Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

NINETEENTH CONGRESS
First Regular Session

House Bit no._4681_

‘Introduced by: Hon. Keith Micah “Atty. Mike” D.L. Tan

AN ACT
ABOLISHING THE PHILIPPINE INTERNATIONAL TRADING CORPORATION
(PITC)

EXPLANATORY NOTE

Article 11, Section 27 of the 1987 Constitution provides that, "The State shall
maintain honesty and integrity in the public service and take positive and effective
measures against graft and corruption.”

On July 21, 1973, the Philippine International Trading Corporation (PITC) was
established through Presidential Decree (PD) No. 252. It is an attached agency to the
Department of Trade and Industry (DT!) and mandated to facilitate trade with Socialist
and Other Centrally Planned Economy Countries.

In 1977, its mandate was expanded under PD 1071 to be one of the drivers of
Philippine trade worldwide.

The PITC was originally crafted as a mechanism to formalize trade with planned
economies through government-to-government procurement. However, only two (2)
centrally planned economies are in existence today, which are Cuba and North Korea.

The Philippines has also moved away from government-to-government trade,
as exemplified by the passage of Republic Act No. 11203 or the "Rice Tariffication
Law" among others.

Moreover, the passage of RA No. 9184 or the "Government Procurement
Reform Act has undermined the mandate of the PITC through the inclusion of relevant
provisions that seeks to strengthen the procurement service of national government
agencies.

Article 5, Section 11 of RA No. 9184 states that all “procurement agencies shall
establish a single BAC (Bids and Awards Committee) for its procurement’. Section 63
(0) further tasks the Government Procurement Policy Board (GPPB) to strengthen the
said BACs by ensuring "that Procuring Entities regularly conduct procurement training
programs and prepare a procurement operation manual for all offices and agencies of
government".

Recently, the PITC has dealt with issues regarding the exercise of their
mandate. Based on the 2020 Commission on Audit Annual Report of the PITC, it has


been shown that Php 11.02 billion of funds transferred from 2014 to 2020 by various
‘source agencies remain unutilized by the PITC as of 31 December 2020.

These transfers were conducted in order to increase the utilization rate of
government agencies, as funds transferred to the PITC is considered obligated and
disbursed already. There are reports of source agencies using the interest of money
transferred to the PITC to generate savings, which are used by the source agency to
fund bonuses, among others

Based on the independent auditor's report on its financial statements by the
COA for the years ended December 31, 2021 and 2020, PICT's inability to generate
substantial income from its mandate of international trading was observed. Likewise,
it raised the concern that the passage of Republic Act 11520, which prohibits
government agencies from outsourcing their procurement from PITC, poses risks on
the ability of PITC to continue in the succeeding years.

The trade liberalization thrust of the global economy has also made the
mandate of the PITC archaic and irrelevant in the current times. The passage of the
"Government Procurement Reform Act" has also weakened the mandate of the PITC,
which has become a repository for unobligated funds of national government
agencies, and as such should be abolished as it has outlived its useful functions.

In this light, this bill seeks to abolish PITC, a line corporate agency of the
government and a chartered GOCC, in order to promote government efficiency,
effectiveness, and economy.

Hence, immediate approval of this measure is earnestly sought

Keith Micah “Atty. Mike” D.L. Tan
4th District, Quezon


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

NINETEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 4681

Introduced by: Hon. Keith Micah “Atty. Mike” D.L. Tan

ABOLISHING THE PHILIPPINE INTERNATIONAL TRADING CORPORATION
(PITC)

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

SECTION 1. Declaration of Policy. - The State shall maintain honesty and
integrity in the delivery of public service and take positive and effective measures
against graft and corruption. Thus, the State shall maintain accountability and
responsibility among its public officials and employees and shall take appropriate
measures to prevent unlawful and ineffectual acts and practices, thereby promoting
efficiency and transparency in the conduct of its business.

SEC. 2. Abolition of the Philippine International Trading Corporation (PITC). -
pine International Trading Corporation (PITC) created under the Presidential
Decree No. 252 shall be abolished.

In lieu of the abolition of the PITC, the respective Departments and Agencies
shall, thereafter, undertake the procurement of supplies, equipment, and infrastructure
projects. Further, the Department of Trade and Industry (DTI) shall undertake the
functions of PITC in relation to facilitative trade-related services, responsive business
solutions, and trade-related government-to-government transactions, among others.

SEC. 3. Separation and Retirement from Service. - Employees affected by the
abolition of the PITC shall receive separation benefits under the Government
Reorganization Law and other existing laws, rules, and regulations. Provided that,
those who are qualified to retire and receive retirement benefits under existing
retirement laws shall be allowed to retire under existing laws, rules, and regulations.

SEC. 4. Reversion of Funds. - In coordination with the concerned Departments
and Agencies, the PITC shall revert all prior years unutilized advances to the National
Treasury. Current year’s advances for the procurement of supplies and equipment and


all other funds held in trust by the PITC shall be returned to the concerned
Departments and Agencies.

SEC. 5. Repealing Clause. - All laws, decrees, orders, rules and regulations or
other Issuances or parts thereof inconsistent with the provisions of this Act are hereby
repealed or modified accordingly.

‘SEC. 6. Separability Clause. - If any portion or provision of this Act is declared
unconstitutional, the remainder of this Act or any provision not affected thereby shall
remain in force and effect.

SEC. 7. Effectivity. - This Act shall take effect after fifteen (15) days following
the completion of its publication either in the Official Gazette or in a newspaper of
general circulation.

Approved,