Inactive Public Service Act

When Republic Act (RA) 11659 was signed on March 22 last year by then outgoing President Rodrigo Duterte, it was billed as one of the so-called “landmark” legacy laws during his administration. RA 11659, or the Public Services Act (PSA) of 2022 as amended, was supposed to supplant the original – almost a century old –Commonwealth Act No. 146 that has been effect since Nov. 7, 1936.

The amendments to the PSA aim to remove the 40 percent foreign nationality ownership restriction being imposed on most public service companies under our country’s 1987 Constitution. The new PSA limits the definition of a “public utility” to particular sectors and introducing the concept of “critical infrastructures” which will be subject to certain foreign restriction requirements.

However, the PSA has yet to be fully implemented since its enactment last year.

This is because the implementing rules and regulations (IRR) have yet to come out even as the PSA turns a year old by next month. Former Finance Secretary Margarito Teves revealed this during our Kapihan sa Manila Bay news forum last week when we tackled the latest Charter change (Cha-cha) moves initiated at the 19th Congress. Teves is currently connected with the Forum for Economic Freedom (FEF), one of the advocacy groups supporting Cha-cha to lift the “restrictive economic provisions” under the country’s Constitution.

The FEF also strongly worked for the passage into law of the PSA which they hailed as something that could bring in more domestic and foreign investments in the public utilities and services sectors.

In RA 11659, the National Economic and Development Authority (NEDA) is tasked to lead 18 government agencies mandated to draft and promulgate within six months from effectivity the IRR for this law. The NEDA started “public consultations” on the IRR via Zoom Webinar on June 29 last year. Upon the latest checks done by the FEF with the NEDA, the IRR for the PSA remains in a limbo.

“Also there was a challenge filed at Supreme Court (SC). So it seems, the agencies are not rushing it,” the FEF rued. A consumers group filed at the SC in October last year a petition for certiorari questioning the constitutionality of RA 11659.

So it turns out, the IRR got stalled somewhere between the two branches of government – at the Executive Department and at the Judiciary. Surely, this will not sit well to the principal authors and sponsors of RA 11659 led by Sen. Grace Poe who are still members of the 19th Congress.

Speaking for the FEF, Teves cited the PSA is the best example where a mere legislation done by Congress could suffice without going through a divisive process such as Cha-cha. Many countries such as Singapore have been doing this, Teves noted.

Had the IRR been issued, the PSA could readily implement its provisions, among others: (a) remove foreign equity restrictions on most public service companies, except those considered as ‘public utility’ and ‘critical infrastructure’; (b) limit the scope of ‘public utility’ to public service companies involved in distribution and transmission of electricity, petroleum and petroleum products pipeline transmission systems, water pipeline distribution systems, wastewater and sewerage pipeline systems, seaports, and public utility vehicles (PUVs); and (c) limit the scope of ‘critical infrastructure’ to public service companies that own, use or operate systems and assets that are “vital to the Republic of the Philippines that the incapacity or destruction of such systems or assets would have a detrimental impact on national security, including telecommunications and other such vital services as may be declared by the President of the Philippines.”

The issue of the constitutionality of RA 11659 continues to be the subject of debates even in the academe. In a debate organized by the Ateneo Law School Joaquin Bernas Student Corps, the constitutional conflict of RA 11659 vis-a-vis the exclusion of Transport Network Vehicle Services (TNVS) as a public utility was raised by one of the panelists. As rightly pointed out, retaining other common carriers such as public utility buses and jeepneys but removing TNVS as public utilities is dangerous because the latter would cease to be accountable for the safety of their passengers.

While it is the policy of the State to encourage private enterprise and expand the base of investment in the country with the goal of providing efficient, reliable, and affordable basic services for all, I don’t see how this can be achieved by simply removing TNVS as a public utility.

In that same provision, RA 11659 declares that PUVs refer to internal combustion engine vehicles that carry passengers and/or domestic cargo for a fee, offering services to the public, namely trucks-for-hire, UV express service, public utility buses (PUBs), public utility jeepneys (PUJs), tricycles, filcabs, and taxis.

This provision in the amended PSA will likewise lead to unfair competition. This makes TNVS providers no longer falling within the classification of PUV which is under the regulatory jurisdiction of the Land Transportation Franchising and Regulatory Board (LTFRB). This can further complicate our existing transportation laws because the TNVS providers – also known as Transports Network Companies –will no longer be considered as PUVs.

The government must not abandon its mandate to impose higher safety standards for TNVS providers. Once they’re online and make their services available for booking as public conveyances, the TNVS must be regarded as common carriers.

This issue on the exclusion of the TNVS as a public utility was not among the arguments raised in the SC petitions. RA 11659 provided though a Separability Clause in case SC declares unconstitutional one or more of its provisions, the amended PSA remains valid and effective. Except, if the SC rules for the repeal of RA 11659.

Meanwhile, the Public Service Act of 2022 remains inactive until such time the IRR comes out. Or, is this intentionally withheld to bolster the need for Cha-cha?