Members of the so-called Magnificent 7 in the House of Representatives on Tuesday vowed to challenge the constitutionality of House Bill (HB) 5828, which sets the statutory definition of public utilities, once the priority measure is enacted into law.

The bill already hurdled second reading on Tuesday night. The lower chamber is expected to approve the measure on third and final reading next week.

In a news conference, Rep. Edcel C. Lagman of of the First District of Albay said if the lower chamber wants to define a public utility, it should amend the economic provisions of the Constitution, either by a constituent assembly or Constitutional convention.

“It [HB 5828] is actually a subterfuge to allow foreigners to own public-utility enterprises without complying with the citizenship requirement imposed by the Constitution,” he said.

“[The passage of the bill]  is prioritized by the House leadership and they have the supermajority.

“I don’t know whether it will pass the Senate, but once it becomes a law, then it is right to be challenged before the High Court,” he said.

Under the 1987 Constitution,  public utilities must be owned by Filipino citizens or by corporations, partnerships or associations, where not less than 60 percent of the capital stock is owned by Filipino citizens.

Lagman said no less than House Committee on Economic Affairs Chairman Arthur Yap of Bohol has admitted during the deliberations that once House Bill (HB) 5828 is enacted into law, foreigners will be allowed to own public utilities.

“In fact, HB 5828 has deleted the requisite Filipino-ownership requirement of public utilities under the Public Service Act, which is identical with Section 11 of Article XII of the Constitution,” he added.

In its definition of a public utility, Lagman said HB 5828 deliberately deleted the concept of ownership and limited the definition to the operation, management and control of public utilities, even if there can be no operation, management or control without an owner.

He added that the bill also deletes from the enumeration of public utilities traditional types, like common carriers and telecommunications companies, which are presently operating with controlling Filipino ownership.

“Another problem with the bill is that traditional public utilities have been deleted from the enumeration of public utilities. Since time immemorial, common carriers were considered as public utilities, and also telecommunications companies were also excluded. If these companies are not included in the enumeration of public utilities, again they can be owned and operated by foreigners,”  the lawmaker said.

In a separate interview, Party-list Rep. Tom Villarin of Akbayan said the bill , if enacted into law, will be unconstitutional because there is a restriction in the Constitution providing limitation to foreign ownership.

“Their [authors of the measures] basis  [is that the government]  does not allow competition coming from foreign companies . . .because of the restriction in foreign ownership. But  the problem is they are opening up a public utility for foreign companies. If they allow this, local companies can be sold eventually to foreign corporations; that’s a big issue,” he added.

Under HB 5828, public utility refers to a person that operates, manages and control for public use distribution of electricity as defined by Electric Power Industry Reform Act (Epira), transmission of electricity as defined by Epira, and water pipeline distribution system or sewerage pipeline system as defined by the act creating the Metropolitan Waterworks and Sewerage System.

The Epira defines distribution of electricity as the conveyance of electric power by a distribution utility through its distribution system, while transmission of electricity is defined as the conveyance of electricity through the high-voltage backbone system.

The bill said no other person, business or service shall be deemed a public utility under the measure unless otherwise provided by law.

The measure said the National Economic and Development Authority secretariat, with the Philippine Competition Commission, shall recommend to Congress the classification of a person, business or service as a public utility.

It said with the exception of those enumerated in the act, no public service shall operate in the Philippines without possessing a valid and subsisting franchise, certificate, or any other appropriate form of authorization for the operation of a public service as the case may be, to the effect that the operation of said service and the authorization to do business will promote the public interests in a proper and suitable manner.