A
collection of Philippine laws, statutes and codes
not
included or cited in the main
indices
of
the
Chan Robles Virtual Law Library
PRESIDENTIAL DECREE NO. 1167
PRESIDENTIAL DECREE NO. 1167 -
DEVELOPING AND REGULATING THE OVERSEAS CONSTRUCTION INDUSTRY, PROVIDING
INCENTIVES THEREFORE, AND FOR OTHER PURPOSES
|
chanroblesvirtualawlibrary
WHEREAS, it
is a primary concern of the government to promote and stimulate
national economic development by embarking on an aggressive export
promotion program;chanroblesvirtualawlibrary
WHEREAS, overseas construction operations provide an opportunity for
the exportation not only of materials and commodities, but also of
labor skills and technical and managerial expertise;chanroblesvirtualawlibrary
WHEREAS, these construction opportunities abroad would be most
effectively availed of with organized, coordinated, and sustained
efforts, and government encouragement and support;chanroblesvirtualawlibrary
WHEREAS, many Filipino construction contractors who have the experience
and skills have organized themselves, and are in a position to
undertake overseas construction work;chanroblesvirtualawlibrary
WHEREAS, success in overseas construction operations will bring not
only economic benefits, but also confidence and pride in the nation's
capabilities; chanroblesvirtualawlibrary
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in me by the Constitution, do hereby
decree and order as follows: chanroblesvirtualawlibrary
Section 1. Short Title. — This Decree shall be known
as the "Overseas Construction Incentives Decree."
Section 2. Declaration of Policy. — It is the policy
of the State to actively encourage and support activities that lead to
the export not only of goods and services, but also of technical and
managerial expertise; accordingly, the State encourages and promotes
Filipino contractors who have the necessary capability to undertake
overseas construction and help increase foreign exchange earnings and
employment opportunities, and thereby hasten the economic development
of the Filipino people.
Section 3. Definition of Terms. — For the purpose of
this Decree:cralaw:red
a) "Construction contractor" shall mean a natural or
juridical person organized and licensed under Philippine laws, who
undertakes or offers to undertake, or submits a bid to, or does himself
or by or through others, construct, alter, repair, add to, subtract
from, remove, move, wreck or demolish any structure, facility, project
development or improvement, or to do any part thereof. The term
contractor includes general engineering contractor, general building
contractor and specialty contractor, construction management,
engineering, and specialized consultancy group;chanroblesvirtualawlibrary
b) "Filipino contractor" shall mean a construction
contractor, who is a citizen of the Philippines, or a corporation or
other juridical entity, of which, in the case of a corporation, at
least sixty percent (60%) of its capital stock outstanding and entitled
to vote, is owned and held by citizens of the Philippines and at least
sixty per cent (60%) of the Board of Directors thereof are citizens of
the Philippines, and in the case of any other juridical entity, at
least sixty percent (60%) of its equity is owned and held by citizens
of the Philippines; chanroblesvirtualawlibrary
c) "Overseas project" shall mean a construction or
consultancy project undertaken or will be undertaken by a contractor
outside the territorial boundaries of the Republic of the Philippines,
and paid for in acceptable or freely convertible foreign currency;chanroblesvirtualawlibrary
d) "Overseas construction operations" shall mean any
activity related to an overseas project, including provision of
technical, managerial and highly professional services; and
e) Board shall mean the Philippine Overseas
Construction Board created under this Decree.
Section 4. Incentives for Filipino Overseas
Contractors. — A duly registered Filipino contractor who is engaged or
will be engaged in an overseas construction project, shall be granted
the incentives provided in Subsections (a) and (b), or at his option,
to the incentive provided in Subsection (c) of this Section:cralaw:red
a) Tax credit — (1) Taxes paid by the Filipino
contractor to foreign governments on income derived from overseas
projects subject, however, to the limitation of Section 30 (c) (4) (a)
and (b) of the National Internal Revenue Code;chanroblesvirtualawlibrary
(2) Tax credit for taxes withheld on interest
payments on foreign loans incurred directly and exclusively for
overseas projects: Provided, That (i) no such credit is enjoyed by the
lender-remittee in his country; and (ii) the overseas contractor has
assumed the liability for payment of the tax due from the
lender-remittee; and chanroblesvirtualawlibrary
(3) Tax credit equivalent to the sales or
compensating taxes paid on domestically manufactured or produced
materials or products which are purchased by the overseas contractor
and actually exported by him to be used in his overseas projects:
Provided, That the sales taxes are indicated as a separate item on the
sales invoice of the manufacturer or producer.
b) Deduction from gross overseas income. — (1)
Accelerated depreciation — At the option of the Filipino construction
contractor and in accordance with the procedures established by the
Bureau of Internal Revenue fixed assets actually used in overseas
operations may be: (i) depreciated to the extent of not more than twice
as fast as the normal rate of depreciation if expected life thereof is
ten (10) years or less; or (ii) depreciated over any number of years,
between five (5) years and expected life if the latter is more than ten
(10) years. Such depreciation cost as may be chosen by the said tax
payer shall be allowed as a deduction from taxable income: Provided,
That he notifies the Bureau of Internal Revenue at the beginning of the
depreciation period which depreciation rate allowed by this Section
will be used by him;chanroblesvirtualawlibrary
(2) Additional deduction of labor training expenses.
— An additional deduction from taxable income of one-half of the value
of labor training expenses incurred for improving the performance and
efficiency of unskilled labor: Provided, That such training program is
duly approved by the Department of Labor: Provided further, That such
deduction shall not exceed ten percent (10%) of the direct labor wage;
and
(3) Net operating loss carry-over. — A net operating
loss incurred on overseas projects in any year of operation may be
carried over as a deduction from taxable income earned from overseas
projects, within the three (3) years immediately following the years of
such loss: Provided, That the loss carried over is computed net of
incentives herein granted: Provided further, That no impairment of
loans or guarantees extended by the Philippine Government or any of its
instrumentalities has occurred or will occur as a result of overseas
construction operations during the taxable year. The net operating loss
shall be computed in accordance with the procedures established by the
Bureau of Internal Revenue and shall be allowed only for purposes of
income declaration in the Philippines.
c) In lieu of the income tax payable as a result of
the application of the incentives provided for in the preceding
subsections, the Filipino contractor may elect to pay a one and
one-half percent (1-1/2%) tax on his overseas gross income.
Section 5. Internationally Bidded Local Projects. —
The incentives provided in the preceding Section Four, other than that
provided for in Subsection (c) thereof, shall be available to Filipino
construction contractors participating as principal in internationally
bidded or foreign-assisted projects, under such rules and regulations
as shall be promulgated by the Board.
Section 6. Priority in Hiring. — Construction
contractors shall have priority in the hiring or placement of
construction workers for their overseas construction projects:
Provided, That such activity is undertaken in accordance with the labor
Code as amended.
Section 7. Registration. — Construction contractors
undertaking or who intend to undertake overseas construction projects
shall register with the Board. No construction contractor shall tender
or bid on any overseas construction project unless registered and
authorized by the Board. chanroblesvirtualawlibrary
Section 8. Composition of the Board. — (a) The Board
shall be composed of five (5) members to be appointed by the President
of the Philippines. The members of the Board shall serve for a term of
three (3) years or until their successors have been appointed. In case
of any vacancy in the Board, the same shall be filled by the President
of the Philippines for the unexpired term.
(b) The members of the Board shall be citizens of the
Philippines, at least thirty-five (35) years of age, of good moral
character and with recognized competence in construction, international
finance, or foreign trade.
(c) The President of the Philippines shall appoint
from among the five members, a full-time Chairman of the Board who
shall, at the same time, be the chief operating officer of the Board.
Section 9. Strategies and Programs for Developing
Philippine Overseas Construction Industry. — It shall be the duty of
the Board to formulate strategies and programs for developing the
Philippine overseas construction industry, to regulate and control the
participation of construction contractors in overseas construction
projects, and to administer the grant of incentives provided under this
Decree.
Section 10. Coordination of Strategies and Policies.
— Unless otherwise specifically prescribed by this Decree, the Board
shall coordinate its strategies and policies with those of the National
Economic and Development Authority, Philippine Export Council,
Philippine Export and Foreign Loan Guaranty Corporation, Overseas
Employment Development Board, and all relevant agencies of the
government involved in the development and promotion of the overseas
construction industry. The strategies formulated by the Board shall be
incorporated into the National Export Strategy. chanroblesvirtualawlibrary
The Board shall be under the control and supervision of the Office of
the President.
Section 11. Powers and Functions. — The Board shall
exercise by itself or through existing agencies, the following powers
and functions:cralaw:red
a) Receive, process and approve, on such terms and
conditions it may deem necessary to promote the objectives of this
Decree, applications of construction contractors for registration under
this Decree, and to impose and collect reasonable fees which shall be
used exclusively to meet the operating and administrative expenses of
the Board and in promoting its objectives;chanroblesvirtualawlibrary
b) Identify, in coordination with the Department of
Foreign Affairs, Overseas Employment Development Board, and Department
of Trade, the projects, opportunities, and the countries where
construction contractors may operate;chanroblesvirtualawlibrary
c) Determine, with the assistance of the
representative of the private construction industry and the Department
of Public Works, Transportation and Communication from among the
interested construction contractors those who will be allowed to bid
for overseas projects;chanroblesvirtualawlibrary
d) Determine from among the registrants those who
will avail of and are eligible for the incentives provided by this
Decree and cause the granting of the same;chanroblesvirtualawlibrary
e) Check, verify, and evaluate at regular intervals,
through the facilities of appropriate existing agencies, the
performance of construction contractors engaged in overseas
projects; chanroblesvirtualawlibrary
f) Check and verify periodically, with the assistance
of other instrumentalities of government, by inspection of the books or
by requiring regular reports or by some other method deemed most
effective, on the compliance by construction contractors with the
provisions of this Decree and the rules and regulations issued
thereunder;chanroblesvirtualawlibrary
g) Authorize, upon recommendation of the Department
of Trade, the exportation of construction materials and equipment,
subject to existing rules on exportation;chanroblesvirtualawlibrary
h) After due notice and hearing, cancel the
registration of, or suspend or cancel, or cause the suspension or
cancellation, wholly or partly, of the enjoyment of incentives and
other benefits by any Filipino contractor, including the imposition of
penalties as provided for under this Decree, for: i) failure by the
contractor to maintain the qualifications required; of ii) for
violation of any provision of this Decree and of other laws granting
incentives and benefits to such contractors, or of the rules and
regulations issued thereunder, or of any law or decree for the
protection of labor; iii) for unjustified abandonment, incompetent
management and administration of any overseas project awarded to such
contractor;chanroblesvirtualawlibrary
i) Recommend or participate, subject to the approval
of appropriate authorities, in the negotiation of bilateral or
multi-lateral agreements that would facilitate the entry of contractors
in overseas markets and to protect the interest of Filipino contractors
and their workers operating overseas; chanroblesvirtualawlibrary
j) Formulate, examine and implement, or cause the
implementation thereof, a scheme or arrangement for the protection of
Filipino contractors from non-commercial risks with respect to their
assets, equipment and other property held overseas in connection with
approved overseas projects;chanroblesvirtualawlibrary
k) Obtain, collate, and evaluate information
necessary for the effective discharge of its primary purpose and the
proper exercise of its powers and functions;chanroblesvirtualawlibrary
l) Generally exercise all the powers necessary or
incidental to attain the purposes of this Decree, including the
promulgation of its internal rules and procedures governing meetings,
organization and staffing.
Section 12. Rules and Regulations. —
a) The Board shall issue rules and regulations as may
be necessary for the proper implementation of the general provisions of
this Decree. Said rules and regulations shall contain, among others,
criteria for determining the eligibility of contractors and their
principals to operate overseas and to avail of the incentives provided
for in this Decree, measures to avoid ruinous competition between
contractors engaged in overseas construction projects, provisions to
encourage the pooling of resources of construction contractors to
enhance their competitive advantage in obtaining overseas construction
contracts, provisions for the utilization of locally available
materials and equipment in overseas construction projects, and measures
to expand within a reasonable time, the ownership base of construction
contractors by either a public offering of their capital stock entitled
to vote, or the sale of such stock to their employees, or other
measures to achieve such end.
b) The Secretary of Finance, upon recommendations of
the Commissioner of Internal Revenue, shall promulgate all necessary
rules and regulations for the effective enforcement of the tax
incentive provisions of this Decree. chanroblesvirtualawlibrary
Section 13. Meeting and Quorum. — The Board shall
meet as often as is necessary but not less than once a month on such
days as it may fix. Special meetings may be convoked upon the call of
the Chairman or upon the written request of at least two (2) of its
members. The presence of three (3) members shall constitute a quorum,
and all decisions shall require the concurrence of at least three (3)
members.
Section 14. Remuneration of Members of the Board. —
The part-time members of the Board shall receive a per diem of five
hundred pesos (P500) for each meeting of the Board actually attended;
Provided, however, That the total per diems paid to a Board member
shall not exceed the sum of two thousand pesos (P2,000) in any one
month. Full time members shall receive annual salaries and commutable
monthly allowances as determined by the President of the Philippines.
Section 15. Executive Staff— (a) The Board shall
have an Executive Staff to implement its decisions. The positions in
the Executive Staff, are hereby declared to be highly technical and
confidential in nature.
(b) The Executive Staff may be augmented on an "as
needed" basis, from time to time, in the exercise of its powers and
performance of its functions by calling upon appropriate agencies of
the government or the private sector.
(c) The Commission on Audit shall appoint its
representative to the Board to audit its accounts in accordance with
pertinent rules and regulations. chanroblesvirtualawlibrary
Section 16. Special Attaches. —
a) The Board may, whenever necessary, designate
special attaches and, in coordination with other appropriate government
agencies, assign such attaches to countries where Filipino contractors
are operating or may be likely to operate, provided that use of
existing labor, commercial or other forms of attaches is optimized for
this purpose. The attaches shall perform the following duties:cralaw:red
i) Gather information needed to develop the overseas
construction market;chanroblesvirtualawlibrary
ii) Assist Philippine government agencies and
Filipino overseas contractors in developing the overseas construction
market;chanroblesvirtualawlibrary
iii) Monitor the performance of construction
contractors overseas and submit relevant reports and recommendations to
the Board;chanroblesvirtualawlibrary
iv) Perform such other duties as may be assigned to
him by the Board.
b) The exercise of the foregoing functions by special
attaches shall be governed by the terms and conditions of an
understanding or agreement between the Board and the Department of
Foreign Affairs.
Section 17. Penal Provisions. — Any violation of the
provisions of this Decree or of the terms or conditions of
registration, or of the rules and regulations issued by the Board,
shall be punished by a fine not to exceed Fifty Thousand Pesos
(P50,000) or imprisonment for not more than three (3) years, or both,
at the discretion of the Court.
Section 18. Appropriation. — There is hereby
appropriated the sum of five million pesos (P5,000,000) out of the
funds of the National Treasury not otherwise appropriated, for the
organizational and operational expenses of the Board during the period
of one year from the approval of this Decree. Thereafter its budget
shall be included in the annual General Appropriations Act.
Section 19. Separability Clause. — The provisions of
this Decree are declared to be separable and if any provision or the
application thereof is held invalid or unconstitutional, the validity
of the other provisions shall not be affected.
Section 20. Repealing Clause. — All provisions of
existing laws, decrees, and executive orders contrary to or
inconsistent with this Decree are hereby repealed or modified
accordingly. chanroblesvirtualawlibrary
Section 21. Effectivity Clause. — This Decree shall
take effect upon its approval.
Done in the City of Manila,
this 27th day of June, in the year of Our Lord, nineteen hundred and
seventy-seven.
|
Back
to Home
- Back
to Main
chanroblesvirtuallawlibrary
Since 19.07.98
|