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SEVENTEENTH C ONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES
f  irst Regular Session
S E N A T E
Senate Bill No. J . 4 4 1
Introduced by Senator Grace Poe
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AN ACT FURTHER AMENDING COMMONWEALTH ACT NO. 146 
OR THE PUBLIC SERVICE ACT, AS AMENDED
Explanatory Note
Consumers often experience high prices and poor quality of basic services in the 
Philippines, because 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 public utility that is often used interchangeably 
with public service under Commonwealth Act No. 146 or the Public Service Act. The key to 
fixing this problem is to develop a clear statutory definition of a public utility by amending 
the Public Service Act.
The Public Service Act 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 the law to bring it to the 2 r' century and 
enable it to fulfill its purpose of truly serving the public.
Notwithstanding numerous amendments, this 80-year old law is still a good law in 
terms of protecting the public interest, albeit outdated in certain aspects, particularly: 1) the


transfer of the functions of the Public Service Commission to various administrative 
agencies; 2) the definition of public service, which is often used as a proxy for public utility 
in reference to the 1987 Constitution; 3) the appropriate mechanism for fixing rates based on 
reasonable rate of return; and 4) the applicable penalties for violations.
This bill proposes to further amend the Public Service Act to effect the necessary 
changes in the antiquated provisions of the law to increase its relevance to contemporary 
concerns, in the interest of providing the general public with more choices, better services, 
and lower prices.
This legislative reform will significantly contribute to increasing competition, as well 
as protecting the public interest. 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.
In view of the foregoing, immediate enactment of this measure is respectfully sought.
;RACE POE


SEVENTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES
First Regular Session
S E N A T E
Senate Bill NoJ- 4  4.1
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Introduced by Senator Grace Poe
AN ACT FURTHER AMENDING COMMONWEALTH ACT NO. 146 
OR THE PUBLIC SERVICE ACT, AS AMENDED
Be it enacted by the Senate and the House of Representatives of the Philippines in Congress 
assembled:
SECTION 1. Short Title — This Act shall be known as the “PSA Amendments Act of
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SECTION 2. Declaration of Policy -  It is a Constitutionally enshrined policy of the 
State to promote a just and dynamic social order that will free the people from poverty 
through measures that promote an improved quality of life for all.
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The State recognizes that public utility is necessary to the public and a natural 
monopoly that needs to be regulated as required by public interest. It is the policy of the State 
to ensure that the consuming public’s satisfaction and quality of life shall be the yardsticks 
for an effective regulation of public utility providers without compromising the reasonable 
rate of return of the latter.


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SECTION 3. -  Recognition of Previous Transfer of 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:
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a.
b.
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d.
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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).
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references to the Public Service Commission in Commonwealth Act No. 146, as
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amended, shall mean any administrative agencies, such as those enumerated above, to which


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the powers and duties of the Public Service Commission were transferred in accordance with
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their respective charters and related statutes.
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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.
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SECTION 4. Public Utility. -  A new Section 13 (d) of Commonwealth Act No. 146,
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as amended, is hereby inserted to read as follows:
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“(D) PUBUC UTILITY. -
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PUBLIC UTILITY IS NOT SYNONYMOUS TO PUBLIC SERVICE AS 
THE FORMER IS A SUB-SET OF THE LATTER. PUBLIC UTILITY 
REGULARLY SUPPLIES AND DIRECTLY TRANSMITS AND 
DISTRIBUTES TO THE PUBUC, THROUGH A NETWORK, A 
COMMODITY OR SERVICE OF PUBLIC CONSEQUENCE AND IS A 
NATURAL 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:
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(1) 
TRANSMISSION 
of 
ELECTRICITY 
AS 
DEFINED 
BY 
SECTION 4 (CCC) OF REPUBLIC ACT NO. 9136;
(2) 
DISIRIBUTION 
OF 
ELECTRICITY 
AS 
DEFINED 
BY 
SECTION 4 (N) OF REPUBLIC ACT NO. 9136; AND
(3) 
WATER WORKS AND SEMTRAGE SYSI EMS AS DEFINED 
BY 
REPUBLIC ACT NO. 
6234, AS AMENDED, AND 
PRESIDENTIAL DECREE NO. 198, AS AMENDED.
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PUBLIC UTILITIES MAY USE AGENTS, CONTRACTORS OR 
SERVICE PROVIDERS IN THE PERFORMANCE OF THEIR 
FUNCTIONS. NEVERTHELESS, THE PUBLIC UTILITIES SHALL 
REMAIN FULLY RESPONSIBLE FOR THEIR FUNCTIONS, AND 
THEIR AGENTS, CONTRACTORS OR SERVICE PROVIDERS 
SHALL NOT BE CONSIDERED PUBLIC UTILITIES.
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 
PHILIPPINE 
COMPETITION COMMISSION (PCC) IN CONSULTATION WITH


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THE NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY 
(NED A )”
SEC riON 5. 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 e.xception 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 "certificate of 
public convenience," or "certificate of public convenience and necessity,"] as 
the case may be, FROM 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.”
SECTION 6. Issuance of Authorizations and Fixing of Rates, Tolls and the like and 
the Rea.sonable 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 vrill promote the public interest in a proper and suitable manner.


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[Provided, That thereafter, certificates of public convenience and certificates 
of public convenience and necessity will be granted only to citizens of the 
Philippines or of the United States or to corporations, 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 to citizens 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.]
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(c) To fix and determine TTTE 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 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 the purpose of fixing the rates; PROVIDED


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THAT THE MAXIMUM RATE OF RETURN SHALL BE EQUAL TO 
THE POST-TAX WEIGHTED AV ERAGE COST OF CAPITAL FOR 
THE SAME OR COMPARABLE BUSINESSES COMPUTED USING 
ESTABLISHED METHODOLOGIES SUCH AS THE CAPITAL 
ASSET PRICING MODEL: PROVIDED ALSO, THAT INCOME TAX 
MAY BE ALLOWED AS A CASH EXPENDITURE OR OUTFLOW 
FOR IMTE-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 REGULATIONS PROMULGATED 
BY THESE ADMINISTRATIVE AGENCIES TO DEREGULATE 
RATES.
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SECTION 7. 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 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]


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ADMINISTRATIVE AGENCY may also assess against any public service 
REASONABLE costs [not to exceed twenty-five pesos] with reference to 
such investigation.”
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SEC ITON 8. Section 20 (i) of Commonwealth Act No. 146, as amended, is hereby
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amended to read as follows;
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“(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 efTect and shall be 
sufficient cause for ordering the cancellation of the certificate.”
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SECTION 9. Section 21 of Commonwealth Act No. 146, as amended, is hereby
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amended to read as follows:
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“Every public service violating or failing to comply with the terms and 
conditions of any certificate or any orders, decisions or regulations of the 
[Commission] 
ADMINISTRATIVE 
AGENCY shall 
be subject to 
DISGORGEMENT OF PROFITS, TREBLE DAMAGES, a fine NOT 
E.XCEEDING FIVE MILLION PESOS (PIIP5,000,000.00) OR ALL OR 
ANY COMBINATION THEREOF [of not exceeding two hundred pesos] 
per day for every day during which such default or violation continues; and
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the [Commission] ADMINISTRATIVE AGENCY is hereby authorized and 
empowered to impose such PENALTY OR fine, after due notice and hearing.
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The PENALTIES AND fines so imposed shall be paid to the Government of 
the Philippines 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 of 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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SECTION 10. Section 23 of Commonwealth Act No. 146, as amended, is hereby
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amended to read as follows:
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“Any public service corporation that shall perform, commit, or do any act or 
thing forbidden or prohibited or shall neglect, fail or omit to do or perform 
any act or thing herein to be done or performed, shall be punished by a fine 
not exceeding [twenty-five thousand pesos] FIVE MILLION PESOS 
(PIIP5,000,000.00), or by imprisonment [not exceeding five years] OF NOT 
LOWER THAN SIX (6) YEARS AND NOT HIGHER THAN TWELVE 
(12) YEARS, or both, in the discretion of the court.”
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SECTION 11. Section 24 of Commonwealth Act No. 146, as amended, is hereby
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amended to read as follows:
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“Any person who shall knowingly and willfully perform, commit, or do, or 
participate in performing, committing, or doing, or who shall knowingly and 
willfully cause, participate, or join with others in causing 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 (PIIP5,000,000.00), or imprisonment [not exceeding two years] OF 
NOT LOWER THAN SIX (6) YEARS AND NOT IIICIIER 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 be subject to the penalties provided for in section sixty-seven (j) of Act 
numbered thirty-nine hundred an ninety-two.]”
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SECTION 12. Section 25 of Commonwealth Act No. 146, as amended, is hereby
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amended to read as follows:
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“Any person who shall knowingly and 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.
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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 published 
by a fine not exceeding [two thousand pesos] FIVE MILLION PESOS 
(PIIP5,000,000.00) or by imprisonment [not exceeding two years] OF NOT 
LOWER THAN SIX (6) YEARS AND NOT HIGHER THAN TWELVE 
(12) YEARS, or both, in the discretion of the court.”
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SECTION 13. Section 26 of Commonwealth Act No. 146, as amended, is hereby
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amended 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 to in charge of the Commission 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 (PHPI,000,000.00) [not exceeding one thousand pesos] 
or imprisonment [not exceeding six months] OF NOT LOWER TUAN SLX 
(6) YEARS AND NOT HIGHER THAN TWELVE (12) YEARS, or both 
in the discretion of the court.
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[Any public service permitting the destruction, injury to, or interference with, 
any such apparatus or appliances shall forfeit a sum not exceeding four 
thousand jjesos for each offense.]”
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SECTION 14. Section 28 of Commonwealth Act No. 146, as amended, is hereby
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amended to read as follows;
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“Violations of the orders, decisions, and regulations of the Commission and of 
the terms and conditions of any certificate issued by the Commission [shall 
prescribe after sixty days,] and violations of the provisions of this Act shall 
[prescribe after one hundred and eighty days.] BE IMPRESCRIPTIBLE.”
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SEC TION 15. Subsequent Adjustment of Fines imposed under this Act -  The
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maximum amounts of fines imposed under this Act, as well those imposed under
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Commonwealth Act No 146, shall be adjusted by the head of each administrative agency
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under Section 1 of this Act by a Cost-of-Living Adjustment on January 1 of the year
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immediately following the date of enactment of this Act and every fifth calendar year
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thereafter. Each head of the administrative agency shall file copies of the adjustment with the
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University of the Philippines Law Center in accordance with Executive Order No. 292
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(1987), as amended.
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The Cost-of-Living Adjustment shall mean the percentage by which the Philippine
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Statistics Authority (PSA) Consumer Price Index for the month of June of the calendar year
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preceding the adjustment e.xceeds the PSA Consumer Price Index for the month of June of
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the calendar year in which the maximum amount of the fine was last set or adjusted pursuant
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to law.
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Any increase shall apply only to fines, including those whose associated violation
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predated such increase, which are assessed after the date the increase takes effect.
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SECTION 16. 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.
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No franchise, certificate, or authorization granted,by the appropriate administrative 
agencies under Section 3 of this Act shall be (a) exclusive in character, (b) for a longer period 
than fifty years, and (c) granted except under the condition that it shall be subject to 
amendment, alteration, or repeal by Congress when 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 belongs to Congress, unless otherwise provided by law to an
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administrative agency.
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SECTION 17. Suppletory Application of Commonwealth Act No. 146. -
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Commonwealth Act No. 146, as amended, shall be construed as a general law that shall apply
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suppletorily to special laws or existing sector-specific laws governing public services, except
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for 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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SECTION 18. Comprehensive Baseline Survey. -  The University of the Philippines
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Law Center shall conduct a comprehensive baseline survey of public services governance
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within six (6) months from the effectivity of this Act.
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SECTION 19. Implementing Rules and Regulations. -  All administrative agencies 
under Section 3 of this Act shall, in coordination with the University of the Philippines Law 
Center, promulgate rules and regulations to implement the provisions of this Act, including 
the criteria for the determination of imposable fines, as provided for in this Act, to be based 
on the capitalization of a public service provider and peculiarities of the public service 
concerned.
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SECTION 20. Repealing Clause. -  All laws, including Commonwealth Act No. 146,
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as 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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SECTION 21. Appropriation. -  The initial funding to carry out the provisions of this
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Act 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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SECTION 22. Separability Clau.se. -  If any portion or provision of this Act is
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declared unconstitutional, the remainder of this Act or any provision not affected thereby
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shall remain in force and effect.
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SECTION 23. KJfectivity. -  This Act shall take effect after fifteen (15) days 
following the completion of its publication either in the Official Gazette or in a newspaper of 
general circulation in the Philippines.
Approved,
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