Law Summary
Definition of Terms
- Defines key terms such as Act, Administrative Agency, Certificate, Concession, Control, Critical Infrastructure, Distribution of Electricity, Foreign State-owned Enterprise, Public Utility Vehicles, Telecommunications, Transmission of Electricity, and Public Service among others.
- Provides detailed explanations of control and ownership structures relevant to foreign investment and public utilities.
- Clarifies public service scope and definitions consistent with existing laws.
Jurisdiction, Powers, and Functions of Administrative Agencies
- Jurisdiction of the Public Service Commission's powers transferred to specific Administrative Agencies listed (e.g., Civil Aeronautics Board, DICT, Energy Regulatory Commission).
- Agencies have authority over franchises, equipment, properties, and supervision of public services or utilities.
- Public services owned by the government are regulated similarly to private entities.
- Congress retains exclusive authority over granting franchises unless delegated by law.
- Agencies regulate operations, rates, depreciation, certificates, and may suspend or revoke certificates for non-compliance after due process.
- Agencies may conduct investigations without prior hearing and impose requirements such as accounting records.
Public Service and Public Utility; Reclassification
- Public utility is defined as a public service operating sectors such as electricity distribution, transmission, pipelines, water/wastewater systems, seaports, and public utility vehicles.
- Criteria for reclassifying a public service as a public utility include regular supply through a network, natural monopoly status, necessity for public life, and obligation to provide adequate service.
- Reclassification review is conducted by NEDA upon request of Administrative Agencies or motu proprio.
- NEDA follows procedures for documentation, assessment, stakeholder consultation, and submits recommendations to the President.
- Businesses affected with public interest are subject to constitutional provisions regarding government takeover during emergencies.
Operators of Public Services and Prohibitions
- Requirement of a certificate from the relevant Administrative Agency to operate public service businesses.
- Prohibits refusal to carry public mail upon Postmaster General's request and mandates urgent service during calamities.
- Acts requiring agency approval include rate changes, facility extensions, stock issuances, property transactions, and share transfers to aliens reducing Filipino ownership below 60%.
Penalties for Violations
- Violations of agency orders or certificate terms may incur fines from PHP 5,000 to PHP 2,000,000 per day.
- Excess rates collected must be refunded.
- Forbidden acts, failures, and willful negligence attract fines up to PHP 2,000,000 and imprisonment from six years and one day to twelve years.
- Officers of juridical persons may be personally liable.
- Destruction of agency apparatus is a misdemeanor with fines and imprisonment.
Procedure and Review
- Agencies adopt hearing rules; technical legal evidence rules do not bind them.
- Hearing officers may punish contempt summarily.
- Agencies may issue subpoenas and compel document production and witness testimonies.
- Depositions may be taken outside Manila; hearings are represented by agency legal officers or Solicitor General as needed.
- Decisions appealed according to Rules of Court.
Fees and Rate Setting
- Agencies may collect reasonable fees, charges, penalties, and fines; adjustments made every five years based on Consumer Price Index.
Critical Infrastructure
- Telecommunications classified as critical infrastructure.
- The President may declare public services as critical infrastructure by executive order.
- NEDA conducts review and submits recommendations to the President.
- Criteria include vital importance to national security through operational capacity.
Monitoring and Review of Investments
- The President may suspend or prohibit foreign investment or mergers granting control in public services for national security.
- PCC is consulted on mergers and acquisitions.
- National security review factors include top secret contracts, use of military-related technology, critical infrastructure status, and location in sensitive areas.
- Review processes include voluntary declaration and motu proprio investigations with specific timelines.
- Confidentiality of submitted information is protected.
- Prohibitions on investments by foreign governments and state-owned enterprises apply post-declaration of critical infrastructure.
- Sovereign wealth funds and independent pension funds may collectively own up to 30% capital subject to best practices.
- Reciprocity required for foreign ownership exceeding 50% in critical infrastructure.
Employment of Foreign Nationals
- Employment of foreign nationals requires proof of non-availability of competent Filipinos.
- Employment permits must be obtained per Labor Code.
- Employers must implement understudy training or skills development programs.
Information Security
- Telecommunications operators must maintain ISO certifications for information security, except MSMEs.
Performance Audit
- Annual independent audit of public services to monitor costs, service quality, emergency responsiveness, cybersecurity.
- Metrics established and regularly updated by Administrative Agencies.
Other Duties of NEDA
- Provides periodic advice on constitutional and legal restrictions regarding local and foreign subcontractors.
- Conducts regulatory reform studies and baseline surveys on public service governance.
Congressional Oversight and Final Provisions
- Congressional Oversight Committee monitors Act's implementation every five years.
- Franchises and certificates are non-exclusive, limited to 50 years, renewable based on performance.
- No impairment of existing contracts or treaties.
- Agencies may revise rules within six months for consistency.
- Severability and repealing clauses included.
- Effectivity 15 days after publication.