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The Manila Times
Rep. Edcel C. Lagman’s
Weekly Thursday Column

AS we usher in 2022, the country faces an improvident and an unconstitutional legislation, which is going through a bicameral conference committee, the final stage of the legislative process.

The approval by the House of Representatives and the Senate of their separate but essentially identical bills allowing 100-percent foreign ownership of traditional public utilities which have been reclassified as “public service”, like transportation and telecommunications, is ominous for 2022 and the years beyond once enacted.

The constitutional protection requiring at least 60-percent Filipino corporate ownership and 100-percent Filipino individual ownership of basic and strategic industries has been an enduring safeguard for Filipino entrepreneurs and the nation’s posterity for about a century since the 1935 Constitution. This patriotic provision is restated in the 1972 and 1987 Constitutions.

The present provision under Sec. 11 of Art. XII of the 1987 Constitution provides: “No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty per centum of whose capital is owned by such citizens  x x x  The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association must be citizens of the Philippines.”

The rationale of reserving to Filipino citizens control over public utilities is highlighted by the Supreme Court in Express Investment v. Bayantel: “to conserve and develop our patrimony” and ensure “a self-reliant and independent national economy effectively controlled by Filipinos”.

While luring foreign investments to beef up economic development is generally beneficial, it must not be undertaken to the extent of abandoning the nationalistic provisions of the Constitution which secures the patrimony for generations of future Filipinos. Our posterity and the protection of Filipino entrepreneurs must not be sacrificed at the altar of the gods of foreign capital.

The authors of the two bills pontificated that the enactment of the New Public Service Act will allow foreign investments to supplement Filipino capital. On the contrary, the complete alienization of hitherto public utilities will supplant, not supplement, Filipino capital.

It must be recalled that South Korea and Taiwan became newly industrialized economies without dependence on the infusion of foreign direct investments (FDIs). Indeed, there must be no inordinate idolatry to the entry of FDIs.

The common agenda of both House Bill 78 and Senate Bill 2094 purportedly amending the “Public Service Act” (PSA) is to exempt from the constitutional requirement of at least 60 percent Filipino capitalization, ownership, management, and control of most public utilities by the perfidious expedience of reclassifying them as “public service” enterprises which can be 100 precent foreign-controlled and operated once the “New Public Service Act” is enacted.

As proposed, public utilities are redefined by limiting the same to distribution of electricity, transmission of electricity, water pipeline distribution, and sewerage pipeline systems. All other traditional public utilities not included in the enumeration are deemed to be public services, including common carriers (transportation conveyances and facilities) and telecommunications (including radio, television, and mass media), which will be exempt from the requisite percentage Filipino capital. With respect to mass media, it must be underscored that the Constitution requires no less than 100 percent Filipino ownership.

This is a malevolent subterfuge of a feigned dichotomy between “public utility” and “public service” and a pretended amendment of the PSA instead of the Constitution, in reality. There is no difference between the two because public service is the very essence of a public utility. No less than the Supreme Court has consistently held that “public utility” is the same or synonymous to “public service” and the two are interchangeable.

In Republic v. Manila Electric Company, the high court held that “a public utility is engaged in public service - providing basic commodities and services indispensable to the interest of the general public.” In Napocor v. C.A., it was ruled that the term public utility “implies public use and service”. Likewise, in JG Summit Holdings v. C.A., it was pronounced that “a public utility provides a service or facility needed for present day living which cannot be denied to anyone who is willing to pay for it.” Verily, public service is the earmark of public utility.

Consequently, there is no sound reason or legal justification in making the subject distinction to justify defiance of the constitutional mandate requiring a minimum percentage ratio of Filipino ownership of public utilities. Even the Constitution does not make such distinction and does not authorize the Congress to legislate a distinction.

The other subterfuge is the pretense of amending the PSA when it is the Constitution itself which is erroneously intended to be amended by a mere statute. It must be underscored that Sec. 16(a) of the PSA, which is sought to be deleted, incorporated almost verbatim Sec. 8 of Art. XIV of the 1935 Constitution (with the inclusion of  parity to American citizens and companies). This is now Sec. 11 of Art. XII of the 1987 Constitution without the parity provision.

No statue can amend the Constitution. It can be amended only through a constitutional amendment proposed by a constitutional assembly, constitutional convention, or by people’s initiative under Art. XVII of the Constitution.

In fact, there are many pending resolutions seeking the amendment of the economic provisions of the Constitution, including Sec. 11 of Art. XII, through a constituent assembly, not by an act of the Congress as a legislative body. However, even by a constitutional amendment, the erosion of the citizenship requirement in sensitive public utilities must not be pursued.

There is no clamor from major foreign investors for dismantling the protective provisions of the Constitution. The entry of foreign investments is assured, without any constitutional amendment, by improving the ease of doing business, assuring predictability of government policies, adequate infrastructure, affordable power cost, universally comparable internet speed, and elimination or drastic reduction of official corruption.

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