Taxwise Or Otherwise

To enhance efficiency, the government has strengthened and broadened the Anti-Red Tape Act of 2007 by passing Republic Act (RA) 11032, or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018. The law took effect on June 17, 2018, intending to create programs that simplify requirements and streamline procedures in government transactions.

More than a year after its effectivity, the Anti-Red Tape Authority (ARTA), the agency mandated to oversee the implementation of the Act, along with the Civil Service Commission (CSC), the Department of Trade and Industry (DTI), and in coordination with other branches of government, promulgated the Implementing Rules and Regulations (IRR). The IRR was issued through Joint Memorandum Circular No. 2019-001, and became effective on Aug. 4.

What are the notable changes in the Act that the IRR seeks to implement?

The coverage of the law has been expanded to apply to all government offices and agencies in the Executive Department, including local government units (LGUs), government-owned or controlled corporations (GOCCs), and other government instrumentalities, whether located in the Philippines or abroad, including quasi-judicial bodies that provide services covering business and non-business related transactions.

To establish accountability and recognize good performance, a Citizen’s Charter is to be set up by all covered government agencies. It is to include the checklist of requirements, persons responsible for each step, the required fees, procedures to obtain the service, maximum time to complete the process, as well as the procedure for filing and handling complaints. All updates to the Citizen’s Charter must be posted not later than March 31st of each year to ensure compliance with its directives.

Each agency is required to classify all transactions and services pursuant to a set of criteria and to assign appropriate processing times based on the classification of the applications or requests. The maximum processing time imposed by the law are as follows: three working days for simple transactions, seven working days for complex transactions, and 20 working days for highly technical applications or those that pose a danger to public health, public safety, public morals, or public policy. In the case of inadvertence to include and classify a specific transaction or service, the excluded activity is to be interpreted as a simple transaction that must be processed within three working days. Thus, government agencies must thoroughly review the activities within their offices to avoid breach of responsibilities.

The maximum time prescribed may be extended only once for the same number of days, but the agency is required to notify the applicant in writing as to the reason for the extension and final date of release.

Failure without cause to render the government service within the prescribed processing time may give rise to administrative and criminal liabilities.

Fixing the maximum time to act on applications should greatly increase efficiency. However, for it to work, it is important to also consider the preliminary assessment or the evaluation stage in the required timeline to process the transaction. It is during the evaluation stage that additional or revised documents are requested by the processing officer. The mandated processing time, while ideal, can be misleading if it does not contemplate the extensive delays that may be experienced during the evaluation stage. Thus, the Citizen’s Charter should likewise set a maximum period for pre-processing the applications.

A noteworthy part of the Act and the IRR is the rule on automatic approval or automatic extension of a license, clearance, permit, certification, or authorization. Under the IRR, the existence of all the following conditions warrants the automatic approval of an original application:

1. If a government office or agency fails to approve or disapprove an original application for a license, permit, certification, or authorization within the prescribed processing time;

2. If all required documents have been submitted; and

3. If all required fees and charges have been paid.

The acknowledgment receipt, together with the official receipt for payment of the fees, is deemed to constitute proof of approval, having the same force and effect of a license, clearance, permit, certification, or authorization.

This third requirement on payment of fees may have the effect of nullifying the benefits of the provision on automatic approval. More often than not, payment of the required fees or charges is made at the final step of the process. What remains after the payment is the mere ministerial work of issuing the certificate, license, or permit. However, as mentioned earlier, delays normally occur during the pre-assessment or evaluation stage. Hence, RA 11032, while promising, can become an empty assertion if the government agencies are unable to reengineer their transaction processes in order to act on applications more efficiently as the law intended.

Under the IRR, to avail of the automatic approval, it is incumbent upon the applicant to file a complaint with the ARTA. Once the ARTA has verified that the applicant has submitted all necessary documents and paid the required fees, it will issue a declaration of completeness and order the concerned office or agency to issue the approval, extension, or renewal of the license or permit deemed automatically approved under the Act. However, the IRR failed to mention how long the process to investigate and issue the declaration of completion should be concluded. One can only surmise if the timeline imposed on other agencies will equally apply to ARTA as chief regulator.

As with all other types of legislation, success depends chiefly on the political will to implement the law with persistence. A poor review and reengineering of operating procedures shortchanges the public. While RA 11032 seeks to ease doing business and to make delivery of government services efficient, it seems that only clerical transactions, such as issuance of permits and public documents, will benefit from the Act. All other deadlines in government services will have to contend with the proverbial Filipino time delay, and sadly, the public will have to manage their expectations and ease way from other alternatives, for now.

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.


Cyril B. Pestilos is a Manager at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.

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