Policy on Foreign Contractors' Special License

Existing provisions under Section 4.6 of the Implementing Rules and Regulations (IRR) of RA 4566 lack sufficient minimum requirements for foreign contractors to demonstrate technical and financial capability comparable to Filipino licensure standards.
To properly assess and regulate foreign contractors, a system for categorization and classification based on their technical and financial credentials is necessary.
This framework ensures foreign contractors meet standards similar to local contractors for the types and sizes of projects they undertake.

Section 5.9 of the IRR of RA 4566 and the Revised Guidelines for Registration and Classification of Contractors provide the authority and procedural mechanism for categorizing and classifying special license contractors, including foreigners.

Foreign contractors must be categorized and classified by PCAB using a dual criterion:
- Global technical performance record.
- Locally based financial and physical resources.
To comply, foreign contractors must establish a branch or subsidiary office within the Philippines.
The unencumbered assets invested by foreign contractors in the Philippines must be in cash or construction-related equipment.
These assets cannot be repatriated, withdrawn, transferred, sold, or leased during the validity of the license.
If the applicant is a subsidiary of a foreign contractor, a back-to-back financial guarantee from the parent company is mandatory.

A resident Filipino agent must represent the foreign contractor in the Philippines.
In absence of such agent or if the agent cannot be located at the address of record, or if the foreign contractor ceases business operations in the Philippines:
- Summons or legal notices may be served on PCAB, who will accept them as though served to the foreign contractor at its principal office abroad.

The policy ensures accountability and legal enforceability of foreign contractors’ obligations in the Philippines.
It protects the integrity of foreign investments by regulating withdrawal and transfer of assets during the license period.
PCAB’s role includes strict evaluation and classification to maintain industry standards and protect local interests.

The Construction Industry Authority of the Philippines, through a unanimous resolution, directed PCAB to implement these provisions and guidelines effective April 3, 1997.
The resolution was formally adopted and signed by the Chairman and members of PCAB or their representatives.