Giving a new definition to a public utility to skirt the foreign equity requirement under the Constitution may harm Filipino investors.
The new law, Republic Act 11659 amending Commonwealth Act No. 146 or the Public Service Act, aims to lure foreign investments by lifting equity restrictions in public utilities. But despite its noble objectives, RA 11659 is not a guaranty that the Philippine economy and key utility services will improve.
The law allows 100-percent ownership of public services in the country, effectively removing the equity restrictions on key utilities, which include, among others, any common carrier, wire or wireless broadcasting stations, shipyard, water supply and power, telecommunications system, wharf or dock, and even public market.
A couple of private petitioners in the High Tribunal has already raised questions on the constitutionality of RA 11659 for good reason.
Louis “Barok” Biraogo, in a petition field against the Department of Transportation, the Civil Aviation Authority of the Philippines and the National Telecommunications Commission, argued that Section 4 and 34 of RA 11659 were unconstitutional and, thus, void and invalid.
The United Filipino Consumers and Commuters, represented by its president Rodolfo Javellana Jr., filed a separate petition, raising the constitutional infirmities of RA 11659, specifically the legislative redefinition of a public utility as previously defined under Article 17 of the 1987 Constitution.
The petition noted that the law signed towards the end of President Duterte’s term posed threats to the national economy and national security.
While there is no argument that the quality of services that Filipinos get from our current public service providers is far from desirable, simply legislating a law to redefine a long-established definition of a public utility purposely to lift the Constitutional foreign equity requirement might not be the best route to take.
The surest way to remove the foreign equity restriction is to amend the Constitution, instead of providing a different interpretation of on the definition of public utilities. We are all aware that the Constitution cannot easily be amended. No ordinary law, such as RA 11659, can provide a long-term guarantee that this policy will be implemented, and not rejected, even by the present administration.
Prominent members of the Marcos administration and the first family have openly opposed the passage of RA 11659. Justice Secretary Jesus Crispin “Boying” Remulla, who was a congressman when it was approved by Congress, voted against its approval. Presidential cousin, Ilocos Norte 2nd District Rep. Angelo Marcos-Barba, also voted against RA 11659.
With the country’s reputation of having policies that can change overnight depending on the prevailing political climate, there is no real assurance foreign investors will continue operating a fully-owned public utility.
Energy Secretary Raphael “Popo” Lotilla is forthright in admitting that while his department is keen on pushing for renewable energy projects that are fully owned by foreign companies, he is concerned that it could harm Filipino investors.
He says “only when there is no Filipino investor in that same area can we entertain foreigners.” Mr. Lotilla’s position contradicts the clear intent of the RA 11659, which is to open full foreign ownership to public utilities as classified without exception. But his statement is an admission that the law is a threat to Filipino businesses.
Former Senator Ralph Recto summed it up when he forwarded his no vote on Senate Bill 2094 on Dec. 15. 2021.
“There is no debate that there have been developments in commerce and civilization, which have rendered parts of the PSA obsolete. … But while the law’s many provisions have become outdated, some principles which underpin them remain valid: the superiority of public interest over private profit, to cite one example,” says Recto. “I still do maintain that there are industries which should remain majority-owned by Filipinos, as they are too vital to our national life that they cannot be totally relinquished without triggering national security concerns.”