EIGHTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES 
)
Second Regular Session 
)
SENATE 
S. No. 2094
(In Substitution of Senate Biil Nos. 13, 318,419, 531, 1257, and 
taking into consideration House Bill No. 78)
RECEIVED
FILED
March
NOEX
GILLS
Prepared and submitted jointly by the Committees on Public Services; Economic 
Affairs; and Finance, with Senators Drilon, Poe, Pangilinan, Zubiri, and
Marcos as authors thereof
AN ACT
AMENDING COMMONWEALTH ACT NO. 146, OTHERWISE KNOWN AS THE 
PUBLIC SERVICE ACT, AS AMENDED
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled.
1 
Section 1. Declaration of Policy. -The State recognizes the role of the private
2 
sector as the main engine for national growth and development. It is hereby declared
3 
the policy of the State to encourage private enterprise and expand the base of
4 
investment in the country, with the goal of providing efficient, reliable and affordable
5 
basic services to all. The State recognizes that economic liberalization promotes the
6 
free flow of capital, efficiently allocates scarce resources, allows the transfer of
7 
advanced technology and facilitates market competition, for the benefit of the
8 
consumers who are given the right to choose between service providers.
9 
Sec. 2. Definition of Terms. - For the purposes of this Act, the terms below
10 
shall be defined as follows:
11 
a.) Common Carrier- refers to persons, corporations, firms or associations
12 
engaged in the business of carrying or transporting passengers or goods or both, by
13 
land, water, or air, for compensation, offering their services to the public, as defined
14 
by Article 1732 of Republic Act No. 386, as amended;


1 
b.) Covered transaction — refers to any merger, acquisition, or takeover
2 
that is proposed or pending after the effectivity of this law, by or with any foreign
3 
person which could result in foreign control of a business or entity providing a private
4 
a public service;
5 
c.) 
Critical infrastructure — refers to systems and assets, whether physical
6 
or virtual, so vital to the Republic of the Philippines that the incapacity or destruction
7 
of such systems or assets would have a debilitating impact on national security. It
8 
shall specifically refer to:
9 
(i) Transmission of Electricity;
10 
(ii) Distribution of Electricity;
11 
(iii) Water Pipeline Distribution Systems and Sewerage Pipeline Systems;
12 
(iv) Telecommunications; and
13 
(v) Common Carrier
14 
d.) 
Disgorgement of Profits- refers to the giving up or recapturing of profits
15 
traceable to a certain transaction or wrongdoing upon demand or by legal compulsion;
16 
e.) 
Distribution of Eiectridty- refers to the conveyance of electric power by
17 
a distribution utility through its distribution system as defined by Section 4 (n) of
18 
Republic Act No. 9136;
19 
f.) 
Foreign government-controlled transaction — refers to any covered
20 
transaction that coiild result in the control of any person engaged in commerce in the
21 
Republic of the Philippines by a foreign government or an entity controlled by or acting
22 
on behalf of a foreign government.
23 
g.) 
Foreign State-owned enterprise - refers to an entity in which a foreign
24 
state:
25 
(i) directly owns more than fifty percent (50%) of the capital;
26 
(ii) controls, through ownership interests, the exercise of more than fifty
27 
percent (50%) of the voting rights; or
28 
(iii) holds the power to appoint a majority of members of the board of
29 
directors or any other equivalent management body.
30 
h.) 
Telecommunications - refers to any process which enables a
31 
telecommunications entity to relay and receive voice, data, electronic messages,
32 
written or printed matter, fixed or moving pictures, words, music or visible or audible


1 
signals or any control signals of any design and for any purpose by wire, radio or other
2 
electromagnetic, spectral, optical or technological means, as defined by Section 3(a)
3 
of Republic Act No. 7925, as amended;
4 
i.) 
Transmission of Electricity - refers to the conveyance of electricity
5 
through the high voltage backbone system, as defined by Section 4 (ccc) of Republic
6 
Act No. 9136;
7 
j.) 
Water Pipeline Distribution Systems and Sewerage Pipeline Systems -
8 
refers to the operation and maintenance of water pipeline distribution systems to
9 
ensure an uninterrupted and adequate supply and distribution of potable water for
10 
domestic and other purposes and the operation and maintenance of sewerage pipeline
11 
systems to ensure public health and safety, as regulated by Republic Act No. 6234, as
12 
amended, and Presidential Decree No. 198, as amended.
13 
Sec. 3. Transfer of Jurisdiction to Various Administrative Agencies. -The powers
14 
of the Public Service Commission under Commonwealth Act No. 146, or the Public
15 
Service Law, as amended, are hereby transferred to the various administrative
16 
agencies of government according to their respective jurisdictions, including but not
17 
limited to the following:
18 
a. Civil Aeronautics Board (CAB);
19 
b. Civil Aviation Authority of the Philippines (CAAP);
20 
c. Department of Energy (DOE);
21 
d. Department of Environment and Natural Resources (DENR);
22 
e. Department of Information and Communications Technology (DICT);
23 
f. Departmentof Transportation (DOTr);
24 
g. Energy Regulatory Commission (ERC);
25 
h. Land Transportation Franchising and Regulatory Board (LTFRB);
26 
i. Land Transportation Office (LTO);
27 
j. Local Water Utilities Administration (LWUA);
28 
k. Maritime Industry Authority (MARINA);
29 
I. Metropolitan Waterworks and Sewerage System (MWSS);
30 
m. National Telecommunications Commission (NTC);
31 
n. National Water Resources Board (NWRB);


1 
0. Philippine Coast Guard (PCG);
2 
p. Philippine Ports Authority (PPA); and
3 
q. Toll Regulatory Board (TRB).
4 
Sec. 4. A new Section 13 (d) of Commonwealth Act No. 146, as amended, is
5 
hereby inserted to read as follows:
6 
"(D) PUBLIC UTILITY. -
7 
PUBLIC UTILITY REFERS TO A PERSON THAT OPERATES,
8 
MANAGES AND CONTROLS FOR PUBLIC USE ANY OF THE
9 
FOLLOWING:
10 
1) 
DISTRIBUTION OF ELECTRICITY;
11 
2) 
TRANSMISSION OF ELECTRICITY; AND
12 
3) WATER PIPELINE DISTRIBUTION SYSTEMS AND
13 
SEWERAGE PIPELINE SYSTEMS
14 
NO OTHER PERSON SHALL BE DEEMED A PUBLIC UTILITY
15 
UNLESS OTHERWISE SUBSEQUENTLY PROVIDED BY LAW.
16 
THE NATIONAL ECONOMIC AND DEVELOPMENT
17 
AUTHORITY (NEDA) THROUGH ITS BOARD, IN CONSULTATION
18 
WITH THE PHILIPPINE COMPETITION COMMISSION (PCC)
19 
AND THE CONCERNED ADMINISTRATIVE AGENCIES, MAY
20 
RECOMMEND TO CONGRESS THE CLASSIFICATION OF A
21 
PUBLIC SERVICE AS A PUBLIC UTILITY ON THE BASIS OF THE
22 
FOLLOWING CRITERIA:
23 
1) THE PERSON OR JURIDICAL ENTITY REGULARLY
24 
SUPPLIES AND DIRECTLY TRANSMITS AND DISTRIBUTES TO
25 
THE PUBLIC THROUGH A NETWORK A COMMODITY OR
26 
SERVICE OF PUBLIC CONSEQUENCE;
27 
2) THE COMMODITY OR SERVICE IS A NATURAL
28 
MONOPOLY THAT NEEDS TO BE REGULATED WHEN THE
29 
COMMON GOOD SO REQUIRES;
30 
3) THE COMMODITY OR SERVICE IS NECESSARY FOR
31 
THE MAINTENANCE OF LIFE AND OCCUPATION OF THE PUBLIC;
32 
AND


1 
4) THE COMMODITY OR SERVICE IS OBLIGATED TO
2 
PROVIDE ADEQUATE SERVICE TO THE PUBLIC ON DEMAND."
3 
UNLESS OTHERWISE INCLUDED IN THE DEFINITION OF
4 
PUBLIC UTILITY UNDER THIS ACT, PERSONS CLASSIFIED AS
5 
PUBLIC UTILITIES UNDER COMMONWEALTH ACT NO. 146 ARE
6 
HEREBY CONSIDERED AS PUBLIC SERVICES WHICH SHALL
7 
CONTINUE TO BE SUBJECT TO REGULATION BY RELEVANT
8 
ADMINISTRATIVE AGENCIES UNDER EXISTING LAWS.
9 
Sec. 5. The first paragraph of Section 15 of Commonwealth Act No. 146, as
10 
amended, is hereby amended to read as follows:
11 
"With the exception of those enumerated in the preceding
12 
section, no public service shall operate in the Philippines without
13 
possessing a valid and subsisting certificate [from the-Public Service
14 
Commission known-as "cortificatG of public convoniGncG,1' or "cortific-ate
15 
of public-convcniGncG-ond nGcessity," os the-casG may be,-] FROM THE
16 
PROPER ADMINISTRATIVE AGENCY to the effect that the operation
17 
of said service and the authorization to do business will promote the
18 
public interest in a proper and suitable manner."
19 
The [Commission] ADMINISTRATIVE AGENCY may prescribe
20 
as a condition for the issuance of the certificate OR AUTHORIZATION
21 
provided in the preceding paragraph that the service can be acquired by
22 
the Republic of the Philippines or any instrumentality thereof upon
23 
payment of the cost of the price of its CAPITAL STOCK, OR useful
24 
equipment, less reasonable depreciation, and likewise, that the
25 
certificate OR AUTHORIZATION shall be valid only for a definite
26 
period of time and that the violation of any of these conditions shall
27 
produce the immediate cancellation of the certificate OR
28 
AUTHORIZATION without the necessity of any express action on the
29 
part of the [Commission] ADMINISTRATIVE AGENCY.
30 
FOR PURPOSES OF THIS ACT, THE TERM'CERTIFICATES'
31 
SHALL INCLUDE FRANCHISES OR ANY OTHER APPROPRIATE
32 
FORM OF AUTHORIZATION FOR THE OPERATION OF A PUBLIC


1 
SERVICE. ALL PROVISIONS OF COMMONWEALTH ACT NO. 146
2 
CONTAINING SUCH TERM ARE HEREBY AMENDED TO REFLECT
3 
SUCH CHANGE.
4 
Sec. 6. Section 16 (a) and (c) of Commonwealth Act No. 146, as amended, are
5 
hereby amended to read as follows:
6 
Section 16. Proceedings of the [CommissionjJ
7 
ADMINISTRATIVE AGENCY Upon Notice and Hearing. - The
8 
[Commission] ADMINISTRATIVE AGENCY shall have THE power,
9 
upon proper notice and hearing in accordance with the rules and
10 
provisions of this Act, [subject—to the limitations' and exceptions
11 
mentioned and saving provisions-to the contrary]:
12 
"(a) To issue certificates [which shall be known os certificates-of
13 
public-convoniencGTj authorizing the operation of public service within
14 
the Philippines whenever the [Commission] ADMINISTRATIVE
15 
AGENCY finds that the operation of the public service proposed and the
16 
authorization to do business will promote the public interest in a proper
17 
and suitable manner. [Provided, That thereafter, certificates of public
18 
convenience and ccrtificotcs-of public convenience and necessity will bo
19 
granted-only tocitizons of the Philippines or of-the United-States or-to
20 
corporations,—co-partnerships, associations -or—joint-stock companies
21 
constituted and organized under the laws of the Philippines; Providodj
22 
That sixty per centum of the stock or paid-up capital of any such
23 
corporations-co-partnership,-association or joint stock company-must
24 
belong-entircly-to-dtizons of the Philippines or-of tho-United Statesr
25 
ProvidedrTurther, That no such-certificatos-shall be issued for a period
26 
of more than fifty years?]
27 
XXX 
XXX 
XXX
28 
(c) To fix and determine THE MAXIMUM individual or joint
29 
rates, tolls, charges, classifications, REVENUES or schedules thereof,
30 
as well as commutation, mileage, kilometrage, and other special rates
31 
which shall be imposed, observed, and followed thereafter by any public
32 
service WHEN THE PUBLIC INTEREST SO REQUIRES: Provided,


1 
That the [Commission] ADMINISTRATIVE AGENCY may, in its
2 
discretion, approve rates proposed by pubiic services provisionally and
3 
without necessity of any hearing; but it shall call a hearing thereon
4 
within [thirty] FIFTEEN (15) days, thereafter, upon publication and
5 
notice to the [concGrns-opGrating] AFFECTED PARTIES in the territory
6 
affected, TO RATIFY ITS PRIOR PROVISIONAL APPROVAL OR
7 
CHANGE, MODIFY OR ALTER THE APPROVED RATE BASED ON
8 
PUBLIC INTEREST: Provided, further. That in case the public service
9 
equipment of an operator is used principally or secondarily for the
10 
promotion of a private business, the net profits of said private business
11 
shall be considered in relation with the public service of such operator
12 
for the purpose of fixing the rates. IN THE INTEREST OF THE
13 
PUBLIC, THE ADMINISTRATIVE AGENCY MAY ESTABLISH AND
14 
ENFORCE A METHODOLOGY FOR SETTING RATES, TAKING
15 
INTO ACCOUNT ALL RELEVANT CONSIDERATIONS, INCLUDING
16 
THE EFFICIENCY OF THE REGULATED PUBLIC SERVICE. THE
17 
RATES MUST BE SUCH AS TO ALLOW THE RECOVERY OF
18 
PRUDENT AND EFFICIENT COSTS AND A REASONABLE RATE OF
19 
RETURN. INCOME TAX SHALL BE ALLOWED AS A CASH
20 
EXPENDITURE OR OUTFLOW FOR RATE-DETERMINATION
21 
PURPOSES. THIS 
PROVISION SHALL NOT BAR THE
22 
APPLICATION OF PERFORMANCE-BASED RATE REGULATION
23 
SHOULD THE ADMINISTRATIVE AGENCY REGULATING SUCH
24 
PUBLIC SERVICE DEEM IT EFFICIENT AND IN THE PUBLIC
25 
INTEREST.
26 
Sec. 7. Section 17 (b) of Commonwealth Act No. 146, as amended, is hereby
27 
amended to read as follows:
28 
"(b) To require any public service to pay the actual expenses
29 
incurred by the [Commission] ADMINISTRATIVE AGENCY in any
30 
investigation if it shall be found in the same that any rate, toll, charge,
31 
schedule, regulation, practice, act or service thereof is in violation of any
32 
provision of this Act or any certificate, order, rule, regulation or


1 
requirement issued or established by the [Commissien]
2 
ADMINISTRATIVE AGENCY. The [Commission] ADMINISTRATIVE
3 
AGENCY may also assess against any public service REASONABLE
4 
costs [not tO"GxcGGd--twGnty-fivG 
pesos] with reference 
to such
5 
investigation."
6 
Sec. 8. Section 20 (i) of Commonwealth Act No. 146, as amended, is hereby
7 
amended to read as follows:
8 
"(i) To sell, alienate or in any manner transfer shares of its capital
9 
stock to any alien if the result of that sale, alienation, or transfer in itself
10 
or in connection with another previous sale shall be the reduction to less
11 
than sixty per centum of the capital stock belonging to Philippine citizens
12 
IN THE OPERATION OF A PUBLIC UTILITY AS REQUIRED BY
13 
THE CONSTITUTION. Such sale, alienation or transfer shall be void
14 
and of no effect and shall be sufficient cause for ordering the
15 
cancellation of the certificate."
16 
Sec. 9. Section 21 of Commonwealth Act No. 146, as amended, is hereby
17 
amended to read as follows:
18 
"Every public service violating or failing to comply with the terms
19 
and conditions of any certificate or any orders, decisions or regulations
20 
of the [Commission] ADMINISTRATIVE AGENCY shall be subject to
21 
DISGORGEMENT OF PROFITS OR FINE EQUAL TO TREBLE
22 
DAMAGES, OR BOTH -[of not GxcGGding two hundred poses] per day
23 
for every day during which such default or violation continues; and the
24 
[Commission] ADMINISTRATIVE AGENCY is hereby authorized and
25 
empowered to impose such PENALTY OR fine, after due notice and
26 
hearing.
27 
The PENALTIES AND fines so imposed shall be paid to the
28 
Government of the Philippines through the [Commission}
29 
ADMINISTRATIVE AGENCY, and failure to pay the PENALTY OR
30 
fine in any case within the same specified in the order or decision of the
31 
[Commission] ADMINISTRATIVE AGENCY shall be deemed good and
32 
sufficient reason for the suspension of the certificate of said public


1 
service until payment shall be made. Payment may also be enforced by
2 
appropriate action brought in a court of competent jurisdiction. The
3 
remedy provided in this section shall not be a bar to, or affect any other
4 
remedy provided in this Act but shall be cumulative and additional to
5 
such remedy or remedies."
6 
Sec. 10. Section 23 of Commonwealth Act No. 146, as amended, is hereby
7 
amended to read as foliows:
8 
"Any public service corporation that shall perform, commit, or do
9 
any act or thing forbidden or prohibited or shall neglect, fail or omit to
10 
do or perform any act or thing herein to be done or performed, shall be
11 
punished by a fine not exceeding-[twGnty-fivG thousand -pesos] TWO
12 
MILLION PESOS (P2/000/000.00), or imprisonment [not oxcGoding
13 
five-years] OF NOT LOWER THAN SIX (6) YEARS AND NOT
14 
HIGHER THAN TWELVE (12) YEARS, or both, in the discretion of
15 
the court."
16 
Sec. 11. Section 24 of Commonweaith Act No. 146, as amended, is hereby
17 
amended to read as follows:
18 
"Any person who shall knowingly and willfully perform, commit,
19 
or do, or participate in performing, committing, or doing, or who shall
20 
knowingly and willfully cause, participate, or join with others in causing
21 
any public service corporation or company to do, perform or commit, or
22 
who shali advice, solicit, persuade, or knowingly and willfully Instruct,
23 
direct, or order any officer, agent, or employee of any public service
24 
corporation or company to perform, commit, or do any act or thing
25 
forbidden or prohibited by this Act, shail be punished by a fine not
26 
exceeding—[twGnty-fivG thousand -pesos] TWO MILLION PESOS
27 
(P2/000/000.00), or imprisonment [not exceeding five years] OF
28 
NOT LOWER THAN SIX (6) YEARS AND NOT HIGHER THAN
29 
TWELVE (12) YEARS, or both, in the discretion of the court -fr
30 
Provided, howGVcr,-that for-oporoting a private passenger automobile
31 
Ds-a-publie service without having a certificate of public convenience for
32 
the same-the offender shall be subject to-the penalties provided-for-in


1 
section sixty scvcn-Q) of Act-numbcrGd thirty-nine hundred an ninety-
vWtTj.
3 
Sec. 12. Section 25 of Commonwealth Act No. 146, as amended, is hereby
4 
amended to read as follows:
5 
"Any person who shall knowingly and willfully neglect, fail, or omit
6 
to do or perform, or who shall knowingly and willfully cause or join or
7 
participate with others in causing any public service corporation or
8 
company to neglect, fail or omit to do or perform, or who shall advise,
9 
solicit, or persuade, or knowingly and willfully instruct, direct, or order
10 
any officer, agent, or employee of any public service corporation or
11 
company to neglect, fail, or omit to do any act or thing required to be
12 
done by this Act, shall be published by a fine not exceeding-[twcnty-five
13 
thousand pesos] TWO MILLION PESOS (P2/000/000.00), or
14 
imprisonment [not exceeding two years] OF NOT LOWER THAN SIX
15 
(6) YEARS AND NOT HIGHER THAN TWELVE (12) YEARS, or
16 
both, in the discretion of the court."
17 
Sec. 13. Section 26 of Commonwealth Act No. 146, as amended, is hereby
18 
amended to read as follows:
19 
"Any person who shall destroy, injure, or interfere with any
20 
apparatus or appliance owned or operated by tie [Commission]
21 
ADMINISTRATIVE AGENCIES or its agents, shall be [deemed-guilty
22 
of a-misdemeanor and upon conviction shall-be] punished by a fine OF
23 
THE AMOUNT EQUIVALENT TO THE ACTUAL MARKET VALUE OF
24 
THE APPARATUS OR APPLIANCE DESTROYED OR INJURED
25 
PLUS A FINE NOT EXCEEDING TWO MILLION PESOS
26 
(PHP2,000,000.00) [not exceeding one-thousand -poses] or
27 
imprisonment [not exceeding six months] OF NOT LOWER THAN SIX
28 
(6) YEARS AND NOT HIGHER THAN TWELVE (12) YEARS, or both
29 
in the discretion of the court.
30 
[Any public service- permitting the destruction, injury to, or
31 
interference with, any such apparatus or-appliances shall forfeit a-sum ;
32 
not exceeding four thousand-pesos for each offense.]"
10


1 
Sec. 14. Review of Foreign Direct Investment in Covered Transactions. -
2 
(a) National Security Reviews, How Initiated. - The President or the National
3 
Security Council ("Council") shall initiate a review of a covered transaction to
4 
determine its effects on the national security of the Republic of the Philippines if—
5 
(i) the covered transaction is a foreign government-controlled
6 
transaction; and
7 
(ii) the transaction would result in control of any critical infrastructure of
8 
or within the Republic of the Philippines.
9 
The authority of the Council to initiate a review may not be delegated to any
10 
person, other than the appropriate Undersecretary of the department or deputy head
11 
of the agency represented in the Council.
12 
Any party to a covered transaction may likewise initiate a review under this
13 
paragraph by submitting a written notice to the Chairperson of the Council.
14 
The President or the Council shall complete a review under this paragraph
15 
within thirty (30) days from the date the review is initiated.
16 
(b) Submission of Additional Information. - No provision of this subsection shall
17 
be construed as prohibiting any party to a covered transaction from submitting
18 
additional information while the review Is on-going, including any proposed
19 
restructuring of the transaction or any modification agreements in connection with the
20 
transaction.
21 
(c) Notice of Results to Parties. - Upon completion of all actions under this
22 
Section, the Council shall promptly notify parties to a covered transaction of the results
23 
of the national security review.
24 
(d) Confidentiality of Information. - Any information or documentary material
25 
filed with the President and Council pursuant to this Section shall be exempt from
26 
disclosure, and no such information or documentary material may be made public,
27 
except as may be relevant to any administrative or judicial action or proceeding.
28 
Nothing in this subsection shall be construed to prevent disclosure to Congress or to
29 
any duly authorized committee or subcommittee of Congress, if the Committee
30 
provides assurances of confidentiality, or unless such party otherwise provides written
31 
consent for disclosure.
11


1 
(e) Action by the President. - The President may take such appropriate action
2 
including the suspension of a covered transaction invoiving critical infrastructure that
3 
threatens to impair the national security of the Philippines, subject to the following
4 
conditions:
5 
(i) there is credible evidence to support the President's belief that the
6 
foreign interest exercising control might undertake actions that threaten
7 
to impair the national security of the Philippines; and
8 
(ii) provisions of law, other than this section, do not, in the judgment of
9 
the President, provide adequate and appropriate authority for the
10 
President to protect the national security matter before the President.
11 
For purposes of determining whether to take appropriate action, the President
12 
shall consider the following:
13 
(i) the potential national security-related effects on critical infrastructure;
14 
(ii) whether the covered transaction is a foreign government-controlled
15 
transaction.
16 
The President shall announce the decision not later than fifteen (15) days from
17 
the date the review as described is completed.
18 
No provision of this section shall be construed as altering or affecting any other
19 
authority, process, regulation, investigation, enforcement measure, or review provided
20 
by or established under any other provision of law, or any other authority of the
21 
President or the Congress under the Constitution.
22 
(f) Mitigation. - To mitigate any threat to national security arising from the
23 
covered transaction, the Council or a Lead agency on behalf of the Council, may
24 
negotiate, enter into, or impose and enforce any agreement or condition with any
25 
party to the covered transaction. Any agreement entered into or condition imposed
26 
under this paragraph shall be supported by a risk-based analysis conducted by the
27 
Council.
28 
(g) Lead Agency for Monitoring and Enforcement. - The Lead Agency shall
29 
negotiate, modify, monitor, and enforce, on behalf of the Council, any agreement
30 
entered into or condition imposed, based on its expertise and knowledge of the issues
31 
related to such transaction. Nothing in this paragraph shall prohibit other departments
32 
or agencies in assisting the lead agency in carrying out the purposes of this paragraph.
12


1 
The lead agency shall provide periodic reports to the Council on any material
2 
modification to any agreement or condition imposed under paragraph (f)*
3 
Sec. 15. Investments by Foreign State-owned Enterprises. - Foreign state-
4 
owned enterprises shall be prohibited from owning capital in any public service
5 
classified as critical infrastructure: Provided, that the prohibition shall apply only to
6 
investments made after the effectivity of this Act: Provided furdier, that state-owned
7 
enterprises which own capital prior to the effectivity of this law are prohibited from
8 
investing In additional capital upon the effectivity of this Act.
9 
Sec. 16. Reciprocity Ciause. - Foreign nationals shall not be allowed to own
10 
more than 40 per centum of capital in public services engaged in the operation and
11 
management of critical infrastructure unless the country of such foreign national
12 
accords reciprocity to Philippine nationals as may be provided by foreign law, treaty
13 
or international agreement. Reciprocity may be satisfied by any form or arrangement
14 
of exchange that is beneficial to Filipinos, including according rights of similar value in
15 
other economic sectors, as may be determined by the Director-General of the National
16 
Economic and Development Authority.
17 
Unless otherwise provided by law, or by any international agreement, a public
18 
service shall employ a foreign national only after the determination of nonavailability
19 
of a Philippine National who is competent, able and willing to perform the services for
20 
which the foreign national Is desired; provided, that in no case shall the employed
21 
foreign nationals comprise more than twenty five percent (25%) of the total
22 
employees of the public service.
23 
Any foreign national seeking admission to the Philippines for employment
24 
purposes and any public service which desires to engage a foreign national for
25 
employment in the Philippines must obtain an employment permit pursuant to
26 
Presidential Decree No. 442, othenwise known as the Labor Code of the Philippines,
27 
as amended.
28 
Sec. 17. Information Security. - Public services in critical infrastructure shall
29 
obtain and maintain certifications from an accredited certification body attesting to
30 
compliance with relevant ISO standards on information security: Provided, that the
31 
maintenance of these certifications shall be a continuing qualification for retention of
32 
franchise or other authority to operate.
13


Sec. 18. Performance Audit - Administrative agencies must ensure the annual 
conduct of performance audit by an independent evaluation team to monitor cost, the 
quality of services provided to the public, and the ability of the public service provider 
to immediately and adequately respond to emergency cases. Metrics for various types 
of services must be established to sustain reliability, security, and safety of the public.
Sec. 19. Conduct of Regular Studies and Comprehensive Baseline Survey. - 
The PCC, in coordination with NEDA, shall conduct regular studies to determine 
whether or not deregulation in a sector Is warranted to improve consumer welfare and 
shall submit its recommendation to Congress.
The University of the Philippines Law Center shall conduct a comprehensive 
baseline survey of public services governance within six (6) months from the effectivity 
of this Act. Copies of the results of said survey shall be furnished to the Congress, the 
NEDA and PCC.
Sec. 20. Congressional Oversight and Periodic Review. — A Congressional 
Oversight Committee shall be created that will monitor and evaluate the 
implementation of this Act every five (5) years commencing from the effectivity of this 
Act. The Congressional Oversight Committee shall be composed of the Chairperson of 
the Senate Committee on Public Services, the Chairperson of the House of 
Representatives Committee on Economic Affairs, and representatives of other relevant 
congressional committees.
Sec. 21. 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.
Sec. 22. Repealing Clause. - All laws, decrees, orders, rules and regulations or
25 
other issuances or parts thereof inconsistent with the provisions of this Act, are hereby
26 
repealed and modified accordingly.
Sec. 23. Separability Clause. - If any portion or provision of this Act is declared
unconstitutional, the remainder of this Act or any provision not affected thereby shall 
remain in force and effect.
Sec. 24. Effectivity. - This Act shall take effect immediately after its publication 
in the Official Gazette or In a newspaper of general circulation.
Approved,
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