Hon. Sen. Manuel Villar
Chair, Senate committee on finance
Senate of the Philippines
GSIS Complex, CCP Complex, Pasay City
May 15, 2006
Dear Mr. Senator:
I’ve been a loyal and ardent student of your advocacies, especially your pitch for the common Filipino to challenge himself by not being content as a mere employee but sail on to become an entrepreneur – to become his or her own boss.
Barely three years ago, I finally heeded your call to become an entrepreneur -- a call that has now become cliché as your President re-echoes it whenever she offers solutions to ending poverty. She would safely seek refuge from that call by urging Pinoys to become entrepreneurs.
I’m now part of the entrepreneurial movement, slowly working my way into the business world. With the support of my colleagues in the media, we have established a company that operates a chain of mall-based barbershops. To date, we operate three branches and, God willing, will open two more branches this year.
After some hits and misses in operating/maintaining a start-up company, I would like to share with you these following observations and suggestions:
When you and the President extolled our countrymen to enter business and become new entrepreneurs, perhaps it never dawned on you that becoming an entrepreneur is not exactly a walk in the park. Based on our harrowing experience, it was not that romantically easy.
Aside from the perfunctory requirements of securing a SEC (P1,500) DTI (P800) and BIR (P600) certificates, an entrepreneur will have to endure other “hassles” and be bombarded with other “requirements/regulations” that are not equally encouraging. (The SEC, DTI and BIR documents are necessary when applying for a license, business permit, building permit etc.)
Consider this: Before we can apply for a SEC registration or a DTI permit, we are told to secure first a barangay clearance/certificate (P700 – P1,200) from the barangay office that has jurisdiction over our prospective area of business. This insignificant piece of paper will re-figure intermittently but prominently as we set-out to complete our requirements for a business permit/building permit/certificate of occupancy/BIR registration, etc.
(A building permit is required when you want to renovate/redesign the area that you will rent from your landlord or from a mall operator. A certificate of occupancy is the next hurdle after you’ve secured the building permit. More on this later.)
4. A separate (read: fresh) barangay clearance is needed everytime we apply for a DTI certificate, business permit, building permit, BIR permit, zoning clearance, signage permit etc. The city hall/DTI/BIR officials will not settle for a photocopy of one original barangay clearance. These people would always a demand for the original and should be currently-dated.
5. Before, you just need only a cedula or proof of residence or letter from your mall/landlord to secure a barangay clearance, now it is like applying for a marriage or driver’s license.
6. In our case, it takes us at least five to seven barangay (7 x P1,200) permits before we could finally start operation of one branch.
7. After hurdling the barangay clearance, we then proceed to apply for a business permit. This another piece of paper is I think one of the most difficult documents to obtain from city hall. This document plainly states the name, nature of your business, and your address etc. and would cloak your business with a semblance of legality.
8. But behind this seeming plainness is the myriad number of city hall officials that have to affix their signatures on the application form before we could be issued a business permit. A business permit, processed through the “express lane (read: City Hall Mafia),” would normally cost between P25,000 to a high of P50,000. Forget it if you want to pass through the regular channels (P4,000), the city hall people always have a “safety valve” that would ensure that you won’t get your permit and licenses the cheaper way. Going through the process and sweating it out in the queuing lines are strongly frowned upon in many city halls in Metro Manila.
9. Next is the building permit: The barangay office suddenly becomes strict on this one; barangay officials will not just demand for your business permit, SEC and DTI/BIR registrations (they have assumed that you’ve already secured these documents when you’ve reached this stage) but they will demand for the building plans, no less. The same building plans that would be submitted to the city hall as requirement for the building permit.
10. After securing (again) the barangay clearance, we then formally submit six to seven sets of copies of the plans to the city hall for approval. Just like the business permit, this piece of paper will require at least seven to 10 signatures before it could be processed into a building permit – with each signature taking at least one week to secure, among of which are signatures for plumbing, sanitary, electrical, mechanical plus the bill of materials.
This document, Sir, is the second most difficult permit to obtain. Considering that this is a building permit – meaning that we have a deadline to beat before the termites, the ants, the cockroaches, the mice and even the ghostly spirits invade our rented area – not to mention the construction bond waiting to be forfeited by the landlord -- the city hall people will have their sweet time going over our plans and would wait till kingdom come for the signatures – one by one -- to literally grace the sheets of the building plans.
11. In our experience, we have come across at least two or three people who have been coming back in one city hall for over a year just to make a follow-up on their building permit. If you’re in the hurry, the City Hall Mafia will charge you between P25,000 to P40,000. Normally, it would only cost you P15,000 if you have the right connection.
12. After we’ve secured our building permit and completed our renovation, we will need a certificate of occupancy from the city hall before we could fully operate our shop. To our surprise and outrage, we will have to go through the same process as we’ve applied for our business and building permits and with the same number of signatures needed. Again, seriously worried that we are getting delayed, the “express lane” will come in handy with P15,000 to P25,000 in bribe in exchange for the speedy issuance of the certificate of occupancy.
13. We tried, Mr. Senator, to wiggle out from the corrupt practice and had initial success in gaining our first “bribe-free” city hall document but we’re nevertheless halted when one of the junior city hall officials asked us to present a “log book” as one of the documentary requirements. We’re told that the log book would reveal in a very detailed manner how many nails, woodjoints, cement, electric cables, lightbulbs were used and how the aircon, water pipes, ceiling, and drainage systems were set-up. Failing to produce a “log book”, we surrendered to the City Hall Mafia and paid the bribe for our certificate of occupancy. To further discourage us from going through the normal channels, please consider the following that we have to secure for a certificate of occupancy: fire certificate, electrical certificate, plumbing certificate, health certificate and locational clearance. Each certificate is like a “mini-building permit or mini-business permit” that entails a lot of signatures.
14. To top it all, the city hall people would demand for recently-dated construction plans and the latest PRC (Professional Regulation Commission) certificate of the architect and electrical engineer who prepared the plans should your application spill-over to the new year. Complying to this would just be like starting all over again!
For example, circa 2004 documents would have to be signature or time-stamp updated when your application crosses over to circa 2005.
After we’ve completed the requirements for a certificate of occupancy, the city hall mafia will demand P1,800 as cost for the actual document (the bond paper bearing the certification).
15 . As we heaved a sigh of relief and set out to finally start operation, different teams of city hall people from various regulatory departments will occasionally visit and pester us with various violation notices.
16. One team from the city hall’s fire department will find our fire extinguishers not conforming to “their” standards. The reason, we will find out later, was that they want us to buy the fire extinguishers from their own dealers.
17. A city hall sanitation expert will hold hostage our “sanitary permit” after he declares that the water from our taps is unsafe and will press for a water test (P1,500) without first finding fault on our landlord who owns and manages to main water pipes.
18.A monitoring team of city hall will find us in violation for failing to secure a permit before installing our signage inside the mall.
19. Another team will issue us a violation for our failure to openly display all our licenses and permits. But even during the times that we follow regulation, they would still find us in violation for displaying only the photocopies and not the original ones!
20. A city hall health team will require our staff to apply for health certificate (P350) from city hall. This means spending their day-off listening to a sick, haggard looking and unshaven city health official lecturing on cleanliness and other health hazards.
21. A team calling themselves the cultural and tourism office will demand for the business permit and BIR certificate. At this very moment, it boggles us to learn that a tourism office of the city hall will be concerned with our BIR certificate and will declare our shop as a “tourism destination.” Next year, the piece of sticker that they posted on our door would be up for renewal and then, the annual “shakedown” begins.
22. Lately and this one, to our utter consternation, a city hall team finds us again in violation for allowing our employees to work without the necessary “occupation permit (P250).” As vaguely explained to us, the permit would indicate that our workers have the “blessing” of the city hall or the mayor to work for us as if they’re the ones who gave out the jobs and the one giving them their wage.
This last one, your honor, is totally absurd and stupid.
23. After going through all these and will probably go through it again in another city or town or provincial hall, we are now highly skeptical if the government and our leaders, including you, are actually sincere in seeing more of our countrymen enter business and become patriotic entrepreneurs.
From the above observations, we respectfully offer the following recommendations:
1. Mr. Senator, we should limit the number of public officials who need to sign every piece of regulatory document, licence or permit.
2. The government, through the DTI/PIA, could start a public awareness campaign discouraging entrepreneurs/businessmen from dealing with city hall mafias. Forget tapping the mayors, they will have to go after their terms but the “mafia” workers are there to stay.
We could specifically appeal to our brother Filipino Chinese businessmen, whom we honestly believed, started and perpetuated the culture of corruption/bribery in many city/town/provincial halls -- to put a stop to this malpractice. (In my many frustrating visits to one city hall, it occurred to me with painful realization that almost all the employees in one of the departments I visited suddenly burst into contagious enthusiasm every time a Chinese-looking person enters their office or upon learning that the papers their processing have a Chinese-sounding name on it.)
3. Perhaps, regulatory agencies/LGUs could relax their requirements like: allowing Xeroxed copies of original documents when applying for licenses or permits; crediting the same requirements submitted for the building permit when applying for the next document like the certificate of occupancy, etc.
4. In the future, it may no longer be necessary for enterprises/tenants located inside shopping malls to secure a building permit and afterwards, a certificate of occupancy. Entrepreneurs could just rely on the integrity of the building permit already obtained by the shopping mall as the landlord. This is because when a mall operator does some minor renovation on its premises, it does not secure a new building permit but would just refer to its existing permit. The burden of seeing to it that the renovation work of its tenant conforms to city hall standards now lies in the hands of the mall operator or landlord since the authority to renovate is drawn from their building permit, which now becomes the “mother permit.”
Another regulation/policy that we’ve found odd is that requiring enterprises or tenants operating inside shopping malls to secure a signage permit (permiso sa karatula) from the city hall. We believe that the interior or inside space of the mall is the sole and exclusive province of the mall owners. If the signage permit was aimed at regulating/checking against offensive, lewd or seditious signboards, we believe that no mall owner in his right business sense would allow such repugnant display. It’s just like asking permission from the village association when hanging a replica of the “Last Supper” in one’s dining hall.
In our experience, our landlords have very strict guidelines when it comes to the shape, lighting, length, color, use of logos and text of signages. Therefore, Sir, the city hall imposition of signage permit on mall tenants is redundant and arbitrary.
6. Partly to blame for the seeming rampant practice of permit and license seekers to embrace the City Hall Mafia is because of their eagerness to beat the construction deadline set by shopping malls. Malls usually give their incoming tenants a maximum 30 days to construct and submit all the documentary requirements or their one-month construction bond would be forfeited. The construction bond is usually worth one month’s rental. Therefore, in their haste to beat the deadline and comply will all the mall-demanded requirements, most entrepreneurs inside malls resort to bribing city hall workers. We could, Sir, appeal to mall owners to relax their construction policies so as not to force their tenants to “buy their way” into complying with the requirements.
7. We’ve opened our third branch last December and triumphantly completed all the city hall requirements including the business permit. Alas, on the first day of 2006, the city hall people came knocking on our shop to remind us that our business permit has already expired. To appease city hall and avoid penalty, we paid and renewed our permit to the tune of P17,000. In this regard, Sir, we proposed that all LGU-secured licenses and permits should be effective for one year based on the date it was issued, similar to vehicle registration. We feel it would be a grave injustice for struggling entrepreneurs who opened their business late in the year only to renew their permit barely a month into their operation.
8. Ultimately, a revisit of the Local Government Code should be in order to find out if lapses or abuses are being committed by LGUs in discharging their enlarged powers.
9. I’m aware that this issue could be ticklish one considering that your family is engaged in the mall business and that relatives are running a Metro Manila city. But we believe you’ll overcome these hindrances.
Thank you and more power,
Dennis Gadil
Reporter, Malaya
Vice President/General Manager, Newsbarbers Co.
