EIGHTEENTH CONGRESS OF THE )

REPUBLIC OF THE PHILIPPINES i)
First Regular Session )
HOUSE OF REPRESENTATIVE
H.B.No._ 4453

Introduced by Representative TEODORICO T. HARESCO, JR.

EXPLANATORY NOTE

Commonwealth Act No. 541 (C.A. 541), otherwise known as “An Act to Regulate the
Awarding of Contracts for Construction or Repair of Public Works,” was enacted in 1940,
during the World War Il. For seventy-nine years, such law remained the same, thus
restricting the competition in the construction industry.

In May 2019, the Government Procurement Policy Board (GPPB) has approved a
resolution raising the foreign equity requirement for infrastructure projects to 40% from the
current 25%.! Under Resolution No. 06-2019, the GPPB adopted Executive Order No. 65 S.
2018, which provided that contractors with 40% foreign equity may be awarded contracts
for the construction and repair of locally funded public works.? This Resolution shows the
direction of the government to ease restrictions on foreign participation in certain

investment areas or activities.

This bill seeks to encourage competition in public works projects and allow the

participation of both foreign and local contractors to bid in government projects.

mM

TEODORICO T. HARESCO, JR.

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EIGHTEENTH CONGRESS OF THE )

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REPUBLIC OF THE PHILIPPINES )
First Regular Session )
HOUSE OF REPRESENTATIVES
H.B. No.

Introduced by Representative TEODORICO T. HARESCO, JR.

AN ACT

AMENDING INVESTMENT RESTRICTIONS IN COMMONWEALTH ACT NO. 541, AS

AMENDED BY LETRRER OF INSTRUCTIONS NO. 630,
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 1 of Commonwealth Act No. 541, as amended by Letter of

Instructions No. 630, is hereby inserted to read as follows:

“SEC. 1. DECLARATION OF POLICY. - THE STATE RECOGNIZES THE IMPORTANCE
OF EFFICIENT AND COST-EFFECTIVE DELIVERY OF RELIABLE, SAFETY-
COMPLIANT AND QUALITY PUBLIC WORKS TO NATIONAL DEVELOPMENT. IT IS
THUS DECLARED THE POLICY OF THE STATE TO ENCOURAGE COMPETITION
AND EXTEND EQUAL OPPORTUNITIES TO ELIGIBLE AND QUALIFIED BIDDERS
TO PUBLIC WORKS PROJECTS OF THE GOVERNMENT AND TO ATTRACT NOT
ONLY DOMESTIC BUT EVEN FOREIGN INVESTMENTS IN THE CONSTRUCTION
INDUSTRY TO IMPROVE MARKET DYNAMISM, ENCOURAGE INNVOATION, AND
REWARD GOOD PERFORMANCE.”

SEC. 2. Section 1 of C.A. 541 is hereby renumbered and amended to read as follows:

SEC. [4] 2. All branches, offices, and subdivisions of the Government and all
government-owned or controlled companies, authorized to contract and make
disbursements for the construction or repair of LOCALLY FUNDED public works,
INCLUDING THE CONSTRUCTION OF DEFENSE-RELATED STRUCTURES, shall
EXTEND EQUAL OPPORTUNITIES [give preference] in awarding OR NEGOTIATING
contract for such works to ELIGIBLE AND QUALIFIED Filipino [or American] AND
FOREIGN contractors. [and-domestic_entities-whenthetowest-bid_of a_domestie



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SEC. 3. Section 2 of C.A. 541 is hereby repealed.

SEC. 4. Separability Clause. - If any portion of this Act shall be held invalid or
unconstitutional, such invalidity or unconstitutionality shall not affect the other provisions

hereof which shall remain in full force effect.
SEC. 5. Repealing Clause. - All laws, decrees, orders, rules and regulations or provisions
thereof which are inconsistent with this Act are hereby repealed, amended or modified

accordingly.

SEC. 6. Effectivity Clause. - This act shall take effect fifteen (15) days after its publication
in the Official Gazette or in a newspaper of general circulation.

Approved,