
joint stock companies ■ constituted and organized under the-laws of the 
Philippines; Provided, That sixty per centum of-the stock or paid up capital 
of- any such ■ corporations, co-partnership, association, or joint-stock 
company must belong entirely-tocitizens of the Philippines or of the United 
States; -Provided, further. That no such certificates shall be issued for a 
period of more than fifty years.]
XXX
XXX
XXX
(c) to fix and determine the MAXIMUM CEILING FOR individual or 
joint rates, tolls, charges, classifications, or schedules thereof, as well as 
commutation, mileage, kilometrage, and other special rates which shall be 
imposed, observed, and followed thereafter by any public service WHEN 
THE PUBLIC INTEREST SO 
REQUIRES: Provided, That the
[Commission] ADMINISTRATIVE AGENCY may, in its discretion, 
approve rates proposed by the public services provisionally and without 
necessity of any hearing; but it shall call a hearing thereon within [thirty] 
FIFTEEN days, thereafter upon publication and notice to the concerns


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operating 
in 
the 
territory 
affected, 
TO 
RATIFY 
ITS 
PRIOR
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PROVISIONAL APPROVAL OR CHANGE, MODIFY, OR ALTER THE
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APPROVED RATE BASED ON PUBLIC INTEREST: Provided, further,
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That in case the public service equipment of an operator is used principally
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or secondarily for the promotion of a private business, the net profits of said
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private business shall be considered in relation with the public service of
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such operator for the purpose of fixing the rates; PROVIDED, THAT THE
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MAXIMUM RATE OF RETURN SHALL BE EQUAL TO THE POST-TAX
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WEIGHTED AVERAGE COST OF CAPITAL FOR THE SAME OR
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COMPARABLE BUSINESS 
COMPUTED 
USING 
ESTABLISHED
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MODERN AND UP TO DATE METHODOLOGIES SUCH AS THE
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CAPITAL ASSET PRICING MODEL; PROVIDED ALSO, THAT
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INCOME TAX BE ALLOWED AS A CASH EXPENDITURE OR
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OUTFLOW FOR RATE-DETERMINATION PURPOSES; PROVIDED
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FURTHER, THAT THIS PROVISION SHALL NOT BAR THE
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APPLICATION OF PERFORMANCE-BASED RATE REGULATION
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SHOULD THE ADMINISTRATIVE AGENCY REGULATING SUCH
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PUBLIC SERVICE DEEM IT EFFICIENT AND IN THE PUBLIC
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INTEREST; PROVIDED FINALLY, THAT THIS SHALL NOT BE
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INTERPRETED AS AMENDING OR REPEALING REGULATIONS
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PROMULGATED BY THESE ADMINISTRATIVE AGENCIES TO
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DEREGULATE RATES.
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SEC. 8 Reasonable Costs. - Section 17 (b) of Commonwealth Act No. 146, as
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amended, is hereby amended to read as follows:
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"(b) To require any public service to pay the actual expenses incurred
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by the [Commission] ADMINISTRATIVE AGENCY in any investigation
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if it shall be found in the same that any rate, toll, charge, schedule.


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regulation, practice, act, or service thereof is in violation of any provision of 
this Act or any certificate, order, rule, regulation, or requirement issued or 
established by the [Gemmission] ADMINISTRATIVE AGENCY. The 
[Commission] ADMINISTRATIVE AGENCY may also assess against any 
public service REASONABLE costs [not to exceed twenty five pesos] with 
reference to such investigation."
SEC. 9. Section 20 (i) of Commonwealth Act No.l46, as amended, is hereby 
amended to read as follows;
"(i) To sell, alienate, or in any manner transfer shares of its capital 
stock to any alien if the result of that sale, alienation, or transfer in itself or 
in connection with another previous sale shall be the reduction to less than 
sixty per centum of the capital stock belonging to Philippine Citizens IN 
THE OPERATION OF A PUBLIC UTILITY AS REQUIRED BY THE 
CONSTITUTION. Such sale, alienation, or transfer shall be void and of no 
effect and shall be sufficient cause for ordering the cancellation of the 
certificate."
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SEC. 10. Section 21 of Commonwealth Act No. 146, as amended, is hereby amended
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to read as follows:
"Every public service violating or failing to comply with the terms and 
conditions of any certificate or any order[s], decision[s], or regulation[s] of 
the [Commission] ADMINISTRATIVE AGENCY shall be subject to 
DISGORGEMENT OF PROFITS, TREBLE DAMAGES, a fine NOT 
EXCEEDING FIVE MILLION PESOS (PHP5,000,000.00) OR ALL OR 
ANY COMBINATION THEREOF [of not exceeding two hundred pesos] 
per day for every day during which such default or violation continued; 
and the [Com mission] ADMINISTRATIVE AGENCY is hereby


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authorized and empowered to impose such PENALTY OR fine, after due 
notice and hearing.
The PENALTIES AND fines so imposed shall be paid to the 
Government 
of 
the 
Philippine 
through 
the 
[Commission] 
ADMINISTRATIVE AGENCY, and failure to pay the PENALTY OR fine 
in any case within the same specified in the order or decision of the 
[Commission] ADMINISTRATIVE AGENCY shall be deemed good and 
sufficient reason for the suspension of the certificate of said public service 
until payment shall be made. Payment may also be enforced by appropriate 
action brought in a court or competent jurisdiction. The remedy provided 
in this section shall not be a bar to or affect any other remedy provided in 
this Act but shall be cumulative and additional to such remedy or 
remedies."
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SEC. 11. Section 23 of Commonwealth Act No. 146, as amended, is hereby amended
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to read as follows:
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"Any public service corporation that shall perform, commit, or do any
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act or thing forbidden or prohibited, or shall neglect, fail, or omit to do or
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perform any act or thing herein to be done or performed, shall be punished
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by a fine not exceeding [twenty five thousand pesos] FIVE MILLION
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PESOS (PHP5,000,000.00), or by imprisonment [not exceeding five years]
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OF NOT LOWER THAN SIX (6) YEARS AND NOT HIGHER THAN
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TWELVE (12) YEARS, or both, in the discretion of the court."
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SEC. 12. Section 24 of Commonwealth Act No. 146, as amended, is hereby amended
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to read as follows:
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"Any person who shall knowingly and willfully perform, commit, or
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do, or participate in performing, committing, or doing, or who shall
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knowingly and willfully cause, participate, or join with others in causing


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any public service corporation or company to do, perform, or commit, or 
who shall advice, solicit, persuade, or knowingly and willfully instruct, 
direct, or order any officer, agent, or employee of any public service 
corporation or company to perform, commit, or do any act or thing 
forbidden or prohibited by this Act, shall be punished by a fine not
exceeding 
[two----thousand----pesos] 
FIVE 
MILLION 
PESOS
(PHP5,000,000.00), or imprisonment [not exceeding two years] OF NOT 
LOWER THAN SIX (6) YEARS AND NOT MORE THAN TWELVE (12) 
YEARS, or both, in the discretion of the court. [: Provided, however, that 
for operating a private passenger automobile as a public service without 
having a certificate of public convenience for the same, the offender shall bo 
subject to the-penalties provided for in section sixty seven (j) of Act 
numbered thirty-nine hundred and ninety two.]"
SEC. 13. Section 25 of Commonwealth Act No. 146, as amended, is hereby amended
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to read as follows:
"Any person who shall knowingly or willfully neglect, fail, or omit to 
do or perform, or who shall knowingly and willfully cause or join or 
participate with others in causing any public service corporation or 
company to neglect, fail, or omit to do or perform, or who shall advise, 
solicit, or persuade, or knowingly and willfully instruct, direct, or order any 
officer, agent, or employee of any public service corporation or company to 
neglect, fail, or omit to do any act or thing required to be done by this Act, 
shall be punished with a fine not exceeding [two thousand pesos] FIVE 
MILLION PESOS (PHP5,000,000.00) or by imprisonment [not exceeding 
two years] OF NOT LOWER THAN SIX (6) YEARS AND NOT MORE 
THAN TWELVE (12) YEARS, or both, in the discretion of the court."
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SEC. 14. Section 26 of Commonwealth Act No. 146, as amended, is hereby amended
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to read as follows:
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"Any person who shall destroy, injure, or interfere with any apparatus 
or appliance owned or operated by or in charge of the [Commission] 
ADMINISTRATIVE AGENCIES or its agents, shall be deemed guilty of a 
misdemeanor and upon conviction shall be punished by a fine OF THE 
AMOUNT EQUIVALENT TO THE ACTUAL MARKET VALUE OF THE 
APPARATUS OR APPLIANCE DESTROYED OR INJURED PLUS A 
FINE NOT EXCEEDING ONE MILLION PESOS (PHP1,000,000.00) [net 
exceeding one thousand pesos] or imprisonment [not exceeding six months]
OF NOT LOWER THAN SIX (6) YEARS AND NOT HIGHER THAN 
TWELVE (12) YEARS, or both in the discretion of the court.
[Any—public—service—permitting—the destruction,—injury—te?—er 
interference with, any such apparatus or appliances shall forfeit a sum not 
exceeding four thousand pesos for each offense.]"
SEC. 15. Section 28 of Commonwealth Act. 146, as amended, is hereby amended to
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read as follows:
"Violations of the orders, decisions, and regulations of the 
[Commission] ADMINISTRATIVE AGENCIES and of the terms and 
conditions 
of 
any 
certificate 
issued 
by 
the 
[Conrunission]
ADMINISTRATIVE AGENCIES [shall prescribe after sixty days,] and 
violations of the provisions of this Act shall [prescribe after one hundred 
and eighty days.] BE IMPRESCRIPTIBLE."
SEC. 16. Subsequent Adjustment of Fines Imposed Under this Act. - The maximum
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amounts of fines imposed under this Act, as well as those imposed under Commonwealth
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Act No. 146, shall be adjusted by the head of each administrative agency under Section 1
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of this Act by a Cost-of-Living Adjustment on January 1 of the year immediately
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following the date of enactment of this Act and every fifth calendar year thereafter. Each
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head of the administrative agency shall file copies of the adjustment with the University 
of the Philippines Law Center in accordance with Executive Order No. 292 (1987), as 
amended.
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Any increase shall apply only to fines, including those whose associated violation 
predated such increase, which are assessed after the date the increase takes effect.
SEC. 17. Interpretation. - This Act shall be subject to and consistent with the 
regulatory powers of the State to promote public interest in article IX-C, Section 4 and 
Article XII, Section 17 of the Constitution.
No franchise, certificate, or authorization granted by the Congress and the
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appropriate administrative agencies under Section 3 of this Act shall be: (a) exclusive in
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character; (b) for a longer period than fifty years; and (c) granted except under the
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condition that it shall be subject to amendment, alteration, or repeal by Congress when
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the public interest so requires.
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The power to grant any franchise, certificate, or any other form of authorization for
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the operation of a public service still belongs to the Congress, unless otherwise provided
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by law to an administrative agency.
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SEC. 18. Non-Impainnent of Existing Agreements. - The application and
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implementation of the pertinent provisions of this Act shall not impair vested rights or
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obligations of contracts. Current and subsisting concession agreements and other similar
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contracts of juridical persons with government agencies or government-owned and -
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controlled corporations covering activities hereunder classified as public utilities shall
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remain valid and in force in accordance with the existing terms and conditions the parties
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agreed to thereunder until expiration or termination thereof.
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SEC. 19. Suppletory Application of Commonwealth Act No. 146. - Commonwealth
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Act No. 146, as amended, shall be construed as a general law that shall apply suppletorily
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to special laws or existing sector-specific laws governing public services, except for
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Section 13 (d) of Commonwealth Act No. 146, as amended, created by Section 4 of this
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Act.
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SEC. 20. Comprehensive Baseline Survey. - The University of the Philippines Law 
Center shall conduct a comprehensive baseline survey of public services governance 
within six (6) months from the effectivity of this Act. Copies of the results of said survey 
shall be furnished to the Congress, NED A, and PCC.
The PCC, in coordination with NED A, is mandated to conduct regular studies on
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whether deregulation is warranted in a sector to improve consumer welfare and to
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submit its recommendation to Congress.
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SEC. 21 Implementing Rules and Regulations. - All administrative agencies under
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Section 3 of this Act shall, in coordination with NED A, PCC and the University of the
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Philippines Law Center, promulgate rules and regulations to implement the provisions
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of this Act within ninety (90) days from the effectivity of this Act, including the criteria
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for the determination of imposable fines, as provided for in this Act, to be based on the
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capitalization of a public service provider and peculiarities of the public service
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concerned.
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SEC. 22. Appropriations. - The initial funding to carry out the provisions of this Act
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shall be charged against the current year's appropriation. Thereafter, such sums as may
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be necessary shall be included in the General Appropriations Act.
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SEC. 23. Separability Clause. - If any portion or provision of this Act is declared
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unconstitutional, the remainder of this Act or any provision not affected thereby shall
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remain in force and effect.
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SEC. 24. Repealing Clause. - All laws, including Commonwealth Act No. 146, as
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amended, decrees, orders, rules and regulations, or other issuances or parts thereof
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inconsistent with the provisions of this Act are hereby repealed or modified accordingly.
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SEC. 25. Effectivity. - This Act shall take effect after fifteen (15) days following the 
completion of its publication either in the Official Gazette or in two (2) newspapers of 
general circulation.
Approved,
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