Requesting Entity: MAXIMA Machineries Incorporated
Issues Concern: Participation of foreign Bidders
Whether Maxima Machineries Incorporated (Maxima), a corporation organized and existing under and by virtue of the laws of the Republic of the Philippines, with seventy-two percent (72%) of its outstanding capital owned by a foreign corporation, may be eligible to participate in the bidding for procurement of goods by the government.
Section 22.214.171.124 of the Implementing Rules and Regulations (IRR) of Republic Act (RA) 9184 provides that corporations duly organized under the laws of the Philippines, and of which at least sixty percent (60%) of the outstanding capital stock belongs to Filipino citizens, may be eligible to participate in the bidding for the supply of goods. Consequently, corporations having less than sixty percent (60%) Filipino ownership or equity shall be ineligible to bid.
However, the IRR of RA 9184 states that upon determination by the procuring entity, after diligent market research, that the goods sought to be procured are not available from local sources, foreign bidders may be eligible to participate in the bidding for the supply of goods. For this purpose, the Head of the Procuring Entity (HOPE) shall certify such instance. If however, the goods can be supplied through a local bidder, but no such bidder is interested, the HOPE shall likewise certify to such circumstance, and that the same was due to reasons not attributable to the procuring entity concerned.
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Upon determination that the goods sought to be procured are unavailable from local sources or when no sixty percent (60%) Filipino-owned corporation is interested in participating in the bidding process, the procuring entity may proceed with the procurement activity and allow domestic corporations with more than forty percent (40%) foreign equity or foreign corporations to participate.
In the case of a domestic corporation with seventy-two percent (72%) foreign equity, such as Maxima, although such juridical entity is generally regarded as ineligible to participate in the bidding process due to the sixty percent (60%) Filipino equity requirement, participation in government procurement activities may still be possible upon determination by the procuring entity of the unavailability of the goods from local suppliers or lack of local suppliers interested to participate in the procurement process.