House passes bill amending 84-year-old public service law

MANILA — The House of Representatives on Tuesday approved on third and final reading a measure amending the 84-year-old Public Service Act (PSA).

With 136 affirmative votes, 43 negative votes, and one abstention, the chamber passed House Bill No. 78, which seeks to provide a clear statutory definition of a public utility.

Under the bill, public utility refers to a “person that operates, manages, and controls for public use” any of the following: electricity distribution, electricity transmission, and water pipeline distribution or sewerage pipeline system.

The proposed measure seeks to exclude transportation and telecommunications on the list of what is considered public utility.

It also proposes that the National Economic and Development Authority (NEDA) Secretariat, in consultation with the Philippine Competition Commission (PCC), shall recommend to Congress the classification of a public service as a public utility on the basis of the following criteria:

• the person regularly supplies and directly transmits and distributes to the public through a network a commodity or service of public consequence;

• the commodity or service is necessary to the public and a natural monopoly that needs to be regulated when the common good so requires;

• the commodity or service is necessary for the maintenance of life and occupation of residents; and

• the commodity or service is obligated to provide adequate service to the public on demand.

Albay Representative Joey Salceda, the bill’s author, said the legislative reform will significantly contribute to increasing competition, as well as protecting the public interest.

“More competition among providers would result in lower prices and improved quality of basic services in the Philippines creating a more competitive economy towards a better quality of life for all,” Salceda said.

Salceda pointed out that the lack of competition is caused by the ambiguity in the definition of public utility that is used interchangeably with public service under the PSA.

“Basic services that are almost universally in use in the country, such as electricity, water, power, and telecommunications, are currently subject to foreign ownership restrictions. However, there is consumer and business dissatisfaction with these services, which are often characterized by high prices and poor services,” he said.

He said the proposed PSA amendments would create jobs and lay the foundation for stronger economic growth with an expected yield of up to 0.22 percent higher gross domestic product (GDP) growth compared to baseline.

The wages, he said, are also expected to go up by 0.14 percent higher than baseline due to more investments in the country.

“Typically, investments in technology-driven sectors like telecommunications tend to bring costs down for consumers. Large-enough investments attracted by the PSA may bring overall inflation down from baseline. Unemployment is likely to decline by 0.1 percent, following growth in output due to more investments,” he said.

The economist-lawmaker said the bill would lead to “better lives” as he cited a crosscountry study showing that increased foreign direct investments positively impact the quality of life in Association of Southeast Asian Nations (Asean) countries.

“In summary, the PSA amendments bear no constitutional infirmity, respond to changes in the market, will create jobs and boost the economy, will improve services and lower costs for consumers, and will improve the quality of life for the Filipino people, while keeping our interpretation of constitutional restrictions on foreign ownership reasonable and not constraining of growth and development,” he said.

The bill also provides safeguards to protect the national interest like authority of the President to suspend or prohibit any merger, acquisition or investment in a public service in the interest of national security.

The proposed PSA amendments also provides that foreigners can only invest if there is reciprocity with Philippine nationals; fines for substantially increased and indexed to inflation; restrictions on hiring of foreign labor if there are Filipinos competent, willing, and able to perform service; and retention of takeover power. ■