THIRTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
S E N A ~ T  
E 
EXPLANATORY NOTE 
This 
bill 
introduces amendments to 
the 
Public 
Service 
Law, 
Commonwealth Act No. 146, amended. The amendments redefine the term 
“public service” in the said law to exclude certain activities from the protection 
and regulation of the law, including the burden of obtaining the certificate of 
public convenience. 
The public service law requires an enterprise engaged in a public service 
to obtain a certificate of public convenience, or of public convenience and 
necessity as the case maybe. Issuance of such certificate effectively grants a 
franchise to the enterprise, guaranteeing it a fixed rate of return, based on the 
value of the assets it employs in the public service. Reciprocally, it should 
comply with the rules and requirements imposed by the regulatory agency, 
which at present is either the Department of Transportation and Communications 
or the Energy Regulatory Board. 
Activities classified in the existing law as “public service” include the 
following: 
a. 
b. 
C. 
d. 
e. 
f. 
g* 
h. 
i. 
Common Carriers - railroad, street and traction railways, subway 
motor vehicle, whether for freight or passenger; 
Express Service; 
Steamboat, steamship line, porfines, ferries and water craft, 
transporting freight and/or passengers; 
Shipyard, marine railway, marine repair shop, wharf or dock; 
Ice plant, ice refrigeration plant; 
Can a I , irrigation system ; 
Gas, electric lights, heat and power, water supply and power; 
Petroleum, sewerage system; 
Wire 
or 
wireless 
communications system, wire 
or 
wireless 
broadcasting stations. 
Many advances in technology, and changes in the industrial and economic 
situation have taken place since CA 146 was enacted in November 1936. These 
technological and industrial changes have made it easier and cheaper to put up 
the facilities required to render some of the “public services”. These changes 
remove the need to create the regulated monopolies/oligopolies that franchises 
imply, thus putting into question the continucd inclusion of some of the above 
activities as franchised public services with a guaranteed rate of return. For the 
foregoing reasons, the amendments in this bill would exclude from the above 
activities the following: 


EXPRESS SERVICE 
At present there are several express services in operation. They deliver 
messages and parcels domestically and/or internationally. 
SHIPYARD, MARINE RAILWAY, MARINE REPAIR SHOP, WHARF OR DOCK 
These activities are already under the jurisdiction of either MARINA or 
PPA. There is no longer any reason for the first three activities, under the 
MARINA jurisdiction, to be considered a 2ublic service; they are not so 
considered in any market economy country that we know of. Wharves and docks 
are under the jurisdiction of the PPA. 
ICE PLANT, ICE-REFRIGERATION PLANT 
Tremendous advances have been made in the ice-making, refrigeration 
cold storage and food preservation industries and their technologies in the last 50 
years. These advances have brought down the cost of refrigeration, reduced the 
economic size of ice plants and refrigeration plants, greatly widened the uses of 
and need for refrigeration, particularly in food preservation, storage and 
processing. Ice making equipment in the last 50 years have become so small, 
inexpensive and simple that an ice plant may be viable in a small fishing village. 
This possibility could not have been thought of with the state of technology in the 
1920’s. 
Thus ice and refrigeration plants should be allowed to proliferate as 
private businesses to serve the needs of farmers, fishermen and general public 
instead of being limited by franchises and regulation. 
CANAL, IRRIGATION SYSTEMS 
Instead of limiting establishment of irrigation systems, by private 
organizations with franchise requirement, they should be encouraged to relieve 
government’s burden of widening the irrigated area in the country. 
This 
liberalization will not remove the need to apply with the appropriate government 
agency for the rights to impound and distribute the water from source. 
PETROLEUM 
The petroleum industry is subject to regulation with respect to selling 
prices of finished products by the Energy Regulatory Board. The industry itself is 
not presently considered as a public utility, nor subject to any other regulation as 
such. 
The bill also provides that purely freight ships, without a fixed route, 
should not be considered a public service. We believe they should be subject to 
regulation only with respect to the maximum freight rates they may charge. We 
suggest that the ceiling rates should be equal to those allowed to ships and 
shipping lines carrying both passengers and freight. 


Another important provision of the billr allows the regulatory agencies to 
establish maximum charges for any public service as may be determined to be 
better suited to ceiling rather than fixed rates. The law only allows the regulatory 
agencies to fix definite rates for the public service. If for example the freight rate 
fixed per ton of cargo from Manila to Lucena is P500, and a trucker were to 
charge only P480, he would theoretically be in violation of his license. The 
amendment we propose would allow the Board of Transportation to establish 
P500 as the maximum, not the fixed rate. On this rate setting, the trucker could 
not charge any rate he chooses, provided the P500 rate is not exceeded. This 
would induce competition into the operation of a number of public services with 
expected consequent benefits to the general public. 
In view of the foregoing, passage of this bill is earnestly requested. 
'/denator 
/ 


THIRTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
S E N A T E  
Introduce by Senator Juan M. Flavier 
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 I. Statement of Policy on Public Services - Public services are 
essential services rendered to the general public for a fee by one (1) or a limited 
number of enterprises in a specific area. Government is responsible for ensuring 
that these services are rendered adequately, extensively, 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 (I) 
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 rendwing public service, and there are 
therefore subjected to regulation by the designated agency of government. 
Continuing review is required of the public services presently franchised 
by government to determine whether the public interest is better served by 
releasing these public services from the franchising requirement, andlor 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 fee or charges for the public service. 
SECTION 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, sub-way motor vehicle, either for freight or 
passenger, or both with or without fixed route and whatever may be 
its classification, freight or carrier service of any class [express 
service,] PASSENGER steamboat, or steamship line, pontines, 
ferries, and water craft engaged in the transportation of passengers 
[or freight ] or both PASSENGERS AND FREIGHT; [shipyard, 
marine railways, marine repair shop, wharf or dock, ice plant, ice- 
refrigeration plant, canal, irrigation system,] gas, electric light, heat 
and power, water supply and power [petroleum,] sewerage system, 
wire or wireless broadcasting stations and other similar public 
services. Provided, 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 parties 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 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 purpose of this Act. 
“SECTION 14. 
The following are exempted from the 
provisions of the preceding section: 
(a) 
Warehouse [ ; 1, INCLUDING COLD STORAGE 
PLANTS: 
(b) 
Vehicles drawn by animals and bancas moved by 
oar or sail, and tugboats and lighters; 
(c) 
Airships within the Philippines except as regards 
the fixing of their maximum rates on freight and 
passengers; 
INTERISLAND CARGO VESSELS WHICH DO 
NOT 
CARRY 
PAYING 
PASSENGERS, 
REGULARLY OR OTHERWISE, AND HAVE NO 
FIXED ROUTE, EXCEPT AS REGARDS THE 
FIXING OF THEIR MAXIMUM RATES ON 
FREIGHT ; 
(d) 
[ D ] Radio companies except with respect to 
the fixing of rates; 
[ e ] Public Services owned or operated by any 
instrumentality of the National Government or by 
any government owned or controlled corporation, 
except with respect to the fixing of rates.” 


“SECTION 16 (c). 
To fix and determine, 
OR TO FIX 
MAXIMUM CEILINGS OF, individual or joint rates, toll, 
charges, classification, 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: Provided, That the Commission may, 
in its discretion, approve 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 : Providd, 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 the purpose of 
fixing the rates.” 
SECTION 3 All laws, acts, executive orders, rules and regulations and 
other issuances inconsistent with this Act are hereby repealed or modified 
accordingly. 
SECTION 4 This Act shall take effect fifteen (15) days after its publication 
in at least two (2) newspapers of general circulation. 
Approved,