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Aimed at reducing red tape and the cost of doing business, Republic Act No. 11234 or the Energy Virtual One-Stop Shop Act ("EVOSS") was signed into law by President Rodrigo Duterte on 8 March 2019 to streamline the permitting process of power generation, transmission, and distribution projects.
Under the new law, prospective power generation, transmission or distribution companies can apply, monitor and receive all the necessary permits, and even pay for charges and fees, through the online platform called EVOSS, cutting down the lengthy permitting process. The permitting process includes the acquisition of a service contract, pre-development and construction of power plants, submission of documentary requirements and payments of fees to relevant government agencies.
In particular, the EVOSS is characterized as a secure paperless processing system through which companies may obtain the list of all requirements and fees of all concerned government agencies, as well as the permitting processes for each phase of the project. Through the EVOSS, companies may likewise monitor and inquire on the status of ongoing applications. What is more, through the EVOSS, all government offices involved in the permitting process are provided uniform templates for documentary requirements, and users may determine the appropriate entity in charge of an ongoing application and the status of said application.
Because of the simplified and more cost-efficient process, electricity generation costs are expected to go down and the influx of investors in the Philippines is expected to rise.
On 5 March 2019, the House of Representatives approved on second reading House Bill No. 9057, which is an intended amendment to Republic Act No. 8762, or the Retail Trade Liberalization Act. The Retail Trade Liberalization Act was originally enacted to encourage Filipino and foreign investors to forge an efficient and competitive retail trade section in the interest of empowering the Filipino consumer through lower prices, higher quality goods, better services and wider choices.
The Retail Trade Liberalization Act gives preference to Filipino entities in retail trade activities by imposing additional requirements on foreign entities who wish to enter the retail trade market in the Philippines. Under the proposed bill, the Act would undergo the following changes: (i) lowering the minimum capitalization requirement for foreign entities to US$ 200,000.oo; (ii) the deletion of the requirements for acquisition of shares of local retailers; (iii) the deletion of the requirement to undergo public offering of shares to be able to engage in retail trade; (iv) the elimination of the stringent requirements to engage in the retail of luxury or high-end goods; and (v) the lowering of the required percentage of locally made goods to be mandatorily carried by foreign retailers that establish retail outlets in the Philippines. The bill likewise introduces a reciprocity requirement, restricting participation by foreign entities in retail trade to entities whose country extends the same concession to Filipino entities.
On 21 February 2019, the Philippine Competition Commission ("PCC") adjusted the thresholds for compulsory notifications of mergers and acquisitions ("M&As") effective 1 March 2019, marking the second threshold adjustment since the Philippine Competition Act was passed in 2015.
The PCC raised the thresholds from PHP 5 Billion to PHP 5.6 Billion for the Size of Person ("SoP") and from PHP 2 Billion to PHP 2.2 Billion for the Size of the Transaction ("SoT"). SoP refers to the value of assets or revenues of the Ultimate Parent Entity of at least one of the parties, while SoT refers to the value of assets or revenues of the acquired entity. The revised thresholds, when met together, are considered triggers for entities to notify the PCC of their transactions.
"The rationale for setting a notification threshold is to ensure that M&As that are more likely to substantially lessen competition are subject to compulsory notification and review, and to exclude those that are less likely to pose competition concerns," PCC Chairman Arsenio M. Balisacan said.
Aimed at the "efficient and effective utilization of lands in order to contribute to wealth creation, entrepreneurship and economic development," Republic Act No. 11231 or the Agricultural Free Patent Reform Act ("R.A. No. 11231") was signed into law by President Rodrigo Duterte on 20 February 2019, removing the restriction on the transfer of agricultural land titles.
Previously, restrictions on the transfer or disposition of agricultural land titles were imposed to prevent Filipino grantees from alienating their grants soon after their titles were issued. This new law removes the restrictions on owners of agricultural free patents and lands from imposing encumbrances, selling or otherwise alienating the lands within five years from the grant of the title. Grantees of agricultural titles may treat them as titles in fee simple and alienate them even before the lapse of the five year period.
According to the Department of Social Welfare and Development data, about 6,500 children have been declared available for adoption. To simplify and make adoption proceedings less costly to encourage adoption and rectification of simulated births, the Simulated Birth Rectification Act ("SBRA") was passed on 21 February 2019.
Under the SBRA, a person who simulated the birth of a child for the child’s best interest, instead of being held criminally, civilly or administratively liable for the act, is granted amnesty and is allowed to adopt the child where the child has since been considered as his own and living with him for at least 3 years. In lieu of going through court proceedings, a person seeking to adopt a child may petition with the Office of the Social Welfare and Development Officer where the child resides.
Under the new law, the administrative adoption order has the same effect as a judicial decree of adoption, whereby the adoptee is considered the legitimate child of the adopter for all intents and purposes.
Primarily aimed to ease the doing of business in the Philippines and to promote good corporate governance, the Revised Corporation Code of the Philippines ("RCC") became effective on 23 February 2019.
Among the significant changes brought by the RCC is the introduction of the one-person corporation, thereby removing the previous requirement of at least five incorporators. In addition, corporations are no longer required to hold a minimum subscribed and paid-up capital. Moreover, corporations can now have perpetual existence and the period before its license to do business is deemed revoked for failure to formally organize and commence its business is increased from 2 to 5 years.
The RCC also takes into consideration the advances in technology by allowing service of notices and the conduct of elections through electronic means. In particular, attendance, participation, and voting in elections and meetings may now be done through remote communication and notices, and consent may be sent through electronic means.
Moreover, the RCC makes various references to the anti-competitive mechanisms prohibited in the Philippine Competition Act ("PCA") and to the regulatory role of the Philippine Competition Commission ("PCC"). Specifically, RCC provides, among others, that the PCC may impose additional qualifications and sanctions for board members, that corporations may require the PCC’s approval prior to any change in its capital stock or any bonded indebtedness, and that bulk sales of a corporation’s assets are subject to the provisions of the PCA.
Finally, the RCC also strengthened the regulatory mechanisms of the Securities and Exchange Commission ("SEC") by explicitly providing for the investigatory, visitorial and contempt powers of the SEC, as well as adding more offenses and penalties (i.e., unauthorized use of corporate name, concealment of disqualification, unjustified failure or refusal to keep corporate records, willful certification of false reports, etc.).
Previously, employed women were entitled only to 60 days paid leave for normal delivery and 78 days for cesarean delivery for their first 4 deliveries. Under Republic Act No. 11210 or the Expanded Maternity Leave Act, which was signed into law on 20 February 2019, all working mothers in the government or private sector, regardless of civil status, are guaranteed 105-day paid maternity leave credits, with an optional extension of 30 days without pay. Single mothers enjoy an additional 15 days of paid leave.
In addition, under the new measure, working mothers may opt to allocate up to 7 days of their maternity leave benefits to the child’s biological father, without prejudice to the 7-day paid paternity leave. Notably, in cases of miscarriage or emergency termination of pregnancy, a 60-day paid maternity leave is granted. The law applies to every pregnancy, removing the four-pregnancy cap provided under the previous law.
Labor Secretary Silvestre Bello III vowed to immediately craft the law’s implementing rules and regulations, including a provision to cover women who gave birth shortly before the law took effect.
On 14 February 2019, Republic Act No. 11213, or the Tax Amnesty Act of 2019, was signed into law. Under the law, the estates of those who passed away on or before December 31, 2017 are granted estate tax amnesty by paying 6% of the total net estate of the deceased, which may be availed of within two (2) years form the effectivity of the implementing rules and regulations ("IRR"). The law likewise grants tax amnesty on tax delinquencies covering all national internal revenue taxes for taxable year 2017 and prior years, granting amnesty in the following cases: (i) delinquencies and assessments, which have become final and executory; (ii) pending criminal cases; (iii) tax cases subject of final and executory judgment; and (iv) unremitted withholding taxes. The amnesty tax ranges from 40% to 100% of the delinquency assessment depending on the nature of delinquency. The Tax Delinquency Amnesty may be availed of within one (1) year from the effectivity of the IRR.
The Secretary of Finance together with the Bureau of Internal Revenue are currently working on the IRR (which should be promulgated within ninety (90) days from the effectivity of the law, as provided under the Tax Amnesty Act) for purposes of implementing the law.
On 14 February 2019, Republic Act No. 11211 or the New Central Bank Act ("R.A. 11211") was signed into law.The new Bangko Sentral ng Pilipinas ("BSP") Charter embodies a package of reforms that will align BSP operations with global best practices, improve the BSP's corporate viability, and enhance its capacity for crafting proactive policies and rising interlinkages in the financial markets and the broader economy. The law widened the coverage of institutions under BSP supervision to include: (i) money service businesses, (ii) credit granting businesses; and (iii) payment system operators.
In a message of thanks to Congress and the President, former BSP Governor Nestor Espenilla emphasized that, in addition to these administrative improvements, R.A. 11211 also implemented new standards to be adhered to by the BSP, such as the removal of "money supply and credit levels as basis for determining monetary policy," and the reliance on a broader set of indicators.
The law also restored the BSP's authority to issue debt papers as part of its regular operation, so as to give the BSP more "flexibility in determining the timing and size of its monetary operations," and increased BSP's capitalization from PhP50 billion to PhP200 billion, sourced from dividends declared by BSP in favor of the national government. BSP is also now exempt from taxes imposed on income derived from its governmental functions.
Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only
intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.
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Contacts: Ben Dominic R YapManaging PartnerD +632 8894 0377F +632 8552 1978bdryap@cagatlaw.comJaime Renato B GatmaytanPartnerD +632 8894 0377F +632 8552 1978jrbgatmaytan@cagatlaw.comAnthony Mark A GutierrezPartnerD +632 8894 0377F +632 8552 1978amgutierrez@cagatlaw.comNorma Margarita B PatacsilPartnerD +632 8894 0377F +632 8552 1978nmbpatacsil@cagatlaw.comRajah & Tann Asia is a network of legal practices based in Asia. | Member firms are independently constituted and regulated in accordance with relevant local legal requirements. Services provided by a member firm are governed by the terms of engagement between the member firm and the client. | This update is solely intended to provide general information and does not provide any advice or create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on this update. |
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