Republic Act No. 11659 or RA 11659, which amended Commonwealth Act No. 146 or the Public Service Act, was signed into law by President Duterte on March 21, 2021 and took effect 15 days after its publication in a newspaper of general circulation.
Probably the most notable amendment made by RA 11659 is the provision defining, or effectively limiting the scope of, a “Public Utility” — which limited the coverage of the nationality or foreign-ownership restriction provided under Section 11, Article XII of the Philippine Constitution for the operation of public utilities.
For decades, we relied on jurisprudence for the definition of “Public Utility,” which equated it to “public service” as broadly described in the Public Service Act. With the amendment by RA 11659, the term “Public Utility” is now limited to the operation, management, or control for public use of (i) distribution of electricity; (ii) transmission of electricity; (iii) petroleum and petroleum products pipeline transmission systems; (iv) water pipeline distribution systems and wastewater pipeline systems, including sewerage pipeline systems; (v) seaports; and (vi) public utility vehicles.
Due to the foregoing amendment, operation, management, and control of other public services, which were previously considered as public utilities, are now open to full ownership by foreign entities. A lot of discussions have already been made on this subject whenever RA 11659 is being talked about.
Another notable amendment made by RA 11659 is in Section 6 of RA 11659, which amended Section 16 of the Public Service Act. By virtue of this amendment, individuals may no longer be granted a franchise for the operation, maintenance, or control of a public service.
Note that the old provision reads:
“(a) To issue certificates … Provided, That thereafter, certificates of public convenience and certificates of public convenience and necessity will be granted only to citizens of the Philippines or of the United States or to corporations, co-partnerships, associations or joint-stock companies constituted and organized under the laws of the Philippines; …”
Meanwhile, the amended provision now reads:
“(a) To issue certificates … Provided, That any certificate authorizing the operation, maintenance 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.”
The removal of “citizens of the Philippines” is interesting since this makes individuals ineligible to apply for, and be issued with, any franchise, certificate of public convenience, or certificate of public convenience and necessity for the operation, maintenance, or control of a public service, including a public utility. Otherwise stated, the Public Service Act, as amended, now only allows the issuance of a franchise, certificate of public convenience, or certificate of public convenience and necessity for the operation, maintenance, or control of a public service, including a public utility, in favor of corporations, partnerships, associations, or joint-stock companies that are constituted and organized under the laws of the Philippines — or simply, Philippine domestic juridical entities.
Due to the foregoing amendment, what will now happen to franchises, certificates of public convenience, or certificates of public convenience and necessity issued in favor of individuals? Most common of these are the certificates of public convenience issued by the Land Transportation Franchising and Regulatory Board to individual operators of public utility vehicles such as jeepneys, UV Express, mini-buses, and taxis; and the franchises issued by the local government units in favor of individual operators of public utility tricycles.
As most of us commuters are probably aware, a lot of these individual franchise holders are either the drivers themselves or operators of only a small number of vehicles. Further, with respect to public utility tricycles, unless they are operated by cooperatives, they are most likely operated by individuals.
We may, thus, wonder whether the removal of “citizens of the Philippines” in Section 16 of the Public Service Act, as amended, was a mere oversight. Otherwise, did our Congress intend to corporatize the operation, maintenance, and control of all public utility vehicles, including jeepneys, UV Express, mini-buses, taxis, and tricycles?
In the meantime, we shall wait for the implementing rules and regulations to be issued by the administrative agencies affected by the amendments to the Public Service Act, especially those to be issued by the Department of Transportation and the Land Transportation Franchising and Regulatory Board.
Nevertheless, as the Public Service Act has been amended and is currently worded, individual public utility vehicle operators may have reached the terminal. n
This article is for general informational and educational purposes only and not offered as and does not constitute legal advice or legal opinion.
Mervin Kenneth C. Ignacio is an associate of the Corporate & Special Projects Department of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW).
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