Press Release
February 15, 2018

Opening Statement of Sen. Grace Poe
Hearing on amendments to the Public Services Act

Feb. 15, 2018

Good morning.

This hearing of the Senate Committee on Public Services joint with Finance and Economic Affairs is now called to order. In this hearing, the Committees will be considering five (5) Senate Bills and the approved House version all on the amendment of Commonwealth Act No. 146 or the Public Service Act filed by this representation and Senators Gatchalian, Zubiri, Gordon and Aquino.

Commonwealth Act No. 146, otherwise known as the "Public Service Act" or PSA, has been enacted way back in 1936. More than 81 years have passed since its enactment.

To put things into proper perspective, here are some facts as to how far we have come from 1936 to the present:

1. Based on the 1939 census, the closest census to 1936, the Philippines' population was only 16 million then. As of today, our population is around 106.5 million.

2. The enactment of the PSA even came 30 years earlier than Neil Armstrong's landing on the moon in 1969

3. The PSA has been in existence from the colonial and post-colonial periods of the Philippines until today's "contemporary history" of the Philippines.

4. The existence of the PSA dates back to the second President of the Philippines, Manuel L. Quezon, and we now have our sixteenth (16th), President Duterte.

Clearly, so much have happened for 81 years. Demographics, technologies, politics and economies have certainly changed during the last eight decades.

As we always say, the only permanent thing in life is change. Ngayong araw, narito tayo upang subukang bigyang halaga at sabayan ng Public Service Act ang kasalukuyang daloy ng buhay ng mga Pilipino.

Ang Public Service Act ay isang makapangyarihang batas sapagkat:

1. Malaki ang epekto ng batas na ito sa presyo ng pamasahe sa iba't-ibang uri ng pampublikong transportasyon;

2. Malaki ang epekto ng batas na ito sa kung gaano kabilis o kabagal ang internet natin sa ating mga tahanan, sa mga opisina o sa ating mga cellphone;

3. Malaki rin ang epekto ng batas na ito sa ating mga bayarin o konsumo, sa tubig at kuryente.

All Senate Bills seeking to amend the PSA have four main objectives, namely:

1. To clearly define what is a "public utility." What this bill seeks to do, is to distinguish between the terms, "public services" versus "public utilities."

Article 12, Section 11, of the 1987 Philippine Constitution provides: "...No franchise or any form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or corporations at least 60% Filipino...".

Unfortunately, the Constitution did not define the term "public utility." However, since the Public Services Act or Commonwealth Act No. 146, was already in existence at that time, public utilities were deemed equivalent to "public services."

The Public Service Act deals with and regulates all types of common carriers, be it by land, air or water, water supplies and systems, petroleum, electricity, communications systems and even broadcasting stations.

I would encourage the constitutional experts to provide us a guide as we delineate the sectors and the corresponding allowed equities set in the fundamental law.

2. To provide a mechanism for the computation of the "Reasonable Rate of Return" for public utilities.

There is a method proposed by the draft bill taking into consideration the actual capitalization and risks taken by the company to finance their ventures on a case-to-case basis, instead of setting an arbitrary rate, such as the 12% that is currently in place. Though this is not found in any statutory law, the Supreme Court has consistently adopted a 12% rate of return for public utilities.

The Committee is open though for recommendations in this regard.

3. To update the system of penalties and violations in the existing statute. For emphasis, the current regulation is an 81-year old law. Sa ngayon, tila ba mas matipid ang paglabag sa PSA kaysa ang sundin ito. For example, note that under the current PSA, only a fine of not exceeding two hundred pesos (Php200.00) per day is being imposed on violating public utilities for every day during which such violation continues. This is too small in the present time.

4. To recognize the transfer of functions of the Public Services Commission to various administrative agencies. The Committee has an objective of fine-tuning the PSA vis-à-vis the various public services that have already been transferred to different national agencies through the years, including but not limited to DOTr, LTFRB, LTO, CAAP, MARINA, DICT, NTC, DOE, ERC, DENR and other government agencies.

Pero sa pag-balangkas ng amyenda sa PSA Law, hindi natin gagalawin ang kasalukuyang mga proseso ng pagtatakda at pag-apruba ng mga prangkisa ng mga public service providers at public utilities at patuloy pa rin silang nasa ilalim ng istriktong regulasyon ng pamahalaan.

But there are two other good reasons why we should review and enact immediately the Public Service Law: first, to generate foreign investments in the country and second, to create employment opportunities for Filipinos.

On foreign investments, a report on the amount of FDIs or foreign direct investments to the ASEAN shows that between 1952 and 2012, Singapore accounts for more than half of total FDI to the whole region (at 52 percent). Thailand ranks the second with a 13 percent share, followed by Indonesia with 11 percent, Malaysia with 10 percent, Vietnam with 8 percent and the Philippines with 3 percent.

Recently, a 2016 report showed that the Philippines has moved up in the rankings. The country emerged the fourth largest recipient of FDIs in the region with $7.93 billion dollars.

The amount of FDI the country received, however, still paled in comparison to the top three ASEAN recipients, with Singapore remaining the region's most attractive investment destination with a total FDI inflow of $53.91 billion.

And on the creation of jobs, it is our commitment in the Senate that we should generate employment opportunities. Trabaho para sa Pilipino, maraming trabaho para sa mamamayang Pilipino.

In December 2017, the PSA reported that the percentage of unemployed Filipinos was estimated at 5.0 percent in October, slightly higher than 4.7 percent recorded in the same month last year. This was equivalent to 2.2 million Filipinos.

On the other hand, independent organizations have forecasted the unemployment to be 5.50 percent by the end of this first quarter and around 6.30 percent in 2020.

Sa pag-amyenda ng PSA, magkakaroon ang taumbayan ng mas maraming mapagpipiliang public service providers. Magpaligsahan sila at makapagbigay ng dekalidad na serbisyo at produkto sa pinakamababang presyo at higit sa lahat, mas maraming trabaho para sa ating mamamayan ang malilikha nito.

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