Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

House Bill No.4895

Introduced by Hon. Ronald M. Cosalan

EXPLANATORY NOTE

In 1990, the Philippine Congress enacted Republic Act (RA) No. 6957 which created
a legal and regulatory framework for Build-Operate-and-Transfer (BOT) Projects. The
enactment of RA No, 6957 gave Philippines the distinction of being one of the first
developing countries to enact a BOT Law. Consequently, RA No. 6957 became the first BOT
Law in Asia. RA No. 6957 was further amended by RA No. 7718 in 1993 to provide for
additional variants of BOT contractual arrangements.

‘ThePhilippine Government recognizes the indispensable role of the private sector as a
partner in the pursuit of national growth and development, notably in financing the
construction, operation and maintenance of infrastructure and development projects normally
financed and undertaken by the Government. However, two decades after the enactment of
RA No. 7718, there is a need to further introduce reforms and amend the law in order to
further increase Private Sector Participation (PSP) and to keep the policy environment
attuned to the current business landscape in order to accelerate infrastructure development
and subsequently attain sustainable economic development.

The proposed amendments of the bill are the following:

(a) Amend the title of the Act to expand the definition of Public-Private Partnership
(PPP) to include other variants not technically considered under the RA No. 6957,
as amended by RA No. 7718;

(b) Enrichment of the Definition of Terms to improve/refine the definition of terms
contained therein;

(©) Inclusion of Concession, Joint Venture (JV), and Management Contract as
variants of PPP contractual arrangements in the implementation of PPP projects;

RECEIVED
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(@) Prescribing that projects that will be financed, constructed, operated and
maintained by the private sector through the PPP contractual arrangements should
be included in the list of priority projectsand that the corresponding approving
bodies depending on project costs as provided for in the IRR;

(©) Providing for the process on how to deal with Unsolicited Proposals as well as
payments to project proponents of accepted Unsolicited Proposals by
implementing agencies (IAs) as basis for public bidding or on a negotiated basis
and prohibition against government guarantees;

(f) Deletion of Direct Negotiation of Contracts;

(@ Allowing the Government to take over facilities or existing works in progress
upon, revocation, cancellation or termination of the contract due to default of
project proponent;

(h) Prescribing that the appropriate 1A shall initiate expropriation proceedings before
the proper court in accordance with RA No. 8974 whenever PPP projects
necessitates the same;

(i) Prescribing that Congress shall automatically appropriate funds for PPP projects
in the National Treasury not otherwise appropriated;

(j) Provide for the incentives for PPP projects that have national significance, as
determined by the Investment Coordination Committee (ICC); and

(k) Allow the accession/divestiture of ownership, rights, or interest to a project
provided that the accession/divestiture shall be after a lock-in period.

In view of the foregoing, the immediate passage of this bill is earnestly sought.

5 (2
cle bla M. COSAL,


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Season

House Bill No. 4895

Introduced by Hon. Ronald M. Cosalan

AN ACT AMENDING REPUBLIC ACT NO. 7718,
WHICH AMENDED REPUBLIC ACT NO. 6957 ENTITLED
“AN ACT AUTHORIZING THE FINANCING, CONSTRUCTION,
OPERATION AND MAINTENANCE OF INFRASTRUCTURE
PROJECTS
BY THE PRIVATE SECTOR, AND FOR OTHER PURPOSES”

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

SEC. 1. A new section to be numbered as Section 1 is hereby added to read as
follows:

“SEC, 1.Short Title. - This Act shall be known as the Public-Private
Partnership (PPP) Act of the Philippines.”

SEC, 2. Section 1 of Republic Act (RA) No. 7718 is hereby renumbered as
Section 2 and shall read as follows:

"SEC. 2.Declaration of Policy. - It is the declared policy of the State to
recognize the indispensable role of the private sector as the main engine for
national growth and development and provide the most appropriate incentives to
mobilize private resources for the purpose of financing the construction,
operation and maintenance of infrastructure or development projects normally
financed and undertaken by the Government. Such incentives, aside from
financial incentives as provided by law, shall include providing a climate of
minimum government regulations and procedures and specific government
undertakings in support of the private sector.”

Page | of 17


SEC. 3. Section 2 of RA No. 7718 is hereby renumbered as Section 3 and
amended to read as follows:

"SEC. 3.Definition of Terms. - The following terms used in this Act shall have
the meanings stated below:

A. Contractor - Any entity accredited under the Philippine laws which
may or may not be the project proponent and which shall undertake
the actual construction and/or supply of equipment for the project.

B. Construction - Refers to new construction, rehabilitation,
improvement, expansion, alteration and related works and activities
including the necessary supply of equipment, materials, labor and
services and related items.

C. Facility Operator - A company registered with the Securities and
Exchange Commission (SEC), which may or may not be the project
proponent, and which is responsible for all aspects of operation and
maintenance of the infrastructure or development facility, including
but not limited to the collection of tolls, fees, rentals or charges from
facility users: Provided, That in case the facility requires a public
utility franchise, the facility operator shall be Filipino or at least sixty
per centum (60%) owned by Filipino.

D. Government Guarantee - An agreement whereby the National
Government orthe implementing agency assume responsibility for the
repayment of debt directly incurred by the project proponent in
implementing the project in case of a loan default.

E. Government Undertakings - Refers to any form of contribution and/or
support which the National Government or the implementing agency
may extend to a project proponent.

F. Implementing Agency - Refers to the Department, Bureau, Office,
Instrumentality, Commission, or Authority of the National
Government, including government-owned or controlled corporations
(GOCCs) and other government corporate entities (GCEs), or local
government units (LGUs) which undertakes an infrastructure or
development project in accordance with this Act.

Page 2 of 17


G. Infrastructure or Development Projects - Activities and/or facilities
normally financed and operated by the public sector but which will
now be wholly or partly implemented by the private sector, including
but not limited to, power plants, highways, ports, airports, canals,
dams, hydropower _ projects, — water ~— supply, _irrigation,
telecommunications, railroads and railways, transport systems, land
reclamation projects, industrial estates or townships, housing,
government buildings, tourism projects, markets, slaughterhouses,
warehouses, solid waste management, information technology
networks and database infrastructure, education and health facilities,
sewerage, drainage, dredging, and other infrastructure and
development projects as may be authorized by the appropriate
implementing agency pursuant to this Act. Such projects shall be
undertaken throughPPP arrangements as defined hereunder and such
other variations as may be defined in the implementing rules and
regulations (IRR) of this Act or approved by the President of the
Philippines.

For the construction stage of these infrastructure or development projects,
the project proponent may obtain financing from foreign and/or domestic
sources and/or engage the services of a foreign and/or Filipino contractor:
Provided, further, That in the case of foreign contractors, Filipino labor
shall be employed or hired in the different phases of construction where
Filipino skills are available: Provided, finally, That projects which would
have difficulty in sourcing funds may be financed partly from direct
government appropriations and/or from Official Development Assistance
(ODA) of foreign governments or institutions subject to applicable laws.

H. Project Development and Monitoring Facility (PDMF) - A revolving
fund to be used for the preparation of Pre-Feasibility Study, Feasibility
Study and transaction documents of PPP projects.

I. Project Proponent - The private sector entity which shall have
contractual responsibility for the project and which shall have an
adequate financial base to implement said project consisting of equity
and firm commitments from reputable financial institutions to provide,
upon award, sufficient credit lines to cover the total estimated cost of
the project.

J. Public-Private Partnership (PPP) - A contractual agreement between
the public sector and the private sector wherein the latter shall engage
in the financing, designing, construction, operating, and/or
maintaining infrastructure or development projects, among others, that

Page 3 of 17


are usually provided by the public sector. The private sector earns a
retum on their investments through either user fees or payments from
the Government, or both.

Without limiting the variations as may be defined in the IRR of this
Act, PPP projects may be implemented through any of the following
contractual arrangements:

Build-Operate-and-Transfer (BOT) - A contractual arrangement
whereby the project proponent undertakes the construction,
including financing, of a given infrastructure facility, and the
operation maintenance thereof. The project proponent operates
the facility over a cooperation period which it is allowed to
charge facility users appropriate tolls, fees, rentals, and charges
not exceeding those proposed in its bid or as negotiated and
incorporated in the contract to enable the project proponent to
recover its investment, and operating and maintenance expenses
in the project. The project proponent transfers the facility to the
concerned implementing agency at the end of the cooperation
period which shall not exceed fifty (50) years.

‘The BOT shall include a supply-and-operate situation which is a
contractual arrangement whereby the supplier of equipment and
machinery for a given infrastructure facility, if the interest of
the Government so requires, operates the facility providing in
the process technology transfer and training to Filipino
nationals.

Build-and-Transfer (BT) - A contractual arrangement whereby
the project proponent undertakes the financing and construction
of a given infrastructure or development facility and after its
completion turns it over to the concerned implementing agency,
which shall pay the proponent on an agreed schedule its total
investments expended on the project, plus a rate of return
thereon, This arrangement may be employed in the
construction of any infrastructure or development project,
including critical facilities which, for security or strategic
reasons, must be operated directly by the Government.

Build-Own-and-Operate (BOO) - A contractual arrangement
whereby a project proponent is authorized to finance, construct,
own, operate and maintain an infrastructure or development
facility from which the proponent is allowed to recover its total

Page 4 of 17


vi.

vii.

investment, operating and maintenance costs plus a return
thereon by collecting tolls, fees, rentals or other charges from
facility users: Provided, That all such projects, upon
recommendation of the Investment Coordination Committee
(ICC), shall be approved by the President of the Philippines.

Build-Lease-and-Transfer (BLT) - A contractual arrangement
whereby a project proponent is authorized to finance and
construct an infrastructure or development facility and upon its
completion turns it over to the concerned implementing agency
on a lease arrangement for a cooperation period after which
ownership of the facility is automatically transferred to the
concerned implementing agency.

Build-Transfer-and-Operate (BTO) - A contractual arrangement
whereby the implementing agency contracts out the
construction of an infrastructure facility to the project
proponent. The project proponent constructs the infrastructure
facility on a tum-key basis, assuming cost overrun, delay and
specified performance risks.

Once the infrastructure facility is commissioned satisfactorily,
title is transferred to the implementing agency. The project
proponent, however, operates the facility on behalf of the
implementing agency under an agreement.

Concession - A contractual arrangement whereby the financing
and construction of a new infrastructure or development facility
and/or rehabilitation of an existing one is undertaken by the
project proponent, and includes the operation, maintenance,
management and improvement, if any, of the facility for a
cooperation period during which the project proponent
generally provides service directly to facility users and is
allowed to charge and collect the approved tolls, fees, tariffs,
rentals or charges. In this arrangement, the implementing
agency receives a concession or franchise fee during the
cooperation period.

Contract-Add-and-Operate (CAO) - A contractual arrangement
whereby the project proponent adds to an existing infrastructure
facility which it is renting from the government. It operates the
expanded project over an agreed cooperation period. There

Page 5 of 17


viii.

may, or may not be, a transfer arrangement in regard to the
facility.

Develop-Operate-and-Transfer. (DOT) - A contractual
arrangement whereby favorable conditions external to a new
infrastructure project which is to be built by a private project
proponent are integrated into the arrangement by giving that
entity the right to develop adjoining property, and thus, enjoy
some of the benefits the investment creates such as higher
property or rent values.

Joint Venture (JV) - an arrangement whereby a private sector
entity or a group of private sector entities on one hand, and a
GOCC, GCE, Government Instrumentality with Corporate
Powers (GICP), Government Financial Institution (GFT), State
University and College (SUC) or groups of GOCCs, GCEs,
GICPs, GFIs or SUCs on the other hand, contribute money /
capital, services, assets (including equipment, land, intellectual
property or anything of value), or a combination of any or all of
the foregoing to undertake an 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 Government. 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.

Management Contract - A contractual arrangement involving
the provision by the project proponent of operation and
maintenance, and related services to an existing infrastructure or
development facility owned by the implementing agency. The
proponent shall undertake the acquisition or provision and
upgrading of equipment, systems and other items related to
operation and maintenance. The project proponent may collect
tolls/fees/rentals and charges which shall be turned over to the
implementing agency and shall be compensated in the form of a
performance-based management or service fee during the
cooperation period.

Page 6 of 17


xi, Rehabilitate-Operate-and-Transfer_ (ROT) - A contractual
arrangement whereby an existing facility is turned over to the
private sector to refurbish, improve, operate and maintain for a
cooperation period,at the expiry of which the legal title to the
facility is turned over to the government. The term is also used
to describe the purchase of an existing facility from abroad,
importing, refurbishing, erecting and consuming it within the
host country.

xii. Rehabilitate-Own-and-Operate (ROO) ~- A contractual
arrangement whereby an existing facility is turned over to the
private sector to refurbish, improve, and operate with no time
limitation imposed on ownership. As long as the operator is not
in violation of its franchise, it can continue to operate the
facility in perpetuity.

K. Public Utility - A business or service engaged in regularly supplying
the public with some commodity or service of public consequence as
defined under Commonwealth Act (CA) No. 146 (Public Service Act),
as amended.

L. Rate of Return of the Project - The rate of return that reflects the
prevailing cost of capital of the project in the domestic and
international markets: Provided, That in case of negotiated contracts,
such rate of retum shall be determined by the ICC prior to the
negotiation and/or call for proposals: Provided, further, That
forprojects which are natural monopolies, the rate of returnshall be
determined by existing laws, which in no case shall exceed twelve per
centum (12%).”

SEC. 4.Section 3 of RA No. 7718 is hereby renumbered as Section 4 and
amended to read as follows:

“SEC. 4.Private Initiative in Infrastructure. — Any Department, Bureau,
Office, Instrumentality, Commission or Authority of the National Government,
including GOCCs, or LGUs authorized by law or their respective charters to
contract for or undertake infrastructure or development projects, may enter into
PPPs with a duly pre-qualified project proponent in accordance with this Act.
When entering into PPPs, the public sector is enjoined to solicit the expertise of
individuals, groups, or corporations in the private sector who have extensive
experience in undertaking infrastructure or development projects.”

Page 7 of 17


SEC. 5.Section 4 of RA No. 7718 is hereby renumbered as Section 5 and
amended to read as follows:

“SEC. 5.Priority Projects and Approving Bodies. - All concerned government
agencies or LGUs are tasked to prepare their infrastructure or development
programsthat may be financed, constructed, operated and maintained by the
private sectorthrough the PPP arrangements authorized under this Act.

Thelist of priority projects shall be consistent with the Philippine Development
Plan (PDP), and Provincial Development and Physical Framework Plan
(PDPFP), and shall be submitted to the appropriate approving body as provided
in the IRR of this Act.

‘The Public Investment Program (PIP) and the Comprehensive and Integrated
Infrastructure Program (CIIP) shall be deemed as the list of national priority
projects, and the Provincial Development Investment Programs (PDIPs)/Local
Development Investment Programs (LDIPs) shall be deemed as the list of local
priority projects. The PIP, CIIP and PDIP/LDIP shall be updated periodically.

Theupdated list of priority projects, local and national, shall be submitted to
National Economic and Development Authority (NEDA) for information.

The list of all such projects must be part of the development programs of the
implementing agencies concerned. Project proposals under this list shall be
submitted to the appropriate approving authority, depending on project costs as
provided in the IRR of this Act.

In recognition of the limited funding for the conduct of a feasibility study (F/S)
for these priority projects, a private sector may undertake the F/S of priority
PPP projects, the cost of which may later on be reimbursed once such project is
approved and has a winning bidder.”

SEC. 6.Section 5 of RA No. 7718 is herebyrenumbered as Section 6 and
amended to read as follows:

. 6.Unsolicited Proposals. - Unsolicited proposals for projects may be
submitted. The implementing agency may either:

A. Use the unsolicited proposal as the basis for public bidding as
provided in Section 8 of this Act. Ifa final award to a winning bidder
is made on the basis of the unsolicited proposal within one (1) year

Page 8 of 17


from the submission thereof, as determined by NEDA, the original
proponent of the unsolicited proposal may be reimbursed for costs
incurred in its preparation, including, but not limited to, the cost of
any Feasibility Studies undertaken: Provided, That such
reimbursement: (1) shall be in the amount to be determined by NEDA,
but not exceeding three per centum (3%) of the total project cost,
excluding any project costs which will be borne by the Government
such as, but not limited to, the cost of right-of-way acquisitions; and
(2) shalll be paid in full by the winning bidder as a requirement for the
award of the project;

B. Accept the unsolicited proposal on a negotiated basis: provided, that,
the following conditions are met: (1) such projects involve a new
concept in technology and/or are not part of the list of priority
projects; (2) no direct government or security from the Government is
required; and (3) the implementing agency has invited by publication
for three (3) consecutive weeks, in a newspaper of general circulation,
comparative or competitive proposals and no other, proposal is
received for a period to be determined by NEDA, but not to exceed
one (1) year: Provided, That in the submission of financial proposals,
the original proponent of the unsolicited proposal may opt to submit a
revised/modified financial proposal to the implementingagency on or
before the date of opening of financial proposals such that if the
financial proposal of the challenger is superior or most advantageous
to the government than the financial proposal of the original
proponent, the contract shall be awarded to the challenger offering the
most advantageous financial proposal: Provided, further, that in case
the challenger failed to outbid or have only tied / matched the financial
proposal of the original proponent, the contract shall be awarded to the
original proponent; or

C. Reject the proposal.

Notwithstanding any agreement to the contrary, the project proponent of an
unsolicited proposal accepted by the Government on a negotiated basis in
accordance with section 6 (B) shall not, at anytime, be entitled to any form of
payment or security from the Government, including, but not limited to, cost
sharing, credit enhancement, direct or indirect government guarantee, subsidy or
equity.

Page 9 of 17


SEC. 7.A new Section 7 is being introduced to read as follows:

“SEC. 7.Projects of National Significance. — Uponcertification and
recommendation of NEDA, the President may classify certain projects in the
priority list pursuant to Section 5 of this Actas projects of national significance,
which shall be entitled to the following incentives:

A. All real properties which are actually and directly used for the project
shall be exempted from any and all real property taxes levied under
RA No. 7160;

B. Alll local taxes imposed by a province, city or municipality in Metro
Manila pursuant to RA No. 7160 on the project proponent shall not
exceed fifty per centum (50%) of one per centum (1%) of gross sales
or receipts of the preceding calendar year; and

C. The necessary business permits, including any renewals thereof, shall
be deemed to have been automatically granted or issued to the
winning project proponent upon tender of the required taxes and fees
to the appropriate LGU.

For purposes of this Section, in order for a project to qualify as a project of
national significance, thefollowing conditions must be satisfied:

1. The total cost of the project is at least Five Billion Pesos (PhP
5,000,000,000.00); and

2, The project will directly benefit the province it is located at and at
least two (2) more provinces.”

SEC. 8.Section 6 of RA No. 7718 is hereby renumbered as Section 8 and
amended to read as follows:

“SEC. 8.Public Bidding of Projects. - Upon approval of the projects mentioned
in Section 5 of this Act, the Head of the concerned implementing agency shall
forthwith cause to be published, once every week for three (3) consecutive
weeks, in at least two (2) newspapers of general circulation and in at least one
(1) local newspaper which is circulated in the region, province, city or
municipality in which the project is to be constructed, a notice inviting all
prospective infrastructure or development project proponents to participate in a
competitive public bidding for the projects so approved.

Page 10 of 17


The contract shall be awarded to the bidder who, having satisfied the minimum
financial, technical, organizational and legal standards required by this Act, has
submitted the most favorable terms for the project, based on the present value of
its proposed tolls, fees, rentals and charges, among others, over a cooperation
period for the facility to be constructed, rehabilitated, operated and maintained
according to the prescribed minimum design and performance standards, plans
and specifications. For this purpose, the winning project proponent shall be
automatically granted by the appropriate agency the franchise to operate and
maintain the facility, including the collection of tolls, fees, rentals, and charges
as indicated in the contract. The winning bidder shall likewise be issued, upon
compliance with the appropriate requirements, such as permits, license,
certificates, or other similar authorizations necessary for the conduct of its
business by the concerned issuing governmental entity.

In the case of BT or BLT arrangement, the contract shall be awarded to the
lowest complying bidder based on the present value of its proposed schedule of
amortization payments for the facility to be constructed according to the
prescribed minimum design and performance standards, plans, and
specifications: Provided, however, That a Filipino contractor who submits an
equally advantageous bid with exactly the same price and technical
specifications as those of a foreign contractor shall be given preference.

Tn all cases, a consortium that participates in a bid must present proof that the
members of the consortium have bound themselves jointly and severally to
assume responsibility for any project. The withdrawal of any member of the
consortium prior to the implementation of the project could be a ground for the
cancellation of the contract.

The public bidding must be conducted under a two-envelope/two-stage system:
the first envelope to contain the technical proposal and the second envelope to
contain the financial proposal. The procedures for this system shall be outlined
in the IRR of this Act.

A copy of each contract involving a project entered into under this Act shall
forthwith be submitted to Congress for its information.”

SEC. 9. Section 8 of RA No. 7718 is hereby renumbered as Section 9 and
amended to read as follows:

“SEC. 9.Repayment Scheme. - For the financing, construction, operation and
maintenance of any infrastructure or development project undertaken through
the PPP arrangements pursuant to the provisions of this Act, the project

Page 11 of 17


proponent shall be repaid by authorizing it to charge and collect reasonable
tolls, fees, and rentals for the use of the project facility not exceeding those
incorporated in the contract and, where applicable, the proponent may likewise
be repaid in the form of a share in the revenue of the project or other non-
monetary payments, such as, but not limited to, the grant of a portion or
percentage of the reclaimed land, subject to the constitutional requirements with
respect to the ownership of land: Provided, That for projects which have been
granted a natural monopoly,the appropriate government regulatory bodies, shall
approve the tolls, fees, rentals, and charges based on arate of return which in no
case shall exceed twelve per centum (12%): Provided, further, That the
imposition and collection of tolls, fees, rentals, and charges shall be for a
cooperation period as proposed in the bid and incorporated in the contract but in
no case shall this term exceed fifty (50) years: Provided, furthermore, That the
tolls, fees, rentals, and charges may be subject to adjustment during the
cooperation period, based on a predetermined formula using official price
indices and included in the instructions to bidders and in the contract: Provided,
also, That all tolls, fees, rentals, and charges and adjustments thereof shall take
into account the reasonableness of said rates to the end-users of private sector-
built infrastructure: Provided, finally, That during the cooperation period, the
project proponent shall undertake the necessary maintenance and repair of the
facility in accordance with standards prescribed in the bidding documents and in
the contract. In the case of a BT arrangement, the repayment scheme is to be
effected through amortization payments by the concemed implementing agency
to the project proponent according to the scheme proposed in the bid and
incorporated in the contract."

SEC. 10. Section 9 of RA No. 7718 is hereby renumbered as Section 10 and
amended to read as follows:

“SEC. 10.Contract Termination. - The contract shall provide a compensation
mechanism in the event that a project is revoked, cancelled or terminated by the
Government through no fault of the project proponent or by mutual agreement.
In the absence of such provision, the compensation shall be based on theactual
expenses incurred in the project plus arate of return thereon,

In the event the Government defaults on certain major obligations in the
contract and such failure is not remediable or if remediable shall remain
unremedied within a reasonable length of time as defined in the contract, the
project proponent may, by prior notice to the concerned implementing agency
specifying the turn-over date, terminate the contract. The project proponent
shall be entitled to reasonable compensation from the Government as defined in
the contract.

Page 12 0f 17,


For contracts which involve transfer of ownership of a facility to the
implementing agency which are terminated prior to their transfer to the
Government, the Government shall have the right to take over the facility or
existing works in progress upon revocation, cancellation or termination of the
contract due to default of project proponent. In the event of take-over, the
Government may pay the project proponent reasonable compensation for the
value of the facility as may be provided in the contract.

The Government's right to take-over shall not impair the rights of third persons
having interest in the financing of the project, such as lenders and creditors.”

SEC. 11.Section 10 of RA No. 7718 is hereby renumbered as Section 11 and
amended to read as follows:

“SEC. 11.Regulatory Boards.The appropriate government regulatory bodies
shall approve the tolls, fees, rentals, and charges.

In the absence of an appropriate regulatory body, the ICC approved parameters
and terms shall be adopted.”

SEC. 12.A new Section 12 is being introduced to read as follows:

“SEC. 12.Accession / Divestiture. - Subject to the approval of the approving
body upon due diligence and recommendation by the Head of the implementing
agency, a project proponent may divest or accede its ownership, rights, or
interest to a project provided that, the divestiture or accession shall be after a
holding or lock-in period which shall be determined by the implementing
agency or as indicated in the contract, and provided that, the new project
proponent has equal or better qualifications as with the previous project
proponent.

A divestment/accession made in violation of this section shall be a ground for
disqualification of the proponent or cancellation of the contract, as the case may
be, and forfeiture of the proponent's bid or performance security.

The implementing agency shall inform in writing the NEDAof the change in
ownership for monitoring purposes.”

Page 13 of 17


SEC. 13.Section 12 of RA No. 7718 is hereby renumbered as Section 13 and
amended to read as follows:

“SEC. 13.dnvestment Incentives. - Among other incentives, PPP projects shall
be entitled to incentives as provided by the Omnibus Investment Code, upon.
registration with the Board of Investments."

SEC. 14, A new Section 14 is being introduced to read as follows:

“SEC. 14.Public-Private Partnership (PPP) Guarantee Fund. - A PPP
Guaranty Fund is hereby created to defray the cost of compensation to project
proponents which enter into PPP contracts. The Congress shall automatically
appropriate the necessary amount out of any funds in the National Treasury not
otherwise appropriated, to cover:

A. Payment of costs relating to the implementation of multi-year projects
which are issued multi-year obligational authorities by the Department
of Budget Management (DBM) in accordance with applicable
guidelines and procedures; and

B. In the event that the implementing agency, through no fault of its own,
fails to comply, or is prevented from complying, with its contractual
obligations created pursuant to RA No. 7718, the cost of
compensation to the project proponent, as prescribed in the contract,
shall be automatically appropriated: Provided, That there are no
existing appropriations to cover said liabilities: Provided further, That
the cost of paying project proponent’s financial obligations, which
Government has guaranteed, may not be automatically appropriated.

The initial funding in the amount of Five Billion Pesos (PhP 5,000,000,000.00)
for the creation of the Fund shall be charged against the overall savings of the
National Government. Thereafter, the PPP Guaranty Fund may be replenished
or increased by such amount as may be deemed necessary in subsequent
General Appropriations Act (GAA).”

SEC. 15.A new Section 15 is being introduced to read as follows:

“SEC. 15.Acquisition of Right-of-Way, Site or Location. - Whenever it is
necessary for PPP projects to acquire real property for the right-of-way, site or
location through expropriation, the appropriate implementing agency shall
initiate the expropriation proceedings before the proper court in accordance with

Page 14 of 17,


RA No. 8974; Provided, That for issuance of a Writ of Possession, the
implementing agency shall pay the property owner the amount equivalent to at
least the sum of: (1) two hundred per centum (200%) of the value of the
property based on the current relevant zonal valuation of the Bureau of Internal
Revenue (BIR); and (2) the value of the improvements and/or structures.

Upon compliance with the applicable guidelines for expropriation proceedings,
the Court shall issue within ten (10) working days the order to take possession
of the property and start the implementation of the project.”

SEC. 16. A new Section 16 is being introduced to read as follows:

“SEC. 16.Prohibition on the Issuance of Temporary Restraining Orders
(TROs), Preliminary Injunctions and Preliminary Mandatory Injunctions. -
No Court, except the Supreme Court, shall issue any TRO, Preliminary
Injunction, or Preliminary Mandatory Injunctionagainst the Government, or any
of its subdivisions, officials or any person or entity, whether public or private,
acting under the Government’s direction, to restrain, prohibit or compel the
following acts under the immediately preceding section:

A. Acquisition, clearance and development of the right-of-way, site or
location;

B, Bidding or Awarding;

C. Commencement, prosecution, execution, implementation and
operation;

D. Termination or rescission of the contract; and

E. The undertaking or authorization of any other lawful activity
necessary or in connection with the execution or implementation of
the project.

This prohibition shall apply in all cases, disputes or controversies instituted by a
private party, including, but not limited to, cases filed by bidders or those
claiming to have rights through such bidders. This prohibition shall not apply
when the matter is of extreme urgency involving a constitutional issue, such that
unless a temporary restraining order is issued, grave injustice and irreparable
injury will arise.

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Any TRO, Preliminary Injunction, or Preliminary Mandatory Injunctionissued
in violation of this section is void and of no force and effect.”

SEC. 17.Section 13 of RA No. 7718 is hereby renumbered as Section 17 and
amended to read as follows:

“SEC. 17.Jmplementing Rules and Regulations (IRR). - A committee called
the IRR Committee composed of one (1) representative from the Department of
Justice (DOJ), the Department of Finance (DOF), the Department ofBudget and
Management (DBM), the Office of the Executive Secretary (OES) and the
National Economic and Development Authority (NEDA)shall, within sixty (60)
days from the effectivity of this Act, formulate and prescribe, after public
hearing and publication as required by law, the IRR in order to carry out the
provisions of this Act in the most expeditious manner.

The IRR shall cover, among others, the project approval process, the bidding
procedure, list of financial incentives and arrangements that the Government
may provide for the project.

‘The Chairman of the IRR Committee shall be the Secretary of Socio-Economic
Planning.

From time to time, the IRR Committee, in consultation with the NEDA Board
Committee on Infrastructure (INFRACOM), may conduct, formulate and
prescribe, after due public hearing and publication, amendments to thelRR,
consistent with the provisions of this Act.”

SEC. 18.A new Section 1 8is being introduced to read as follows:

“SEC. 18.Project Development and Monitoring Facility (PDMF). — Upon the
effectivity of this Act, the PDMF, created through EO No. 8, shall be
administered and managedby the NEDA Board INFRACOM.

The PDMF shall be used for the procurement of consultancy contracts for PPP-
related activities including the conduct of Feasibility Studies for solicited
infrastructure projects funded by the National Government.

‘The PDME shall be funded through GAA, ODA, grants or other financing

resources; Providedthat the procurement of consultancy contracts for PPP
projects will be governed by RA No. 9184 and itsIRR.”

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SEC. 19.Section 16 of RA No. 7718 is hereby renumbered as Section 19 and
amended to read as follows:

“SEC. 19.Repealing Clause. - All laws or parts of any law, including RA No.

7718, rules and regulations, or parts thereof inconsistent with the provisions of
this Act are hereby repealed or modified accordingly.”

SEC. 20, Section 17 of RA No. 7718 is hereby renumbered as Section 20 and
shall read as follows:

“SEC. 20.Separability Clause. - If any provision of this Act is held invalid, the
other provisions not affected thereby shall continue in operation.”

SEC. 21. Section 18 of RA No. 7718 is hereby renumbered as Section 21 and
amended to read as follows:

“SEC. 21.Effectivity Clause. - This Act shall take effect fifteen (15) days after

its publication in the Official Gazette or in at least two (2) newspapers of
general circulation.”

Approved.

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