Law to Optimize Public Administration, Improve Services to Citizens and Strengthen Transparency

Reform Articles 2, 3, 4, 5, 6, 12, 13, 14, 15, 20, 22, 26, 27, 28, 29, 45, 50, 53, 85, 99, 100, 101, 102, 113, 117, 124-C and 124-D of the GENERAL LAW OF PUBLIC ADMINISTRATION contained in Legislative Decree Number 146-86 of October 27, 1986; likewise incorporate into the same Law a new text as an Article by addition, which in the correlative order shall occupy number 98, whose norm was repealed, which should be read in the following manner:

Public Administration is Centralized and Decentralized. When in the text of this Law the expression Public Administration is used, it is understood that it comprises the two (2) types of administration mentioned. For this purpose, private law entities must collaborate with Public Administration in the fulfillment of its purposes. Private law entities that are auxiliaries of Public Administration are administrative curators, associated centers, trusts, community associations, State concessionaires, public-private partnerships, trusts that provide a service to the State and private law entities that by ownership or management are controlled by Public Administration, likewise the other entities or organs to which for reasons of efficiency or economy they are permitted to exercise one or more administrative functions. Administrative laws should only be applied for the approval of these auxiliary entities of Public Administration and in the appointment of their personnel. The State is not responsible to third parties for damages and losses caused by private law entities that are auxiliaries of Public Administration in the exercise of their functions.

The creation, modification or elimination of the organs of Public Administration including Deconcentrated and Decentralized Institutions can only be done after prior definition of the public purpose to be satisfied when its economic-administrative feasibility is accredited, considering the cost of its operation, specialized performance or anticipated savings. New organisms of Centralized Administration or decentralized institutions that imply duplication of others already existing should not be created if the competence of these is not duly eliminated or restricted on a daily basis. The President of the Republic must take the measures considered necessary to guarantee compliance with this provision." "ARTICLE 4: The creation, modification or suspension of State Secretariats or Deconcentrated Organisms or Entities can only be done by the President of the Republic in Council of State Secretaries.

Public Administration has as its object to strengthen the Rule of Law to ensure a politically, economically and socially just society; that affirms nationality and promotes conditions for the full realization of man as a human person within justice, liberty, security, stability, pluralism, peace, representative and participatory democracy and the common good; in accordance with the principles of decentralization, efficacy, efficiency, integrity, solidarity, subsidiarity, transparency and citizen participation.

Within the framework of Legislative Decree No. 286-2009 dated January 13, 2010, containing the Law for the Establishment of a Country Vision and the Adoption of a Plan of Nation for Honduras, Public Administration has strategic and results-based direction, which implies designing its plans, setting its objectives and goals, collecting tax revenues, allocating resources, ensuring coordination among state organs and activities, effectively and efficiently executing projects and programs, monitoring them and evaluating results achieved. Similarly, Public Administration must coordinate with the other Powers of the State and Honduran society the common objectives and goals and the means to achieve them. The President of the Republic must take the necessary measures to ensure that plans, policies, projects and programs are fulfilled, for which purpose must create or modify the strategic management bodies considered necessary and, where appropriate, may be assisted by the pertinent private law organisms to achieve the objectives of the nation plan and the strategic plans derived from it, as well as the continuity of policies, projects and programs that are mandatory for successive governments.

The President of the Republic has the faculty to organize his cabinet; for this purpose may appoint State Secretaries in charge of a general responsibility or for the coordination of sectors comprising one or more State Secretariats, decentralized entities, deconcentrated entities, programs, projects, enterprises or public services; likewise may assign or not assign the Offices considered convenient, in the latter case to advise him on the matters he entrusts to them. The Appointment Agreement shall define the responsibilities that the President of the Republic assigns to each State Secretary; and for the latter, the Offices for their assignment. The rank of State Secretary can only be granted by the President of the Republic, as well as its precedence.

The President of the Republic may create commissions composed of public officials, prominent figures and representatives of diverse sectors of national life and national or foreign advisors; likewise may designate single authorities for the development of special areas, programs or projects, with the attributions determined by the Decrees of their creation.

The President of the Republic, by Decree in Council of State Secretaries, may issue within Centralized Administration the regulations required to:

• 1)

  Determine the competence of the Offices by the State Secretariats and create the internal dependencies necessary for good administration;

• 2)

  Merge the internal dependencies that duplicate functions or activities, or that merged can be efficiently performed;

• 3)

  Eliminate internal dependencies when necessary or convenient for the purposes of Public Administration;

• 4)

  Reorganize those dependencies that deficiency of Public Administration demands; and, 5) Transfer functions, activities and services to the municipalities or to private law entities that are auxiliaries of Public Administration. These provisions may be issued by the President of the Republic in Council of State Secretaries even when the dependency or function has been created or granted by means of a legal provision. Decentralized institutions, within the scope of their competence, shall adopt equal measures in accordance with Central Government policies.

To coordinate everything related to the strategic management of Public Administration, the President of the Republic may be assisted by a public official of the highest rank from the State Secretariats and create sector cabinets under the charge of State Secretaries who coordinate the same. The Sector Cabinets have the faculties and competencies designated by their Decree of creation and shall be composed as provided in Article 12 of this Law.

The sessions of the Council of State Secretaries are presided over by the President of the Republic and, failing that, by the State Secretary he designates.

The Council of State Secretaries has the following attributions:

• 1)

  Exercise preventive oversight of the execution of the General Budget of Income and Expenditures of the Republic;

• 2)

  Discuss and reconcile the National Development Plan so that the Executive Power submits it for approval of the National Congress;

• 3)

  Create, modify, merge, divide or eliminate dependencies of Public Administration;

• 4)

  Formulate and approve, in accordance with development plans, the Project of the General Budget of Income and Expenditures of the Republic that the Executive Power must submit annually to the National Congress;

• 5)

  Enact extraordinary measures in economic and financial matters when so required by the national interest, having to report to the National Congress;

• 6)

  Create, maintain and eliminate public services and take the necessary measures for their proper functioning;

• 7)

  Approve the provision of services through private law entities that are auxiliaries of Public Administration and issue regulations for their functioning, when there is no special law;

• 8)

  Modify the General Budget of Income and Expenditures of the Republic in the cases indicated in the Constitution of the Republic;

• 9)

  Know and resolve matters that the President of the Republic submits to it;

• 10)

  Authorize the sale of fiscal assets;

• 11)

  Regulate the procedures necessary for electronic government, and, 12) The other matters conferred upon it by the Constitution of the Republic and the laws.

The public or private character of the deliberations of the Council of State Secretaries shall be determined by the President of the Republic; for this purpose may invite people to the sessions with the purpose that they report on certain aspects. The President of the Republic may order that its deliberations be published or declare some of the decisions taken in Council of State Secretaries as reserved.

The Secretary of the Council of State Secretaries shall keep minutes summarizing what was discussed and recording what was agreed. All minutes must be authorized with the signature of said Secretary and the President of the Republic. The minutes shall include the Decrees issued.

State Secretariats are organs of the General Administration of the Country and depend directly on the President of the Republic. The Offices shall be created by the President of the Republic who shall assign them to the various State Secretaries. The State Secretariats have the competencies that in accordance with the Constitution, the law or regulations are assigned to them.

For the General Administration of the country that the Constitution of the Republic confers to the Executive Power, the State Secretariats shall have the following competencies:

• 1)

  General Government Coordination Assist the President of the Republic in the coordination of public administration; strategic planning within the framework of the Country Vision and Plan of Nation; the definition of general policies; the allocation of resources to achieve the objectives and goals defined by the President of the Republic in the annual and multiyear strategic plan by sectors, through articulation of the Budget Subsystem and the Public Investment Program; mechanisms and procedures for monitoring and evaluating the results of Government management;

• 2)

  Human Rights, Justice, Governance and Decentralization That which concerns the Interior Government of the Republic, including coordination, liaison, supervision and evaluation of the departmental and municipal regimes; decentralization and citizen participation; local economic development, social infrastructure and equipment at the local level; territorial planning; technical support to municipalities and civil associations of neighbors and trusts; regulations of public spectacles and the protection of children and youth and public health and public order in relation to social media, written publications and social networks; that relating to professional registration; that concerning population comprising citizenship, nationality, foreign nationality and the regulation and control of migration; the publication of laws, regulations and provisions of a general nature; the prevention of contingencies and firefighting; that relating to policies, plans and programs for the promotion and defense of human rights, access to justice, the national penitentiary system, the granting and cancellation of legal personality of all civil entities whenever special laws do not confer this power to other state organs; the regulation, registration, audit and monitoring of civil associations, everything related to the organization, promotion and development of sports; access to justice and extrajudicial resolution of conflicts.

• 3)

  Secretariat of the Presidency That which concerns the General Secretariat of the Presidency of the Republic, the superior direction of the Civil Service; the liaison with Political Parties in coordination with the Government; coordination with the organs of the Judicial Branch, Public Ministry, Office of the Attorney General of the Republic, Supreme Electoral Tribunal, National Registry of Persons and Superior Court of Accounts. The presidential coordination of strategic communications attached to the Presidency of the Republic which includes government information and press services; the Secretariat of the Cabinet of State Secretaries; general services and the administration of the Presidency of the Republic; Protocol, Ceremony, Agenda and Advance of the President of the Republic.

• 4)

  Social Development and Inclusion That which concerns the formulation, coordination, execution and evaluation of public policies on social development and inclusion, poverty reduction; as well as the planning, administration and execution of programs and projects derived from those policies, and those aimed at vulnerable groups and those oriented to children, youth, indigenous and Afro-Honduran peoples, disabled and persons with special needs, and elderly adults.

• 5)

  Health That which concerns the formulation, coordination, execution and evaluation of policies related to the protection, promotion, prevention, preservation, restoration and rehabilitation of the health of the population; sanitary regulations related to the production, preservation, handling and distribution of food destined for human consumption; sanitary control of water treatment, conduction and supply systems for human consumption, as well as fluvial waters, sewage and wastewater and the disposal of excreta; as well as that relating to burials, exhumations, cemeteries, in coordination with municipal authorities; the control and surveillance of the production and sale of pharmaceutical products, cosmetics and similar substances for human use and the production, trafficking, possession, use and commercialization of psychotropic drugs.

• 6)

  Education That which concerns the formulation, coordination, execution and evaluation of policies related to all levels of the formal education system, with emphasis on the level of basic education, except higher education; that relating to civic education of the population and scientific, technological and cultural development; literacy and adult education, including non-formal and extracurricular education.

• 7)

  Economic Development That which concerns the formulation, coordination, execution and evaluation of policies related to the promotion and development of industry, technology, promotion of investments, country image, industrial parks and free zones, the national government's relationship with Employment and Economic Development Zones (ZEDE), national and international trade in goods and services, promotion of exports, economic integration, business development, private investment, science and technology, quality management, weights and measures, compliance with provisions of consumer protection laws and the defense of competition, research, rescue and dissemination of the nation's cultural heritage, artistic education and the identification, conservation and protection of the historical and cultural heritage of the nation; the development of policies related to tourism, as well as promoting the development of tourism supply and promoting its demand, highlighting and supervising the presentation of tourism services and in general, developing all kinds of activities within its competence that tend to favor and increase national and foreign investments and tourism flows.

• 8)

  Labor and Social Security That which concerns the formulation, coordination, execution and evaluation of employment policies, including disabled persons, wages, labor force training, job training, promotion of worker education and labor-management relations; selective labor migration; coordination with institutions of social security and provision; the recognition and registration of legal personality of unions and other labor organizations; that relating to occupational health and safety; the handling of administrative procedures for resolving individual and collective labor conflicts.

• 9)

  Agriculture and Livestock That which concerns the formulation, coordination, execution and evaluation of policies related to the production, preservation and marketing of food, the promotion and modernization of agriculture, animal and plant health; the generation and transfer of agricultural technology, irrigation and drainage in agricultural activities; the distribution and sale of agricultural inputs acquired by the State or in any way, as well as the regulations to which they shall be subject; the coordination of activities related to forestry, the superior direction of agrometeorological services and the promotion of agricultural credit.

• 10)

  Energy, Natural Resources and Environment That which concerns the formulation, coordination, execution and evaluation of policies related to the protection and use of water resources, new and renewable energy sources, the generation, transmission and distribution of energy, mining activity and the exploration and exploitation of hydrocarbons, policies related to the environment, ecosystems, the national system of protected natural areas and national parks and the protection of flora and fauna, as well as research and contamination control services in all its forms.

• 11)

  Security That which concerns the formulation of the national policy of internal security and programs, plans, projects and strategies of citizen security; that relating to the reestablishment of public order for peaceful and harmonious coexistence, prevention, criminal investigation and combating of crimes and false violations; the security of persons in their life, honor, beliefs, liberties, property and human rights; aid in the preservation of the environment, public morality and state assets; close cooperation with migration authorities for the prevention or repression of illegal or clandestine immigration or human trafficking, and with national defense authorities for the effective combating of terrorism, organized crime; the regulation and control of private security services; the registration and control of weapons and explosives; assistance to public powers; and matters concerning the education and training of members of the National Police.

• 12)

  Defense That which concerns the formulation, coordination, execution and evaluation of policies related to national defense and the education and training of members of the Armed Forces.

• 13)

  Public Works, Transportation, Housing and Public Enterprises That which concerns the formulation, coordination, execution and evaluation of policies related to housing, infrastructure works, the road, urban planning and transportation systems, matters concerning public enterprises, as well as the concessionaire regime of other public works.

• 14)

  Foreign Relations and International Cooperation That which concerns the formulation, coordination, execution and evaluation of foreign policy and relations with other States, the conduct of Honduras' representation in international organizations and forums, the direction and administration of diplomatic and consular services, the international defense of our sovereignty and borders, the protection of Hondurans abroad, the protection of the interests of the Honduran State against claims, arbitrations or other actions that threaten it; the promotion of economic, political, cultural relations, investments, exports, tourism, country image and international cooperation.

• 15)

  Finances That which concerns the formulation, coordination, execution and evaluation of policies related to Public Finances; the execution of the General Budget of Income and Expenditures of the Republic, that relating to credit and public debt, the management of the Treasury and the Payroll of the Republic, the registration, administration, protection and control of national assets, the programming of public investment within the framework of priorities established by the Presidency of the Republic through the general government coordination. The competencies indicated in this provision do not diminish or distort those contained in other laws or regulations. The President of the Republic may regulate this provision expanding, reducing, merging and reassigning the competencies and Offices of the State Secretariats. May also appoint State Secretaries Coordinating Sectors, assigning them the task of coordinating the work of various State Secretariats, formerly deconcentrated, decentralized or regulatory, programs, projects and public enterprises concerned with matters related.

Deconcentrated organs or entities shall be created, modified, merged or eliminated by Decree of the President of the Republic in Council of State Secretaries and their managers shall answer for their management to the dependency of Centralized Administration from which they depend.

In addition to what is established in the preceding Article, autonomous institutions cannot be created except for the management of those activities necessary to promote economic and social development. For this purpose, prior to the creation of an autonomous entity, the respective opinion of the Executive Power shall be requested.

Public enterprises are those created to develop economic activities in the service of diverse purposes, which may take the form of a commercial company, prior Decree of the Council of State Secretaries ordering their transformation, indicating the destination of their assets and liabilities.

In order for the financial guarantees granted by autonomous institutions to be effective, they must be approved by the State Secretariat in the Office of Finances.

The Executive Power may intervene, totally or partially, all entities, organs or units of public administration that operate with losses, do not comply with their functions or do not adequately provide the services for which they were created.

If intervention is warranted, it shall be in charge of an intervention commission that shall be responsible for the administration of the intervened entity, organ or unit and shall conduct an evaluation of it with the advice of the Superior Court of Accounts (TSC).

The intervention commission has the faculties that correspond to the administrators of the same, exercising their legal representation. The act of intervention is justified cause for the intervention commission to proceed to temporary suspension of personnel, termination of employment contracts or revocation of Personnel Agreements considered unnecessary.

Within the deadline set by the Executive Power, the intervention commission shall render its evaluation report in which it shall recommend the measures it considers appropriate to improve the administrative and financial situation of the intervened entity.

The Executive Power, in view of the report of the intervention commission, shall enact the necessary decisions, making the corresponding liability. Among the measures it may adopt are the modification, merger, division or elimination of the intervened Public Administration entity; the modification or elimination of its budget or the allocation of all or part of its assets to another Public Administration entity.

Minutes shall be kept of each session containing the indication of the place, date and order of business of the meeting, the names and representative status of those present, a summary of the points of deliberation, the procedure and result of voting and the content of the agreements. The minutes shall be signed by the Secretary with the approval of the President and shall be read and approved in the same or subsequent session. Sessions may be held electronically.

Acts shall be issued by Decree that in accordance with the Constitution of the Republic, secondary laws or regulations are exclusive to the President of the Republic or must be enacted in Council of State Secretaries. The motivation in the Decrees is preceded, as the case may be, by the expression "THE PRESIDENT OF THE REPUBLIC" or "THE PRESIDENT OF THE REPUBLIC IN COUNCIL OF STATE SECRETARIES", being followed by the formula "DECREES". Decrees of the President of the Republic, in addition to the date, shall bear the signature of same and shall be countersigned with the signature of the State Secretary or Secretaries, and Decrees issued in Council of State Secretaries must be incorporated into the minutes of the respective session, which shall be certified by whoever acts as Secretary of that collegiate body.

Employees or servants who hold executive appointment agreements from dependencies of the Executive Branch that, in the application of this Law are merged, divided or eliminated, shall retain their seniority and acquired rights in accordance with law and shall continue rendering their services in the dependency that is notified to them and that corresponds in accordance with the administrative reorganization that is executed. In the case of contracted employees, they shall be subject to the deadline and contractual conditions agreed between the parties. In relation to what is provided by this Article, what is not foreseen or to even modify, vary or expand what is provided herein shall be resolved or decided by Executive Decree by the President of the Republic by himself or through the Council of State Secretaries. Likewise, other officials appointed by the Executive Power in positions of trust before the entry into force of special laws that modify the organizational structure of entities or organs of the State shall continue in their functions until the period for which they were appointed according to the respective agreement is completed and, in the absence of deadline or period, until they are terminated.

Assets allocated to entities, all assets, liabilities and budget execution of organs or dependencies of Public Administration that are eliminated must be administered by or under the coordination of the State Secretariat in the Office of Finances, while the President of the Republic decides what corresponds or reassigns them to other dependencies by Executive Decree, by himself or through the Council of State Secretaries.

Reform Articles 1, 6, 41, 61, 87, 88, 119, 123 and 126 of the LAW OF ADMINISTRATIVE PROCEDURE contained in Legislative Decree Number 152-87 dated September 28, 1987, which should be read as follows:

The organs and entities of Public Administration are subject to this Law when they declare, recognize or limit the rights of private parties. The same shall not be applicable to electronic government or to procedures that are processed electronically, which are regulated by Executive Decree issued by the President of the Republic in Council of State Secretaries.

The superior organ may take cognizance of matters attributed by Law to the competence of a lower organ.

It corresponds to the Executive Power to issue regulations of Public Administration, unless provided otherwise by Law.

If initiated at the instance of an interested person, in the written statement that this person presents, the following shall be expressed:

• a)

  Summary that unifies its content or the procedure in question;

• b)

  The indication of the organ to which it is directed;

• c)

  The name and surnames, status, profession or occupation, residence of the applicant or his representative, numbers of fixed and mobile telephone contact, email, in which case must present the document proving his representation;

• ch)

  The facts and reasons on which it is based and the clear expression of what is requested;

• d)

  In the case of Administrative Claims that include payment of real damages effectively caused, must accompany a certificate issued by the Executive Direction of Income (DEI) of being solvent for tax obligations of the last five (5) years as of the date of presentation of the administrative claim; and,

• e)

  Place, date, signature or digital fingerprint when unable to sign.

Resolutions shall be notified personally or electronically within a maximum period of five (5) days from their date; the orders when they prejudice the interested parties, the period of two (2) days.

Personal or electronic notification shall be practiced by sending or delivery of a complete copy of the act in question. If personal or electronic notification of the act could not be made within the periods established in Article 87, notification shall be made by posting on the notice board of the Office the order or operative part of the resolution.

The declaration of nullity of the acts enumerated in Article 34 shall be made ex officio and at any time by the organ that issued the act or by the superior.

The annulment, revocation and modification of an act shall only give rise to reparation of damage effectively caused when the same is expressly provided for in the Law.

Public Administration may validate voidable acts by correcting the defects from which they suffer, even if a remedy has been filed against the same. The act of validation shall produce effect from its date. If the defect consisted of lack of competence, validation may be carried out by the competent organ when it is the superior hierarchical body of the one that issued the act. Acts vitiated by the lack of some authorization may be validated through the granting of the same by the competent organ.

Reform Articles 2, 3, 27, 121, 128, 129 and 153 of the LAW OF STATE CONTRACTING contained in Legislative Decree Number 74-2001 dated June 1, 2001 and in its reform decrees, and incorporate into the same by addition Articles 3-A and 3-B; which should be read as follows:

OTHER CONTRACTS.- The preparation, adjudication and formalization of purchase-sale, barter, donation, lease, loan or other contracts of patrimonial content that Public Administration must enter into shall be exempt from the procedures and requirements established by this Law, by virtue of the fact that the object of the same are in all cases specific and particular immovable property, applying to them the special legal provisions that are applicable to them. The State is not obligated to comply with the formalities or form requirements that Private Law would require for the validity of said contracts. As to their effects and extinction, the norms of Private Law shall be applicable, unless special legal norms are established that are applicable to them.

LEGAL REGIME.- The legal regime of contracting to which Article 1 of this Law refers is Administrative Law, and it is competent to know of the controversies resulting therefrom the Jurisdiction of Administrative Litigation, mediation, arbitration or expert panels as determined by law. As to the contracts referred to in the preceding Article, the Civil Courts are competent to know of the controversies resulting from their execution. However, once the administrative means have been exhausted, the controversies generated by the administrative acts issued in relation to the preparation and adjudication of these contracts may be resolved using alternative means of dispute resolution or the Jurisdiction of Administrative Litigation as determined by law. To take advantage of any of the judicial or extrajudicial mechanisms of controversy resolution mentioned in this Article, the interested private party must provide a bond equivalent to twenty percent (20%) of the amount claimed.

DISPUTE RESOLUTION BOARDS.- In contracts entered into by the State exceeding the amount established in the Regulation of this Law, Dispute Resolution Boards must be created for the purpose of helping the parties resolve their disagreements and disputes. The Dispute Resolution Boards must be incorporated into the contracts using standard clauses and the Regulation of the International Council (ICC) relating to them. Contracts models created by the International Federation of Consulting Engineers (FIDIC) may also be used. The Boards may issue recommendations or binding resolutions.

PENALTY CLAUSE.- The contracts entered into by Public Administration must include a penalty clause in which the indemnification to be paid in case of non-performance by the parties is stipulated.

NULLITY FOR LACK OF BUDGET.- Contracts executed without budget allocation at the time of execution shall be null and void. The resolution of the contract for this cause shall result in the payment of damages and losses occasioned.

MODIFICATION OF CONTRACTS.- Public Administration may modify contracts entered into for reasons of public interest and agree to their resolution, within the limits and subject to the requirements and effects indicated in this Law and its regulatory norms. When the modification of the contract involves additional obligations on the part of the contractor, its value shall be paid, considering the unit prices initially agreed upon, without prejudice, where applicable, to the application of the cost increase adjustment clause. If the resolution for causes not attributable to the contractor causes him damages, Public Administration is obligated to compensate them; however, in the cases of force majeure or acts of God, only the part effectively executed and the expenses reasonably incurred by the contractor in anticipation of the total execution of the contract shall be liquidated.

RESOLUTION ATTRIBUTABLE TO THE CONTRACTOR.- When the resolution is due to causes attributable to the Contractor, Public Administration shall declare ex officio and make effective the performance guarantee when the corresponding Agreement is final. The Agreement resolving the contract shall be notified personally or electronically to the Contractor through his legal representative or by delivery of the notification to the person located at the physical address indicated in the contract. In any case, the rights corresponding to the Contractor remain protected.

RESOLUTION ATTRIBUTABLE TO PUBLIC ADMINISTRATION.- Public Administration's non-compliance with the clauses of the Contract shall result in its resolution only in the cases provided for in this Law; in such case the Contractor has the right to payment of the portion of the obligation executed and payment of the real damages effectively caused. When this occurs, the Contractor shall request Public Administration to resolve the contract; if it does not rule favorably, once the administrative means have been exhausted, the Contractor must submit to the Dispute Resolution Board and subsequently may resort to the Jurisdiction of Administrative Litigation or an arbitration agreement. What is stipulated in this provision shall be understood without prejudice to what is provided in Article 121 paragraph three of this Law.

COST OF CONDITIONS OF BIDDING.- Public Administration shall charge interested parties a price for the delivery of the Conditions of Bidding and other documents attached to bids and contests, which shall be determined for each case.

Reform Articles 1, 34, 39, 45, 47, 76, 82, 100 and 124 of the LAW OF THE JURISDICTION OF ADMINISTRATIVE LITIGATION contained in Legislative Decree Number 189-87 dated November 20, 1987 and in its reform Decrees, which should be read as follows:

By this Law the Jurisdiction of Administrative Litigation is regulated, which is responsible for knowing the claims deduced in relation to acts of particular or general character of Public Administration subject to Administrative Law. It is not applicable to entities, organs or units of Public Administration whose requests, proceedings or adjudications are subject to alternative means of dispute resolution.

The plaintiff party legitimated as provided in Article 14 of this Law may claim, in addition to what is provided in the preceding Article, the recognition of an individualized legal situation and the adoption of the necessary measures for its full restoration, including the indemnification of real damages effectively caused, when applicable.

The amount of the action shall be fixed in the complaint on the basis of the damage effectively caused. The action can only be admitted if the plaintiff provides a bond equivalent to twenty percent (20%) of the amount claimed. This bond is not required in the case of personnel matters regulated by this Law, to which damages and losses and other legal and conventional indemnifications provided for may also be recognized. When the amount is not fixed, the Court, ex officio or at the instance of the defendant, shall require the plaintiff to fix it, granting for that purpose a period of three (3) business days, after which if not done, the Court shall fix it, prior to hearing the defendant, having to provide the bond indicated in this Article.

When Public Administration itself, author of an act, seeks to sue for its nullity before the Jurisdiction of Administrative Litigation, must first declare it harmful to public interests of an economic character or of other nature, within a period of four (4) years counting from the date on which it was issued.

To the written statement referred to in the preceding Article shall be attached:

• a)

  The document evidencing the representation of the party appearing in court, when not the interested party itself;

• b)

  The document evidencing the legitimacy with which the author appears in court when possessing it by inheritance or by any other title;

• c)

  Certification or authorized copy of the impugned act or the copy of the Official Gazette "La Gaceta" in which it was published, and if publication was made in any other national newspaper, the copy thereof shall be attached;

• ch)

  Copy of the complaint and, if applicable, its attachments. If such documents are not attached or those presented are incomplete and in general, whenever the Court deems that the requirements necessary for the validity of the appearance do not concur, it shall set a period of five business days for the plaintiff to remedy the defect and if not, the written statement shall be deemed not presented and the court shall order the proceedings archived. The presentation of the proceedings shall be required of the plaintiff;

• d)

  In the case of requesting payment of real damage effectively caused, the complaint shall be accompanied by a certificate issued by the Executive Direction of Income (DEI) of being solvent for tax obligations of the last five (5) years as of the date of presentation of the written statement.

In the concluding statement, the plaintiff may request that the judgment formulate concrete pronouncement on the existence and amount of real damages effectively caused of which reparation is sought, if already proven in the proceedings.

If the judgment declares the action admissible:

• a)

  It shall pronounce that it does not conform to law and, where applicable, shall annul totally or partially the impugned act;

• b)

  If the claims referred to in Article 34 have been deduced, it shall recognize the individualized legal situation and shall adopt all necessary measures for its full restoration and recognition; and,

• c)

  If reparation of real damages effectively caused has been sought, the judgment shall be limited to declaring the right and the determination of the amount thereof shall be deferred to the period of execution of the judgment, except as provided in Article 76.

Even if the judgment does not provide for it, the liquid amounts recognized in judgments that condemn the State or its entities shall accrue legal interest on money in accordance with civil or mercantile law depending on the matter at issue for a period not to exceed twelve (12) months.

Once the suspension is lifted at the end of the process or for any other cause, the administration or person who claims to have a right to indemnification for real damages effectively caused by the suspension must request it before the Court by means of incidental motions within two (2) months following the date of lifting of the suspension, and if the request is not made within that period or the right is not proven, the guarantee provided shall be canceled immediately. The Court shall communicate the suspension to the administration that issued the act, and the provisions of Chapter III of this Title shall apply to the effectiveness of the suspension.

Reform Articles 12 numeral 6) and 37 numeral 2) of the ORGANIC LAW OF THE BUDGET contained in Legislative Decree Number 83-2004 dated May 28, 2004 and in its reform decrees, which should be read as follows:

CONTENT OF INCOME BUDGETS.- Income Budgets shall contain the various sources of resources regardless of their origin, therefore are income and as such constitute the State's financial resources: 1) Resources generated by taxes, rates, contributions, fees and royalties. 2) Revenues from the management of assets including revenues from the sale or lease of goods, services and participations or profits from eventual investments; 3) Resources from public credit; 4) Transfers from other public entities; 5) Resources from donations, including donations in kind duly valued; 6) Resources from concession and privatization processes, except when the same have been delivered to a trust or other special purpose mechanism created by the State; 7) Income from the Poverty Reduction Strategy Fund; and, 8) Other income produced by any other concept or source.

COMPETENCY TO AUTHORIZE TRANSFERS BETWEEN BUDGETARY ALLOCATIONS.- Transfers between budgetary allocations approved for each Fiscal Year shall be made as follows:

• 1)

  It corresponds to the National Congress to authorize transfers of budgetary funds between Powers of the State;

• 2)

  It corresponds to the President of the Republic to authorize transfers of budgetary funds between State Secretariats, Decentralized Institutions and between both. It also corresponds to him to authorize the modification or elimination of the budget of entities, organs or units of Public Administration subject to an intervention process;

• 3)

  It corresponds to State Secretariats through their managers or legal substitutes to authorize transfers of budgetary funds between specific objectives of spending or between categories of the same program, following the procedure established for this purpose by the State Secretariat in the Office of Finances; and,

• 4)

  It corresponds to the State Secretariat in the Office of Finances to authorize by Internal Resolution the transfer of funds from Allocations for Contingencies as well as those that are made between State Secretariats and the National Congress.

Reform Articles 11 and 19 numerals 3) and 4) of the ORGANIC LAW OF THE ATTORNEY GENERAL OF THE REPUBLIC contained in Decree Number 74 dated March 11, 1971 and in its reform decrees, which should be read as follows:

The Attorney General and Sub-Attorney General of the Republic may act as Ministers of Public Faith in the authorization of public documents in which the State has an interest when the law permits.

The Attorney General of the Republic is in charge of representing the State in the fulfillment of the following attributions:

• 1)

  To promote, represent and uphold the rights of the State in all trials in which it is a party. In these cases shall have the faculties of a General representative but shall require express authorization from the Executive Power, granted by agreement in each case to exercise the faculties designated in numeral 1 of Article 81 and numeral 2 of Article 82 of the Civil Procedural Code;

• 2)

  To take the appropriate remedies against unfavorable resolutions in whole or in part with respect to the interests it represents in the exercise of that same representation. The Attorney General is obligated to appear at the proceeding to answer interrogatories when expressly having that faculty;

• 3)

  To appear in representation of the State in accordance with the instructions of the President of the Republic as holder of the Executive Power and at the granting of acts or contracts in which the State has an interest, except in cases where the President of the Republic or the law has authorized other officials;

• 4)

  To issue forms or instructions with the legal requirements that documents transferring title that the State grants or in which it has an interest must meet;

• 5)

  To monitor and give the appropriate instructions so that the State's Titles of Property and credit are kept in the respective archives with the classification and registration that corresponds and to proceed to the replacement of those that have been lost;

• 6)

  To render opinion on consultations made to it regarding doubts in the application of tax laws;

• 7)

  To advise the Executive Power in all cases in which the President of the Republic or State Secretaries require its opinion;

• 8)

  To distribute among the sections of the Attorney General's Office the documents that correspond or authorize them to collect them from government offices for the purpose of establishing the corresponding judicial or extrajudicial actions, keeping in all cases a complete detail of the trials and their results. When the Attorney General has requested pronouncements from the State Secretariats in relation to some particular matter and the term of fifteen days, or that the law indicates passes without having obtained them, shall proceed to formulate his request according to his own judgment and in accordance with law;

• 9)

  To ensure that his subordinates comply with the obligations and exercise the attributions that the laws establish for them;

• 10)

  To prepare the Annual Report of the Attorney General's Office gathering all the data on the movement of its sections to present it to the National Congress within the first 15 days of January of each year;

• 11)

  Repealed;

• 12)

  To assume when it deems convenient the temporary or permanent representation in the trials or matters in which the officials of its dependency intervene;

• 13)

  Repealed;

• 14)

  Repealed; and, 15) To comply with the other obligations imposed by the laws.

Reform Article 95 of the LAW OF THE SUPERIOR COURT OF ACCOUNTS contained in Decree No 10-2002-E dated December 3, 2002, which should be read as follows:

CIVIL ACTION.- Once the resolution is final, which has the character of an enforceable title, the Superior Court of Accounts shall proceed to transfer the respective file to the Attorney General of the Republic so that it may execute the civil actions that correspond. On the amounts recovered legal interest on money shall be paid in civil matters.