HOUSE OF KREDI
RECEIVED
> i 2013

Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Seventeenth Congress

First Regular Session
Ri TRATION UNIT

7783 BILLS AND INDEX SERVICE

HOUSE BILL NO.

Introduced by Representative JOEY SARTE SALCEDA

AN ACT CREATING THE PUBLIC-PRIVATE PARTNERSHIP AUTHORITY,
FURTHER AMENDING REPUBLIC ACT NO. 6957, AS AMENDED BY
REPUBLIC ACT NO. 7718, ENTITLED “AN ACT AUTHORIZING THE

FINANCING, CONSTRUCTION, OPERATION AND MAINTENANCE OF
INFRASTRUCTURE PROJECTS BY THE PRIVATE SECTOR
AND FOR OTHER PURPOSES”
FOR THIS PURPOSE

EXPLANATORY NOTE

RA No. 6957, as amended: An Offshoot of the Important Role of the Private Sector in
Nation Building. The private sector is an indispensable component in sustainable
development. Recognizing the contribution of the private sector to nation building, Section
20, Article II of the 1987 Philippine Constitution explicitly provides that “The State
recognizes the indispensable role of the private sector, encourages private enterprise, and
provides incentives to needed investments.”

Pursuant to this declared State policy, two primary laws were enacted by Congress namely’
Republic Act No. 9184 or the Government Procurement Reform Act (RA 9184) for the
procurement of goods, supplies and services, and Republic Act No. 6957 as amended by
Republic Act No. 7718 or the Philippine Build-Operate-and-Transfer (BOT) Law allowing
for a more focused framework in PPP infrastructure development. R.A. No. 9184 was
enacted to, among others, promote transparency in the procurement process and in the
implementation of procurement contracts. Republic Act No. 6957 allows for LGUs to enter
into contractual arrangements with the private sector to implement infrastructure projects thru
a Built-Operate-And-Transfer and Build-Transfer-and-Operate. Eventually, R.A. No. 6957
was amended by Republic Act No. 7718 or the Philippine Build-Operate-and-Transfer (BOT)
Law broadened the list of PPP government implementing government entities to include
government owned and controlled corporations (GOCCs), government financing institutions
(GFls) and state universities and colleges (SUCs); putting up incentives for attracting private
sector investments to venture into PPP projects; and allowing negotiated unsolicited


proposals provided that these comply with conditions outlined in the Law. More importantly,
RA 7718 allowed for other contractual arrangements or schemes to implement PPP projects.

Under existing law, the overall policy making body for all PPP-related matters is lodged with
the PPP Governing Board (PPPGB), composed of the Secretary of Socio-Economic Planning
as chairperson, the Secretary of Finance, as vice-chairperson and as members, the Secretary
of Budget and Management, Secretary of Justice, Secretary of Trade and Industry, Executive
Secretary and the Private Sector Co-Chairman of the National Competitiveness Council

Salient Features of the Proposed Bill. This proposed bill further enhances and reinforces
the provisions of R.A. 6957, as amended to engender transparency in transactions, efficiency
in the performance of project obligations, and putting additional thrust and impetus to the
PPP program through a more robust cooperation between the public and private sectors. With
these in mind, the bill proposes the following additional amendments to RA 6957, as
amended, to wit

Section 1, as proposed, emphasizes the role of the private sector as “prime mover” for
national growth and development. It expresses in a categorical and explicit terms the
bounden obligation of the government to provide support to allow the private sector to
achieve reasonable rate of return on investments (ROI) in financing the construction etc.
through a competitive and transparent selection process. It also makes it the declared policy
of the state to abide by the principle of transparency with the end in view of protecting the
interest of the public by ensuring fair and reasonabie pricing and timely delivery of quality
services.

Amendments to Section 2. (Definition of Terms) under the proposed bill are hereunder
enumerated, to wit:

a) Inclusion of “bulk grains handling facility or logistic support system” among the list of
Public-Private Infrastructure or Development Projects or “projects” enumerated in R.A. 6957
as amended

b) Inclusion of a definition of “PPP Infrastructure AND Development Plan (PLAN)”.

c) Under RA69S7 as amended, the definition of “Facility operator” spells out in specific terms
that Filipino ownership of the public utility franchise should be at least 60% which is
reflective of the wording of Sec. 11 Art. XII of the 1987 Constitution, However, under the
proposed bill “Facility operator” as defined makes reference not only to the nationality and
equity requirements as stated in the Constitution but also to include requirements under all
applicable laws.

4) Allows for a more specific and expanded definition of “Government guarantee” to include
“full or partial responsibility” by the government.

©) The definition of “Return on Investment” as proposed specifies the factors to be considered in
determining the ROL. The definition of ROT in RA69S7 is more restrictive and does not take
into account the aforementioned factors.

f) More detailed definition of the “Project Cost.”

As proposed, Section 3. Private Initiative in Infrastructure includes a proviso that specifically
requires the submission to the BOT Authority for approval of all national and local
government projects; with the exception of projects that require national government
guarantee or undertaking, in which case the project shall be recommended by the BOT
Authority Board to the president for approval.


A new section, to be numbered as Section 4, defines contractual arrangements.

‘The previous Section 4, renumbered as Section 5 in the proposed bill, makes it a requirement
for government agencies and LGUs to submit to the PPP authority list of projects for possible
listing in the plan and harmonized investment promotion.

Section 4-A of Republic Act No. 6957, as amended, renumbered as Section 5-A in the
proposed bill, makes it a requirement for Unsolicited Proposals accepted by any appropriate
government agencies / LGUs to be submitted to the PPP Authority for evaluation and
approval, subject to certain conditions.

Section 5, to be renumbered as Section 6 in the proposed bill, requires that projects under the
law shall be done through competitive and transparent public bidding

A new section (Section 8) is introduced establishing a Project Development Facility (PDF) to
serve as a revolving fund to, among others, finance the proper identification, study,
validation, development, and preparation for public bidding

Section 9, as proposed, spells out the consequences of contract terminations as a result of the
fault or non-fault of the project proponent. Notice that RA No. 6957, as amended, envisages
two situations for contract termination, namely:

1) it is the government that initiates contract termination without the fault of the
proponent, or
2) the government defaults on certain major obligations,

The proposed provision however shifis the emphasis and perspective to the project
proponent’s fault or non-fault which, for all intents and purposes, will have substantial
bearing on the burden of proof.

Section 10 of the RA 6957, as amended, renumbered as Section 12 in the proposed bill,
removes the one billion peso (P1,000,000,000) threshold for projects entitled to incentives.
As proposed, projects, except unsolicited projects, are entitled to incentives regardless of
cost.

A new section, to be numbered as Section 13 in the proposed bill, makes it the obligation of
the Republic of the Philippines or LGUs to uphold the validity and enforceability of a duly
executed contract, unless proven otherwise,

A new section (Section 15), which we will consider as the most substantive, allows for the
creation and establishment of the Public-Private Partnership Authority to serve as the central
body of the government for BOT, Private Sector Participation (PSP) or Public-Private
Partnership projects (PPP), attached to the Department of Trade and Industry (DTI). This is a
significant departure from the organizational structure under RA 6957 which vests upon the
PPP Governing Board the power to set the policy direction of the PPP. As envisioned under
the proposed bill however, the PPP Authority institutionalizes the policy-making body of the
government for BOT and other contractual arrangements. This will make for a more
consistent policy direction for the PPP programs. Subsequent provisions as proposed concern
the composition of the Authority including its powers and functions, budget, and appointment


of its personnel, To give more teeth to the proposed bill, a penalty clause is also introduced,
defining the penalties and sanctions for the violation of any provision of the law and its
implementing rules and regulations

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



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Seventeenth Congress
First Regular Session

HOUSE BILL NO. 7 73

Introduced by Representative JOEY SARTE SALCEDA.

AN ACT CREATING THE PUBLIC-PRIVATE PARTNERSHIP AUTHORITY,
FURTHER AMENDING REPUBLIC ACT NO. 6957, AS AMENDED BY
REPUBLIC ACT NO. 7718, ENTITLED “AN ACT AUTHORIZING THE

FINANCING, CONSTRUCTION, OPERATION AND MAINTENANCE OF

INFRASTRUCTURE PROJECTS BY THE PRIVATE SECTOR

AND FOR OTHER PURPOSES”
FOR THIS PURPOSE

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

assembled:

SECTION 1. Section 1 of Republic Act. No. 6957, as amended, is hereby further
amended to read as follows:

“Sec. 1. Declaration of Policies. — It is the declared policy of the State
to recognize the indispensable role of the private sector as the PRIME
MOVER for national growth and development and TO provide
GOVERNMENT SUPPORT AND incentives THAT SHALL ALLOW
‘THE PRIVATE SECTOR TO ACHIEVE A REASONABLE RATE OF
RETURN ON ITS INVESTMENTS IN financing the construction,
operation and/or maintenance of facilities, infrastructure or development
projects normally financed and undertaken by the Government
THROUGH COMPETITIVE AND TRANSPARENT SELECTION
PROCESS.

IT IS ALSO THE POLICY OF THE STATE TO PROTECT THE
PUBLIC INTEREST BY ENSURING FAIR AND REASONABLE
PRICING AND TIMELY DELIVERY OF QUALITY SERVICES
UNDER THE GUIDING PRINCIPLE OF FULL PUBLIC
DISCLOSURE OF ALL TRANSACTIONS, AND EQUITABLE
RISKS ALLOCATION INHERENT IN PROJECTS UNDERTAKEN
THROUGH CONTRACTUAL ARRANGEMENTS AUTHORIZED
IN THIS ACT.


THE GRANT BY THE GOVERNMENT OF ANY FORM OF
SUPPORT TO THE PRIVATE SECTOR SHALL BE JUDICIOUSLY
AND TRANSPARENTLY ARRANGED CONSISTENT WITH THE
APPROPRIATE ECONOMIC AND TECHNICAL REGULATORY
FRAMEWORKS TO ENSURE FAITHFUL PERFORMANCE AND
DELIVERY OF CONTRACTUAL OBLIGATIONS.”

SECTION 2. Section 2 of the same Act, as amended, is hereby further amended to read
as follows:

“Sec. 2. Definition of Terms. — The following terms used in this Act
shall have the meanings stated below:

(a) Public-Private Infrastructure or Development Projects (hereafter
referred to as ‘PROJECT(S)’) — The general description of infrastructure
or development projects 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, BULK GRAINS HANDLING FACILITY OR
LOGISTIC SUPPORT SYSTEM 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 government agency or LOCAL
GOVERNMENT UNIT (LGU) pursuant to this Act. Such projects shall
be undertaken through contractual arrangements UNDER: THIS ACT.

For the construction stage of these infrastructure projects, the project
proponents may obtain financing from foreign and/or domestic sources
and/or engage the services of a foreign and/or Filipino contractor:
Provided, That in case an infrastructure or a development facility’s
operation requires a public utility franchise, the facility operator must be
Filipino CITIZENS OR CORPORATION OR ASSOCIATION
ORGANIZED UNDER PHILIPPINE LAWS AT LEAST SIXTY
PERCENT (60%) OF WHOSE CAPITAL IS OWNED BY FILIPINOS;
Provided, further, That in the case of foreign contractors, Filipino labor,
WHENEVER AVAILABLE, shall be employed or hired in the different
phases of the construction: Provided, FINALLY, That 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 not exceeding
fifty percent (50%) of the project cost, and the balance to be provided
by the project proponent,

(b) PPP INFRASTRUCTURE AND DEVELOPMENT PLAN (PLAN)
- REFERS TO THE LIST OF PRIVATE SECTOR


INFRASTRUCTURE OR DEVELOPMENT PROJECTS
FORMULATED BY THE BOT AUTHORITY EVERY FIVE YEARS.

(c) Build-operate-and-transfer — A contractual arrangement...

(d) Build-and-transfer — A contractual arrangement..

(e) Build-own-and-operate — A contractual arrangement.

(f) Build-lease-and-transfer — A contractual arrangement.

(g) Build-transfer-and-operate — A contractual arrangement.

(h) Contract-add-and-operate — A contractual arrangement.

(i) Develop-operate-and-transfer — A contractual arrangement.
(j) Rehabilitate-operate-and-transfer — A contractual arrangement...
(k) Rehabilitate-own-and-operate — A contractual arrangement...
(1) Project proponent — The private sector entity.

(m) Contractor — Any entity accredited

(n) Facility operator — A company registered with the Securities and
Exchange Commission, 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 COMPLY WITH THE NATIONALITY AND
OWNERSHIP REQUIREMENTS UNDER THE CONSTITUTION
AND OTHER APPLICABLE LAWS.

(0) GOVERNMENT GUARANTEE - an agreement whereby the
government or any of its agencies or local government units assume
FULL OR PARTIAL responsibility, THROUGH ANY OF THE
FOLLOWING: (1) PROVISION OF EQUITY, SUBSIDIES,
INCENTIVES, OR CREDIT ENHANCEMENTS, OF WHATEVER
FORM OR NATURE; (2) GUARANTEED PROJECTED
REVENUES/FEES/CHARGES, or (3) for the repayment of debt
incurred by the project proponent in implementing the project, in case
of a loan default.

(p) REASONABLE RATE OF RETURN — REFERS TO THE RATE
OF RETURN THAT A PROJECT PROPONENT SHALL BE
ENTITLED TO, TAKING INTO ACCOUNT, AMONG OTHERS,
THE PREVAILING COST OF CAPITAL, IN TERMS OF EQUITY
AND DEBT, IN THE DOMESTIC AND INTERNATIONAL
MARKETS, RISKS BEING ASSUMED BY THE PROJECT
PROPONENT AND THE LEVEL OF GOVERNMENT
UNDERTAKINGS EXTENDED FOR THE PROJECT, AS
DETERMINED BY THE APPROPRIATE GOVERNMENT
AGENCY OR LGU AND APPROVED BY THE BOT AUTHORITY
BOARD.

(q) Construction — Refers to new construction, rehabilitation,
improvement, expansion, alteration and related works and activities
including the necessary DESIGN, supply, INSTALLATION, TESTING


AND COMMISSIONING of equipment, SYSTEMS, PLANTS,
materials, labor and services, and related items.

(r) PROJECT COST - REFERS TO THE TOTAL COST TO BE
EXPENDED BY THE PROJECT PROPONENT TO PLAN,
DEVELOP AND CONSTRUCT THE PROJECT TO COMPLETION,
INCLUDING BUT NOT LIMITED TO, WORKING CAPITAL, COST
OF FEASIBILITY STUDIES, DETAILED ENGINEERING AND
DESIGN, CONSTRUCTION EQUIPMENT, LAND AND RIGHT-OF-
WAY, TAXES IMPOSED ON SAID COST, AND DEVELOPMENT
COST.

(s) UNSOLICITED PROPOSAL — REFERS TO PROJECT
PROPOSALS WHICH ARE NOT IDENTIFIED IN THE PLAN AND.
SUBMITTED BY THE PRIVATE SECTOR NOT IN RESPONSE TO
A FORMAL SOLICITATION OR REQUEST BY GOVERNMENT
AGENCY OR LGU TO UNDERTAKE A PROJECT WHICH MAY
BE ACCEPTED BY THE SAID GOVERNMENT AGENCY OR LGU
ON A NEGOTIATED BASIS.”

SECTION 3. Section 3 of Republic Act No 6957, as amended, is hereby further
amended to read as follows:

“Sec. 3. PRIVATE INITIATIVE IN INFRASTRUCTURE - All
govern-ment infrastructure agencies, including government-owned and
controlled-corporations (GOCCs) and LGUs are hereby authorized to
enter into contract with any duly qualified project proponent for the
financing, construction, operation and maintenance of any financially
viable infrastructure or development facility through any of the projects
authorized in this Act.

ALL NATIONAL AND LOCAL GOVERNMENT PROJECTS TO BE
IMPLEMENTED UNDER THIS ACT SHALL BE SUBMITTED TO
THE BOT AUTHORITY FOR APPROVAL; PROVIDED, THAT FOR
PROJECTS THAT REQUIRE NATIONAL GOVERNMENT
GUARANTEE OR UNDER-TAKING, THE PROJECT SHALL BE
RECOMMENDED BY THE BOT AUTHORITY BOARD TO THE
PRESIDENT FOR APPROVAL.”

SECTION 4. A new section to be numbered as Section 4 of the same Act, as amended,
is hereby added, to read as follows:

“Sec. 4. CONTRACTUAL ARRANGEMENTS - REFER TO
ARRANGE-MENTS INVOLVING PRIVATE SECTOR
INVESTMENTS IN PROJECTS IDENTIFIED BY THE
APPROPRIATE GOVERNMENT AGENCIES OR LGUS AS
DEFINED IN THE IMPLEMENTING RULES AND REGULATIONS
AND APPROVED BY THE BOT AUTHORITY.”


SECTION 5. Section 4 of the same Act, as amended, is hereby renumbered as Section
5 and further amended to read as follows:

“Sec. 5. Priority Projects. - All concerned government agencies,
including government-owned and controlled corporations and local
government units, shall include in their development programs priority
projects that may be financed, constructed, operated and maintained by
the private sector under the provisions of this Act. Further, concerned
government agencies AND LOCAL GOVERNMENT UNITS SHALL
SUBMIT TO THE PPP AUTHORITY LIST OF PROJECTS FOR
POSSIBLE LISTING IN THE PLAN AND HARMONIZED
INVESTMENT PROMOTION.”

SECTION 6. Section 4-A of Republic Act No. 6957, as amended by Republic Act No.
7718, is hereby renumbered as Section 5-A and further amended to read as follows:

“Sec. 5-A. Unsolicited Proposals. ~ Unsolicited proposals for projects
accepted by any APPROPRIATE GOVERNMENT AGENCIES/
LGUS, SHALL BE SUBMITTED TO THE PPP AUTHORITY FOR
EVALUATION AND APPROVAL WITHIN THIRTY (30)
WORKING DAYS, UPON SUBMISSION OF COMPLETE
DOCUMENTS, PROVIDED, THAT NO GOVERNMENT
GUARANTEE, SUBSIDY OR EQUITY, IN WHATEVER FORM OR
NATURE, IS GRANTED: PROVIDED FURTHER, THAT THE
UNSOLICITED PROPOSAL UPON APPROVAL BY THE PPP
AUTHORITY BOARD SHALL BE SUBJECT TO OPEN,
COMPARATIVE OR COMPETITIVE TENDER PROCESS.”

SECTION 7. Section 5 of the same Act, as amended, is hereby renumbered as Section
6 and further amended to read as follows:

“Sec. 6. Public Bidding of Projects. PROJECTS TO BE IMPLEMEN-
TED UNDER THIS ACT SHALL BE DONE THROUGH
COMPETITIVE AND TRANSPARENT PUBLIC BIDDING.”

SECTION 8. Section 5-A of Republic Act No. 6957, as amended by Republic Act No.
7718, is hereby renumbered as Section 6-A and further amended to read as follows:

“Sec. 6-A. Direct Negotiation of Contracts. ~ Direct negotiation shall be
resorted to when there is only one complying bidder left as defined IN
THE IMPLEMENTING RULES AND REGULATIONS (IRR) OF
THIS ACT.”

SECTION 9. Section 6 of the same Act, as amended, is hereby renumbered as Section
7 to read as follows:

“Sec. 7. Repayment Scheme. - For the financing, construction, operation
and maintenance of any infrastructure OR DEVELOPMENT projects
undertaken through the CONTRACTUAL ARRANGEMENT UNDER
THIS ACT, the project proponent shall be repaid by authorizing it to


charge and effect reasonable tolls, fees, and rentals for the use of the
project facility not exceeding those incorporated in the contract and,
where applicable, the PROJECT 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 negotiated contracts,
and for projects which have been granted a natural monopoly or where
the public has no access to alternative facilities, the appropriate
government regulatory bodies, shall approve the tolls, fees, rentals, and
charges based on a reasonable rate of retum AS APPROVED BY THE
PPP AUTHORITY : Provided, further, That the imposition and
collection of tolls, fees, rentals, and charges shall be for a fixed term 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
EFFECTIVITY of the contract, 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 EFFECTIVITY OF THE CONTRACT, 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 build-and-transfer
CONTRACTUAL arrangement, the repayment scheme is to be effected
through amortization. payments by the APPROPRIATE
GOVERNMENT AGENCY or LGU concerned to the project proponent
according to the scheme proposed in the bid and incorporated in the
contract.”

SECTION 10. A new section to be numbered as Section 8 of the same Act, as amended,
is hereby added to read as follows:

“Sec. 8. PROJECT DEVELOPMENT FACILITY. —- THERE IS
HEREBY CREATED A PROJECT DEVELOPMENT FACILITY
(PDF) THAT SHALL SERVE AND BE OPERATED AS A
REVOLVING FUND TO FINANCE THE PROPER
IDENTIFICATION, STUDY, VALIDATION, DEVELOPMENT,
AND PREPARATION FOR PUBLIC BIDDING OR OTHER
COMPETITIVE PROCESS, OF PRIVATE SECTOR
INFRASTRUCTURE OR DEVELOPMENT PROJECTS IMPLE-
MENTED UNDER THIS ACT OR OTHER LAWS. THE PDF SHALL
BE ADMINISTERED BY THE BOT AUTHORITY, AND SHALL BE
SUBJECT TO THE CONDITIONS PRESCRIBED BY LAW ON
REVOLVING FUNDS AND OTHER APPLICABLE GOVERNMENT
RULES AND REGULATIONS.”

SECTION 11. Section 7 of the same Act, as amended, is hereby renumbered as Section
9 and further amended to read as follows:


“Sec. 9. CONTRACT TERMINATION. - IN THE EVENT THAT A
CONTRACT IS TERMINATED THROUGH NO FAULT ON THE
PART OF THE PROJECT PROPONENT, THE APPROPRIATE
GOVERNMENT AGENCY OR LGU SHALL COMPENSATE THE
SAID PROJECT PROPONENT FOR ITS ACTUAL EXPENSES
REASONABLY INCURRED IN THE PROJECT PLUS A
REASONABLE RATE OF RETURN ON INVESTMENTS NOT
EXCEEDING THAT STATED IN THE CONTRACT AS OF THE
DATE OF SUCH TERMINATION.

IN THE EVENT THAT THE PROJECT PROPONENT DEFAULTS
ON CERTAIN MAJOR OBLIGATIONS IN THE CONTRACT AND
SUCH FAILURE IS NOT REMEDIABLE OR IF REMEDIABLE
SHALL REMAIN UNREMEDIED FOR AN UNREASONABLE
LENGTH OF TIME, THE APPROPRIATE GOVERNMENT
AGENCY OR LGU MAY, BY PRIOR NOTICE TO THE PROJECT
PROPONENT, TERMINATE THE CONTRACT. THE
APPROPRIATE GOVERNMENT AGENCY OR LGU SHALL CALL
ON THE PERFORMANCE SECURITY POSTED BY THE PROJECT
PROPONENT AND OTHER JUST AND EQUITABLE REMEDIES
AS CONSEQUENTIAL COMPENSATION AS PROVIDED FOR IN
THE CONTRACT.”

SECTION 12. Section 8 and 9 of the same Act, as amended, is hereby renumbered as
Section 10 and 11.

SECTION 13. Section 10 of the same Act, as amended, is hereby renumbered as
Section 12 to read as follows:

“Sec. 12. Investments Incentives. - PROJECTS EXCEPT
UNSOLICITED PROJECTS, REGARDLESS OF COST, shall be
entitled to incentives as provided by the Omnibus Investments Code OR
THE APPLICABLE INCENTIVES LAW AND _ LOCAL
GOVERNMENT CODE, upon registration with the APPROPRIATE
GOVERNMENT AGENCY.”

SECTION 14. A new section to be numbered as Section 13 of the same Act, as
amended, is hereby further added to read as follows:

“Sec. 13. WARRANTY TO UPHOLD THE VALIDITY OF THE
CONTRACT. - THE REPUBLIC OF THE PHILIPPINES OR LOCAL
GOVERNMENT UNITS SHALL BE BOUND TO UPHOLD THE
VALIDITY AND ENFORCEABILITY OF A DULY EXECUTED
CONTRACT, UNLESS PROVEN OTHERWISE.”

SECTION I5. Section 11 of the same Act, as amended, is hereby renumbered as
Section 14 and further amended to read as follows:


“Sec. 14. Implementing Rules and Regulations. - A COMMITTEE
SHALL BE CREATED TO PROMULGATE THE IRR OF THIS ACT
TO BE CHAIRED BY PPP AUTHORITY and composed of one (1)
representative each from the Department of Public Works and
Highways, the Department of Transportation and Communications, the
Department of Energy, the Department of Environment and Natural
Resources, the Department of Agriculture, the Department of Trade and
Industry, the Department of Finance, the Department of the Interior and
Local Government, the National Economic and Development Authority,
and other concerned government agencies shall, within sixty (60) days
from the effectivity of this Act, formulate and prescribe, after public
hearing and publication as required by law, the implementing rules and
regulations including, among others, the criteria and guidelines for
evaluation of bid proposals, list of financial incentives and arrangements
that the Government may provide for the project, in order to carry out
the provisions of this Act in the most expeditious manner.

From time to time the committee may conduct, formulate and prescribe,
after due public hearing and publication, amendments to the
implementing rules and regulations, consistent with the provisions of
this Act.”

SECTION 16. Section 12 of the same Act, as amended, is hereby renumbered as
Section 15 of the same Act, as amended, is hereby further amended to read as follows:

“Sec. 15. CREATION OF THE PUBLIC-PRIVATE PARTNERSHIP
AUTHORITY. THERE IS HEREBY CREATED A PUBLIC-PRIVATE
PARTNERSHIP AUTHORITY (PPP AUTHORITY) THAT SHALL
SERVE AS THE CENTRAL BODY OF THE GOVERNMENT FOR
BOT, PRIVATE SECTOR PARTICIPATION (PSP) OR PUBLIC-
PRIVATE PARTNERSHIP PROJECTS (PPP), ATTACHED TO THE
DEPARTMENT OF TRADE AND INDUSTRY (DTI). THE PPP
AUTHORITY SHALL BE COMPOSED OF THIRTEEN (13) BOARD
OF DIRECTORS. THE SECRETARY OF TRADE AND INDUSTRY
SHALL BE THE CHAIRMAN, CO-CHAIRED BY THE
SECRETARY OF THE DEPARTMENT OF FINANCE. THE
MEMBERS OF THE BOARD SHALL BE THE SECRETARIES OF
NEDA, OP, DENR, DOLE, DBM, DIRECTOR GENERAL OF THE
PPP AUTHORITY AND FIVE (5) REPRESENTATIVES FROM THE
PRIVATE SECTOR TO BE APPOINTED BY THE PRESIDENT,
WHO SHALL BE AT LEAST 35 YEARS OLD, WITH PROVEN
PROBITY AND INTEGRITY AND WITH A DEGREE IN LAW,
ENGINEERING, ECONOMICS, BUSINESS, PUBLIC
ADMINISTRATION, MANAGEMENT OR ITS EQUIVALENT, FOR
A TERM NOT EXCEEDING THREE (3) YEARS: PROVIDED, THAT
THE PRIVATE SECTOR REPRESENTATIVE MAY BE
REAPPOINTED; PROVIDED FURTHER, THAT HE SHALL SERVE
AS SUCH UNTIL HIS SUCCESSOR SHALL HAVE BEEN
APPOINTED AND QUALIFIED.


THE PPP AUTHORITY SHALL BE HEADED BY A DIRECTOR
GENERAL WITH THE RANK OF AN UNDERSECRETARY, TO BE
APPOINTED BY THE PRESIDENT AND ASSISTED BY (2)
DEPUTY DIRECTORS GENERAL, RECOMMENDED BY THE
SECRETARY TO BE APPROVED BY THE BOARD.

MEMBERS OF THE BOARD SHALL RECEIVE A REASONABLE
PER DIEM TO BE FIXED BY THE BOARD.

THE BOARD SHALL HOLD MEETINGS AT LEAST ONCE A
MONTH FOR THE CONDUCT OF BUSINESS OR AS OFTEN AS
MAY BE NECESSARY UPON THE CALL OF THE CHAIRMAN.
THE NOTICE OF MEETING SHALL BE GIVEN TO ALL THE
MEMBERS OF THE BOARD AND THE PRESENCE OF SEVEN (7)
MEMBERS SHALL CONSTITUTE A QUORUM AND THE
AFFIRMATIVE VOTE OF THE MAJORITY OF THE MEMBERS
PRESENT IN A MEETING VALIDLY HELD SHALL BE
NECESSARY TO CARRY THE ACTION. IN THE ABSENCE OF
THE SECRETARY, HE MAY BE REPRESENTED BY A DULY
AUTHORIZED ALTERNATE WITH THE RANK OF AN
UNDERSECRETARY AND VESTED WITH FULL AUTHORITY
TO ACT IN THE BOARD MEETINGS.

SECTION 17. A new section to be numbered as Section 16 of the same Act, as
amended, is hereby further added to read as follows:

Sec. 16. POWERS AND FUNCTIONS. THE PPP AUTHORITY
SHALL EXERCISE THE FOLLOWING POWERS AND
FUNCTIONS:

1. FORMULATE THE INFRASTRUCTURE AND
DEVELOPMENT PLAN’ FOR PRIVATE SECTOR
PARTICIPATION AND PUBLIC-PRIVATE PARTNERSHIP.

2. FORMULATE POLICIES ON _ PRIVATE SECTOR
INVESTMENTS, IN INFRASTRUCTURE AND
DEVELOPMENT PROJECTS.

3. PROMOTE THE INFRASTRUCTURE AND DEVELOPMENT
INVESTMENT PROGRAMS THROUGH BOT, PSP OR PPP.

4. EVALUATE, REVIEW AND APPROVE THE PROJECTS
SUBMITTED BY THE APPROPRIATE GOVERNMENT
AGENCIES OR LGUS TO BE IMPLEMENTED UNDER THIS
ACT. FOR THIS PURPOSE, PROJECT PROPOSALS AND
CONTRACTS INVOLVING CONTRACTUAL
ARRANGEMENTS PROPOSED TO BE IMPLEMENTED
UNDER THIS LAW SHALL BE SUBMITTED BY THE
APPROPRIATE GOVERNMENT AGENCIES AND LGUS TO
THE PPP AUTHORITY. THE PPP AUTHORITY SHALL BE


THE SOLE AND EXCLUSIVE APPROVING AUTHORITY FOR
BOT, PSP OR PPP PROJECTS. FURTHER, THE PPP
AUTHORITY SHALL ACT ON THE PROJECT WITHIN,
THIRTY WORKING DAYS, UPON SUBMISSION OF
COMPLETE DOCUMENTS, OTHERWISE, THE PROJECT IS
AUTOMATICALLY APPROVED.

5. COORDINATE, MONITOR AND FACILITATE PROJECT
IMPLEMENTATION UNDER THIS ACT.

6. SERVE AS THE OFFICIAL REPOSITORY OF ALL BOT, PSP,
AND PPP CONTRACTS, DULY APPROVED BY THE BOARD
AND EXECUTED BY THE APPROPRIATE GOVERNMENT
AGENCY OR LGU CONCERNED.

7. MANAGE AND ADMINISTER THE REVOLVING FUND FOR
PROJECT DEVELOPMENT.

8. DETERMINE THE ORGANIZATIONAL STRUCTURE OF THE
PPP AUTHORITY. APPOINT, DISCIPLINE OR REMOVE ITS
PERSONNEL CONSISTENT WITH THE PROVISIONS OF
CIVIL SERVICE LAWS, RULES AND REGULATIONS.

9. AFTER DUE PROCESS, IMPOSE FINES, PENALTIES AND
SANCTIONS, INCLUDING, SUSPENSION AND
CANCELLATION OF CONTRACTS, FOR VIOLATION OF THE
PROVISIONS OF THIS ACT, ITS IMPLEMENTING RULES
AND REGULATIONS OR THE TERMS AND CONDITIONS OF
THE CONTRACT.

10. REPORT TO THE PRESIDENT AND TO CONGRESS ON THE
IMPLEMENTATION OF ALL PROJECTS WITH
CONTRACTUAL ARRANGEMENTS COVERED BY THIS
ACT.

SECTION 18. A new section to be numbered as Section 17 of the same Act, as
amended, is hereby further added to read as follows:

Sec, 17. APPROPRIATION. — THE INITIAL ANNUAL BUDGET
FOR THE OPERATIONS OF THE AUTHORITY IS PESOS: FIVE
HUNDRED MILLION (PHP 500,000,000.00) DIVIDED INTO 200
MILLION FOR THE PROJECT DEVELOPMENT FACILITY AS
SEED MONEY AND 300 MILLION FOR OPERATIONS. IN THE
EVENT THAT THE SEED MONEY FOR THE PDF IS IN A
PRECARIOUS SITUATION, THE GOVERNMENT SHALL
APPROPRIATE AN AMOUNT AS __ REPLENISHMENT.
APPROPRIATION HERETO SHALL BE TAKEN FROM THE
GENERAL APPROPRIATION ACT. THEREAFTER, THERE WILL
BE A CONTINUING APPRO-PRIATIONS FOR ITS OPERATION.


SECTION 21

THE PPP AUTHORITY SHALL BE ALLOWED TO RETAIN ITS
INCOME ARISING FROM ITS OPERATIONS TO FINANCE ITS
ACTIVITIES AND PROGRAMS.

Sec. 18. APPOINTMENT OF BOT AUTHORITY PERSONNEL. - THE
PPP AUTHORITY SHALL APPOINT ITS TECHNICAL STAFF AND
OTHER PERSONNEL SUBJECT TO CIVIL SERVICE LAWS,
RULES AND REGULATIONS. ALL POSITIONS IN THE PPP
AUTHORITY SHALL BE GOVERNED BY A COMPENSATION,
POSITION CLASSIFICATION SYSTEMS, AND QUALIFICATION
STANDARDS APPROVED BY THE PPP AUTHORITY BOARD
BASED ON A COMPREHENSIVE JOB ANALYSIS AND AUDIT
OF ACTUAL DUTIES AND RESPONSIBILITIES. THE
COMPENSATION PLAN SHALL BE COMPARABLE WITH THE
PREVAILING COMPEN-SATION PLANS OF A GOVERNMENT
FINANCIAL INSTITUTION AND SHALL BE SUBJECT TO
PERIODIC REVIEW BY THE PPP AUTHORITY BOARD NO
MORE THAN EVERY TWO YEARS WITHOUT PREJUDICE TO
YEARLY MERIT REVIEWS OR INCREASES BASED ON
PRODUCTIVITY. THE BOT AUTHORITY SHALL THEREFORE
BE EXEMPT FROM EXISTING LAWS, RULES AND
REGULATIONS ON COMPENSATION, POSITION CLASSI-
FICATION AND QUALIFICATION STANDARDS.

Sec. 19. ESTABLISHMENT OF PPP UNITS. - EACH AGENCY OR
LGU SHALL CREATE A BOT UNIT HEADED BY A SENIOR
OFFICIAL OF THE AGENCY/LGUS AND SHALL DESIGNATE A
SENIOR OFFICIAL AS BOT PROJECT DEVELOPMENT OFFICER:
(PDO), WHO SHALL BE RESPONSIBLE FOR PLANNING,
OVERSEEING AND MONITORING PROJECTS OF APPROPRIATE
GOVERNMENT AGENCIES OR LGUS AUTHORIZED UNDER
THIS ACT. THE PDO SHALL CLOSELY COORDINATE WITH
THE PPP AUTHORITY.

Sec. 20. PPP ACTION CENTER. - THERE IS HEREBY CREATED A.
PPP ACTION CENTER UNDER THIS ACT TO SERVE AS AN
INFORMATION SOURCE OF BOT PROJECTS AND LINKAGE TO
ALL GOVERNMENT AGENCIES TO FACILITATE PROCESSING
OF GOVERNMENT REQUIREMENTS FOR THE
IMPLEMENTATION OF BOT, PSP OR PPP PROJECTS.

SECTION 19. A new section to be numbered as Section 18 of the same Act, as
amended, is hereby further added to read as follows:

SECTION 20. A new section to be numbered as Section 19 of the same Act, as
amended, is hereby further added to read as follows:

A new section to be numbered as Section 20 of the same Act, as
amended, is hereby further added to read as follows:


THE PPP ACTION CENTER SHALL BE COMPOSED OF ALL
GOVERNMENT AGENCIES INVOLVED IN THE
IMPLEMENTATION OF THE PROJECT INCLUDING, BUT NOT
LIMITED TO, SECURITIES AND EXCHANGE COMMISSION,
BUREAU OF IMMIGRATION AND DEPORTATION, THE
DEPARTMENTS OF TRADE AND INDUSTRY, FINANCE,
ENVIRONMENTAL AND NATURAL RESOURCES, LABOR AND
EMPLOYMENT, AND SUCH OTHER APPROPRIATE
REGULATORY AGENCIES OR INSTITUTIONS AS MAY BE
REQUIRED BY THE PPP AUTHORITY. THE GOVERNMENT
AGENCIES INVOLVED SHALL DESIGNATE
REPRESENTATIVES TO THE BOT ACTION CENTER THAT ARE
CLOTHED WITH AUTHORITY TO ACT ON ANY MATTER
RELATIVE TO HIS AGENCY.

SECTION 22. A new section to be numbered as Section 21 of the same Act, as
amended, is hereby further added to read as follows:

Sec, 21. APPEAL FROM THE BOARD’S DECISION. ALL ORDERS
OR DECISIONS OF THE PPP AUTHORITY IN CASES INVOLVING
THE PROVISIONS OF THIS ACT SHALL IMMEDIATELY BE
EXECUTORY. NO APPEAL FROM THE ORDER OR DECISION OF
THE BOT AUTHORITY BY THE PARTY ADVERSELY
AFFECTED SHALL STAY SUCH ORDER OR DECISION, UNLESS
A SUPERSEDEAS BOND EQUIVALENT TO THE AMOUNT
STATED IN THE ORDER OR DECISION IS POSTED BY THE
APPELLANT. ONLY ONE MOTION FOR RECONSIDERATION
SHALL BE ALLOWED AND SHOULD BE FILED WITHIN THIRTY
(30) DAYS FROM DATE OF RECEIPT OF NOTICE OF BOARD’S
ORDER OR DECISION SUBJECT TO THE POSTING OF THE
AFOREMENTIONED SUPERSEDEAS BOND WHICH SHALL BE
LIMITED TO CASH AND/OR SURETY BOND FROM A BOT-
ACCREDITED BONDING COMPANY.

IN THE EVENT OF DENIAL OF THE MOTION FOR
RECONSIDERATION, THE PROJECT PROPONENT MAY
APPEAL TO THE OFFICE OF THE PRESIDENT WITHIN THIRTY
(30) DAYS FROM NOTICE OF THE ORDER OR DECISION OR OF
THE DENIAL OF THE APPELLANT’S MOTION FOR
RECONSIDERATION.”

SECTION 23. A new section to be numbered as Section 22 of the same Act, as
amended, is hereby further added to read as follows:

“Sec, 22. PENAL PROVISIONS. PENALTIES AND SANCTIONS,
SHALL BE STRINGENTLY APPLIED TO PROMOTE TIMELY
COMPLETION OF INFRASTRUCTURE FACILITIES OR
DEVELOPMENT PROJECTS.


ANY ENTITY WHICH VIOLATES ANY PROVISION OF THIS
ACT, ITS IMPLEMENTING RULES AND REGULATIONS, THE
TERMS AND CONDITIONS OF ITS CONTRACT, SHALL BE
SUBJECT TO A FINE NOT TO EXCEED ONE MILLION PESOS
(P1,000,000.00) BUT, WITHOUT PREJUDICE TO THE
CANCELLATION OF ITS CONTRACT; PROVIDED, THAT ANY
WILLFUL COMMISSION OF FRAUDULENT
MISREPRESENTATION, CONTRACT FALSIFI-CATION IN ITS
SUBMISSION OF DOCUMENTS OR GROSS VIOLATION OF THIS
ACT AND ITS IMPLEMENTING RULES AND REGULATIONS, A
FINE OF AT LEAST ONE MILLION PESOS (P1,000,000.00) BUT
NOT TO EXCEED TEN MILLION PESOS (P10,000,000.00) SHALL
BE IMPOSED, IN ADDITION TO OTHER PENALTIES THAT MAY
BE IMPOSED BY THE BOARD.

THE PPP AUTHORITY SHALL PREPARE A SCHEDULE OF FINES
AND PENALTIES TO BE IMPOSED ON ERRING PARTIES
DEPENDING ON THE VIOLATION INCURRED, WHICH MAY BE
REDUCED IN EXCEPTIONAL CASES.

RESPONSIBLE OFFICERS OF SUCH ENTITIES, INCLUDING
DULY APPOINTED EXTERNAL CONSULTANTS-AGENTS WHO
KNO-WINGLY COMMIT, AID OR ABET THE COMMISSION OF
ANY OF THE ACTS MENTIONED ABOVE, SHALL BE SUBJECT
TO A FINE OF NOT LESS THAN ONE HUNDRED THOUSAND
PESOS (P100,000.00) BUT NOT MORE THAN THREE HUNDRED
THOUSAND PESOS (P300,000.00).

GOVERNMENT OFFICERS AND EMPLOYEES WHO
PARTICIPATE DIRECTLY OR INDIRECTLY. IN THE
COMMISSION OF THE FOREGOING ACTS SHALL BE SUBJECT
TO CRIMINAL AND ADMINISTRATIVE PENALTIES
IMPOSABLE UNDER THE CIVIL SERVICE LAW, REVISED
PENAL CODE, REPUBLIC ACT NO. 3019 (ANTI-GRAFT AND
CORRUPT PRACTICES ACT), REPUBLIC ACT NO. 6713 (CODE OF
CONDUCT AND ETHICAL STANDARDS FOR PUBLIC OFFICIALS)
AND OTHER APPLICABLE LAWS, IN ADDITION TO
FORFEITURE OF RETIREMENT BENEFITS AND PROHIBITION
FROM RE-EMPLOYMENT INTO GOVERNMENT SERVICE.

IF THE OFFENDER IS A FOREIGN NATIONAL, IN ADDITION TO
THE IMPOSABLE FINES AND PENALTIES ABOVE, THE FORE-
GOING ACTS SHALL BE GROUNDS FOR HIS SUMMARY
DEPORTATION.”

SECTION 24. A new section to be numbered as Section 23 of the same Act, as
amended, is hereby further added to read as follows:

“Sec. 23. MISCELLANEOUS PROVISION. - THE AUTHORITY IS
HEREBY AUTHORIZED TO CHARGE APPROPRIATE FEES AS

13


MAY BE PROVIDED FOR UNDER THE IMPLEMENTING RULES
AND REGULATIONS OF THIS ACT.

SECTION 25. A new section to be numbered as Section 24 of the same Act, as
amended, is hereby further added to read as follows:

Sec. 24. TRANSITORY PROVISION. - UNTIL THE
IMPLEMENTING RULES AND REGULATIONS OF THIS CODE
TAKE EFFECT, THE PRESENT RULES AND REGULATIONS TO
IMPLEMENT THE PROVISIONS OF THIS CODE.”

SECTION 26. Section 16 of Republic Act No. 6957, as amended by Republic Act No.
7718, is hereby renumbered as Section 25 to read as follows:

“Sec. 25. Repealing Clause. - SEC. 302 OF THE LOCAL
GOVERNMENT CODE AND OTHER laws or parts of any law
inconsistent with the provisions of this Act are hereby repealed or
modified accordingly.”

SECTION 27. Section 17 of Republic Act No. 6957, as amended by Republic Act No.
7718, is hereby renumbered as Section 26 to read as follows:

“Sec. 26. Separability Clause. ~ If any provision of this Act is held
invalid, the other provisions not affected thereby shall continue in
operation.”

SECTION 28. Section 18 of Republic Act No. 6957, as amended by Republic Act No.
7718, is hereby renumbered as Section 27 to read as follows:

“Sec. 27. Effectivity Clause. — This Act shall take effect fifteen (15) days

after its publication in at least two (2) newspapers of general
circulation.”

Approved,