House panel approves amendment to Public Service Act
By CJ Juntereal
Published Aug 28, 2019 05:18 pm
By Ben Rosario
Despite strong doubts over its constitutionality, the bill proposing to amend the Public Service Act of 1936 was approved on Wednesday by the House Committee on Economic Affairs and will now advance to the plenary.
Linemen fix an electric post along Port Area on Thursday, April 25, 2019. Red alert raised in Luzon grid for the fourth straight day. (JANSEN ROMERO / MANILA BULLETIN)
Chaired by AAMBIS-OWA Rep. Sharon Garin, the panel approved the bill that seeks to provide a definition of public utility.
Deputy Speaker and North Cotabato Rep. Ferdinand Hernandez aired strong reservations on the agreed definition of public utility as he warned that this runs counter to the Constitutional provisions that limit the operation of a public utility to firms and corporations with 60 percent Filipino ownership.
The approved-consolidated bill provides that “public utility” refers to a person that operates, manages and controls for public use any of the following: a clear definition of public utility that covers three sectors: distribution of electricity system, transmission of electricity system and water pipeline distribution system or sewerage pipeline system.
“If this definition is to be adopted, it may then be argued that businesses impressed with public interest - and which are essentially public utilities - other than those enumerated in the definition, such as common carriers and telecommunication companies, will no longer be considered within the ambit of the “60-40 rule” enshrined in our Constitution,” said Hernandez.
Grin invoked House Rule Section 48 or the one day hearing only rule to fast track approval of the bill by the economic affairs panel.
Such action can be resorted to if the pending bill under committee study has already passed plenary approval in the previous Congress.
The consolidated bill is listed as a priority legislative measure of the Duterte administration.
Nevertheless, Garin stressed that further deliberation of the bill may be entertained during the plenary proceedings, adding that amendments may also be introduced.
"The operation of public utlity is subject to 60-40 rule of the Constitution. However the charter does not define . Currently, our definition of public utility is the PSA and other jurisprudence issued by the Supreme Court. So now we're putting definition of the public utility," she said.
Albay Rep. Joey Salceda, senior vice chairman of the economic affairs committee and one of the authors of the bill, said the Public Service Act is a law that was crafted in 1936 to govern public services in the Philippines.
However, he said consumers often experience high prices and poor quality of basic services in the Philippines, because only a few local players or oligarchs effectively control the market.
"Competition and foreign investment are inhibited, because limitations that should only apply to the operation of a public utility are usually also applied to all public services. This situation is caused by the ambiguity in the definition of public utility that is often used interchangeably with public service under Commonwealth Act No. 146 or the Public Service Act," he said.
The lawmaker said the key to fix this problem is to develop a clear statutory definition of a public utility by amending the Public Service Act.
“This bill proposes to further amend the Public Service Act to effect the necessary changes in the antiquated provisions of the law to increase its relevance to contemporary concerns, in the interest of providing the general public with more choices, better services, and lower prices,” said Salceda.
He explained that the legislative proposal also prescribes a 12 percent cap on rate of return and prohibits income tax as operating expense for rate-determination purposes for public services, including public utilities, consistent with administrative and judicial pronouncements..
Hernandez countered that if the objective of the bill is to relax restrictions on foreign ownership of public utilities and certain industries, “then the best way to go about it is to amend the economic provisions of the Constitution.”
Linemen fix an electric post along Port Area on Thursday, April 25, 2019. Red alert raised in Luzon grid for the fourth straight day. (JANSEN ROMERO / MANILA BULLETIN)
Chaired by AAMBIS-OWA Rep. Sharon Garin, the panel approved the bill that seeks to provide a definition of public utility.
Deputy Speaker and North Cotabato Rep. Ferdinand Hernandez aired strong reservations on the agreed definition of public utility as he warned that this runs counter to the Constitutional provisions that limit the operation of a public utility to firms and corporations with 60 percent Filipino ownership.
The approved-consolidated bill provides that “public utility” refers to a person that operates, manages and controls for public use any of the following: a clear definition of public utility that covers three sectors: distribution of electricity system, transmission of electricity system and water pipeline distribution system or sewerage pipeline system.
“If this definition is to be adopted, it may then be argued that businesses impressed with public interest - and which are essentially public utilities - other than those enumerated in the definition, such as common carriers and telecommunication companies, will no longer be considered within the ambit of the “60-40 rule” enshrined in our Constitution,” said Hernandez.
Grin invoked House Rule Section 48 or the one day hearing only rule to fast track approval of the bill by the economic affairs panel.
Such action can be resorted to if the pending bill under committee study has already passed plenary approval in the previous Congress.
The consolidated bill is listed as a priority legislative measure of the Duterte administration.
Nevertheless, Garin stressed that further deliberation of the bill may be entertained during the plenary proceedings, adding that amendments may also be introduced.
"The operation of public utlity is subject to 60-40 rule of the Constitution. However the charter does not define . Currently, our definition of public utility is the PSA and other jurisprudence issued by the Supreme Court. So now we're putting definition of the public utility," she said.
Albay Rep. Joey Salceda, senior vice chairman of the economic affairs committee and one of the authors of the bill, said the Public Service Act is a law that was crafted in 1936 to govern public services in the Philippines.
However, he said consumers often experience high prices and poor quality of basic services in the Philippines, because only a few local players or oligarchs effectively control the market.
"Competition and foreign investment are inhibited, because limitations that should only apply to the operation of a public utility are usually also applied to all public services. This situation is caused by the ambiguity in the definition of public utility that is often used interchangeably with public service under Commonwealth Act No. 146 or the Public Service Act," he said.
The lawmaker said the key to fix this problem is to develop a clear statutory definition of a public utility by amending the Public Service Act.
“This bill proposes to further amend the Public Service Act to effect the necessary changes in the antiquated provisions of the law to increase its relevance to contemporary concerns, in the interest of providing the general public with more choices, better services, and lower prices,” said Salceda.
He explained that the legislative proposal also prescribes a 12 percent cap on rate of return and prohibits income tax as operating expense for rate-determination purposes for public services, including public utilities, consistent with administrative and judicial pronouncements..
Hernandez countered that if the objective of the bill is to relax restrictions on foreign ownership of public utilities and certain industries, “then the best way to go about it is to amend the economic provisions of the Constitution.”