EIGHTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
‘.ill; ?
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S E N A T E
"IL 16 All 37
Senate Bill No.
In trod uced by S enator Juan M iguel F. Zubiri
AN ACT
FURTHER AMENDING COMMONWEALTH ACT NO. 146 OTHERWISE KNOWN AS 
THE PUBLIC SERVICE ACT, AS AMENDED
EXPLANATORY NOTE
Every Filipino has the right to accessible and affordable public services. These basic 
cornerstones of living—such as clean water, effective transport, uninterrupted electricity, 
and efficient communication services—should be made available to all, in an indiscriminate 
manner. Yet our people remain saddled by high costs that they are forced to pay monthly, 
in spite of poor services of these public utilities. They have little choice but to bear it, 
because of the limited options available to them.
The problem lies in the fact that very few parties dominate control of these public 
service markets. Competition and foreign investments are inhibited because public 
services are made to accede to limitations that are applied to public utilities. "Public utility" 
has grown synonymous to "public service," and that situation is due to the ambiguity in 
the definition of "public utility" under Commonwealth Act No. 146, or the Public Service 
Act. To resolve the problem, a policy as to the clear and legal definition of "public utility" 
must be laid down, amending thereof the Public Service Act.
The said law was enacted in 1936 to govern public services; undeniably it is no 
longer apt with our current market situation, considering the rapid innovation and 
technological advancements that have taken place. The cause for its revision is justifiable 
to fully service its intents and purposes. This proposed measure intends to: 1) transfer 
functions of the Public Service Commission to various administrative agencies; 2) provide 
a clear definition of "public service" and "public utility"; 3) provide the appropriate 
mechanism for fixing rates based on reasonable rate of return; and 4) provide the 
applicable penalties and fees for public services.
The proposed amendments will cause necessary changes in the antiquated 
provisions of the law to encourage competition and ensure that the public will have more 
choices and better services at lower prices.
Thus, approval of this bill is earnestly sought.
JUAN MIGUEL F. ZU B IR I


EIGHTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
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'19 JUL 16 All •36 Air-38
S E N A T E
In tro d u ce d  by Senator Juan M iguel F. Z ubiri
AN ACT
FURTHER AMENDING COMMONWEALTH ACT NO. 146 OTHERWISE KNOWN AS 
THE PUBLIC SERVICE ACT, AS AMENDED
Be it enacted by the Senate and House o f Representatives o f the Philippines in 
Congress assembled:
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SECTION 1. Transfer o f Functions o f the Public Service Com m ission. -  The
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relevant provisions of Commonwealth Act No. 146 or the Public Service Act, as amended,
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referring to the Public Service Commission, its powers and duties, are hereby transferred
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to the various administrative agencies of the government according to their respective
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jurisdictions, such as:
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(a) 
Department of Transportation;
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(b) 
Land Transportation Franchising and Regulatory Board
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(c) 
Land Transportation Office;
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(d) 
Civil Aeronautics Board;
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(e) 
Civil Aviation Authority of the Philippines;
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(f) 
Philippine Ports Authority;
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(g) 
Maritime Industry Authority;
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(h) 
Philippine Coast Guard;
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(i) 
Department of Information and Communications Technology;
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(j) 
National Telecommunications Commission;
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(k) 
Department of Energy;
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(I) 
Energy Regulatory Commission;
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(m) 
Department of Environment and Natural Resources;
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(n) 
National Water Resources Board;


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(o) 
Local Water Utilities Administration;
(p) 
Philippine Competition Commission; and others.
All references to the Public Service Commission in Commonwealth Act No. 146 or the 
Public Service Act, as amended, shall mean any such administrative agencies concerned 
in accordance with their respective charters.
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Sec. 2. Public U tility. -  A new Section 13 (d) of Commonwealth Act No. 146 or 
the Public Service Act, as amended is hereby inserted to read as follows:
"(D ) I. PUBLIC UTILITY DEFINITION. -  THE TERM "PUBLIC U TILITY " 
REFERS TO A PUBLIC SERVICE THAT REGULARLY SUPPLIES THE PUBLIC AND 
DIRECTLY TRANSMITS AND DISTRIBUTES TO THE PUBLIC THROUGH A 
NETWORK ITS COMMODITY OR SERVICE OF PUBLIC CONSEQUENCE. A PUBLIC 
UTILITY IS  NECESSARY TO THE PUBLIC AND A NATURAL MONOPOLY THAT 
NEEDS TO BE REGULATED WHEN THE PUBLIC INTEREST SO REQUIRES AS 
DETERMINED BY CONGRESS.
I I. PUBLIC U TILITY EXEMPTIONS -  ANY EXISTING LAW TO THE 
CONTRARY W ITHSTANDING, THE FOLLOWING SHALL NOT BE CONSIDERED A 
PUBLIC U TILITY OPERATION:
(1 ) 
ELECTRIC POWER GENERATION IN  SECTION 6 OF REPUBLIC ACT 
NO. 9136 OR THE ELECTRIC POWER INDUSTRY REFORM ACT OF 
2001;
(2 ) 
ELECTRIC POWER SUPPLY IN  SECTION 29 OF REPUBLIC ACT NO. 
9136 OR THE ELECTRIC POWER INDUSTRY REFORM ACT OF 2001;
(3 ) 
CRUDE O IL AND PETROLEUM PRODUCTS UNDER REPUBLIC ACT 
NO. 8479 OR THE DOWNSTREAM O IL INDUSTRY DEREGULATION 
ACT OF 1998;
(4 ) 
TRANSPORTATION IN  THIS ACT, EXECUTIVE ORDER NO. 202 
(1 987 ), PRESIDENTIAL DECREE NO. 474 (1 9 7 4 ) AS AMENDED, 
AND REPUBLIC ACT NO. 776 (1 951 ) AS AMENDED;
(5 ) 
BROADCASTING, TELECOMMUNICATIONS, AND VALUE-ADDED 
SERVICES 
IN  
REPUBLIC 
ACT 
NO. 
7925 
OR 
THE 
PUBLIC 
TELECOMMUNICATIONS POLICY ACT OF THE PHILIPPINES; AND
(6 ) 
OTHER PUBLIC SERVICES IN  THIS ACT."


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Sec. 3. C ertificate o f Authorization. -  The first paragraph of Section 15 of
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Commonwealth Act No. 146 or the Public Service Act, as amended, is hereby
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amended to read as follows:
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"[W ith the exception of those enumerated in the preceding section] No public
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service shall operate in the Philippines without possessing a valid and subsisting
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certificate OF AUTHORIZATION OBTAINED APPROPRIATELY [from the
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Public Service Commission known as "certificate of public convenience", or
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"certificate of public convenience and necessity", as the case may be,] to the effect
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that the operation of said service and the authorization to do business will promote
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the public interest in a proper and suitable manner. W ITH THE EXCEPTION OF
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ITEMS NOS. 1 and 3 OF SECTION 2 (D )(II), ALL PUBLIC SERVICES
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CURRENTLY 
SECURING 
A 
LEGISLATIVE 
FRANCHISE 
FROM 
THE
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CONGRESS OF THE PHILIPPINES SHALL CONTINUE TO DO THE SAME."
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All references to a certificate of public convenience or a certificate of public convenience
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and necessity in Commonwealth Act No. 146 or the Public Service Act, as amended, shall
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mean any authorization obtained appropriately as the case may be.
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Sec. 4. Proceedings Upon Notice and Hearing. -  Section 16 (a) and (c) of
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Commonwealth Act No. 146 or the Public Service Act, as amended, are hereby amended
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to read as follows:
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"(a) To issue certificates [which shall be known as certificates of public
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convenience,] authorizing the operation of public service within the Philippines
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whenever the Commission finds that the operation of the public service proposed
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and the authorization to do business will promote the public interest in a proper
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and suitable manner: Provided, That [thereafter, certificates of public convenience
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and certificates of public convenience and necessity will be granted only to citizens
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of the Philippines or of the United States or to corporations, co-partnerships,
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associations or joint stock companies constituted and organized under the laws of
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the Philippines: Provided, That sixty per centum of the stock or paid up capital of
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any such corporations, co-partnership, association or joint stock company must
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belong entirely to citizens of the Philippines or of the United States: Provided
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further, That] no such certificates shall be issued for a period of more than fifty
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years.
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(b ) XXX
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(c) To fix and determine individual or joint rates, tolls, charges, classifications, or
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schedules thereof, as well as commutation, mileage, kilometrage, and other special


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rates which shall be imposed, observed, and followed thereafter by any public
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service: Provided, That the Commission may, in its discretion, approve rates
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proposed by public services provisionally and without necessity of any hearing; but
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it shall call a hearing thereon within thirty days, thereafter, upon publication and
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notice to the concerns operating in the territory affected: Provided further, That in
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case the public sen/ice equipment of an operator is used principally or secondarily
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for the promotion of a private business, the net profits of said private business
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shall be considered in relation with the public service of such operator for the
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purpose of fixing the rates: 
PROVIDED FURTHERMORE, 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 COMPARABLE
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BUSINESSES COMPUTED USING ESTABLISHED METHODOLOGIES SUCH
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AS THE CAPITAL ASSET PRICING MODE: PROVIDED ALSO, THAT INCOME
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TAX 
SHALL 
BE 
ALLOWED 
AS 
A 
CASH 
OUTFLOW 
FOR 
RATE-
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DETERMINATION 
PURPOSES: 
PROVIDED 
FINALLY, 
THAT 
THIS
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PROVISION SHALL NOT BAR THE APPLICATION OF PERFORMANCE-
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BASED RATE REGULATION SHOULD THE ADMINISTRATIVE AGENCY
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REGULATING SUCH PUBLIC SERVICE DEEM IT  EFFICIENT AND IN  THE
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PUBLIC INTEREST."
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Sec. 5. -  Proceedings W ithout Hearing -Section 17 (b) of Commonwealth Act
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No. 146 or the Public Service Act, as amended, is hereby amended to read as follows:
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"(b) To require any public service to pay the actual expenses incurred by
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the Commission in any investigation if it shall be found in the same that any
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rate toll, charge, schedule, regulation, practice, act or service thereof is in
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violation of any provision of this Act or any certificate, order, rule, regulation
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or requirement issued by the Commission. The Commission may also assess
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against any public service REASONABLE costs [not to exceed twenty five
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pesos] with reference to such investigation."
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Sec. 6. Acts Requiring Approval -  Section 20 (i) of Commonwealth Act No. 146
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or the Public Service Act, as amended, is hereby amended to read as follows:
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"(i) To sell, alienate, or in any manner transfer shares of its capital stock to
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any alien if the result of that sale, alienation, or transfer in itself or in connection
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with another previous sale shall be the reduction to less than sixty per centum of
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the capital stock belonging to the Philippine citizens IN  THE OPERATION OF A


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PUBLIC UTILITY AS REQUIRED BY THE CONSTITUTION. Such sale, 
alienation or transfer shail be void and of no effect and shall be sufficient cause for 
ordering the cancellation of the certificate."
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Sec. 7. Penalties fo r Violations -  Section 21 of Commonwealth No. 146 or the
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Public Service Act, as amended, is hereby amended to read as follows:
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"Every public service violating or failing to comply with the terms and
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conditions of any certificate or any orders, decisions or regulations of the
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Commission shall be subject to DISGORGEMENT OF PROFITS, TREBLE
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DAMAGES, a fine of UP TO FIVE M ILLIO N  PESOS OR ALL OR ANY
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COMBINATION THEREOF, [o f not exceeding two hundred pesos per day for
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every day] FOR EACH DAY during which such default or violation continues; and
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the Commission is hereby authorized and empowered to impose such fine, after
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due notice and hearing. THE FINE OF UP TO FIVE M ILLIO N  PESOS SHALL BE
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INCREASED EVERY FIVE (5 ) YEARS UPON CERTIFICATION BY NEDA ON
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THE COMPUTATION OF THE COST OF MONEY BASED ON THE CURRENT
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CONSUMER PRICE INDEX.
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The PENALTIES AND fines so imposed shall be paid to the Government of
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the Philippines through the Commission, and failure to pay the PENALTY OR fine
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in any case within the same specified in the order or decision of the Commission
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shall be deemed good and sufficient reason for the suspension of the certificate of
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said public service until payment shall be made. Payment may also be enforced by
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appropriate action brought in a court of competent jurisdiction. The remedy
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provided in this section shall not be a bar to, or affect any other remedy provided
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in this Act but shall be cumulative and additional to such remedy or remedies."
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Sec. 8. Interpretation. -Commonwealth Act. No. 146 or the Public Service Act,
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as amended, shall be interpreted to apply suppletorily to existing sector-specific laws
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governing public services and public utilities, unless otherwise expressly provided.
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Sec. 9 Comprehensive Baseline Survey. — The University of the Philippines
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Law Center shall conduct a comprehensive baseline survey of public services and public
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utilities governance within six (6) months from the effectivity of this Act.
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Sec. 10. Im plem enting Rules and Regulations. — All administrative agencies
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to which the powers and duties of the Public Service Commission have been transferred


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shall, in coordination with the University of the Philippines Law Center, promulgate rules 
and regulations to implement the provisions of this Act, ninety (90) days upon its 
effectivity.
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Sec. 11. Repealing Clause. -  All laws, decrees, orders, rules and regulations or 
other issuances or parts thereof, including Commonwealth Act No. 146 or the Public 
Service Act, as amended, inconsistent with the provisions of this Act are hereby repealed 
or modified accordingly.
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Sec. 12. Appropriation. -T h e  initial funding to carry out the provisions of this 
Act shall be charged against the current year's appropriation. Thereafter, such sums as 
may be necessary shall be included in the General Appropriations Act.
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Sec. 13. Separability Clause. — If any portion or provision of this Act is declared
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unconstitutional, the remained of this Act or any provision not affected thereby shall
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remain in force and effect.
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Sec. 14. E ffectivity. -T h is Act shall take effect after fifteen (15) days following
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the completion of its publication either in the Official Gazette or in a newspaper of general
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circulation in the Philippines.
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Approved,