The Anti-conflict of Interest in Public Utilities Act

TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES 25 JUL -7 A9:03 First Regular Session ) SENATE 157 Senate Bill No. Introduced by Senator Erwin Tulfo AN ACT PROHIBITING ELECTED PUBLIC OFFICIALS AND THEIR IMMEDIATE FAMILY MEMBERS FROM OWNING, CONTROLLING, OR HAVING FINANCIAL OR MATERIAL INTEREST IN PUBLIC UTILITIES DURING THEIR TERM OF OFFICE, PROVIDING PENALTIES THEREFOR, AND FOR OTHER PURPOSES EXPLANATORY NOTE

Section 1, Article XI of the 1987 Constitution declares that

"Public office is a public trust." Those entrusted with power should not leverage such authority for private gain, much less when such gain comes at the expense of the public interest. Public utilities, being providers of essential services, are particularly susceptible to abuse when those in power have pecuniary stakes in them. This situation risks regulatory capture, where public officials may unduly influence regulatory actions for personal benefit, leading to compromised policies, preferential treatment, and ultimately, public harm. This measure supplements Republic Act No. 6713, otherwise known as the "Code of Conduct and Ethical Standards for Public Officials and Employees," Republic Act No. 3019, otherwise known as the "Anti-Graft and Corrupt Practices Act," and other existing laws by establishing a categorical prohibition on elected public officials and

their immediate family members from owning, controlling, or having financial or material interest in any public utility during the official's term of office. It also mandates divestment of existing interests and provides for penalties in case of violation. Strengthening the constitutional principle of accountability, this bill ensures that public duty remains distinct from private interest, especially in sectors that directly affect the welfare of Filipinos. In view of the foregoing, approval of this bill is earnestly sought.

TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES JUL -7 A9:03 First Regular Session SENATE Senate Bill No. 157 Introduced by Senator Erwin Tulfo AN ACT PROHIBITING ELECTED PUBLIC OFFICIALS AND THEIR IMMEDIATE FAMILY MEMBERS FROM OWNING, CONTROLLING, OR HAVING FINANCIAL OR MATERIAL INTEREST IN PUBLIC UTILITIES DURING THEIR TERM OF OFFICE, PROVIDING PENALTIES THEREFOR, AND FOR OTHER PURPOSES Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled:

SECTION 1. Short Title. - This Act shall be known as the "Anti-

2 Conflict of Interest in Public Utilities Act."

SEC. 2. Declaration of Policy. - It is the declared policy of the

State to uphold the highest standards of integrity, accountability, and 6 public trust in public service. In recognition of the indispensable nature 7 of public utilities in national development and public welfare, the State shall ensure that these enterprises are governed and regulated solely for public interest. To prevent conflicts of interest and regulatory capture, the State shall prohibit elected public officials and their immediate family members from having financial or material interests in public utility enterprises during the officials' incumbency, thereby preserving 13 the integrity of public service and protecting the welfare of the public.

SEC. 3. Definition of Terms. - As used in this Act:

a. "Beneficial owner" refers to any natural person who controls or exercises ultimate effective control over the public utility; b. "Conflict of interest" refers to a situation where an elected public official or any of his or her immediate family member directly or indirectly owns, controls, manages, or otherwise derives financial or material interest in a public utility, whether personally or through intermediaries, in addition to the definition provided under Republic Act No. 6713, otherwise known as the "Code of Conduct and Ethical Standards for Public Officials and Employees"; c. "Divestment" refers to the transfer of title or disposal of interest in a public utility by voluntarily, completely, and actually depriving or dispossessing oneself of his or her right or title to it in favor of a person or persons other than his or her immediate family members; d. "Financial Interest" refers to any interest capable of monetary value, whether readily ascertainable or not, held by an elected public official, his or her immediate family members or a business they own, control or manage; e. "Elected Public Official" refers to any person duly elected to an official position in the national or local government, including those in special or autonomous regions; f. "Immediate Family Members" refers to the spouse, children, parents, brothers or sisters, or any other dependent or person living in the same household and related to the elected public official by consanguinity or affinity within the fourth civil degree; g. "Material Interest" refers to any substantial interest, whether direct or indirect, in any matter, transaction or proceeding that

may be affected by the official acts or omissions of the elected public official; h. "Public Utility" refers to persons or entities engaged in supplying the public with goods or services of public consequence, as defined under Commonwealth Act No. 146 otherwise known as the "Public Service Act," as amended by Republic Act No. 11659.

SEC. 4. Prohibited Acts. - During their term of office, no elected

public official shall directly or indirectly: a. Own, control, manage, or derive any financial or material interest in any public utility; b. Allow or cause any immediate family member to own, control, manage, or derive financial or material interest in any public utility, whether directly or indirectly; c. Grant preferential treatment, unwarranted benefits, privileges, or exemptions to any public utility in which the elected public official, his or her immediate family member, or their business have any form of interest; or d. Influence, attempt to influence, or cause any government agency or instrumentality, to act favorably in any matter involving a public utility in which the elected public official, his or her immediate family member, or their business have any form of interest; Any scheme or arrangement intended to conceal beneficial ownership in a public utility, including but not limited to the use of intermediaries, nominees, dummies, or other similar business structure, shall be deemed a violation of this Act.

SEC. 5. Divestment Requirement. - Any elected public official

and/or his or her immediate family members, who at the time of the

official's assumption to office, already owns, controls, manages, or 2 derives financial or material interest in a public utility shall, within sixty (60) days from assumption of office resign from any controlling position in such public utility or otherwise divest such interest in accordance with the rules and regulations of this Act. Failure to comply with the divestment requirement shall constitute prima facie evidence of intent to circumvent this Act and shall subject the concerned elected public official and/or immediate family member to the penalties prescribed herein.

SEC. 6. Penalties. -

a) Any elected public official found to have committed any violation of this Act shall be subject to the following penalties: (1) Forfeiture of the interest in the public utility in favor of the State; (2) Fine equivalent to at least six (6) months' worth of salary; and Suspension from office for a period of not less than one (3) (1) year but not exceeding three (3) years: Provided, That in cases where the violation is accompanied by manifest bad faith or results in undue injury to the government or to the public, the penalty shall be dismissal from service with perpetual disqualification from holding public office. b) Immediate family members who knowingly aid, abet, conspire, or collude in the commission of any violation of this Act shall be subject to forfeiture of their interest, imposition of fine, and perpetual disqualification from holding public office, as may be applicable. Their liability shall be separate and independent from that of the elected public official. The penalties herein shall be without prejudice to the filing of appropriate criminal, civil, or administrative cases under existing laws.

SEC. 7. Implementing Rules and Regulations. - Within ninety

2 (90) days from the effectivity of this Act, the Civil Service Commission 3 (CSC), in consultation with the Office of the Ombudsman, shall 4 promulgate the necessary rules and regulations to effectively implement this Act. The Securities and Exchange Commission (SEC), the Philippine Competition Commission (PCC) and other relevant 7 regulatory bodies shall assist the CSC in determining beneficial ownership.

SEC. 8. Separability Clause. - If any part or provision of this Act

is held invalid or unconstitutional, the other parts or provisions thereof 12 not so declared shall remain valid and effective.

SEC. 9. Repealing Clause. - All other laws, decrees, orders,

issuances, rules, and regulations or parts thereof, which are inconsistent with this Act are hereby repealed or modified accordingly.

SEC. 10. Effectivity. - This Act shall take effect within fifteen

(15) days following its complete publication in the Official Gazette or in two (2) newspapers of general circulation. Approved,