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

HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B. Rodriguez

House Bill No. £840
EXPLANATORY NOTE

The Philippine Constitution declares in Article II, 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 itis 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 goverment to regain the confidence of business, so that
business can, in tum, 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 Concems (PCBC) is proposed to be created under the Office of

the President.
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RUFUS B. se


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

HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B. Rodriguez
2840

House Bill No.

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 fulfilment 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.


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.

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 altermative 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.

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

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.

|. 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.

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.

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.

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.

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.

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.

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.

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 (%) 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.

h. 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.

j. 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 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
@ 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.

c. 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.

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 concemed and concemed 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 concerned

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 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 Concems (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:

a. PCBC Executive Director as PCBC Chairman


Secretary of Trade and Industry

Secretary of Labor and Employment

Chairman of Senate Committee on Trade and Industry

Chairman of House of Representatives Committee on Trade and Industry

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

h. Three (3) nominees from labor groups

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‘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 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;

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

(c) 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;

(e) 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 research 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 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,