Law Summary
Definition of Terms
- Clarifies key definitions including:
- "Act" as Republic Act No. 11659.
- "Administrative Agency" as government entities exercising powers of the former Public Service Commission.
- "Certificate" as any franchise or authorization to operate public services/utilities.
- Definitions for "Concession", "Control", "Critical Infrastructure", "Distribution of Electricity", "Foreign State-owned Enterprise", "Investment", "National Security", "Natural Monopoly", "Public Utility Vehicles", "Telecommunications", among others.
Jurisdiction, Powers, and Functions of Administrative Agencies
- Jurisdiction transferred from Public Service Commission to designated Administrative Agencies (e.g., Civil Aeronautics Board, Department of Energy, NTC, etc.).
- Administrative Agencies regulate franchises, equipment, and properties of public services/utilities.
- Government-owned public services are regulated similarly to private ones.
- Certificate issuance is mandatory for operating public services, subject to public interest and just compensation conditions.
- Agencies have powers, upon notice and hearing, to issue certificates, fix rates, suspend/revoke certificates, investigate, and enforce compliance.
Public Service and Public Utility; Reclassification
- Public Utility defined to include sectors such as electricity distribution/transmission, pipelines, water systems, seaports, and public utility vehicles.
- The President may recommend to Congress the reclassification of certain public services as public utilities based on criteria including natural monopoly and public necessity.
- NEDA conducts reviews for reclassification based on documents, audits, market studies, with stakeholder consultations.
Operators of Public Services and Prohibitions
- Certificate from the relevant Administrative Agency required before operating any public service business.
- Prohibitions include refusal to carry public mail when requested, or refusal to render service during calamities.
- Major acts such as rate setting, facility extensions, share issuance or property transactions require prior agency approval.
- Foreign ownership must comply with constitutional limits (minimum 60% Philippine ownership in public utilities).
Penalties for Violations
- Fines ranging from PHP 5,000 up to PHP 2,000,000 per day for violations of certificates or agency orders.
- Imprisonment of 6 years and 1 day to 12 years or fines for prohibited acts or willful negligence.
- Penalties apply to officers or employees responsible for violations.
- Destruction of agency apparatus punishable by fines and imprisonment.
Procedure and Review
- Administrative Agencies govern hearings and investigations with power to issue subpoenas and enforce compliance.
- Obstruction or disrespect during proceedings may lead to fines or imprisonment.
- Depositions can be taken in various locations via court clerks.
- Decisions subject to appeal under Rules of Court.
Fees and Rate Setting
- Agencies may collect fees, charges, and penalties, adjusting every five years according to the Consumer Price Index.
Critical Infrastructure
- Telecommunications services classified as critical infrastructure.
- The President may declare other public services as critical infrastructure via executive order.
- NEDA conducts review for such declarations based on impact on national security and consultations.
Monitoring and Review of Investments
- The President can suspend or prohibit mergers/acquisitions leading to foreign control over public services with national security review.
- National security review considers factors such as critical infrastructure involvement, access to sensitive info, and geographic areas critical to security.
- Voluntary declaration and motu proprio review processes defined with timelines for risk assessment and comprehensive review.
- Investments by foreign governments and state-owned enterprises are regulated with limitations and prohibitions.
- Reciprocity requirements apply for foreign ownership over 50% in critical infrastructure.
Employment of Foreign Nationals
- Foreign nationals may be employed only after proving the unavailability of qualified Filipino workers.
- Employment permits and compliance with labor laws required.
- Understudy training or skills development programs must be implemented.
Information Security
- Telecommunications service providers must be certified compliant with ISO information security standards.
- Micro, small, and medium enterprises exempted.
Performance Audit
- Annual independent performance audit required for public utilities and critical infrastructure.
- Audit includes cost, service quality, emergency response, cybersecurity, with established metrics.
Other Duties of NEDA
- Provides periodic advice on nationality restrictions to subcontractors.
- Conducts regular studies on regulatory reform and baseline surveys on public service governance.
Congressional Oversight and Review
- A Congressional Oversight Committee monitors implementation every five years.
Interpretation
- Rules must be consistent with constitutional regulatory powers.
- Franchises/certificates limited to 50-year terms maximum, non-exclusive, and subject to amendment by Congress.
Non-Impairment of Existing Agreements
- Vested rights and existing contracts unaffected.
- Treaties remain binding.
Amendments and Repeals
- Conflicting laws and regulations repealed or modified to conform.
Effectivity
- Rules take effect fifteen days after publication.
This summary encompasses the critical provisions, scope, definitions, procedural guidelines, penalties, and key legal principles relevant to the implementation of Republic Act No. 11659 as amended through its IRR.