FOURTEENTH CONGRESS OF THE 
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REPUBLIC OF THE PHILIPPINES 
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F h t  Regular Session 
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INTRODUCED BY HONORABLE MAR R O U S  
EXPLANATORY NOTE 
Official Development Assistance (ODA), as defined in Republic Act 8182, as amended by 
Republic Act No. 8555, is a loan or a grant administered with the objective of promoting sustainable 
social and economic developmen‘tand welfare of the Philippines. Since domestic resources are not 
enough to finance domestic investments needed for economic growth and development, the country, 
therefore, resorts to foreign resources to supplement existing resources. ODA, thus, provides a 
relatively more concessional means of financing government programs and projects. 
While the objectives of the ODA Law is laudable, as this will mean more infrastructure 
projects that will greatly aid in the growth and development of the country, ODA has, unfortunately, 
been used to muddle, if not to avoid, the requirement of competitive bidding in the procurement of 
goods, services, and infrastructure projects. Under the current ODA law, particularly under Section 
11-A thereof, the application of the country’s procurement laws may be waived or modified, which 
thereby negates the possibility of a price challenge that would help lower the debt expenditure of the 
government. What then is the guarantee of the country that the loan contracted as ODA was tightly 
negotiated and in accordance with sound procurement practice if the same did not go through 
competitive bidding? 
It is also noteworthy that during the passage of the ODA law, as well as during the passage of 
the amendatory law thereto (Republic Act No. 8555), the country did not yet have a consolidated 
procurement law that is now embodied in Republic Act No. 9184, otherwise known as the 
Government Procurement Refom Act, which mandates, among others, the use of competitive 
bidding in the procurement of goods, services, and infrastructure projects that would help ensure the 
most advantageous price for the country. 
Thus, in order to avoid “lender-driven’’ contracts from foreign countries, which often 
prescribe either their own contractor that eliminates the application of competitive bidding or their 
own procurement process, and in order to curb corruption through the padding of prices in the 
procurement of goods, services, and infrastructure projects, this bill seeks .to establish a check and 
balance in contracting ODA loans relative to the procurement of goods, services, and infrastructure 
projects by making the same the subject of review and approval by the Senate prior to its perfection 
and consummation. 
Moreover, a more stringent standard on what should be considered as ODA must also be set 
in place so as to minimize the foreign debt servicing of the government and to ensure better financial 
terms in the availment of foreign loans. 
In view of the foregoing, the approval of this bill is earnestly sought. 


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FOURTEENTH CONGRESS OF THE 
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REPUBLIC OF THE PHILIPPINES 
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a OCT 23 /\L :46 
First Regular Session 
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INTRODUCED BY HONORABLE MAR R O U S  
AN ACT 
IMPOSING SAFEGUARDS IN CONTRACTZNG LOANS CLASSIFIED AS OFFICIAL 
DEVELOPMENT ASSISTANCE, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 
8182, AS AMENDED BY REPUBLIC ACT NO. 8555, OTHERWISE KNOWN AS THE 
OFFICIAL DEVELOPMENT ASSISTANCE ACT OF 1996, AND FOR OTHER PURPOSES. 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assem bled: 
SECTION 1. Section 2 of Republic Act No. 8182, as amended, otherwise known as the 
Official Development Assistance Act of 1996, is hereby amended to read as follows: 
Sec. 2. Official Development Assistance (ODA). - 
For purposes of this Act, 
ODA is a loan or loan and grant which means all of the following criteria: 
(a) It must be administered with the objective of promoting 
sustainable social and economic development and welfare of the 
Philippines; 
(b) It must be contracted with governments of foreign countries 
with whom the Philippines has diplomatic, trade relations or 
bilateral agreements or which are members of the United 
Nations, their agencies and international or multilateral lending 
institutions; 
(c) There are no available comparable financial instruments in 
the capital market: and 
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(d) It must contain a grant element of at least [twenty-five] 
FORTY percent (40Yo). Granr element under this Act is the 
reduction enjoyed by the borrower whenever the debt service 
payments which shall include both principal and interest and 
expressed at their present values discounted at ten percent 
(10%) OR AT THE YIELD ON COMPARABLE COMMERCIAL 
BONDS MOST RECENTLY ISSUED BY THE NATIONAL 
GOVERNMENT, WHICHEVER IS LOWER, are less than the 
face value of the loan or loan and grant. The grant element of a 
loan or loan and grant is computed at the ratio of (i) the 
difference between the face value of the loan or loan and grant 
and the debt service payments to (ii) the face value of the loan 
or loan and grant; 
SECTION 2. Section 11-A of Republic Act No. 8182, as amended, is hereby amended to 
:ead as follows: 
Sec. 11-A. In the contracting of any loan, credit or indebtedness under this Act 
or any law, the President of the Philippines may, when necessary, agree to 
waive or modify the application of any provision of law granting preferences 
in connection with, or imposing restrictions on, the procurement of goods or 
services OR INFRASTRUCTURE PROJECTS: Provided, however, IF THE 
PROCUREMENT DOES NOT GO THROUGH COMPETITIVE BIDDING 
MANDATED UNDER REPUBLIC ACT NO. 9184, OTHERWISE KNOWN AS 
THE GOVEhYJMEENT PROCUREMENT REFORM ACT THE LOAN TO BE 
OBTAINED, REGARDLESS OF CLASSIFICATION, PRIOR TO ITS 
PERFECTION AND CONSUMMATION, AS WELL AS THE GOOD, 
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SERVICE, OR INSFRASTRUCTURE PROJECT THAT IS INTENDED TO BE 
FUNDED THEREWITH, SHALL BE THE SUBJECT OF 
REVIEW AND 
RATIFICATION BY AT LEAST TWO-THIRDS (213) OF THE MEMBERS OF 
THE SENATE; Provided, firther, That as far as practicable, utilization of the 
services of qualified Filipino citizens or corporations or associations owned by 
such citizens in the prosecution of projects financed under this Act shall be 
prepared on the basis of the standards set for a particular project: PROVIDED, 
FINALLY, That the matter of preference in favor of articles, materials, or 
supplies of the growth, production or mandacture of the Philippines, 
including the method or procedure in the comparison of bids for purposes 
therefor, shall be the subject of agreement between the Philippine 
Government and the lending institution. (as amended by R.A. 8555) 
SECTION 3. Separability Clause. - Any portion or provisions of this Act that may be 
declared unconstitutional or invalid shall not have the effect of nullifying other portions and 
provisions hereof as long as such remaining portion or provision can still subsist and be given 
effect in their entirety. 
SECTION 
4. Repealing Clause. - All laws, decrees, executive orders, proclamations and 
administrative regulations, or parts thereof inconsistent herewith are hereby repealed or 
modified accordingly. 
SECTION 5. Ef&ctiw'y Clause. - This Act shall take effect fifteen (15) days after its 
publication in at least two national papers of general circulation. 
Approved, 
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