Question & AnswerQ&A (Commonwealth Act No. 138)
The main purpose of Commonwealth Act No. 138 is to give preference to native products and domestic entities in the purchase of articles for the government in the Philippines.
The Purchase and Equipment Division (now Supply Coordination Office), municipal and provincial governments, the Government of the Philippines, chartered cities, boards, commissions, bureaus, departments, offices, agencies, branches, and bodies of any description, including government-owned companies, are required to give such preference.
A 'domestic entity' means any citizen of the Philippines or the United States habitually established in business engaged in manufacture or sale, or any corporate body or commercial company duly organized and registered in the Philippines with at least 75% ownership by citizens of the Philippines or the United States, or both.
If the lowest foreign bid including customs duties does not exceed two pesos, the award shall be made to the lowest domestic bidder provided his bid is not more than 100% in excess of the foreign bid.
When the lowest foreign bid including customs duties exceeds two pesos but does not exceed twenty pesos, the award can be made to the lowest domestic bidder whose bid is not more than 50% in excess of the foreign bid.
A 'domestic bidder' means any person or entity offering unmanufactured articles, materials, or supplies of Philippine or U.S. growth or production or manufactured articles substantially from Philippine or U.S. articles or materials.
A 'foreign bid' is any offer of articles, materials or supplies not manufactured or substantially produced in the Philippines or the United States.
- Over 20 pesos but less than or equal to 200 pesos: domestic bid can be up to 25% higher. - Over 200 pesos but less than or equal to 2000 pesos: domestic bid can be up to 20% higher.
The domestic entity's bid can be up to 15% in excess of the lowest bid made by a non-domestic entity to be awarded the contract.
The Act took effect upon its approval on November 7, 1936.