Request of DOTC to Amend Section 24.3.3 of the Revised IRR of RA No. 9184 on the Registration of Foreign Consultants

October 31, 2014

GPPB RESOLUTION NO. 022-14

REQUEST OF THE DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS (DOTC) TO AMEND SECTION 24.3.3 OF THE REVISED IMPLEMENTING RULES AND REGULATIONS (IRR) OF REPUBLIC ACT (RA) NO. 9184 ON THE REGISTRATION OF FOREIGN CONSULTANTS

WHEREAS, Section 63.1 (b) of Republic Act (R.A.) No. 9184 and its Revised Implementing Rules and Regulations (IRR) authorize the Government Procurement Policy Board (GPPB) to formulate public procurement policies, rules and regulations, and amend, whenever necessary, the IRR; HTcADC

WHEREAS, under Section 24.3.3 of the IRR of RA 9184, in order to manifest trust and confidence in and promote the development of Filipino consultancy, foreign consultants may be hired in the event Filipino consultants do not have the sufficient expertise and capability to render the services required under the project, as determined by the Head of the Procuring Entity. Foreign consultants may be eligible to participate in the procurement of consulting services, subject to the following conditions:

a. must be registered with the Securities and Exchange Commission (SEC) and/or any agency authorized by laws of the Philippines;

b. when the types and fields of consulting services in which the foreign consultant wishes to engage involve the practice of regulated professions, the foreign consultant must be authorized by the appropriate GOP professional regulatory body to engage in the practice of those professions and allied professions: Provided, however, that the limits of such authority shall be strictly observed.

WHEREAS, on 19 March 2014, the Department of Transportation and Communications (DOTC) wrote the GPPB-Technical Support Office (GPPB-TSO) requesting to amend the requirement under Section 24.3.3 of the IRR of RA 9184, relative to the Light Rail Transit Authority's (LRTA) engagement of an independent engineer, allowing the submission of an undertaking that foreign consultants will register with the SEC within thirty (30) days after obtaining the award; CAIHTE

WHEREAS, on 22 Apri1 2014, GPPB-TSO met with DOTC and LRTA on the matter. According to LRTA the present rule discourages foreign consultants to participate in government contracts: (a) application for SEC registration takes time; (b) it is costly for the consultants even though they are not assured that they will be awarded with the contract; and (c) not all professions are registered and regulated by the Professional Regulation Commission (PRC);

WHEREAS, Section 7 (j) of RA No. 8981, otherwise known as the "Professional Regulation Commission (PRC) Modernization Act of 2000" and its Implementing Guidelines (PRC Resolution No. 2012-668) require foreign professionals in foreign-funded, joint venture or foreign-assisted consultancy projects of the government to secure a Special Temporary Permit (STP) to practice from the PRC; aScITE

WHEREAS, before DOTC's letter-request, GPPB-TSO has written PRC on 11 September 2013 seeking clarification on the latter's policy on allowing foreign individual consultants to practice a regulated profession in the Philippines involving locally-funded procurements;

WHEREAS, on 22 July 2014, GPPB-TSO met with the representatives of the PRC, who then opined that although RA 8981 (PRC Modernization Act of 2000) requires foreign consultants hired under foreign-funded projects to secure a Special Temporary Permit, the same rule should also apply to the engagement of foreign consultants involving local funds;

WHEREAS, on 28 July 2014, the GPPB-TSO had a meeting with SEC regarding the registration of foreign consultants. According to SEC, based on the existing jurisprudence, bidders are required to register with the SEC before they could participate in government procurement; DETAC

WHEREAS, participating in the bidding process constitutes "doing business" because it shows the foreign corporation's intention to engage in business in the Philippines. The bidding for the concession contract is but an exercise of the corporation's reason for its creation or existence. Thus, it has been held that "a foreign company invited to bid for IBRD and ADB international projects in the Philippines will be considered as doing business in the Philippines for which a license is required." In this regard, it is the performance by a foreign corporation of the acts for which it was created, regardless of volume of business, that determines whether a foreign corporation needs a license or not. (Hutchison Ports Philippines Limited vs. Subic Bay Metropolitan Authority et al., G.R. No. 131367, 31 August 2000); HEITAD

WHEREAS, the object of requiring a license is not to prevent the foreign corporation from performing single acts, but to prevent it from acquiring domicile for the purpose of business without taking the steps necessary to render it amenable to suits in the local courts. In other words, the foreign corporation is merely prevented from being in a position where it takes the good without accepting the bad. (European Resources and Technologies, Inc. vs. Ingenieuburo, et al., G.R. No. 159586, 26 July 2004);

WHEREAS, on 29 September 2014, PRC issued a letter opinion stating that foreign professional, whose engagement or undertaking will involve the practice of a regulated profession is covered by the STP requirement, regardless of the source or nature of funds that will be utilized for the government project;

WHEREAS, the PRC likewise stated that foreign professionals, who are to participate in government procurement, are also subject to the STP requirement as the nature of the undertaking is deemed to be constitutive of the practice of profession. A reading of some of the professional regulatory laws 1 will show that participation in the procurement process, such as the preparation of bidding documents, cost estimates, et al., falls within the ambit of professional practice, and for which an STP has to be secured;

WHEREAS, during the 6th GPPB and 5th Inter-Agency Technical Working Group (IATWG) Joint Meeting on 31 October 2014, the GPPB-TSO presented the matter for the Board's consideration and recommended the denial of DOTC's request on the following grounds: ATICcS

a. Participation in the bidding process constitutes "doing business" because it shows the foreign corporation's intention to engage in business in the Philippines (Hutchison Ports Philippines Limited vs. Subic Bay Metropolitan Authority et al., G.R. No. 131367, 31 August 2000);

b. Foreign professional whose engagement or undertaking will involve the practice of a regulated profession is covered by the STP requirement, irrespective of the source or nature of funds that will be utilized for the government project (PRC letter dated 29 September 2014).

WHEREAS, the Board thoroughly discussed the matter, and, after careful deliberation, favorably approved the recommendation of the GPPB-TSO;

NOW, THEREFORE, for and in consideration of the foregoing, WE, the Members of the GOVERNMENT PROCUREMENT POLICY BOARD, by virtue of the powers vested on US by law, hereby RESOLVE to approve and adopt, as WE hereby confirm, adopt and approve the following: ETHIDa

1. DENY the request of Department of Transportation and Communications (DOTC) and SUSTAIN the requirement under Sec. 24.3.3 of the revised Implementing Rules and Regulations (IRR) of Republic Act (RA) No. 9184:

a. Participation in the bidding process constitutes "doing business" because it shows the foreign corporation's intention to engage in business in the Philippines;

b. Foreign professional, whose engagement or undertaking will involve the practice of a regulated profession is covered by the Special Temporary Permit (STP) requirement, irrespective of the source or nature of funds to be utilized for the government project. TIADCc

2. DIRECT the GPPB-TSO to write the DOTC relative to the Board's resolution on the matter;

3. RECOMMEND to the Professional Regulation Commission (PRC) the issuance of a Circular reiterating PRC's letter-opinion dated 29 September 2014.

APPROVED this 31st day of October 2014 at Pasig City, Philippines.

(SGD.) _____________________________Department of Budget and Management

_______________________________________National Economic and Development Authority

(SGD.) _________________________Department of Education

_____________________Department of Energy

_______________________Department of Finance

(SGD.) ___________________Department of Health

_________________________________________Department of the Interior and Local Government

_____________________________Department of National Defense

(SGD.) ____________________________________Department of Public Works and Highways

(SGD.) _________________________________Department of Science and Technology

_____________________________Department of Trade and Industry

(SGD.) _________________________________________Department of Transportation and Communications

(SGD.) __________________________Private Sector Representative

Attested by:

(SGD.) DENNIS S. SANTIAGOBoard Secretary, GPPB

 

Footnotes

1. Sec. 3 (4) (e), IRR of RA 9266 (Architecture Act of 2004) and Sec. 5 (a), IRR of RA 9292 (Electronics Engineering Law of 2004).