Question & AnswerQ&A (Commonwealth Act No. 541)
The main purpose of Commonwealth Act No. 541 is to regulate the awarding of contracts for the construction or repair of public works by giving preference to Filipino or American contractors and domestic entities under certain conditions.
It applies to all branches, offices, and subdivisions of the government, as well as all government-owned or controlled companies authorized to contract and make disbursements for the construction or repair of public works.
Preference is given to Filipino or American contractors and domestic entities when their lowest bid is not more than fifteen percent in excess of the lowest foreign bid.
No, foreign bids are prohibited for contracts related to the construction of land, air, and sea-coast defenses, arsenals, barracks, depots, hangars, landing fields, quarters, hospitals, and other buildings and structures required for national defense of the Philippines.
A "Filipino or American contractor" means any citizen of the Philippines or the United States who is habitually established in business and engaged in general construction work.
A "domestic entity" refers to any corporate body or commercial company duly organized and registered under Philippine laws, seventy-five percent of whose capital is owned by citizens of the Philippines or the United States, or both.
A "domestic bidder" is any Filipino or American contractor or domestic entity that bids for any public work or work of construction or repair for the Government of the Philippines or its instrumentalities as enumerated in Section 1.
A "foreign bid" is the bid of any contractor or entity not classified as a Filipino or American contractor or domestic entity as defined in the Act.
A Filipino or American contractor or domestic entity can be given preference if their bid is not more than fifteen percent (15%) higher than the lowest foreign bid.
The Act took effect upon its approval on May 26, 1940.