Commonwealth Act No. 541, enacted on May 26, 1940, regulates the awarding of contracts for public works construction or repair in the Philippines. It mandates that government branches and controlled companies prioritize contracts to Filipino or American contractors if their bids do not exceed the lowest foreign bid by more than 15%. Additionally, for national defense-related constructions, foreign bids are strictly prohibited. The Act defines key terms such as "domestic bidder," "Filipino or American contractor," and "domestic entity" to clarify eligibility for bidding. This law aims to support domestic businesses and enhance national defense capabilities.
May 26, 1940
COMMONWEALTH ACT NO. 541
AN ACT TO REGULATE THE AWARDING OF CONTRACTS FOR THE CONSTRUCTION OR REPAIR OF PUBLIC WORKS
SECTION 1. All branches, offices, and subdivisions of the Government and all government-owned or controlled companies, authorized to contract and make disbursements for the construction or repair of public works, shall give preference in awarding contracts for such works to Filipino or American contractors and domestic entities when the lowest bid of a domestic bidder is not more than fifteenper centum in excess of the lowest foreign bid: Provided, however, That for the construction of land, air, and seacoast defenses, arsenals, barracks, depots, hangars, landing fields, quarters, hospitals, and all other buildings and structures required for the national defense of the Philippines, no foreign bids shall be allowed. aETDIc
SECTION 2. For the purposes of this Act, the following terms shall be taken in the sense herein-below indicated:
(a) The term "Filipino or American contractor" means any citizen of the Philippines or of the United States habitually established in business and engaged in general construction work.
(b) The term "domestic entity" means 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.
(c) The term "domestic bidder" means any Filipino or American contractor or domestic entity which bids for any public work or work of construction or repair for the Government of the Philippines and/or any of its instrumentalities as enumerated in section one of this Act.
(d) The term "foreign bid" means the bid of any other contractor or entity, not included in subsection (a) of this section.
SECTION 3. This Act shall take effect upon its approval.
Approved: May 26, 1940