SEVENTEENTH CONGRESS OF THE ]

REPUBLIC OF THE PHILIPPINES. ]
Third Regular Session 1
18 AUG -2 P658
SENATE
s.B. No. 1909 we he

Introduced by SEN. WIN T. GATCHALIAN

AN ACT
FURTHER AMENDING REPUBLIC ACT NO. 4566
TO PROMOTE COMPETITION AND INVESTMENTS IN THE
CONSTRUCTION CONTRACTING SERVICES INDUSTRY,
AND FOR OTHER PURPOSES

EXPLANATORY NOTE

Through its linkages with other industries, the construction industry in
the Philippines plays a vital role to national economic development as a
provider of production inputs and as consumer of services and products from

other sectors.

However, nationality requirement in the granting of licenses has created
a substantial barrier to entry of new contractors, thereby, hindering the
growth of the construction industry. A survey of the Philippine Construction
Accreditation Board’s data on licenses issued annually show a very low rate
of entry for both new domestic players and foreign firms, which is indicative
of how competition in the construction industry remained limited throughout

the years.! Essentially, these government restrictions on foreign participation

} Philippine Competition Commission’s Policy Note No.1, Series of 2017, entitled “Anti-
competitive Effects of Regulatory Restrictions: The Case of the Construction Sector.”



in the construction industry create distortions that reduce competitive

pressure, rewards poor performance, and distort incentives to innovate.

In this light, the Philippine government has to balance the need to
supervise and regulate the construction industry for public safety with the
need to ensure a level-playing field that would generate growth due to the
considerable scope for learning-by-doing, knowledge generation, expansion of
product variety, and an upgrade on product quality in the construction
industry. Therefore, this proposed bill seeks to provide a level playing field
and extend equal opportunities to eligible and qualified domestic and foreign
contractors, by removing barriers to entry of new players, including
government restrictions that hinder potential economic growth.

In view of the foregoing, immediate passage of this bill is earnestly

sought.



Republic of the Philippines
SENATE

SEVENTEENTH CONGRESS ‘18 NB-2 P6S8

Third Regular Session

Senate Bill No. 1909 REC: pp

Introduced by Senator Sherwin T. Gatchalian

AN ACT
FURTHER AMENDING REPUBLIC ACT NO. 4566
TO PROMOTE COMPETITION AND INVESTMENTS IN THE
CONSTRUCTION CONTRACTING SERVICES INDUSTRY,
AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

SECTION 1. A new Section 2 of Republic Act No. 4566 (R.A. 4566),
otherwise known as the “Contractors’ License Law,” is hereby inserted to
read as follows:

“SEC. 2. STATEMENT OF POLICY. - THE STATE RECOGNIZES
THE VITAL ROLE OF CONTRACTORS IN THE DELIVERY OF
RELIABLE, SAFETY-COMPLIANT AND QUALITY CONSTRUCTION,
BUILDING AND ENGINEERING THAT ARE FUNDAMENTAL TO
NATIONAL DEVELOPMENT.

GIVEN THE COUNTRY’S DEVELOPMENT OBJECTIVES, THERE
IS A NEED TO SUPERVISE AND REGULATE THE PRACTICE OF
CONSTRUCTION CONTRACTING FOR PUBLIC SAFETY, AND TO
PROMOTE COMPETITION IN THE CONSTRUCTION INDUSTRY
FOR ITS DEVELOPMENT AND GROWTH AND THE UPGRADING
OF CONSTRUCTION CAPABILITY IN THE COUNTRY.”

SECTION 2. Section 9 of R.A. 4566 is hereby amended to insert the
definition of new terms and to read as follows:

“Sec. 9. Definition of terms. As used in this Act,
(A) “Persons” include an individual, firm, partnership,

corporation, association or other organization, or any combination
of any thereof, REGARDLESS OF NATIONALITY OR CITIZENSHIP.



XXX XXX XXX

(F) “LICENSE” REFERS TO AUTHORITY GRANTED BY THE
PHILIPPINE CONTRACTORS ACCREDITATION BOARD (THE
“BOARD”) WITH CONFORMITY WITH THE CONSTRUCTION
INDUSTRY AUTHORITY OF THE PHILIPPINES (CIAP) FOR A
PERSON TO ENGAGE IN CONSTRUCTION CONTRACTING IN
THE PHILIPPINES WITHIN THE SCOPE AND FIELD OF ITS
LICENSE CLASSIFICATION FOR THE PERIOD OF ITS VALIDITY.
IT SHALL BE MAINTAINED THROUGH ANNUAL RENEWAL,
UNLESS SUSPENDED, CANCELLED OR REVOKED.

(G) “ACCREDITATION” REFERS TO THE STATUS
CONFERRED ON A_ LICENSED CONSTRUCTOR BY THE
CONSTRUCTION INDUSTRY AUTHORITY OF THE PHILIPPINES.
(THE “AUTHORITY”), INDICATING THE PERFORMANCE AND
EXPERIENCE OF THE CONSTRUCTOR AS BEING IN ACCORD
WITH STANDARDS SET BY THE BOARD.”

SECTION 3. Article III of RA 4566 shall be retitled as Practice of

Construction Contracting, and Section 16 thereof is hereby amended to read
as follows:

“SEC. 16. SCOPE OF PRACTICE. - CONSTRUCTION
CONTRACTING SERVICE SHALL EMBRACE THE SERVICES IN
RELATION TO ANY OR ALL OF THE FOLLOWING PRINCIPAL.
CLASSIFICATIONS:

(a) General engineering contracting
(b) General building contracting; and
(c) Specialty contracting.”

SECTION 4. A new Section 17 is hereby inserted to read as follows:

“SEC. 17. WHO MAY PRACTICE CONSTRUCTION
CONTRACTING. - ONLY PERSONS, REGARDLESS OF
NATIONALITY OR CITIZENSHIP, PROPERLY LICENSED AND
REGISTERED WITH THE BOARD IN CONFORMITY WITH THE
AUTHORITY MAY PRACTICE CONSTRUCTION CONTRACTING IN
THE PHILIPPINES.”

SECTION 5. A new Section 18 is hereby inserted to read as follows:

“SEC. 18. FOREIGN RECIPROCITY. - NO FOREIGN
CONTRACTOR SHALL BE GRANTED A LICENSE TO PRACTICE
CONSTRUCTION CONTRACTING IN THE PHILIPPINES, UNLESS
THE COUNTRY OR STATE OF WHICH THE FOREIGN
CONTRACTOR IS A SUBJECT OR CITIZEN, SPECIFICALLY
PERMITS FILIPINO CONTRACTORS TO PRACTICE WITHIN ITS



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TERRITORIAL LIMITS ON THE SAME BASIS AS THE SUBJECTS
OR CITIZENS OF SAID FOREIGN COUNTRY OR STATE UNDER
RECIPROCITY AND UNDER INTERNATIONAL AGREEMENTS;
PROVIDED FURTHER, THAT SUCH FOREIGN CONTRACTOR
SHALL DULY ESTABLISH ITS BUSINESS IN THE PHILIPPINES,
AND SHALL ENSURE TECHNOLOGY TRANSFER AND CAPACITY
BUILDING OF LOCAL CONTRACTORS. ”

SECTION 6. The succeeding sections of R.A. 4566 are hereby
renumbered accordingly.

SECTION 7. Implementing Rules and Regulations. - The Board, in
conformity with the Authority, and in consultation with concerned sectors
shall issue or revise implementing rules and regulations within thirty (30)
days from the effectivity of this Act.

SECTION 8. Separability Clause. - If any portion of this Act is declared
invalid or unconstitutional, the portions or provisions which are not affected
shall remain valid and subsisting.

SECTION 9. Repealing Clause.- All laws, decrees, executive
issuances, rules and regulations inconsistent with this Act are hereby
repealed or modified accordingly.

SECTION 10. Effectivity. - This Act shall take effect fifteen (15) days
after its publication in the Official Gazette or in a newspaper of general
circulation.

Approved.