A3.

Political, Governmental and Legal Forces

Key Political, Governmental and Legal Source

Variables
1. Air conditioning companies’ compliance to
established Environmental Laws
2. Air conditioning engineers and technicians
must follow a strict process to be able to
practice this profession
3. Approval of the President to end
Contractualization in the Philippines
4. Second Highest Income Tax Rate among
ASEAN Countries
Republic Act 8749: The Philippine
Clean Air Act of 1999
Republic Act 4110: An Act
Regulating the practice of Air
Conditioning and Refrigeration
Engineering in the Philippines
DOLE Department Order 168:
Banning of “labor only” contracts
2016 Research from the Joint
Foreign Chambers of the
Philippines

A.3.1 Air conditioning companies’ compliance to established Environmental Laws

Chlorofluorocarbons are any of a class of compounds of carbon, hydrogen,

chlorine, and fluorine, typically gases used in refrigerants and aerosol propellants; they
are harmful to the ozone layer in the earth's atmosphere owing to the release of chlorine
atoms upon exposure to ultraviolet radiation. These compounds are located in hairspray
cans and as well as in air conditioning units. In 1999, Congress had made an effort to
reducing air pollution by passing Republic Act 8749, or what is more commonly known as
The Philippine Clean Air Act of 1999. This law aims to pursue a policy of balancing
development and environmental protection and to achieve this end, the frame work for
sustainable development shall be pursued. Pursuant to its provisions, the Department of
Environment and Natural Resources conduct their annual national air quality status report
that showcased the decrease of the total suspended particulate in the Philippines. It is
however important to note that the company, being engaged in the business of
industrializing air conditioning, it is important that they assist the government in its effort
to reduce environmental turmoil.
 Annual National Air Quality Status Report (Year 2014)

A.3.2 Strict Application of Air Conditioning and Refrigeration Engineers

According to Republic Act 4110 or the more commonly known as "an Act to provide
for Specialization in Air Conditioning and Refrigeration in the Philippines” (amended by
Republic Act 5778 to be read as "Air Conditioning and Refrigeration Specialization Law”),
the Board of Mechanical Engineering Examiners is authorized to grant a certificate of
Specialization in Air Conditioning and Refrigeration to registered professional engineers.
The purpose of this law is to safeguarding life, health and property of consumers, and to
prevent fraudulent productions. These professionals give seals of approval to products
that have been thoroughly examined by them to grant assurance to the customers of the
product’s credibility. It is important for the company to have credible engineers that have
been granted the specialization by the Board to be able to operate their business and as
well as to assure their customers of the reliability of their products.
A.3.3 Approval of the President to end Contractualization in the Philippines

Recently, the Department of Labor and Employment had released an order to end
the existence of job contractualization or “labor only” contracts in the Philippines to which
the newly-elected president, President Rodrigo Duterte had approved without any
reservations. “Labor only” contracts are arrangements where the contractor or
subcontractor merely recruits, supplies or places workers to perform a job, work or service
for a principal. These greatly affect companies that need a great number of employees
like ALMADECO because it lessens their access to supply of employees to work on
multiple projects at a specific time.

A.3.4. Second Highest Income Tax Rate among ASEAN Countries

According to the studies of the Joint Foreign Chambers, the Philippines has the
second highest rate in income taxation next to Thailand. In the National Internal Revenue
Code, the rate for income tax of corporations is at 30%, far from the tax rates of Indonesia
and Malaysia which both are at 25%. The reason for this is because the Philippines has
been struggling with fiscal deficit for years now and one way to fix that is to impose hefty
taxes on its citizenry and corporates. Tax collections are on the rise although slow
spending has also yielded better fiscal numbers, it is important to note that the
neighboring countries of the Philippines are struggling to run their government due to
deficits in their Gross Domestic Product. However, recently the President has been giving
hints on the possibility of lowering the rates of income taxation in the Philippines and as
taxpayers themselves, the company is greatly affected by these possible changes.
 Analysis of Political, Governmental and Legal Forces
Analysis of the Political, Governmental and Legal Forces
- There has been a lowering percentage of air pollution
in the as proven by the recent Annual National Air
Quality Status Report
Monitoring
- Congress has been recently discussing the possibility
of approving the President’s plea for lowering the
income tax rate
- Possible decrease of air pollution Philippines due to
Forecasting human and technological efforts
- Passing of the bill to lower income tax rate
Opportunity 1: Lesser harm to the human and environmental
Assessment
conditions
Opportunity 2: Lesser payment of income tax for individuals
and corporations in the Philippines
Threat 1: Lessening of customers due to non-existence of
filter of CFC’s