I. General Discussion Flashcards
What is a public utility?
A public utility provides a service and use of its facilities that are available to the general public which may demand as a legal right for its services.
What are considered as public utilities under Sec. 13 (d) CA 146 as amended by RA 11659?
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Sec. 13 (d) CA No. 146 as amended by RA 11659 (“Public Service Act”). (d) Public Utility. — Public utility refers to a public service that operates, manages or controls for public use any of the following:
(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, including sewerage pipeline systems;
(5) Seaports; and
(6) Public Utility Vehicles.
All concessionaires, joint ventures and other similar entities that wholly operate, manage or control for public use the sectors above are public utilities.
Nothing in this Act shall be interpreted as a requirement for legislative franchise where the law does not require any. No other person shall be deemed a public utility unless otherwise subsequently provided by law.
Doctrine: Munn v. Illinois (1876)
Under common law, when private property is “affected with a public interest, it ceases to be juris privati only” (Lard Hale), and in case of dedication to such a purpose, the owners cannot take arbitrary excessive duties, but the duties must be reasonable – there is a need to control pricing (make it reasonable and not excessive).
When one devotes his property to a use in which the public has an interest, he, in effect, grants to the public an interest in that use, and must submit to be controlled by the public for the common good, to the extent of the interest he has thus created.
Is the scope of clientele a determining factor on whether a business is a public utility?
Doctrine: Luzon Stevedoring v. PSC (1953)
No. Public utility is not determined by the number of people actually served; nor does the mere fact that service is rendered only under contract prevent a company from being a public utility.
To be a public service or public utility, it is only necessary that it must in some way be impressed with a public interest – whether or not the service rendered by it is of a public character and of public consequence and concern.
A public utility may not evade control and supervision of its operation by the government by selecting its customers under the guise of private transactions.
[Luzon Stevedoring v. PSC, 1953]
What is the constitutional basis or rationale for the regulation of public utilities?
Sec. 6, Art. XII, Constitution “The use of property bears a social function, and all economic agents shall contribute to the common good. Individuals and private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish, and operate economic enterprises,** subject to the duty of the State to promote distributive justice and to intervene when the common good so demands**.”
According to jurisprudence, what is the basis for the regulation of public utilities?
Doctrine: Republic v. Meralco (2007)
The regulation of rates to be charged by public utilities is founded upon the police powers of the State and statutes prescribing rules for the control and regulation of public utilities are a valid exercise thereof. [Republic v. Meralco, 2007]
Who are the persons or entities tasked with regulation?
- PPA for MICT, under EO No. 30 (under EO No. 30, PPA may contract with private entities to operate MICT without need for franchise of the private entity) [Albano v. Reyes, 1989];
- LTFRB for regulating provincial bus operators (and other PUVs) [KMU v. Garcia, 1994];
- NTC for CATV systems (however LGUs may regulated when it comes to use of public streets, right of way, etc.) [Batangas CATV v. CA, 2004]
- COMELEC during election (however only limited to franchise or permit to operate the public utility; does not extend to the ownership) [1-UTAK v. COMELEC, 2015];
- LGUs have authority to regulate traffice conditions in its locality [Bagong Reporma v. Mandaluyong, 2020]
What are the successor agencies of the Public Service Commission?
- (a) Civil Aeronautics Board (CAB);
- (b) Civil Aviation Authority of the Philippines (CAAP);
- (c) Department of Energy (DOE);
- (d) Department of Environment and Natural Resources (DENR);
- (e) DICT;
- (f) Department of Transportation (DOTr);
- (g) Energy Regulatory Commission (ERC);
- (h) Land Transportation Franchising and Regulatory Board (LTFRB);
- (i) Land Transportation Office (LTO);
- (j) Local Water Utilities Administration (LWUA);
- (k) Maritime Industry Authority (MARINA);
- (l) Metropolitan Waterworks and Sewerage System (MWSS);
- (m) National Telecommunications Commission (NTC);
- (n) National Water Resources Board (NWRB);
- (o) Philippine National Railways (PNR);
- (p) Philippine Ports Authority (PPA); and
- (q) Toll Regulatory Board (TRB). [Sec. 3, R.A. 11659]
When is an entity considered a public utility?
- When one devotes his property to a use, “in which the public has an interest,” he in effect “grants to the public an interest in that use” and must submit to be controlled for the common good. [Nebbia v. New York, 1934 (US Case)];
- The criterion by which to judge of the character of the use is whether the public may enjoy it by right or only by permission. If the use is merely optional with the owners, or the public benefit is merely incidental, it is not a public use, authorizing the exercise of the jurisdiction of the public utility commission. [Iloilo Ice and Cold Storage Co. v. Public Utility Board, 1923];
- When the corporation (power plant) renders service to the public. The application for a municipal or legislative franchise is only required when a corporation desires a franchise to construct and maintain an electric line or power plant and line for business purposes or to render service to the general public at such rate of compensation as may be approved by the government. [Teresa Electric and Power Co., Inc. v. PSC, 1967];
- To constitute a public utility, the facility must be necessary for the maintenance of life and occupation of the residents. The term “public utility” implies public use and service to the public. The principal determinative characteristic of a public utility is that of service to, or readiness to serve, an indefinite public or portion of the public as such which has a legal right to demand and receive its services or commodities. [JG Summit Holdings, Inc. v. CA, 2003];
- Public Utility – a business or service engaged in regularly supplying the public with some commodity or service of public consequence such as electricity, gas, water, transportation, telephone, or telegraph service. (JG Summit Holdings v. CA); Determinative characteristic – service to, or readiness to serve, an indefinite public or portion of the public as such which has a legal right to demand and receive its services or commodities. (However, even if public utility, business may still not be exempt from paying taxes when its earnings do not redound to the benefit of the government, such as when earnings are for its maintenance) [CIR v. SOJ, 2021].
Under the concessionaire agreement with MWSS, are the Manila Water Company, Inc. and the Maynilad Water Services, Inc. (the concessionaires) considered public utilities?
In determining whether the concessionaires are public utilities or mere agents of MWSS, there must be an examination of the intention of MWSS and the concessionaires at the time of the bidding process, negotiation, and execution of the Concession Agreements. Certainly, this matter is a factual issue requiring presentation and evaluation of evidence such as bidding documents, memoranda, and the testimonies of the participants of the bidding and contract negotiations.
The intent of MWSS and the concessionaires at the time of the bidding process, negotiation, and execution of the Concession Agreements is for the MWSS to remain as a public utility providing waterworks and sewerage services, while the concessionaires are its agents and contractors, consistent with the framework of the concession arrangements. [However, the current law provides that the concessionaires are public utilities]
[Freedom from Debt Coalition v. MWSS, 2007]
What is the criteria for the President to recommend to Congress the classification of a public service as a public utilitiy?
(e) Upon the recommendation of the National Economic and Development Authority (NEDA), the President may recommend to Congress the classification of a public service as a public utility on the basis of the following criteria:
(1) The person or juridical entity regularly supplies and transmits and distributes to the public through a network a commodity or service of public consequence;
(2) The commodity or service is a natural monopoly that needs to be regulated when the common good so requires. For this purpose, natural monopoly exists when the market demand for a commodity or service can be supplied by a single entity at a lower cost than by two or more entities;
(3) The commodity or service is necessary for the maintenance of life and occupation of the public; and
(4) The commodity or service is obligated to provide adequate service to the public on demand.
Is power generation considered a public utility?
No. According to Sec. 6 of R.A. No. 9136,
“Any law to the contrary notwithstanding, power generation shall not be considered a public utility operation. For this purpose, any person or entity engaged or which shall engage in power generation and supply of electricity shall not be required to secure a national franchise.”
Is a national franchise required fro the transmission sector?
No. It is only subject to the rate-making powers of the ERC.
SECTION 7. Transmission Sector. — The transmission of electric power shall be a regulated common electricity carrier business, subject to the ratemaking powers of the ERC.
R.A. No. 9136
Is a national franchise required for the distribution sector?
Yes. SECTION 22. Distribution Sector. — The distribution of electricity to end-users shall be a regulated common carrier business requiring a national franchise.
R.A. No. 9136
What is the nature of a Supply Sector business?
Transmission of Electricity
SECTION 29. Supply Sector. — The supply sector is a business affected with public interest. Except for distribution utilities and electric cooperatives with respect to their existing franchise areas, all suppliers of electricity to the contestable market shall require a** license from the ERC**.
