Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

NINETEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 1g 14

|
AN ACT STRENGTHENING PUBLIC-PRIVATE PARTNERSHIPS AND
APPROPRIATING FUNDS THEREFOR

INTRODUCED BY REPRESENTATIVE ROMEO S. MOMO, SR.

EXPLANATORY NOTE

While the existing Build-Operate-Transfer (BOT)/Public-Private Partnership (PPP) Law has
successfully generated several PPP projects, there is a need to strengthen the Law in order to
further expand the use of PPP, by making PPP projects more commercially attractive to private
investors and beneficial to the users and the Government. PPP is suitable especially for major
infrastructure projects that are financially viable to the private sector and affordable by the
facility users, such as expressways, railways, airports, energy, water resources, and information
and communication technology (ICT) projects. PPP can complement the limited Government
budgetary resources for infrastructure which can then be (partly) reallocated to more social-
oriented and non-financially viable projects.

Among the current major issues that should be addressed are the following:

Issues on accessibility to people and environmental sustainability of PPP Projects.
Inadequate transparency in PPP transactions.

. Inclusion of Joint Venture in the PPP Act.

Lack of awareness on other modes of financing PPP Projects.

Approving authorities and thresholds for National and Local PPP Projects.
Need for clear guidance on bid parameters to be used by the Implementing Agencies.
Need for clear guidance on forms of subsidy and maximum limit for a solicited PPP Project.

mmeaogp


b

h. Consideration of priority projects for unsolicited proposals.
i, Delays in infrastructure delivery.
j. Need to mitigate slippage and unnecessary costs.

This Bill seeks to address these issues through a new PPP Act which embodies the following
major provisions:

a. Section 2 - Declaration of Policy

(1) Foster private sector participation by ensuring a competitive climate through reduced
costs of doing business, providing proper financial incentives and government
undertakings.

(2) Protect the public interest by providing affordable, accessible, and efficient public
services.

(3) Provide for fair and reasonable pricing and timely delivery of quality infrastructure and
services through equitable risk allocation.

(4) Ensure that PPP Projects yield sufficient value for money.

(5) Take measures to integrate environmental sustainability and value for communities

(6) Maintain a reasonable balance on infrastructure financing to meet government’s
objectives.

(7) Determine appropriate financing by considering project drivers and constraints like
budget availability, timelines, stakeholder commitments, and market capacity,

(8) Affirm open, fair, transparent, and competitive selection in securing private investment in
PPP Projects.

b, Section 3 - Scope and Application
Includes Joint Ventures within the scope and coverage of the proposed new law.
¢. Section 4 ~ Definition of Terms

(1) Expands financing options to include Blended Finance, Co-financing, and Green Finance.
(2) Retains the 50% cap on the amount of Subsidy.

d. Section 6 — Priority Projects

(1) Applies the following principles in identifying priority projects: (a) effectiveness in
meeting government objectives, (b) value for money, (c) accountability and ney,
(@) consumer rights, (e) affordability, (£) public access, (g) safety, and (h) security.

(2) Uses Multi-Criteria Analysis in project screening.

e. Section 7 — Approval of PPP Projects
(1) Increases the thresholds for approvals and delegates updating thereof to the ICC-NEDA.

(2) Sets the parameters in determining Project Cost for each type of PPP project.
(3) Authorizes the PPP Center to approve PPP projects costing PS billion and below.


(4) Provides for approval of local PPP projects by the local Sanggunians regardless of cost.
(8) Sets the guidelines in setting the financial bid parameters.

Section 8 — Solicited Proposals

(1) Provides for conduct of open, fair, transparent, and competitive public bidding.

(2) Allows government undertakings subject to prior approval by the Approving Body.

(3) Gives importance on affordable user fees and efficient services in awarding a PPP
contract.

(4) Identifies the instances where there is failure of bidding.

(5) Authorizes the Implementing Agency to consider single complying and responsive bid.

(6) Allows electronic bid submission.

. Section 9 — Unsolicited Proposals

(1) Allows unsolicited proposals involving priority projects and requires reimbursement by
the Private Proponent of project development costs incurred by the Implementing
Agency.

(2) Provides for automatic conversion of unsolicited proposal for a priority project requiring
government undertaking into a solicited bid.

(3) Shifts from Swiss challenge system to Best-and-final-offer system in the conduct of
comparative challenge. |

(4) Provides for reimbursement of development costs incurred by the original proponent.

(5) Allows electronic bid submission.

|. Section 11 - Contract Management and Risk Mitigation and Contingent Liabilities

(1) Requires the adoption of Contract Management and Risk Mitigation Plan.
(2) Allows capping in the amount of contingent liabilities.

|
Section 12 - Project Supervision and Monitoring, Impact Evaluation, Value Engineering
Studies, and Building Information Modelling

(1) Clarifies institutional roles on project supervision, monitoring, and impact evaluation.
(2) Provides for mandatory application of value engineering in PPP projects.
(3) Prescribes Building Information Modeling (BIM) or similar automated management tool.
Section 13 — Investment Incentives
Grants existing incentives to PPP projects. |

. Section 14 — Principles of Compensation for Private Proponent
Sets the principles in determining the methods and terms of compensation.

Section 15 — Investment Recovery Scheme


(1) Prescribes repayment mechanism for revenue-based and availability-based PPP projects.
(2) Sets guidelines in determining the maximum rate of return.

. Section 16 — Regulation
Provides that regulation of PPP projects can be through a regulatory body or contract.
|. Section 17 - Variation, Expansion, or Extension of an Existing PPP Project

(1) Allows contract variation
(2) Allows expansion/extension of an existing project up to 50% without further bidding.

. Section 19 — Contract Termination
Gives the contracting parties the right to compensation in case of contract termination.
. Section 21 - Temporary Restraining Orders and Preliminary Injunctions

Includes proscription against issuance of such Orders and Injunctions.

|. Section 22 — PPP Center

(1) Institutionalizes the PPP Center and expands its functions and responsibilities.
(2) Attaches the PPP Center to the Department of Finance.

Section 25 - Creation of a Risk Management Fund
Creates the Risk Management Fund and strengthens its governance framework.
Section 26 - Establishment of a PPP Unit

Requires the mandatory establishment of a PPP unit in every Implementing Agency
Section 28 - Miscellaneous Provisions

(1) Requires Memorandum of Agreement for an interconnection or interface plad of projects.

(2) Provides for automatic grant by the regulatory body of franchise, permits, license,
certificates, or other similar authorizations.

(3) Provides for standardization of Real Property Tax (RPT) valuation and exemption of
Greenfield PPP Projects from payment of RPT.

(4) Exempts PPP projects from payment of transfer taxes.

(5) Adopts standard timelines and requirements for endorsements, approvals, and permits.

(6) Provides for mandatory inclusion of dispute avoidance and alternative dispute resolution
mechanisms in PPP contracts.


(7) Prohibits national Implementing Agency from implementing a PPP project that it
regulates.

(8) Requires the regulatory agency or body to adopt a conflict mitigation and management
plan for its own PPP projects.

(9) Allows alternative sources of financing like Green Financing, corporate or project bonds
and securities, and other forms of capital market financing.

(10) Provides for free private legal assistance to Bids and Awards Committee (BAC)
members and other public officials serving the BAC, and free medical assistance to BAC
members

(11) Prescribes preferential hiring of Filipino workers during the construction stage.

(12) Prescribes safeguard mechanisms to protect public interest.

(13) Provides for land value capture strategies.

u. Section 29 — Implementing Rules and Regulations (IRR)
Creates an inter-agency IRR Committee.

Early approval of this Bill is earnestly sought.


10

oe

Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

NINETEENTH CONGRESS
First Regular Session

House BiLLNo__1974

INTRODUCED BY REPRESENTATIVE ROMEO  S. Momo, SR.

AN ACT
STRENGTHENING PUBLIC-PRIVATE PARTNERSHIPS AND
APPROPRIATING FUNDS THEREFOR

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

SECTION 1. Short Title. — This Act shall be known as the “Public-Private
Partnership (PPP) Act of 2022.” |

SEC. 2. Declaration of Policy. — Section 20, Article Il, of the Constitutign provides
that the State recognizes the indispensable role of the private sector, encourages private
enterprise, and provides incentives to needed investments, Furthermore, it is the declared
policy of the State to recognize the private sector as the main engine for national growth and
development, and provide an enabling environment for private sector participation to
mobilize private resources for the purpose of financing, designing, constructing, operating
and maintaining development programs and projects normally undertaken by the government.
Aside from financial incentives as provided by law, the government shall foster robust private

sector participation by ensuring a competitive climate through reduced costs of doing


10

coe

22

13

14

15

16

7

18

19

20

2

22

23

24

25

business by providing cost-effective and time-saving government regulations and procedures
and specific government undertakings in support of the private sector without endangering
the county’s fiscal strength.

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

Furthermore, it is declared that the State shall ensure that all PPP Projects yield
sufficient value for money to optimize the use of resources in order to achieve better quality
of PPP Projects at lower costs. It shall also take appropriate measures to integrate
environmental sustainability and value for the communities involved in the evaluation,
planning, and implementation of PPP projects.

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

Finally, it is declared that the State shall affirm open, fair, transparent, and
competitive selection as the central tenet for securing private investment in PPP Projects. It
shall implement a policy of full public disclosure of all its transactions involying public
interest, subject to limitations under existing laws.

SEC. 3. Scope and Application. — This Act shall apply to all PPP Projects undertaken

by Implementing Agencies through PPP contracts with a Private Proponent, including Joint


1

Fi

10

oe

2

13

14

15

16

7

19

20

21

22

23

24

25

Ventures, as defined under this Act. It shall likewise apply to and be enforceable among all

parties to said PPP contracts.

Implementing Agencies are hereby authorized to undertake PPP Projects through PPP

contracts with a Private Proponent in accordance with this Act.

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

(a)

)

©

@

©

(h)

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

Blended Finance — refers to the strategic use of combined concessional funds
from development institutions or partners and commercial funds from lenders and

private investors to provide financing for PPP Projects.

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

|
Co-financing — refers to collaborative financing of the same PPP Project by two

‘or more banks or other lending institutions. |

Construction - refers to new construction, rehabilitation, improvement, expansion,

alteration, and related works and activities including the necessary supply and
installation of equipment, materials, labor and services, and related items;
Contractor - refers to any entity allowed under Philippine laws, which may or
may not be the Private Proponent, and which shall undertake the actual
construction or supply of equipment for the PPP Projects;

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

Facility Operator - refers to an entity with legal personality authorized under

existing laws, which may or may not be the Private Proponent, that shall be



10

nu

12

13

14

15

16

7

18

19

20

2.

22

23

24

25

26

@

@

®
oO

(m)

(n)

responsible for all aspects of operation and maintenance of a facility, including,
bt not ai to, the: colistoa of tos, ee, rénita ot changes fbn Belt
users;

Fair market value — refers to the estimated amount for which a property shall
exchange on the date of valuation between a willing buyer and a willing seller in
an arm’s length transaction which is a transaction between independent, unrelated
parties involving no irregularity, after proper marketing wherein the parties had
each acted knowledgeably, prudently, and without compulsion: Provided, that fair
market value may be higher than the value reflected in the Schedule of Market
Values (SMV) enacted by the concerned Sanggunian or any othet valuation
undertaken by a government agency for whatever purpose prior to the ttansaction
Government Undertakings - refers to any form of contribution and support, which
the government may extend to a Private Proponent for the implementation of PPP
Projects;

Greenfield Project - refers to a pioneer development program or project;

Green Finance — refers to investments that create environmental benefits in

support of green growth, low-carbon, and sustainable development.

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

Joint Venture (JV) ~ refers to a contractual arrangement whereby both the
Implementing Agency and the Private Proponent contribute to pool resources

4


10

te

12

13

14

15

16

17

18

19

20

2

22

23

24

25

26

©)
®)

@

©

)

10)

comprising of capital, services, or assets (including equipment, land or intellectual
property) to jointly undertake a specific investment activity. The investment
activity shall be for the purpose of accomplishing a specific goal with the end
view of facilitating private sector initiative in a particular industry or sector, and
eventually transfer the activity to either the private sector under competitive
market conditions or to the government. The JV involves a community or pooling
of interests in the performance of the investment activity, and each party shall
have the right to direct and govern the policies in connection therewith with the
intention to share both profits, and risks and losses subject to agreement by the
parties. A JV may be undertaken through a contract or by creating a JV entity;
Local PPP Project - refers to a PPP Project that shall be undertaken by an LGU;
National PPP Project - refers to a PPP Project that shall be undertaken by the
national government, GOCC, GICP, GCE, GFI, or SUCs;

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

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

Private Proponent - refers to the private sector entity which shall have contractual

responsibility for the PPP Project. The Private Proponent may be f
foreign-owned, and may engage the services of a foreign Contractor|or foreign
Facility Operator, subject to requirements and limitations provided under the
Philippine Constitution;

Subsidy - refers to an agreement whereby the Implementing Agency shall:


10

oe

12

13

14

15

16

7

18

19

20

21

22

23

24

a. defray, pay for, or shoulder a portion of the Project Cost or the expenses and

costs in operating or maintaining the project; |

b. contribute any property or assets to the project;

¢. waive or grant special rates on real property taxes on the project during the

term of the contractual arrangement; and/or

d. waive charges or fees relative to business permits or licenses that are to be

obtained for the construction of the project,

all without receiving payment or value from the Private Proponent and/or Facility
Operator for such payment, contribution, or support: Provided, That under no
circumstance shall the total subsidy exceed fifty percent (50%) of the total Project

Cost;

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

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

SEC. 6. Priority Projects. — Implementing Agencies shall include in their
development plans, strategies, and investment programs priority PPP Projects. In identifying

those projects, the Implementing Agencies shall be guided by the following principles:


10

coe

12

13

14

15

16

18

19

20

2a

22

23

24

25

26

effectiveness in meeting government objectives, value for money, accountability and
transparency, consumer rights, affordability, public access, safety, and security. Priority
projects shall be consistent with the national and local development and investment plans.

The Implementing Agencies shall submit their list of PPP Projects or any update
thereto to the PPP Center, referred to in Section 22 of this Act, for information. Each
proposed PPP Project shall be subject to the approval of the appropriate Approving Body.

In addition, the Implementing Agency shall adopt methodological guidelines for
project screening as authorized by the PPP Governing Board pursuant to this Act. The
guidelines shall define a multi-criteria analysis that integrates financial, economi¢, technical,
legal, environmental, and social standards to attract Blended Finance, Co-financing, and
Green Finance for Priority Projects. |

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

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

(1) National PPP Projects. National PPP Projects costing up to five billion pesos
(P5,000,000,000.00) shall be approved by the PPP Center unless overturned by the
Investment Coordination Committee of the National Economic and Development Authority
(ICC-NEDA) within thirty (30) days from the date of approval. Projects costing more than
five billion pesos (P5,000,000,000.00) shall be approved by the NEDA Board, upon prior
recommendation by the ICC-NEDA. The ICC-NEDA may, from time to time, update the
aforementioned thresholds when the need arises, Project cost shall be determined + follows:

(@) For Greenfield Projects, it shall refer to the total capital expenditure;
(i) For Brownfield Projects, it shall refer to the sum of teal capital

expenditure and remaining book value of the asset or system; |

(iii) For Operation and Maintenance agreements:


10

oe

12

2B

14

15

16

7

18

19

20

2a

22

23

24

25

a. It shall refer to the remaining book value of the asset or system in
case of concession-based PPP Project; and

b. It shall refer to the present value of total government payments in
case of availability-based PPP Project; |

(iv) For JV projects, it shall refer to the total amount of contributions of the

government to the project in present value with discount rate as

prescribed by the appropriate Approving Body. The said discount rates

shall be regularly published in the NEDA website.

(2) Local PPP Projects. Local PPP Projects shall be approved by the local
Sanggunians, regardless of the project cost, Provided, That Local PPP Projects involving
Government Undertakings using national government funds shall require the approval of the
PPP Center for projects up to five billion pesos (P5,000,000,000.00) in project cost and by
the ICC-NEDA for projects with project cost of above five billion pesos (P5,000,000,000.00).
‘The disapproval of the requested national Government Undertakings shall not preclude the
local government from pursuing the PPP project without the requested national Government
Undertakings, notwithstanding any laws, rules, or regulations to the contrary. National
Government Undertakings shall include, among others, the following items be provided by
the national govemmment to a Local PPP Project: (i) Guarantees on Demand, (ii) (Guarantees
on Private Sector Retum, (iii) Guarantees on Loan Repayment; (iv) Viability Gap Funding
and other forms of Subsidy; (v) payment of Contingent Liability, including Termination
Payments.

Provided, further, That permits, clearances, licenses, or endorsements from national
government agencies required for Local PPP Projects under laws, rules, and regulations, shall
not be considered as Government Undertakings by the national government for Local PPP

Projects.


10

1

2

123

14

15

16

7

18

19

20

21

22

23

24

25

26

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

(©) The Implementing Agency shall set the financial bid patameters to
determine the most advantageous bid based on the following guidelines which
shall be included in the bidding documents:

1. For Revenue-based PPP Project which does not require any form bf Subsidy,
the bidding parameter shall be the lowest starting tariff or user chatge below a
prescribed ceiling, or highest revenue share above a prescribed flgor, as may
be appropriate;

2. For solicited Revenue-based PPP Project which requires Viability Gap
Funding, the bidding parameter shall be the lowest VGF or starting tariff or
user charge below the prescribed ceiling:

3. For Availability-based PPP, the bidding parameter shall be the lowest
amortization payment or other equivalent forms;

4. For Operations and Maintenance PPP Project, the bidding parameyer shall be
the lowest Operations and Maintenance fee. |

(@) The Implementing Agency may consider other financial bid parameters
appropriate for a PPP Project, subject to the approval of the Approving Oe

(e) The appropriate Approving Body shall act on the project within thirty
(30) working days upon satisfactory compliance by the concemed Implementing

Agency with the requirements of the appropriate Approving Body. Failure of the


10

1

12

13

14

15

16

7

18

19

20

2

22

23

24

25

26

appropriate Approving Body to act on the project within the specified period shall
be deemed an approval thereof and the concerned Implementing Apiay may
proceed with the procurement of the PPP Project.

SEC. 8. Solicited Proposals. ~ Solicited Proposals refer to submissions by the Private
Proponent to bid for priority PPP Projects through open, fair, transparent, and competitive
public bidding initiated by the Implementing Agency. Government Undertakings are allowed,
subject to the approval of the Approving Body.

The public bidding may be conducted in a single-stage or two-stage bidding process.
The prequalification documents, technical, and financial proposals shall be submitted in at
least three (3) separate envelopes. Electronic bid submission may also be allowed.

The contract shall be awarded to the bidder who has passed the prequliation stage
after having satisfied the prescribed minimum financial, organizational, and legal standards,
has passed the technical proposal evaluation, and has submitted the most favorable financial
bid based on the parameters defined in the bid documents. Affordable user fees and efficient
public services shall be of paramount importance in awarding a PPP contract.

The Implementing Agency shall declare failure of bidding in case of any of the
following:

a. Ifno bids are received;

b. If there are no complying bids;

c. If, after advertisement, only one bidder applied for and met the pre-qalifcation,

unless otherwise allowed by the ICC-NEDA.

The Implementing Agency may consider, on a negotiated basis, a single complying
and responsive bid in case of any of the following:

a. If, after advertisement, more than one bidder applied for pre-qualification but only

one met the pre-qualification requirements;

b. If, after pre-qualification of more than one bidder, only one submitted a bid; or

10


10

1

12

2B

4

15

16

7

18

19

20

21

22

23

24

25

26

c. If, after pre-qualification, more than one bidder submitted bids but only one is

found by the Implementing Agency to be complying.

If the winning bidder fails to comply with any post-award requirement or fails to enter
into a contract with the Implementing Agency, the latter may proceed to consider the next
technically and financially qualified bidder. In case the contract is awarded to the next
technically and financially qualified bidder, it shall be without prejudice to legal remedies
available to the Implementing Agency like forfeiture of bid security, withdrawal of award,
and such other remedies allowed under existing laws and the PPP contract.

The head of the Implementing Agency shall create a Bids and Awards Committee
(BAC), which shall be responsible for all aspects of pre-bidding and bidding process in
solicited proposals, or the comparative bidding process in unsolicited proposals. The
composition of the BAC shall be specified in the IRR of this Act which may ixlude other
relevant government agencies.

Any change in control of the Private Proponent or composition of the consortium after
the submission of a solicited proposal shall be subject to the approval of the Implementing
Agency.

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

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

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

Implementing Agency has already incurred any development cost for the priority project,

| 1


10

1

12

13

4

15

16

17

18

19

20

21

22

23

24

25

26

such as the conduct of feasibility study, business case, and surveys, among others, for the last
five (5) years, the Private Proponent must undertake to reimburse the Implementing Agency
of such documented development costs. Reimbursable development costs for a specific
priority project shall be determined by the Implementing Agency.

An unsolicited proposal for a priority project which requires a Government
Undertaking may be accepted by the Implementing Agency: Provided, That such proposal
shall be automatically converted to a solicited bid.

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

a. Viability Gap Funding and other forms of Subsidy;

b. Payment of Right-of-Way related costs;

c. Performance undertaking;

d. Exemption from any taxes as required by laws, except local taxes imposed by

local government units;

e. Guarantee on Demand;

f. Guarantee on Loan Repayment;

g. Guarantee on Private Sector Return;

h. Government equity except in JV arrangements; and

i, Contribution of assets, properties, and rights except in JV arrangements,

As an exception, item (i) above may be allowed provided the government owns the
Right-of-Way, asset, property or rights and receives compensation based on fair market
value.

In cases where the Implementing Agency receives more than one unsolicited proposal
involving the same or similar project within one (1) year, the Implementing Agency may

reject all such proposals, and instead, bid out the project as a solicited proposal. Otherwise,

12


10

1

12

13

14

15

16

7

18

19

20

21

22

23

24

25

26

the Implementing Agency shall evaluate the proposals using a first in time approach. Under
this approach, the first complete proposal is evaluated and decided upon. ‘The second
complete proposal shall only be processed if the first one is rejected or if there ig a failure in
the negotiation of the first proposal within two (2) years from submission thereof.

If the Implementing Agency accepts, on a negotiated basis, an unsolicited proposal, it
shall grant the Private Proponent who submitted the unsolicited proposal an “Original
Proponent” status, which shall be valid for a period not exceeding one (1) year, and may be
extended by the head of the Implementing Agency, Provided, That such extension shall not
exceed a period of one (1) year.

The Implementing Agency shall publish an invitation for the submission of
‘comparative proposals.

‘The comparative challenge shall be conducted either manually or electronically, by
the Implementing Agency within the period proposed by it and approved by the appropriate
Approving Body, taking into consideration the nature and complexity of the PPP Project;
Provided, That the period shall start from the date of last publication of the invitation for the
submission of comparative proposals and shall be reasonable, fair, and upholds the
competitive nature of public budding. Comparative proposals shall be evaluated based on the
best-and-final offer method, the procedure of which shall be discussed in the IRR. If no other
proposal is received after the challenge period, the PPP contract shall be awarded to the
Original Proponent.

If the Implementing Agency converts an unsolicited proposal and uses it as basis for
public bidding, the original proponent shall be reimbursed of the cost incurred in the
preparation of the proposal, such as the cost of any feasibility study undertaken: Provided,
‘That such reimbursement shall be in an amount as may be determined in the IRR of this Act,
excluding those which are borne by the Implementing Agency, such as the cost ot right-of

way acquisition: Provided, further, That such reimbursement shall be paid in full by the

13


10

uu

2

13

14

15

16

7

18

19

20

2

22

23

24

26

winning bidder as a requirement for the award of the contract, or by the Implementing
Agency in case of two consecutive failures of bidding. The PPP Governing Board, as referred
to in Section 22 of this Act, may adjust the amount of reimbursement cost as the need arises.
If the Implementing Agency fails to act on an unsolicited proposal within sixty (60) working
days from receipt thereof, the project proposal shall be deemed rejected, without prejudice to
any liability that the erring or negligent officials or employees may incur under existing laws.

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

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

‘Any change in control of the Private Proponent or composition of the consortium after
the submission of an unsolicited proposal shall be subject to the approval of the
Implementing Agency.

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

(a) In case of National PPP Projects:

( Decisions of the BAC may be questioned by filing a motion for reconsideration
within fifteen (15) working days from receipt thereof. The BAC shall act on the motion and
render a decision within forty-five (45) calendar days, otherwise it shall be deemed denied.

(ii) The decision of the BAC on the motion for reconsideration in the immediately
preceding paragraph may be further questioned by filing an appeal to the head of the
Implementing Agency concemed, and paying a non-refundable appeal fee in an amount

equivalent to no less than % of 1% of the project cost within fifteen (15) working days from

14


10

ai.

12

13

14

15

16

w7

18

19

20

2

22

24

25

receipt thereof. The head of the Implementing Agency shall act on the appeal and render a
decision within forty-five (45) calendar days, otherwise it shall be deemed denied,

If the head of the Implementing Agency in the immediately preceding paragraph is
not a Department Secretary, the decision of the head of the Implementing Agency may be
further questioned by filing an appeal to the Secretary of the Department to which the
Implementing Agency is attached within fifteen (15) working days from receipt thereof . The
Department Secretary shall act on the appeal and render a decision within forty-five (45)
calendar days, otherwise it shall be deemed denied.

(iii) The decision of the Department Secretary in the immediately preceding
paragraph may be questioned by filing an appeal to the Office of the President within fifteen
(15) working days from receipt thereof. If, within forty-five (45) calendar days, the Office of
the President does not act on the appeal, the same is deemed denied.

(b) In the case of Local PPP Projects:

(@ Decision of the BAC may be questioned by filing a motion for reconsideration
within seven (7) calendar days from receipt thereof. The BAC shall act on the motion and
render a decision within forty-five (45) calendar days, otherwise it shall be deemed denied.

(ii) The decision of the BAC on the motion for reconsideration in the immediately
receding! peragsapl may. be-furter' questioned ‘by filing’ n.‘eppeal to’ the ocalchieé
executive or his authorized representative concerned within seven (7) calendar days from
receipt thereof, and paying a non-refundable appeal fee in an amount equivalent to no less
than 1/2 of 1% of the Project Cost. The local chief executive shall resolve the appeal within
forty-five (45) calendar days from receipt thereof, otherwise it shall be deemed denied. The
selection process will be suspended for a maximum period of forty-five (45) calendar days
while the appeal is being evaluated. The decision of the local chief executive or his

authorized representative on the appeal shall be final and immediately executory.

15


10

Soe

12

13

14

15

16

7

18

20

21

22

23

24

25

26

Unless otherwise provided in this Act, in no case shall a motion for reconsideration or
an appeal from any decision by the BAC, Head of Implementing Agency, or Department
Secretary stay or delay the bidding process. No award shall however be made until a decision
on any pending appeal is rendered, or deemed denied.

‘SEC. 11. Adoption of Contract Management and Risk Mitigation Plans in PPP
Projects and government contingent liabilities cap clauses. — In order to manage the fiscal
risks arising from PPP Projects, strengthen the credibility of the PPP program and projects
among the private sector, and to ensure the timely compliance with the contractual
obligations of Implementing Agencies, projects undertaken shall require the adoption of a
contract management and risk mitigation plan (CMRMP). The CMRMP shall contain the
agreed project execution plan and risk mitigation plans of the contractual parties, which shall
ensure that value for money derived from undertaking a PPP Project shall not be diminished
and that all risks are mitigated, to avoid contingent liabilities from being realized. All
CMRMPs shall be submitted to the PPP Center for monitoring. The procedures in creating,
managing, and monitoring the CMRMP shall be prescribed in the IRR.

Wherever acceptable to the Private Proponent or other contracting parties, the
Implementing Agency may also pursue the inclusion in the governing terms of a PPP project
of a ceiling to the contingent liabilities that the government shall be contractually obliged to
bear or realize in favor of the Private Proponent or other contracting parties.

SEC. 12. Project Supervision and Monitoring, Impact Evaluation, Value
Engineering Studies, and Building Information Modelling. — Every PPP Project shall be
implemented in accordance with the project terms as approved by the appropriate Approving
Body, as well as the signed PPP contract. The coverage of the project terms and the minimum
required provisions in a PPP contract shall be set forth in the IRR of this Act. The
Implementing Agency shall be entitled to exercise sufficient powers of supervision,

monitoring, and control over the implementation of each PPP contract it has entered into.

16


10

eet

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

(a) Supervision. The Implementing Agency shall be responsible fot the overall
supervision of the PPP Project and for submission of periodic monitoring reports, executed
under oath, to the appropriate oversight agencies. The approval by any public officer of any
certificate of compliance or certificate of completion that is submitted by the Private
Proponent shall also be made under oath. The liability of the public officer or former public
officer for any criminal act under existing pertinent laws related to the actions made on such
reports and such approvals shall survive the retirement of the public officer, the termination
of the project contract, and the lapse of the applicable warranty period/s.

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

‘The PPP Center shall be responsible for the coordination and monitoring of projects
implemented under this Act. For this purpose, the Implementing Agency shall submit to the
PPP Center all executed PPP contracts, information on the status of projects implemented by,
as well as copies of all unsolicited proposals and related documents received by, the former.

At the end of every calendar year, the PPP Center shall submit a report to the
President of the Philippines and to the Congress of the Philippines- particularly to the Senate
President and the Speaker of the House of Representatives, and the Chairpersons of the
Committee on Public Works - on the progress of all projects implemented under this Act.

(©) Impact Evaluation. As the primary socio-economic policy think tank of the
national government, the Philippine Institute for Development Studies (PIDS) is hereby
mandated to conduct periodic impact evaluation studies of PPP Projects implemented under
this Act. The results of these studies shall be submitted to the PPP Governing Board, the PPP
Center, and other relevant oversight agencies.

(d) Value Engineering Studies - In order to improve value ad eos,
unnecessary costs, value engineering, management, and analysis shall be appl in PPP

projects under this Act, as necessary. The submission of value engineering strategies, and

17


10

1

2

13

14

15

16

7

18

19

20

21

22

23

24

25

periodic reports on the status of such strategies, shall be imposed by the PPP Governing
Board as a requirement for PPP projects. The details of such application shall be provided in
the IRR of this Act.

(©) _ Building Information Modeling (BIM) or similar automated management tool-
For all PPP projects under this Act, Implementing Agency shall use the BIM or similar
automated management tool that will provide a digital representation of the physical and
functional characteristics of a facility, including time and cost elements, during its entire life-
cycle. The Implementing Agency shall require the use, by all project proponents and
concessionaires, of BIM or similar tool, as part of the prescribed minimum performance
standards and specifications. The Implementing Agency shall also use the BIM in monitoring
and evaluating the project performance in all phases of the project life-cycle.

SEC. 13. Investment Incentives. - PPP Projects undertaken through this Act shall be
entitled to various incentives under applicable laws and existing policies of the ev

SEC. 14. Principles of Compensation for Private Proponent. ~ In determining the
method and terms of compensating the Private Proponent for the functions it will undertake
within the PPP, the following principles shall be observed in the terms of the PPP:

(a) The private firm shall be given adequate opportunity to recover the costs of
undertaking the functions assigned to it, including the cost of bearing the risk of undertaking
these functions, subject to the conditions set under Section 15 of this Act;

(b) Notwithstanding overriding social equity considerations,and except where clear
policy objectives justify a subsidy towards operations, fees and tariffs paid by end-users shall
be set at or as close as possible to the full long-run marginal cost of providing the services
they receive;

(c) A strong system of incentivizing firms to meet service or asset maintenance

|
standards shall be in place; and |

18


a

10

uu

13

14

15

16

7

18

19

20

2

22

23

24

25

26

(d) The identified method of compensating the Private Proponent shall be consistent
with the risk allocation and mitigation mechanism set in place pursuant to Section 11 of this
Act.

SEC. 15. Investment Recovery Scheme. — \n undertaking PPP Projects, the Private
Proponent shall be allowed to recover its investments and earn profit within an allowed Rate
of Return (ROR) set in the terms of the PPP through any of the following schemes or a
combination thereof:

a. Revenue-based - refers to a scheme where the Private Proponent is
authorized to charge and collect, in whole or in part, from the public reasonable
user fees or tariffs not exceeding those agreed in the contract subject to
appropriate regulation in accordance with Section 15 of this Act. Where
applicable, the Private Proponent may likewise be repaid in the form of a share in
the revenue of the project; and

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

Other non-monetary payments, such as commercial development rights, or the grant
of a portion or percentage of the reclaimed land, subject to the constitutional requirements on
land ownership, may also be allowed to supplement the foregoing schemes, Provided, that
where non-monetary payments are the option taken by the Implementing Agency, it is
required to justify the option through value management and engineering analysis, cost-
benefit analysis, and other quantitative and qualitative studies to ensure that the State is not
unduly disadvantaged, and that the financial valuation of the non-monetary payment justifies

the option and approximates the value of the monetary payment if the same were taken as the

19


10

ee

12

13

14

15

16

7

19

20

21

22

23

24

25

26

option instead: Provided further, that such justification shall be included in the reports to
Congress required under this Act.

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

Where the revenue-based option is taken such that fees or tariffs are charged the end
user, the fees or tariff’ shall be set at the lowest level that end users are willing to pay or that
recovers the full cost of service; Provided that where the tariff is lower than the full cost of
service, the government may set a subsidy whose mechanism maximizes the policy objective
of the subsidy, reaches its intended beneficiaries in a cost-efficient manner as justified by a
cost-benefit analysis, and is acknowledged by the Secretary of Finance to be fiscally
sustainable; Provided further, that the disbursement of the subsidy shall be linked to the
private partner or private proponent meeting service provision or asset maintenance
standards.

SEC. 16. Regulation. — All PPP Projects shall be subject to regulation by the
appropriate regulatory body or by contract in the absence of the former.

SEC. 17. Variation, Expansion, or Extension of an Existing PPP Project. — A
contract variation, which includes expansion, extension, augmentation of capacity, among
others, that is not within the approved scope of an existing PPP Project may be allowed by
the Implementing Agency, subject to the rules and procedures as provided in the IRR of this
Act: Provided, That upon prior approval by the Approving Body, the Private Prophnent of an

existing PPP Project may be allowed to expand or extend the same even without further

20


10

cee

12

13

14

15

16

7

18

19

20

2

22

23

24

25

bidding: Provided, further, That the cost thereof shall not exceed fifty percent (50%) of the
price-adjusted original approved Project Cost: Provided, finally, That any| subsequent
expansion or extension shall no longer be allowed, and such shall be considered a new project
and shall be tendered accordingly.

‘Any pending application for contract variation, expansion or extension of an existing
PPP project, that has not yet been approved prior to the effectivity of this Act shall be
governed by this Act retroactively.

SEC. 18. Divestiture/Divestment. ~ Subject to the approval of the head of the
Implementing Agency, a Private Proponent may divest its ownership, rights, or interest in a
PPP Project: Provided, That the divestiture shall be after a holding or lock-in period as
indicated in the PPP contract: Provided, further, That the new Private Proponent has equal or
better qualifications as with the previous Private Proponent.

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

SEC. 19. Contract Termination. — If a PPP contract is revoked, cancelled or
terminated prior to its completion, either contracting party shall compensate the other party
pursuant to terms as defined in the PPP contract. Depending on the contractual stipulations,
the grounds for contract termination which would warrant the right of compensation may
include, but are not limited to, default, insolvency, unlawful divestment or divestiture, or
other unlawful acts, by the Private Proponent or by the government.

SEC. 20. Decommissioning, Wind-up, and Transfer Measures. — All PPP contracts
shall provide for decommissioning, wind-up, and transfer measures. Such proyision shall

|
include, among others, the following:

24


10

un

2

13

14

15

16

7

18

19

20

21

22

23

24

25

26

(©) Mechanisms and procedures forthe tnsfr of asets fo the Unplementng
Agency;

(b) The transfer of technology required for the operation of the PPP Project,
‘subject to limitations under existing laws, rules and regulations;

(©) The training of the personnel of the Implementing Agency or of a successor in
the operation and maintenance of the PPP Project;

(@ The provision, by the Private Proponent, of a warranty that the PPP Project
‘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 PPP Project to the Implementing Agency or to a successor; and

(© _ Incase of JV Projects, the compensation to which the Private Proponent may
be entitled in case of buy-out and transfer of assets to the Implementing Agency, or to a
successor,

SEC. 21. Prohibition on the issuance of Temporary Restraining Orders,
Preliminary Injunctions and Preliminary Mandatory Injunctions. — No, temporary
restraining order, preliminary injunction, or preliminary mandatory injunction shall be issued
by any court, except the Supreme Court, against any Implementing Agency or the PPP
Center, its officials or employees, or any person or entity, whether public or private acting
under the government direction, to restrain, probibit, or compel the following acts:

a. Bidding, rebidding, or declaration of failure of bidding of PPP Projects;

b. Qualification or disqualification of bidders;

c. Awarding of PPP contract;

4. Acceptance of any unsolicited PPP Project proposal, even if not acted upon by the

Implementing Agency concemed under Section 9 of this Act;
©. Acquisition, clearance, development of the right-of-way, site or location of any

PPP Project;

22


10

1

12

13

14

15

16

17

18

19

20

2a

22

23

24

25

£ Construction, operation and maintenance of any PPP Project;

g. Commencement, execution, implementation, termination or rescission of any PPP

contract; and

h. Undertaking or authorization of any other lawful activity necessary for such PPP

Project or contract.

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

In addition to any civil and criminal liabilities a judge may incur under existing laws,
any judge who shall issue a temporary restraining order, preliminary injunction ot
preliminary mandatory injunction in violation of this Section, shall suffer the penalty of
suspension of at least sixty (60) days without pay.

Any temporary restraining order, preliminary injunction, or preliminary| mandatory
injunction issued in violation of this section is void and of no force and effect.

SEC. 22. PPP Center. ~ To achieve the goals of this Act, the PPP Center created
under Executive Order No. 8, series of 2010, as amended by Executive Order No.|136, series
of 2013, is hereby institutionalized, It is hereby 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:

a Assist Implementing Agencies in identifying, developing, prioritizing, and

maintaining a pipeline of PPP Projects; |

23


1 b. Provide advisory services, technical assistance, trainings, and capacity

2 development to Implementing Agencies in all PPP-related matters, and act as a
3 procurement agent upon the request of the Implementing Agency;
4 ©. Manage and administer the Project Development and Monitoring Facility (PDMF)
5 as provided in Section 23 of this Act;
6 4. Recommend plans, policies, and implementation guidelines related to PPP, in
7 consultation with appropriate oversight committees or agencies, Implementing
8 Agencies, private sector and other relevant stakeholders;
9 €. Ensure the sustainability of the PPP program by monitoring, capturing, and
10 sharing lessons learned from PPP Projects;
n £ Submit reports to the Office of the President and the Congress of the Philippines
2 on the implementation of PPP program and projects of the government at the end
1B of each year;
14 g. Promote and market PPP programs and projects, in collaboration with other
15 government investment promotion agencies;
16 h. Issue advisory opinions relating to PPPs;
v7 i. Serve as the central repository of all PPP Project documents, including all
1B executed PPP contracts and any subsequent amendment or supplement thereto,
19 including settlement agreements, entered into by Implementing Agencies;
20 j. Actas Secretariat to the PDMF Committee and the PPP Governing Rote
21 k. Perform such other functions as may be necessary to achieve the objectives and
2 purposes of this Act. |
23 The PPP Center shall report directly to the PPP Governing Board and shall be

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

25 coordination. |

24



2

10

1

14

15

16

7

18

19

20

21

22

23

24

25

26

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

a. Undertake the day-to-day management and supervise the operations of the PPP

Center;

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

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

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

SEC. 23. PPP Governing Board. — The PPP Governing Board, created under
Executive Order No. 136, series of 2013, and hereinafter referred to as the Board, is hereby
institutionalized. It shall be the overall policy-making body for all PPP-related matters,
including the PDMF. It shall be responsible for setting the strategic direction of PPP
programs and projects and in creating an enabling policy and institutional environment for
PPP.

The Board shall be composed of the following:

a. The Secretary of Finance as Chairperson;

b. The Secretary of Socio-Economic Planning as Vice-Chairperson;
c. The Secretary of Budget and Management;

d. The Secretary of Justice;

e. The Secretary of Trade and Industry;

f. The Executive Secretary;

g. The Secretary of Interior and Local Government;

25


10

nu

12

13

14

16

7

18

19

20

21

22

23

24

2s

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

i, A private sector representative, appointed by and co-terminus with be President

of the Philippines.

‘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 tic.

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

SEC. 24, Project Development and Monitoring Facility. - (a) 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, project
evaluation, and monitoring of implementation of PPP Projects.

(b) The PDME 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.

(©) 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

26


10

oe

12

13

14

15

16

7

18

19

20

2.

22

23

24

25

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 the Implementing Agencies.

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

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

SEC. 25. Creation of a Risk Management Fund, — Under an optimal allocation of
risks between the Implementing Agency and the Private Proponent, each risk in a PPP Project
shall be assigned to the party that is best able to control the likelihood of its occurrence,
‘manage its impact on the project, and absorb the risk at the lowest cost.

To ensure fiscal sustainability, enhance the ability of the Implementing Agency to
discharge its obligations under risks allocated to it, and improve terms of financing of PPP
Projects, there is hereby created a trust fund named Risk Management Fund, herein referred
to as the Fund, which shall be financed through dedicated budgetary appropriations and
contributions from the budgets of the Implementing Agencies.

The Risk Management Fund shall provide a reliable pool from which disbursements
on government obligations on liabilities that have materialized can be drawn. Any
appropriation and contribution to the Fund, including accrued interests thereon, are
permanently appropriated and shall not revert to the general fund if not disbursed during the

fiscal year. The Fund shall be administered by the DOF following fiduciary for

27


10

nu

12

13

4

15

16

7

18

19

20

2

22

23

24

25

26

fund management. The operations of the Fund can be enhanced through official development
assistance. |

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

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

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

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

SEC. 26. Establishment of a PPP Unit. — Each concerned Implementing Agency
shall organize a PPP unit headed by a senior official, who shall be responsible for planning,
overseeing, and monitoring PPP Projects of the Implementing Agency. The PPP unit may
also include as members, among others, technical and legal personnel who are knowledgeable
on the technical and legal aspects, respectively, of the PPP Projects.

SEC. 27. Contracts and Public Disclosure. — Copies of all PPP contracts executed
under this Act shall be considered as public documents, and appropriately kept safe and
preserved as such. Except those provisions in the contract which are deemed proprietary, or
may pose threats to national security or safety under relevant laws, rules, and regulations, the
procedures for the disclosure of such documents shall be consistent with existing policies,
laws, decrees, orders, rules and regulations, including the IRR of this Act. The Implementing

Agency and the PPP Center shall publicly make available copies of PPP contracts through

28


10

1

12

13

14

15

16

7

18

19

20

21

22

23

24

25

26

their respective websites, unless otherwise prohibited by existing laws, rules, and regulations,
including national security and public safety concerns. |

SEC. 28. Miscellaneous Provisions. ~ (a) Mitigation of Interconnectivity and
Interface Risks. All PPP Projects which will interconnect or interface with a local or national
facility shall be required to submit a Memorandum of Agreement (MOA) containing an
interconnection/interface plan agreed upon by all relevant parties. For National PPP Projects,
said MOA shall be submitted to the ICC-NEDA; while for Local PPP Projects, said MOA
shall be submitted to the Local Sanggunian

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

(c) Standardization of Real Property Tax Valuation. The DoF shall issue
the guidelines on real property tax valuation of PPP Projects to ensure uniform
and consistent implementation among all LGUs. All real properties which are
actually, directly, and exclusively used for a Greenfield PPP Project shall be
exempted from the payment of real property taxes during the period of
construction and until such time the facility is used or operational, whether partial
or full. The details of the exemption shall be prescribed in the IRR of this Act.

(d) Exemption from Payment of Transfer Taxes. For all PPP Projects, the
transfer of ownership of the PPP Project to the Implementing Agency shall be
exempt from capital gains tax, documentary stamp tax, donor’s tax, and all taxes

and fees, whether from national or local, related to the transfer thereof.

29


13

14

15

16

7

18

19

20

21

22

23

24

25

26

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

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

(g) Conflict of Interest. Conflict of interest shall be prohibited at all times
in the interpretation and implementation of this Act. Conflict of interest, which
refers to any act or omission tending to oppose or disrupt the faithful performance
of one’s duty or mandate, shall include personal, pecuniary, and) regulatory
conflicts of interests: Provided, That no national Implementing Agency shall
implement a PPP Project that it regulates: Provided, further, That any regulatory
agency or body which implements a PPP Project shall adopt a conflict mitigation
and management plan.

(G) Alternative Sources of Financing, In addition to Private, Proponent
say aid debe, chdnaifve Sida tamer auch 09 Groen |Pioancia,
corporate or project bonds and securities, and other forms of capital market
financing may be allowed for PPP Projects, subject to the approval of relevant
regulatory bodies for such instruments under existing laws, rules, and regulations.

(i) Private Legal and Medical Assistance. All the BAC members and

other public officials providing services to the BAC shall be authorized to engage

30


10

1

12

13

14

15

16

7

18

19

20

2

22

23

24

25

26

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 BAC members shall alsq be entitled
to medical assistance for injuries incurred in the performance of their functions.

(i) Preferential Hiring of Filipino Workers. For the construction stage of
infrastructure facilities where the Contractor is a foreigner, Filipino labor shall be
employed or hired in the different phases of construction where Filipino skills are
available.

(k) 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 with, notice and
hearing with all potential stakeholders, the details of which shall be threshed out
in the IRR; and (3) The Implementing Agency and the PPP Center shall post in
their respective websites the approved starting fare or user fee in a yp Project as
well as the approved parametric formula on fare increases or aden, if
applicable. |

(1) Land value capture strategies, \n order to ensure that the —
shall be able to maximize the land value gains consequent to the implementation
of the PPP project, the PPP Center shall propose to the Implementing Ageasy land
value capture strategies that will maximize the returns to the governpent of the

PPP Project and its consequent economic benefits. Details on these strategies shall

31


10

1

12

2B

14

16

7

18

19

20

21

2

23

24

25

be included in the reports to Congress required herein. Such strategies may

include:

a. The rationalization of land valuation for taxation purposes in areas
surrounding the PPP project or serviced by it, and the extension of technical
assistance to local governments and other relevant valuation agencies in
performing the same;

b. Land-banking strategies, which may be accompanied by transit-oriented and
sustainably planned urban development;

c. Special fees and levies as may be allowed by law and by the terms of the PPP
project;

4. Auction of development rights as may be allowed by law and by the terms of
the PPP project; and

e. Such other strategies that may supplement the direct economic and financial
returns of the PPP project itself. |

SEC. 29. Implementing Rules and Regulations. ~ The IRR. Committee shall be

pou, pm,

composed of representatives from the NEDA, DOF, DBM, DPWH, DOTr, DILG,
DENR, Office of the President, PPP Center, and Private Sector Representatives and other
agencies, as may be identified by the PPP Governing Board. Within forty (40) working 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.

32


1 SEC. 30, Administrative, Civil, and Penal Sanction. — Any person, whether private
2. individual or public officer or employee, who commits any of the prohibited acts hereunder
3 proscribed, shall be punished by imprisonment from a minimum of three (3) years to a

4 maximum of six (6) years and one (1) day:

5 a. Downgrading the category of the project cost for purposes of evading the
6 required approvals under this Act;
7 b. Representation that the Private Proponent has the necessary capitalization to
8 commence, complete, and implement the PPP Project when the same is false in
9 material respects;
10 c. Falsification or insertion of certain provisions in the execution copy of the
n contract which are materially and substantially different from the approved final
12 draft contract;
3 4. Any violation of Section 27 (G) under this Act; and
4 €. A public officer or employee, whether in connivance with others or agting alone,
1s negligently or by fraud commits a failure to ensure compliance with the project
16 terms as approved by the Approving Body, and the signed PPP cpntrect, by
7 approving, issuing, or confirming any certification, required documents, or
18 deliverables of the Private Proponent, which are non-compliant with existing
19 tules, erroneous, not authentic, or fraudulent.
20 In addition, such act committed by the Private Proponent and its concerred officers

21 _ shall cause the rescission of its contract for the said PPP Project without compensation and
22 shall be perpetually disqualified from participating in any bidding or other pontractual
23 arrangement for any government project. This is without prejudice to any other civil or
24 — administrative liability that erring officials or Private Proponents may incur. |

25 SEC. 31. Accountability in PPP Projects. — The head of the concerned Implementing

26 Agency shall at all times be accountable to PPP Projects undertaken through this Act. The

33



10

oe

12

13

14

15

16

7

18

19

20

21

22

23

24

25

Private Proponent shall likewise be held accountable for the works and services it has
committed and delivered for a PPP Project. All PPP contracts are hereby require to clearly
define the scope of each party's accountability under the PPP contract. To further promote
accountability in PPP Projects, the Commission on Audit (COA) shall have jurisdiction over
the activities and transactions of the PPP Project, which shall be limited to the exercise of its
visitorial power as defined in the 2009 Revised Rules of Procedure of the COA, and any
amendments thereto. Such power shall be further limited to determining whether the
contribution or share of the Implementing Agency in the PPP Project is being allocated and
utilized according to its intended purpose, and if the Implementing Agency is getting its
rightful share from the revenues generated, as may be applicable.

SEC, 32. Joint Congressional Oversight Committee on Public Private Partnerships
(PPP). - A Joint Congressional Oversight Committee on Public-Private Partnerships (PPP) 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 House Committee
on Public Works and Highways, the House Committee on Appropriations, the Senate
Committee on Public Works, and the Senate Committee on Finance.

SEC. 33. Transitory Clause. ~ The provisions of this Act shall apply to all PPP
Projects except: (a) all projects wherein a PPP contract between the andl Private
Proponent and the Implementing Agency concerned has been executed prior to effectivity of
this Act; and (b) all projects undertaken through competitive selection wherein the bid/s have
already been opened prior to the effectivity of this Act. For PPP Projects not covered under
items (a) and (b) above, this Act shall govern, provided that this Act shall not, in any manner,

operate to impair vested rights already accruing to a party.

34


12

13

14

15

16

7

18

19

20

All unexpended funds for the calendar year, properties, equipment, contracts and

records of the PPP Center are hereby retained. The amount necessary to carry out the

organizational changes of the PPP Center provided in this Act shall be determined by the PPP

Governing Board. Appropriations for succeeding years shall be incorporated in its budget

proposals for congressional action.

|
All officials and employees of the PPP Center shall be retained and shall not suffer

any loss of seniority or rank or decrease in emoluments.

SEC. 34. Separability Clause. — If any provision of this Act is declared

unconstitutional or invalid, other parts or provisions hereof not affected thereby shall

continue to be in full force and effect.

SEC. 35. Repealing Clause. — The following are hereby repealed:

a

b.

g

Republic Act No. 6957;

Republic Act No. 7718;

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

2013);

|. Executive Order No. 78 (s. 2012);

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

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

Joint Venture Guidelines issued by LGUs.

All other laws, decrees, orders, rules and regulations, and all other related national

and local issuances or parts thereof inconsistent with this Act are hereby repealed or amended

accordingly.
SEC. 36. Effectivity. — This Act shall take effect fifteen (15) days after its publication

in the Official Gazette or in a newspaper of general circulation.

Approved,

35