EIGHTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES

_Introduced by Representative Rufus B. Rodriquez
4873

House Bill No.
EXPLANATORY NOTE

Section 20, Article II of the 1987 Philippine Constitution provides that ‘The State recognizes
the indispensable role of the private sector, encourages private enterprise, and provides
incentives to needed investments.”

To implement the above provision of the Constitution, Republic Act No. 9184 or the
Goverment Procurement Reform Act and Republic Act No. 6957 as amended by Republic
Act No. 7718 or the Philippine Build-Operate-and-Transfer (BOT) Law was enacted.

Subsequently, Executive Order No. 8 series of 2010 basically established the Public-Private
Partnership (PPP) Center from the Build-Operate-Transfer Center. Then Executive Order
No. 136 series of 2013 amended the previous EO and created the PPP Governing Board.
The PPP Center is mandated to facilitate the implementation of the country’s PPP Program
and Projects while the PPP Governing Board (PPPGB) is the overall policy making body for
all PPP-related matters, including the Project Development and Monitoring Facility (PDMF)

The PPP Center is the main driver of the PPP Program. It serves as the central coordinating
and monitoring agency for all PPP projects in the Philippines. It champions the country's
PPP Program by enabling implementing agencies in all aspects of project preparation,
managing of the PDMF, providing projects advisory and facilitation services, monitoring and
‘empowering agencies through various capacity building activities

This bill seeks to improve the PPP program of the government. It aims to have better
transparency in transactions, makes the PPP center more efficient and strengthens the
cooperation between the public and private sectors.
In view of the foregoing, immediate approval of this measure is earnestly requested
4
bs

RUFYS B. RODRI


EIGHTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES

_____Introduced by Representative Rufus B. Rodriguez
House Bill No, 4873
AN ACT
STRENGTHENING PUBLIC-PRIVATE PARTNERSHIPS AND APPROPRIATING FUNDS
THEREFOR

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled.

SECTION 1. Short Title — This Act shall be known as the “Public-Private Partnership
(PPP) Rationalization Act.”

SEC. 2. Declaration of Policies and Principles. — Section 20, Article II, of the Constitution
Provides that the State recognizes the indispensable role of the private sector, encourages
private enterprise, and provides incentives to needed investments. Furthermore, it is the
declared policy of the State to recognize the private sector as the main engine for national
growth and development, and provide an enabling environment for private sector
Participation to mobilize private resources for the purpose of financing, designing,
Constructing, operating and maintaining development programs and projects normally
undertaken by the government. Aside from financial incentives as provided by law, the
government shall foster robust private sector participation by ensuring a competitive climate
through reduced costs of doing business by providing cost-effective and time-saving
government regulations and procedures and specific government undertakings in support of
the private sector.

It is further declared that the State shall protect the public interest by providing
affordable, accessible, and efficient public services. Subject to reasonable rules and under
the guiding principle of full public disclosure of all transactions, the State shall ensure fair
and reasonable pricing and timely delivery of quality infrastructure and services through
equitable risk allocation inherent in PPP Projects.

Furthermore, it is declared that the State shall ensure that all PPP Projects yield
sufficient value for money to optimize the use of resources in order to achieve better quality
of PPP Projects at lower costs.

The State shall pursue a policy of maintaining a reasonable balance on infrastructure
financing through all means available that will most effectively meet the government's
objectives. In optimizing value for money, the State shall determine the appropriate financing
by taking into account project drivers and constraints like budget availability, timelines,
stakeholder commitments, and market capacity. Alternative sources of financing may include
appropriations, official development assistance, and PPPs

Finally, it is declared that the State shall affirm open, fair, transparent, and
competitive selection as the central tenet for securing private investment in PPP. Projects.

SEC. 3. Scope and Application. ~ This Act shall apply to all PPP Projects undertaken by
Implementing Agencies through PPP contracts with a Private Proponent, including Joint
Ventures, as defined under this Act. It shall likewise apply to and be enforceable among all
Parties to said PPP contracts.

Implementing Agencies are hereby authorized to undertake PPP Projects through
PPP contracts with a Private Proponent in accordance with this Act

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SEC. 4. Definition of Terms. — As used in this Act:

(a) Approving Body - refers to an entity authorized to approve PPP Projects, in
accordance with Section 7 of this Act;

() Brownfield Project - refers to a project with existing development programs or
projects;

(c) Construction - refers to new construction, rehabilitation, improvement,
expansion, alteration, and related works and activities including the necessary
supply and installation of equipment, materials, labor and services, and related
items;

(d) Contractor - refers to any entity allowed under Philippine laws, which may or
may not be the Private Proponent, and which shall undertake the actual
construction or supply of equipment for the PPP Projects;

(€) Cooperation Period - refers to the period during which the PPP contract is in
effect;

() Facility Operator - refers to an entity with legal personality authorized under
existing laws, which may or may not be the Private Proponent, that shall be
responsible for all aspects of operation and maintenance of a facility, including,
but not limited to, the collection of tolls, fees, rentals or charges from facility
users;

(9) Government Undertakings - refers to any form of contribution and support,
which the government may extend to a Private Proponent for the implementation
of PPP Projects;

(h) Greenfield Project - refers to a pioneer development program or project:

() Implementing Agency - refers to a department, bureau, office, instrumentality
commission, authority of the national government, state universities and colleges
(SUCs), local government units (LGUs), or government owned-or-controlled
corporation (GOCC) as defined in Republic Act No. 10149, including government
instrumentalities with corporate powers (GICP), government corporate entities
(GCE), goverment financial institutions (GFls), which is authorized to undertake
any PPP Project;

() Joint Venture (JV) - refers to a contractual arrangement whereby both the
Implementing Agency and the Private Proponent contribute to pool resources
comprising of capital, services, or assets (including equipment, land or intellectual
property) to jointly undertake @ specific investment activity. The investment
activity shall be for the purpose of accomplishing a specific goal with the end view
of facilitating private sector initiative in a Particular industry or sector, and
eventually transfer the activity to either the Private sector under competitive
market conditions or to the govemment. The JV involves a community or pooling
of interests in the performance of the investment activity, and each party shall
have the right to direct and govern the policies in connection therewith with the
intention to share both profits, and risks and losses subject to agreement by the
parties. A JV may be undertaken through a contract or by creating a JV entity,

(k) Local PPP Project - refers to a PPP Project that shall be undertaken by an LGU:

(0) National PPP Project - refers to a PPP Project that shall be undertaken by the
National govemment, GOCC, GICP, GCE, GFI, or SUCs;

(m) Operation and Maintenance - refers to activities necessary and incidental to
Preserve or restore the operational status of an asset or system based on
specified performance indicators;

(9) PPP Project - refers to infrastructure or development programs, projects,
activities, facilities, and related services normally financed and undertaken by the
Public sector but which shall now be wholly or partly financed, designed, built
operated and maintained by the private sector:



(0) Private Proponent - refers to the private sector entity which shall have
contractual responsibility for the PPP Project. The Private Proponent may be
Filipino or foreign-owned, and may engage the services of a foreign Contractor or
foreign Facility Operator, subject to requirements and limitations provided under
the Philippine Constitution;

(p) Viability Gap Funding (VGF) - refers to such financial support the government
may provide to a concession-based PPP Project with the objective of making
fees affordable, while improving the commercial attractiveness of the project,
excluding costs of right-of-way, resettlement, and real estate taxes

SEC. 5. Public-Private Partnership. — A PPP is a contractual arrangement between the
Implementing Agency and the Private Proponent for the financing, designing, constructing,
operating and maintaining, or any combination thereof, of PPP Projects which are normally
provided by the public sector. PPP Projects may be undertaken through contractual
arrangements, including joint ventures, authorized under the Implementing Rules and
Regulations (IRR) of this Act.

SEC. 6. Priority Projects. — Implementing Agencies shall include in their development plans,
strategies, and investment programs those priority PPP Projects. In identifying those
projects, the Implementing Agencies shall be guided by the following principles
effectiveness in meeting govemment objectives, value for money, accountability and
transparency, consumer rights, affordability, public access, safety, and security. Priority
projects shall be consistent with the national and local development and investment plans

The Implementing Agencies shall submit their list of PPP Projects or any update
thereto to the PPP Center, referred to in Section 20 of this Act, for information, Each
proposed PPP Project shall be subject to the approval of the appropriate Approving Body.

The PPP Center shall ensure that the Congress of the Philippines and the public
shall be provided with adequate and timely information on PPP Projects.

SEC. 7. Approval of PPP Projects. — (a) The approval of PPP Projects under this Act shall
be in accordance with the following:

(1) National PPP Projects. National PPP Projects costing up to five billion pesos
(P5,000,000,000.00) shall be approved by the Investment Coordination Committee of
the National Economic and Development Authority (ICC-NEDA). Projects costing
more than five billion pesos (P5,000,000,000.00) shall be approved by the NEDA
Board, upon prior recommendation by the ICC-NEDA. The ICC-NEDA may, from
time to time, update the aforementioned amounts when the need arises. Project cost
shall be determined as follows:

(i) For Greenfield Projects, it shall refer to the total capital expenditure;
(ii) For Brownfield Projects, it shall refer to the sum of total capital
expenditure and remaining book value of the asset or system;
(iii) For Operation and Maintenance agreements:
a. It shall refer to the remaining book value of the asset or system in
case of concession-based PPP Project; and
b. It shall refer to the present value of total government payments in
case of availability-based PPP Project
(iv) For JV projects, it shall refer to the total amount of contributions of the
government to the project in present value with discount rate as
prescribed by the appropriate Approving Body. The said discount rates
shall be regularly published in the NEDA website.

(2) Local PPP Projects. Local PPP Projects shall be approved by the local
sanggunians, except in cases where a Local PPP Project: (1) requires any
Government Undertaking from the national government for capital-intensive projects;
or (2) exposes the national government to significant fiscal and monetary risks, as
may be determined by the ICC-NEDA


(b) The Approving Body shalll assess all PPP Projects based on its overall feasibility
analysis and accord paramount importance on the affordability of user fees and efficiency in
public service. To ensure that all risks associated with PPP Projects are managed and
mitigated accordingly, all PPP contracts to be entered into by the Implementing Agency shall
adhere to the principles stipulated under the Generic Preferred Risk Allocation Matrix
(GPRAM) issued by the ICC-NEDA

(0) The appropriate Approving Body shall act on the project within thirty (30) working
days upon satisfactory compliance by the concerned Implementing Agency with the
requirements of the appropriate Approving Body. Failure of the appropriate Approving Body
to act on the project within the specified period shall be deemed an approval thereof and the
concerned Implementing Agency may proceed with the procurement of the PPP Project.

SEC. 8. Solicited Proposals. — Solicited Proposals refer to submissions by the Private
Proponent to bid for priority PPP Projects through open, fair, transparent, and competitive
public bidding initiated by the Implementing Agency. Government Undertakings are allowed,
Subject to the approval of the Approving Body
The public bidding may be conducted in a single-stage or two-stage bidding process
The prequalification documents, technical, and financial proposals shall be submitted in at
least three (3) separate envelopes. Electronic bid submission may also be allowed
The contract shall be awarded to the bidder who has passed the prequalification
stage after having satisfied the prescribed minimum financial, organizational, and legal
standards, has passed the technical proposal evaluation, and has submitted the most
favorable financial bid based on the parameters defined in the bid documents. Affordable
user fees and efficient public services shall be of paramount importance in awarding a PPP
contract.
The Implementing Agency shall deciare failure of bidding in case of any of the
following:
a. If no bids are received;
b. If there are no complying bids;
c. If, after advertisement, only one bidder applied for and met the pre-qualification,
unless otherwise allowed by the ICC-NEDA
The Implementing Agency may consider, on a negotiated basis, a single complying
and responsive bid in case of any of the following
a. If, after advertisement, more than one bidder applied for pre-qualification but only
‘one met the pre-qualification requirements;
b. If, after pre-qualification of more than one bidder, only one submitted a bid; or
c. If, after pre-qualification, more than one bidder submitted bids but only one is
found by the Implementing Agency to be complying
If the winning bidder fails to comply with any post-award requirement or fails to enter
into a contract with the Implementing Agency, the latter may proceed to consider the next
technically and financially qualified bidder. In case the contract is awarded to the next
technically and financially qualified bidder, it shall be without prejudice to legal remedies
available to the Implementing Agency like forfeiture of bid security, withdrawal of award, and
such other remedies allowed under existing laws and the PPP contract
The head of the Implementing Agency shall create a Bids and Awards Committee
(BAC), which shall be responsible for all aspects of pre-bidding and bidding process in
solicited proposals, or the comparative bidding process in unsolicited proposals. The
composition of the BAC shall be specified in the IRR of this Act which may include other
relevant government agencies.
Any change in control of the Private Proponent or composition of the consortium after
the submission of a solicited proposal shall be subject to the approval of the Implementing
Agency,


SEC. 9. Unsolicited Proposals. ~ Unsolicited Proposals refer to project proposals submitted
Py @ Private Proponent not in response to a formal solicitation or request issued by the
Implementing Agency.

In accordance with the provisions of this Section, the Implementing Agency may
accept, reject, or convert an unsolicited proposal into a solicited proposal, subject to the
evaluation of eligibility and merits of the project, and the qualifications of the Private
Proponent who submitted the unsolicited proposal

An unsolicited proposal involving a priority project may be considered if the
Implementing Agency has not awarded any contract to implement such project. in case the

An unsolicited proposal may also be accepted for a project that is not in the list of
Prionty projects: Provided, that it does not require any of the following Government
Undertakings:

Viability Gap Funding;

Govemment equity except in JV arrangements;
Performance undertaking;

Exemption from real property taxes;

Loan guarantee;

Contribution of assets, properties, and rights; and
Right-of-Way and related costs

As an exception, items (f) and (g) above shall not be considered as Government
Undertakings in the following instances:

a. The Implementing Agency owns the assets, properties, rights, including the right-

of-way; or

b. The government receives appropriate compensation pursuant to existing laws,

rules, regulations and guidelines.

In cases where the Implementing Agency receives more than one unsolicited
proposal involving the same or similar project, the Implementing Agency may reject all such
pronosals, and instead, bid out the project as a solicited proposal. Otherwise, the
implementing Agency shall evaluate the proposals using a first in time approach Unaicr thie
approach, the first complete proposal is evaluated and decided upon. The second complete

©>ea0cH

Negotiation of the first proposal.

Ir the implementing Agency accepts, on a negotiated basis, an unsolicited proposal, it
shall grant the Private Proponent who submitted the unsolicited proposal fn original
prebonent status, which shall be valid for a period not exceeding one (1) year, unless
Srtended by the head of the Implementing Agency. The Implementing Agency shall publish
an invitation for the submission of comparative proposals.

If no other proposal is received for a period of not less than six (6) months from the
date of last publication, the PPP contract shall be awarded to the original proponent

{another qualified comparative proponent submits a superior counter.financial
Proposal within the period referred to above, and it is accepted by the head of the
tmplementing Agency, the original proponent shall have the right to match such counter
Financial proposal within a period not exceeding thirty (30) calendar days from the receipt of
notice.

If the Implementing Agency converts an unsolicited proposal and uses it as basis for
Public bidding, the original proponent shall be reimbursed of the cost incuned wt the
Preparation of the proposal, such as the cost of any feasibility study undertaken. Provided

6


that such reimbursement shall be in an amount as may be determined in the IRR of this Act,
excluding those which are borne by the Implementing Agency, such as the cost of right-of-
way acquisition: Provided, further, That such reimbursement shall be paid in full by the
winning bidder as a requirement for the award of the contract, or by the Implementing
Agency in case of two consecutive failures of bidding. The PPP Goveming Board, as
referred to in Section 21 of this Act, may adjust the amount of reimbursement cost as the
need arises. If the Implementing Agency fails to act on an unsolicited proposal within sixty
(60) working days from receipt thereof, the project proposal shall be deemed rejected,
without prejudice to any liability that the erring or negligent officials or employees may incur
under existing laws.

Within ten (10) working days from receipt of the unsolicited proposal, the
Implementing Agency shall inform the PPP Center in writing of such receipt and shall fumish
it with a copy of the proposal. The PPP Center may assist the Implementing Agency in the
evaluation of unsolicited proposals.

Upon submission of the unsolicited proposal, the Private Proponent shall pay an
administrative fee to the Implementing Agency for processing of the same, subject to
existing laws, rules and regulations.

‘Any change in contro! of the Private Proponent or composition of the consortium after
the submission of an unsolicited proposal shall be subject to the approval of the

Implementing Agency.

SEC. 10. Protest Mechanism. — In all stages of the procurement process, the following
protest protocol shall be strictly followed

(a) Decisions of the BAC may be questioned by filing a motion for reconsideration
within fifteen (15) working days from receipt thereof. The BAC shall act on the motion and
render a decision within thirty (30) calendar days, otherwise it shall be deemed denied

(b) The decision of the BAC on the motion for reconsideration in the immediately
preceding paragraph may be further questioned by filing an appeal to the head of the
Implementing Agency concerned, and paying a non-refundable appeal fee in an amount
equivalent to no less than % of 1% of the project cost within fifteen (15) working days from
receipt thereof. The head of the Implementing Agency shall act on the appeal and render a
decision within thirty (30) calendar days, otherwise it shall be deemed denied

If the head of the Implementing Agency in the immediately preceding paragraph is
not a Department Secretary, the decision of the head of the implementing Agency may be
further questioned by filing an appeal to the Secretary of the Department to which the
Implementing Agency is attached within fifteen (15) working days from receipt thereof . The
Department Secretary shall act on the appeal and render a decision within thirty (30)
calendar days, otherwise it shall be deemed denied,

(c) The decision of the Department Secretary in the immediately preceding
paragraph may be questioned by filing an appeal to the Office of the President within fifteen
(15) working days from receipt thereof. If, within sixty (60) calendar days, the Office of the
President does not act on the appeal, the same is deemed denied.

In no case shall an appeal taken from any decision rendered pursuant to this Act stay
or delay the bidding process.

SEC. 11. Project Supervision and Monitoring. — Every PPP Project shall be implemented in
accordance with the designs, plans, specifications, and standards as approved by the
Implementing Agency, and costs as approved by the appropriate Approving Body. The
Implementing Agency shall supervise the project and provide periodic monitoring reports to
the appropriate oversight agencies.

The PPP Governing Board shall set the framework for monitoring of the compliance
of the parties to PPP contracts.

The PPP Center shall be responsible for the coordination and monitoring of projects
implemented under this Act. For this purpose, the Implementing Agency shall submit to the
PPP Center all executed PPP contracts, information on the status of projects implemented

7


by, as well as copies of all unsolicited proposals and related documents received by, the
former, At the end of every calendar year, the PPP Center shall submit a report to the
President of the Philippines and to the Congress of the Philippines on the progress of all
projects implemented under this Act

SEC. 12. Investment incentives. - The PPP Goveming Board shall recommend to the
Board of Investments the variations or specific priority projects/activities and the threshold
amounts to qualify a PPP Project for incentives under applicable laws or policies governing
investments in the country.

SEC. 13. Investment Recovery Scheme. - In undertaking PPP Projects, the Private
Proponent shall be allowed to recover its investments and earn profit through any of the
following schemes or a combination thereof:

(a) Revenue-based - refers to a scheme where the Private Proponent is authorized
to charge and collect, in whole or in part, from the public reasonable user fees or tariffs not
exceeding those agreed in the contract subject to appropriate regulation in accordance with
Section 14 of this Act. Where applicable, the Private Proponent may likewise be repaid in the
form of a share in the revenue of the project; and

(b) Availability-based - refers to a scheme where the Implementing Agency commits
to make predetermined payments, which do not take the form of charges paid by the users
of the works or of the service, but of regular payments by the Implementing Agency based
‘on contractually-defined performance delivery.

‘Other non-monetary payments, such as commercial development rights, or the grant
of a portion or percentage of the reclaimed land, subject to the constitutional requirements
on land ownership, may also be allowed to supplement the foregoing schemes.

In determining the Rate of Retum (ROR), the maximum ROR shall be equal to the
post-tax weighted average cost of capital for the same or comparable businesses computed
using established methodologies such as the capital asset pricing model. Income tax shall
be allowed as a cash outflow for rate-determination purposes. This provision shall not bar
the application of performance based-rate regulation or any other rate methodologies,
should the administrative agency regulating such public service deem it efficient and in the
public interest,

SEC. 14. Regulation. — All PPP Projects shall be subject to regulation by the appropriate
regulatory body or by contract in the absence of the former.

SEC. 15. Variation, Expansion, or Extension of an Existing PPP Project. - A contract
variation, expansion, or extension may be allowed by the Implementing Agency, subject to
the rules and procedures as provided in the IRR of this Act: Provided, That in case of project
expansion or extension, it shall not exceed the cost of the civil works of the original project
and shall be adjacent or contiguous to the same, otherwise, the project shall be considered a
new project and shall be tendered accordingly

For avoidance of doubt, application for variation, expansion, or extension shall be
governed by existing laws, decrees, orders, rules and regulations at the time of application.

SEC. 16. Divestiture / Divestment. — Subject to the approval of the head of the Implementing
Agency, a Private Proponent may divest its ownership, rights, or interest in a PPP Project:
Provided, that the divestiture shall be after a holding or lock-in period as indicated in the PPP
contract: Provided further, that the new Private Proponent has equal or better qualifications
as with the previous Private Proponent

The Implementing Agency may divest its ownership, rights, or interest in a project:
Provided, that projects which involve full or partial divestment or transfer of ownership of
government assets or properties shall be subject to approval of the appropriate Approving
Body and applicable laws, decrees, orders, rules and regulations.


SEC. 17. Contract Termination. — fa PPP contract is revoked, cancelled or terminated prior
tc its completion, either contracting party shall compensate the other party pursuant to terms
as defined in the PPP contract. Depending on the contractual stipulations, the grounds for
contract termination which would warrant the right of compensation may include, but are not
limited to, default, insolvency, unlawful divestment or divestiture, or other unlawful acte by
the Private Proponent or by the government.

SEC. 18. Wind-up and Transfer Measures. — All PPP contracts shall Provide for wind-up and
transfer measures

SEC. 19. Prohibition on the issuance of Temporary Restraining Orders, Preliminary
munctions and Preliminary Mandatory Injunctions. ~ No temporary restraining order
Preliminary injunction, or preliminary mandatory injunction shall be issued by any court
except the Supreme Court, against any Implementing Agency or the PPP Center. its officials
or employees. or any person or entity, whether public or private acting under the
Government direction, to restrain, prohibit, or compel the following acts
2. Bidding, rebidding, or declaration of failure of bidding of PPP Projects,
Qualification or disqualification of bidders:
Awarding of PPP contract:
‘Acceptance of any unsolicited PPP project proposal, even if not acted upon by
the Implementing Agency concerned under Section 9 of this Act:
Deguisition, clearance, development of the right-of-way, site or location of any
PPP Project;
£ Construction, operation and maintenance of any PPP Project:
Commencement, execution, implementation, termination or rescission of any
PPP contract; and
h. Undertaking or authorization of any other lawful activity necessary for such PPP
Project or contract

aos

®

and irreparable injury will arise
in. addition to any civil and criminal liabilities a judge may incur under existing laws.
any judge who shall issue a temporary restraining order, preliminary injunction or preliminary
eandatory injunction in violation of this Section, shall suffer the penalty of suspension of at
least sixty (60) days without pay,
Any temporary restraining order, preliminary injunction, or preliminary mandatory
injunction issued in violation of this section is void and of no force and effect

SEC. 20. PPP Center. - To achieve the goals of this Act, the PPP Center created under
Executive Order No. 8, series of 2010, as amended by Executive Order No. 136, series of
2018, is hereby institutionalized, It is hereby authorized to adopt its current organizational
Stfucture, absorb its existing employees, and upgrade its human resource component ne
may be necessary

Towards a more efficient and effective performance of its mandate, the PPP Center

shall have the following powers and functions:

@ Assist Implementing Agencies in identifying, developing, priontizing, and
maintaining a pipeline of PPP Projects;

b. Provide advisory services, technical assistance, trainings, and capacity
development to Implementing Agencies in all PPP-related matters and act as 5
Procurement agent upon the request of the Implementing Agency.

© Manage and administer the Project Development and Monitoring Facility (PDME)
8 provided in Section 22 of this Act:


d. Recommend plans, policies, and implementation guidelines related to PPP, in
consultation with appropriate oversight committees or agencies, Implementing
Agencies, private sector and other relevant stakeholders;

e. Ensure the sustainability of the PPP program by monitoring, capturing, and
sharing lessons learned from PPP Projects;

f Submit reports to the Office of the President and the Congress of the Philippines
on the implementation of PPP program and projects of the govemment at the
end of each year;

g. Promote and market PPP Programs and projects, in collaboration with other
government investment promotion agencies;

h. Issue advisory opinions relating to PPPs;

Serve as the central repository of all PPP Project documents, including all

executed PPP contracts and any subsequent amendment or supplement thereto,

including settlement agreements, entered into by Implementing Agencies:

j. Actas Secretariat to the PDMF Committee and the PPP Governing Board:

k. Perform such other functions as may be necessary to achieve the objectives and
Purposes of this Act.

The PPP Center shall report directly to the PPP Governing Board and shall be

attached to the Department of Finance (DOF) for purposes of policy and program
coordination,

The PPP Center shall be headed by an Executive Director with the rank equivalent

to an Undersecretary, who shall be appointed by and co-terminus with the President of the
Philippines. The Executive Director shall perform the following functions:

@. Undertake the day-to-day management and supervise the operations of the PPP
Center;

b. Recommend to the PPP Governing Board such policies and measures which are
deemed necessary for the effective exercise and discharge of the powers and
functions of the PPP Center;

©. Sit.as a non-voting member of the PPP Governing Board, and as a member of the
INFRACOM, ICC-NEDA, and other inter-agency bodies in cases where PPPs are
concemed; and

d. Perform such other functions as may be assigned by the PPP Governing Board

SEC. 21. PPP Goveming Board. ~ The PPP Governing Board, created under Executive
Order No. 136, series of 2013, and hereinafter referred to as the Board, is hereby
institutionalized. It shall be the overall policy-making body for all PPP-related matters,
including the PDMF. It shall be responsible for setting the strategic direction of PPP
Programs and projects and in creating an enabling policy and institutional environment for

PPP.

The Board shall be composed of the following:
The Secretary of Finance as Chairperson;

The Secretary of Socio-Economic Planning as Vice-Chairperson:

The Secretary of Budget and Management:

The Secretary of Justice;

The Secretary of Trade and Industry;

The Executive Secretary;

The Secretary of Interior and Local Government;

The Executive Director of the PPP Center, as non-voting member, and

A private sector representative, appointed by and co-terminus with the President
of the Philippines.

The principal members of the Board may designate their respective alternates, who

Fe>ea0cH

shall be the official next-in-rank to them, and whose acts shall be considered the acts of
their principals.

The presence of the Chairperson and four (4) other members of the Board shall

constitute @ quorum and a majority vote of the members present shall be necessary for the

10


adoption of any issuance, order, resolution, decision or other act of the Board in the exercise
Of its functions. The Board shall act as a collegial body. In the conduct of meetings, the
Chairperson shall not vote except to break a tie

The Board shall act on any matter for its consideration not later than thirty (30)
working days from the date of submission thereof.

SEC. 22. Project Development and Monitoring Facility. - (a) The PDMF is hereby
established and shall be used for the procurement of advisory and support services related
10 she Preparation, structuring, probity management, procurement, financial close, project
evaluation, and monitoring of implementation of PPP Projects

(b) The PDMF referred to under EO No. 8, series of 2010, as amended by EO No
136, series of 2013, shall be transferred to the POMF under this Act The PDME may be
funded through and such amount as may be needed and included in the general
appropriations act, official development assistance, or other sources

(c) The POMF shall be managed and administered by the PPP Center as a revolving
fund. In order to sustain the POMF, the PPP Center may collect and receive fees and
the Dep ats expended through PDMF in accordance with the guidelines to be approved by
the PPP Governing Board. Such amount shall be retained and authorized to be Leed by the
PPP Center for the purposes indicated herein

‘A PDMF Committee is hereby created which shall approve applications for PDME
Support submitted by the Implementing Agencies.

The POMF Committee shall be composed of: (1) the Secretary of Socio-Economic
Fanning as chairperson; (2) the Secretary of Finance, (3) the Secretary of Budgel and
Management, and (4) the Executive Director of the PPP Center, as members, The PPP
Center shall serve as the Secretariat for the PDMF Committee

Subject to approval of the PPP Governing Board, the PDMF Committee shall also
formulate, prescribe, and recommend policies, procedures, and guidelines for the use of
POMF and recovery of costs charged to the fund.

SEC. 23. Creation of a Risk Management Fund. - Under an optimal allocation of risks
between the Implementing Agency and the Private Proponent, each risk ina PPP Project
shall be assigned to the party that is best able to control the likelihood of its occurrence,
manage its impact on the project, and absorb the risk at the lowest cost,

Teferred to as the Fund, which shall be financed through dedicated budgetary appropriations
and contributions from the budgets of the Implementing Agencies,

The Risk Management Fund shall provide a reliable pool from which disbursements
spo apremment obligations on liabilities that have materialized can be drawn Any
appropriation and contribution to the Fund, including accrued interests thereon, are
Pere enently appropriated and shail not revert to the general fund if not disbursed during the
fiscal year. The Fund shall be administered by the DOF following fiduciary standards for
fund management. The operations of the Fund can be enhanced through offical
development assistance.

The initial seed fund of Three Billion Pesos (P3,000,000,000.00) shall be constituted
to the Fund from the effectivity of this Act.

Notwithstanding the establishment of this fund, the government may still provide an
un-programmed appropriation for unforeseen risks that the government may incur from PPP
Projects.

To monitor such government obligations on liabilities that have materialized and
other unforeseen risks that may arise from PPP Projects, and to develop the guidelines to
Budock CeognG the inter-agency technical working group created under Development
Budget Coordination Committee (OBCC) Resolution No. 2015-2, is hereby institution sree

"


As part of the budget submission, the DOF shall submit an annual report on the
Status of the fund to Congress of the Philippines. Proceeds of the fund shall be invested in
risk-free highly liquid assets

SEC. 24. Establishment of a PPP Unit. - Each concerned Implementing Agency shall
organize a PPP unit headed by a senior official, who shall be responsible for planning,
overseeing, and monitoring PPP Projects of the Implementing Agency. The PPP unit may
also include as members, among others, technical and legal personnel who are
knowledgeable on the technical and legal aspects, respectively, of the PPP Projects

SEC. 25. Contracts and Public Disclosure. — Copies of all PPP contracts executed under
this Act shall be considered as public documents. The procedure for the disclosure of such
documents shall be consistent with existing policies, laws, decrees, orders. rules and
regulations.

SEC. 26. Miscellaneous Provisions. — (a) Issuance of Legislative or Administrative
Franchise, License or Permit. All PPP Projects requiring legislative franchise under
existing laws shall secure the same prior to project implementation. Upon compliance by the
Private Proponent of the requirements set by the appropriate regulatory body, the Private
Proponent shall be automatically granted or issued by the appropriate regulatory body the
franchise, permits, license, certificates, or other similar authorizations necessary for the
conduct of its business,

(b) Standardization of Real Property Tax Valuation. The DOF shall issue the
guidelines on real property tax valuation of PPP Projects to ensure uniform and consistent
implementation among all LGUs.

() Exemption from Payment of Transfer Taxes. For all PPP Projects, the transfer
of ownership of the PPP Project to the Implementing Agency shall be exempt from capital
gains tax, documentary stamp tax, donor's tax, and all taxes and fees, whether from national
oF local, related to the transfer thereof

(¢) Standardization of Required Endorsements and Permits for PPP Projects.
The PPP Center, in consultation with relevant goverment agencies, bodies, and LGUs,
shall ensure the adoption of standard timelines and requirements for the issuance of
relevant endorsements, approvals, and permits for PPP Projects.

(e) Mandatory Inclusion of Dispute Avoidance and Alternative Dispute
Resolution Mechanisms in PPP Contracts. All PPP contracts shall include provisions on
the use of dispute avoidance and Altemative Dispute Resolution (ADR) mechanisms. The
Contracting parties shall be given complete freedom to choose which ADR mechanisms and
venue shall govern their dispute, as well as the rules or procedures to be followed in
involving the same.

(f) Conflict of Interest. Conflict of interest shall be prohibited at all times in the
interpretation and implementation of this Act. Conflict of interest, which refers to any act or
omission tending to oppose or disrupt the faithful performance of one’s duty or mandate,
shall include personal, pecuniary, and regulatory conflicts of interests: Provided. That with
fegard to regulatory conflicts of interest, no regulatory body shall be allowed to enter into
any PPP contract that they regulate: Provided further, That a regulatory agency that owns
Public infrastructure or right-of-way that is intended for a PPP Project shall assign the same
to the department exercising administrative supervision over it, or to the department to
which itis attached, in order that such department may enter into a PPP contract involving
‘such public infrastructure or right-of-way.

(9) Capital Market Financing. In addition to equity and loans, capital markets may
also be accessed to finance PPP Projects under proper guidance by the appropriate
regulatory bodies,


SEC. 27. Implementing Rules and Regulations. — A committee called the IRR Committee
shall, within sixty (60) working days from the effectivity of this Act, formulate and prescribe,
after’ public hearing, the IRR for the proper implementation of this Act. The IRR shall be
published after the 60-day period and shall take effect fifteen (15) days after its publication.

The IRR Committee shall be composed of the members of the PPP Governing
Board, and other agencies as may be identified by the PPP Governing Board.

From time to time, the Committee may formulate and prescribe, after due public
hearing, amendments or revisions to the IRR, consistent with the provisions of this Act. The
amended or revised IRR shall take effect fifteen (15) days after its publication.

SEC. 28. Administrative, Civil, and Penal Sanction. — Any person, whether private individual
or public officer or employee, who commits any of the prohibited acts hereunder proscribed,
shall be punished by imprisonment from a minimum of three (3) years to a maximum of six
(6) years and one (1) day:

‘a. Downgrading the category of the project cost for purposes of evading the
required approvals under this Act;

b. Representation that the Private Proponent has the necessary capitalization to
commence, complete, and implement the PPP Project when the same is false in
material respects;

c. Falsification or insertion of certain provisions in the execution copy of the
contract which are materially and substantially different from the approved final
draft contract; and

d. Any violation of Section 26 (F) under this Act.

In addition, such act committed by the Private Proponent and its concemed officers
shall cause the rescission of its contract for the said PPP Project without compensation and
shall be perpetually disqualified from participating in any bidding or other contractual
arrangement for any government project. This is without prejudice to any other civil or
administrative liability that erring officials or Private Proponents may incur.

SEC. 29. Accountability in PPP Projects. - The Commission on Audit (COA) shall have
jurisdiction over the activities and transactions of the PPP Project, which shall be limited to
the exercise of its visitorial power as defined in the 2009 Revised Rules of Procedure of the
COA, and any amendments thereto. Such power shall be further jimited to determining
whether the contribution or share of the Implementing Agency in the PPP Project is being
allocated and utilized according to its intended purpose, and if the Implementing Agency is
getting its rightful share from the revenues generated, as may be applicable

SEC. 30. Transitory Clause. — The provisions of this Act shall apply to all PPP Projects
except: (a) all projects wherein a PPP contract between the winning Private Proponent and
the Implementing Agency concerned has been executed prior to effectivity of this Act; and
(b) all projects undertaken through competitive selection wherein the bid/s have already
been opened prior to the effectivity of this Act. For PPP Projects not covered under items (a)
and (b) above, this Act shall govern, provided that this Act shall not, in any manner, operate
to impair vested rights already accruing to a party.

All unexpended funds for the calendar year, properties, equipment, contracts and
records of the PPP Center are hereby retained. The amount necessary to carry out the
organizational changes of the PPP Center provided in this Act shall be determined by the
PPP Governing Board. Appropriations for succeeding years shall be incorporated in its
budget proposals for congressional action

All officials and employees of the PPP Center shall be retained and shall not suffer
any loss of seniority or rank or decrease in emoluments

SEC. 31. Separability Clause. ~ If any provision of this Act is declared unconstitutional or
invalid, other parts or provisions hereof not affected thereby shall continue to be in full force
and effect


SEC. 32. Repealing Clause — The following are hereby repealed:

a.
b.
Cs

d.
e
f

Republic Act No, 6957;
Republic Act No. 7718;

Executive Order No. 8 (s. 2010) as amended by Executive Order No. 136 (s
2013);

Executive Order No. 78 (s. 2012);

Section 8 of Executive Order No. 423 (s. 2005);

2013 Revised Guidelines and Procedures for Entering Into Joint Venture
Agreements Between Government and Private Entities; and

Joint Venture Guidelines issued by LGUs

All other laws, decrees, orders, rules and regulations, and all other related national
and local issuances or parts thereof inconsistent with this Act are hereby repealed or
amended accordingly

SEC. 33. Effectivity. This Act shall take effect fifteen (15) days after its publication in the
Official Gazette or in a newspaper of general circulation.

Approved,