Economy Profile Philippines

Ease of Doing Business in Philippines

Rankings on Doing Business topics – Philippines

Topic Scores

Starting a Business

This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city.

To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators.

The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure

Procedures to legally start and formally operate a company (number)

Preregistration (for example, name verification or reservation, notarization)
Registration in the economy’s largest business city
Postregistration (for example, social security registration, company seal)
Obtaining approval from spouse to start a business or to leave the home to register the company
Obtaining any gender specific document for company registration and operation or national identification card

Time required to complete each procedure (calendar days)

Does not include time spent gathering information
Each procedure starts on a separate day (2 procedures cannot start on the same day)
Procedures fully completed online are recorded as ½ day
Procedure is considered completed once final document is received
No prior contact with officials

Cost required to complete each procedure (% of income per capita)

Official costs only, no bribes
No professional fees unless services required by law or commonly used in practice

Paid-in minimum capital (% of income per capita)

Funds deposited in a bank or with third party before registration or up to 3 months after incorporation

Case study assumptions

To make the data comparable across economies, several assumptions about the business and the procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes.

The business:

-Is a limited liability company (or its legal equivalent). If there is more than one type of limited liability company in the economy, the limited liability form most common among domestic firms is chosen. Information on the most common form is obtained from incorporation lawyers or the statistical office.

-Operates in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.

-Performs general industrial or commercial activities such as the production or sale to the public of goods or services. The business does not perform foreign trade activities and does not handle products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily polluting production processes.

-Does not qualify for investment incentives or any special benefits.

-Is 100% domestically owned.

-Has five business owners, none of whom is a legal entity. One business owner holds 30% of the company shares, two owners have 20% of shares each, and two owners have 15% of shares each.

-Is managed by one local director.

-Has between 10 and 50 employees one month after the commencement of operations, all of them domestic nationals.

-Has start-up capital of 10 times income per capita.

-Has an estimated turnover of at least 100 times income per capita.

-Leases the commercial plant or offices and is not a proprietor of real estate.

-Has an annual lease for the office space equivalent to one income per capita.

-Is in an office space of approximately 929 square meters (10,000 square feet).

-Has a company deed that is 10 pages long.

The owners:

-Have reached the legal age of majority and are capable of making decisions as an adult. If there is no legal age of majority, they are assumed to be 30 years old.

-Are in good health and have no criminal record.

-Are married, the marriage is monogamous and registered with the authorities.

-Where the answer differs according to the legal system applicable to the woman or man in question (as may be the case in economies where there is legal plurality), the answer used will be the one that applies to the majority of the population.

Starting a Business – Philippines

Figure – Starting a Business in Philippines – Score

Figure – Starting a Business in Philippines and comparator economies – Ranking and Score

Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators.

Figure – Starting a Business in Philippines – Procedure, Time and Cost

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below.

Details – Starting a Business in Philippines – Procedure, Time and Cost

1 Notarize articles of incorporation and treasurer’s affidavit at the notary

According to Section 14 and 15 of the Corporation Code, articles of incorporation should be notarized before filing with the SEC. Under Section 15 of the Corporation Code, the Treasurer's Affidavit should also be notarized. The 2004 Rules on Notarial Practice require the presence of the person(s) who executed the document (Articles of Incorporation and Treasurer's Affidavit) before the notary public.

Apply for company incorporation and pre-registration for Taxpayer Identification Number (TIN), Social Security System (SSS), Philippine Health Insurance Company (PhilHealth) and Home Development Mutual Fund (Pag-ibig Fund)

Agency : Securities and Exchange Commission

There are three options for applying for incorporation: regular process (paper form), fast-track process (online form), and LEAP (express process recently introduced). Most companies use regular process for incorporation as online system for fast-track process does not always work, and LEAP is a newly introduced and not yet popular option. To apply for company incorporation, the business fill in an application form. The availability of the company name can be verified by filing the application. The following documents are required for SEC registration:

Application form;
Articles of incorporation (notarized) and by-laws;
Written undertaking to change corporate name (notarized).

Once the documents are received, SEC reviews and pre-approves application. After initial review, a payment order is issued and the applicant must pay the required fees and provide the proof of payment. After payment, there is a waiting time to prepare incorporation certificate and supporting documents, which then need to be collected by the applicant at SEC.

The pre-registered Taxpayer Identification Number (TIN) is automatically obtained from SEC upon incorporation. However, the company must still register with the Bureau of Internal Revenue (BIR) in order to identify the applicable taxes, pay an annual registration fee and obtain an approval to print invoices and receipts. The company will also obtain a pre-registration with the Social Security System (SSS), the Philippine Health Insurance Company (PhilHealth) and the Home Development Mutual Fund (Pag-ibig Fund).

3 Pay the registration fees

Agency : Securities and Exchange Commission

Once the business founder has applied for company incorporation online, SEC will issue the payment fees. The applicant must pay the name approval and registration fees at a bank and provide the proof of payment to the system.

The costs to register a company are as follows:

PHP 100 for name verification fee;
Filing fee of 1/5 of 1% of the authorized capital stock or the subscription price of the subscribed capital stock (whichever is higher but not less than PHP 1,000);
Legal research fee (LRF) equivalent to 1% of filing fee but not less than PHP 10;
PHP 1,000 for registration of bylaws;
PHP 150 + 320 for registration of stock and transfer book (STB) required for new corporations;
PHP 10 legal research fee for the bylaws.

1 day (simultaneous with previous procedure)

see procedure details

4 Obtain a business permit

The founders of a new company must obtain a business permit from the local Municipality. The fees vary depending on the LGU issuing the permit. The rate of license fee imposed in Quezon City is 25% of 1% of the authorized capital stock. Other permits, such as location clearance, fire safety and inspection certificate, sanitary permit, certificate of electrical inspection, mechanical permit, and other clearances or certificates required depending on the nature of business, are also imposed. The rate of these fees depends on the nature of business and land area occupied by the proposed corporation.

The company is assessed a basic and an additional community tax. The basic community tax rate depends on whether the company legal form is a corporation, partnership, or association (PHP 500 or lower). The additional community tax (not to exceed PHP 10,000.00) depends on the assessed value of real property the company owns in the Philippines at the rate of PHP 2.00 for every PHP 5,000.00 and on its gross receipts, including dividends or earnings, derived from business activities in the Philippines during the preceding year, at the rate of PHP 2.00 for every PHP 5,000.00.

5 Receive inspection

An inspection is commonly conducted in practice prior to issuing a business permit.

6 Obtain barangay clearance

The company’s founders must obtain a clearance and pay the annual community tax at the local Barangay (neighborhood).

To obtain the Barangay clearance, the following documentary requirements should be submitted: Application form, SEC Certificate of Incorporation and approved articles of incorporation and bylaws, location plan/site map and the lease over the corporation’s office.

The clearance is obtained from the Barangay where the business is located. Barangay fees vary in each Barangay since they have the discretion to impose their own fees and charges as long as these fees are reasonable and within the limits set by the Local Government Code and city ordinances. In Quezon City, the fees range from PHP 300 to PHP 1000. The clearance is obtained in one day, provided that the Barangay captain is in the office as the captain is the only official authorized to sign.

7 Buy special books of account at bookstore

Special books of accounts are required for registering with the BIR. The books of accounts are sold at bookstores nationwide. One set of journals consisting of four books (cash receipts account, disbursements account, ledger, general journal) costs about PHP 400.

If the company has a computerized accounting system (CAS), it may opt to register its CAS under the procedures laid out in BIR Revenue Memorandum Order Nos. 21-2000 and 29-2002.

The BIR Computerized System Evaluation Team is required to inspect and evaluate the company’s CAS within 30 days from receipt of the application form (BIR Form No. 1900) and complete documentary requirements.

The company must also submit a copy of the PCD to the BIR RDO having jurisdiction over the printer’s principal place of business.

Takes place simultaneously with previous procedure.

Dealing with Construction Permits

This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2019. See the methodology for more information

What the indicators measure

Procedures to legally build a warehouse (number)

Submitting all relevant documents and obtaining all necessary clearances, licenses, permits and certificates
Submitting all required notifications and receiving all necessary inspections
Obtaining utility connections for water and sewerage
Registering and selling the warehouse after its completion

Time required to complete each procedure (calendar days)

Does not include time spent gathering information
Each procedure starts on a separate day—though procedures that can be fully completed online are an exception to this rule
Procedure is considered completed once final document is received
No prior contact with officials

Cost required to complete each procedure (% of income per capita)

Official costs only, no bribes
Quality of building regulations (0-2)
Quality control before construction (0-1)
Quality control during construction (0-3)
Quality control after construction (0-3)
Liability and insurance regimes (0-2)
Professional certifications (0-4)

To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility connections are used.

The construction company (BuildCo):

Is a limited liability company (or its legal equivalent) and operates in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.
Is 100% domestically and privately owned; has five owners, none of whom is a legal entity. Has a licensed architect and a licensed engineer, both registered with the local association of architects or engineers. BuildCo is not assumed to have any other employees who are technical or licensed experts, such as geological or topographical experts.
Owns the land on which the warehouse will be built and will sell the warehouse upon its completion.

The warehouse:

Will be used for general storage activities, such as storage of books or stationery.
Will have two stories, both above ground, with a total constructed area of approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 meters (9 feet, 10 inches) high and will be located on a land plot of approximately 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the warehouse is valued at 50 times income per capita.
Will have complete architectural and technical plans prepared by a licensed architect. If preparation of the plans requires such steps as obtaining further documentation or getting prior approvals from external agencies, these are counted as procedures.
Will take 30 weeks to construct (excluding all delays due to administrative and regulatory requirements).

The water and sewerage connections:

Will be 150 meters (492 feet) from the existing water source and sewer tap. If there is no water delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage infrastructure, a septic tank in the smallest size available will be installed or built.
Will have an average water use of 662 liters (175 gallons) a day and an average wastewater flow of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and a peak wastewater flow of 1,136 liters (300 gallons) a day.
Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection.

Dealing with Construction Permits – Philippines

Figure – Dealing with Construction Permits in Philippines – Score

Figure – Dealing with Construction Permits in Philippines and comparator economies – Ranking and Score

DB 2020 Dealing with Construction Permits Score

Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators.

Figure – Dealing with Construction Permits in Philippines – Procedure, Time and Cost

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Figure – Dealing with Construction Permits in Philippines and comparator economies – Measure of Quality

Details – Dealing with Construction Permits in Philippines – Procedure, Time and Cost

1 Obtain a Geotechnical study / Soil test

BuildCo will request a soil boring test for the structural calculations for the foundation.

15 days

PHP 70,000

While the soil test is not required by law, it is done in practice as it is used for the structural

calculations for the foundation and it is commonly submitted as a supporting document for a building permit application.

No.

Procedures

Time to Complete

Associated Costs

2 Obtain a Topographical / Geodetic Survey

Agency : Private firms

Topographic Surveys are used to identify and map the contours of the land plot. Its purpose is to serve as a base map for the design of a building. It also shows the boundary lines and is used by designers to accurately show the required setbacks. It is used for the site plan, which is a mandatory requirement for all construction.

13 days PHP 35,000

3 Obtain lot plan with site map from the geodetic engineer

Agency : Geodetic Engineer

BuildCo must obtain the lot plan with a site map from a geodetic engineer to confirm the location of the land purported to be in the land title. The lot plan with a site map is signed, sealed, and prepared after a meticulous geodetic survey, or at least after an analysis has been conducted of the lot technical description appearing on the title.

4 Obtain certified true copy of the land title from the Register of Deeds (RD)

Agency : Register of Deeds (RD)

5 Obtain barangay clearance

Agency : Barangay

The barangay clearance is not formally a requirement to secure a building permit but it is common industry practice in order to avoid an objection of the Barangay which could delay or stop the construction project. The costs for barangay clearances vary as barangays have the discretion to impose their own fees for as long as such fees are reasonable and within the limits imposed by the Local Government Code and city ordinances.

1 day

PHP 500

The following documents must be submitted:

Certified true copy of the land title
Blueprint copy of the building plans
Authorization from the company
Photocopy of IDs of authorized representative

The certified true copy of the land title serves as proof of ownership of the land on which the warehouse is to be built. In order to obtain the copy, BuildCo must visit the Registry of Deeds to fill out an application and show an ID card. After paying a processing fee, a receipt is produced which is presented when returning to collect the Certified True Copy of the Land Title.

10 days PHP 20,000

4 days PHP 235

6 Apply for the locational clearance at the City Planning and Development Office (CPDO) Agency : City Planning and Development Office (CPDO) at the Quezon City One Stop Shop The locational clearance is required to ensure that the construction conforms to the city’s Comprehensive Land Use Plan and zoning ordinances.	1 day	PHP 200
By virtue of E.O. 11, S-2017 the Quezon City One Stop Shop for Construction Permits receives
and processes the locational clearance.
BuildCo must submit the following documents, in addition to the application form:
1. Two (2) Original copies of Accomplished Form for Locational Clearance;
2. Two (2) Original copies of Lot Plan (for new structure/signed & sealed by a Geodetic Engineer).
An additional three (3) sets of photocopies must be submitted prior to the release of the clearance;
and
3. Two (2) Original copies of Architectural Plan (B.P. 344 –Accessibility Law compliance, if
applicable; Site Development Plan (showing parking layout). An additional three (3) sets of
photocopies must be submitted prior to the release of the clearance.
The following legal documents and clearances are submitted simultaneously with the foregoing
documents:
1. Certified True Copy of the land title;
2. Tax Clearance or Real Property Tax Receipt & Bill;
3. Tax Declaration of the Property;
4. If applicable: Deed of Absolute Sale, Lease Contract/Award Notice, Deed of Assignment or
Donation, Memorandum of Agreement or Joint Venture Agreement;
5. Duly Notarized Authorization of Representative; and
6. Authority to Sign (Corporate Secretary's Affidavit)
7 Receive inspection for the locational clearance from the CPDO Agency : City Planning and Development Office (CPDO)	1 day	no charge
8 Obtain the locational clearance from the CPDO Agency : City Planning and Development Office (CPDO)	22 days	PHP 13,006
BuildCo obtains the order of payment at the releasing section if the application is compliant with
the Zoning Ordinance of 2016, the Fire Code of the Philippines and the National Building Code of
the Philippines. Buildo will then obtain the locational clearance at the CPDO and claim the
permits, clearances, sticker and official receipts at the Releasing Section.
9 Apply and obtain fire safety evaluation clearance (FSEC) from the local Fire Marshall at the Bureau of Fire Protection (BFP)	7 days	PHP 11,055
Agency : Quezon City Fire Marshall – Bureau of Fire Protection (BFP)
The City Fire Marshall evaluates one set of plans and specifications submitted by the applicant to
ensure that they conform to the fire safety and control requirements of the Fire Code. Three sets
of the architectural plans must be stamped and approved by the Quezon City Fire Marshall.
The following documents must be submitted:
1. Two (2) sets of Original copies of accomplished Application Form for Fire Safety Evaluation
Clearance;
2. Two (2) Original copies of Fire Protection Plan, (if applicable); and
3. Two (2) Original copies of Cost Estimate/Bill of Materials
This is submitted simultaneously with the requirements for the applications for Locational
Clearance, Building and Ancillary Permits.
10 Apply and obtain the building permit and ancillary permits at the Office of the Building Official (OBO)	21 days	PHP 43,043
Agency : Office of the Building Official (OBO)
Buildco must submit one (1) set of each of the following documents:
1. Building Permit Application Form (Notarized);
2. Sanitary/Plumbing Permit Application Form;
3. Electrical Permit Application Form;
4. Mechanical Permit Application Form;
5. Electronics Permit Application Form;
6. Photocopies of valid PRC IDs & current PTRs with dry seal and 3 specimen signatures of the
professionals
As well as two (2) sets of the following documents:
1. Structural Plan (with PRC ID & PTR of the Civil Engineer who signed the plans);
2. Sanitary/Plumbing Plans;
3. Electrical Plans;
4. Mechanical Plans
5. Electronics Plan
One (1) set of the following supporting documents:
1. Project Specifications
2. Structural Analysis and Design Computation (if involving structural members)

11 Apply for the fire safety inspection certificate (FSIC) at the BFP Agency : Bureau of Fire Protection (BFP)	1 day	PHP 4,304
Once construction has been completed, BuildCo requests the BFP to inspect the site to certify that
the required fire safety construction, fire protective and/or warning systems are properly installed
and in good working condition.
12 Receive final inspection for the FSIC from the BFP Agency : Bureau of Fire Protection (BFP)	1 day	no charge
13 Obtain the FSIC from the BFP Agency : Bureau of Fire Protection (BFP)	5 days	no charge
14 Apply for the certificate of occupancy at the OBO Agency : Office of the Building Official (OBO)	1 day	no charge
In order to apply for a certificate of occupancy, BuildCo must submit the following to the OBO:
A. Clearances/Certificates/Legal Documents
1. Fire Safety Inspection Certificate (original + 2 photocopies)
2. Locational Clearance (3 photocopies)
3. Approved Building Permit (3 photocopies, present original if it has no bar code)
4. Approved Sanitary Permit (3 photocopies)
5. Certificate of Electrical Inspection (CEI) or Approved Electrical Permit (3 copies) w/ CEI
Application Forms (2 copies)
6. Approved Mechanical Permit (3 photocopies)
7. Corporate Secretary's Certification of Board Resolution Authorizing Signatory (if
Corporation/notarized original copy + 2 photocopies)
Technical Documents (form must be duly accomplished, wet signed & dry sealed by the
professional and signed by the owner/s)
1. Certificate of Completion (for the Structure/2 copies wet signed and dry sealed)
2. Certificate of Completion of Mechanical & Request for Inspection (especially if under Green
Building Ordinance / 2 copies, wet signed & dry sealed)
3. Two (2) photocopies each of valid PRC IDs & current PTRs with seal and specimen signatures
of the professional in blue ink.
Supporting Document/s (signed and sealed by professionals)
1. Construction Logbook
BuildCo must also present the Tax Declaration to the OBO as a condition for the release of the
occupancy permit.
All documents should be signed and sealed by the architect or engineer who undertook the full-
time inspection and supervision of the construction.
15 Receive final inspection for the certificate of occupancy from the OBO Agency : Office of the Building Official (OBO)	1 day	no charge
The OBO conducts a final inspection to check the building based on the certificate of completion,
construction logbook, building inspection sheets, and original and as-built plans and
specifications.
16 Obtain the certificate of occupancy from the OBO Agency : Office of the Building Official (OBO)	18 days	PHP 17,688
After the OBO has processed the application and conducted the inspection, it then issues an
assessment and order of payment. The OBO issues the certificate of occupancy after the
applicant has paid the corresponding fees.
17 Apply for water and sewage connection Agency : Manila Water	1 day	no charge
There are two private water providers for Quezon City. Maynilad services the west zone and
Manila Water services the east zone. An inspection takes place within a week and the connection
is completed some days after the inspection. The case study assumes that BuildCo will request
water from Manila Water as this is the most favorable option.
The required documents, in addition to the application form, are:
1. Proof of Ownership
2. Barangay Clearance
3. Company TIN
4. Valid ID
5. Excavation permit (If advised by the implementing Manila Water business center)
18 Receive inspection for water and sewage connection Agency : Manila Water	1 day	no charge
19 Obtain water and sewage connection Agency : Manila Water	21 days	PHP 15,000

Apply for the tax declaration of improvement at the City Assessor's Office (CAO)

Agency : City Assessor's Office (CAO)

BuildCo must update its official records to include the newly built warehouse for tax purposes. The OBO furnishes the CAO with a copy of the building plan and certificate of occupancy to notify them of the new building construction. BuildCo must submit the floor plan and as-built plan to the CAO.

1 day

no charge

Ordinance No. 2361, series of 2014 entitled: "An Ordinance Requiring All Persons Acquiring Real Property in Quezon City or Making Improvements Thereon to Declare and File a Sworn Statement to the Office of the City Assessor for Real Property Taxation Purposes Such Property Within Sixty

(60) Days After Its Acquisition or Upon Completion/Occupancy or Installation of Machineries Whichever Comes First and Imposing Penalties for Violation Thereof" was adopted on 23 December 2014. According to the legislation, the filing of the sworn statement declaring the true value of the property must be done within 60 days after: (a) the date of the final deed of sale, contract or other deed of conveyance; or (b) the date of completion or occupancy of the newly constructed building, house or improvements; or (c) the date of completion or occupancy of any expansion, renovation, or additional structures or improvements; or (d) the date of installation of machinery. Any property owner who fails to comply with the new ordinance will be penalized with a

fine of PHP 2,000.00.

21 Receive inspection from the appraiser of CAO

22 Obtain the tax declaration of improvement from the CAO

Agency : City Assessor's Office (CAO)

The tax declaration of improvement is released after an appraiser inspects the property.

3 days

no charge

Agency : City Assessor's Office (CAO)

1 day no charge

Takes place simultaneously with previous procedure.

Details – Dealing with Construction Permits in Philippines – Measure of Quality

Getting Electricity

This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure

Procedures to obtain an electricity connection (number)

Submitting all relevant documents and obtaining all necessary clearances and permits
Completing all required notifications and receiving all necessary inspections
Obtaining external installation works and possibly purchasing material for these works
Concluding any necessary supply contract and obtaining final supply

Time required to complete each procedure (calendar days)

Is at least 1 calendar day
Each procedure starts on a separate day
Does not include time spent gathering information
Reflects the time spent in practice, with little follow-up and no prior contact with officials

Cost required to complete each procedure (% of income per capita)

Official costs only, no bribes
Value added tax excluded

The reliability of supply and transparency of tariffs index (0-8)

Duration and frequency of power outages (0–3)
Tools to monitor power outages (0–1)
Tools to restore power supply (0–1)
Regulatory monitoring of utilities’ performance (0–1)
Financial deterrents limiting outages (0–1)
Transparency and accessibility of tariffs (0–1)

To make the data comparable across economies, several assumptions about the warehouse, the electricity connection and the monthly consumption are used.

The warehouse:

Is owned by a local entrepreneur and is used for storage of goods.
Is located in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.
Is located in an area where similar warehouses are typically located and is in an area with no physical constraints. For example, the property is not near a railway.
Is a new construction and is being connected to electricity for the first time.
Has two stories with a total surface area of approximately 1,300.6 square meters (14,000 square feet). The plot of land on which it is built is 929 square meters (10,000 square feet).

The electricity connection:

Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140- kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 kilowatt (kW).
Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution network and is either overhead or underground, whichever is more common in the area where the warehouse is located and requires works that involve the crossing of a 10-meter road (such as by excavation or overhead lines) but are all carried out on public land. There is no crossing of other owners’ private property because the warehouse has access to a road.
Does not require work to install the internal wiring of the warehouse. This has already been completed up to and including the customer’s service panel or switchboard and the meter base.

The monthly consumption:

It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 p.m. (8 hours a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours (kWh); hourly consumption is 112 kWh.
If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier.
Tariffs effective in January of the current year are used for calculation of the price of electricity for the warehouse. Although January has 31 days, for calculation purposes only 30 days are used.

*Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor in the ranking on the ease of getting electricity.

Getting Electricity – Philippines

Figure – Getting Electricity in Philippines – Score

Figure – Getting Electricity in Philippines and comparator economies – Ranking and Score

Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity.

Figure – Getting Electricity in Philippines – Procedure, Time and Cost

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

reflected here, see the summary below.

Figure – Getting Electricity in Philippines and comparator economies – Measure of Quality

Details – Getting Electricity in Philippines – Procedure, Time and Cost

1 Submit application to MERALCO and await site inspection

Customers apply for a new connection at Meralco regional office or online <(https://www.meralco.com.ph/apply). Upon receipt, Meralco will review the application and will send an engineer for a site inspection. The engineer will give instruction on service entrance – the meter, the metering device and the transformer. The metering device will be located on customer's property.

Formal request letter
Complete service application form
Electrical Plan signed & sealed by Professional Electrical Engineer (load schedule, list of loads, single line diagram, location sketch)

Other requirements before contracting
Wiring Permit (Original/Meralco Copy for issuance of meter base)
Valid ID card with picture ( Driver's license, GSIS ID, SSS ID, Passport, TIN Card, Firearm's License, Philhealth ID, PRC License, Original NBI Clearance, Pag-ibig ID)
TIN Card / BIR Certificate of Registration
SEC Registration with Articles of Incorporation or DTI Registration
Company's Latest General Information Sheet (GIS)
Secretary's Certificate
Contract of Lease / Transfer Certificate Title (TCT) / Deed of Sale / Condominium Title Certificate (CTC) / Contract to Sell
Depending on the nature of your business and location, a PEZA or BOI Certification for Zero VAT Rating

Other requirements before energization

-CFEI

-Payment of service deposit

No.

Procedures

Time to Complete

Associated Costs

2 Receive site visit from MERALCO and await approval

Agency : MERALCO

An engineer from Meralco comes on site to perform a feasibility study is and approve the connection request. The applicant's contractor will typically be present.

3 Request and receive certificate of final electrical inspection (CFEI) from Quezon City

Agency : Quezon City

A Certificate of final electrical Inspection (CFEI) must be obtained from Quezon City. This is done once the electrical installations are complete. As part with the application for CFEI to the city, the engineer in-charge of the installation must sign and submit the “Completion Certificate of Electrical Installation”.

7 calendar days

PHP 7,500

If the electrical installation is found to be in conformity with the approved electrical permit and with

the approved electrical plans, the CFEI will be released.

Back in the office, an engineer from Design Office in Meralco will prepare the design of facilities to serve the application and another one to prepare the electric service contract between Meralco and the customer. The contract can be sent through email or the customer can receive it at the Meralco office.

14 calendar days PHP 0

4 Submit inspection certificate to MERALCO and await final connection

Agency : MERALCO

Once the feasibility study is completed and approved by MERALCO and the customer obtained the CFEI from the City Hall, he/she visits MERALCO to submit CFEI and the deposit (which is 1 month of expected consumption). After this, MERALCO can begin the installation of the power service connection and metering. The project cost is shouldered by MERALCO through the Customer Allocation Budget.

The security deposit charged can be refunded to the customer, including accumulated interest, upon the termination of the service contract or if the account is transferred to another owner.

Interest rates fluctuate with the current central bank rate and are accrued to the account. However, based on the issuance of the Distribution Services and Open Access Rules, which contains the “Early Refund Policy”, customers who pay their on time for 3 consecutive years can get a full refund prior to the termination of their service.

20 calendar days PHP 40,026.56

Takes place simultaneously with previous procedure.

Details – Getting Electricity in Philippines – Measure of Quality

Note:

If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index.

If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index.

Registering Property

This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure

Procedures to legally transfer title on immovable property (number)

Preregistration procedures (for example, checking for liens, notarizing sales agreement, paying property transfer taxes)
Registration procedures in the economy's largest business city.
Postregistration procedures (for example, filling title with municipality)

Time required to complete each procedure (calendar days)

Does not include time spent gathering information
Each procedure starts on a separate day – though procedures that can be fully completed online are an exception to this rule
Procedure is considered completed once final document is received
No prior contact with officials

Cost required to complete each procedure (% of property value)

Official costs only (such as administrative fees, duties and taxes).
Value Added Tax, Capital Gains Tax and illicit payments are excluded

Quality of land administration index (0-30)

Reliability of infrastructure index (0-8)
Transparency of information index (0–6)
Geographic coverage index (0–8)
Land dispute resolution index (0–8)
Equal access to property rights index (-2–0)

To make the data comparable across economies, several assumptions about the parties to the transaction, the property and the procedures are used.

The parties (buyer and seller):

Are limited liability companies (or the legal equivalent).
Are located in the periurban (that is, on the outskirts of the city but still within its official limits) area of the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.
Are 100% domestically and privately owned.
Perform general commercial activities.

The property (fully owned by the seller):

Has a value of 50 times income per capita, which equals the sale price.
Is fully owned by the seller.
Has no mortgages attached and has been under the same ownership for the past 10 years.
Is registered in the land registry or cadastre, or both, and is free of title disputes.
Is located in a periurban commercial zone (that is, on the outskirts of the city but still within its official limits), and no rezoning is required.
Consists of land and a building. The land area is 557.4 square meters (6,000 square feet). A two- story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in good condition, has no heating system and complies with all safety standards, building codes and legal requirements. The property, consisting of land and building, will be transferred in its entirety.
Will not be subject to renovations or additional construction following the purchase.
Has no trees, natural water sources, natural reserves or historical monuments of any kind.
Will not be used for special purposes, and no special permits, such as for residential use, industrial plants, waste storage or certain types of agricultural activities, are required.
Has no occupants, and no other party holds a legal interest in it.

Registering Property – Philippines

Figure – Registering Property in Philippines – Score

Figure – Registering Property in Philippines and comparator economies – Ranking and Score

DB 2020 Registering Property Score

Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators.

Figure – Registering Property in Philippines – Procedure, Time and Cost

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Figure – Registering Property in Philippines and comparator economies – Measure of Quality

Details – Registering Property in Philippines – Procedure, Time and Cost

Check against encumbrances and obtain certified true copy of the land title from the Register of Deeds (RD)

Agency : Register of Deeds

The lawyer goes to the Registry of Deeds, fills out an application that includes the property title number and the name of the owner, and shows his ID card. Upon paying the processing fees, the lawyer is given a receipt which he must present when returning to collect the Certified True Copy of the land title.

4 days PHP 444.16; (PHP 209 for

checking against encumbrances and PHP

235.16 for obtaining the true copy of the land title. The value of 235.16 is divided as follows: PHP 36 for the certificate + PHP 6 per additional page of the certificate (usually 1 additional page) + PHP

160.97 IT fee + PHP 32.19

per additional page of the IT fees (usually 1 additional page).)

Prepare the notarized deed of sale and related documents

Agency : Notary

While the deed of sale can be prepared by anyone, it must be executed before and notarized by a notary public. In many instances, the notary public drafts the deed of sale and conducts the whole process on behalf of the parties. In addition to the deed of sale, the Register of Deeds also requires both the buyer and the seller to submit notarized secretary's certificates containing the resolution of their board of directors approving the sale.

1 day PHP 146,912.24; (1 – 2% property value for notarization)

3 Obtain tax clearance certificate of real property taxes from the Land Tax Division of the City Treasurer’s Office (CTO)

Agency : Real Estate Tax Division of the City Treasurer’s Office

The seller, after paying any arrears, obtains a tax clearance certificate from the CTO. The documentation shall include: (1) an original of the official receipt evidencing payment by seller of realty taxes; (2) certified true copy of latest tax declarations for each of the land and the warehouse; (3) photocopy of official receipt for payment of real property tax for each of the land and the warehouse for the immediately preceding year. Note: Separate tax clearance for real property tax should be obtained for the land and the warehouse

4 Obtain certified true copy of latest tax declaration and certificate of "with improvement" from the City Assessor’s Office (CAO)

Agency : City Assessor’s Office

The seller obtains a certified true copy of the latest tax declaration and a certificate of "with improvement" from the City Assessor’s Office of Quezon City.

2 days PHP 130; (PHP 130 (PHP

50 for tax clearance of land and PHP 50 for real estate clearance plus PHP 30 for documentary stamp tax))

1 day PHP 250; (PHP 250 (PHP

50 per RPU (1 land RPU and 1 Building RPU) + PHP 90 for certificate of "with improvement" + PHP 60 (PHP 20 per

documentary stamp tax (3 documents)))

5 Pay documentary stamp tax and final capital gains tax for the transfer of real property

Agency : Authorized Agent Bank (AAB)

The seller or the buyer (based on their agreement) files the Documentary Stamp Tax return and Capital Gains Tax return with the authorized agent bank. This is done within 5 days after the close of the month when the taxable document was signed or within 30 days after the sale, whichever is earlier. The taxes are paid at the authorized bank to the account of the Bureau of Internal Revenue.

The Creditable Withholding Tax at the rate of 6%.

The Documentary Stamp Tax is 1.5% based on selling price or fair market value, whichever is higher. The buyer should file CWT and pay the CWT at the rate stated above no later than 10 days after the end of the month when the withholding tax was withheld, except for taxes withheld in December for which the deadline is on January 15 of the following year.

1 day

PHP 146,912.24; (1.5% of

property value (Documentary Stamp Tax))

The documentation shall include:

Original copy and photocopy of notarized deed of sale of building (obtained in Procedure 1)
Certified true copy of transfer certificate of title (in the name of seller)
Certified true copy of latest tax declaration (in the name of seller) (obtained in Procedure 2)
Photocopy of the latest realty tax receipt
Letter-request
Identification card of the person requesting

Obtain Certificate Authorizing Registration (CAR) from the Bureau of Internal Revenue (BIR)

Agency : Bureau of Internal Revenue (BIR)

The Certificate Authorizing Registration (CAR) is a certification issued by the BIR that the transfer and conveyance of the property was reported and the taxes due have been fully paid.

The taxpayer/applicant must submit the following documents to the BIR:

Tax identification number (TIN) of seller and buyer;
Notarized deed of absolute sale/document of transfer, but only photocopied document shall be retained by the BIR;
Certified true copy of the latest tax declaration issued by the City Assessor’s Office for the land and improvement applicable to the taxable transaction;
Owner’s copy (for presentation purposes only) and photocopy (for authentication) of the Original Certificate of Title (OCT), or the certified true copy of the Transfer Certificate of Title (TCT);
Sworn declaration of “with Improvement” by at least one (1) of the parties, or certificate of “with Improvement” issued by the City Assessor’s Office.

Official Receipt issued by the Notary Public who notarized the deed of sale

All documents submitted must also include 2 photocopies. The Certificate Authorizing Registration that will be released will be accompanied by the following documents:

The Original copy of the Deed of Absolute Sale stamped received by the BIR 2000 (DST) stamped received by the BIR

Applicant accomplishes BIR forms 2000-OT and 1706 for DST and CWT respectively, based on the ONETT computation sheets prepared by the BIR ONETT team. The applicant files the DST return and CGT return and pays the taxes at the AAB of the Revenue District Office. Upon receipt of proof of tax payment from the taxpayer/applicant, the BIR immediately issues a claim slip.

14 days PHP 130; (PHP 130 (PHP

100 certification fee + PHP 30 documentary tax))

Pay the transfer tax at the CTO

Agency : Real Estate Tax Division of the City Treasurer’s Office

The transfer tax must be paid at the CTO not later than 60 days from the date of execution of the Deed of Absolute Sale or the notarization date thereof, whichever is earlier. The documentation shall include:

Original copy of the deed of sale
Tax clearance certificate from the Treasurer’s Office of Quezon City (obtained in Procedure 3);
Tax declaration from the City Assessor’s Office of Quezon City (obtained in procedure 4) ;
Official receipt of the Bureau of Internal Revenue (for documentary stamp tax) (obtained in Procedure 5);
Certificate Authorizing Registration from the Bureau of Internal Revenue (obtained in Procedure 6);

1 day PHP 73,581.12; (0.75% of

property price (transfer tax) + PHP 125 (certificate of payment))

8 Apply for registration with the Register of Deeds

Agency : Register of Deeds

The buyer applies for registration with the Register of Deeds.

10 days

The documentation shall include:

Copy of deed of absolute sale;
Official receipt evidencing payment of transfer tax;
Certificate Authorizing Registration from the BIR (CAR) including official receipts for payment of DST and CGT;
Real property tax clearance from the City Treasurer’s Office;
Original copy of the owner's duplicate of TCT (in the name of the seller);
Original or certified true copy of the latest tax declaration;
Notarized secretary's certificate containing resolution of the board of directors of the seller approving the sale;
Notarized secretary's certificate containing resolution of the board of directors of the buyer approving the sale;
Articles of incorporation of the buyer and by-laws; and
Certificate of company's incorporation

PHP 49,837.93;

(Registration fee consisting of PHP 8,796 for first PHP 1.700,000 + PHP 90 for every PHP 20,000 or fraction thereof in excess of PHP 1.700,000 + PHP 199.56

legal research fee + PHP 30 judicial form fee + PHP 3,104.37 IT fee (PHP

344.93 per document (x9))

+ PHP 300 primary entry fee (PHP 30 per document (x10)) + PHP 480

registration fee for specific documents (PHP 120 per document(x4)) + PHP 120 fixed entry fee for specific documents (PHP 30 per document (x4)) + PHP 40 legal research fee for specific documents (PHP 10 per document(x4)) + PHP 60 annotation fee (PHP 30 per document (x2)) + PHP 258 fee for issuance of new transfer

certificate of title.)

Obtain new tax declaration over the building and the land in the name of buyer from CAO

Agency : City Assessor’s Office – City Government

The buyer applies with the CAO for the issuance of a new tax declaration over the building in his name.

The documentation shall include:

Photocopy of notarized deed of sale;
Copy of latest tax declaration (in the name of seller);
Tax clearance certificate of real property taxes from the CTO;
Certificate authorizing registration from the BIR;
Photocopy of official receipt of transfer tax payment (original copy to be presented);
The transfer certificate of title (TCT) issued by the RD (in the name of the buyer);

2 days no charge

Takes place simultaneously with previous procedure.

Details – Registering Property in Philippines – Measure of Quality

	Answer	Score
Quality of the land administration index (0-30)		12.5
Reliability of infrastructure index (0-8)		2.0
Type of land registration system in the economy:	Title Registration System
What is the institution in charge of immovable property registration?	Land Registration Authority (LRA) – Register of Deeds
In what format are past and newly issued land records kept at the immovable property registry of the largest business city of the economy —in a paper format or in a computerized format (scanned or fully digital)?	Computer/Scanned	1.0
Is there a comprehensive and functional electronic database for checking for encumbrances (liens, mortgages, restrictions and the like)?	Yes	1.0
Institution in charge of the plans showing legal boundaries in the largest business city:	Department of Environment and Natural Resources (DENR) – Land Management Bureau (LMB)
In what format are past and newly issued cadastral plans kept at the mapping agency of the largest business city of the economy—in a paper format or in a computerized format (scanned or fully digital)?	Paper	0.0
Is there an electronic database for recording boundaries, checking plans and providing cadastral information (geographic information system)?	No	0.0
Is the information recorded by the immovable property registration agency and the cadastral or mapping agency kept in a single database, in different but linked databases or in separate databases?	Separate databases	0.0
Do the immovable property registration agency and cadastral or mapping agency use the same identification number for properties?	No	0.0
Transparency of information index (0–6)		3.0
Who is able to obtain information on land ownership at the agency in charge of immovable property registration in the largest business city?	Only intermediaries and interested parties	0.0
Is the list of documents that are required to complete any type of property transaction made publicly available– and if so, how?	Yes, online	0.5
Link for online access:	http://lra.gov.ph/servic es/requirements/
Is the applicable fee schedule for any type of property transaction at the agency in charge of immovable property registration in the largest business city made publicly available–and if so, how?	Yes, online	0.5
Link for online access:	http://lra.gov.ph/servic es/fees/
Does the agency in charge of immovable property registration agency formally commit to deliver a legally binding document that proves property ownership within a specific timeframe –and if so, how does it communicate the service standard?	Yes, online	0.5
Link for online access:	https://www.lra.gov.ph /citizen-s-charter.html
Is there a speciﬁc and independent mechanism for filing complaints about a problem that occurred at the agency in charge of immovable property registration?	No	0.0
Contact information:
Are there publicly available official statistics tracking the number of transactions at the immovable property registration agency?	No	0.0
Number of property transfers in the largest business city in 2018:	18.1
Who is able to consult maps of land plots in the largest business city?	Anyone who pays the official fee	0.5
Is the applicable fee schedule for accessing maps of land plots made publicly available—and if so, how?	Yes, online	0.5

Link for online access:	http://www.lra.gov.ph/ mediafiles/pdf%20for ms/LRA%20Fees/lraf eeschedule1.pdf
Does the cadastral/mapping agency formally specifies the timeframe to deliver an updated cadastral plan—and if so, how does it communicate the service standard?	Yes, online	0.5
Link for online access:	https://www.lra.gov.ph /citizen-s-charter.html
Is there a speciﬁc and independent mechanism for filing complaints about a problem that occurred at the cadastral or mapping agency?	No	0.0
Contact information:
Geographic coverage index (0–8)		4.0
Are all privately held land plots in the largest business city formally registered at the immovable property registry?	Yes	2.0
Are all privately held land plots in the economy formally registered at the immovable property registry?	No	0.0
Are all privately held land plots in the largest business city mapped?	Yes	2.0
Are all privately held land plots in the economy mapped?	No	0.0
Land dispute resolution index (0–8)		4.5
Does the law require that all property sale transactions be registered at the immovable property registry to make them opposable to third parties?	Yes	1.5
Legal basis:	Property Registration Decree, Civil Code and jurisprudence
Is the system of immovable property registration subject to a state or private guarantee?	Yes	0.5
Type of guarantee:	State guarantee
Legal basis:	Philippine Constitution, Civil code and other pertinent Philippine laws, Article XII, National Economy and Patrimony Law.
Is there a is a speciﬁc, out-of-court compensation mechanism to cover for losses incurred by parties who engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry?	Yes	0.5

Legal basis:	Section 95 of Presidential Decree on Assurance Fund #1529 which provides that: "A person who, without negligence on his part, sustains loss or damage, or is deprived of land or any estate or interest therein in consequence of the bringing of the land under the operation of the Torrens system of arising after original registration of land.
Does the legal system require a control of legality of the documents necessary for a property transaction (e.g., checking the compliance of contracts with requirements of the law)?	Yes	0.5
If yes, who is responsible for checking the legality of the documents?	Registrar; Notary; Lawyer;
Does the legal system require verification of the identity of the parties to a property transaction?	Yes	0.5
If yes, who is responsible for verifying the identity of the parties?	Registrar; Notary; Lawyer;
Is there a national database to verify the accuracy of government issued identity documents?	No	0.0
What is the Court of first instance in charge of a case involving a standard land dispute between two local businesses over tenure rights for a property worth 50 times gross national income (GNI) per capita and located in the largest business city?	Regional Trial Court
How long does it take on average to obtain a decision from the first-instance court for such a case (without appeal)?	Between 2 and 3 years	1.0
Are there publicly available statistics on the number of land disputes at the economy level in the ﬁrst instance court?	No	0.0
Number of land disputes in the economy in 2018:
Equal access to property rights index (-2–0)		-1.0
Do unmarried men and unmarried women have equal ownership rights to property?	Yes
Do married men and married women have equal ownership rights to property?	No	-1.0

Getting Credit

This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure

Strength of legal rights index (0–12)

Rights of borrowers and lenders through collateral laws (0-10)
Protection of secured creditors’ rights through bankruptcy laws (0-2)

Depth of credit information index (0–8)

Scope and accessibility of credit information distributed by credit bureaus and credit registries (0-8)

Credit bureau coverage (% of adults)

Number of individuals and firms listed in largest credit bureau as a percentage of adult population

Credit registry coverage (% of adults)

Number of individuals and firms listed in credit registry as a percentage of adult population

Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of indicators. The depth of credit information index measures rules and practices affecting the coverage, scope and accessibility of credit information available through a credit registry or a credit bureau. The strength of legal rights index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined whether a unitary secured transactions system exists. Then two case scenarios, case A and case B, are used to determine how a nonpossessory security interest is created, publicized and enforced according to the law. Special emphasis is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a secured lender, BizBank.

In some economies the legal framework for secured transactions will allow only case A or case B (not both) to apply. Both cases examine the same set of legal provisions relating to the use of movable collateral.

Several assumptions about the secured borrower (ABC) and lender (BizBank) are used:

ABC is a domestic limited liability company (or its legal equivalent).
ABC has up to 50 employees.
ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.
Both ABC and BizBank are 100% domestically owned.

The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests).

In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets.

Getting Credit – Philippines

Indicator	Philippines	East Asia & Pacific	OECD high income	Best Regulatory Performance
Strength of legal rights index (0-12)	1	7.1	6.1	12 (5 Economies)
Depth of credit information index (0-8)	7	4.5	6.8	8 (53 Economies)
Credit registry coverage (% of adults)	0.0	16.6	24.4	100.0 (2 Economies)
Credit bureau coverage (% of adults)	13.5	23.8	66.7	100.0 (14 Economies)

Figure – Getting Credit in Philippines – Score

Figure – Getting Credit in Philippines and comparator economies – Ranking and Score

DB 2020 Getting Credit Score

Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index.

Figure – Legal Rights in Philippines and comparator economies

Details – Legal Rights in Philippines

Figure – Credit Information in Philippines and comparator economies

Details – Credit Information in Philippines

Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0.

Protecting Minority Investors

This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure

Extent of disclosure index (0–10): Disclosure, review, and approval requirements for related-party transactions
Extent of director liability index (0–10): Ability of minority shareholders to sue and hold interested directors liable for prejudicial related-party transactions; Available legal remedies (damages, disgorgement of profits, disqualification from managerial position(s) for one year or more, rescission of the transaction)
Ease of shareholder suits index (0–10): Access to internal corporate documents; Evidence obtainable during trial and allocation of legal expenses
Extent of conflict of interest regulation index (0-30): Sum of the extent of disclosure, extent of director liability and ease of shareholder suits indices
Extent of shareholder rights index (0-6): Shareholders’ rights and role in major corporate decisions
Extent of ownership and control index (0-7): Governance safeguards protecting shareholders from undue board control and entrenchment
Extent of corporate transparency index (0-7): Corporate transparency on ownership stakes, compensation, audits and financial prospects
Extent of shareholder governance index (0–20): Sum of the extent of shareholders rights, extent of ownership and control and extent of corporate transparency indices
Strength of minority investor protection index (0–50): Sum of the extent of conflict of interest regulation and extent of shareholder governance indices

To make the data comparable across economies, a case study uses several assumptions about the business and the transaction.

The business (Buyer):

Is a publicly traded corporation listed on the economy’s most important stock exchange.
Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of Buyer where permitted, even if this is not speciﬁcally required by law.
Has a supervisory board in economies with a two-tier board system on which Mr. James appointed 60% of the shareholder-elected members.
Has not adopted bylaws or articles of association that go beyond the minimum requirements. Does not follow codes, principles, recommendations or guidelines that are not mandatory.
Is a manufacturing company with its own distribution network.

The transaction involves the following details:
Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two directors to Buyer’s ﬁve-member board.
Mr. James also owns 90% of Seller, a company that operates a chain of retail hardware stores. Seller recently closed a large number of its stores.
Mr. James proposes that Buyer purchase Seller’s unused ﬂeet of trucks to expand Buyer’s distribution of its food products, a proposal to which Buyer agrees. The price is equal to 10% of Buyer’s assets and is higher than the market value.
The proposed transaction is part of the company’s principal activity and is not outside the authority of the company.
Buyer enters into the transaction. All required approvals are obtained, and all required disclosures made—that is, the transaction was not entered into fraudulently.
The transaction causes damages to Buyer. Shareholders sue Mr. James and the executives and directors that approved the transaction.

Protecting Minority Investors – Philippines

Figure – Protecting Minority in Philippines – Score

Figure – Protecting Minority Investors in Philippines and comparator economies – Ranking and Score

DB 2020 Protecting Minority Investors Score

Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conﬂict of interest regulation index and the extent of shareholder governance index.

Figure – Protecting Minority Investors in Philippines and comparator economies – Measure of Quality

Details – Protecting Minority Investors in Philippines – Measure of Quality

	Answer	Score
Extent of conflict of interest regulation index (0-30)
Extent of disclosure index (0-10)		9.0
Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3)	Board of directors excluding interested members	2.0
Must an external body review the terms of the transaction before it takes place? (0-1)	Yes	1.0
Must Mr. James disclose his conflict of interest to the board of directors? (0-2)	Full disclosure of all material facts	2.0
Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2)	Disclosure on the transaction and on the conflict of interest	2.0
Must Buyer immediately disclose the transaction to the public? (0-2)	Disclosure on the transaction and on the conflict of interest	2.0
Extent of director liability index (0-10)		4.0
Can shareholders representing 10% of Buyer's share capital sue for the damage the transaction caused to Buyer? (0-1)	Yes	1.0
Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0-2)	Not liable	0.0
Can shareholders hold the other directors liable for the damage the transaction caused to Buyer? (0-2)	Not liable	0.0
Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by shareholders? (0-1)	Yes	1.0
Must Mr. James repay profits made from the transaction upon a successful claim by shareholders? (0-1)	Yes	1.0
Is Mr. James disqualified upon a successful claim by shareholders? (0-1)	Yes	1.0
Can a court void the transaction upon a successful claim by shareholders? (0-2)	Only in case of fraud or bad faith	0.0
Ease of shareholder suits index (0-10)		7.0
Before suing, can shareholders representing 10% of Buyer's share capital inspect the transaction documents? (0-1)	Yes	1.0
Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3)	Any relevant document	3.0
Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1)	No	0.0
Can the plaintiff directly question the defendant and witnesses at trial? (0-2)	Yes	2.0
Is the level of proof required for civil suits lower than that of criminal cases? (0-1)	Yes	1.0
Can shareholder plaintiffs recover their legal expenses from the company? (0-2)	At the discretion of the court	0.0
Extent of shareholder governance index (0-20)
Extent of shareholder rights index (0-6)		1.0
Does the sale of 51% of Buyer's assets require shareholder approval?	No	0.0
Can shareholders representing 10% of Buyer's share capital call for a meeting of shareholders?	No	0.0
Must Buyer obtain its shareholders’ approval every time it issues new shares?	No	0.0
Do shareholders automatically receive preemption rights every time Buyer issues new shares?	No	0.0
Do shareholders elect and dismiss the external auditor?	Yes	1.0
Are changes to the rights of a class of shares only possible if the holders of the affected shares approve?	No	0.0
Extent of ownership and control index (0-7)		5.0

Is it forbidden to appoint the same individual as CEO and chairperson of the board of directors?	No	0.0
Must the board of directors include independent and nonexecutive board members?	Yes	1.0
Can shareholders remove members of the board of directors without cause before the end of their term?	Yes	1.0
Must the board of directors include a separate audit committee exclusively comprising board members?	Yes	1.0
Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Buyer?	Yes	1.0
Must Buyer pay declared dividends within a maximum period set by law?	Yes	1.0
Is a subsidiary prohibited from acquiring shares issued by its parent company?	No	0.0
Extent of corporate transparency index (0-7)		4.0
Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%?	Yes	1.0
Must Buyer disclose information about board members’ primary employment and directorships in other companies?	Yes	1.0
Must Buyer disclose the compensation of individual managers?	No	0.0
Must a detailed notice of general meeting be sent 21 days before the meeting?	No	0.0
Can shareholders representing 5% of Buyer’s share capital put items on the general meeting agenda?	No	0.0
Must Buyer's annual financial statements be audited by an external auditor?	Yes	1.0
Must Buyer disclose its audit reports to the public?	Yes	1.0

Paying Taxes

This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2019 covering for the Paying Taxes indicator calendar year 2018 (January 1, 2018 – December 31, 2018). See the methodology for more information.

What the indicators measure

Tax payments for a manufacturing company in 2018 (number per year adjusted for electronic and joint filing and payment)

Total number of taxes and contributions paid or withheld, including consumption taxes (value added tax, sales tax or goods and service tax)
Method and frequency of filing and payment

Time required to comply with 3 major taxes (hours per year)

Collecting information, computing tax payable
Preparing separate tax accounting books, if required
Completing tax return, filing with agencies
Arranging payment or withholding

Total tax and contribution rate (% of commercial profits)

Profit or corporate income tax
Social contributions, labor taxes paid by employer
Property and property transfer taxes
Dividend, capital gains, financial transactions taxes
Waste collection, vehicle, road and other taxes

Postfiling Index

Time to comply with VAT refund (hours)
Time to obtain VAT refund (weeks)
Time to comply with a corporate income tax correction (hours)
Time to complete a corporate income tax correction (weeks)

Using a case scenario, Doing Business records taxes and mandatory contributions a medium size company must pay in a year, and measures the administrative burden of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of filing and payments, time taken to comply with tax laws, time taken to comply with the requirements of postfiling processes and time waiting.

To make data comparable across economies, several assumptions are used:

TaxpayerCo is a medium-size business that started operations on January 1, 2017. It produces ceramic flowerpots and sells them at retail. All taxes and contributions recorded are paid in the second year of operation (calendar year 2018). Taxes and mandatory contributions are measured at all levels of government.

The VAT refund process:
In June 2018, TaxpayerCo. makes a large capital purchase: the value of the machine is 65 times income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are equally expensed per month (875 times income per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, sales and the machine and the tax reporting period is every month. Input VAT will exceed Output VAT in June 2018.

The corporate income tax audit process:
An error in calculation of income tax liability (for example, use of incorrect tax depreciation rates, or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. discovered the error and voluntarily notified the tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period.

Paying Taxes – Philippines

Figure – Paying Taxes in Philippines – Score

Figure – Paying Taxes in Philippines and comparator economies – Ranking and Score

DB 2020 Paying Taxes Score

Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold.

Figure – Paying Taxes in Philippines and comparator economies – Measure of Quality

Details – Paying Taxes in Philippines

Details – Paying Taxes in Philippines – Tax by Type
Taxes by type	Answer
Profit tax (% of profit)	20.2
Labor tax and contributions (% of profit)	8.9
Other taxes (% of profit)	14.0

Details – Paying Taxes in Philippines – Measure of Quality
	Answer	Score
Postfiling index (0-100)		50.0
VAT refunds
Does VAT exist?	Yes
Does a VAT refund process exist per the case study?	No
Restrictions on VAT refund process	Restricted to international traders and others
Percentage of cases exposed to a VAT audit (%)	Not applicable
Is there a mandatory carry forward period?	No
Time to comply with VAT refund (hours)	No VAT refund per case study scenario	0.0
Time to obtain VAT refund (weeks)	No VAT refund per case study scenario	0.0
Corporate income tax audits
Does corporate income tax exist?	Yes
Percentage of cases exposed to a corporate income tax audit (%)	0% – 24%
Time to comply with a corporate income tax correction (hours)	1.5	100
Time to complete a corporate income tax correction (weeks)	No tax audit per case study scenario	100

Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable.

The hours for Social Security include all the hours for labor taxes and mandatory contributions in general.

The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction.

N/A = Not applicable.

Trading across Borders

Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure

Case study assumptions

Documentary compliance

Obtaining, preparing and submitting documents during transport, clearance, inspections and port or border handling in origin economy
Obtaining, preparing and submitting documents required by destination economy and any transit economies
Covers all documents required by law and in practice, including electronic submissions of information

Border compliance
Customs clearance and inspections
Inspections by other agencies (if applied to more than 20% of shipments)
Handling and inspections that take place at the economy’s port or border

Domestic transport
Loading or unloading of the shipment at the warehouse or port/border
Transport between warehouse and port/border
Traffic delays and road police checks while shipment is en route

To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions:

Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are recorded as 22×24=528 hours). If customs clearance takes 7.5 hours, the data are recorded as is. Alternatively, suppose documents are submitted to a customs agency at 8:00a.m., are processed overnight and can be picked up at 8:00a.m. the next day. The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours.

Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the costs recorded. Costs are reported in U.S. dollars. Contributors are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. Contributors are private sector experts in international trade logistics and are informed about exchange rates.

Assumptions of the case study:

For all 190 economies covered by Doing Business, it is assumed a shipment is in a warehouse in the largest business city of the exporting economy and travels to a warehouse in the largest business city of the importing economy.
It is assumed each economy imports 15 metric tons of containerized auto parts (HS 8708) from its natural import partner—the economy from which it imports the largest value (price times quantity) of auto parts. It is assumed each economy exports the product of its comparative advantage (defined by the largest export value) to its natural export partner—the economy that is the largest purchaser of this product. Shipment value is assumed to be $50,000.
The mode of transport is the one most widely used for the chosen export or import product and the trading partner, as is the seaport or land border crossing.
All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process.
A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy.
Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities.

Trading across Borders – Philippines

Indicator	Philippines	East Asia & Pacific	OECD high income	Best Regulatory Performance
Time to export: Border compliance (hours)	42	57.5	12.7	1 (19 Economies)
Cost to export: Border compliance (USD)	456	381.1	136.8	0 (19 Economies)
Time to export: Documentary compliance (hours)	36	55.6	2.3	1 (26 Economies)
Cost to export: Documentary compliance (USD)	53	109.4	33.4	0 (20 Economies)
Time to import: Border compliance (hours)	120	68.4	8.5	1 (25 Economies)
Cost to import: Border compliance (USD)	690	422.8	98.1	0 (28 Economies)
Time to import: Documentary compliance (hours)	96	53.7	3.4	1 (30 Economies)
Cost to import: Documentary compliance (USD)	68	108.4	23.5	0 (30 Economies)

Figure – Trading across Borders in Philippines – Score

Time	Cost	Time	Cost	Time	Cost	Time	Cost
to	to	to	to	to	to	to	to
export:	export:	export:	export:	import:	import:	import:	import:
Border	Border	Documentary	Documentary	Border	Border	Documentary	Documentary
compliance	compliance	compliance	compliance	compliance	compliance	compliance	compliance

Figure – Trading across Borders in Philippines and comparator economies – Ranking and Score

73.9

57.0

79.3

86.9

57.3

42.5

60.3

90.4

DB 2020 Trading Across Borders Score

0 100

88.5: Malaysia (Rank: 49)

84.6: Thailand (Rank: 62)

78.1: Lao PDR (Rank: 78)

71.6: Regional Average (East Asia & Pacific)

68.4: Philippines (Rank: 113)

67.5: Indonesia (Rank: 116)

Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import.

Figure – Trading across Borders in Philippines – Time and Cost

120

690

456

140

Time (hours)

120

100

Export

–

Export

–

Time (hours) Cost (USD)

Import

–

Import

–

800

700

Cost (USD)

600

500

400

300

200

100

Border Compliance

Documentary Compliance

Border Compliance

Documentary Compliance

Details – Trading across Borders in Philippines

Characteristics Export Import

Product HS 85 : Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles

HS 8708: Parts and accessories of motor vehicles

Border

Manila port

Trade partner Hong Kong, China Japan

Domestic transport time (hours)

Distance (km) 18 18

Domestic transport cost (USD) 300 300

Details – Trading across Borders in Philippines – Components of Border Compliance

	Time to Complete (hours)	Associated Costs (USD)
Export: Clearance and inspections required by customs authorities	2.9	60.7
Export: Clearance and inspections required by agencies other than customs	0.0	0.0
Export: Port or border handling	42.5	395.3
Import: Clearance and inspections required by customs authorities	120.0	139.5
Import: Clearance and inspections required by agencies other than customs	0.0	0.0
Import: Port or border handling	120.0	550.0

Details – Trading across Borders in Philippines – Trade Documents

Export

Import

Packing List Packing List

Invoice Invoice

Bill of Lading Bill of Lading

Customs Export Declaration Customs Import Declaration

SOLAS certificate Certificate of Origin

SOLAS certificate

Enforcing Contracts

The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2019. See the methodology for more information.

What the indicators measure

Case study assumptions

Time required to enforce a contract through the courts (calendar days)

Time to file and serve the case
Time for trial and to obtain the judgment
Time to enforce the judgment

Cost required to enforce a contract through the courts (% of claim value)
Average attorney fees
Court costs
Enforcement costs

Quality of judicial processes index (0-18)
Court structure and proceedings (-1-5)
Case management (0-6)
Court automation (0-4)
Alternative dispute resolution (0-3)

The dispute in the case study involves the breach of a sales contract between two domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt enforcement.

To make the data on the time and comparable across economies, several assumptions about the case are used:

The dispute concerns a lawful transaction between two businesses (Seller and Buyer), both located in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.
The Buyer orders custom-made furniture, then fails to pay alleging that the goods are not of adequate quality.
The value of the dispute is 200% of the income per capita or the equivalent in local currency of USD 5,000, whichever is greater.
The Seller sues the Buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000 whichever is greater.
The Seller requests the pretrial attachment of the defendant’s movable assets to secure the claim.
The claim is disputed on the merits because of Buyer’s allegation that the quality of the goods was not adequate.
The judge decides in favor of the seller; there is no appeal.
The Seller enforces the judgment through a public sale of the Buyer’s movable assets.

Enforcing Contracts – Philippines

Standardized Case

Claim value PHP 362,779

City Covered Quezon city

Court name Quezon City Metropolitan Trial Court

Figure – Enforcing Contracts in Philippines – Score

Indicator

Philippines

East Asia & Pacific

OECD high income

Best Regulatory Performance

Time (days)

962

581.1

589.6

120 (Singapore)

Quality of judicial processes index (0-18)

7.5

8.1

11.7

None in 2018/19

Cost (% of claim value) 31.0 47.2 21.5 0.1 (Bhutan)

31.0

65.2

41.7

Time

Cost

Quality of judicial processes index

Figure – Enforcing Contracts in Philippines and comparator economies – Ranking and Score

DB 2020 Enforcing Contracts Score

68.2: Malaysia (Rank: 35)

67.9: Thailand (Rank: 37) 53.0: Regional Average (East Asia & Pacific)

49.1: Indonesia (Rank: 139)

46.0: Philippines (Rank: 152)

42.0: Lao PDR (Rank: 161)

0 100

Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators.

Figure – Enforcing Contracts in Philippines – Time and Cost

1200

Time (days)

1000

800

600

400

200

East Asia &

Pacific

Indonesia Lao

PDR

Time (days) Cost (% of claim value)

70.3

962

828

47.2

581.1

37.9

589.6

403

31.6

425

31.0

420

21.5

16.9

Malaysia OECD

high income

Cost (% of claim value)

Philippines Thailand

Figure – Enforcing Contracts in Philippines and comparator economies – Measure of Quality

Philippines

Indonesia

Lao PDR

Malaysia

Thailand

OECD high income

East Asia & Pacific

2.5

1.5

3.5

2.5

2.8

0.6

2.5

0 1

2.5

3.2

2.4

3.6

2.2

1.3

0 2 4 6 8 10 12 14

Sub-Indicator Score

Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5)

Details – Enforcing Contracts in Philippines

Indicator

Time (days) 962

Trial and judgment 700

Filing and service 58

Cost (% of claim value) 31.0

Enforcement of judgment 204

Court fees 6

Attorney fees 20

Quality of judicial processes index (0-18) 7.5

Enforcement fees 5

Case management (0-6) 1.5

Court structure and proceedings (-1-5) 3.5

Alternative dispute resolution (0-3) 2.5

Court automation (0-4) 0.0

Details – Enforcing Contracts in Philippines – Measure of Quality
	Answer	Score
Quality of judicial processes index (0-18)		7.5
Court structure and proceedings (-1-5)		3.5
1. Is there a court or division of a court dedicated solely to hearing commercial cases?	No	0.0
2. Small claims court		1.5
2.a. Is there a small claims court or a fast-track procedure for small claims?	Yes
2.b. If yes, is self-representation allowed?	Yes
3. Is pretrial attachment available?	Yes	1.0
4. Are new cases assigned randomly to judges?	Yes, automatic	1.0
5. Does a woman's testimony carry the same evidentiary weight in court as a man's?	Yes	0.0
Case management (0-6)		1.5
1. Time standards		0.5
1.a. Are there laws setting overall time standards for key court events in a civil case?	Yes
1.b. If yes, are the time standards set for at least three court events?	Yes
1.c. Are these time standards respected in more than 50% of cases?	No
2. Adjournments		0.0
2.a. Does the law regulate the maximum number of adjournments that can be granted?	No
2.b. Are adjournments limited to unforeseen and exceptional circumstances?	Yes
2.c. If rules on adjournments exist, are they respected in more than 50% of cases?	No
3. Can two of the following four reports be generated about the competent court: (i) time to disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single case progress report?	No	0.0
4. Is a pretrial conference among the case management techniques used before the competent court?	Yes	1.0
5. Are there any electronic case management tools in place within the competent court for use by judges?	No	0.0
6. Are there any electronic case management tools in place within the competent court for use by lawyers?	No	0.0
Court automation (0-4)		0.0
1. Can the initial complaint be filed electronically through a dedicated platform within the competent court?	No	0.0
2. Is it possible to carry out service of process electronically for claims filed before the competent court?	No	0.0
3. Can court fees be paid electronically within the competent court?	No	0.0
4. Publication of judgments		0.0
4.a Are judgments rendered in commercial cases at all levels made available to the general public through publication in official gazettes, in newspapers or on the internet or court website?	No
4.b. Are judgments rendered in commercial cases at the appellate and supreme court level made available to the general public through publication in official gazettes, in newspapers or on the internet or court website?	No
Alternative dispute resolution (0-3)		2.5
1. Arbitration		1.5
1.a. Is domestic commercial arbitration governed by a consolidated law or consolidated chapter or section of the applicable code of civil procedure encompassing substantially all its aspects?	Yes
1.b. Are there any commercial disputes—aside from those that deal with public order or public policy— that cannot be submitted to arbitration?	No
1.c. Are valid arbitration clauses or agreements usually enforced by the courts?	Yes

2. Mediation/Conciliation 1.0

2.b. Are mediation, conciliation or both governed by a consolidated law or consolidated chapter or

section of the applicable code of civil procedure encompassing substantially all their aspects (for example, definition, aim and scope of application, desig

Yes

2.a. Is voluntary mediation or conciliation available? Yes

2.c. Are there financial incentives for parties to attempt mediation or conciliation (i.e., if mediation or No conciliation is successful, a refund of court filing fees, income tax credits or the like)?

Resolving Insolvency

Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2019. See the methodology for more information.

What the indicators measure

Case study assumptions

Time required to recover debt (years)

Measured in calendar years
Appeals and requests for extension are included

Cost required to recover debt (% of debtor’s estate)
Measured as percentage of estate value
Court fees
Fees of insolvency administrators
Lawyers’ fees
Assessors’ and auctioneers’ fees
Other related fees

To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used:
- A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties.
- The value of the hotel is 100% of the income per capita or the equivalent in local currency of USD 200,000, whichever is greater.
- The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s real estate. The hotel cannot pay back the loan, but makes enough money to operate otherwise.
In addition, Doing Business evaluates the quality of legal framework applicable to judicial liquidation and reorganization proceedings and the extent to which best insolvency practices have been implemented in each economy covered.

Outcome
Whether business continues operating as a going concern or business assets are sold piecemeal

Recovery rate for creditors
Measures the cents on the dollar recovered by secured creditors
Outcome for the business (survival or not) determines the maximum value that can be recovered
Official costs of the insolvency proceedings are deducted
Depreciation of furniture is taken into account
Present value of debt recovered

Strength of insolvency framework index (0- 16)
Sum of the scores of four component indices:
Commencement of proceedings index (0-3)
Management of debtor’s assets index (0-6)
Reorganization proceedings index (0-3)
Creditor participation index (0-4)

Resolving Insolvency – Philippines

Indicator

Philippines

East Asia & Pacific

OECD high income

Best Regulatory Performance

Recovery rate (cents on the dollar)

21.1

35.5

70.2

92.9 (Norway)

Cost (% of estate)

32.0

20.6

9.3

1.0 (Norway)

Time (years) 2.7 2.6 1.7 0.4 (Ireland)

Figure – Resolving Insolvency in Philippines – Score

Strength of insolvency framework index (0-16)

14.0

7.0

11.9

None in 2018/19

Outcome (0 as piecemeal sale and 1 as going concern) 0 .. .. ..

22.7

87.5

Recovery rate Strength of insolvency framework index

Figure – Resolving Insolvency in Philippines and comparator economies – Ranking and Score

DB 2020 Resolving Insolvency Score

0 100

76.8: Thailand (Rank: 24)

68.1: Indonesia (Rank: 38)

67.0: Malaysia (Rank: 40)

55.1: Philippines (Rank: 65)

40.9: Regional Average (East Asia & Pacific)

0.0: Lao PDR (Rank: 168)

Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index.

Figure – Resolving Insolvency in Philippines – Time and Cost

Time (years)

2.5

1.5

0.5

East Asia &

Pacific

Indonesia No

Practice Lao PDR

Time (years) Cost (% of estate)

2.6

2.7 32.0

20.6

21.6

1.7

1.5 18.0

1.1

1.0

10.0

9.3

Malaysia OECD

high income

Cost (% of estate)

Philippines Thailand

Figure – Resolving Insolvency in Philippines and comparator economies – Measure of Quality

Philippines

Indonesia

Lao PDR

Malaysia

Thailand

OECD high income

East Asia & Pacific

5.5

2.5

0.5

0 0.5

0.5

2.5

5.3

2.8

2.1

1.9

3.7

2.3

1.3

0 2 4 6 8 10 12 14 16

Sub-Indicator Score

Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3)

Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.”

Figure – Resolving Insolvency in Philippines and comparator economies – Recovery Rate

81.0

65.5

70.1

35.5

21.1

Recovery rate(cents on the dollar)

No Practice

Philippines Indonesia Lao PDR Malaysia Thailand East Asia & Pacific

Details – Resolving Insolvency in Philippines

Indicator Answer Score

Proceeding liquidation (after an attempt at reorganization)

The most likely procedure applicable to our case study would be a reorganization, which will then be converted into a liquidation. Mirage may use the reorganization proceeding to gain time, find a new investor, or renegotiate its debt.

Insolvency proceedings will therefore start with Mirage (debtor) filing for court-supervised reorganization with the Regional Trial Court. The court will appoint a rehabilitation receiver who is in charge of determining the viability of Mirage and preparing a Rehabilitation Plan. However, it is very likely that this plan is not approved, and that the case will be converted into liquidation.

Time (in years)

2.7

A reorganization procedure that is then converted into liquidation will approximately take 2.7 years in total. According to the Financial Rehabilitation and Insolvency Act (FRIA) of 2010, the court shall have a maximum period of one (1) year from the date of the filing of the petition to confirm a Rehabilitation Plan. If the Rehabilitation plan is not approved, the case will then be converted into liquidation, which can take up to 2 additional years (until the proceeds of the sale

are finally distributed among creditors).

Outcome piecemeal sale The hotel will stop operating and Mirage assets will be sold piecemeal in a public auction upon the completion of the liquidation proceeding.

Recovery rate

(cents on the dollar)

21.1

Cost (% of estate) 32.0 The costs associated with the case would amount to approximately 32% of the value of the debtor's estate. Cost incurred during the entire insolvency process mainly include attorney fees (10%), official receiver fees (10%), accountants and other professionals fees (7%), fees of auctioneers (3%), and court fees (2%).

Details – Resolving Insolvency in Philippines – Measure of Quality
	Answer	Score
Strength of insolvency framework index (0-16)		14.0
Commencement of proceedings index (0-3)		2.5
What procedures are available to a DEBTOR when commencing insolvency proceedings?	(a) Debtor may file for both liquidation and reorganization	1.0
Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor?	N/A	0.5
What basis for commencement of the insolvency proceedings is allowed under the insolvency framework? (a) Debtor is generally unable to pay its debts as they mature (b) The value of debtor's liabilities exceeds the value of its assets	(c) Both (a) and (b) options are available, but only one of them needs to be complied with	1.0
Management of debtor's assets index (0-6)		5.5
Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the debtor?	Yes	1.0
Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts?	Yes	1.0
Does the insolvency framework allow avoidance of preferential transactions?	Yes	1.0
Does the insolvency framework allow avoidance of undervalued transactions?	Yes	1.0
Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of insolvency proceedings?	Yes	1.0
Does the insolvency framework assign priority to post-commencement credit?	(a) Yes over all pre- commencement creditors, secured or unsecured	0.5
Reorganization proceedings index (0-3)		3.0
Which creditors vote on the proposed reorganization plan?	(b) Only creditors whose rights are affected by the proposed plan	1.0
Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as what they would obtain in a liquidation?	Yes	1.0
Are the creditors divided into classes for the purposes of voting on the reorganization plan, does each class vote separately and are creditors in the same class treated equally?	Yes	1.0
Creditor participation index (0-4)		3.0
Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency representative?	Yes	1.0
Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor?	No	0.0
Does the insolvency framework provide that a creditor has the right to request information from the insolvency representative?	Yes	1.0
Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting creditors' claims?	Yes	1.0

Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.”

Employing Workers

Doing Business presents detailed data for the employing workers indicators on the Doing Business website (http://www.doingbusiness.org). The study does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business.

The most recent round of data collection was completed in May 2019. See the methodology for more information.

What the indicators measure

Case study assumptions

Hiring

(i) whether fixed-term contracts are prohibited for permanent tasks; (ii) maximum cumulative duration of fixed-term contracts;

(iii) length of the maximum probationary period; (iv) minimum wage;(v) ratio of minimum wage to the average value added per worker.

Working hours

(i) maximum number of working days allowed per week; (ii) premiums for work: at night, on a weekly rest day and overtime;

(iii) whether there are restrictions on work at night, work on a weekly rest day and for overtime work; (iv) length of paid annual leave.

Redundancy rules

(i) whether redundancy can be basis for terminating workers; (ii) whether employer needs to notify and/or get approval from third party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether the law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment.

To make the data comparable across economies, several assumptions about the worker and the business are used.

The worker:

Is a cashier in a supermarket or grocery store, age 19, with one year of work experience.
Is a full-time employee.
Is not a member of the labor union, unless membership is mandatory.

The business:
Is a limited liability company (or the equivalent in the economy).
Operates a supermarket or grocery store in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.
Has 60 employees.
Is subject to collective bargaining agreements if such agreements cover more than 50% of the food retail sector and they apply even to firms that are not party to them.
Abides by every law and regulation but does not grant workers more benefits than those mandated by law, regulation or (if applicable) collective bargaining agreements.

Redundancy cost

(i) notice period for redundancy dismissal; (ii) severance payments, and (iii) penalties due when terminating a redundant worker. Data on the availability of unemployment protection for a worker with one year of employment is also collected.

Employing Workers – Philippines

Details – Employing Workers in Philippines

Answer

Hiring

Fixed-term contracts prohibited for permanent tasks? No

Maximum length of a single fixed-term contract (months) No limit

Maximum length of fixed-term contracts, including renewals (months) No limit

Minimum wage applicable to the worker assumed in the case study (US$/month) 295.7

Maximum length of probationary period (months) 6.0

Ratio of minimum wage to value added per worker 0.6

Working hours

Standard workday 8.0

Maximum number of working days per week 6.0

Premium for night work (% of hourly pay) 10.0

Premium for work on weekly rest day (% of hourly pay) 30.0

Premium for overtime work (% of hourly pay) 25.0

Restrictions on night work? No

Restrictions on weekly holiday? No

Restrictions on overtime work? No

Paid annual leave for a worker with 1 year of tenure (working days) 5.0

Paid annual leave for a worker with 5 years of tenure (working days) 5.0

Paid annual leave for a worker with 10 years of tenure (working days) 5.0

Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 5.0

Redundancy rules

Dismissal due to redundancy allowed by law? Yes

Third-party notification if one worker is dismissed? Yes

Third-party approval if one worker is dismissed? No

Third-party notification if nine workers are dismissed? Yes

Third-party approval if nine workers are dismissed? No

Retraining or reassignment obligation before redundancy? No

Priority rules for redundancies? Yes

Priority rules for reemployment? No

Redundancy cost

Notice period for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 4.3

Notice period for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 4.3

Notice period for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 4.3

Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 4.3

Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 4.3

Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 21.7

Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 43.3

Unemployment protection after one year of employment? No

Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 23.1

PEO Philippines

The Philippines, as a PEO (Professional Employer Organization) country, presents an attractive destination for businesses seeking to expand their global footprint. Known for its skilled and English-speaking workforce, the Philippines offers a conducive environment for outsourcing various business functions. PEO services in the country enable foreign companies to easily navigate through the complexities of local labor laws, taxes, and regulations. By partnering with a PEO, international businesses can tap into the Philippines’ vast talent pool without the need to establish a physical entity in the country. This allows for cost-efficiency and faster market entry, making the Philippines a favored choice for companies looking to outsource key operations while maintaining focus on their core competencies. Moreover, the country’s strategic location in Southeast Asia and its rapidly growing economy further enhance its appeal as a PEO destination, attracting a diverse range of industries seeking reliable and skilled talent to drive their success in the region and beyond.

PEO services in the Philippines offer a valuable and strategic solution for foreign companies looking to establish a presence in this vibrant Southeast Asian market. By partnering with a reputable PEO service provider, international businesses can effectively outsource their human resources, payroll, and compliance needs. The PEO acts as the employer of record, ensuring adherence to the complex and ever-evolving Philippine labor laws and regulations. This allows foreign companies to enter the market swiftly, bypassing the need for establishing a legal entity, and focus on their core business activities. Additionally, PEO services grant access to local expertise and talent, facilitating smoother operations and cultural integration. With a PEO handling administrative tasks, foreign companies can navigate the unique challenges of doing business in the Philippines and tap into the country’s growing opportunities with greater ease and efficiency.

Business Reforms in Philippines

From May 2, 2018 to May 1, 2019, 115 economies implemented 294 business regulatory reforms across the 10 areas measured by Doing Business. Reforms inspired by

Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. Doing Business reform making it easier to do business. = Change making it more difficult to do business.

DB2020

Starting a Business: The Philippines made starting a business easier by abolishing the minimum capital requirement for domestic companies.

Dealing with Construction Permits: The Philippines made dealing with construction permits easier by improving coordination and streamlining the process for obtaining an occupancy certificate.

Protecting Minority Investors: The Philippines strengthened minority investor protections by requiring greater disclosure of transactions with interested parties and enhancing director liability for transactions with interested parties.

DB2019

Starting a Business: The Philippines made starting a business easier by simplifying tax registration and business licensing processes. At the same time, the Philippines increased tax registration costs.

Dealing with Construction Permits: The construction sector in the Philippines improved its risk management practices as latent defect liability insurance is now commonly obtained by industry players.

Registering Property: Philippines made transferring property easier by introducing a national database to check for encumbrances. DB19.

Protecting Minority Investors: The Philippines strengthened minority investor protections by increasing shareholders’ rights and role in major corporate decisions and clarifying ownership and control structures.

Trading across Borders: The Philippines made trading across borders more difficult by increasing the number of inspections for importing, thereby increasing the average time for border compliance.

DB2018

Getting Electricity: The Philippines reduced the time to get an electricity connection by implementing a new asset management system and by creating a new scheduling and planning office.

Paying Taxes: The Philippines made paying taxes easier by introducing a new electronic system for payment and collection of the housing development fund contributions.

DB2017

Dealing with Construction Permits: The Philippines made dealing with construction permits easier by increasing the transparency of its building regulations.

Paying Taxes: The Philippines made paying taxes easier by introducing an online system for filing and paying health contributions and by allowing for the online corporate income tax and VAT returns to be completed offline.

DB2016

Starting a Business: The Philippines made starting a business easier by streamlining communications between the Securities and Exchange Commission and the Social Security System and thereby expediting the process of issuing an employer registration number.

DB2015

Trading across Borders: In the Philippines trading across borders became more difficult because of a new city ordinance restricting truck traffic in Manila.

DB2014

Dealing with Construction Permits: The Philippines made dealing with construction permits easier by eliminating the requirement to obtain a health certificate.

Getting Credit: The Philippines improved access to credit information by beginning to distribute both positive and negative information and by enacting a data privacy act that guarantees borrowers’ right to access their data.

Paying Taxes: The Philippines made paying taxes easier for companies by introducing an electronic filing and payment system for social security contributions.

DB2012

Resolving Insolvency: The Philippines adopted a new insolvency law that provides a legal framework for liquidation and reorganization of financially distressed companies.

DB2011

Starting a Business: The Philippines eased business startup by setting up a one-stop shop at the municipal level.

Dealing with Construction Permits: The Philippines made construction permitting more cumbersome through updated electricity connection costs.

Trading across Borders: The Philippines reduced the time and cost to trade by improving its electronic customs systems, adding such functions as electronic payments and online submission of declarations.

DB2010

Getting Credit: The Philippines improved access to credit information through a new act regulating the operations and services of a credit information system.

Paying Taxes: The Philippines made paying taxes less costly for companies by reducing the corporate income tax rate.

Resolving Insolvency: The Philippines enhanced its insolvency process by promoting reorganization procedures through the introduction of prepackaged reorganizations and by establishing qualification requirements for receivers.

DB2009

Trading across Borders: The Philippines reduced the time for importing by upgrading the risk-based inspection and electronic data interchange systems.

DB2008

Starting a Business: The Philippines made starting a business more difficult by increasing the paid-in minimum capital requirement.

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