EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
)
)
SENATE 
S. No.
C . | 1 -
•19 
JUL 15 
A10-.42
R11CL...JL.
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 of living, and improving the quality of life 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 environment, 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, including 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 Economics1 showed that 
government risk management practices severely understate the level of exposure and 
risk arising 
from 
unfettered 
provision 
of guarantees. 
Philippine 
Institute 
for
1 Reside, R. (1999). Estimating the Philippine Governm ents Exposure to and Risk from  Contingent Liabilities and Infrastructure Projects. 
Quezon City: University o f the Philippines School of Economics


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 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 
activities4. 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.
The mechanisms to enable the public and the policymaker to make informed 
decisions on public debt, however, remained largely inadequate.
Commission on Audit5 has already recommended the disclosure of relevant 
information pertaining to the contingent liabilities including the fiscal risks associated 
with guarantees on Public-Private Partnership (PPP) projects and on issuances of 
government-owned or -controlled corporations (GOCCs) and government 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 PPP 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 President's annual budget to 
Congress. It will provide Members of Congress and other stakeholders with a better 
appreciation of the fiscal and monetary impact of the government's contingent liabilities 
on future government spending.
2 Philippine Institute fo r Development Studies. (2005). Contingent Liabilities: adding up to the fiscal burden. Makati: Republic o f the
Philippines.
3 Development Budget Coordinating Committee. (2012). 2012 Fiscal Risks Statem ent Quezon City: Republic o f the Philippines.
4 Senate Economic Planning Office. (2004) Five Pillars o f Growth: An Economic and Social Development Framework. Pasay City: United 
Nations Development Programme.
5 Commission on Audit (2004). Public D ebt Management: Overall Report. Quezon City: Republic of the Philippines; and
Commission on Audit. (2010). Annual A udit Report on the Public Debt Reporting (A Public D ebt Management A udit) 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: CoA flags P1.3-T hidden Noy debts. Daily Tribune, p. 1.


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.
•null'


EIGHTEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
SENATE
s. NO. 
477
Q'.r-u' "  
•
*19 
JUL 15 
,rllC!:42
REcr ■-
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
Be it enacted by the Senate and House o f Representatives o f the Philippines in 
Congress assembled:
1 
Section 1. Short Title. -  This Act shall be known as the "Contingent Liabilities
2 
Disclosure Act."
3 
Sec. 2. Declaration o f Policy and Objectives. -  It is the declared policy of the
4 
State to recognize the right of the people to information on matters of public concern.
5 
The Philippine Government shall be transparent in all of its financial transactions and
6 
decisions and as such, shall afford the citizens access to official records, documents and
7 
research data that pertains to, or used as basis for, the country's fiscal and monetary
8 
policy.
9 
Sec. 3. Contingent Liabilities. -  Contingent liabilities shall refer to explicit
10 
guarantees extended by the Philippine Government through any of its agencies
11 
including local government units, government-owned or -controlled corporations
12 
(GOCCs) and government financial institutions (GFIs) including, but not limited to, the
13 
following:
14 
(a) Guarantees arising from Republic Act No. 6957, as amended by Republic Act
15 
No. 7718;
16 
(b) Loans contracted and liabilities incurred by GOCCs or by GFIs which were
17 
guaranteed by the National Government;
18 
(c) Guarantee programs implemented by GOCCs and GFIs;
19 
(d) GFI-guaranteed private loans which were subsequently transferred to and
20 
assumed by the National Government by virtue of Proclamation No. 50, Administrative
21 
Order No. 64 s.1988, and other similar statutes or issuances;


1 
(e) Government insurance programs; and
2 
(f) Other potential losses arising from indemnities, pending litigation, and other
3 
circumstances relating to claims and assessments in respect of breach of contract,
4 
damages to persons and property, and similar items.
5 
Sec. 4. Full Disclosure o f Contingent Liabilities. -  The Department of Finance
6 
(DOF) is hereby mandated to implement full disclosure of all contingent liabilities of the
7 
national government or any of its agencies including GOCCs and GFIs in an annual
8 
basis. All information related to the government contingent liabilities shall be contained
9 
in an annual report to be submitted to the Chairpersons of the Senate Committee on
10 
Finance and House Committee on Appropriations no later than June 30 of the
11 
succeeding year.
12 
Sec. 5. Content and Publication o f the Contingent Liability Report. -  The report
13 
shall indicate, among others, the specific contingent liabilities of government, the
14 
amount involved therein, the purpose and scope of such liabilities, its duration and
15 
conditions, and its intended beneficiaries. Information related to the government
16 
contingent liabilities shall also be published in at least two newspapers of national
17 
circulation and/or in the official websites of the government agencies concerned at least
18 
a month prior to the submission of the President's annual budget to Congress.
19 
Sec. 6. Implementing Rules and Regulations. -  Within ninety (90) days from
20 
effectivity of this Act, the DOF and the National Economic and Development Authority
21 
(NEDA), in consultation with other relevant government agencies shall promulgate the
22 
rules and regulations to effectively 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
25 
any other provisions, sections or parts hereof.
26 
Sec. 8. Repealing Clause. -  All laws, decrees, orders, rules and regulations which
27 
are inconsistent with the provisions of this Act are hereby repealed or modified
28 
accordingly.
29 
Sec. 9. Effectivity. -  This Act shall take effect fifteen (15) days following its
30 
publication in at least two (2) newspapers of general circulation or the Official Gazette.
Approved,