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Justice Antonio T. Carpio (Ret.)

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Foreign ownership of public utilities

There are three ways to amend the Constitution, as specifically provided in the Constitution itself: convening Congress into a constituent assembly, calling for a constitutional convention, and holding a people’s initiative. In all three, the proposed amendment becomes effective only if ratified by the people in a plebiscite.

Ingeniously, the House of Representatives has found a fourth way, not specified in the Constitution, to amend the Constitution. The House intends to redefine constitutional terms though an ordinary law, and in the process even do away with ratification by the people in amending the Constitution.

The House approved last Tuesday, March 10, on third and final reading House Bill No. 78 which redefines the term “public utility” in the Constitution by limiting the term only to power transmission and distribution, water distribution, and sewage collection. All other businesses previously understood in constitutional law to constitute public utilities, like telecommunications and transportation, will no longer be public utilities. Consequently, the 60:40 ownership requirement under the Constitution in favor of Philippine citizens will no longer apply to telecommunications and transportation. These businesses can be 100-percent foreign-owned under House Bill No. 78.

It is abundantly and categorically clear in the deliberations of the Constitutional Commission that the term “public utility” includes telecommunications and transportation. The following are just some of the statements of the Commissioners declaring in their deliberations that telecommunications and transportation are public utilities.

THE PRESIDENT: xxx In other words, there was an understanding among the Commissioners that commercial telecommunications was included in the term “public utilities” xxx. So, there is no question, therefore, Commissioner Suarez, that commercial telecommunications was considered as part of “public utilities” when the Commission decided on the equity ratio 60:40. xxx.

MR. ROMULO: xxx Secondly, the minutes will show that we really discussed nothing else except telecommunications in Section 15 between myself, Commissioner Rosario Braid and Commissioner Davide. xxx.

MR. NOLLEDO: xxx In my answer to the interpellation of Commissioner Regalado, I said the term “public utility,” which is almost synonymous with public service, shall include transportation, electric service and telecommunications. xxx

THE PRESIDENT: xxx If the Members will recall, the Chair was called upon to rule actually on two issues. First, whether the subject of “commercial telecommunications” was included in the discussion of the section on public utilities in the Article on National Economy and Patrimony. So I had to refer to the transcripts of the proceedings on that particular day. This appears to be August 23, and I stated and I ruled that the subject of “commercial telecommunications” was, in fact, included in the deliberations and in the decision of the body with respect to the issue of ownership which is the 60-40 percent equity ratio. xxx

MR. REGALADO: xxx My researches show that as early as 1913 and even up to now, commercial telecommunications have always been considered as public utilities. Starting with RA 2307 in 1913, then to RA 3108 in 1917, and then the Public Service Act—Commonwealth Act No. 146—in 1936, and Presidential Decree No. 1 in 1972, the term “public utility” always included telecommunications establishments. xxx the records will show, even from the Journals, that when Section 15 of the Article on National Economy and Patrimony was discussed, the main subject and that is the only subject debated upon between Commissioners Romulo, Rosario Braid and Davide, was precisely the telecommunications industry. And the vote there was in favor of a 60-40 percent equity.

MR. NOLLEDO: I do not disagree with Commissioner Regalado that commercial telecommunications is a public utility. xxx.

There is no doubt whatsoever that the framers of our Constitution included telecommunications and transportation in the term “public utility.”

Now, if Congress succeeds in amending the Constitution through a redefinition of constitutional terms, then the three modes of amending the Constitution will become largely useless, and the people’s ratification will no longer be needed in amending the Constitution.

Congress can simply enact ordinary laws redefining the constitutional terms “land” to exclude reclaimed land, “mass media” to exclude online newspapers, “educational institutions” to exclude correspondence schools. Like the term “public utility,” these constitutional terms are not defined in the Constitution. In fact, the Constitution does not contain a definition of terms.

The ultimate interpreter of the Constitution will no longer be the Supreme Court but Congress.

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Designed and developed by Sam Galope.