RA 11659 — An Act Amending Commonwealth Act No. 146 (Public Service Act)
Signed: March 21, 2022 Effective: April 5, 2022 (15 days after publication)
RA 11659 is the 2022 Public Service Act — the most significant overhaul of the Philippines’ public utility regulatory framework since Commonwealth Act 146 (1936). Its central change: redefining “public utility” to only six specific services, narrowing what requires 60% Filipino ownership under the Constitution. For the energy sector, transmission and distribution of electricity and petroleum pipeline transmission systems remain public utilities (60% Filipino ownership required), while generation and supply of electricity, oil retail/refining, and most energy services are no longer public utilities — opening them to up to 100% foreign equity. The law also creates a presidential national security review of foreign investments in public services, and prohibits foreign state-owned enterprises from owning capital in public utilities and critical infrastructure. See National Grid Corporation of the Philippines (NGCP) for transmission implications.
Enabling statute: Amends Commonwealth Act No. 146 (Public Service Act), as amended. The Public Service Commission’s functions are confirmed as having been transferred to the “Administrative Agencies” listed in §3.
§1 — Policy
State recognizes private sector as a main engine for growth. Policy goals: (a) ensure effective regulation of public services; (b) provide reasonable rate of return; (c) rationalize foreign equity restrictions by clearly defining “public utilities”; (d) institute national security investment review processes. [RA 11659, §1, 2022]
§2 — Key Definitions
| Term | Definition |
|---|---|
| Administrative Agency | Government agency to which PSC powers were transferred by subsequent laws (DOE, ERC, LTFRB, etc. — see §3); “Commission” in CA 146 = these agencies |
| Certificates | Any franchise, CPC, CPCN, concession, or other authorization for operation of a public service |
| Critical Infrastructure | Public service owning, using, or operating systems/assets “so vital to the Republic” that incapacity or destruction would have “detrimental impact on national security” — including telecommunications; President may declare others |
| Distribution of Electricity | Per EPIRA §4(n) (RA 9136) |
| Foreign State-owned Enterprise | Entity where a foreign state: (i) directly/indirectly owns >50% capital (voting+beneficial); OR (ii) controls >50% voting rights through ownership; OR (iii) has power to appoint majority of board |
| National Security | Requirements/conditions necessary for territorial integrity and safety/security/well-being of Filipino citizens |
| Petroleum and Petroleum Products Pipeline Transmission Systems | Operation and maintenance of pipeline transmission systems for uninterrupted/adequate supply of petroleum and petroleum products to the public — excludes pipelines operated exclusively for private/own use or incidental to a distinct business |
| Philippine National | Per Foreign Investments Act of 1991, RA 7042 §3(a) |
| Public Utility Vehicles (PUVs) | ICE vehicles carrying passengers/cargo for fee (trucks-for-hire, UV express, PUBs, PUJs, tricycles, filcabs, taxis) — excludes transport vehicles accredited with and operating through Transport Network Corporations |
| Seaport | Per PPA/SBMA/PHIVIDEC/Cebu Port Authority/LGU charters |
| Telecommunications | Per RA 7925 §3(a); excludes passive infrastructure (poles, fiber ducts, dark fiber cables, passive towers as defined by DICT) and value-added services per RA 7925 §3(h) |
| Transmission of Electricity | Per EPIRA §4(cc) (RA 9136) |
| Water Pipeline Distribution Systems and Wastewater Pipeline Systems | Per RA 6234 and PD 198; excludes desludging companies and septic tanks |
[RA 11659, §2, 2022]
§3 — Administrative Agencies (Former PSC Successors)
All references to “Commission” (PSC) in CA 146 now refer to the relevant Administrative Agency. Agencies listed [RA 11659, §3, 2022]:
| Sector | Agency |
|---|---|
| Aviation (airports) | CAB; CAAP |
| Energy | DOE; ERC |
| Environment | DENR |
| ICT | DICT |
| Transportation | DOTr; LTFRB; LTO; MARINA; PNR |
| Water | LWUA; MWSS; NWRB |
| Ports | PPA |
| Telecommunications | NTC |
| Tolls | TRB |
§4 — Amended CA 146 §13: The Critical Public Utility Redefinition
The central reform: §13(d) now defines “Public Utility” as only:
| # | Service |
|---|---|
| 1 | Distribution of Electricity |
| 2 | Transmission of Electricity |
| 3 | Petroleum and Petroleum Products Pipeline Transmission Systems |
| 4 | Water Pipeline Distribution Systems and Wastewater Pipeline Systems (incl. sewerage) |
| 5 | Seaports |
| 6 | Public Utility Vehicles |
“No other person shall be deemed a public utility unless otherwise subsequently provided by law.” [RA 11659, §4 amending CA 146 §13(d), 2022]
Energy Sector Implications
Remain public utilities (60% Filipino ownership required under Constitution):
- Transmission of electricity (NGCP, TransCo)
- Distribution of electricity (all ECs and private DUs)
- Petroleum/petroleum product pipeline transmission systems
No longer public utilities (no 60% Filipino ownership requirement from RA 11659):
- Generation of electricity (NPC, private gencos, IPPs)
- Supply of electricity
- Downstream oil (retail, refining, marketing, terminals — unless pipeline transmission)
- LPG industry (unless petroleum pipeline transmission)
Note: RA 9513 (RE Act, §30) and other sector laws may impose separate nationality requirements independent of RA 11659. RA 11659 removes the public utility classification but does not override specific sectoral Filipino ownership requirements unless they are grounded solely in the public utility classification.
New Provisions in §13
Non-public utilities = business affected with public interest (§13): Public services not classified as public utilities are considered “business affected with public interest” under Article XII, §§17–18 of the Constitution — subject to general regulation but not the 60% Filipino ownership requirement. [RA 11659, §4, 2022]
No nationality requirements on non-public utilities: Administrative Agencies cannot impose nationality requirements on public services not classified as public utilities. [RA 11659, §4, 2022]
NEDA advisory role: NEDA shall provide periodic advice to administrative agencies on applying constitutional and legal restrictions to local and foreign-owned subcontractors. [RA 11659, §4, 2022]
§13(e) — New Public Utility Classification Criteria: NEDA may recommend to the President that Congress classify a public service as a public utility if it meets all 4 criteria:
- Entity regularly supplies/transmits/distributes to the public through a network a commodity or service of public consequence
- The commodity/service is a natural monopoly (single entity supplies market at lower cost than two or more)
- The commodity/service is necessary for the maintenance of life and occupation of the public
- The entity is obligated to provide adequate service to the public on demand
[RA 11659, §4, 2022]
§5–11 — Amended CA 146 Provisions: Certificates, Rate-Setting, Enforcement
Certificate Requirements (§5 amending CA 146 §15)
Certificates issued by Administrative Agencies must include: (a) condition that the State may acquire the service upon payment of just compensation (eminent domain clause); (b) validity only for a definite period; (c) immediate cancellation upon violation of conditions after hearing. [RA 11659, §5, 2022]
Rate-Setting Powers (§6 amending CA 146 §16)
Administrative Agencies may set fair and reasonable rates — methodology may be: (a) cost-based (prudent and efficient costs + reasonable rate of return); (b) alternative internationally accepted rate-setting methodology. Rates must not be discriminatory. [RA 11659, §6, 2022]
Deregulation savings clause (§16): This provision does NOT mandate rate regulation nor amend/repeal deregulation laws: RA 7925 (Telecom), RA 8479 (Downstream Oil), RA 9136 (EPIRA), RA 9295 (Domestic Shipping), RA 6957 (BOT Law). Deregulation regulations remain in effect. [RA 11659, §6, 2022]
Certificate suspension/revocation (§16(p)): Administrative Agency may suspend/revoke certificate when holder fails 3 consecutive annual performance audits (see §29). [RA 11659, §6, 2022]
Penalties (§11–15)
| Penalty | Detail |
|---|---|
| Administrative fine | PhP 5,000–2,000,000 per day of violation (§21 of CA 146 as amended); replaces lower fine if sector law has lesser amount |
| Refund to consumers | Administrative Agency may order refund to consumers if excess rates collected |
| Criminal — corporate | Fine up to PhP 2M + 6yr1d–12yr imprisonment; alternatively both (§23 of CA 146 as amended) |
| Criminal — individual | Same penalties for individuals directing or causing violations (§24 of CA 146 as amended) |
| Critical infrastructure | Must respond to service interruption complaints within 10 days; monthly report to regulatory agency on interruptions, complaints, and actions (§23 of CA 146 as amended) |
| Apparatus interference | Fine equivalent to actual market value of apparatus destroyed/injured + up to PhP 2M fine + 6yr1d–12yr imprisonment (§26) |
[RA 11659, §11–15, 2022]
Prescription: Per Act No. 3326 (prescription for violations penalized by special acts). [RA 11659, §16 amending CA 146 §28, 2022]
Administrative Fees and Charges (§22 amending CA 146 §40)
Administrative Agencies may collect reasonable fees/charges and impose fines/penalties. CPI-adjusted every 5 years per PSA CPI. [RA 11659, §22, 2022]
Franchise duration (§31): No franchise/certificate/concession granted by Administrative Agencies shall be exclusive in character or exceed 50 years. Exemplary service record + substantial investments shall be taken into consideration for renewal priority. All grants subject to amendment, alteration, or repeal by Congress when public interest requires. [RA 11659, §31, 2022]
§23 — Presidential Power on National Security: M&A and Investment Review
In the interest of national security, the President may, within 60 days from receipt of a recommendation from the relevant government department or Administrative Agency, suspend or prohibit:
- Any proposed merger or acquisition transaction; OR
- Any investment in a public service that effectively results in the grant of control, whether direct or indirect, to a foreigner or foreign corporation
The PCC may be consulted on all matters relating to mergers and acquisitions. NEDA shall promulgate rules and regulations. [RA 11659, §23, 2022]
Energy sector application: A proposed acquisition of a DU, transmission asset, or petroleum pipeline company by a foreign entity that would result in foreign control can be suspended or prohibited by the President within 60 days of agency recommendation. The DOE and ERC are the relevant administrative agencies.
§24 — Foreign State-Owned Enterprise Prohibition
An entity controlled by or acting on behalf of a foreign government or foreign SOE is prohibited from owning capital in any public service classified as public utility or critical infrastructure. [RA 11659, §24, 2022]
Qualifications:
- Prohibition applies only to investments made after effectivity (April 5, 2022)
- Foreign SOEs with capital owned before effectivity: prohibited from investing in additional capital after effectivity
- Exception: Sovereign wealth funds and independent pension funds of each state may collectively own up to 30% of the capital of such public services
Foreign SOEs and government-controlled entities: also prohibited from making any data or information disclosure, or extending assistance, support, or cooperation to any foreign government, instrumentalities, or agents. NEDA to promulgate implementation rules. [RA 11659, §24, 2022]
Energy sector application: A foreign state-owned enterprise (e.g., a Chinese SOE or Korean KEPCO-affiliate) cannot acquire a Philippine distribution utility (DU), transmission operator, or petroleum pipeline company after April 5, 2022, because these are public utilities. SOEs that held minority positions before effectivity cannot increase their stake.
§25 — Reciprocity for Critical Infrastructure
Foreign nationals cannot own more than 50% of the capital of entities engaged in the operation and management of critical infrastructure (including telecommunications and President-declared services) unless their country accords reciprocity to Philippine Nationals as provided by foreign law, treaty, or international agreement. Reciprocity may be satisfied by according rights of similar value in other economic sectors. NEDA promulgates rules. [RA 11659, §25, 2022]
Foreign nationals employed in public services must obtain employment permits under PD 442 (Labor Code). Public services employing foreign nationals in DOLE-determined industries must implement understudy/skills development programs to ensure technology/skills transfer to Filipinos within a period set by DOLE. [RA 11659, §25, 2022]
§26 — Information Security (Telecommunications)
Telecommunications companies must obtain and maintain certifications from accredited certification bodies attesting compliance with relevant ISO standards on information security, as prescribed by DICT. Compliance is a continuing qualification for franchise/authority retention. Exception: micro, small, and medium enterprises (MSMEs) per RA 6977. [RA 11659, §26, 2022]
§27 — NEDA Studies on Regulatory Reform
NEDA shall conduct regular studies on whether regulatory reform is warranted in a public service sector to improve consumer welfare, and submit recommendations to Congress. NEDA, in coordination with relevant agencies and LGUs, shall conduct a comprehensive baseline survey of public services governance within 6 months from effectivity. Copies to Congress, NEDA, and PCC. [RA 11659, §27, 2022]
§28 — Congressional Oversight (5-Year Review)
A Congressional Oversight Committee (COC) was created to monitor and evaluate implementation every 5 years from effectivity (~2027, 2032, etc.). Composed of: Chairperson of Senate Committee on Public Services + Chairperson of House of Representatives Committee on Economic Affairs + representatives of other relevant congressional committees. [RA 11659, §28, 2022]
§29 — Annual Performance Audit
Administrative agencies must ensure the annual conduct of performance audit by an independent evaluation team to monitor: cost; quality of services; ability to immediately and adequately respond to emergencies. For critical infrastructure and public utilities: audit must include risk assessment, emergency response, and cybersecurity. [RA 11659, §29, 2022]
Failure to pass 3 consecutive annual performance audits = basis for certificate suspension/revocation (§6 amending CA 146 §16(p)). [RA 11659, §29, 2022]
§30 — IRR
All administrative agencies under §3 must, in coordination with NEDA, promulgate IRR within 6 months from effectivity (~October 5, 2022). [RA 11659, §30, 2022]
§32 — Non-Impairment of Existing Agreements
Application of RA 11659 shall not impair vested rights or obligations of contracts. Current and subsisting concession agreements and other similar contracts of juridical persons with government agencies or GOCCs covering activities hereunder classified as public utilities shall remain valid and in force in accordance with the existing terms and conditions until expiration or termination. [RA 11659, §32, 2022]
Energy application: NGCP’s concession agreement (2009–2059) covering transmission operations remains in full force. Similarly, MWSS concession agreements for water distribution remain valid.
§34 — Repealing Clause
Foreign ownership amendments to: RA 6957 (BOT Law); RA 9295 (Domestic Shipping Development Act); RA 9497 (Civil Aviation Authority Act); RA 776 (Civil Aeronautics Act); PD 1112 (Toll Operation Decree); DOTr DO 2018-13 (TNCs as public utilities); RA 7925 (Public Telecommunications Policy Act) — insofar as classifying telecom as public utility. [RA 11659, §34, 2022]
“Nothing herein shall be construed as amending or repealing laws and administrative regulations deregulating or delisting services, industries and/or rates.” — preserves RA 8479 (Downstream Oil Deregulation), EPIRA, and similar deregulation frameworks intact. [RA 11659, §34, 2022]
Full text: Cleaned copy