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Republic of the Philippines
DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS
CENTRAL OFFICE
Manila

May 20, 2019

DEPARTMENT MEMORANDUM )
)

CIRCULAR NO. __ 4_2__ )

)
Series of 2019~ ~ .vY. (9

FOR / TO : Undersecretaries
Assistant Secretaries
Service Directors
Bureau Directors
Regional Directors
Heads of UPMOs
District Engineers
This Department

For information and guidance, attached is a copy of GPPB RESOLUTION No. 06-2019,
re: "ADOPTION OF FOREIGN EQUITY REQUIREMENT UNDER EXECUTIVE ORDER
NO. 65 S. 2018 AND AMENDMENT OF THE RELEVANT PROVISIONS OF THE 2016
REVISED IMPLEMENTING RULES AND REGULATIONS OF REPUBLIC ACT NO.
9184."

A copy of Resolution may also be downloaded from the DPWH website:

said
htto://dowhweb. If an office cannot access the DPWH website, a hard copy may be
obtained from the Records Management Division, HRAS, upon request.

For dissemination to all concerned.

B.EL_VAP, Ph.D.,CESO
II
Assistant Secretary for Support Services

Encl: GPPB Resolution No. 06-2019

Cc: Office of the Secretary

12.1.1 CGSCjEDY/MNC/MVSG
 RESOLUTION NO. 06-2019

ADOPTION OF FOREIGN EQUITY REQUIREMENT UNDER EXECUTIVE ORDER NO. 65

S. 2018 AND AMENDMENT OF THE RELEVANT PROVISIONS OF THE 2016 REVISED
IMPLEMENTING RULES AND REGULATIONS OF REPUBLIC ACT NO. 9184

WHEREAS Republic Act (RA) No. 9184 otherwise known as the "Government
Procurement Reform Act" took effect on 26 January 2003, while its 2016 Revised
Implementing Rules and Regulations (IRR) took effect on 28 October 2016;

WHEREAS, Section 63 of RA No. 9184 and its 2016 revised IRR authorized the
Government Procurement Policy Board (GPPB) to formulate and amend public procurement
policies, rules and regulations, and amend, whenever necessary, its IRR;

WHEREAS, Sections 23.4.2.1 (b), (c) and (e) provide for a threshold of at least seventy-
five percent (75%) on domestic interest, outstanding capital stock or ownership as eligibility
criteria for partnerships, corporations or joint ventures in the procurement of infrastructure
projects;

WHEREAS, Commonwealth Act (CA) No. 541, dated 26 May 1940, requires
government agencies to give preference in awarding of contracts for construction or repair of
public works to domestic entities and that the term domestic entity shall refer to any corporate
body or commercial company duly organized and registered under the laws of the Philippines
seventy-five per centum of the capital of which is owned by citizens of the Philippines
or of the United States, or by citizens of both countries;

WHEREAS, Letters of Instruction No. 630, dated 22 November 1977, provides that
"unless specifically authorized by the President of the Philippines in exceptional cases, bidding
award or negotiations of primarily civil works contracts shall be limited to Filipino individuals
and to corporations, partnership, or associations seventy-five percent (75%) of the capital
of which is owned by citizens of the Philippines";

WHEREAS, the Office of the President (OP) issued Executive Order

(EO) No. 65 on 29 October 2018 promulgating the Eleventh (11th) Foreign Investment
Negative List (FINL) which provides for limitation on investment by foreign entities in specific
business and/or industry;

WHEREAS, EO No. 65, s. 2018, provides that contractors with forty percent (40%)
foreign equity may get contracts for construction and repair of locally-funded public works
subject to regulatory frameworks;

WHEREAS, on 18 January 2019, representatives from GPPB-Technical Support Office

(TSO) met with representatives from the Office of the Deputy Executive Secretary for General
Administration (ODESGA) of the OP to discuss the shift in requirements and the conflict
between the provisions of the EO and the IRR;

WHEREAS, ODESGA representatives conveyed that the intention is to ease restrictions

on foreign participation in certain investment areas or activities by increasing the threshold of
how much foreign entities may own from twenty-five percent (25%) to forty percent (40%) and
that such was the intention of the President in issuing EO No. 65, s. 2018;

GPPB Resolution No. 06-2019, dated 08 March 2019 page 1 of 7

 WHEREAS, during the 1st Joint Meeting of the GPPB and the Inter-Agency Technical
Working Group (IATWG) held last 07 February 2019, the GPPB-TSO presented the issue to
the Board and recommended that the matter be referred to the IATWG for further study and
to address the conflicting provisions between EO No. 65, s. 2018 and 2016 revised IRR of RA
No. 9184, and while the matter is under review, to retain the eligibility criteria provided in
Section 23.4.2.1(b), (c) and (e) of the 2016 revised IRR of RA No. 9184;

WHEREAS, consistent with the intention to ease restrictions on foreign participation in

certain investment areas or activities, the Board resolved to adopt the provisions of EO No.
65 and amend the relevant provisions of the 2016 revised IRR of RA No. 9184;

WHEREAS, based on the instructions of the Board, the GPPB-TSO drafted the
proposed amendments to the relevant provisions of the 2016 revised IRR of RA No. 9184 and
the Philippine Bidding Documents (PBD) for the Procurement of Infrastructure Projects to
adopt the policy provided in EO No. 65 s. 2018, and presented the same for consideration of
the IATWG in its 2nd Regular Meeting last 28 February 2019;

WHEREAS, after due consideration, the IATWG resolved to recommend to the Board
the proposed amendments to the 2016 revised IRR of RA No. 9184 and the PBDs for the
Procurement of Infrastructure Projects, including the corresponding provisions in the Generic
Procurement Manuals (GPMs);

WHEREAS, during the 2nd Regular Meeting of the GPPB last 08 March 2019, the GPPB-
TSO presented the proposed amendments to Sections 23.4.2.1 (b), (c) and (e) of the 2016
revised IRR of RA No. 9184, and proposed amendments to Instructions to Bidders (ITB)
Clause 5 of the PBDs for the Procurement of Infrastructure Projects as recommended by the
IATWG;

WHEREAS, after careful review and due deliberations, the GPPB approved the
recommendation of the IATWG to amend Sections 23.4.2.1 (b), (c) and (e) of the 2016 IRR
of RA No. 9184 and ITB Clause 5 of the PBDs for the Procurement of Infrastructure Projects,
including the corresponding provisions of the GPMs, subject to the relevant provisions of CA
541;

Now, THEREFORE, for and in view of all the foregoing, WE, the Members of the
GOVERNMENTPROCUREMENTPOLICY BOARD, by virtue of the powers vested on Us by law and
other executive issuances, hereby RESOLVE to confirm, adopt, and approve, as WE hereby
confirm, adopt, and approve the amendments to Sections 23.4.2.1 of the 2016 IRR of RA No.
9184 and amendment to ITB Clause 5 of the PBDs for the Procurement of Infrastructure
Projects, including the corresponding provisions in the GPMs, subject to the relevant
provisions of CA 541, a copy of which is attached as Annex "A", and made an integral part
hereof.

This resolution shall take effect immediately.

APPROVED this 8th day of March 2019 in Manila City, Philippines.

(SGD) (SGD)

DEPARTMENT OF BUDGET AND NATIONAL ECONOMIC AND

MANAGEMENT DEVELOPMENT AUTHORITY

GPPB Resolution No. 06-2019, dated 08 March 2019 page 2 of 7

 (SGD)

DEPARTMENT OF EDUCATION DEPARTMENT OF ENERGY

(SGD)

DEPARTMENT OF FINANCE DEPARTMENT OF HEALTH

DEPARTMENT OF INFORMATION AND DEPARTMENT OF INTERIOR AND LOCAL

COMMUNICATION TECHNOLOGY GOVERNMENT

(SGD) (SGD)

DEPARTMENT OF NATIONAL DEPARTMENT OF PUBLIC WORKS AND

DEFENSE HIGHWAYS

(SGD)

DEPARTMENT OF SCIENCE AND DEPARTMENT OF TRADE AND

TECHNOLOGY INDUSTRY

(SGD) (SGD)

DEPARTMENT OF TRANSPORTATION PRIVATE SECTOR REPRESENTATIVE

GPPB Resolution No. 06-2019, dated 08 March 2019 page 3 of 7

 ANNEX" A"

2016 revised Implementing Rules and Regulations of Republic Act No. 9184

Original Amendment
Section 23.4.2.1 (b)
Partnerships duly organized under the laws of Partnerships duly organized under the laws of the
the Philippines and which at least seventy-five Philippines and which at least sixty percent
percent (75%) of the interest belongs to citizens (60%) of the interest belongs to citizens of the
of the Philippines; Philippines;

Section 23.4.2.1 (c)

Corporations duly organized under the laws of Corporations duly organized under the laws of
the Philippines, and of which at least seventy-five the Philippines, and of which at least sixty
percent (75%) of the outstanding capital stock percent (60%) of the outstanding capital stock
belongs to citizens of the Philippines. belongs to citizens of the Philippines.

Section 23.4.2.1 (e)

Persons/entities forming themselves into a joint Persons/entities forming themselves into a joint
venture, i.e. a group of two (2) or more venture, i.e. a group of two (2) or more
persons/entities that intend to be jointly and persons/entities that intend to be jointly and
severally responsible or liable for a particular severally responsible or liable for a particular
contract: Provided, however, That in accordance contract: Provided, however, That in accordance
with Letter of Instructions No. 630 (LOI 630), with Executive Order No. 65 (EO 65), s. 20181,
Filipino ownership or interest of the joint venture Filipino ownership or interest of the joint venture
concerned shall be at least seventy-five percent concerned shall be at least sixty percent (60%):
(75%): Provided, further, That joint ventures in Provided, further, That joint ventures in which
which Filipino ownership or interest is less than Filipino ownership or interest is less than sixty
seventy-five percent (75%) may be eligible percent (60%) may be eligible where the
where the structures to be build require structures to be build require application of
application of techniques and/or technologies techniques and/or technologies which are not
which are not adequately possessed by a adequately possessed by a person/entity
person/entity meeting the seventy-five percent meeting the sixty percent (60%) Filipino
(75%) Filipino ownership requirement: Provided, ownership requirement: Provided, finally, That in
finally, That in the latter case, Filipino ownership the latter case, Filipino ownership or interest shall
or interest shall not be less than twenty-five not be less than twenty-five percent (25%). For
percent (25%). For this purpose, Filipino this purpose, Filipino ownership or interest shall
ownership or interest shall be based on the be based on the contributions of each of the
contributions of each of the members of the joint members of the joint venture as specified in the
venture as specified in the JVA. JVA.

1 Promulgating the Eleventh Foreign Investment Negative List issued on 29 October 2018.

GPPB Resolution No. 06-2019, dated 08 March 2019 page 4 of 7

 5th Edition of the Philippine Bidding Documents for the Procurement of
Infrastructure Projects

Original Amendment

ITS Clause 5.1 (b)

Partnerships duly organized under the laws of Partnerships duly organized under the laws of the
the Philippines and which at least seventy-five Philippines and which at least sixty percent
percent (75%) of the interest belongs to citizens (60%) of the interest belongs to citizens of the
of the Philippines; Philippines;

ITS Clause 5. 1(c)

Corporations duly organized under the laws of Corporations duly organized under the laws of
the Philippines, and of which at least seventy-five the Philippines, and of which at least· sixty
percent (75%) of the outstanding capital stock percent (60%) of the outstanding capital stock
belongs to citizens of the Philippines. belongs to citizens of the Philippines.

ITS Clause 5.1(e)

Persons/entities forming themselves into a joint Persons/entities forming themselves into a joint
venture, i.e. a group of two (2) or more venture, i.e. a group of two (2) or more
persons/entities that intend to be jointly and persons/entities that intend to be jointly and
severally responsible or liable for a particular severally responsible or liable for a particular
contract: Provided, however, That in accordance contract: Provided, however, That in accordance
with Letter of Instructions No. 630 (LOI 630), with Executive Order No. 65 (EO 65), s. 20182,
Filipino ownership or interest of the joint venture Filipino ownership or interest of the joint venture
concerned shall be at least seventy-five percent concerned shall be at least sixty percent (60%):
(75%): Provided, further, That joint ventures in Provided, further, That joint ventures in which
which Filipino ownership or interest is less than Filipino ownership or interest is less than sixty
seventy-five percent (75%) may be eligible percent (60%) may be eligible where the
where the structures to be build require structures to be build require application of
application of techniques and/or technologies techniques and/or technologies which are not
which are not adequately possessed by a adequately possessed by a person/entity
person/entity meeting the seventy-five percent meeting the sixty percent (60%) Filipino
(75%) Filipino ownership requirement: Provided, ownership requirement: Provided, finally, That in
finally, That in the latter case, Filipino ownership the latter case, Filipino ownership or interest shall
or interest shall not be less than twenty-five not be less than twenty-five percent (25%). For
percent (25%). For this purpose, Filipino this purpose, Filipino ownership or interest shall
ownership or interest shall be based on the be based on the contributions of each of the
contributions of each of the members of the joint members of the joint venture as specified in the
venture as specified in the JVA. JVA.

2 Promulgating the Eleventh Foreign Investment Negative List issued on 29 October 2018.

GPPB Resolution No. 06-2019,dated 08 March 2019 page 5 of 7

 Generic Procurement Manual Volume 3 -
Manual of Procedures for the Procurement of Infrastructure Projects

Original Amendment

Section 3 - Instructions on the Procedural Steps for the Procurement of Infrastructure Project

Part One - Competitive Bidding

Step 4 - Receive, Open and Examine the Technical and Financial Envelopes
Who may be eligible to participate in a public bidding Who may be eligible to participate in a public bidding
for infrastructure projects? for infrastructure projects?

The following persons/entities shall be allowed to The following persons/entities shall be allowed to
participate in the bidding: (2016 IRR Section participate in the bidding: (2016 IRR Section
23.4.2.1) 23.4.2.1)

a. Xxx a. Xxx

b. Partnerships duly organized under the laws b. Partnerships duly organized under the laws
of the Philippines and which at least of the Philippines and which at least sixty
seventy-five percent (75%) of the interest percent (60%) of the interest belongs to
belongs to citizens of the Philippines; citizens of the Philippines;

c. Corporations duly organized under the laws c. Corporations duly organized under the laws
of the Philippines, and of which at least of the Philippines, and of which at least sixty
seventy-five percent (75%) of the percent (60%) of the outstanding capital
outstanding capital stock belongs to citizens stock belongs to citizens of the Philippines;
of the Philippines.
d. Xxx
d. Xxx
e. Persons/entities forming themselves
e. Persons/entities forming themselves into a into a joint venture, i.e. a group of two
joint venture, i.e. a group of two (2) or more
persons/entities that intend to be jointly and
(2) or more persons/entities that
severally responsible or liable for a intend to be jointly and severally
particular contract: Provided, however, That responsible or liable for a particular
in accordance with Letter of Instructions No.. contract: Provided, however, That in
630 (LOI 630), Filipino ownership or interest accordance with Executive Order
of the joint venture concerned shall be at
least seventy-five percent (75%): Provided,
No. 65 (EO 65), s. 20183, Filipino
further, That joint ventures in which Filipino ownership or interest of the joint
ownership or interest is less than seventy- venture concerned shall be at least
five percent (75%) may be eligible where the sixty percent (60%): Provided,
structures to be build require application of further, That joint ventures in which
techniques and/or technologies which are
not adequately possessed by a
Filipino ownership or interest is less
person/entity meeting the seventy-five than sixty percent (60%) may be
percent (75%) Filipino ownership eligible where the structures to be
requirement: Provided, finally, That in the build require application of
latter case, Filipino ownership or interest techniques and/or technologies
shall not be less than twenty-five percent
(25%). For this purpose, Filipino ownership
which are not adequately possessed
or interest shall be based on the by a person/entity meeting the sixty
contributions of each of the members of the percent (60%) Filipino ownership
joint venture as specified in the JVA. requirement: Provided, finally, That
in the latter case, Filipino ownership
or interest shall not be less than

3 Promulgating the Eleventh Foreign Investment Negative List issued on 29 October 2018.

GPPB Resolution No. 06-2019, dated 08 March 2019 page 6 of 7

 twenty-five percent (25%). For this
purpose, Filipino ownership or
interest shall be based on the
contributions of each of the members
of the joint venture as specified in the
JVA.

GPPB Resolution No. 06-2019, dated 08 March 2019 page 7 of 7