Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
17 CONGRESS
Third Regular Session

8174

House Bill No:

Introduced by Representative Wes Gatchalian

ee

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 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.

bill is earnest)

In view of the foregoing, immediate passage of this yught.

(WES GATCHALIAN
Aepresentative
First District, Valefzuela City

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.”


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
17% CONGRESS
Third Regular Session

8174

House Bill No.

Introduced by Representative Wes 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 (RA. 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 00K 300K

(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
(©) 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
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 RA. 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.