I’ve heard lawyers mention a kind of maxim which says what isn’t expressly forbidden is allowed. This, in a nutshell, is the approach taken by lawmakers in amending Commonwealth Act No. 146, the Public Service Act of 1936 which basically said public services and public utilities are the same, required certification by the Public Service Commission to operate, and ownership by Filipinos since the public relied on them. The law in turn derived its basis on the 60 percent Filipino ownership on public utilities, our current and previous constitutions since 1935 have all required. This is why the CA 146 has remained relevant, not least because it underscores that public utilities cannot be divorced from the concept of public service. Businesses of course, prefer that profit should be unimpeded by ideas of public service; and that ownership shouldn’t be determined by passports.
What can now be 100 percent foreign-owned: telecommunications, domestic shipping, railways and subways, airlines, expressways and tollways, and airports. What remains restricted to a maximum of 40 percent foreign ownership: distribution and transmission of electricity; petroleum and petroleum products pipeline transmission systems; water pipeline distribution systems and wastewater pipeline systems, including sewerage pipeline systems; seaports; public utility vehicles.
For companies engaged in the operation and management of critical infrastructure, foreign ownership is limited to 50 percent (unless Filipinos enjoy reciprocal rights in that country). It’s the National Security Council that will determine what falls under the definition of critical infrastructure.
The national chameleon, Joey Salceda, grandly proclaimed the amendments an “Oligarchy-busting reform,” ignoring of course, that it’s the oligarchy that has long wanted to liberalize the economy so they can sell out to foreign capital. Sen. Grace Poe for her part claims “Adequate safeguards and security provisions are in place, including giving authority to the President to suspend or prohibit any proposed merger or acquisition transaction, or any investment in a public service that will grant control to a foreigner or a foreign corporation,” which only underscores what even moderate supporters of the law point out as one of its shortcomings: the presidential discretion.
For one thing, what the President can do, he or she can choose not to do; for another, as the retired investment banker Leo Alejandrino bluntly puts it in his blog (and Ferdinand Marcos showed), “Executive discretion is the mother of corruption.” Alejandrino is equally blunt about some so-called safeguards being nothing of the sort, or actually counterproductive. For example, the amended law forbids investments by foreign state-owned enterprises. Administration proponents objected to this, saying it was obviously an anti-China move. But as Alejandrino convincingly argues, this is meaningless when it comes to China where all enterprises, even the biggest and officially non-state-owned, is under the control of Beijing as Alibaba and Tencent proved. On the other hand, the provision forbids sovereign wealth funds such as Singapore’s Temasek from becoming owners.
Or take the law’s reciprocity clause: in the first place, no Filipino company is in a position to compete abroad in industries where, precisely, those industries have been liberalized to welcome foreign capital to make up for a lack of domestic capital. But what it could open up is competition by foreign firms that enjoy subsidies from their own governments: here Alejandrino points to airlines from the Middle East or China.
Rep. Edcel Lagman has pointed out the Constitution can’t be amended by merely amending a law. This is the clincher. The President can reply this is one law he managed to push through: and a Supreme Court molded in his image will surely uphold it.
In previous Congresses, the straightforward path to liberalizing ownership through a simple one-phrase amendment (“as may be provided by law”) was proposed. But a cleverer solution was proposed in 2017: leave the Constitution alone but render its provisions inoperative by amending existing legislation. It finally came to pass earlier this month. It betrays a Marcosian contempt for the law. Prior to 1972, President Marcos’ battling with Meralco had frustratingly found the Public Service Commission established by the Public Service Law to be independent. So, in his first presidential decree, he abolished it, eliminating institutional resistance to him while investing himself with what had formerly been independent powers.