Senate Ofier of the Erricurp TWENTIETH CONGRESS OF THE 25 SEP -9 P4:00 REPUBLIC OF THE PHILIPPINES First Regular Session RECEIVED BY: SENATE Senate Bill No. 1365 Introduced by Senator Erwin T. Tulfo AN ACT AMENDING PRESIDENTIAL DECREE NO. 1759, OTHERWISE KNOWN AS PENALIZING CONTRACTORS AND SUBCONTRACTORS WHO VIOLATE ANY MATERIAL PROVISIONS OF CONTRACTS INVOLVING PUBLIC WORKS OF THE GOVERNMENT, AND PUBLIC OFFICIALS WHO ALLOW SUCH VIOLATIONS, AND FOR OTHER PURPOSES EXPLANATORY NOTE From 2023 to 2025, corruption in flood control projects has reportedly inflicted economic losses amounting from PHP 42.3 billion to PHP 118.5 billion annually.' These projects have been flagged as substandard, undocumented, or entirely non-existent also known as ghost projects. Presidential Decree (P.D.) No. 1759 was enacted to penalize contractors and subcontractors who violate material provisions of contracts involving public works projects, as well as the government ' Beech, Marco Luis, "Pl 18.5 billion a year lost to flood control corruption - DOF", September 03, 2025, retrieved from https://www.philstar.com/headlines/2025/09/03/2470047/p1185-billion-year-lost-flood-control-corruption-dof, retrieved on 09 September 2025.
officials who allowed such violations. However, its provisions and sanctions are no longer adequate to deter large-scale fraud and collusion. This proposed measure seeks to strengthen P.D. No. 1759 by imposing heavier penalties, including imprisonment of twenty (20) years from Five Hundred Thousand Pesos to life, fines ranging (PHP500,000.00) to One Million Pesos (PHP1,000,000.00), and the revocation of license of the offending contractor or sub-contractor. In view of the foregoing, the immediate passage of this bill is earnestly sought. ERWIN T. TUL.FO
/Office of the ererctarp TWENTIETH CONGRESS OF THE 25 SEP -9 P4:00 REPUBLIC OF THE PHILIPPINES First Regular Session RECEIVED BY: SENATE Senate Bill No._ 1365 Introduced by Senator Erwin T. Tulfo AN ACT AMENDING PRESIDENTIAL DECREE NO. 1759, OTHERWISE KNOWN AS PENALIZING CONTRACTORS AND SUBCONTRACTORS WHO VIOLATE ANY MATERIAL PROVISIONS OF CONTRACTS INVOLVING PUBLIC WORKS OF THE GOVERNMENT, AND PUBLIC OFFICIALS WHO ALLOW SUCH VIOLATIONS, AND FOR OTHER PURPOSES Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled:
SECTION 1. Section 1 of Presidential Decree No. 1759 is hereby
amended to read as follows: "Section 1. Any provisions of law to the contrary notwithstanding, contractors and sub-contractors who violate any material provisions of contracts, [involving public works projects, either as to materials, quality and quantity of work, resulting to the prejudice of the government,| INCLUDING, BUT NOT LIMITED TO, THE USE OF SUBSTANDARD
MATERIALS, THE DEVIATION FROM THE QUALITY AND QUANTITY OF WORK AGREED UPON, THE CAUSING OF UNJUSTIFIED DELAYS IN THE COMPLETION OF THE PROJECT, OR THE UNDERTAKING OF NON-EXISTENT OR GHOST PROJECTS shall suffer the penalty of IMPRISONMENT from [twelve (12)] TWENTY (20) years to life imprisonment AND/OR A FINE RANGING FROM FIVE HUNDRED THOUSAND PESOS (PhP500,000.00) TO ONE MILLION PESOS (PhP1,000,000.00) at the discretion of the Court and shall, in addition suffer REVOCATION OF LICENSE AND perpetual disqualification from participating in any government contracts. The offending contractor or sub-contractor shall further be liable for the cost of reconstructing such public works project in accordance with the specifications agreed upon. IN CASES WHERE THE GOVERNMENT DETERMINES THAT IT IS NO LONGER FEASIBLE OR PRACTICABLE FOR THE CONTRACTOR OR SUBCONTRACTOR TO CONTINUE WITH THE PROJECT, THE SAID CONTRACTOR OR SUBCONTRACTOR SHALL BE REQUIRED TO RETURN ALL FUNDS RELEASED TO IT. In case of corporations, partnerships or associations, the President, General Manager or any responsible chief executive officer/officers shall be liable."
SEC. 2. Section 2 of Presidential Decree No. 1759 is hereby
amended to read as follows: "Section 2. Any public official who [by reason of the duties of his office,] shall consent, or through abandonment or negligence, permit the contractor or subcontractor to commit the violations mentioned in Section I hereof, shall suffer the penalty of from [twelve (12) TWENTY (20) years to life imprisonment and perpetual disqualification to hold any public office."
SEC. 3. Separability Clause. - Should any provision or part of this
Act be declared unconstitutional or invalid, the other provisions and parts hereof, insofar as they are separable from the invalid ones, shall remain in full force and effect.
SEC. 4. Repealing Clause. - All laws, decrees, orders,
18 proclamations, rules and regulations, or parts thereof, which are inconsistent with this Act are hereby repealed, amended, or modified accordingly.
SEC. 5. Effectivity. - This Act shall take effect fifteen (15) days
after its publication in the Official Gazette or in at least two (2) newspapers of general circulation. Approved,