Cutting Red Tapes with the new Ease of Doing Business Act

Despite recent inflation, the International Monetary Fund projects an economic growth outlook by the end of 2019 for the Philippines.1 Due to the growth prospects, as well as strong political leadership and macroeconomic fundamentals, foreign investments continue to surge for the country.2 Nonetheless, there are factors that discourage investors from putting a stake in the Philippines. The recent tax reforms, poor infrastructural developments, unfriendly labor laws and activities of trade unions and bureaucratic procedures in the form of a red tape are among such considerations. The government, in the effort to further promote investments and intensify economic growth, has reinforced certain policies to lure foreign investors. One of which is the cutting of red tapes through legislative enactments.

The Anti Red Tape Act of 2007

In order promote integrity, accountability, proper management of public affairs and public property and prevent graft and corruption, the Anti Red Tape Act of 2007 was enacted.3 Aside from mandating the reengineering of systems and procedures to reduce bureaucratic red tape and processing time and holding the heads of offices and agencies accountable for the implementation of the law, it decrees the constitution of a “Citizen’s Charter” for all government agencies including departments, bureaus, offices, instrumentalities, or government-owned and/or controlled corporations, or local government or district units which should detail the following:

(a) The procedure to obtain a particular service;

(b) The person/s responsible for each step;

(c) The maximum time to conclude the process;

(d) The document/s to be presented by the customer, if necessary;

(e) The amount of fees, if necessary; and

(f) The procedure for filing complaints.”4

It is furthermore required that offices shall act in all applications and/or requests not longer than 5 working days in the case of simple transactions and 10 working days in the case ofc \omplex transactions from the date the request or application was received.5 However, this maybe extended depending on the nature of the service requested as stated in the Citizen’s charter after notifying the requesting party in writing the reason for the extension.6 Moreover, any denial of a government service must be explained in writing.7 Lastly, work schedules must be adopted in such a way that frontline services shall always be available even during lunch time.8 It is important to note that if a government office or agency fails to act on an application and/or request for renewal of a license, permit or authority subject for renewal within the prescribed period, said permit, license or authority shall automatically be extended until a decision or resolution is rendered on the application for renewal except when such permit, license, or authority covers activities which pose danger to public health, public safety, public morals or to public policy including, but not limited to, natural resource extraction activities.9 The failure of a public officer to comply with the mandates of the law shall give rise to penalties ranging from suspension without pay to dismissal and perpetual disqualification from public service.10 Fixers are also punished with fine and imprisonment.11

Ease of Doing Business and Efficient Government Service Delivery Act of 2018 

In order to attract more foreign investments by simplifying requirements and streamlining procedures, the Ease of Doing Business and Efficient Government Service Delivery Act of 2018 was enacted to address the inadequacies and inefficiencies of the former Anti Red Tape Act of 2007. The focal point of the said law however is the intensification of business competitiveness.While the Anti Red Tape Act of 2007 was limited to frontline services in all government offices, agencies, local government units (LGUs), and government-owned and controlled corporations (GOCCs), the Ease of Doing Business and Efficient Government Service Delivery Act of 2018 now includes every single office, agency, or GOCC whether located in the Philippines or abroad.12 This effectively places all Philippine embassies and consulate offices under the jurisdiction of the said law.13 The following are the significant amendments under the said law.

Zero Contact Policy and Shorter Processing Time

A significant addition under the new law is the “Zero Contact Policy”. Accordingly,

“Except during the preliminary assessment of the request and evaluation of sufficiency of submitted requirements, no government officer or employee shall have any contact, in any manner, unless strictly necessary with any applicant or requesting party concerning an application or request. Once the Department of Information and Communications Technology (DICT) has completed a web-based software enabled business registration system that is acceptable to the public as mandated under Section 26 of this Act, all transactions shall be coursed through such system. All government agencies including LGUs shall adopt a zero-contact policy”14

This reduces the chance of “under-the-table” transactions. Furthermore, the Ease of Doing Business and Efficient Government Service Delivery Act of 2018 requires shorter processing time for each transaction. Simple transactions should be acted on within 3 days while complex transactions should last no more than 7 days.15 However, if the application or request involves activities which pose danger to public health, public safety, public morals, public policy, and highly technical application, the prescribed processing time shall in no case be longer than 20 working days.16 Lastly, if the application or request for license, clearance, permit,certification or authorization shall require the approval of the local Sangguniang Bayan,Sangguniang Panlungsod, or the Sangguniang Panlalawigan as the case may be, the Sanggunian concerned shall be given a period of 45 working days to act on the application or request, which can be extended for another 20 working days.17

Preliminary Assessment and Application or Request Identification Number

While the Anti Red Tape Act of 2007 mandates a preliminary assessment at the time of the receipt of application by the officer, the Ease of Doing Business and Efficient Government Service Delivery Act of 2018 takes a step further by expressly requiring that the receiving officer or employee shall immediately inform the applicant or requesting party of any deficiency in the request. Moreover, the same officer shall assign a unique identification number to an application or request, which shall be the identifying number for all subsequent transactions between the government and the applicant or requesting party regarding such specific application or request.18 This ID number shall make it easier to track the progress of the application.

Limitation of Signatories and Electronic Versions of Licenses and Clearance

From the maximum number of 5 signatories in any official document under the Anti Red Tape Act of 2007, the Ease of Doing Business and Efficient Government Service Delivery Act of 2018 cuts it down to a maximum of 3 signatories which shall represent officers directlysupervising the office or agency concerned. Furthermore, all government agencies shall, when applicable, develop electronic versions of licenses, clearances, permits, certifications or authorizations with the same level of authority as that of the signed hard copy, which may be printed by the applicants or requesting parties in the convenience of their offices.19

Business One Stop Shop and Streamlined Procedures for the Issuance of Permits

To encourage doing business in the country, a significant development in the new law is the establishment of a Business One Stop Shop (BOSS). A BOSS is a single common site or location, or a single online website or portal designated for the Business Permit and Licensing System (BPLS) of an LGU to receive and process applications, receive payments, and issue approved licenses, clearances, permits, or authorizations.20 In line with this pursuit, a single or unified business application form shall be used in processing new applications for business permits and business renewals which consolidates all the information of the applicant or requesting party by various local government departments, such as, but not limited to, the local taxes and clearances, building clearance, sanitary permit, zoning clearance, and other specific LGU requirements, as the case may be, including the fire clearance from the Bureau of Fire Protection (BFP).21 This unified form shall be made available online.22 Furthermore, to lessen the transaction requirements, other local clearances such as, but not limited to, sanitary permits, environmental and agricultural clearances shall be issued together with the business permit.23 However, cities and municipalities are given a grace period of 3 years to automate their business permitting and licensing system or set up an electronic BOSS for a more efficient business registration processes.24

Conclusion

Dealing with government regulatory commissions, as well as the costs that come with it,is one of the common apprehensions in commencing a business, especially for a micro and small to medium enterprises. There is a notion that securing permits and licenses alone can take so much of a capital that none would be left for financing the pursuit. There is a tendency therefore to conduct business underground, to the detriment of both the government and the business owner.

The President, in line with his 10-point socio-economic agenda, hopes that the passage o fthe Ease of Doing Business and Efficient Government Service Delivery Act of 2018 will "solve the perennial problem of bureaucratic red tape" in government and "spare people of intolerable waiting time."25 With the law poised to facilitate prompt actions or resolution of all government transactions with efficiency, this will encourage not only big investors but also small time business owners from legitimizing their trade in the country.

Christian Andrew Labitoria Gallardo recently graduated with a degree of Juris Doctor at the Ateneo School of Law and is currently an associate of the Sangalang & Gaerlan, Business Lawyers. You may reach him at andrew.gallardo@paladinslaw.org

References

[1] Zhorea Shara Garcia, The Philippines Investment Outlook for 2019, accessible athttps://www.aseanbriefing.com/news/2018/12/14/philippines-investment-outlook-2019.html (last accessed July29, 2019).

[2] Id.

[3] § 2, RA 9845, The Anti Red Tape Act of 2007.

[4] See Id, § 5,6 and 7.

[5] Id. § 8.

[6] Id.

[7] Id.

[8] Id.

[9] Id.

[10] § 11, RA 9845.

[11] § 12.

[12] § 3, RA 11032, Ease of Doing Business and Efficient Government Service Delivery Act of 2018.

[13] Andronico Del Rosario, Differences between Anti-Red Tape Act and Ease of Doing Business Act, accessible athttp://primer.com.ph/tips-guides/2018/06/11/differences-between-anti-red-tape-act-and-ease-of-doing-business-act/ (last accessed July 19, 2019).

[14] §7, RA 11032.

[15] Id. § 9.

[16] Id.

[17] Id. § 7 (b).

[18] Id.

[19] Id. § 9 (e). [20] § 4 (b), RA 11032. [21] Id. § 11 (a). [22] Id. [23] Id. § 11(d). [24] Id. § 11 (c).

[25] Pia Ranada, Duterte signs Ease of Doing Business Act, accessible at https://www.rappler.com/nation/203536-duterte-signs-ease-doing-business-act-philippines (last accessed July 22, 2019).

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