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Republic of the Philippines
HOUSE OF REPRESENTATIVES Receive % A
Queson City onreMAY 3 )
Time;
SEVENTEENTH CONGRESS 2,
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Introduced by HONORABLE LUIS RAYMUND F. VILLAFUERTE, JR.

EXPLANATORY NOTE

Public-Private Partnerships are gaining ground all over the world in extending
the ability of governments to provide key services in difficult economics by tapping
private sector resources. In most countries, PPP contractual arrangements are
aimed at overcoming public sector constraints such as lack of capital or lack of public
sector capacity, resources and specialized expertise to develop, manage and
operate infrastructure assets. PPPs are now commonly utilized to accelerate
economic growth, development and infrastructure delivery — these ultimately result
in quality service and overall good governance.

The Philippines recognizes the indispensable role of private sectors vis-a-vis
PPPs. In fact, the country is one of the pioneers in private sector participation in
major infrastructure projects in Asia. Republic Act No. 6957 otherwise known as the
Built-Operate-Transfer (BOT) Law passed in 1990 was the first of its kind in the
region. In 1994, Republic Act No. 7718 amended the BOT Law and introduced new
variants of private sector infrastructure or development projects. On 9 September
2010, former President Benigno S. Aquino Ill signed Executive Order No. 8, as
amended by Executive Order No. 136, entitled “Reorganizing and Renaming the
Build-Operate-and-Transfer (BOT) Center to the Public-Private Partnership (PPP)
Center of the Philippines and Transferring its Attachment from the Department of
Trade and Industry to the National Economic and Development Authority and for
Other Purposes”. Executive Order No. 8 established the PPP Center to conduct
project facilitation and assistance to implementing agencies in addressing
impediments in the implementation of PPP programs and projects, among its other
functions.

Despite these developments, the Philippines still lags behind other countries
in providing public infrastructure. The massive pipeline of key infrastructure deals
is a reflection of how much money the country needs to invest to improve the quality
of life in the country. With this issue at hand, funding mechanisms for public-private
partnership (PPP) contracts must be expanded.’ In order to tap capital markets for

* Marasigan, Lorenz S. “Groups make final push for proposed PPP Act”. Business Mirror, Manila Philippines. 8
‘April 2016, Available URL: http:/www.businessmirror.com.ph/groups-make-final-push-for-proposed-ppp-acl/


infrastructure financing, there is a need to enact amendments to the existing BOT
Law.

This re-filed version of the bill takes inspiration from House Bill No. 6331 filed
during the 16™ Congress. It intends to update and replace the BOT Law by
incorporating the valuable lessons learned from successful and failed projects in the
past, as well as global best practices in PPP. It further seeks to accelerate public
infrastructure development by strengthening the PPP institutional framework;
providing financial and technical support through the Project Development and
Monitoring Facility (PDMF); optimizing project risks and obtaining government
support; expanding the PPP contractual arrangements; providing for transparent and
competitive bidding; setting standard contents and implementation of PPP projects
for transparency, consistency, and predictability; and granting incentives to PPP
Projects.

Moreover, it recognizes and strengthens the autonomy of local government
units to enter into PPP contractual arrangements. There is a need to arm the LGUs
with technical expertise to properly prepare, monitor and implement PPP projects at
the local level. A report by the Asian Development Bank (ADB) noted that many
LGUs encounter snags in implementing PPP projects related to infrastructure, power
generation and bulk water supply in their respective communities because of the lack
of technical and financial resources to carry out these initiatives.

President Rodrigo Roa Duterte himself stated in his 10-point socio-economic
agenda that Public-Private Partnerships play a key role in promoting economic and
social development and accelerating annual infrastructure spending to account for
5% of gross domestic product (GDP).

Thus, the immediate approval of this bill is earnestly sought.

si i aR.


Repo ofthe Philippines
HOUSE OF REPRESENTATIVES
Queson City

SEVENTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 5805

Introduced by HONORABLE LUIS RAYMUND F. VILLAFUERTE, JR.

AN ACT INSTITUTIONALIZING AND 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 Act of 2017".

SECTION 2. Declaration of Policy. — \t 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, create an enabling environment for Public-Private
Partnerships (PPP), and provide the most appropriate incentives to mobilize private
resources for the purpose of financing, design, construction, operation, and
maintenance of infrastructure projects and services normally financed and undertaken
by the government. Such incentives, aside from financial incentives as provided by law,
‘shall include provision of liberalized government regulations and procedures in support
of the Project Proponent.

The State recognizes the long-term nature of private investment in infrastructure
projects and mitigation of risks by ensuring that the validity and enforceability of
contracts are respected through the due process of law.

The State affirms open, transparent, and competitive selection as the central
tenet of government procurement in securing private investment in public infrastructure
projects. It shall secure private investments through transparent and competitive
selection process and bidding procedures.

SECTION 3. 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:


(b)

(c)

(d)

(e)

(g)

(h)

(i)

g)

(k)

()

Availability-based PPP refers to a PPP where the Implementing Agency
commits to make predetermined payments for contractually-defined performance
delivery;

Concession-based PPP refers to a PPP where the Implementing Agency grants
the Project Proponent the right to recover its investment, operating, and
financing costs by charging the public a user fee or tariff;

Concession Period refers to the period of construction and / or operation of an
Infrastructure Facility;

Construction refers to rehabilitation, improvement, expansion, alteration,
installation, building of a new Infrastructure Facility, and related works and
activities, including the necessary supply of equipment, materials, labor, and
services and related items;

Contingent Liability refers to obligations of the government arising from a valid
PPP Contract whose occurrence, timing, and amount depend on some uncertain
future event or circumstance;

Contractor refers to any Private Person, who may or may not be the Project
Proponent, and who shall undertake the actual Construction of an Infrastructure
Facility of a PPP Project;

Cooperation Period refers to the period of operation of an Infrastructure Facility,
which period, in the case of public utilities requiring a franchise, shall be in
accordance with law;

Facility Operator refers to a Private Person registered with the Securities and
Exchange Commission or Department of Trade and Industry (DTI), who. may or
may not be the Project Proponent, who is responsible for all aspects of operation
and maintenance of an Infrastructure Facility, including, but not limited to, the
collection of tolls, fees, rentals, or charges from facility users;

GOCC refers to a government-owned or controlled corporation as defined in
Republic Act (RA) No. 10149, otherwise known as GOCC Governance Act of
2011;

Government Undertakings refer to any form of support, contribution,
assistance, Viability Gap Funding, among others, which the government may
provide to a Solicited PPP Project;

Grantors refer to Implementing Agency and another government agency that
own the project assets or franchise;


(m)

(n)

(0)

(p)
(a)

()
(s)

(ty

(u)
(vy)

(w)

ICC refers to the Investment Coordination Committee of the National Economic
and Development Authority (NEDA) Board;

Implementing Agency refers to any of the various units of the Government of
the Republic of the Philippines, including a department, bureau, office,
instrumentality, GOCC as defined under RA No. 10149, state universities and
colleges (SUCs), or a local government, or a distinct unit therein;

Infrastructure Facility and Related Service refers to any facility and
infrastructure related service identified by the government in relation to or as
necessary for the discharge of its functions, whether governmental or proprietary:

(1) Infrastructure Facility — includes power plants, highways, ports, airports,
canals, dams, hydropower projects, water supply, _ irrigation,
telecommunications facilities, railroads and railways, transport systems,
reclaimed land, industrial estates or townships, housing, government
buildings, tourism — projects, markets, _ slaughterhouses,
warehouses, information technology systems and infrastructure, education
and health facilities, sewerage, drainage, and other infrastructure and
development projects as may be authorized by the Implementing Agency
pursuant to this Act;

(2) Infrastructure-related Service — includes dredging, climate change
mitigation and adaptation measures, and other related services;

IRR refers to the implementing rules and regulations of this Act;

LGU refers to any local government unit defined under RA No. 7160, otherwise
known as the Local Government Code;

Local PPP Project refers to a PPP Project that will be undertaken by an LGU;

National PPP Project refers to a PPP Project that will be undertaken by the
national government;

PDMF refers to the Project Development and Monitoring Facility created under
Section 8 of this Act;

PPP PBAC refers to the PPP Pre-qualifications, Bids, and Awards Committee;

PPP Center refers to the Public-Private Partnership Center of the Philippines
created under Executive Order (EO) No. 8, series of 2010, as amended;

PPP Contract refers to the contract between the Implementing Agency and the
Project Proponent for the design, financing, construction, operation, or

3


(x)

(y)

(2)

(aa)

(bb)

(cc)

(dd)

(ee)

maintenance, or any combination thereof, of an Infrastructure Facility under a
PPP Project;

PPP Project refers to a project undertaken under this Act:

Priority Project refers to a project identified by an Implementing Agency that
may be undertaken under this Act as a PPP Project and is consistent with the
Philippine Development Plan (PDP) or its equivalent at the local level:

Private Person refers to a individual, sole Proprietorship, partnership,
corporation, or any other form of organization, whether domestic or foreign;

Project Cost refers to the total cost to be expended to plan, develop, and
construct the project to completion stage including but not limited to cost of
feasibility studies, engineering and design, construction, equipment, land and
right-of-way, taxes imposed on said cost, and development cost: Provided, That
in cases of Operation and Maintenance Contracts, this shall refer to total cost,
financing, and other expenses for Operation and maintenance of the
Infrastructure Facility;

Project Proponent refers to the Private Person who shall have contractual
responsibility to undertake a PPP Project;

Public-Private Partnership refers to a contractual arrangement between the
Implementing Agency and the Project Proponent for the financing, design,
construction, operation, and maintenance, or any combination thereof, of an
Infrastructure Facility, in which the Project Proponent bears significant risk,
management responsibility, or both;

Rate of Return refers to the Project Proponent’s expected return from the
Project: Provided, That in case of an unsolicited proposal, the appropriate Rate
of Return shall be determined by the appropriate Approving Body prior to the call
for proposals based on the prevailing cost of capital in the domestic and
international markets, the risk profile and the gearing ratio;

Services refer to services for or related to infrastructure facilities such as,
construction supervision, management, operation, and maintenance and related
services, and other technical services, which may be included as part of a PPP
Project;

Solicited PPP Project refers to Priority Projects identified by the Implementing
Agency;


(gg)

(hh)

SECTION 4. Contractual Arrangements, — ppp Projects may be undertaken

through any of the following contractual arrangements, and such other variations as
may be approved by the ICC:

(a)

(b)

(c)

(d)

(e)

Build-and-Transfer refers to @ contractual arrangement whereby the Project
Proponent undertakes to finance and construct a given Infrastructure Facility and

a lease arrangement for a Cooperation Period, after which ownership thereof is
automatically transferred to the Implementing Agency concerned;

Build-Own-and-Operate refers to @ contractual arrangement whereby a Project
Proponent is authorized to undertake a PPP Project, ‘specifically to finance,

charges from facility users;

Build-Operate-and-Transfer refers to a contractual arrangement whereby the
Project Proponent undertakes @ PPP Project and transfers ownership of the
Infrastructure Facility to the Implementing Agency at the end of the Cooperation
Period;


()

(9)

(h)

(i)

@

(k)

however, operates the Infrastructure Facility on behalf of the Implementing
Agency;

Contract-Add-and-Operate refers to a contractual arrangement whereby, the
Project Proponent adds to an existing Infrastructure Facility which it is renting
from the goverment. It operates the expanded Infrastructure Facility over an
agreed Cooperation Period. There may, or may not be, a transfer arrangement in
regard to said facility;

Develop-Operate-and-Transfer refers to a contractual arrangement whereby
favorable conditions extemal to a new PPP Project which is to be built bya
Project Proponent are integrated into the arrangement by giving that entity the
fight to develop adjoining Property, and thus, enjoy some of the benefits the
investment creates such as higher Property or rent values;

Joint Venture refers to a contractual arrangement whereby a Private Person or
@ group of Private Persons, and an Implementing Agency, contribute money,
Services, assets, or a combination of any or all of the foregoing, to undertake a
PPP Project, with the intention to share profits, risks, and losses. Assets may
include equipment, land, intellectual property or anything of value;

Operations and Maintenance Contract refers to a contractual arrangement
whereby the Project Proponent undertakes the day-to-day operation and
maintenance of an Infrastructure Facility owned by the Implementing Agency.
The Project Proponent shall undertake the acquisition or Provision and upgrading
Of equipment, systems and other items related to operation and maintenance.
The Project Proponent shall be compensated in the form of a performance-
based management or service fee during the Cooperation Period;

Rehabilitate-Operate-and-Transfer refers to a contractual arrangement
whereby an existing Infrastructure Facility is turned over to the Project Proponent
to refurbish, improve, operate and maintain for a Cooperation Period, at the
expiry of which the ownership of the facility is transferred to the Implementing
Agency; and

Supply-and-Operate refers to a contractual arrangement whereby the supplier
of equipment and machinery for a given Infrastructure Fazllity, if the interest of
the government so requires, Operates such facility. Foreign firms who are
allowed to operate the facility shall provide technology transfer and training to
Filipino nationals.

SECTION 5. Authority of Implementing Agencies. — Implementing Agencies,

in accordance with their respective charters, are hereby authorized to undertake PPP
Projects with any Project Proponent in accordance with the provisions of this Act.


In undertaking a PPP Project under this Act, a GOCC or any of its subsidiaries
shall secure the approval of the head of department or agency to which the GOCC is
attached. If the procurement thereof is undertaken by the department or agency, the
governing board of the GOCC shall adhere to the approval of the Approving Body and
shall give its full cooperation in bidding the project.

SECTION 6. Priority Projects. — Priority Projects that will be implemented under
this Act shall be consistent with the PDP or its equivalent at the local level.

The Implementing Agencies shall submit their list of PPP Projects or any update
thereto to the PPP Center for information. Each proposed PPP Project to be
implemented under this Act shall be subject to the approval of the Approving Body, if
applicable,

The PPP Center shall ensure that Congress and the general public are provided
with adequate, timely, and relevant information pertaining to these Priority Projects:
Provided, That the release of proprietary information, which shall be defined in the IRR
of this Act, is not contrary to existing laws.

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

A. National Projects. National PPP Projects shall be approved by the ICC or by the
NEDA Board, or both, depending on the Project Cost as prescribed in the IRR of
this Act. Such approval shall be followed by the Implementing Agency or Grantor
concerned.

B. For National PPP Projects that have impact on a particular region, the
Implementing Agency shall secure the endorsement of the concerned Regional
Development Council (RDC) prior to submitting the project for approval to the
Approving Body. The RDC shall have thirty (30) calendar days from receipt of the
request of the Implementing Agency within which to issue its endorsement;
otherwise, the same shall be deemed automatically endorsed by the RDC.

C. Local Projects. Local PPP Projects shall be approved by the local sanggunians.
and, depending on the Project Cost as may be prescribed in the IRR, confirmed
by the local development councils.

The confirmation of the project by the local development council concerned shall
be based on a review of the project documents submitted to it by the LGU concerned,
which includes the feasibility study and the draft contract on the project, and shall
ensure that said project documents are in full compliance with the requirements set
forth under this Act.


SECTION 8. Project Development and Monitoring Facility (PDMF). — The
PDMF is hereby established and shall be used for the procurement of advisory and
support services related to the preparation, structuring, probity management,
Procurement, financial close, and monitoring of implementation of PPP Projects.

A. Funding Source. The PDMF Fund referred to under EO No. 8, series of 2010,
as amended by EO No. 136, series of 2013, shall be transferred to the PDMF_
under this Act. The PDMF may be funded through and such amount as may be
needed and included in the General Appropriations Act, Official Development
Assistance or other sources.

B. Institutional Arrangement. The PDMF shall be managed and administered by
the PPP Center as a revolving fund. In order to sustain the PDMF, the PPP
Center may collect and receive fees and recover costs 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 used by the PPP Center for
the purposes indicated herein.

A PDMF Committee is hereby created which shall approve applications for
PDMF support submitted by Implementing Agencies. It shall be composed of
representatives from the NEDA, Department of Finance (DOF), Department of Budget
and Management (DBM) and the PPP Center.

The PPP Center shall serve as Secretariat for the PDMF Committee.

Cc. Procedure. The procurement of consulting services for the PDMF shall be
conducted through RA 9184, otherwise known as the Government Procurement
Reform Act, and its IRR, subject to existing laws on the practice of professions
reserved to Filipino nationals. An open registry of consultants may be
established for ready availability of consulting expertise. Registration is not
tantamount to a finding of eligibility, and non-registered consultants shall be
allowed to bid. The procedures for such procurement shall be prescribed in the
IRR of this Act, consistent with R.A. No. 9184 and its associated IRR.

The PPP Center is not precluded from adopting a set of rules for the
engagement and consulting services funded by an international financing institution or
through official development assistance.

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 PDMF and recovery of costs charged to the fund.

SEC. 9. Unsolicited Proposals. — Unsolicited proposals may be considered for
projects that are not part of the list of Priority Projects or which involve a new concept or

8


technology: Provided, That if the Implementing Agency concemed is an LGU, it may
adopt its own guidelines in evaluating unsolicited proposals.

When a Project Proponent submits an unsolicited proposal, the Implementing
Agency may either:

A. Accept the unsolicited proposal on a negotiated basis, subject to the following
conditions:

(1) No direct government guarantee, VGF, government subsidy or equity, or
right-of-way is required: Provided, That the Implementing Agency shall
facilitate the acquisition of the right-of-way;

(2) Guided by the principles of transparency and competitiveness, the
Implementing Agency has:

@ Published the invitation to pre-qualify and to bid for three (3)
consecutive weeks in a newspaper of general circulation, as well as
Posting in the websites of the PPP Center and of the Implementing
Agency;

(ii) Conducted a competitive bidding within a period stated in the IRR
of this Act, which should not be less than three (3) months nor
more than six (6) months from the date of last publication in a
newspaper of general circulation. In the event another proponent
‘submits a superior counter-proposal within the period referred to
above and it is accepted by the Approving Body, the original
Proponent shall have the right to outbid; and

(iii) Determined the winning bid based on the best financial proposal
submitted, including the bid of the original proponent.

B. Use the unsolicited proposal as the basis for public bidding as provided in
Section 10 of this Act. Upon approval by the Approving Body, the original
proponent thereof shall be reimbursed of the cost incurred in the preparation of
the proposal, such as the cost of any feasibility study undertaken: Provided, That
the reimbursement is:

(1) _ in an amount specified in the IRR of this Act, not to exceed three (3%)
percent of the Project Cost excluding those which are borne by the
Implementing Agency, such as, the cost of right-of-way acquisitions; and

(2) __ paid in full by the winning Project Proponent as a requirement for the
award of the contract.


Cc. Reject the proposal. If the Implementing Agency fails to act on the Proposal
within the period stated in the IRR of this Act, 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
furnish it with a copy of the proposal. The PPP Center shall provide assistance to
the Implementing Agency in the evaluation of unsolicited proposal,

SECTION 10. Public Bidding of Projects. —

A. Publication. Upon approval of PPP Projects as mentioned in Section 7 of this
Act, the head of the Implementing Agency concemed shall immediately cause
the publication of a notice inviting all prospective Project Proponents to
Participate in a transparent and competitive public bidding, 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 where the project is implemented. The notice must
also be posted continuously in the websites of the Implementing Agency and the
PPP Center.

B. Public Bidding. The public bidding shall be conducted under a single or two-
Stage system. The pre-qualification documents, technical, and financial
proposals shall be submitted in at least three (3) separate envelopes. The
Procedures for public bidding, which shall be transparent and competitive,
including the conduct of one-on-one meetings with pre-qualified bidders, shall be
outlined in the IRR of this Act.

C. Award. The contract shall be awarded to the bidder who has passed the pre-
qualification stage after having satisfied the minimum financial, organizational,
and legal standards required under this Act; 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 PPP Projects.

D. Single Complying and Responsive Bid. In case of a single complying and
responsive bidder, the Implementing Agency may award the PPP Contract to
that bidder upon its compliance with the post-award requirements under the
bidding rules of the PPP Project.

A bid is considered a single complying and responsive bid submission if it falls
under any of the following circumstances:


(1) If, after advertisement, only one bidder applied for pre-qualification and it
meets the pre-qualification requirements, after which it is required to
submit a bid or proposal which is subsequently found by the Implementing
Agency to be complying;

(2) _ If, after advertisement, more than one bidder applied for pre-qualification
but only one meets the pre-qualification requirements, after which it
‘submits a bid or proposal which is found by the Implementing Agency to
be complying;

(3) If, after pre-qualification of more than one bidder, only one submits a bid
which is found by the Implementing Agency to be complying; or

(4) If, after pre-qualification, more than one bidder submits bids but only one
is found by the Implementing Agency to be complying.

Protest. |n all stages of the procurement process, the following protest protocol
‘shall be strictly followed:

(1) Decisions of the PPP PBAC may be questioned by filing a motion for
reconsideration within a period prescribed in the IRR of this Act.

(2) The decision of the PPP PBAC on the motion for reconsideration in the
immediately preceding paragraph may be further questioned by the filing
of an appeal to the head of the Implementing Agency concerned, the fee
for which Is prescribed in the IRR of this Act.

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 a period prescribed in the IRR of this Act.

(3) The decision of the Department Secretary in the immediately preceding
paragraph (2) may be questioned by the filing of an appeal to the Office of
the President within fifteen (15) working days from receipt thereof.

In no case shall any appeal taken from any decision rendered pursuant to this

Act stay or delay the bidding process; Provided, however, That appeal must first be
resolved before any Notice of Award.

ia

Failure to Comply or Execute the Contract. \f the winning bidder fails to
comply with any post-award requirement or fails to enter into a contract with the
Implementing Agency, the latter shall consider the next technically and financially
qualified bidder, without prejudice to availment of other legal remedies by the

n


Implementing Agency such as the forfeiture of bid security, the withdrawal of
Notice of Award, or both.

G. PPP BAC. The head of the Implementing Agency, shall create a PPP BAC which
shall be responsible for all aspects of the pre-bidding and bidding process in the
case of solicited proposals, and for the comparative bidding process in the case
of unsolicited proposals. The PPP BAC shall be chaired by at least a third
ranking regular official of the said agency and its composition shall be specified
in the IRR of this Act: Provided, That the PPP BAC constituted for National PPP.
Projects shall also include other relevant government agencies as may be
determined in the IRR of this Act. The creation of a PPP PBAC in case of co-
Grantors shall be prescribed in the IRR of this Act.

SECTION 11. Private Legal and Medical Assistance. — All the PPP PBAC
members and other public officials providing services to the PPP PBAC shall be
authorized to engage the services of private lawyers, or shall be provided with free legal
assistance, where a civil, criminal, or administrative action is filed against them by
reason of the performance of their official functions or duties, unless they are finally
adjudged in such action or proceeding to be liable for gross negligence or misconduct
or grave abuse of discretion. The PPP PBAC members shall also be entitled to medical
assistance for injuries incurred in the performance of their functions.

SECTION 12. Contract Termination. — \n the event that a contract is revoked,
cancelled or terminated, either contracting party shall compensate the other party
pursuant to terms as defined in the contract.

SECTION 13. Issuance of Administrative Franchise, License or Permit. —
Once a PPP Contract is duly executed, the regulator, licensing authority or LGUs shall
automatically grant in favor of the Project Proponent an administrative franchise, license
permit, or any other form of authorization required for the implementation of a PPP
Project subject to submission by the Project Proponent of the requirements by the
regulator, licensing authority or LGU.

Any provision of law to the contrary notwithstanding, it shall be mandatory on the
part of the regulator, licensing authority or LGUs to accept and approve the application
for administrative franchise, license or permit. Failure to act on a proper and complete
application thereof within thirty (30) working days from receipt of the same shall be
deemed as approval thereof.

SECTION 14. Expansion or Extension of an Existing Infrastructure Facility.
— Subject to conditions specified in the IRR of this Act and upon prior approval by the
Approving Body, the Project Proponent of an existing PPP Infrastructure Facility may be
allowed to expand or extend the same even without further bidding: Provided, That the
cost thereof shall not exceed twenty-five percent (25%) of the price-adjusted original

12


Project Cost: Provided, further, That any subsequent expansion or extension shall no
longer be allowed.

SECTION 15. Contracts and Public Disclosure. — Copies of all PPP Contracts
concluded under this Act shall be considered public documents. However, any
proprietary information or information relating to security or national ‘security matters
contained in the PPP Contract and its annexes may be kept confidential for a limited
period, as may be determined by the Implementing Agency but not to exceed five (5)
years.

The determination of whether or not such contracts shall be kept confidential, as
well as the terms and duration of confidentiality, shall be the responsibility of the
Implementing Agency concemed. The Implementing Agency shall transmit to the PPP
Center for records and monitoring purposes, a copy of the duly executed contract,
within thirty (30) working days from its complete execution.

SECTION 16. Prohibition on the Issuance of Temporary Restraining Orders
or Injunctions. —

A No temporary restraining order, preliminary injunction, or preliminary mandatory
injunction shall be issued by any court, except the Supreme Court, against any
Implementing Agency, 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:

(1) Bidding, rebidding or declaration of failure of bidding of PPP Projects,
either national or local;

(2) — Qualification or disqualification of bidders;

(3) Awarding of PPP Contract;

(4) Acceptance of any Unsolicited PPP Project proposal, even if not acted
upon by the Implementing Agency concerned under Section 9 of this Act:

(5) Acquisition, clearance, development of the right-of-way, site or location of
any PPP Project;

(6) Construction, operation and maintenance of any PPP Project:

(7) Commencement, execution, implementation, termination or rescission of
any PPP Contract; and

(8) Undertaking or authorization of any other lawful activity necessary for
such PPP Project or contract:

Provided, further, That the temporary restraining order, preliminary injunction or
preliminary mandatory injunction issued by the Supreme Court shall be effective for a
period not to exceed six (6) months.

B. Bond. The applicant for such temporary restraining order, preliminary injunction
or preliminary mandatory injunction shall file a bond, in an amount to be fixed by
13


the court. The bond shall accrue in favor of the government if the court should
finally decide that the applicant was not entitled to the relief sought.

C. Void. Any temporary restraining order, preliminary injuction or preliminary
mandatory injunction issued in violation of this Section is void and of no force
and effect.

D. Application. The foregoing prohibition shall apply in all disputes, cases, or
controversies instituted by any and all parties, including cases filed by bidders,
Implementing Agencies or those claiming to have rights through such bidders or
Implementing Agencies involving a PPP Project or contract.

E. Liability. \n addition to civil and criminal liabilities as may be incurred under
existing laws, any judge who shall issue a temporary restraining order,
Preliminary injunction or preliminary mandatory injunction in violation of this
Section, shall be disciplined by the Supreme Court and suffer the penalty of
removal from office.

SECTION 17. Assignment of Assets for PPP Projects. — 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 it is attached, in order that such department may enter into a
PPP Contract involving such public infrastructure or right-of-way.

No regulatory body shall be allowed to enter into any PPP Contract that they
regulate.

SECTION 18. Project Supervision and Monitoring. — Every PPP Project
undertaken under the provisions of this Act shall be in accordance with the designs,
plans, specifications, standards,-and-cests approved by the Implementing Agency and
Approving Body, and the cost as approved by the appropriate Approving Body, and
shall be under the supervision of the Implementing Agency concerned.

SECTION 19. Investment Incentives. — Among other incentives, PPP Projects
in excess of One Billion Pesos (PhP1,000,000,000) may be entitled to incentives as
provided by the Omnibus Investment Code, upon prior endorsement of the PPP Center
and registration by the Project Proponent with the Board of Investments.

SECTION 20. Projects of National Significance. — Upon certification and
recommendation by the ICC, and prior consultation with the Department of Interior and
Local Government (DILG) and the LGU concemed, the President may classify certain
projects, such as energy, toll road, mass transit, water, sewerage, and such other
projects undertaken under this Act as projects of national significance, which shall be
entitled to the following incentives:

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(a) All real properties which are actually and directly used for the project shall
be exempt from any and all real property taxes levied under RA No. 7160,
otherwise known as the Local Government Code;

(b) All projects of national significance shall likewise be exempt from any and
all local taxes, fees and charges; and

(c) Automatic grant or issuance of the necessary business permits, including
renewals thereof, in favor of the winning Project Proponent.

For a project to qualify as a project of national significance, it shall meet the
following criteria:

(a) The total Project Cost falls within the threshold set by the ICC;

(b) The project has direct and indirect economic impact which shall not be
less than the threshold set by the ICC;

(c) The project will have direct and indirect economic impact beyond the LGU
where it is located; and

(d) The project can create new jobs.

SECTION 21. Exemption from Payment of Transfer Taxes. — For all PPP
Projects, the transfer of ownership of Infrastructure Facility to the Implementing Agency
shall be exempt from capital gains tax, documentary stamp tax and all taxes and fees,
whether from national or local, related to the transfer thereof.

SECTION 22. Institutionalization of PPP Center. —

A Functions. To achieve the goals of this Act, the PPP Center is hereby
institutionalized and authorized to adopt its current organizational structure,
absorb its existing employees, and upgrade its human resource component, as
may be necessary. Towards a more efficient and effective performance of its
mandate, the PPP Center shall have the following powers and functions:

(1) Assist Implementing Agencies in identifying, developing, prioritizing and
maintaining a pipeline of PPP Projects;

(2) Provide advisory services, technical assistance, trainings, and capacity
development to Implementing Agencies in all PPP-related matters, and
act as a procurement agent upon the request of an Implementing Agency:

(3) Manage and administer the PDMF as provided in Section 8 of this Act;

(4) Work with Implementing Agencies in setting procurement and
implementation timelines for approved PPP Projects;

(6) 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;

(6) Facilitate, monitor, and evaluate the implementation of PPP Programs and
projects developed by the Implementing Agencies;

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(7) Report to the Office of the President and Congress on the implementation
of the PPP programs and projects of the government at the end of each
year;

(8) Serve as a link between the government and the Private sector;

(9) Promote and market PPP Programs and projects, in collaboration with
other government promotion agencies;

(10) Sit as member of NEDA-Infrastructure Committee (INFRACOM), ICC, and
other inter-agency bodies where a PPP Project is a major concern;

(11) __ Issue advisory opinions and interpret the provisions of this Act and its IRR,
relating solely to technical aspects of PPP;

(12) Serve as the central repository of all executed PPP Contracts and any
subsequent amendment or Supplement thereto, including settlement
agreements, entered into by Implementing Agencies;

(13) Provide and transmit copies of duly executed PPP Contracts to Congress;

(14) Act as Secretariat to the PDMF Committee, PPP Governing Board, and
ICC insofar as PPP Projects are concemed;

(15) Maintain an integrated Projects’ bank to serve as an interactive database
of all current and past projects;

(16) Review PPP Contracts for National PPP Projects Prior to execution;

(17) Act as a procurement agent upon the request of the Implementing
Agency; and

(18) Perform such other functions as may be necessary to achieve the
objectives and purposes of this Act.

Administrative Relationship. The PPP Center shall report directly to the PPP
Governing Board and shall be attached to the NEDA for purposes of policy and
Program coordination.

Executive Director. The PPP Center shall be headed by an Executive Director
with the rank equivalent to an Undersecretary, who shall be appointed by the
President of the Philippines for a fixed term of six (6) years, upon
fecommendation of the PPP Governing Board;: Provided, That the term of the
first Executive Director appointed under this Act shall expire at noon of June 30,
2022, and the term of the next Executive Director shall commence on the said
hour and date: Provided further, That in case a vacancy occurs before the
expiration of the term, the person appointed to such vacancy shall serve only the
unexpired term of the predecessor. The Executive Director shall perform the
following functions:

(1) Undertake the day-to-day Management and supervise the operations of
the PPP Center;

(2) | 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;


(3) Sit as an ex-officio, non-voting member of the PPP Governing Board,
INFRACOM, ICC and other inter-agency bodies where a PPP Project is a
major concer; and

(4) Perform such other functions as may be assigned by the PPP Governing
Board.

SECTION 23. PPP Governing Board, - The PPP Governing Board, hereinafter
referred to as the Board, is hereby created. 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:
(a) The Secretary of Socio-Economic Planning as Chairperson;
(b) The Secretary of the DOF as Vice-Chairperson;
(c) The Secretary of the DBM;
(d) The Secretary of the Department of Justice;
(e) The Secretary of the DTI;
(f) The Executive Secretary;
(9) The Secretary of the Interior and Local Government;
(h) The Executive Director of PPP Center; and
(i) The Private sector as Co-chairperson of the National Competitiveness
Council (NCC), as members.

The principal members of the Board may designate their respective alternates,
who 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 a quorum and a majority vote of the members Present shall be necessary for
the 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)
days from the date of submission thereof.

SECTION 24, Mandatory Inclusion of Alternative Dispute Resolution (ADR)
Mechanisms in PPP Contracts. — Al| PPP Contracts shall stipulate therein the use of
ADR mechanisms. The contracting parties shall be given complete freedom to choose
which ADR mechanisms shall govern their dispute, as well as the rules or procedures to
be followed in resolving the same.

SECTION 25. Creation of a PPP Contingent Liability Fund. — To ensure fiscal
sustainability and negotiate better financing terms of PPP Projects, there is hereby

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Created a PPP Contingent Liability Fund to be used for the payment of contingent
liabilities arising from PPPs in accordance to its contract terms.

The target amount in the PPP Contingent Liability Fund is to be determined by
the Development Budget Coordination Committee (DBCC) using risk-adjusted methods
or such other means that estimate the exposure of the Government of the Philippines to
PPP Contingent Liabilities,

The PPP Contingent Liability Fund shall be funded from the following sources:
(a) concession fees;

(b) Implementing Agency reimbursements;

(c) interest earnings from the PPP Contingent Liability Fund; and

(a) National Government contributions.

National Government contributions shall cover only the difference between the
target amount of the PPP Contingent Liability Fund, and the current value of the fund.
The DOF shall regularly monitor and review the viability of the PPP Contingent Liability
Fund in relation to the magnitude of PPP Projects undertaken by government, and if
necessary, recommend the increase in the target amount of the PPP Contingent
Liability Fund and the reason therefore, All National Government contributions to the
PPP Contingent Liability Fund shall be included in the proposed DOF budget.

When the value of the PPP Contingent Liability Fund is in excess of the target
amount, the excess funds may, upon the recommendation of the DBCC, be transferred
to the general fund of the National Government,

The Implementing Agency must seek confirmation from the DOF that the
National Government can bear the additional contingent liabilities associated with the
project, taking into consideration fiscal ‘sustainability,

Further, to foster accountability and efficiency in implementing PPP Projects, it is
mandatory for Implementing Agencies to enter into a recourse agreement with the DOF
before any payment can be drawn from the PPP Contingent Liability Fund for
contingent liabilities that have materialized within contract terms.

The Bureau of the Treasury shall maintain the PPP Contingent Liability Fund in
the Treasury Single Account. Interest eamings therefrom shall accrue to the PPP
Contingent Liability Fund.

SECTION 26. Penal Provision. — Any person, whether private individual or
public officer or employee, who commits any of the acts hereunder prescribed, shall be
punished by imprisonment from a minimum of three (3) years to a maximum of six (6)
years and one (1) day:


(a) Representation that the Project Proponent has the necessary capitalization
to commence, complete and implement the project when the same is false in
material respects; and

(b)  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.

SECTION 27. Miscellaneous Provisions. —

Safeguard Mechanisms to Protect Public Interest. In order to improve
transparency and to promote bankability and social acceptability of PPP Projects,
the following mechanisms shall be observed:

(1) Whenever applicable, the Implementing Agency shall assess the
affordability of fee or tariff, and conduct a willingness-to-pay survey among
the users of the Infrastructure Facility;

(2) The Implementing Agency shall conduct public consultation or dialogue
with all potential stakeholders, including the users, in all stages of the PPP
Project; and

(3) The Implementing Agency and the PPP Center shall post in their
respective websites the approved Starting fare or user fee in a PPP
Project as well as the approved Parametric formula on fare increases or
adjustments, if applicable.

Bulld-and-Transfer and Social Infrastructure PPP Projects. For PPP Projects
under the Build-and-Transfer scheme, as well as social infrastructure PPP
Projects, the Congress shall include the Necessary appropriations to meet the
financial obligations arising from such Projects on the fiscal year when the
obligation becomes due and demandable. Such appropriations shall be over and
above the annual budget of the Implementing Agency.

Joint Venture Agreements. For joint venture arrangements, the ownership of
the Infrastructure Facility may be transferred to either the Implementing Agency
or to the Project Proponent: Provided, That in the latter case, the transfer shall
be made under competitive market conditions: Provided, further, That the equity
Contribution of the Implementing Agency in a joint venture Corporation shall in no
case exceed fifty percent (50%) of the outstanding capital stock of the
corporation: Provided, finally, That the retum on investment of either party shall
be in proportion to their respective contribution,

Recovery of Investment. As may be agreed in the PPP Contract, the Project
Proponent may be allowed to collect tolls, fees, rentals, or charges, engage in

19


commercial development, receive VGF, and receive direct government
Payments, among others, to recover investment.

Wind-up and Transfer Measures. The PPP Contract shall provide, as
appropriate, for:

(1) Mechanisms and procedures for the transfer of assets to the
Implementing Agency;

(2) The compensation to which the Project Proponent may be entitled in
respect of assets transferred to the Implementing Agency, or to a
Successor, or purchased by the Implementing Agency;

G) The transfer of technology required for the Operation of the Infrastructure
Facility;

(4) The training of the Implementing Agency's personnel or of a successor in
the operation and maintenance of the Infrastructure Facility; and

(5) The provision, by the Project Proponent, of a warranty that the
Infrastructure Facility meets the Project technical specifications, agreed
‘system features, and performance standards and services for a certain
Period as may be defined in the IRR of this Act after the transfer of the
Infrastructure Facility to the Implementing Agency or to a successor.

Prescription. No one shall in any Proceedings before any court or tribunal allege
the invalidity of any PPP Contract on the ground of non-compliance with the
Provisions of this Act after a period of one (1) year has elapsed from the signing
of the PPP Contract.

Operation. The Private Person, whether or not the Project Proponent, that shall
actually operate and maintain the Infrastructure Facility, including but not limited
to the collection of tolls, fees, rentals, or charges from users of the Infrastructure
Facility, must be registered with the Securities and Exchange Commission,

Preferential Hiring of Filipino Workers. For the Construction stage of
Infrastructure Facilities where the Contractor is a foreigner, Filipino labor shall be
preferred in the employment and hiring in the different phases of Construction.

Contracts, Procedures, And Authority Not Affected by this Act. This Act
shall not affect:

(1) PPP Contracts entered into, and procurement Procedures for which the
invitation to pre-qualify and bid has been published, by Implementing
Agencies prior to the effectivity of this Act in accordance with the relevant
laws, regulations, guidelines, and ordinances; and

(2) The authority of LGUs to enact their own PPP ordinances, code or
guidelines provided that no statute will be infringed.
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SECTION 28. Joint Congressional Oversight Committee. — A Joint
Congressional Oversight Committee is hereby created to oversee the implementation of
this Act. The Committee shall be composed of five (5) members each from the Senate
and House of Representatives to be designated by the Senate President and the
Speaker of the House of Representatives, respectively. The Committee shall be jointly
chaired by the respective Chairpersons of the Senate Committee on Public Works, the
Senate Committee on Appropriations, the Senate Committee on Economic Affairs, and
the Senate Committee on Finance, and the House Committee on Public Works and
Highways, the House Committee on Appropriations, and the House Committee on
Economic Affairs. To effectively monitor the implementation of this Act, the PDP and the
priority list of national and local projects shall be submitted to the Joint Congressional
Oversight Committee.

SECTION 29. Implementing Rules and Regulations. — The members of the
PPP Governing Board shall designate their respective representatives who shall
constitute the IRR Committee. Within sixty (60) days from the effectivity of this Act, the
PPP Center shall formulate and prescribe, in consultation with the IRR Committee, after
public hearing and publication as required by law, the rules and regulations to
implement the provisions of this Act. The IRR shall be approved by the PPP Governing
Board,

From time to time the PPP Governing Board may instruct the PPP Center, in
consultation with the IRR Committee, to conduct, formulate and prescribe, after due
public hearing and publication, amendments to the IRR, consistent with the provisions
of this Act.

SECTION 30. Transitory Provisions. — 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 PPP Center
provided in this Act shall be determined by the PPP Goveming 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.

SECTION 31, Separability Clause. — If any provision of this Act is held invalid,
the other provisions not affected thereby shall continue in operation.

SECTION 32. Repealing Clause. — RA No. 6957, RA No. 7718, Sec. 3(a) of
Presidential Decree (PD) No. 1112, Section 2 of PD No. 1894, and EO No. 8 (s. 2010)
as amended by EO 136 (s. 2013), EO 78 (s. 2012), Section 8 of EO No. 423 (s. 2005),
2013 Revised Guidelines and Procedures for Entering Into Joint Venture Agreements
Between Government and Private Entities are hereby repealed. All other laws, rules

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

SECTION 33. Effectivity Clause. — This Act shall take effect fifteen (15) days
after its publication in the Official Gazette or at least one (1) newspaper of general
circulation.

Approved,