Republic Of the Philippines
THE HOUSE OF REPRESENTATIVES
Quezon City
NINETEENTH CONGRESS
Second Regular Session
HouseB[[]No8806
Introduced by: Hon. Arnolfo "Arnie" A. Teves, |r.
AN ACT
INSTITUTIONALIZING   THE   PREFERENTIAL   TREATMENT   IN   THE   PROCUREMENT   OF
MATERIALS AND SUPPLIES PRODUCED, MADE AND MANUFACTURED IN THE PHILIPPINES
REPEALING  COMMONWEALTH  ACT  138  ENTITLED  AN ACT  TO  GIVE  NATIVE  PRODUCTS
AND  DOMESTIC  ENTITIES  THE  PREFERENCE  IN  THE  PURCHASE  0F ARTICLES  FOR THE
GOVERNMENT AND AMENDING SECTIONS 4 AND 43 0F REPUBLIC ACT 9184 ENTITLED AN
ACT  PROVIDING  FOR  THE  MODERNIZATION,  STANDARDIZATION  AND  REGUI.ATION  OF
THE PROCUREMENT ACTIVITIES OF THE GOVERNMENT AND FOR OTHER PURPOSES
EXPLANATORY NOTE
Section  12,  Article  XII  of  the  Constitution  provides  that  the  "Stcrte  sha// promote  the
preferential  use  of  Filipino  labor,  domestic  materials  and  locally  produced  goods,  and  adopt
measures that help make them competitive:'
This preferential treatment policy has never been more important than today, during this
COVID-19  pandemic  where  many  businesses  are  closed  and  workers  are  displaced  due  to
reduced operations.   This  policy acknowledges that the government should help businesses to
return to its normal level of operation in order not to further harm the country's economy.  Local
goods  are  not  inferior  to  those  made  abroad, and  Filipinos must be proud  to promote these
goods and services which are produced, made and manufactured in the Philippines.
On  November 7,1936, Commonwealth Act No.138 entitled "An Act to GJ.ve IVcz£J've Prodz/cts
and Domestic Entities the Preference in the Purchase Of Articles for the Government" was enacted.
On January 26, 2003, Republic Act No. 9184, otherwise known as the "Covemme7i£ Procz/remcnc
Re/arm Act" took effect.  Section 4 thereof states:
"SEC. 4.   Scope and Application. -This Act shall apply to the Procurement
of Infrastructure Projects, Goods,  and  Consulting Services, regardless of source Of
funds,   whether   local   or   foreign,   by   all   branches   and   instrumentalities   of
government,  its  departments,  offices and agencies, including  government-owned
and/or  -controlled  corporations  and  local  government  units,  subject  to  the
provisions   of   Commonwealth   Act   No.   138.   Any   treaty   or   international
agreement   affecting   the   subject   matter  of  this  Act  to  which  the   Philippine
government is a signatory shall be observed."(Emphasis supp\±ed)
Further, Section 43 of Republic Act No. 9184 also provides that:
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"SECTION 43.  Procurement of Domestic and Foreign Goods. -Consistent with
the country's obligations under international treaties or agreements, goods may be
obtained from domestic or foreign sources and the procurement thereof shall be open
to all eligible suppliers, manufacturers and distributors.   However, in the interest of
availability,  efficiency  and  timely  delivery  of goods, the procuring  entity may give
preference   to   the  purchase  of  domestically-produced  and  manufiactured  goods,
supplies and materials that meet the specified or desired quality."
While  Republic Act  (RA)  No.  9184  makes reference to Commonwealth Act (CA) No.138,
this  is  basically  more  on  the  procurement  of foreign  and  domestic  goods,  and  the  bidding
process, wherein the procuring entity shall give preference to materials and supplies produced,
made and  manufactured  in the Philippines, subject to some conditions, and the award shall be
made to the lowest domestic bidder, provided the lowest domestic bid is not more than fifteen
percent (15%) in excess of the lowest foreign bid. However, CA 138 provides graduated amounts
of bids  that  should  be  offered  by the  lowest  Filipino  bidder  vis-a-vis the lowest foreign bid
before the award will be made to the lowest Filipino bidder. Also, the amounts of bids which are
mentioned in CA 138 are no longer practical and applicable given the current value of the peso
against the US dollar. It is about time that CA 138 be repealed and Sections 4 and 43 of RA 9184
be   amended   to   strengthen   the   policy   of  giving  preference  to   Filipino  goods,  subject  to
international treaties or agreement wherein the Philippines is a signatory.
Thus,  this  proposed  measure  seeks  to  institutionalize  the  Filipino  first  policy  in  the
government  procurement  system,  and  to  establish  the  parameters,  wherein  all  government
institutions,  departments  and  agencies  must procure  their  supplies  and  products  as well as
services from Filipino suppliers, as long as these products and services are of acceptable
standard in accordance with existing laws and treaties or international engagements.  It
also  provides  that  all  government-sponsored  or  government-issued  supplies  to beneficiaries
have at least seventy percent (70%)  local  added value.   It is only when there are no available
locally made supplies that they can procure those from abroad.
This proposed bill also  requires that the materials needed are not only locally produced
but  also  locally-sourced.    This  guarantees  that  local  industries  will have a  fair chance  in the
delivery and supply of government needed goods, products and materials. Local enterprises are
encouraged  to  invest  more  in  local  manufacture  due  to  the  increased  demand  which  will
eventually result to job generation as a necessary offshoot of the expanded business activities.
Hence, the swift passage of this bill is earnestly sought.
Cy
ARNOLFO "ARNIE" A. TEVES, |R.
Republic of the Philippines
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THE HOUSE OF REPRESENTATIVES
Quezon City
NINETEENTH CONGRESS
Second Regular Sess ion
8806
House Bill  No.
Introduced by: Hon. Arnolfo "Arnie" A. Teves, |r.
AN ACT INSTITUTIONALIZING THE PREFERENTIAL TREATMENT IN THE PROCUREMENT
OF MATERIALS AND SUPPLIES PRODUCED, MADE AND MANUFACTURED IN THE
PHILIPPINES REPEALING COMMONWEALTH ACT 138 ENTITLED AN ACT TO GIVE NATIVE
PRODUCTS AND DOMESTIC ENTITIES THE PREFERENCE IN THE PURCHASE OF ARTICLES
FOR THE GOVERNMENT AND AMENDING SECTIONS 4 AND 43 0F REPUBLIC ACT 9184
ENTITLED AN ACT PROVIDING FOR THE MODERNIZATION, STANDARDIZATION AND
REGULATION OF THE PROCUREMENT ACTIVITIES OF THE GOVERNMENT AND FOR OTHER
PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled'.
SECTION 1. Short rl.tJe.-This Act shall be known as the "Loka/ Mzfna 4c£"
SECTION 2. Doc/aratlon a/Po/fey. -It is the poliey of the State to in still   patriotism and
nationalism among the people.  Public officials  and employees  shall at all times be loyal to the
country  and  promote  greater  Filipino  role  in  the  country's  economy.  For  this  purpose,  all
government offices  shall give preference to domestically produced and manufactured goods or
supplies that meet the required quality or standard.
SECTION  3.  Cbvemge.  - All heads of departments, bureaus, offices and agencies of the
National   Government,   including  local  government  units,  government-owned  or  -controlled
corporations, government financial institutions, state universities and colleges, and military and
police  units, authorized to  requisition,  purchase,  contract or make disbursements  for articles,
materials and supplies for public use, public biddings or public works, shall dive Dreference in
the   procurement   of   materials   and   supplies,   produced,   made   and   manufactured   in   the
Philippines  that  meet  the  specified  or  desired  quality  in  accordance  with  the  provisions  of
existing laws and treaties or international agreements.


SECTION  4.  £ocaJ Added  Value.  -  All  government-sponsored  or  government-issued
supplies to beneficiaries shall have at least seventy percent (70%) local added value.
For purposes  of this  Act,  supplies  refer to  materials  and  equipment necessary in  the
transaction of the official business of the procuring entity and used in its day to day operations.
SECTION 5. Cerfl-Ircatr.on Requl.rement. - In order to be qualified to participate in the
bidding  process,  suppliers  are  required  to  show  proof  of  compliance  to  the  requirement
mentioned in Section 4 of this Act.
The Department of Trade and Industry shall issue the certification to qualified suppliers
or vendors who want to participate in the procurement process.
SECTION  6. Auni.Jabfll.ty a/ £ocaJ Materl.aJs.  -The  materials  needed  to  produce  the
government-sponsored or government-issued supplies shall be locally sourced.   In case of non-
availability of materials locally, it is required that a certification from the Department of Trade
and Industry stating that locally made and sourced materials are not available, before a supplier
can participate in any government procurement bidding.
SECTION  7.  Domestl-c  and  FOJlei.gn  BI.ds.  -  Whenever  several  domestic  and  foreign
bidders shall participate in the bidding to supply articles, materials and equipment mentioned
in Section 3 of this Act, the award shall be given to the domestic bidder offering the lowest bid,
provided the amount of the bid is  not more than twenty flve percent (25%)  in excess of the
lowest bid offered by a foreign bidder.
SECTION 8. Procurement a/ Imported Goods. - The procurement of imported goods
may be allowed if local products, materials and supplies are not manufactured domestically in
sufficient quantity or comparable quality and at reasonable prices.
SECTION 9. Implementing Rules and Regulations. - Within sixty (60) days after the
approval of this Act, the Government Procurement Policy Board (GPPB) created by Republic Act
No. 9184 shall formulate the necessary rules and regulations including the standard forms for
government  procurement  for  the  proper  implementation  of  this  Act.  The  said  rules  and
regulations shall be approved by the President of the Philippines.
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SECTION 10.   RepeaJI.ng CJaHse. -Commonwealth Act No.138, entitled ``An Act to GI.ve
Native   Products   and   Domestic   Entities   the   Preference  in   the   Purchase   of  Articles  for  the
Govemmenc" is hereby repealed.  Sections 4 and 43 of Republic Act No. 9184, otherwise known
as the "Govemmenf Procur€m€nc I?€/arm Act," and all other laws, decrees, rules and regulations
inconsistent with the provisions of this Act are hereby modified or amended accordingly.
SECTION 11. E/rectfvi.ty. -This Act shall take effect fifteen (15) days after its publication
in the O#ci.a/ Cazcitte or in a news paper of general circulation.
Approved.