Authority to

Operate as Public
Utility
1. Congressional Franchise
2. Certificate of Public
Convenience (CPC) or
Certificate of Public Convenience
and Necessity (CPCN)
3. Congressional Franchise and
CPC or CPCN
Who has the power to authorize
and control the operation of a
public utility?

1. Congress (Sec. 11, Art. XII of the

Constitution)
2. Administrative Agencies (delegated
power of Congress)
3. LGU’s - Cities and municipalities [Sec.
447(3)(vi) and (vii), Sec. 458(3)(vi) and (vii),
R.A. 7160 The Local Government Code]
The Public Service Commission created
under the Public Service Act (C.A. No. 146,
as amended) was abolished under P.D. No. 1
and other laws and issuances. It was
replaced by the following government
agencies:
Civil Aeronautics Board (CAB)
Civil Aviation Authority of the Philippines (CAAP) formerly the Air Transportation Office
Clark Development Corporation (CDC)
Energy Regulatory Commission (ERC)
Land Transportation Franchising and Regulatory Board (LTFRB)
Land Transportation Office (LTO)
Local Government Units (LGUs)
Local Water Utilities Administration (LWUA)
Manila International Airport Authority (MIAA)
Maritime Industry Authority (MARINA)
National Electrification Administration (NEA)
National Telecommunications Commission (NTC)
National Water Resources Board (NWRB)
Philippine Coast Guard (PCG)
Philippine Ports Authority (PPA)
Subic Bay Metropolitan Authority (SBMA)
Toll Regulatory Board (TRB)
FRANCHISE
A legislative franchise is a grant or
privilege to operate a public utility emanating
from the sovereign power of the State and owing
its existence to a grant, is subject to regulation by
the State itself by virtue of its police power
through its administrative agencies.
 CERTIFICATE OF PUBLIC
CONVENIENCE (CPC)
- issued whenever the Public Service Commission finds that the
operation of the public service proposed and the authorization to
do business will promote the public interests in a proper and
suitable manner, for which a municipal or legislative franchise
is NOT necessary (Public Service Act, Sec. 16 [a]).

- is an authorization issued for the operation of public services

for which no franchise, either municipal or legislative, is
required by law. It constitutes neither a franchise nor a contract,
confers no property right, and is a mere license or privilege
(Pangasinan Transportation Co., Inc. vs. Public Service
Commission, G.R. No.47065, June 26,1940, 70 Phil. 221)
CERTIFICATE OF PUBLIC
CONVENIENCE AND NECESSITY
(CPCN)
- is issued upon approval by the Public Service
Commission of any franchise or privilege granted by
any political subdivision of the Philippines when, in the
judgment of the Commission, such franchise or privilege
will properly conserve the public interests, and the
Commission shall in so approving impose such
conditions as to the construction, equipment,
maintenance, service, or operation as the public interests
and convenience may reasonably require. (Public
Service Act, Sec. 16 [b]).

A CPCN is an authorization issued by the appropriate

government agency for the operation of public services
for which a franchise is required by law.
 The use of the word “necessity,” in conjunction
with “public convenience” in a certificate of
authorization to a public service entity to operate, does
not in any way modify the nature of such certification, or
the requirements for the issuance of the same. It is the
law which determines the requisites for the issuance of
such certification, and not the title indicating the
certificate (Philippine Airlines v. Civil Aeronautics
Board, No. 119528, March 26, 1997, 270 SCRA 539).
 The existence or non-existence of public
convenience and necessity is therefore a question of fact
that must be established by evidence, real and/or
testimonial; empirical data; statistics and such other means
necessary, in a public hearing conducted for that purpose.
The object and purpose of such procedure, among other
things, is to look out for, and protect, the interests of both
the public and the existing transport operators (Kilusang
Mayo Uno Labor Center v. Garcia, G.R. No 115381,
December 3, 1994).
BASIC REQUIREMENTS
(Sec.16a, C.A. No. 146)
1. The applicant must be a citizen of the Philippines, or a
corporation or co-partnership, association or joint stock company
constituted and organized under the laws of the Philippines, 60 per
centum at least of the stock or paid-up capital of which belong
entirely to citizens of the Philippines;
2. The applicant must be financially capable of undertaking the
proposed service and meeting responsibilities incident to its
operations; and
3. The applicant must prove that the operation of the public
service proposed and the authorization to do business will promote
the public interest in a proper and suitable manner.
Note: Still subject to specific requirements of the applicable
special law or regulation
 CONDITIONS FOR THE ISSUANCE OF CPC OR
CPCN
(Sec.15 par.2, C.A. No. 146)

1. That the service can be acquired by the Republic of the Philippines or by

any instrumentality thereof upon payment of the cost price of its useful
equipment, less reasonable depreciation;

2. That the certificate shall be valid only for a definite period of time; and

3. That the violation of any of these conditions shall produce the immediate
cancellation of the certificate without the necessity of any express action
on the part of the Commission.

`
NATURE OF A CPC/CPCN
- a mere license or privilege
- a private property
RULES AND POLICIES IN
GRANTING A CPC/ CPCN
1. Prior Operator Rule
2. Prior Applicant Rule
3. Third Operator Rule
4. Protection of Investment Rule
PROVISIONAL AUTHORITY
◦ refers to an authority given to an entity qualified to
operate a public utility for a limited period during
the pendency of its application for, or before the
issuance of its CPC
◦ It has a general scope because it is akin to a
provisional CPC
◦ It is not the equivalent of Temporary Permits
TEMPORARY PERMITS
◦ refers to a document containing the call sign,
authorized power, frequency/channel, class
station, hours of operation, points of
communication and equipment particulars
granted to an authorized public utility

◦ more specific than a P.A.

◦ contains details and specifications under

which a public utility should operate pursuant
to a previously updated P.A.
INSTANCES WHEN A CERTIFICATE
OF PUBLIC CONVENIENCE IS NOT
REQUIRED
(Sec.14, C.A. No. 146)
1. Warehouses;
2. Vehicles drawn by animals and bancas moved by oar or
sail, tugboats and lighters;
3. Airships within the Philippines except as regards the fixing
of their maximum rates on freight and passengers;
4. Radio companies except with respect to
the fixing of rates;
5. Public services owned or operated by any
instrumentality of the National Government or by any
government-owned or controlled corporation, except with
respect to the fixing of rates. (As amended by Com. Act 454,
R.A. No.2031, and R.A. No.2677)