On 11 September 2020, President Rodrigo Roa Duterte signed into law the Recover as One Act (RA No. 11494), also known as “Bayanihan 2 Law”.
The Bayanihan 2 law aims to mitigate the adverse socioeconomic impact of the COVID-19 pandemic and accelerate the recovery of the health and economy of the country.
Impacts of Bayanihan 2 Law: From the Business Point of view
1.Under the Bayanihan 2 law, mergers and acquisitions with transaction value below Fifty Billion pesos (P50,000,000,000.00) are now exempt from the notification requirement to the Philippine Competition Commission (PCC), provided that they are entered into within two (2) years from the effectivity of the Recover as One-Act. Further, such transactions are also exempt from the PCC’s power to review motu propio mergers and acquisitions [Sec. 4(eee) RA 11494]
This means that the One Billion pesos (P1,000,000,000.00) threshold for compulsory notification for mergers and acquisitions under the Philippine Competition Act is now increased under the Bayanihan 2 law.
2. Bayanihan 2 provides an exemption from import duties, taxes, and other fees for manufacture and import of critical equipment and essential goods upon determination of Bureau of Customs (BOC) and Bureau of Internal Revenue (BIR) [Sec. 4(cc) of RA 11494].
3. The net operating loss of business or enterprise for taxable years 2020 and 2021 is carried over as a deduction from gross income for the next five (5) consecutive taxable years immediately following the year of such loss [Sec 4(bbb) of RA 11494].
5. The sale, barter, or exchange of shares of stock listed and traded through initial public offering is no longer subject to a percentage tax on stock transfers because Section 127 (B) of the National Internal Revenue Code (NIRC), as amended, is repealed by the Bayanihan 2 law (Sec 6 of RA 11494).
6. For internet and communications providers, there is a temporary suspension of requirements to secure permits and clearances for the construction of telecommunications and internet infrastructure [Sec. 4(ii) of RA 11494].
7. For critically impacted businesses in the transportation industry, they may avail of the following aid from the government: direct cash or loan interest rate subsidy; grants for applicable regulatory fees; substitution or refund option to travel vouchers; grants for fuel subsidy and/or digital fare vouchers; and grants for training equipment facilities, test kits, and necessary personnel, on coping with increased health risk arising from infectious diseases.[Sec. 4(gg) of RA11494]
8. To help critically impacted tourism enterprises, among the programs provided for them are as follows: loan interest rate subsidy, Tourism Road Infrastructure Program, cash-for-work programs, marketing, and product development or advertising programs, and training for new normal alternative livelihood programs [Sec. 4(hh) of RA 11494].
9. Offering technical and financial assistance to those engaged in E-commerce to accelerate the promotion of online commerce [Sec. 4(jj) of Ra11494].
10. Alternative working arrangements for employees in private sectors are still authorized [Sec. 4(mm) of RA11494].
Commercial rents of Micro, Small and Medium Enterprises (MSMEs) and cooperatives ordered to temporarily cease operations falling due within community quarantine shall be given a minimum thirty (30) days grace period without incurring interests, penalties, and other charges. The amount due within this period of community quarantine shall be amortized in equal monthly installments until 2020 December 31[Sec. 4(ww) of RA 11494].
11. MSMEs, cooperatives, and those who are self-employed are given credit accommodations with low-interest rates, payable within three (3) years, and without the need for any collateral for loans not exceeding three million pesos (P3,000,000.00). [Sec. 4(x) of RA 11494]
12. The President is given the authority to direct privately owned hospitals, medical health facilities, passenger vessels, and other establishments to serve as quarantine areas/centers and public transportation to ferry health and frontline personnel and other persons; and authority to take over their operations should they unjustifiably refuse or signify that they are incapable of operating their enterprises for these purposes, but subject to limitations and safeguards enshrined in the Constitution. (Sec. 9 of RA 11494)
The Bayanihan 2 Law promises to get back the economy on the right track. The accompanying benefits of the law will not only help micro-entrepreneurs but medium and big corporations as well. It serves as a reprieve for an economy that is in recession and as a beacon of hope which will eventually guide businesses into recovery. History teaches us that in times of Pandemic, even great economies fall, survival is a matter of resilience, prudence, and persistence.