EIGHTEENTH CONGRESS OF THE )

REPUBLIC OF THE PHILIPPINES )
First Regular Session )
HOUSE OF REPRESENTATIVE
HB. No, 8377

Introduced by Representative TEODORICO T. HARESCO, JR.

EXPLANATORY NOTE

Extensive and efficient infrastructure is critical for ensuring the effective
functioning of the economy. Effective modes of transport enable entrepreneurs to get
their goods and services to market in a secure and timely manner and facilitate the
movement of workers to the most suitable jobs. Economies also depend on electricity
supplies that are free from interruptions and shortages so that businesses and factories
can work unimpeded. Finally, a solid and extensive telecommunications network allows
for a rapid and free flow of information, which increases overall economic efficiency.
Generally, inadequate infrastructure is the second most problematic factor in doing
business.

This bill seeks to amend Commonwealth Act No. 146 or the Public Service Act
(PSA). The salient features of the bill are:

* Clarifies the definition of public services and public utilities;

«Institutes an appropriate mechanism for fixing rates based on a reasonable
rate of return;

* Increases applicable penalties and fees; and

¢ Establishes a process for vetting investments in critical infrastructure, and
empowers the President to suspend or prohibit transactions involving critical
infrastructure (i.e. electricity transmission, electricity distribution, water
pipeline distribution, sewerage pipeline system, and telecommunications) that
threaten to impair the national security of the Republic of the Philippines.

The bill also provides safeguards should any investor pose a potential threat to
national security. The President is empowered to suspend or prohibit transactions
involving critical infrastructure (i.e. electricity transmission, electricity distribution,
water pipeline distribution, sewerage pipeline system, and telecommunications) that
threaten to impair the national security of the Republic of the Philippines.

In view of the foregoing, the passage of this bill is immediately sought.

ie
TEODORICO T. ESCO, JR.


EIGHTEENTH CONGRESS OF THE )

REPUBLIC OF THE PHILIPPINES i
First Regular Session J
HOUSE OF REPRESENTATIVES
HB. No._6377

Introduced by Representative TEODORICO T. HARESCO, JR.

AN ACT
TO DEFINE PUBLIC UTILITIES, PROMOTE INVESTMENT, IMPROVE REGULATION,
AND ENSURE NATIONAL SECURITY BY AMENDING COMMONWEALTH ACT NO. 146,
OTHERWISE KNOWN AS THE PUBLIC SERVICE ACT, AS AMENDED, AND OTHER
RELATED LAWS, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

Section 1. Short Title - This act shall be known as the “The New Public Service Law
of the Philippines.”

Sec. 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.

The State recognizes that public utilities are necessary to the public and natural
monopolies that must 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. It is likewise the policy of the State to encourage
private enterprise and provide incentives for needed investments.

These policies are fulfilled by: 1) ensuring effective regulation of public utilities
and public services; 2) ensuring reasonable rate of return to public utilities and public
services, where applicable; 3) harmonizing foreign equity restrictions with the global
average by clearly defining what are public utilities; and 4) instituting processes which
protect national security.

Sec. 3. Definition of 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 Carrier - 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;

¢)

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 of Profits - refers to the giving up or recapturing of profits traceable
toa certain transaction or wrongdoing upon demand or by legal compulsion;

e

Distribution of Electricity - 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) Philippine 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 of Electricity - refers to the conveyance of electricity through the
high voltage backbone system, as defined by Section 4 (ccc) of Republic Act No.
9136;

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 of Transfer of Jurisdiction to Various Administrative Agencies.
Since the enactment of Commonwealth Act No. 146, jurisdiction over public services has
been transferred to various administrative agencies. These agencies are authorized 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 - 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;

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

publiceonves ” or “certifi £publicconven and necessity.”
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 of Authorizations and Fixing of Rates, Tolls and the like and the
Reasonable 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 will promote the public interest in a proper
and suitable manner. [Provided corti i

(©) 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 ofa 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 JUST AND REASONABLE COSTS 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
WILL 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 service REASONABLE costs [not to exceed twenty-five pesos] with
reference to such investigation.”

Sec. 9. Section 20 (i) of Commonwealth Act No. 146, as amended, is hereby
amended to read as follows:

“(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
effect and shall be sufficient cause for ordering the cancellation of the
certificate.”

Sec. 10. Section 21 of Commonwealth Act No. 146, as amended, is hereby amended to
read as follows:
“Every public service violating or failing to comply with the terms and
conditions of any certificate or any orders, decisions or regulations of the
[Cemmission] ADMINISTRATIVE AGENCY shall be subject to
DISGORGEMENT OF PROFITS, TREBLE DAMAGES, a fine NOT


EXCEEDING FIVE MILLION PESOS (PHPS,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 the [Commission] ADMINISTRATIVE AGENCY is hereby authorized
and empowered to impose such PENALTY OR fine, after due notice and
hearing.

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.”

Sec. 11. Section 23 of Commonwealth Act No. 146, as amended, is hereby
amended to read as follows:

“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 (PHPS5,000,000.00), 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.”

Sec. 12. Section 24 of Commonwealth Act No. 146, as amended, is hereby
amended to read as follows:

“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 [twe—thousand—pesos] FIVE MILLION PESOS
(PHP5,000,000.00), or 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[:Previded- however,



Sec. 13. Section 25 of Commonwealth Act No. 146, as amended, is hereby
amended to read as follows:

“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, 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 punished by a fine not exceeding [two thousand
pesos] FIVE MILLION PESOS (PHP5,000,000.00) 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.”

Sec. 14. Section 26 of Commonwealth Act No. 146, as amended, is hereby
amended to read as follows:

“Any person who shall destroy, injure, or interfere with any apparatus or
appliance owned or operated by the [Commission] ADMINISTRATIVE
AGENCIES or their 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 (PHP1,000,000.00) [not-exceeding
ene-thousand-peses] or imprisonment [net-exceeding-six-months] OF
NOT LOWER THAN SIX (6) YEARS AND NOT HIGHER THAN TWELVE
(12) YEARS, or both in the discretion of the court.

[any public cor tei the dere
four thousand pesoc-for-each-offence |"

Sec. 15. Section 28 of Commonwealth Act No. 146, as amended, is hereby
amended to read as follows:

Hury to, or interte

“Violations of the orders, decisions, and regulations of the [Commission]
ADMINISTRATIVE AGENCIES and of the terms and conditions of any certificate issued
by the ADMINISTRATIVE AGENCIES [Commission shall prescribe after sixty days,] and
violations of the provisions of this Act shall [prescribe after one hundred and eighty
days.] BE IMPRESCRIPTIBLE.”

Sec. 16. Adjustment of Fines. - The maximum amounts of fines imposed under
Commonwealth Act No. 146 as further amended by this Act, shall be adjusted by the head
of each administrative agency under Section 4 of this Act by a Cost-of-Living Adjustment
on January 1 of the year immediately following the date of enactment of this Act and every
fifth calendar year thereafter. Each head of the administrative agency shall file copies of


the adjustment with the University of the Philippines Law Center in accordance with
Executive Order No. 292 (1987), as amended.

Any increase shall apply only to fines, including those whose associated violation
predated such increase, which are assessed after the date the increase takes effect.

Sec. 17. 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.

A person classified as a public utility prior to the effectivity of this Act and
declassified as such under this Act shall be considered a public service and a business
affected with public interest for the purpose of Article XII, Section 17 of the Constitution.
Such person shall continue to be subject to regulation by relevant administrative agencies
under existing laws. This Act does not redefine the term “common carrier” or alter its
obligation to exercise extraordinary diligence.

No franchise, certificate, or authorization granted by the appropriate
administrative agencies under Section 4 of this Act shall be (a) exclusive in character, (b)
fora 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.

The power to grant any franchise, certificate, or any other form of authorization
for the operation of a public service still belongs to Congress, unless otherwise provided
by law to an administrative agency.

Sec. 18. Non-Impairment of Existing Agreements. - The application and
implementation of the pertinent provisions of this Act shall not impair vested rights or
obligations of contracts. Current and subsisting concession agreements and other similar
contracts of juridical persons with government agencies or government-owned and -
controlled corporations covering activities hereunder classified as public utilities shall
remain valid and in force in accordance with the existing terms and conditions the parties
agreed to thereunder until the expiration or termination thereof.

‘SEC. 19 - REVIEW OF FOREIGN DIRECT INVESTMENT IN COVERED
TRANSACTIONS. -

(a) DEFINITIONS. — FOR PURPOSES OF THIS SECTION, THE FOLLOWING
DEFINITIONS SHALL APPLY:

(1)COUNCIL; CHAIRPERSON. — THE TERMS ‘COUNCIL’ AND
‘CHAIRPERSON’ MEAN THE NATIONAL SECURITY COUNCIL, WITH
THE ADDITION OF THE SECRETARY OF THE DEPARTMENT OF
TRADE AND INDUSTRY, SECRETARY OF THE DEPARTMENT OF
FINANCE, AND DIRECTOR-GENERAL OF THE NATIONAL ECONOMIC
AND DEVELOPMENT AUTHORITY, AND THE CHAIRPERSON
THEREOF OR THE PRESIDENT’S DESIGNEE, RESPECTIVELY.


(2) CONTROL. — THE TERM “CONTROL” HAS THE MEANING GIVEN TO
SUCH TERM IN REGULATIONS WHICH THE COUNCIL SHALL
PRESCRIBE.

(3) COVERED TRANSACTION. — THE TERM “COVERED TRANSACTION”
MEANS ANY MERGER, ACQUISITION, OR TAKEOVER THAT IS
PROPOSED OR PENDING AFTER THE EFFECTIVITY OF THIS LAW,
BY OR WITH ANY FOREIGN PERSON WHICH COULD RESULT IN
FOREIGN CONTROL OF ANY PERSON ENGAGED IN COMMERCE IN
THE REPUBLIC OF THE PHILIPPINES.

(4) FOREIGN GOVERNMENT-CONTROLLED TRANSACTION. — THE
TERM “FOREIGN GOVERNMENT-CONTROLLED TRANSACTION”
MEANS ANY COVERED TRANSACTION THAT COULD RESULT IN
THE CONTROL OF ANY PERSON ENGAGED IN COMMERCE IN THE
REPUBLIC OF THE PHILIPPINES BY A FOREIGN GOVERNMENT OR
AN ENTITY CONTROLLED BY OR ACTING ON BEHALF OF A
FOREIGN GOVERNMENT.

(S)CRITICAL INFRASTRUCTURE. — THE TERM “CRITICAL
INFRASTRUCTURE” MEANS, SUBJECT TO RULES ISSUED UNDER
THIS SECTION, SYSTEMS AND ASSETS, WHETHER PHYSICAL OR
VIRTUAL, SO VITAL TO THE REPUBLIC OF THE PHILIPPINES THAT
THE 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—

@ THE COVERED TRANSACTION IS A FOREIGN
GOVERNMENT-CONTROLLED TRANSACTION;
AND

(ii) THE TRANSACTION WOULD RESULT IN
CONTROL OF ANY CRITICAL
INFRASTRUCTURE OF OR WITHIN THE
REPUBLIC OF THE PHILIPPINES.

ANY PARTY OR PARTIES TO ANY COVERED TRANSACTION MAY
LIKEWISE INITIATE A REVIEW OF THE TRANSACTION UNDER
THIS PARAGRAPH BY SUBMITTING A WRITTEN NOTICE OF THE
TRANSACTION TO THE CHAIRPERSON OF THE COUNCIL.

(B) TIMING. — ANY REVIEW UNDER THIS PARAGRAPH SHALL
BE COMPLETED BEFORE THE END OF THE 90 DAY PERIOD
BEGINNING ON THE DATE OF THE INITIATION OF THE
REVIEW IN ACCORDANCE WITH SUBPARAGRAPH (A).

(C) LIMIT ON DELEGATION OF CERTAIN AUTHORITY. — THE
AUTHORITY OF THE COUNCIL TO INITIATE A REVIEW
UNDER SUBPARAGRAPH (A) MAY NOT BE DELEGATED TO
ANY PERSON, OTHER THAN THE APPROPRIATE
UNDERSECRETARY OF THE DEPARTMENT OR DEPUTY
HEAD OF THE AGENCY REPRESENTED ON THE COUNCIL.


(2) SUBMISSION OF ADDITIONAL INFORMATION. — NO PROVISION OF
THIS SUBSECTION SHALL BE CONSTRUED AS PROHIBITING ANY
PARTY TO A COVERED TRANSACTION FROM SUBMITTING
ADDITIONAL INFORMATION CONCERNING THE TRANSACTION,
INCLUDING ANY PROPOSED RESTRUCTURING OF THE
TRANSACTION OR ANY MODIFICATIONS TO ANY AGREEMENTS IN
CONNECTION WITH THE TRANSACTION, WHILE ANY REVIEW OF
THE TRANSACTION IS ONGOING.

(3) NOTICE OF RESULTS TO PARTIES. — THE COUNCIL SHALL NOTIFY
THE PARTIES TO A COVERED TRANSACTION OF THE RESULTS OF
A REVIEW UNDER THIS SECTION, PROMPTLY UPON COMPLETION
OF ALL ACTION UNDER THIS SECTION.

(c) CONFIDENTIALITY OF INFORMATION. — ANY INFORMATION OR
DOCUMENTARY MATERIAL FILED WITH THE PRESIDENT OR THE
PRESIDENT'S DESIGNEE PURSUANT TO THIS SECTION SHALL BE EXEMPT
FROM DISCLOSURE, AND NO SUCH INFORMATION OR DOCUMENTARY
MATERIAL MAY BE MADE PUBLIC, EXCEPT AS MAY BE RELEVANT TO ANY
ADMINISTRATIVE OR JUDICIAL ACTION OR PROCEEDING. NOTHING IN
THIS SUBSECTION SHALL BE CONSTRUED TO PREVENT DISCLOSURE TO
EITHER HOUSE OF CONGRESS OR TO ANY DULY AUTHORIZED
COMMITTEE OR SUBCOMMITTEE OF THE CONGRESS IF THE COMMITTEE
PROVIDES ASSURANCES OF CONFIDENTIALITY, UNLESS SUCH PARTY
OTHERWISE CONSENTS IN WRITING TO SUCH DISCLOSURE.

(d) ACTION BY THE PRESIDENT. —

(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—

12


(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 NONREVIEWABLE. — 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.

(e) EFFECT ON OTHER LAW. — NO PROVISION OF THIS SECTION SHALL BE
CONSTRUED AS ALTERING OR AFFECTING ANY OTHER AUTHORITY,
PROCESS, REGULATION, INVESTIGATION, ENFORCEMENT MEASURE, OR
REVIEW PROVIDED BY OR ESTABLISHED UNDER ANY OTHER PROVISION
OF LAW, OR ANY OTHER AUTHORITY OF THE PRESIDENT OR THE
CONGRESS UNDER THE CONSTITUTION OF THE REPUBLIC OF THE
PHILIPPINES.

(f) MITIGATION AND  POST-CONSUMMATION MONITORING AND
ENFORCEMENT. —

(2)MITIGATION. —

(A) IN GENERAL. — THE COUNCIL OR A LEAD AGENCY MAY, ON
BEHALF OF THE COUNCIL, NEGOTIATE, ENTER INTO OR
IMPOSE, AND ENFORCE ANY AGREEMENT OR CONDITION
WITH ANY PARTY TO THE COVERED TRANSACTION IN
ORDER TO MITIGATE ANY THREAT TO THE NATIONAL


SECURITY OF THE REPUBLIC OF THE PHILIPPINES THAT
ARISES AS A RESULT OF THE COVERED TRANSACTION.

(B)RISK-BASED ANALYSIS REQUIRED. — ANY AGREEMENT
ENTERED INTO OR CONDITION IMPOSED UNDER
SUBPARAGRAPH (A) SHALL BE BASED ON A RISK-BASED
ANALYSIS, CONDUCTED BY THE COUNCIL, OF THE THREAT
TO NATIONAL SECURITY OF THE COVERED TRANSACTION.

(2) NEGOTIATION, MODIFICATION, MONITORING, AND
ENFORCEMENT. —

(A) DESIGNATION OF LEAD AGENCY. — THE LEAD AGENCY
SHALL NEGOTIATE, MODIFY, MONITOR, AND ENFORCE, ON
BEHALF OF THE COUNCIL, ANY AGREEMENT ENTERED INTO
OR CONDITION IMPOSED UNDER PARAGRAPH (1) WITH
RESPECT TO A COVERED TRANSACTION, BASED ON THE
EXPERTISE WITH AND KNOWLEDGE OF THE ISSUES
RELATED TO SUCH TRANSACTION ON THE PART OF THE
DESIGNATED DEPARTMENT OR AGENCY. NOTHING IN THIS
PARAGRAPH SHALL PROHIBIT OTHER DEPARTMENTS OR
AGENCIES IN ASSISTING THE LEAD AGENCY IN CARRYING
OUT THE PURPOSES OF THIS PARAGRAPH.

(B)REPORTING BY DESIGNATED AGENCY. — THE LEAD
AGENCY IN CONNECTION WITH ANY AGREEMENT ENTERED
INTO OR CONDITION IMPOSED WITH RESPECT TO A
COVERED TRANSACTION SHALL PROVIDE PERIODIC
REPORTS TO THE COUNCIL ON ANY MATERIAL
MODIFICATION TO ANY SUCH AGREEMENT OR CONDITION
IMPOSED WITH RESPECT TO THE TRANSACTION.

(g) CONGRESSIONAL OVERSIGHT AND PERIODIC REVIEW. — UPON
EFFECTIVITY OF THIS ACT, A JOINT CONGRESSIONAL OVERSIGHT
COMMITTEE SHALL BE CREATED THAT WILL CONDUCT A PERIODIC
REVIEW EVERY FIVE (5) YEARS 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 TO BE DESIGNATED BY THE SENATE PRESIDENT AND
SPEAKER OF THE HOUSE OF REPRESENTATIVES, RESPECTIVELY.

Sec. 20. Suppletory Application of Commonwealth Act No. 146. - Commonwealth Act
No. 146, as amended, shall be construed as a general law that shall apply suppletorily to
special laws or existing sector-specific laws governing public services, except for Section
13(d) of Commonwealth Act No. 146, as amended, created by Section 4 of this Act.

Sec. 21. Comprehensive Baseline Survey. - The University of the Philippines Law
Center shall conduct a comprehensive baseline survey of public services governance

14


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.

The PCC, in coordination with NEDA, is mandated to conduct regular studies on
whether deregulation is warranted in a sector to improve consumer welfare and to
submit its recommendation to Congress.

Sec. 22. Implementing Rules and Regulations. - All administrative agencies under
Section 4 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,
which shall account for the capitalization or other circumstances of the public service
concerned.

Sec. 23. Repealing Clause. - All laws, including Commonwealth Act No. 146, as
amended, decrees, orders, rules and regulations, or other issuances or parts thereof
inconsistent with the provisions of this Act are hereby repealed or modified
accordingly. This includes:

(a) Section 2(a) of Republic Act No. 6957, as amended, insofar as the clause
limiting investment in a facility operator where a public utility franchise is
required;

(b) Section 3(c) of Republic Act No. 9295, as amended, insofar as the clause
limiting investment in a Domestic Ship Operator or Domestic Ship Owner; and

(c) Section 44 of Republic Act No. 9497, as amended, insofar as the clause
limiting registration of aircraft which are owned or leased by non-Philippine
nationals.

Sec. 24. Appropriation. - The initial funding to carry out the provisions of this Act shall be
charged against the current year’s appropriation. Thereafter, such sums as may be
necessary shall be included in the General Appropriations Act.

Sec. 25. 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. 26. Effectivity. - 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,