License Integrity Act

Senate Office of the Secretary TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES First Regular Session 25 OCT 13 • P1:17 SENATE RECEIVED BY: 1453 Senate Bill No. Introduced by Senator Erwin T. Tulfo AN ACT PROHIBITING THE UNLAWFUL LENDING, BORROWING, OR FRAUDULENT USE OF LICENSES, PERMITS, AND OTHER CONCESSIONS GRANTED BY THE STATE, PROVIDING PENALTIES THEREFOR, AND FOR OTHER PURPOSES EXPLANATORY NOTE Licenses, permits, and other concessions issued by the government are solemn instruments of State authority, conferring privileges that carry with them weighty responsibilities. When exercised with integrity, they enable commerce, protect the environment, regulate industries and the practice of professions, and safeguard the welfare of the people. Yet these privileges have too often been misused and abused. A disturbing practice has emerged where grantees lend, lease, sell, or otherwise allow third parties to unlawfully use their licenses, while others fraudulently obtain or misrepresent such privileges to cloak illegitimate transactions under the guise of legality. Equally troubling are instances where public officials, whether through negligence or bad faith, issue licenses to unqualified applicants or in circumvention of the law. In public works contracting, Department of Public Works and Highways (DPWH) contractors have been found "leasing" their

licenses to unqualified firms, resulting in substandard, unfinished, or even ghost projects that bleed taxpayers dry. In customs brokerage, licensed customs brokers have been exposed for "renting out" their licenses to smugglers, which has fueled contraband importations, deprived government of billions in revenue, and strengthened criminal syndicates. In environmental management, grantees of permits from the Department of Environment and Natural Resources (DENR) have "sold" or "leased" their permits to unscrupulous operators who exploit our natural resources, leaving irreversible scars on forests, rivers, and ecosystems. These abuses undermine the very integrity of our regulatory system. They open the door to corruption, smuggling, environmental destruction, and economic sabotage. They imperil public health and safety, drain national resources, and inflict irreparable damage on public funds and national security. Above all, they corrode the people's trust in government institutions. The proposed License Integrity Act affirms the nature of licenses and permits as personal, non-transferable privileges subject to the continuing oversight of the State, and criminalizes unlawful lending, borrowing, and fraudulent use, ensuring accountability not only of individuals but also of entities and their responsible officers. By restoring the integrity of government-issued licenses and permits, this measure strengthens accountability, prevents abuses that undermine governance, and ensures that the privileges conferred by the State serve only their lawful and intended purposes. In view of the foregoing, the immediate passage of the bill is earnestly sought. ERWIN T. TULFO

". Senate Office of the Secretary TWENTIETH CONGRESS OF THE ) REPUBLIC OF THE PHILIPPINES ) ) 25 OCT 13 P1:17 First Regular Session RECEIVED BY: SENATE Senate Bill No. 1453 Introduced by Senator Erwin T. Tulfo AN ACT PROHIBITING THE UNLAWFUL LENDING, BORROWING, OR FRAUDULENT USE OF LICENSES, PERMITS, AND OTHER CONCESSIONS GRANTED BY THE STATE, PROVIDING PENALTIES THEREFOR, AND FOR OTHER PURPOSES Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled:

SECTION 1. Short Title. - This Act shall be known as the

2 "License Integrity Act".

SEC. 2. Declaration of Policy. - It is the policy of the State to

protect the integrity of licenses, permits, and other concessions issued by the government. The State shall ensure that these privileges are not abused, circumvented, or fraudulently misused to the detriment of the people, the government, or the environment.

SEC. 3. Nature of Licenses, Permits, and Similar Concessions. -

(a) All licenses, permits, and similar concessions granted by the State are personal privileges, conferred only upon qualified applicants who have complied with legal requirements and demonstrated 14 integrity, competence, and accountability.

(b) These privileges are non-transferable, except when expressly 2 authorized by law or approved by the issuing authority. (c) Such privileges do not vest absolute rights in the grantee and may be amended, suspended, revoked, or rescinded by the State in the interest of public policy, public order, public welfare, or national security.

SEC. 4. Coverage. - This Act shall apply to all licenses, permits,

and concessions granted, issued, or made to appear as having been granted or issued, by national government agencies, government- 11 owned or controlled corporations, and other national regulatory bodies. Licenses, permits, and concessions issued by local government units (LGUs) shall remain within the exclusive jurisdiction of the LGUs concerned. Nothing in this Act shall preclude LGUs from enacting ordinances adopting similar prohibitions and penalties within their respective jurisdictions.

SEC. 5. Prohibited Acts. - The following acts shall be prohibited:

(a) Unlawful License Lending - The lending, leasing, transferring, assigning, or otherwise allowing another person to use one's license, permit, or concession, thereby enabling the latter to transact with the government or the public under the guise of lawful authority. (b) Unlawful License Borrowing - The borrowing, renting, or otherwise use of any license, permit, or concession not lawfully one's own, for the purpose of transacting with the government or the public without proper authority. (c) Fraudulent Use of License - The unauthorized use, appropriation, or representation of a license, permit, or concession, through deceit, falsification, misrepresentation, forgery, identity theft, simulation of authority, or any other fraudulent scheme or device.

SEC. 6. Prohibited Acts of Public Officials. - It shall be unlawful

for any public official or employee, in bad faith or with gross negligence, to: (a) Issue or cause the issuance of a license, permit, or concession to persons, partnerships, associations, or corporations that do not meet the legal qualifications, or the standards of personal, technical, and financial integrity and capability required by law; or (b) Issue, approve, or facilitate the issuance of any license, permit, or concession despite the existence of a conflict of interest or in circumvention of existing laws, rules, and regulations.

SEC. 7. Aggravating Circumstances. - The penalty shall be

imposed in its maximum period in the following cases: (a) The prohibited act facilitated corruption, smuggling, economic sabotage, tax evasion, or money laundering; (b) The act caused substantial injury or damage to public funds, national security, public safety, public health, or the environment; or (c) The prohibited act was committed by, or in conspiracy with, a public official in relation to his or her office.

SEC. 8. Administrative Penalties. - The following administrative

penalties shall apply: (a) Revocation and cancellation of the license, permit, or concession; (b) Perpetual disqualification from applying for, or being granted, the same license, permit, or concession;

(c) Forfeiture of performance bonds or deposits; and (d) Restitution or return of any funds or benefits wrongfully derived from any transaction with the government or the public.

SEC. 9. Criminal Penalties. - Any person who commits any of

the prohibited acts under this Act shall suffer the penalty of imprisonment of not less than three (3) years to not more than twelve 10 (12) years, and/or a fine of not less than Three Hundred Thousand Pesos (PHP 300,000.00) but not more than Three Million Pesos (PHP 3,000,000.00), at the discretion of the court. If the violator is a corporation, partnership, or association, the responsible officers and directors shall be held personally liable.

SEC. 10. Liability of Public Officials. - If the violator is a public

official or employee, he or she shall, in addition to the penalties provided under Sections 8 and 9 of this Act, be dismissed from service with perpetual disqualification to hold public office, and forfeiture of benefits. Nothing in this provision shall preclude prosecution under Republic Act No. 3019 otherwise known as the "Anti-Graft and Corrupt Practices Act", Republic Act No. 6713 otherwise known as the "Code of Conduct and Ethical Standards for Public Officials and Employees" ", the Revised Penal Code, or other applicable laws.

SEC. 11. Whistleblower Protection. - Persons who, in good faith,

report violations of this Act shall be protected against retaliation and may be entitled to incentives under existing laws.

SEC. 12. Implementing Rules and Regulations. - Within ninety

(90) days from the effectivity of this Act, the Department of Justice, in coordination with the concerned agencies, shall issue the necessary rules and regulations for its effective implementation.

SEC. 13. Separability Clause. - Should any provision or part of

this Act be declared unconstitutional or invalid, the other provisions and parts hereof, insofar as they are separable from the invalid ones, shall remain in full force and effect.

SEC. 14. Repealing Clause. - All laws, decrees, orders,

7 issuances, rules, and regulations or parts thereof, which are inconsistent with this Act are hereby repealed or modified accordingly.

SEC. 15. Effectivity. - This Act shall take effect fifteen (15) days

after its publication in the Official Gazette or in at least two (2) newspapers of general circulation. Approved,