FIFTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES

a3
House Bill No, _720

Introduced by Representative Rufus B. Rodriguez and
Representative Maximo B. Rodriguez, Jr.

EXPLANATORY NOTE

The Philippine Constitution declares in Article Il, Section 20: “The
State recognizes the indispensable role of the private sector,
encourages private enterprise, and provides incentives to needed
investments.”

It is sad to note that the Philippines continues to lag behind its
neighbors in attracting investors both local and foreign. For valid reasons, the
country is not perceived to have a business-friendly investment climate, and
therefore, investor confidence in the Philippines is not as strong as it is in
other ASEAN countries. Basic to this weakness is the perception that our
system of laws and public governance do not work.

The general view is that the country may have good laws but these are
not properly implemented. Legal loopholes abound and these are exploited by
the unscrupulous. White-collar crooks are able to avoid being jailed. For
instance, thus far, nobody has been jailed for violations of the Revised
Securities Act or the General Banking Act, which have time and again been
blatantly violated.

Investors come in and invest under a seemingly firm set of rules. But,
down the road, the perception is that the rules are changed without prior
notice and consultations. Because personal connections are perceived to
count heavily, people in business perceive that the playing field is not even-at
all. Finally, the courts seem to take forever to arbitrate disputes and
occasionally have interfered in business decisions, which should probably be
left to management sound discretion.

In the light of the foregoing, there is an need to clarify roles that the
government performs and that business plays so that the economic
development of the country may be hastened. There is also a need for
government to regain the confidence of business, so that business can, in
turn, be induced to expand their operations or to invest in new ventures and
contribute to nation-building.


The Magna Carta hopes to respond to these concems by clearly
spelling out the rights and obligations of business and the kind of protection
that Government will accord it. The Magna Carta is envisioned to be the
social compact between Government and business

To oversee the implementation of the Magna Carta for Business, a
Presidential Commission for Business Concerns (PCBC) is proposed to be
created under the Office of the President.

RUFUS B. RODRIGUEZ

Why:

MAXIMO B. RODRIGUEZ, JR


FIFTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES —_)
First Regular Session

HOUSE OF REPRESENTATIVES

c 720

House Bill No.

Introduced by Representative Rufus 8. Rodriguez and
Representative Maximo B. Rodriguez, Jr.

AN ACT
DEFINING THE RIGHTS AND DUTIES OF ENTREPRENEURS, THE
COMMITMENTS OF THE STATE IN PROVIDING A BUSINESS-FRIENDLY
ENVIRONMENT, CREATING THE PRESIDENTIAL COMMISSION FOR
BUSINESS CONCERNS AND FOR OTHER PURPOSES.

Be it enacted by the Senate and House of Representatives of the Philippines
in Congress assembled:

SECTION 1. Short Title. - This Act shall be known as the “Magna
Carta for Philippine Business”.

SECTION 2. Declaration of State Policy. - It is hereby declared the
Policy of the State to recognize private business enterprise as the engine for
economic growth. The State also commits itself to providing the necessary
policy framework and effective operational systems and structures to

encourage business initiatives and activities and promote their productivity
and viability

SECTION 3. Definition of Business. - Business refers to any natural
or juridical person, duly registered and organized under applicable laws, that
legally provides goods and services.


SECTION 4. Definition of Government - “Government” means the
national government and the local government and all their departments,
instrumentalities, agencies and services.

SECTION 5. Main Purposes. - The purposes of this Act are: (a) to
define the expectations and commitments of Business and Government to
each other; and (b) to provide the mechanism and structure for monitoring
fulfillment of these expectations and commitments. The ultimate purpose of
this Act is to promote and foster a climate of trust, transparency, and
cooperation between Government and Business so that both parties can work
productively together for the attainment of economic growth and national
development

SECTION 6. Rights of Business - Business shall have the following
rights:

a. Business has the right to expect a level playing field from
Government. A level playing field is characterized by equal and fair
application of all laws, and by transparency at all levels of policy-
formulation and public governance

b. Business has the right to expect a reasonable rate of profit from
their business operations, commensurate to the amounts of risk and
capital that are involved, and consistent with law, prevailing market
conditions and market structures.

c. Business has the right to decide on and to establish all lawful
operating parameters of its activities, including but not limited to,
such issues as the location of their factories and operating
headquarters, the sourcing of their raw material, labor, power, water
and other utility requirements, and other similar issues, free from
undue interference from dictation by government regulators. No
impositions on these operating business decisions may be made by
Government unless in pursuance of law, public interest or welfare.


d. Business has the right to a speedy disposition of its cases before all
judicial, quasi-judicial and administrative bodies, specifically those
which may have an effect on the continuity and viability of its
operations. Towards this end, the enforcement of the continuous
trial system, the use of alternative modes of dispute resolution such
as conciliation, mediation and arbitration; the shortening of the
reglementary period for filing pleadings and the prescribed period
for decision-making; the close monitoring of the performance of
members of the judiciary, the swift imposition of administrative
penalties upon corrupt, lazy, incompetent and inefficient judges;
and such other measures which have for their purpose the speedy
disposition of cases shall be strictly and rigidly observed.

e. Business has the right to expect productivity from its workers and
employees at output levels and quality standards consistent with
industry standards.

f. Business has the right to consult and be consulted in the
formulation of all laws and regulations through open consultative
processes with legislators and regulators at both local and national
levels. To this end, Congress shall create joint or separate
committees to hear the suggestions, petitions, grievances, and the
like, of Business relative to the business and investment climate in

which it operates. Local Government Units are likewise encouraged
to do so.

g. Business has the right to complete and accurate information from
Government concerning the implementation, interpretation, revision
and arbitration processes of all laws, rules and regulations, and
ordinances.

h. Business has the right to seek protection from all forms of
harassment, intimidation, coercion, interference and unnecessary


vexation by government regulators and from unfair competition by
their competitors, including those that are fully or partially
capitalized by the State. Once a business has been authorized to
operate by the appropriate government bodies and agencies, it
shall be allowed to continue to operate under the same terms and
conditions for as long as it possesses the same qualifications and
none of the disqualifications and none of the disqualifications as
when it was originally allowed to operate except only as may be
provided by law.

i. Business has the right to expect consistency in government rules
and regulations affecting it, regardless of a change in administration
at the national or local levels of government. Any change in the said
rules and regulations may be made to the demands of public
interest and welfare only in accordance with law.

j. Business has the right to manage and operate its organizations
freely and in the manner as it may deem fit and proper, subject only
to the legal and rightful demands of labor, and to obligations set
forth in this Act and other laws. Business shall be protected at all
times against illegal strikes even as it may not engage in illegal acts
against its employees.

k. Business has the right to security in its operations and properties
against all forms of criminality and harassment.

|. Business has the right to expect and to demand prompt, efficient,
courteous, and competent service and full assistance and
cooperation from all levels of government in the pursuit of their
legitimate business objectives.

SECTION 7. Duties of Business. - Business shall have the following
duties:


a. Business has the duty to run its operations in a manner consistent
with existing local and national laws, such as, but not limited to,
laws on taxes, labor and minimum wage, anti-bribery and anti-
corruption, product quality and safety standards, environmental
protection and pollution control, truth in advertising, full product
information and labeling requirements, consumer welfare, land
Zoning, the filing of complete and accurate reports with the pertinent
government regulators.

b. Business has the duty to run and manage its affairs and operations
in the most efficient and effective manner consistent with the
country's economic needs and priorities. It shall seek to integrate

the best business practices obtaining in the world into their
operations.

c. Business has the duty within the limits of conventional business
prudence and ethics, to deal with its employees, customers,
suppliers, investors, competitors, and society as a whole in a fair,
honest, transparent and even-handed manner. Any and all
information it shares with these parties and with government
regulators must be accurate, complete, coherent and up-to-date.
Entrepreneurs shall not distort, hide, camouflage nor misrepresent
the relevant facts of their business operations. It shall present only
truthful and consistent information, including corporate reports,
brochures, financial statements and the like to all parties entitled to
the same and to the public.

d. Business has the duty to pay its employees a level of compensation
commensurate to their productivity levels and contribution to the
profitability of the business. At the very least, Business shall comply
with minimum wage and child labor laws.

e. Business has the duty to afford its employees every opportunity for
developing their full potential as human beings through appropriate


and effective promotion and incentive schemes, on-the-job training,
values formation and productivity enhancement seminars,
alternative income and livelihood workshops for its workers and
dependents, and human resource development programs. Business
shall be required to set aside every year at least three (3%) percent
of its net profit after tax to be spent in the following year for human
resource development programs.

Business has the duty to treat all their workers with dignity and
respect befitting their human nature. It shall provide its workers with
safe, healthy and pleasant working conditions consistent with the
best practices obtaining within their particular industries, as well as.
prevailing standards on safety of the workplace

|. Business has the duty to promote the welfare of communities within
which it operates their factory sites, plantations, and manufacturing
facilities. It shall set aside at least one-half (1%) of one (1) percent
(1/2%) of its annual net sales as a fund for community development
projects, such as, but not limited to, assistance to public elementary
and secondary schools, construction of artesian wells and village
water and sewerage systems and other community-based facilities,
and environmental protection, income and livelihood projects, and
cooperatives.

Business has the duty to deal with civil servants in a professional
manner and to protect, reinforce and enhance the latter's integrity,
honesty, efficiency and productivity. Business shall not bribe or
pressure, in any manner whatsoever, civil servants into committing
acts, which are violate existing laws or which distort the level
playing field to their advantage over the rights of consumers,
workers, business competitors, and the public in general, To this
end, Business shall report all forms inefficiency, dishonesty, and
graft and corruption within the government bureaucracy and the
perpetrators thereof to the proper government agency. Business


shall have the duty to actively cooperate in all investigative and
judicial processes aimed at eradicating corruption and other

obstacles to the creation of a wholesome business environment.

i. Business has the duty to minimized any damage on the
environment caused or aggravated by its business operations and
to assure that the ecology of the area is restored to its original or
pristine state prior to the business venture’s entry into the locality. It
may be held liable for the damage to the ecology of the area to the
extent of the actual costs incurred by the government to repair such
damage and to restore the environment to an acceptable level.
Business may negotiate with the government agency concerned to
arrive at a compromise on its liability. No adverse implications may
be derived from any offer of compromise by the Business
concerned on this matter. Such recompense is without prejudice to
other penalties and fines, as provided for by law. To include
Business to enhance and improve the ecology of the area, the
national and the local governments may extend to it appropriate
packages of tax credits, financial rewards and other incentives
commensurate with the actual and opportunity costs incurred by the
business entity for protecting and improving the environment.

Business has the duty within the limits imposed by technology,
economies of scale, and other relevant factors, of promoting free
and open competition. To this end, business shall refrain from
resorting to monopolist activities, price manipulation and
connivance, false or misleading advertising, and other unfair trade
practices.

SECTION 8 Government Main Obligations to Business. - The
Government shall:

a. Provide an efficient and level playing field for Business

characterized by the equal application of law on all players without

bias for or against any member of the business community or any


10

business group. To this end, any memoranda of agreement, or

understanding and contracts entered into by Business and
Government shall be enforced as valid and binding or the parties
thereof unless retrained by the Supreme Court.
Any case involving the validity of business agreements,
understandings or contracts shall be resolved by the concerned
administrative agencies of the government within three (3) months
from the start or filling of the proceedings. As a matter of
government policy, the Supreme Court may direct all courts before
which such agreements, understandings or contracts are have been
filed to terminate such proceedings within six (6) months from the
submission thereof,

b. Enforce the highest standards of ethical behavior on all business
operations.

¢. Compel free and open competition among all, businesses, industries
and enterprises within the limits of law as the norm of business
activities.

d. Make government officials, employees and the Bureaucracy render
courteous, prompt, efficient, competent, and honest professional
services demanded by Business and by the people.

e. Prohibit and all forms of graft and corruption, dishonesty and
Incompetence among government officials and employees
expeditiously and without delay. To this end the time for preliminary
investigations at the level of Ombudsman, the Department of
Justice and the courts may be shortened accordingly. Investigations
at the level of the police, the NBI and other agencies under the
executive department shall be terminated or forwarded to other
offices concerned foe filling with the prosecutors or the courts within
two (2) weeks from the filling thereof with the investigator. Failure to
comply with these provisions shall be punished in accordance with
the rules and regulations of the National Police Commission, the
National Police or the Civil Service Commission.

f Maintain law and order efficiently so that business may safely
operate and the people may feel secure


M1

g. Conduct at all levels of government public consultations in the
drafting of laws, ordinance, rules and regulations, which directly
bear on business with duly recognized Business representatives
and with concerned non-government organizations.

h. Allow through the Presidential Commission for Business concerns
that is created under Section 8 of this act adjustments or changes
in the original package of business incentives and privileges
granted by the government after due consultations with the
business concerned and concerned non-government organizations
(NGO).

i. Construct infrastructure, such as, but not limited to, roads, bridges,
airports, seaports, and cost-effective power and communication
facilities not only for Business but also for the community in which
the Business is located. In the that the government does not have
the necessary funds to undertake such investments, private
enterprise may be invited to invest in these facilities under existing
mechanisms, such as, but not limited to Build-Operate-Transfer
(BOT) schemes and its variants. Local governments concerned
may also provide the infrastructure above mentioned without any
additional authority from the national government.

j. Not compete, except in emergency situations or in the interest of
national security, with Business by setting up new agencies or
allowing existing ones to engage in parallel business activities
which are already being adequately served by the private sector.
‘Such market interventions shall be undertaken only for the duration
of an emergency or a crisis. The Government may not invest in or
grant favors to companies run by the political cronies, allies,
accountants or lawyers of the President or other officials who have
jurisdiction over the line of business activities engaged in by the
companies concemed.

k. Not enforce or implement temporary or restraining orders by courts
other than the Supreme Court to stop, impede or delay the
operations of Business unless such operations constitute a real and


12

present danger to the national interest as may be recommended by
the Presidential Commission for Business Concerns.

SECTION 9. Creation of the Presidential Commission for Business
Concerns. - To enforce the intents and purposes of this Act, there is hereby
created an agency to be known as the Presidential Commission for Business
Concerns (PCBC). The agency shall be attached for supervision purposes to
the Office of the President.

SECTION 10. Composition of the Presidential Commission for
Business Concerns. - The Commission shall have the following
composition:

PCBC Executive Director as PCBC Chairman
. Secretary of Trade and Industry
Secretary of Labor and Employment
Chairman of Senate Committee on Trade and Industry

e@aocs®m

. Chaitman of House of Representatives Committee on Trade and
Industry

f. Four (4) nominees by and from private business groups duly
registered with the Securities and Exchange Commission, such as,
but not limited to the Philippine Chamber of Commerce, Inc., the
Makati Business Club, and the _Bishops-Businessmen's
Conference.

g. One (!) nominee from foreign chambers of commerce and

Three (3) nominees from labor groups

The department secretaries concerned may designate one of their
undersecretaries to represent them at the meetings of the commission, to
vote, and to act on their behalf, as they may deem appropriate and proper.

SECTION 11. Mission of the Commission. - The mission of the
Commission is to help create a business-friendly environment for the purpose
of attracting investments into the country, generating jobs and economic


13

opportunities for the citizenry and promoting economic development. The
mission shall:

(a) Take all appropriate and necessary actions which will create, maintain,
and promote the level of investor confidence in the country:

(0) Promote better coordination among the different agencies of
government, on both policy formulation and policy implementation
levels;

() Reduce the amount of bureaucratic red tape which hampers business
operations and provides a fertile ground for graft and corruption;

(d) Identify existing laws, ordinances, rules and regulations which are
perceived as being anti-business or may impede business efficiency
and viability, and working for their amendment or repeal;

(@) Identifying infrastructural, superstructural, and systemic bottlenecks
which impede business efficiency and productivity;

(f) Encourage and promote a business-friendly attitude in Philippine
society, particularly in the civil service and among government
regulators;

(g) Undertake policy studies and developing appropriate recommendations
for the resolution of specific business issues and for the improvement
of investor confidence in the country; and

(h) Receive and act on complaints, suggestions and recommendations

from all sectors of society regarding the operation of business.

SECTION 12. Commission Secretariat and policy Research Group. ~
The Commission shall establish a full-time working secretariat and a policy
Tesearch group, to be headed by the Executive Director.

SECTION 13. Commission Executive Director. - The Executive Director
of the Commission shall be at least forty (40) years old; has a master’s degree
in business administration, business management, public administration, law,
or economics and a proven track record either in public service or as a
business professional. He/She shall be appointed by and shall serve for a


14

term of six (6) years unless removed for cause pursuant to the rules of the
Civil Service Commission.

He/She shall receive an annual compensation of Five Hundred
Thousand Pesos (PHP500,000.00) .

The Executive Director shall also serve as the Commission
Chairperson and shall preside over all its meetings. He/She shall not vote
during the deliberations except in case of a tie.

SECTION 14. Commission Vice-Chairman - A Vice-Chairperson
shall be elected from the private sector membership of the Commission.
He/she shall preside over meetings of the Commission in the absence of the
Chairman. When presiding in the absence of the Chairman, he/she shall also
not vote during its deliberations, except in case of a tie.

SECTION 15. Quorum - The Commission shall hold monthly meetings
every third Monday of the month. A quorum is deemed to exist if at least 50%
plus one (1) of the voting members of the Commission are physically present
at the meeting. These regular monthly meetings shall be held at the
Commission's main office in the Metro Manila area. The Commission may
also hold special meetings not more than twice a month as it may deem
necessary and at places it may deem convenient.

SECTION 16. Honoraria and salaries — The Commission shall fix
reasonable honoraria for the Vice-chairman and other members of the
Commission. All other employees of the Commission shall receive salaries,
emoluments and benefits as may be fixed by the Commissions subject to
pertinent rules of the civil service

SECTION 17. Funding. - Initial funding for the operations of the
Commission shall be Fifty Million (50,000,000.00) Pesos which may be taken
from the funds of the Office of the President. Every year thereafter, the
Executive Director shall prepare a budget for the operating and capital


expenditures of Commission and submit it to the Office of the President for
inclusion in the Annual Appropriations Act

SECTION 18. Implementing Rules and Regulations. - Within sixty
(60) days after the effectivity of this Act, the President shall appoint the
Executive Director of the Commission. The Executive Director shall within
fifteen (15) days from his or her appointment recommend to the President the
appointment of the private sector representatives, mentioned in this Act. As
soon as eight (8) private sector representatives shall have been appointed by
the President, the Executive Director shall convene the organizational
meeting of the Commission. The Commission shall draft and complete the
Implementing Rules of this Act within a period of ninety (90) days from its
organization

SECTION 19. Penalties. - Any individuals who violates the duties
imposed by this Act upon Business and the Government shall be punished
with imprisonment of not less than six (6) months or more than one (1) year
and a fine of not less than One Hundred Thousand (100,000.00) Pesos. The

fine may be imposed upon any juridical person who violates the provisions of
this Act.

SECTION 20. Effectivity. — This Act shall take effect after one month
following its approval and publication in a newspaper of national circulation.

Approved,