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Public Service Act

Joy C Belencio

Public Service Act Comm Act. 146, as amended

Definition of Public Service

It includes every person who 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, subway motor vehicle, steamboat, or steamship line, ferries and water craft shipyard, ice-plant, electric light, heat power or any other public utility

Public Service Law

Public Service Public Utilities Mass Media Oil Industry Deregulation Power Industry

Certificate of Public Convenience and Necessity

Requisites for issuance of CPC

Owned by Filipino Financial Ability and Profit Motive Public Necessity


Warehouses; Vehicles drawn by animals and bancas moved by oar or sail, and tugboats and lighters; Airships within the Philippines (except as regards to rates on freight and passengers;) Radio companies (except with respect to rates); National Government Operated or by any government-owned or controlled corporation, (except with respect to the fixing of rates.) Public Markets

Public Service Commission (PSC)

authorize and control the operation of a public utility suspend or revoke the certificate of public convenience issued, for cause and with proper hearing collect fees-both tax as well as regulatory [PLDT v PSC, 34 SCRA 609 (1970)]

Notice and Hearing Required

Issuance of certificate of public convenience and certificate of public convenience and necessity. Fixing rates, tolls and charges Setting-up of just reasonable standard and classification. Suspension, revocation, modification of certificate of public convenience and certificate of public convenience and necessity.

When Notice and Hearing NOT Required

Investigate any matter concerning public service Require any public service to furnish safe, adequate and proper service Appraise and value the property of any public Service Require any public service to properly keep books records and account and to make report on finances Require public service to comply with laws and ordinances

Replacement of PSC
Land Transportation Office and Land Transportation, Franchising and Regulatory Board

Land transportation

Air transportation office

governing air transportation

National Telecommunication Commission


Replacement of PSC
Board of Energy (the power utilities Regulatory Board, now the and services regulatory Commission operation of National Electrification electric Administration companies National Water Resources Waterworks Council water Marine Industry Authority transportation


271 SCRA 417 (1997)

Regular courts, and not Board of Energy, have a proper jurisdiction over a case filed by a consumer seeking from MERALCO the showing how it arrived at the purchased power adjustment, to which information consumer of electricity are entitled under Revised Order 1 issued by the then PSC.

Is a business or service engage in regularly supplying the public with some commodity or service of public consequence such as electricity, gas, water, transportation, telephone or telegraph service.

Determinative characteristic of a public utility

of service, or the readiness to serve, Public has a legal right to demand and receive its services or commodities

(JG Summit Holdings, Inc v Court of Appeals)

Public Utility
Citizens of the Philippines Corporations or associations organized under Philippine laws where 60% of the capital is owned by Filipino

Extent of Foreign Equity Participation

Shall be limited to their proportionate share in the capital, all the executive and managing officers of such corporations or associations must be citizens of the Philippines

Non-Exclusivity of Franchises
Shall not be exclusive in character or for a period longer than 50 years shall be subject to amendment, alteration or repeal by the Congress when the common good so requires.

Non-Exclusivity of Franchises
Pilipino Telephone Corporation v NTC 410 SCRA 82 (2003)

Every franchise, certificate or authority to operate a public utility is by constitutional mandate, non exclusive.

Primary and Secondary Franchises

General or Primary franchise Special or Secondary franchise

Constitutional Prohibition Against Monopolies

Shipyard not a public utility

JG Summit Holdings v Court of Appeals 412 SCRA 10 (2003) Shipyard is a place of enclosure where ships are built or repaired It is not a public utility because while it offers its facilities to whoever may wish to avail its services, a shipyard is not legally obligated to render its service indiscriminately to the public

Refinement of Petroleum from Abroad

Bagatsing v Committee on Privatization 246 SCRA 334 (1995) The activities considered as public utility under Section 7 Reo Act 387 refer only to petroleum which is indigenous to the Philippines Hence, the refining of petroleum products sourced from abroad as is done by Petron, is not within the contemplation of the law

Regulation of Rate Charges by Public Utilities

fair return on the public utility upon the value of the property performing the service one that is reasonable to the public for services rendered.

Coverage of Term Rates

Rate is defined as
A charge, payment or price fixed according to a ratio, scale or standard an amount paid or charged for a good or service

Three major factors considered by the regulating agency (Republic v Meralco)

Rate of return
This court has consistently adopted a 12% rate of rate of return for public utilities

Rate base The computed revenue to be earned by the public utility

Income Taxes Cannot be included in computation of Operating expenses for Public Utility
Republic v Meralco 391 SCRA 700 (2002) Issue: Is Meralco correct in including income tax payments a part of the expense for determining the base of the returns? Held: No, Income tax should not be included in the computation of operating expenses of a public utility, Since income tax paid by the public utility is not consistent with the nature of operating expenses

Government take over of Public Utilities

Mass Media

Is a medium of communication that is designed to reach the mass of the people and that tends to set the standards, ideals and aims of the masses

National Telecommunications Commission (NTC)

determine what specific operating and technical requirement of public convenience and necessity authority to issue CPCN determine the areas of operation of applicants for telecommunication services

National Telecommunications Commission (NTC)

GMA Network, Inc v ABS-CBN Broadcasting Corp 470 SCRA 727 2005 Wrongful acts complained of and upon which the damages prayed for are based have to do with the operations and ownership of the cable companies These factual matters undoubtedly pertain to the NTC and not the regular courts

Coverage of Telecommunications
Telecommunication is
any process Which enables a telecommunications entity to relay and receive Voice, data, electronic messages, Written or printed manner Fixed or moving pictures, words, music or visible or audible signal or any control signal of any design and for any purpose By wire, radio or other electromagnetic, spectral, optical or technological means (Sec 3 [a] R.A. 7925)

Coverage of Telecommunications

It covers the following areas

Telephone service Inter-exchange carrier International carrier Value-added service provider Mobile radio services Radio paging services Radio-telephony system

Prohibition on CrossOwnership

No single franchise shall authorize an entity to engage in both telecommunications and broadcasting entities

Public Offerings Requirement

shall make bona fide public offering through the stock exchanges of at least 30% of aggregate common stock with the period of 5 years from its affectivity or the entitys first start of commercial operation, whichever date is later

Electronic Commerce Act 2000


Is a giant network which interconnects innumerable smaller groups of linked computer networks, which offers three broad types of service
Electronic mail (email) Bulletin Board System (bbs) World wide web (www)

DOJ Opinion 40 series of 1998

Internet business does not fall within the coverage of the constitutional mandate limiting ownership and management of mass media to citizens of the Philippines or whollyowned and managed Philippine Corporations

Value-Added Services (VAS)

Value-added service provider

An entity which relying on the transmission switching and local distribution facilities of the local exchange and inter-exchanged operators, and overseas carrier, offers enhanced services beyond those ordinarily provided for by such carriers VAS providers need not secure a franchise, provided that they do not put up their own network

Value-Added Services (VAS)

Globe telecom, Inc v NTC Issue: Public Telecommunications Act allows outsider to offer VAS without prior NTC clearance, whereas existing telecommunications entities require prior NTC clearance in order to offer VAS Held: to ensure that such VAS offerings are not cross-subsidized from the proceeds of their utility operations. There is an implicit recognition under PTA that VAS is not strictly a public service offering in the way that voice-to-voice lines are, but merely supplementary to the basic service

Value-Added Services (VAS)

Service Provider under the E-Commerce Act is defined as a provider of

On-line services or network access Transmission, routing, or providing of connections for online communications, digital or otherwise, between or among points specified by user, of electronic documents of the users choosing The necessary technical means by which electronic documents of an originator may be stored and made accessible to a designated third party

Value-Added Services (VAS)

BUT such service providers cannot

Modify or alter content of electronic data message or electronic document received Make any entry therein or on behalf of the originator addressee or any third party unless specifically authorized to do so and who shall retain the electronic document in accordance with the specific request or as necessary for the purpose of performing the services it was engaged to perform

Broadcasting Industry

transmit over-the-air commercial radio or television messages for the reception of a broad audience in a geographical area

Covers the transmission of and television programs that are intended for general public reception;

Cable Television Operations

Is a facility which receives television and radio signals by means of high antenna or by microwave transmission, amplifies them and distributes them by coaxial cables to the premise of its subscriber who pays a fee for the service

Cable TV
owned and managed by Filipino Citizens or corporations, cooperatives and associations, wholly-owned and managed by Filipino Citizens pursuant to the mandate of the Constitutions Regulated by NTC separately from Telecommunications and Broadcasting Carry Advertisements

Executive Order No. 436 (1997)

Determination of rates Issuance of certificate of authority Establishment of areas and operations Examination and assessment of the legal , technical and financial qualification