\ 
SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Third Regular Session 
) 
) 
) 
SENATE 
S. No. 
2860 
'15 
JUL 20 P5:54 
R>X'","EU Hy,J/ 
Introduced by Senator Ralph G. Recto 
AN ACT 
MANDATING THE ANNUAL PUBLIC DISCLOSURE OF ALL CONTINGENT 
LIABILITIES INCURRED BY ALL NATIONAL GOVERNMENT AGENCIES, LOCAL 
GOVERNMENT 
UNITS, 
GOVERNMENT-OWNED 
OR 
-CONTROLLED 
CORPORATIONS, GOVERNMENT FINANCIAL INSTITUTIONS, AND OTHER 
GOVERNMENT INSTRUMENTALITIES 
Explanatory Note 
The Philippine Government is mandated by no less than the 1987 Constitution to 
recognize the role of the private sector in providing adequate social services, promoting full 
employment, raising the standard ofliving, and improving the quality oflife for all Filipinos. 
Encouraging the private sector to participate in the delivery of public services, however, 
is hampered by the country's market realities marked by stringent regulations, uncertain socio-
economic and political enviromnent, and market distortions caused by price control and 
subsidies. 
To tap private sector capital and skills, the government was compelled to make public 
sector investments more profitable by providing incentives and assuming investment risks. As 
such, the conferment of government guarantees on public sector investment and borrowings 
became one of the prominent features of Republic Act No. 6957 as amended, otherwise known 
as the Build-Operate-Transfer (BOT) Law. 
The benefits of government guarantees, however, come at a price. Studies conducted by 
the University of the Philippines School of Economics] showed that government risk 
management practices severely understate the level of exposure and risk arising from unfettered 
provision of guarantees. Philippine Institute for Development Studies2 and the Development 
Budget Coordinating Committee3 raised their concerns over the unexpected public sector 
obligations that could be brought about by government guarantees, especially on the delivery of 
public goods and services. 
Senate Economic Planning Office 4 underscored the importance of effective identification, 
management, and reporting of contingent liabilities and off-budget risks of GOCCs, since past 
fiscal crises in the Philippines were triggered by extra-budgetary activities. Considering the 
potential of government guarantees to wreak havoc on public resources, the conferment and 
management of such guarantees require exacting deliberations and wide-ranging public 
disclosures. 
1 Reside, R. (1999). Estimating the Philippine Government's Exposure to and Riskfrom Contingent Liabilities and Infrastructure Projects. 
Quezon City: University of the Philippines School of Economics 
2 Philippine Institute for Development Studies. (2005). Contingent Liabilities: adding up to the fiscal burden. Makati: Republic of the 
Philippines. 
3 Development Budget Coordinating Committee. (2012). 2012 Fiscal Risks Statement. Quezon City: Republic of the Plulippines. 
4 Senate Economic Planning Office. (2004) Five Pillars of Growth. An Economic and Social Development Framework. Pasay City: United 
Nations Development Programme. 
1 


The mechanisms to enable the public and the policymaker to make informed decisions on 
public debt, however, remained largely inadequate. 
Commission on AuditS has already recommended the disclosure of relevant information 
pertaining to the contingent liabilities including the fiscal risks associated with guarantees on 
PPP projects and on issuances of govermnent-owned and -controlled corporations (GOCCs) and 
govermnent financial institutions (GFIs) in its Public Debt Management Audit for 2004 and 
2009-2010. In 2015, the Commission reiterated this position when the Commission identified the 
non-disclosure of over one trillion pesos contingent liabilities arising from government 
guarantees on public-private partnership projects and liabilities from GOCCs and GFIs6. 
This bill requires the annual public disclosure of government's contingent liabilities at 
least a month prior to the submission of the annual budget documents by the President to 
Congress. It will provide Members of Congress and other stakeholders with a better appreciation 
of the fiscal and monetary impact of the govermnent's contingent liabilities on future govermnent 
spending. 
At the end of the day, prudent fiscal management warrants the establishment of a stronger 
legal and institutional framework in apprising the public about the obligations and risks involved 
in public-private partnership in public service delivery. 
It is in this light that the swift approval of this bill is earnestly sought. 
Imdg 
S Commission on Audit (2004). Public Debt Management: Overall Report. Quezon City: Republic of the Philippines; and 
Commission on Audit. (2010). Annual Audit Report on the Public Debt Reportrng (A Public Debt Management Audtt) For the Year Ended 
December 2009 and June 30 2010, Quezon City: Republic of the Philippines. 
6 Murcia, A. (2015, June 8). Disclosure Rules in Charter Breached: eoA flags P1.3-T hidden Noy debts. Daily Tribune, p. 1. 
2 


SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Third Regular Session 
) 
) 
) 
SENATE 
S.No. 
2860 
Introduced by Senator Ralph G. Recto 
AN ACT 
"15 
JUL 20 P5 :54 
MANDATING THE ANNUAL PUBLIC DISCLOSURE OF ALL CONTINGENT 
LIABILITIES INCURRED BY ALL NATIONAL GOVERNMENT AGENCIES, LOCAL 
GOVERNMENT 
UNITS, 
GOVERNMENT-OWNED 
OR 
-CONTROLLED 
CORPORATIONS, GOVERNMENT FINANCIAL INSTITUTIONS, AND OTHER 
GOVERNMENT INSTRUMENTALITIES 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
1 
SECTION 1. Short Title. - This Act shall be known as the "Contingent Liabilities 
2 
Disclosure Act of2015." 
3 
SEC. 2. Declaration of Policy and Objectives. - It is the declared policy of the State to 
4 
recognize the right of the people to infonnation on matters of public concern. The Philippine 
5 
Government shall be transparent in all of its financial transactions and decisions and as such, 
6 
shall afford the citizens access to official records, documents and research data that pertains to, 
7 
or used as basis for, the country's fiscal and monetary policy. 
8 
SEC. 3. Contingent Liabilities. - Contingent liabilities shall refer to explicit guarantees 
9 
extended by the Philippine Government through any of its agencies including local government 
10 
units, government-owned and controlled corporations (GOCCs) and government financial 
11 
institutions (GFIs) including, but not limited to, the following: 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
(i) 
guarantees arising from Republic Act No. 6957, as amended by Republic Act 
No. 7718; 
(ii) 
loans contracted and liabilities incurred by GOCCs or by GFIs which were 
guaranteed by the National Government; 
(iii) Guarantee programs implemented by GOCCs and GFls; 
(iv) GFI-guaranteed private loans which were subsequently transferred to and 
assumed by the National Government by virtue of Proclamation No. 50, 
Administrative Order No. 64 s.1988, and other similar statutes or issuances; 
(v) 
Bailouts of public enterprises and institutions, as well as strategically important 
private sector enterprises; 
(vi) Government insurance programs; 


1 
(vii) Spending on national disaster relief and disaster rehabilitation and recovery 
2 
operations; and 
3 
(viii) Other potential losses arising from indemnities, pending litigation, and other 
4 
circumstances relating to claims and assessments in respect of breach of 
5 
contract, damages to persons and property, and similar items. 
6 
SEC. 4. Full Disclosure of Contingent Liabilities. - The Department of Finance (DOF) is 
7 
hereby mandated to implement full disclosure of all contingent liabilities of the national 
8 
government or any of its agencies including GOCCs and GFIs in an annual basis. All 
9 
information related to the government contingent liabilities shall be contained in a report to be 
10 
submitted to the Chairpersons of the Senate Committee on Finance and House Cornmittee on 
11 
Appropriations. 
12 
SEC. 5. Content and Publication of the Contingent Liability Report. - The report shall 
13 
indicate, among others, the specific contingent liabilities of government, the amount involved 
14 
therein, the purpose and scope of such liabilities, its duration and conditions, and its intended 
15 
beneficiaries. Information related to the government contingent liabilities shall also be published 
16 
in at least two newspapers of national circulation and/or in the official web sites of the 
17 
government agencies concerned at least a month prior to the President's submission of the annual 
18 
budget documents to Congress. 
19 
SEC. 6. Implementing Rules and Regulations. - Within ninety (90) days from effectivity 
20 
of this Act, the DOF, the National Economic and DeVelopment Authority (NEDA), and other 
21 
relevant government agencies shall promulgate the rules and regulations to effectively 
22 
implement the provisions of this Act. 
23 
SEC. 7. Separability Clause. - If any provision, section or part of this Act shall be 
24 
declared unconstitutional or invalid, such judgment shall not affect, invalidate or impair any 
25 
other provisions, sections or parts hereof. 
26 
SEC. 8. Repealing Clause. - All laws, decrees, orders, rules and regulations which are 
27 
inconsistent with the provisions ofthis Act are hereby repealed or modified accordingly. 
28 
SEC. 9. Effectivity. - This Act shall take effect fifteen (15) days following its publication 
29 
in at least two (2) newspapers of general circulation or the Official Gazette. 
30 
Approved, 
2