THIRTEENTH CONGRESS OF THE REPUBLIC 
FIRST REGULAR SESSION 
OF THE PHILIPPINES 
4 SE? 23 P 5 3 9  
EXPLANATORY NOTE 
The Build-Operate-Transfer (BOT) Law is the precept and doctrine 
on public private sector partnership infrastructure development now 
recognized not only in the country but in the international financial and 
business community. In our country, the BOT system has succeeded 
beyond expectations, with total investment in BOT projects-to-date 
estimated at $20 billion for 85% projects covering a wide range of 
activities from power generation to telecommunications, port and 
highways, etc. 
Among the economic benefit derived from BOT projects are the 
acceleration and spread of development to an even wider area enhancing 
the value of the lands or property traversed by or in the vicinity of the 
projects. 
However, BOT investors recover their investment and returns only 
from fees charged from road-users, passengers and cargoes. 
In 
missionary routes, for instance, where the traffic volume has yet to build, 
the toll-roads would not be financially viable even if the socio-economic 
benefits are high. The users will have to be charged high fees which, in 
turn, drastically reduce the volume of activities on which the charges are 
imposed. At times, the project does not take off at all. 
This bill amends the BOT Law to provide in the statute a system of 
compensation whereby the project builder or contractor could recover his 
investment for construction costs, maintenance and operation not solely 
from the road-users, passenger and cargoes, or the direct users of the 
project, but also from the real estates directly or indirectly benefited by 
the BOT project. 
The scheme proposed under this bill can create investment 
opportunities for small businessmen, our OFWs who may be skilled 
craftmen or professional and BOT projects need not necessarily be the 
preserve of well-funded foreign investors or builders. 
Approval of this bill is, therefore urgently recommended. 
1 


THIRTEENTH CONGRESS OF THE REPUBLIC 
FIRST REGULAR SESSION 
OF THE PHILIPPINES 
'04 
SEP 23 P5 :I 3 
INTRODUCED BY SENATOR MAGSAYSAY, JR. 
i 
AN ACT 
PROVIDING FOR A SYSTEM OF COMPENSATION TO BUILDERS AND 
WHICH ENHANCE THE VALUE OF LANDS OR PROPERTY 
Be it enacted by the Senate and House of Representatives of the 
Philippines in Congress assembled 
CONTRACTORS OF BUILD-OPERATE-TRANSFER (BOT) PROJECTS 
SECTION 1. It is hereby declared the policy of the State to 
accelerate the development of local government units and communities 
through the active system of reimbursement to builders or contractors of 
build-operate-transfer infrastructure or development projects, utilities or 
services as defined under Republic Act No. 7718, otherwise known as the 
"Amended Build-Operate-Transfer Law", from land or properties which 
are duly benefited. 
SEC. 2. 
Builders or contractors of infrastructure, utilities or 
services which enhance the value of lands or property shall be duly 
compensated through a system of reimbursement as part of the overall 
financial repayment scheme and contractual arrangements as mutually 
agreed upon among the parties involved, especially those benefited, 
based on a percentage of the realized gain or increase in the value of the 
property. 
SEC. 3. The value of the land or property before and after the 
building of the infrastructure or utilities or the rendering of services shall 
be determined by an accredited land appraiser and concurred in by the 
municipal land assessor and parties concerned. The reimbursement 
from land value appreciation attributable to the project shall be part of 
the overall financial plan and financial repayment scheme comprising toll 
fees, rentals, charges, and other income from project venture. This shall 
also be part of the financial valuation process and determination of a 
reasonably rate of return and capital recovery scheme of the project 
venture. 
SEe. 4. After the increase in the value of the land or property 
attributable to the development has been determined, the builder, 
contractor or provider of the service which caused or resulted in the 
increase in the value of the land property shall be compensated by the 
land or property owner, 
or in case of public lands, by the local 
government unit or the National Government, through an equitable 
reimbursement based on a percentage of the realized gain or increase in 
value attributable to said development. 


SEC. 5. The mode of payment shall either be in cash or lands or 
percentage of pertinent local land or realty tax collection revenues on 
affected properties or combination thereof as agreed upon by the (a) 
builder, contractor or provider of services; (b) landowner or landowners 
affected; and (c) local government unit represented by the local chief 
executive and as authorized by an ordinance or resolution of the 
sanggunian concerned. 
SEC. 6. To initiate and conclude an agreement between the 
parties mentioned in the next preceding Section, the builder, contractor, 
or proponent shall submit his or its proposal to undertake a build- 
operate-transfer or build-operate-own scheme or similar contractual 
scheme to the Mayor in case of a municipal or city project, the Provincial 
project, or the concerned government agency in the case of a national 
project, who shall then call a meeting between and among the proponent, 
the landowners affected, and the punong barangay, and the members of 
the Sangguniang Bayan; and members of the Sangguniang Lungsod, as 
the case may be. In that meeting, the municipal or city mayor, governor, 
or the government agency concerned, shall explain the proposed 
infrastructure utilities or services to be put up on the lands involved, the 
development plan, the cost of the project and limits to deviations, 
financial plan, project risks and coverage, the period of construction and 
operations, 
capital 
recovery 
repayment 
scheme, and 
proposed 
development partnership and venture terms and conditions for the 
proposed proposal. The parties affected shall then review through a 
continuing process of consultative meetings and approve, among others: 
the cost of the construction, operation, and maintenance of the project; 
reasonable margin of profit and rate of return of the proponent the 
reimbursement scheme of the builder, contractor, or proponent; and 
other pertinent aspects of the proposal. The parties involved shall then 
enter into contractual agreement duly noting its terms and conditions 
and affiing their names and signatures to the contractual arrangement. 
SEC. 7. All acts, decrees, executive orders, administrative orders, 
rules and regulations or parts thereof which are inconsistent with this 
Act are hereby repealed or modified accordingly. 
SEC. 8. 
This Act shall take effect fifteen (15) days after its 
publication in a newspaper of general circulation in the Philippines. 
APPROVED,