EIGHTEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
S E N A T E  
S. No. 
.*^18
(DU rr o i; !r 
' ft.'irw
■19 JlllO A9:45
Introduced by Senator Grace Poe
AN ACT
FURTHER AMENDING COMMONWEALTH ACT NO. 146, OTHERWISE 
KNOWN AS THE PUBLIC SERVICE ACT, AS AMENDED, AND FOR OTHER
PURPOSES
Explanatory Note
One of the "State Policies" enshrined in the 1987 Constitution of the 
Philippines states that "the State shall promote a just and dynamic social order that 
will ensure the prosperity and independence of the nation and free the people 
from  p o K e /ty through policies that provide adequate social services, promote full 
employment, a rising standard o f living^ and an improved quality o f Ufa fo r 
all."1
Unfortunately, high prices and poor quality of basic services in the Philippines 
have become the unfortunate norm for consumers. Such sad reality is due to the 
fact that only a few local players or oligarchs effectively control the market. 
Competition and foreign investment are inhibited because limitations that should 
only apply to the operation of a public utility are usually also applied to all public 
services. This situation is caused by the ambiguity in the definition of a "public 
utility" that is often used interchangeably with "public service" under Commonwealth 
Act No. 146 or the Public Service Act ("PSA"). The key to fixing this problem is to 
develop a clear statutory definition of a "public utility" by amending the PSA.
The PSA is a law that was crafted in 1936 to govern public services in the 
Philippines. Understandably, it no longer sufficiently addresses the changes in the 
economic framework brought about by globalization and rapid technological 
innovation. Hence, there is a need to adjust the provisions of this 80-year old law to 
bring it to the 21st century and enable it to fulfill its purpose of truly serving the 
public, and to make it more responsive to market developments, advances in 
technology and recent Supreme Court decisions.
This Bill particularly seeks to amend the PSA by: (a) clarifying the definition of 
"public services" and "public utilities"; (b) instituting an appropriate mechanism for
1 Article II, Section 9 o f the Constitution.


fixing rates based on a reasonable rate of return; (c) increasing applicable penalties 
and fees to realistically deter violations of the law; and (d) recognizing the transfer 
of functions of the Public Service Commission to various administrative agencies as 
provided by various laws.
The above-mentioned amendments shall be introduced in the interest of 
providing the general public with more choices, better services, and lower prices. 
More competition among providers would result in lower prices and improved quality 
of basic services in the Philippines creating a more competitive economy towards a 
better quality of life for all. Furthermore, government regulation, effective and 
stringent guarding of national security and interest. Congressional power and 
oversight over franchise holders, and applicable and pre-existing Constitutional 
restrictions, among others, shall not, in any way, be diminished or relaxed.
In view of the foregoing, the immediate enactment of this legislative measure 
is hereby earnestly sought.
/CJpCE POE


EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
)
S E N A T E
S. No. _3l8
'4. i , ■ 
. . 
.
r'in ili( r  ot l.|.’ •- 
• t' * '
*19 JllO A9 ‘-A5
Introduced by Senator Grace I^Se!V' DB'
AN ACT
FURTHER 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 House o f Representatives o f the Philippines in 
Congress assembled.
1 
Section 1. Short Title. -T h is  Act shall be known as "The New Public Service
2 
Law o f the Philippines."
3 
Sec. 2. Declaration o f Policy. -  It is a Constitutionally enshrined policy of the
4 
State to promote a just and dynamic social order that will free the people from
5 
poverty through measures that promote an improved quality of life for all.
6 
The State recognizes that public utilities are necessary to the public and
7 
natural monopolies that must be regulated as required by public interest. It is the
8 
policy of the State to ensure that the consuming public's satisfaction and quality of
9 
life shall be the yardsticks for an effective regulation of public utility providers
10 
without compromising the reasonable rate of return of the latter. It is likewise the
11 
policy of the State to encourage private enterprise and provide incentives for needed
12 
investments.
13 
These policies are fulfilled by: (a) ensuring effective regulation of public
14 
utilities and public services; (b) ensuring reasonable rate of return to public utilities
15 
and public services, where applicable; and (c) instituting processes which protect
16 
national security.


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Sec. 3. Definition o f Terms. -  For the purposes of this Act, the terms below 
shall be defined as follows:
a. ) 
Administrative Agency -  refers to existing agencies to which the 
powers and duties of the Public Service Commission were transferred;
b. ) 
Common C arrier- refers to persons, corporations, firms or associations 
engaged in the business of carrying or transporting passengers or goods or both, by 
land, water, or air, for compensation, offering their services to the public, as defined 
by Article 1732 of Republic Act No. 386, as amended;
c. ) 
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 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;
d. ) 
Disgorgement o f Profits -  refers to the giving up or recapturing of 
profits traceable to a certain transaction or wrongdoing upon demand or by legal 
compulsion;
e. ) 
Distribution o f Eiectricity -  refers to the conveyance of electric power 
by a distribution utility through its distribution system as defined by Section 4 (n) of 
Republic Act No. 9136;
f. ) 
Phiiippine National -  refers to citizens, partnerships, associations, and 
corporations defined by Section 3(a) of Republic Act No. 7042, as amended;
g. ) 
Telecommunications -  refers to any process which enables a 
telecommunications entity to relay and receive voice, data, electronic messages, 
written or printed matter, fixed or moving pictures, words, music or visible or audible 
signals or any control signals of any design and for any purpose by wire, radio or 
other electromagnetic, spectral, optical or technological means, as defined by 
Section 3(a) of Republic Act No. 7925, as amended
h. ) 
Transmission o f Electricity -  refers to the conveyance of electricity 
through the high voltage backbone system, as defined by Section 4 (ccc) of Republic 
Act No. 9136;


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i. ) 
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
j. ) 
Water Pipeline Distribution Systems and Sewerage Pipeline Systems -  
refers to the operation and maintenance of water pipeline distribution systems to 
ensure an uninterrupted and adequate supply and distribution of potable water for 
domestic and other purposes and the operation and maintenance of sewerage 
pipeline systems to ensure public health and safety, as regulated by Republic Act No. 
6234, as amended, and Presidential Decree No. 198, as amended.
Sec. 
4. 
Recognition o f Previous 
Transfer o f Jurisdiction to 
Various 
Administrative Agencies. -  Since the enactment of Commonwealth Act No. 146, the 
jurisdiction 
over 
several 
public 
services 
had 
been 
transferred 
to 
various 
administrative agencies such as, but not limited to, the following: 
a. 
Department of Transportation (DOTr);
Land Transportation Franchising Regulatory Board (LTFRB);
Land Transportation Office (LTO);
Civil Aeronautics Board (CAB);
Civil Aviation Authority of the Philippines (CAAP);
Philippine Ports Authority (PPA);
Maritime Industry Authority (MARINA);
Philippine Coast Guard;
Department of Information and Communications Technology (DICT); 
National Telecommunications Commission (NTC);
Department of Energy (DOE);
Energy Regulatory Commission (ERC);
Department of Environment and Natural Resources (DENR);
League of Cities;
National Water Resources Board;
Local Water Utilities Administration;
Philippine Competition Commission (PCC).
All references to the Public Service Commission in Commonwealth Act No. 
146, as amended, shall mean any administrative agencies, such as those
b.
c.
d.
e.
f.
g-
h.
i.
j.
k.
l.
m.
n. 
0. 
P-
q-


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enumerated above, to which the powers and duties of the Public Service Commission 
were transferred in accordance with their respective charters and related statutes.
In addition, all administrative agencies, such as those enumerated above, to 
which the powers and duties of the Public Service Commission were transferred, are 
hereby authorized and ordered to charge and collect from any public service or 
public utility or applicant, as the case may be, reasonable fees as reimbursement of 
its expenses in the exercise of its authorization, supervision, and regulation duties, 
and to impose appropriate penalties and fines as provided by law.
Sec. 5. Public Utility. -  A new Section 13 (d) of Commonwealth Act No. 146, 
as amended, is hereby inserted to read as follows;
"(D ) PUBLIC UTILITY. -
PUBLIC UTILITY REFERS TO A PERSON THAT OPERATES, 
MANAGES AND CONTROLS FOR PUBLIC USE ANY OF THE 
FOLLOWING:
1) 
DISTRIBUTION OF ELECTRICITY;
2) 
TRANSMISSION OF ELECTRICITY; AND
3) 
WATER PIPELINE DISTRIBUTION SYSTEMS AND 
SEWERAGE PIPELINE SYSTEMS
NO OTHER PERSON SHALL BE DEEMED A PUBLIC 
UTILITY UNLESS OTHERWISE SUBSEQUENTLY PROVIDED BY 
LAW.
THE 
NATIONAL 
ECONOMIC 
AND 
DEVELOPMENT 
AUTHORITY 
(NEDA) 
THROUGH 
ITS 
BOARD, 
IN 
CONSULTATION 
WITH 
THE 
PHILIPPINE 
COMPETITION 
COMMISSION (PCC) AND THE CONCERNED ADMINISTRATIVE 
AGENCIES, 
MAY 
RECOMMEND 
TO 
CONGRESS 
THE 
CLASSIFICATION OF A PUBLIC SERVICE AS A PUBLIC UTILITY 
ON THE BASIS OF THE FOLLOWING CRITERIA:
1) 
THE PERSON OR JURIDICAL ENTITY REGULARLY 
SUPPLIES AND DIRECTLY TRANSMITS AND DISTRIBUTES TO 
THE PUBLIC THROUGH A NETWORK A COMMODITY OR 
SERVICE OF PUBLIC CONSEQUENCE;


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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;
3) 
THE COMMODITY OR SERVICE IS NECESSARY FOR 
THE 
MAINTENANCE 
OF 
LIFE 
AND 
OCCUPATION 
OF 
RESIDENTS; AND
4) 
THE COMMODITY OR SERVICE IS OBLIGATED TO 
PROVIDE ADEQUATE SERVICE TO THE PUBLIC ON DEMAND."
Sec. 6. Authorization to Operate. -  The first paragraph of Section 15 of 
Commonwealth Act No. 146, as amended, is hereby amended to read as follows: 
"With the exception of those enumerated in the preceding 
section, no public service shall operate in the Philippines without 
possessing a valid and subsisting FRANCHISE, certificate, OR ANY 
OTHER APPROPRIATE FORM OF AUTHORIZATION FOR THE 
OPERATION OF A PUBLIC SERVICE [from the Public Service 
Commission— known— as— ^ e rtificotc— of—public— eonvcnicncc,"— or 
^ ^ r tificotc of public convenience-and ncccGsity,"] as the case may be,
FROM THE CONGRESS, THE SECURITIES AND EXCHANGE 
COMMISSION 
AND/OR 
THE 
PROPER 
ADMINISTRATIVE 
AGENCY to the effect that the operation of said service and the 
authorization to do business will promote the public interest in a 
proper and suitable manner."
Sec. 7. Issuance o f Authorizations and Fixing o f Rates, Toiis and the iike and 
the Reasonabie Rate o f Return. -  Section 16 (a) and (c) of Commonwealth Act No. 
146, as amended, are hereby amended to read as follows:
"(a) To issue certificates [w hich shall be known os ccrtificGtcs 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 thereafter, certificates of 
peblic- convenience and certificates of public convenience and necessity


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wHI-be- grantcd--only to citizens of the PhilippincG or- of the United 
States or- to corporotions, co portnorships, associotionG or joint-stock 
eompanies— eenstituted— aed— organized— ander 
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 jo int 
stock company must belong entirely to citizens of the Philippines or of 
the-United States-: Providedr fiirther-r -That no such certificates shall bo 
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 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 operating in the territory 
affected , TO RATIFY ITS PRIOR PROVISIONAL APPROVAL OR 
CHANGE, MODIFY OR ALTER THE APPROVED RATE BASED ON 
PUBLIC INTEREST: 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 the purpose of fixing the rates; PROVIDED FURTHER, THAT IN 
THE PUBLIC INTEREST, THE ADMINISTRATIVE AGENCY MAY 
ESTABLISH AND ENFORCE A METHODOLOGY FOR SETTING 
RATES, 
TAKING 
INTO 
ACCOUNT 
ALL 
RELEVANT 
CONSIDERATIONS, INCLUDING THE EFFICIENCY OF THE 
REGULATED PUBLIC SERVICE. THE RATES MUST BE SUCH AS 
TO ALLOW THE RECOVERY OF 3UST AND REASONABLE COSTS


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AND A REASONABLE RATE OF RETURN TO ENABLE THE 
PUBLIC SERVICE TO OPERATE VIABLY. THE ADMINISTRATIVE 
AGENCY 
MAY 
ADOPT 
ALTERNATIVE 
FORMS 
OF 
INTERNATIONALLY ACCEPTED RATE-SETTING METHODOLOGY 
AS IT  
MAY 
DEEM 
APPROPRIATE AND W ILL 
PROMOTE 
EFFICIENCY. 
THE 
RATE-SETTING 
METHODOLOGY 
SO 
ADOPTED AND APPLIED MUST ENSURE A REASONABLE PRICE 
OF THE COMMODITY OR SERVICE. THE RATES PRESCRIBED 
SHALL 
BE 
NONDISCRIMINATORY.; 
PROVIDED 
FURTHER,
THAT INCOME TAX BE ALLOWED AS A CASH EXPENDITURE OR 
OUTFLOW 
FOR 
RATE-DETERMINATION 
PURPOSES.; 
PROVIDED FURTHER, THAT THIS PROVISION SHALL NOT BAR 
THE 
APPLICATION 
OF 
PERFORMANCE-BASED 
RATE 
REGULATION 
SHOULD 
THE 
ADMINISTRATIVE 
AGENCY 
REGULATING SUCH PUBLIC SERVICE DEEM IT  EFFICIENT AND 
IN  THE PUBLIC INTEREST.; PROVIDED FINALLY, THAT THIS 
SHALL NOT BE INTERPRETED AS AMENDING OR REPEALING 
(1) LAWS PROVIDING A DEREGULATION POLICY, SUCH AS 
REPUBLIC ACT NOS. 7925, 8479, 9136, AND 9295 AND (2) 
REGULATIONS PROMULGATED BY THESE ADMINISTRATIVE 
AGENCIES TO DEREGULATE RATES.
Sec. 8. Reasonable Costs. -Section 17 (b) of Commonwealth Act No. 146, as 
amended, is hereby amended to read as follows:
"(b) To require any public service to pay the actual expenses 
incurred by the [Commission] ADMINISTRATIVE AGENCY in any 
investigation if it shall be found in the same that any rate, toll, charge, 
schedule, 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 
[Commission] 
ADMINISTRATIVE 
AGENCY. 
The 
[ Commission] 
ADMINISTRATIVE AGENCY may also assess against any public


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service REASONABLE costs [ not to-exceed twenty-five pesos] with
2 
reference to such investigation."
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Sec. 9. Section 20 (i) of Commonwealth Act No. 146, as amended, is hereby
4 
amended to read as follows:
5 
"(i) To sell, alienate or in any manner transfer shares of its
6 
capital stock to any alien if the result of that sale, alienation, or
7 
transfer in itself or in connection with another previous sale shall be
8 
the reduction to less than sixty per centum of the capital stock
9 
belonging to Philippine citizens IN THE OPERATION OF A PUBLIC
10 
UTILITY AS REQUIRED BY THE CONSTITUTION. Such sale,
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alienation or transfer shall be void and of no effect and shall be
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sufficient cause for ordering the cancellation of the certificate."
13 
Sec. 10. Section 21 of Commonwealth Act No. 146, as amended, is hereby
14 
amended to read as follows:
15 
"Every public service violating or failing to comply with the
16 
terms and conditions of any certificate or any orders, decisions or
17 
regulations of the [ Commission] ADMINISTRATIVE AGENCY shall
18 
be subject to DISGORGEMENT OF PROFITS, TREBLE DAMAGES,
19 
a 
fine 
NOT 
EXCEEDING 
FIVE 
MILLION 
PESOS
20 
(PHP5,000,000.00) OR ALL OR ANY COMBINATION THEREOF
21 
[ of not cxcGoding tw o -hundred- pesos] per day for every day during
22 
which such default or violation continues; and the [ Commission]
23 
ADMINISTRATIVE AGENCY is hereby authorized and empowered to
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impose such PENALTY OR fine, after due notice and hearing.
25 
The PENALTIES AND fines so imposed shall be paid to the
26 
Government 
of 
the 
Philippines 
through 
the 
[ Commission]
27 
ADMINISTRATIVE AGENCY, and failure to pay the PENALTY OR
28 
fine in any case within the same specified in the order or decision of
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the [Commission] ADMINISTRATIVE AGENCY shall be deemed
30 
good and sufficient reason for the suspension of the certificate of said
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public service until payment shall be made. Payment may also be
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enforced by appropriate action brought in a court of competent
8


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jurisdiction. The remedy provided in this section shall not be a bar to,
2 
or affect any other remedy provided in this Act but shall be cumulative
3 
and additional to such remedy or remedies."
4 
Sec. 11. Section 23 of Commonwealth Act No. 146, as amended, is hereby
5 
amended to read as follows:
6 
"Any public service corporation that shall perform, commit, or
7 
do any act or thing forbidden or prohibited or shali neglect, fail or omit
8 
to do or perform any act or thing herein to be done or performed, shali
9 
be punished by a fine not exceeding [ twenty-five thousand pesos]
10 
FIVE MILLION PESOS (PHP5,000,000.00), or by imprisonment
11 
[ not exceeding five years] OF NOT LOWER THAN SIX (6) YEARS
12 
AND NOT HIGHER THAN TWELVE (12) YEARS, or both, in the
13 
discretion of the court."
14 
Sec. 12. Section 24 of Commonwealth Act No. 146, as amended, is hereby
15 
amended to read as follows:
16 
"Any person who shall knowingly and willfully perform, commit,
17 
or do, or participate in performing, committing, or doing, or who shall
18 
knowingly and willfully cause, participate, or join with others in causing
19 
any public service corporation or company to do, perform or commit,
20 
or who shall advice, solicit, persuade, or knowingly and willfully
21 
instruct, direct, or order any officer, agent, or employee of any public
22 
service corporation or company to perform, commit, or do any act or
23 
thing forbidden or prohibited by this Act, shall be punished by a fine
24 
not exceeding 
[twe-th o u sand—pesos] FIVE MILLION PESOS
25 
(PHP5,000,000.00), or imprisonment [not exceeding two years] OF
26 
NOT LOWER THAN SIX (6) YEARS AND NOT HIGHER THAN
27 
TWELVE (12) YEARS, or both, in the discretion of the courtfr
28 
Provided, however, that for operating a private passenger automobile
29 
as- a public- service w ithout having a ccrtific-atc of public convenience
30 
for the same-tbe offender shall be-subject to the pcnaltics-provided for
31 
ta section sixty seven (j) of Act numbered thirty nine hundred an
32 
ninety-two]."


1 
Sec. 13. Section 25 of Commonwealth Act No. 146, as amended, is hereby
2 
amended to read as follows:
3 
"Any person who shall knowingly and willfully neglect, fail, or
4 
omit to do or perform, or who shall knowingly and willfully cause or
5 
join or participate with others in causing any public service corporation
6 
or company to neglect, fail or omit to do or perform, or who shall
7 
advise, solicit, or persuade, or knowingly and willfully instruct, direct,
8 
or order any officer, agent, or employee 
of any public service
9 
corporation or company to neglect, fail, or omit to do any act or thing
10 
required to be done by this Act, shall be published by a fine not
11 
exceeding 
[twe— thousand— pesos] 
FIVE 
MILLION 
PESOS
12 
(PHPS/OOO/OOO.OO) or by imprisonment [ not exceeding two years]
13 
OF NOT LOWER THAN SIX (6) YEARS AND NOT HIGHER THAN
14 
TWELVE (12) YEARS, or both, in the discretion of the court."
15 
Sec. 14. Section 26 of Commonwealth Act No. 146, as amended, is hereby
16 
amended to read as follows:
17 
"Any person who shall destroy, injure, or interfere with any
18 
apparatus or appliance owned or operated by 
the [Commission]
19 
ADMINISTRATIVE AGENCIES or its agents, shall be deemed guilty
20 
of a misdemeanor and upon conviction shall be punished by a fine OF
21 
THE AMOUNT EQUIVALENT TO THE ACTUAL MARKET VALUE
22 
OF THE APPARATUS OR APPLIANCE DESTROYED OR INJURED
23 
PLUS 
A 
FINE 
NOT 
EXCEEDING 
ONE 
MILLION 
PESOS
24 
(P H P l,000/000.00) 
[ not exceeding one ■ -thousand pesos] or
25 
imprisonment [ not cxcccdmg- six- months] OF NOT LOWER THAN
26 
SIX (6) YEARS AND NOT HIGHER THAN TWELVE (12) YEARS,
27 
or both in the discretion of the court.
28 
[ Any public service permitting the destruction, injupy^-to; or
29 
interference with, any such apparatus or appliances shall forfeit a sum
30 
net-exceeding four thousand pesos for each offense.]"
31 
Sec. 15. Section 28 of Commonwealth Act No. 146, as amended, is hereby
32 
amended to read as follows:
10


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"Violations of the orders, decisions, and regulations of the
2 
[Commission] ADMINISTRATIVE AGENCIES and of the terms and
3 
conditions 
of 
any 
certificate 
issued 
by 
the 
[ Commission]
4 
ADMINISTRATIVE AGENCIES [ shall prescribe after sixty days,] and
5 
violations of the provisions of this Act shall [ prescribe after one
6 
hundred and eighty days.] BE IMPRESCRIPTIBLE."
7 
Sec. 16. Adjustment o f Fines. -  The maximum amounts of fines imposed
8 
under Commonwealth Act No. 146 as further amended by this Act, shall be adjusted
9 
by the head of each administrative agency under Section 4 of this Act by a Cost-of-
10 
Living Adjustment on January 1 of the year immediately following the date of
11 
enactment of this Act and every fifth calendar year thereafter. Each head of the
12 
administrative agency shall file copies of the adjustment with the University of the
13 
Philippines Law Center in accordance with Executive Order No. 292 (1987), as
14 
amended.
15 
Any increase shall apply only to fines, including those whose associated
16 
violation predated such increase, which are assessed after the date the increase
17 
takes effect.
18 
Sec. 17. Interpretation. -  This Act shall be subject to and consistent with the
19 
regulatory powers of the State to promote public interest in Article IX-C, Section 4
20 
and Article XII, Section 17 of the Constitution.
21 
A person classified as a public utility prior to the effectivity of this Act and
22 
declassified as such under this Act shall be considered a public service and a
23 
business affected with public interest for the purpose of Article XII, Section 17 of the
24 
Constitution. Such person shall continue to be subject to regulation by relevant
25 
administrative agencies under existing laws. This Act does not redefine the term
26 
"common carrier" or alter its obligation to exercise extraordinary diligence.
27 
No franchise, certificate, or authorization granted 
by the appropriate
28 
administrative agencies under Section 3 of this Act shall be (a) exclusive in
29 
character, (b) for a longer period than fifty years, and (c) granted except under the
30 
condition that it shall be subject to amendment, alteration, or repeal by Congress
31 
when the public interest so requires.
11


1 
The power to grant any franchise, certificate, or any other form of
2 
authorization for the operation of a public service belongs to Congress, unless
3 
otherwise provided by law to an administrative agency.
4 
Sec. 18. Non-Impairment o f Existing Agreements. -  The application and
5 
implementation of the pertinent provisions of this Act shall not impair vested rights
6 
or obligations of contracts. Current and subsisting concession agreements and other
7 
similar contracts of juridical persons with government agencies or government-
8 
owned and -controlled corporations covering activities hereunder classified as public
9 
utilities shall remain valid and in force in accordance with the existing terms and
10 
conditions the parties agreed to thereunder until the expiration or termination
11 
thereof.
12 
Sec. 19. Review o f Foreign Direct Investment in Covered Transactions. -
13 
(a) Definitions. — For purposes of this section, the following definitions shall
14 
apply:
15 
(1) Council; chairperson — The terms 'Council' and 'chairperson'
16 
mean the National Security Council and the chairperson thereof or the
17 
President's designee, respectively.
18 
(2) Control— The term "control" has the meaning given to such term
19 
in regulations which the Council shall prescribe.
20 
(3) Covered transaction — The term "covered transaction" means any
21 
merger, acquisition, or takeover that is proposed or pending after the
22 
effectivity of this law, by or with any foreign person which could result in
23 
foreign control of any person engaged in commerce in the Republic of the
24 
Philippines.
25 
(4) Foreign government-controlled transaction — The term "foreign
26 
government-controlled transaction" means any covered transaction that could
27 
result in the control of any person engaged in commerce in the Republic of
28 
the Philippines by a foreign government or an entity controlled by or acting
29 
on behalf of a foreign government.
30 
(5) Critical infrastructure — The term "critical infrastructure" means,
31 
subject to rules issued under this section, systems and assets, whether
32 
physical or virtual, so vital to the Republic of the Philippines that the
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incapacity or destruction of such systems or assets would have a debilitating 
impact on national security. Unless otherwise provided by the rules, "critical 
infrastructure" shall refer to:
(A) Transmission of Electricity, as defined by Section 4 (CCC) of 
Republic Act No. 9136;
(B) Distribution of Electricity, as defined by Section 4 (N) of Republic 
Act No. 9136;
(C) 
Water Pipeline Distribution Systems and Sewerage Pipeline 
Systems -  refers to the operation and maintenance of water pipeline 
distribution systems to ensure an uninterrupted and adequate supply 
and distribution of potable water for domestic and other purposes and 
the operation and maintenance of sewerage pipeline systems to ensure 
public health and safety, as regulated by Republic Act No. 6234, as 
amended, and Presidential Decree No. 198, as amended; and
(D) Telecommunications, as defined by Republic Act No. 7925, as 
amended
(6) Lead agency — The term "lead agency" means the agency, or agencies, 
designated by the President, or his designee, to be the lead agency or 
agencies on behalf of the Council—
(A) for each covered transaction, and for negotiating any mitigation 
agreements or other conditions necessary to protect national security; 
and
(B) for all matters related to the monitoring of the completed 
transaction, to ensure compliance with such agreements or conditions 
and with this section.
(b) National Security Reviews. —
(1) National security reviews. —
(A) In general. — The President or the Council shall initiate a 
review of a covered transaction to determine its effects on the national 
security of the Republic of the Philippines if—
(i) the covered transaction is a foreign government-controlled 
transaction; and
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(ii) the transaction would result in control of any critical
2 
infrastructure of or within the Republic of the Philippines.
3 
Any party or parties to any covered transaction may likewise
4 
initiate a review of the transaction under this paragraph by
5 
submitting a written notice of the transaction to the Chairperson
6 
of the Council.
7 
(B) Timing. — Any review under this paragraph shall be
8 
completed before the end of the 30 day period beginning on the date
9 
of the initiation of the review in accordance with subparagraph (A).
10 
(C) Limit on delegation of certain authority. — The authority of
11 
the Council to initiate a review under subparagraph (A) may not be
12 
delegated to any person, other than the appropriate Undersecretary of
13 
the department or deputy head of the agency represented on the
14 
Councii.
15 
(2) Submission of additional information. — No provision of this
16 
subsection shail be construed as prohibiting any party to a covered
17 
transaction from submitting additional information concerning the transaction,
18 
including any proposed restructuring of the transaction or any modifications
19 
to any agreements in connection with the transaction, while any review of the
20 
transaction is ongoing.
21 
(3) Notice of results to parties. — The Council shall notify the parties to
22 
a covered transaction of the results of a review under this section, promptly
23 
upon completion of all action under this section.
24 
(c) Confidentiality of information. — Any information or documentary material
25 
filed with the President or the President's designee pursuant to this section shall be
26 
exempt from disclosure, and no such information or documentary material may be
27 
made public, except as may be relevant to any administrative or judicial action or
28 
proceeding. Nothing in this subsection shall be construed to prevent disclosure to
29 
either House of Congress or to any duly authorized committee or subcommittee of
30 
the Congress if the committee provides assurances of confidentiality, unless such
31 
party otherwise consents in writing to such disclosure.
32 
(d) Action by the President. —
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(1) In general. — Subject to paragraph (4); the President may take 
such action for such time as the President considers appropriate to suspend 
or prohibit any covered transaction involving critical infrastructure that 
threatens to impair the national security of the Republic of the Philippines.
(2) Announcement by the President. — The President shall announce 
the decision on whether or not to take action pursuant to paragraph (1) not 
later than 15 days after the date on which a review described in subsection 
(b) is completed.
(3) Enforcement. — The President may direct the Solicitor General of 
the Republic of the Philippines to seek appropriate relief, including divestment 
relief, in the courts of the Republic of the Philippines, in order to implement 
and enforce this subsection.
(4) Findings. — The President may exercise the authority conferred by 
paragraph (1), only if—
(A) there is credible evidence that leads the President to believe that 
the foreign interest exercising control might take action that threatens 
to impair the national security of the Republic of the Philippines; and
(B) provisions of law, other than this section, do not, in the judgment 
of the President, provide adequate and appropriate authority for the 
President to protect the national security in the matter before the 
President.
(5) Factors to be considered. — For purposes of determining whether 
to take action under paragraph (1), the President shall consider the following:
(A) 
the 
potential 
national 
security-related 
effects 
on 
critical 
infrastructure;
(B) whether the covered transaction is a foreign government-controlled 
transaction;
(6) Actions and Findings Non-reviewable. — The actions of the 
President under paragraph (1) of subsection (d) and the findings under 
paragraph (4) of subsection (d) by the President shall not be subject to 
judicial review unless grave abuse of discretion amounting to lack or excess of 
jurisdiction was committed.
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(e) Effect on Other Law. — No provision of this section shall be construed as
2 
altering or affecting any other authority, 
process, 
regulation, 
investigation,
3 
enforcement measure, or review provided by or established under any other
4 
provision of law, or any other authority of the President or the Congress under the
5 
Constitution of the Republic of the Philippines.
6 
(f) Mitigation and Post-Consummation Monitoring and Enforcement. —
7 
(1) Mitigation. —
8 
(A) In general. — The Council or a lead agency may, on behalf
9 
of the Council, negotiate, enter into or impose, and enforce any
10 
agreement or condition with any party to the covered transaction in
11 
order to mitigate any threat to the national security of the Republic of
12 
the Philippines that arises as a result of the covered transaction.
13 
(B) Risk-based analysis required. — Any agreement entered into
14 
or condition imposed under subparagraph (A) shall be based on a risk-
15 
based analysis, conducted by the Council, of the threat to national
16 
security of the covered transaction.
17 
(2) Negotiation, modification, monitoring, and enforcement. —
18 
(A) Designation of lead agency. — The lead agency shall
19 
negotiate, modify, monitor, and enforce, on behalf of the Council, any
20 
agreement entered into or condition imposed under paragraph (1) with
21 
respect to a covered transaction, based on the expertise with and
22 
knowledge of the issues related to such transaction on the part of the
23 
designated department or agency. Nothing in this paragraph shall
24 
prohibit other departments or agencies in assisting the lead agency in
25 
carrying out the purposes of this paragraph.
26 
(B) Reporting by designated agency. — The lead agency in
27 
connection with any agreement entered into or condition imposed with
28 
respect to a covered transaction shall provide periodic reports to the
29 
Council on any material modification to any such agreement or
30 
condition imposed with respect to the transaction.
31 
(g) Congressional Oversight and Periodic Review. — A Congressional
32 
Oversight Committee shall be created that will conduct a periodic review every five
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(5) years commencing from the effectivity of this Act. The Congressional Oversight
2 
Committee shall be composed of the Chairperson of the Senate Committee on Public
3 
Services, the Chairperson of the House of Representatives Committee on Public
4 
Services, and representatives of other relevant congressional committees.
5 
Sec. 
20. 
Suppletory Application o f Commonwealth Act No. 
M6. 
-
6 
Commonwealth Act No. 146, as amended, shall be construed as a general law that
7 
shall apply suppletorily to special laws or existing sector-specific laws governing
8 
public services, except for Section 13(d) of Commonwealth Act No. 146, as
9 
amended, created by Section 4 of this Act.
10 
Sec. 21. Comprehensive Baseline Survey. -  The University of the Philippines
11 
Law Center shall conduct a comprehensive baseline survey of public services
12 
governance within six (6) months from the effectivity of this Act. Copies of the
13 
results of said survey shall be furnished to the Congress, the NEDA and PCC.
14 
Sec. 22. Implementing Rules and Regulations. -  Ali administrative agencies
15 
under Section 3 of this Act shall, in coordination with the University of the Philippines
16 
Law Center, promuigate rules and regulations to implement the provisions of this
17 
Act, including the criteria for the determination of imposable fines, as provided for in
18 
this Act, to be based on the capitalization of a public service provider and
19 
peculiarities of the public service concerned.
20 
Sec. 23. Repealing Clause. -  All laws, including Commonwealth Act No. 146,
21 
as amended, decrees, orders, rules and regulations, or other issuances or parts
22 
thereof inconsistent with the provisions of this Act are hereby repealed or modified
23 
accordingly. This includes:
24 
(a) Section 2(a) of Republic Act No. 6957, as amended, insofar as the clause
25 
limiting investment in a facility operator where a public utility franchise is required;
26 
(b) Section 3(c) of Republic Act No. 9295, as amended, insofar as the clause
27 
limiting investment in a Domestic Ship Operator or Domestic Ship Owner; and
28 
(c) Section 44 of Republic Act No. 9497, as amended, insofar as the clause
29 
limiting registration of aircraft which are owned or leased by non-Philippine
30 
nationals.
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Sec. 24. Appropriation. -  The initial funding to carry out the provisions of this
2 
Act shall be charged against the current year's appropriation. Thereafter, such sums
3 
as may be necessary shall be included in the General Appropriations Act.
4 
Sec. 25. Separabiiity Ciause. -  If any portion or provision of this Act is
5 
declared unconstitutional, the remainder of this Act or any provision not affected
6 
thereby shall remain in force and effect.
7 
Sec. 26. Effectivity. -  This Act shall take effect after fifteen (15) days
8 
following the completion of its publication either in the Official Gazette or in a
9 
newspaper of general circulation in the Philippines.
Approved,
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