Public Service Act

Sec 13

(a) The Commission shall have jurisdiction and supervision over all public services, including public utilities, and their franchises, equipment, and other properties, and in the exercise of its authority, it shall have the necessary powers and the aid of public force: Provided, That public services, including public utilities, owned or operated by government entities shall be regulated by the Commission in the same way as privately-owned public services. Nothing in this Act shall be interpreted to diminish, limit, or restrict the authority of Congress from granting franchises to public services, as may be provided by law. Any franchise or certificate necessary for the operation of a public service shall be granted by Congress unless otherwise previously delegated by law to the relevant Administrative Agencies. (b) The term 'public service’ includes every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common carrier, railroad, street railway, traction railway, sub-way motor vehicle, either for freight or passenger, or both with or without fixed route and whatever may be its classification, freight or carrier service of any class, express service, steamboat, or steamship line, pontines, ferries, and water craft, engaged in the transportation of passengers or freight or both, shipyard, marine railway, marine repair shop, wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water supply and power, petroleum, sewerage system, wire or wireless communications systems, wire or wireless broadcasting stations and other similar public services: Provided, however, That a person engaged in agriculture, not otherwise a public service, who owns a motor vehicle and uses it personally and/or enters into a special contract whereby said motor vehicle is offered for hire or compensation to a third party or third parties engaged in agriculture, not itself or themselves a public service, for operation by the latter for a limited time and for a specific purpose directly connected with the cultivation of his or their farm, the transportation, processing, and marketing of agricultural products of such third party or third parties shall not be considered as operating a public service for the purposes of this Act. (c) The word 'person' includes every individual, co-partnership, joint-stock company or corporation, whether domestic or foreign, their lessees, trustees or receivers, as well as any municipality, province, city, government-owned or controlled corporation, or agency of the Government of the Philippines, and whatever other persons or entities that may own or possess or operate public services. (As amended by CA No 454, RA Nos 1270, 2677, 11659) (d) Public Utility. - Public Utility refers to a public service that operates, manages or controls for public use any of the following: Distribution of Electricity; Transmission of Electricity; Petroleum and Petroleum Products Pipeline Transmission Systems; Water Pipeline Distribution Systems and Wastewater Pipeline Systems, including sewerage pipeline systems; Seaports; and Public Utility Vehicles. All concessionaires, joint ventures and other similar entities that wholly operate, manage or control for public use the sectors above are public utilities. Nothing in this Act shall be interpreted as a requirement for legislative franchise where the law does not require any. No other person shall be deemed a public utility unless otherwise subsequently provided by law. (e) Upon the recommendation of the National Economic and Development Authority (NEDA), the President may recommend to Congress the classification of a public service as a public utility on the basis of the following criteria: The person or juridical entity regularly supplies and transmits and distributes to the public through a network a commodity or service of public consequence; The commodity or service is a natural monopoly that needs to be regulated when the common good so requires. For this purpose, natural monopoly exists when the market demand for a commodity or service can be supplied by a single entity at a lower cost that by two or more entities; The commodity or service is necessary for the maintenance of life and occupation of the public; and The commodity or service is obligated to provide adequate service to the public on demand. All public services, including those classified as public utilities under this Act, shall continue to be regulated and supervised by the relevant Administrative Agencies under existing laws. A public service which is not classified as a public utility under this Act shall be considered a business affected with public interest for purposes of Sections 17 and 18 of Article XII of the Constitution. Notwithstanding any law to the contrary, nationality requirements shall not be imposed by the relevant Administrative Agencies on any public service not classified as a public utility. The NEDA shall provide periodic advice to Administrative Agencies on the proper application of the constitutional and other legal restrictions to local and foreign-owned subcontractors, without putting operational resiliency at risk. (As added by RA No 11659)

Sec 14

The following are exempted from the provisions of the preceding section: (a) Warehouses; (b) Vehicles drawn by animals and bancas moved by oar or sail, and tugboats and lighters; (c) Airships within the Philippines except as regards the fixing of their maximum rates on freight and passengers; (d) Radio companies except with respect to the fixing of rates; (e) Public services owned or operated by any instrumentality of the National Government or by any government-owned or controlled corporation, except with respect to the fixing of rates. (As amended by CA No 454, RA Nos 2031, 2677)

Sec 15

With the exception of those.enumerated in the preceding section, no public service shall operate in the Philippines without possessing a valid and subsisting certificate from the Public Sendee Commission, known as 'certificate of convenience and public necessity, as the case may be, to the effect that the operation of said service and the authorization to do business will promote the public interests in a proper and suitable manner. The Commission shall prescribe as a condition for the issuance of the certificate or authorization provided in the preceding paragraph that the service can be acquired by the Republic of the Philippines or any instrumentality thereof, or the issuing local government unit, upon payment of just compensation in accordance with the pertinent laws, rules, and regulations on expropriation; and likewise, that the certificate or authorization shall be valid only for a definite period of time and that the violation of any of theses conditions shall, after hearing, result in the immediate cancellation of the certificate or authorization without the necessity of any express action on the part of the issuing authority. (As amended by RA No 11659) In estimating the depreciation, the effect of the use of the equipment, its actual condition, the age of the model, or other circumstances affecting its value in the market shall be taken into consideration. The foregoing is likewise applicable to any extension or amendment of certificates actually in force and to those which may hereafter be issued, to permits to modify itineraries and time schedules of public services and to authorizations to renew and increase equipment and properties. (As amended by CA No 454)

Sec 16

Proceedings of the Commission, upon notice and hearing.—The Commission shall have the power, upon notice and hearing in accordance with the rules and provisions of this Act: To issue certificates authorizing the operation of public service within the Philippines whenever the Commission 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 any certificate authorizing the operation, management or control of a public service shall only be issued to corporations, partnerships, associations or joint stock companies that are constituted and organized under the laws of the Philippines. To approve, subject to constitutional limitations, any franchise or privilege granted under the provisions of Act Numbered Six hundred and sixty-seven, as amended by Act Numbered One thousand and twenty-two, by any political subdivision of the Philippines when, in the judgment of the Commission, such franchise or privilege will properly conserve the public interests, and the Commission shall in so approving impose such conditions as to construction, equipment, maintenance, service, or operation as the public interests and convenience may reasonably require, and to issue certificates of public convenience and necessity when such is required or provided by any law or franchise. To fix and determine the fair and reasonable individual or joint rates, tolls, charges, classifications, tariffs 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 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 fifteen (15) days, thereafter, upon publication and notice to the affected parties in the territory affected, to ratify its prior provisional approval or change, modify or later 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, finally, That when the public interest requires, 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 prudent and efficient costs and a reasonable rate of return to enable the public service to operate viably and efficiently. The Administrative Agency may adopt alternative forms consistent with internationally accepted rate-setting methodology. The adopted rate-setting methodology shall ensure a reasonable price of the commodity or service and that the rates prescribed shall not be discriminatory. This provision shall not be interpreted as mandating rate regulation nor amending or repealing: (1) laws providing a deregulation policy, such as Republic Act No. 7925, otherwise known as the "Public Telecommunications Policy Act of the Philippines', as amended; Republic Act No. 8479, otherwise known as the 'Downstream Oil Industry Deregulation Act of 1998', as amended; Republic Act No. 9136, otherwise known as the 'Electric Power Industry Reform Act of 2001', as amended; Republic Act No. 9295, otherwise known as the 'Domestic Shipping Development Act of 2004', as amended; and Republic Act No. 6957, otherwise known as the 'BOT law', as amended; and (2) regulations promulgated by these Administrative Agencies to deregulate rates. To fix just and reasonable standards, classifications, regulations, practices, measurements, or service to be furnished, imposed, observed, and followed thereafter by any public service. To ascertain and fix adequate and serviceable standards for the measurement of quantity, quality, pressure, initial voltage, or other condition pertaining to the supply of the product or service rendered by any public service, and to prescribe reasonable regulations for the examination and test of such product or service and for the measurement thereof. To establish reasonable rules, regulations, instructions, specifications, and standards, to secure the accuracy of all meters and appliances for measurements. To compel any public service to furnish safe, adequate, and proper service as regards the manner of furnishing the same as well as the maintenance of the necessary material and equipment. To require any public service to establish, construct, maintain, and operate any reasonable extension of its existing facilities, where, in the judgment of said Commission, such extension is reasonable and practicable and will furnish sufficient business to justify the construction and maintenance of the same, and when the financial condition of the said public service reasonably warrants the original expenditure required in making and operating such extension. To direct any railroad, street railway or traction or company to establish and maintain at any junction or point of connection or intersection with any other line of said road or track, or with any other line of any other railroad, street railway or traction company, such just and reasonable connection as shall be necessary to promote the convenience of shippers of property, or of passengers, and in like manner to direct any railroad, street railway, or traction company engaged in carrying merchandise, to construct, maintain and operate, upon reasonable terms, a switch connection with any private sidetrack which may be constructed by any shipper to connect with the railroad, street railway or traction company line where, in the judgment of the Commission, such connection is reasonable and practicable, and can be put in with safety, and will furnish sufficient business to justify the construction and maintenance of the same. To authorize, in its discretion, any railroad, street railway or traction company to lay its tracks across the tracks of any other railroad, street railway or traction company, or across any public highway. To direct any railroad or street railway company to install such safety devices or adopt such other reasonable measures as may in the judgment of the Commission be necessary for the protection of the public at passing grade crossings of (1) public highways and railroads, (2) public highways and street railways, or (3) railroads and street railways. To fix and determine proper and adequate rates of description of the property of any public service which will be observed in a proper and adequate depreciation account to be carried for the protection of stockholders, bondholders or creditors, in accordance with such rules, regulations, and forms of accounts as the Commission may prescribe. Said rates shall be sufficient to provide the amounts required over and above the expense of maintenance to keep such property in a state of efficiency corresponding to the progress of the industry. Each public service shall conform its depreciation accounts to the rates so determined and fixed, and, as may be required by the proper Administrative Agency, shall set aside the moneys so provided for out of its earnings and carry the same in a depreciation fund. The income from investments of money in such fund shall likewise be carried in such fund. This fund shall not be expended otherwise than for depreciation, improvements, new constructions, extensions or additions to the property of such public service. To amend, modify or revoke at any time any certificate issued under the provisions of this Act, whenever the facts and circumstances on the strength of which said certificate was issued have been misrepresented or materially changed. To suspend or revoke any certificate issued under the provisions of this Act whenever the holder thereof has violated or willfully and contumaciously refused to comply with any order, rule or regulation of the Commission or any provision of this Act: Provided, That the Commission, for good cause, may prior to the hearing suspend for a period not to exceed thirty days any certificate or the exercise of any right or authority issued or granted under this Act by order of the Commission, whenever such step shall in the judgment of the Commission be necessary to avoid serious and irreparable damage or inconvenience to the public or to private interests. To fix, determine, and regulate, as the convenience of the State may require, a special type for auto-buses, trucks, and motor trucks, to be hereafter constructed, purchased, and operated by operators after the approval of this Act; to fix and determine a special registration fee for auto-buses, trucks, and motor trucks so constructed, purchased, and operated: Provided, That said fees shall be smaller than those charged for auto-buses, trucks, and motor trucks of types not made regulation under this subsection. To suspend or revoke any certificate issued under the provisions of this Act when the holder thereof has failed for three (3) consecutive years the annual performance audit conducted by an independent evaluation team in accordance with the metrics to be set by the Administrative Agency. (As amended by RA No 11659)

Sec 17

Proceedings of Commission without previous hearing.—The Commission shall have power, without previous hearing, subject to established limitations and exceptions and saving provisions to the contrary: To investigate, upon its own initiative, or upon complaint in writing, any matter concerning any public service as regards matters under its jurisdiction; to require any public service to furnish safe, adequate, and proper service as the public interest may require and warrant; to enforce compliance with any standard, rule, regulation, order or other requirement of this Act or of the Commission, and to prohibit or prevent any public service as herein defined from operating without having first secured a certificate and require existing public services to pay the fees provided for in this Act for the issuance of the certificate, under the penalty, at the discretion of the Commission, of the revocation and cancellation of any acquired right. To require any public service to pay the actual expenses incurred by the Commission 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. The Commission may also assess against any public service reasonable costs with reference to such investigation. From time to time appraise and value the property of any public service, whenever in the judgment of the Commission it shall be necessary so to do, for the purpose of carrying out any of the provisions of this Act, and in making such valuation the Commission may have access to and use any books, documents, or records in the possession of any department, bureau, office, or board of the Government of the Philippines or any political subdivision thereof. To provide, on motion by or at the request of any or user of a public service, for the examination and test of any appliance used for the measuring of any product or service of a public service, and for that purpose, by its agents, experts, or examiners to enter upon any premises where said appliances may be, and other premises of the public service, for the purpose of setting up and using on said premises any apparatus necessary therefor, and to fix the fees to be paid by any consumer or user who may apply to the Commission for such examination or test to be made, and if the appliance be found defective or incorrect to the disadvantage of the consumer or user, to require the fees paid to be refunded to the consumer or user by the public service concerned. To permit any street railway or traction company to change its existing gauge to standard steam railroad gauge, upon such terms and conditions as the Commission shall prescribe. To grant to any public service special permits to make extra or special trips within the territory covered by its certificate of public convenience, and to make special excursion trips outside of its own territory if the public interest or special circumstances require it; Provided, however. That in case a public service cannot render such extra service on its own line or in its own territory, a special permit for such extra service may be granted to any other public service. To require any public service to keep its books, records, and accounts so as to afford an intelligent understanding of the conduct of its business and to that end to require every such public service of the same class to adopt a uniform system of accounting. Such system shall conform to any system approved and confirmed by the Commission on Audit. To require any public service to furnish annual reports of finances and operations. Such reports shall set forth in detail the capital! stock issued, the amounts of said capital stock paid up and the form of payment thereof; the dividends paid, the surplus, if any, and the number of stockholders; the consolidated and pending obligations, and the interest paid thereon; the cost and value of the property of the operator; concessions or franchises and equipment; the number of employees and salaries paid to each class; the accidents to passengers, employees, and other persons, and the causes thereof; the annual expenditures on improvements, the manner of their investment and nature of such improvements; the receipts and profits in each of the branches of the business and of whatever source; the operating and other expenses; the balance of profits and losses; and a complete statement of the annual financial operations of the operator, including an annual balance sheet. Such reports shall also contain any information which the Commission may require concerning freight and passenger rates, or agreements, compromises or contracts affecting the same. Said reports shall cover a period of twelve months, ending on December thirty-first of each year, and shall be sworn to by the officer or functionary of the public service authorized therefor. The Commission shall also have power to require from time to time special reports containing such information as above provided for or oh other matters as the Commission may deem necessary or advisable. To require every public service to file with the Commission a statement in writing, verified by the oaths of the owner or the president and the secretary thereof, if a corporation, setting forth the name, title of office or position, and post-office address, and the authority, power, and duties of every officer, member of the board of directors, trustees, executive committee, superintendent, chief or head of construction and operation thereof, in such form as to disclose the source and origin of each administrative act, rule, decision, order or other action of the operator of such public service; and, within ten days after any change is made in the title of, or authority, powers or duties appertaining to any such office or position, or the person holding the same, file with the Commission a like statement, verified in like manner, setting forth such change. To require any public service to comply with the laws of the Philippines and with any provincial resolution or municipal ordinance relating thereto and to conform to the duties imposed upon it thereby or by the provisions of its own charter, whether obtained under any general or special Jaw of the Philippines, To investigate any or all accidents that may occur on the property of any public service or directly or indirectly arising from or connected with its maintenance or operation in the Philippines; to require any public service to give the Commission immediate and effective notice of all or any such accidents, and to make such order or recommendation with respect thereto as the public interest may warrant to require. To require every public service as herein defined to file with it complete schedules of every classification employed and of every individual or joint rate, toll, fare or charge made, charged or exacted by it for any product supplied or service rendered within the Philippines, and, in the case of public carriers, to file with it a statement showing the itineraries or routes served as specified in such requirement. (As amended by RA No 11659)