THIRTEENTH CONGRESS OF THE REPUBLIC 
First Regular Session 
I
,
 
OF THE PHILIPPINES 
I 
, I  
'j ,a[) p5 :/3 
f-. 
S. No. 
2 
Introduced by Senator S. R. OsmeAa 111 
EXPLANATORY NOTE 
The accepted paradigm for market economies is that so long as conditions 
for free competition are satisfied, markets for goods and services, populated by 
private businesses pursuing the profit motive are the most efficient mechanism 
for the allocation of resources. 
One of the exceptions to this paradigm is the case of public goods and 
services, where market competition fails to deliver optimum results - hence 
government intervention is justified, and political processes must substitute for 
the market process for optimum results. 
In the Philippines, Commonwealth Act No. 146, otherwise known as the 
Public Service Act serves as the framework for the award by the government of 
contracts to private enterprises for the provision of public goods and services. 
Since the passage of the Public Service Act, the Philippine economy has 
grown and developed, and certain areas have evolved to allow for market 
mechanisms that work, even without government intervention, This bill seeks to 
amend the Public Service Act to delist such areas from the coverage of the law. 
The government will be better off disengaging itself from areas where its 
presence has become redundant and unnecessary. 
This will free scarce 
government resources for more urgent applications, thereby reducing the 
pressure on the fiscal deficit. It will also allow the economy to tap private sector 
innovativeness and vigor in increasing areas where market competition has 
become feasible. 
In view of the foregoing, early passage of this bill is earnestly requested. 
tL 
SERGlO OSMENA 111 
Senator 


1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
IJ 
I 
jl.) p 2  :2j 
THIRTEENTH CONGRESS OF THE REPUBLIC 
First Regular Session 
OF THE PHILIPPINES 
'= 
S E N A T E  
>
I
 
r 
s. No. 
Introduced by Senator S. R. Osmena 111 
AN ACT 
DEREGULATING CERTAIN PUBLIC SERVICES, AMENDING FOR THE 
PURPOSE COMMONWEALTH ACT NO. 146, AS AMENDED, AND FOR 
OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Statement of Policy on Public Services. - Public Services 
are essential services rendered to the general public for a fee by one or a limited 
number of enterprises in specific area. Government is responsible for ensuring 
that these services are rendered adequately, extensively, and continuously, and 
fairly. Wherever private enterprise is able to render the public services 
satisfactorily, government shall encourage private enterprises to do so. 
Franchises to render specific public services may be extended to one or a 
limited number of private enterprises in a specified service area, if necessary to 
encourage private enterprises to render such public service. The best qualified 
and most capable to render such public service shall be selected in the required 
number from among competing applicants. Such franchises have the effect of 
limiting normal competition in rendering the public service, and are therefore 
subjected to regulation by the designated agency of government. 
Continuing review is required of the public services presently franchises 
by government to determine whether the public interest is better served by 
1 


1 
2 
3 
4 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
releasing these public services from the franchising requirement, and/or by 
subjecting them to full or limited price competition. 
Pursuant to the above policy, this Act revises the definition of “public 
service” in order to deregulate certain activities, and allows regulatory agencies 
to impose maximum fee or charge ceilings in addition to their authority to fix 
definite. 
SEC. 2. To carry out the purposes of this Act, Section 13 (b), Section 14 
and Section 16 (c) of Commonwealth Act No. 146, as amended, otherwise 
known as the Public Service Law, are hereby further amended to read as follows: 
“SECTION 13(b). The term public service “includes every person 
that now or hereafter may own, operate, manage, or control in the 
Philippines, for hire or compensation, with general [or limited] clientele, 
whether permanent, occasional or accidental, and done for general 
business purposes, any common carrier, railroad, street railway, traction 
railway, subway motor vehicle, either for freight or passenger, or both with 
or without fixed route and whatever maybe its classification, freight or 
carrier service of any class [express service] steamboat, or steamship line, 
pontines, ferries, and water craft, engaged in the transportation of 
passengers or freight or both shipyard, marine railway, marine repair 
shop, wharf or dock ice, [ice-plant, canal, ice-refrigeration plant, canal, 
irrigation system,] gas, electric light, heat and power, water supply and 
power, [petroleum] sewerage systems, wire or wireless communication 
systems, wire or wireless broadcasting stations and other similar public 
services: Provide, however, That a person engaged in agriculture, not 
otherwise a public service, who owns a motor vehicle and uses it 
personally and/or enters into a special contract whereby said motor 
vehicle is offered for hire or compensation to a third party or third paties 
engaged in agriculture, not itself or themselves a public service, for 
operation by the latter for a limited time and for a specific purpose directly 
2 


1 
2 
3 
4 
purpose of this Act.” 
5 
6 
this preceding section: 
7 
(a) 
Warehouse[;] , INCLUDING COLD STORAGE PLANTS; 
8 
(b) 
9 
and tugboats and lighters; 
(c) 
connected with the cultivation of his or their farm, the transportation, 
processing, and marketing of agricultural products of such third party or 
third parties shall not be considered as operating a public service for the 
“SECTION 14. The following are exempted from the provisions of 
Vehicles drawn by animals and bancas moved by oar or sail, 
10 
11 
12 
Radio companies except with respect to the fixing of rates; 
13 
Public Services owned or operated by any instrumentality of 
14 
the National Government or by government-owned or controlled 
15 
16 
‘SECTION 16 (c ). To fix and determine, OR TO FIX MAXIMUM 
17 
CEILINGS OF, individual or joint rates, toll, charges, classifications, or 
18 
schedules thereof, as well as commutation, mileage, kilometrage, and 
19 
other special rates which shall be imposed, observed, and followed 
Airships within the Philippines except as regards the fixing of 
their maximum rates on freight and passengers; 
(d) 
(e) 
corporation, except with respect to the fixing of rates.” 
20 
21 
22 
23 
24 
25 
26 
27 
thereafter any public service: Provided, That the Commission may, in its 
discretion, approved rates proposed by public services provisionally and 
without necessity of any hearing; but it shall call a hearing thereon within 
thirty (30) days thereafter, upon publication and notice to the concerns 
operating in the territory affected: Provided, further, That in case the public 
service equipment of an operator is used principally or secondarily for the 
promotion of a private business, the net profits of said private business 
shall be considered in relation with the public service of such operator for 
28 
the purpose of fixing the rates.” 
3 


1 
SEC. 3. All laws, acts, executive orders, rules and regulations and other 
2 
3 
4 
issuance inconsistent with this Act are hereby repealed or modified accordingly. 
SEC. 4. This Act shall take effect fifteen (15) days after its publication in 
at least two (2) newspapers of general circulation. 
Approved, 
4