EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
F irst R e g u la r Session
1
SENATE 
s .B . No. 1 0 0 9
v -’.r- 
o ti.i.' 
«. 
s£->- . t-'-''
"i9 SEP-4 PI :23
In tro d u ce d  by SEN. WIN GATCHALIAN
AN ACT
AMENDING INVESTMENT RESTRICTIONS IN COMMONWEALTH ACT 
NO. 541, AS AMENDED BY LETTER OF INSTRUCTIONS NO. 630, AND
FOR OTHER PURPOSES
EXPLANATORY NOTE
Commonwealth Act No. 541 (C.A. 541), also called “An Act to Regulate 
the Awarding of Contracts for Construction or Repair of Public Works,” was 
enacted in 1940, a time when the Philippines was still transitioning to full 
independence, setting-up its own government, promoting local capital and 
industrialization, and establishing the basis for national defense while World 
War II was looming. Clearly, the principle of competitiveness as enshrined 
today in the 1987 Constitution and the Philippine Competition Act was diluted 
and not a priority in the minds of the then National Assembly when a domestic 
preference policy was adopted by the Government in the awarding of public 
works projects to the local construction industry.
For seventy-eight years, such domestic preference policy has confined 
competition in the construction industry within our territorial boundaries and 
has discriminated in favor of domestic businesses with substantial market 
power and political influence. Between 2010 and 2015, public construction


grew by 8% while private construction grew by 58%.1 The lack of genuine 
competition in the public construction industry impairs public welfare as 
there are fewer incentives for existing domestic firms to innovate and puts at 
risk the delivery of reliable, safety-compliant and quality public works.
Accordingly, this bill should be considered in the context of positioning 
the Philippines more competitively and attracting new investments in the 
construction industry to enable the Government to deliver the much-needed 
infrastructure that would support the country’s initiatives in providing a 
business climate conducive to investments in the country. In this light, this 
bill seeks to provide a more level playing field and extend equal opportunities 
to eligible and qualified domestic and foreign bidders to participate in the 
bidding by the Government for public works projects. It is hoped that the 
enactment of this measure will encourage and attract foreign firms that 
possess the capacity to construct vital projects and are capable of sharing
technical expertise with local firms to enter the Philippine^j:;qnstruction 
market. 
/
1 Philippine Competition Commission’s Policy Note No. 1, Series of 2017, entitled “Anti­
competitive Effects of Regulatory Restrictions: The Case of the Construction Sector.”


EIGHTEENTH CONGRESS OF THE 
]
REPUBLIC OF THE PHILIPPINES 
j
F irst R e g u la r S ession 
]
SENATE
S.B. No. 1009
PI 
*■.
: r.n-p
•19 SEP-4 PI :23
In tro d u c e d  by SEN. WIN GATCHALIAN
AN ACT
AMENDING INVESTMENT RESTRICTIONS IN COMMONWEALTH ACT 
NO. 541, AS AMENDED BY LETTER OF INSTRUCTIONS NO. 630, AND
FOR OTHER PURPOSES
Be it enacted by the Senate and the House of Representatives of the 
Philippines in Congress assembled:
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Section 1. A new Section 1 of Commonwealth Act No. 541 (C.A. 541),
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also known as “An Act to Regulate the Awarding of Contracts for the
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Construction or Repair of Public Works,” as amended by Letter of Instructions
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No. 630, is hereby inserted to read as follows:
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“SEC. 1. STATEMENT OF POLICY. -  THE STATE RECOGNIZES
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THE IMPORTANCE OF THE EFFICIENT DELIVERY OF RELIABLE,
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SAFETY-COMPLIANT 
AND 
QUALITY 
PUBLIC 
WORKS 
TO
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NATIONAL 
DEVELOPMENT. 
IT ALSO 
RECOGNIZES 
THAT
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HEALTHY 
COMPETITION 
CAN 
FURTHER 
DEVELOP 
THE
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CONSTRUCTION INDUSTRY AND OPTIMIZE THE CONSTRUCTION
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CAPABILITY OF THE COUNTRY TO EFFICIENTLY DELIVER SUCH
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PUBLIC WORKS.
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IT IS THUS THE POLICY OF THE STATE TO EXTEND EQUAL
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OPPORTUNITIES TO ELIGIBLE AND QUALIFIED BIDDERS TO
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PUBLIC WORKS PROJECTS OF THE GOVERNMENT AND TO 
ATTRACT DOMESTIC AND FOREIGN INVESTMENTS IN THE 
CONSTRUCTION INDUSTRY TO IMPROVE MARKET DYNAMISM, 
ENCOURAGE 
INNOVATION, 
AND 
REWARD 
GOOD 
PERFORMANCE.”
Sec. 2. Section 1 of C.A. 541 is hereby renumbered and amended to 
read as follows:
SEC. [T] 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 
preferences} in awarding OR NEGOTIATING contract for such 
works to ELIGIBLE AND QUALIFIED FILIPINO AND FOREIGN 
[Filipino or American] contractors, [and domestic entities when 
the lowest bid of a domestic bidder is not more than fifteen per 
centum in excess of the lowest foreign bid: Provided, However,
That or the construction of land, air, and sea coast defenses, 
arsenals, barracks, depots, hangars, landing fields, quorter-Sr 
hospitals, and all other buildings and structures required for the 
national defense of the-Philippines, no foreign bids -shall be 
allowed.]
Sec. 3. Section 2 of C.A. 541 is hereby repealed.
Sec. 4. 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.


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Sec. 5. Repealing Clause. -  All laws, decrees, executive issuances, rules 
and regulations inconsistent with this Act are hereby repealed or modified 
accordingly.
Sec. 6. Effectivity. -  This Act shall take effect fifteen (15) days after its 
publication in the Official Gazette or in a newspaper of general circulation.
Approved,