Vous êtes sur la page 1sur 35

ORDINANCE NO.

___
SERIES OF 2014

AN ORDINANCE ADOPTING AND PURSUING A PUBLICPRIVATE PARTNERSHIP (PPP) APPROACH TOWARDS


DEVELOPMENT, CREATING A PPP OFFICE and PPP
SELECTION COMMITTEE, AND PROVIDING GUIDELINES AND
INCENTIVES THEREFOR AND FOR OTHER PURPOSES
SPONSORED BY ALL MEMBERS OF
THE SANGGUNIANG BAYAN
Chapter 1.Basic Principles and Definitions
Sec 1. Short Title. This Ordinance shall be known and cited as the 2014 PPP
CODE.
Sec. 2. Declaration of Policy. It is hereby declared as a policy that the
Municipality shall advance the general welfare and promote the interest of the
community and the Municipality within the framework of sustainable and
integrated development; and shall ensure the participation of the private sector in
local governance through effective and viable Public-Private Partnerships.
Sec. 3. Operative Principles. The accomplishment of the stated policy shall be
guided by the following principles:
(a) The Municipality, pursuant to Sections 1, 2 and 5, Article X of the 1987
Constitution, is a territorial and political subdivision which enjoys local
autonomy and fiscal autonomy. Under Section 3, Article X of the 1987
Constitution, local autonomy means a more responsive and accountable
local government structure instituted through a system of decentralization.
Fiscal autonomy means that local governments have the power to create
their own sources of revenue in addition to their equitable share in the
national taxes released by the national government, as well as the power
to allocate their resources in accordance with their own priorities.
(b) The Municipality exists and operates in its governmental and
proprietary capacities thereby making the Municipality an agent of and is
therefore accountable to the State and its community.
(c) The Municipality must develop into a self-reliant community and as
such, is in a better position to address and resolve matters that are local in
scope.

(d) Under Section 18 of the 1991 LGC, the Municipality may acquire,
develop, lease, encumber, alienate, or otherwise dispose of real or
personal property held by them in their proprietary capacity and to apply
their resources and assets for productive, developmental, or welfare
purposes.
(e) Under Section 22 (d) of the 1991 LGC, the Municipality enjoys full
autonomy in the exercise of its proprietary functions and shall exercise the
powers expressly granted, those necessarily implied therefrom, as well as
powers necessary, appropriate, or incidental for its efficient and effective
governance, those not otherwise prohibited by law and those which are
essential to the promotion of the general welfare.
(f) Under Section 25 (b) of the 1991 LGC, the Municipality may collaborate
or cooperate with other local governments, national government agencies,
government-owned
and
controlled
corporations,
government
instrumentalities and government corporate entities for the implementation
of local projects.
(g) Under the charter of the Municipality, Sections 16, 17, 19 and 129 of
Republic Act No. 7160 or the Local Government Code of 1991 (1991 LGC)
and other statutes, the Municipality has been given the responsibility and
mandate to exercise devolved and delegated powers.
(h) The Municipality, under Section 106 of 1991 LGC, is mandated to draw
up and implement a comprehensive multi-sectoral development plan.
(i) The Municipality under Section 3 (l) of the 1991 LGC is duty-bound to
ensure the active participation of the private sector in local governance.
(j) The role of the Municipality both as a regulator of business and as
implementer of a proprietary undertaking must be delineated.
(k) The Municipality, as a partner in a PPP arrangement, may provide
equity, subsidy or guarantee and use local funds and that the usage
thereof for a PPP project shall be considered for public use and purpose.
(l) Under Sections 34, 35 and 36 of the 1991 LGC and in the exercise of
its powers, the Municipality may enter into joint ventures and such other
cooperative arrangements with peoples and non-governmental
organizations to engage in the delivery of certain basic services,
capability-building and livelihood projects, and to develop local enterprises
designed to improve productivity and income, diversity agriculture, spur
rural industrialization, promote ecological balance, and enhance the
economic and social well-being of the people; provide assistance, financial
or otherwise, to such peoples and non-governmental organizations for
economic, socially-oriented, environmental, or cultural projects to be
implemented within its territorial jurisdiction; provide funding for local

projects, provide incentives and tax exemptions to private companies.


Sec. 4. Rationale for PPP. PPPs shall be promoted to provide more, better,
affordable and timely services to the community. In pursuing PPPs, the
Municipality shall be guided by the following reasons and drivers:
(a)

PPPs should be adopted to address a pressing and urgent or critical


public need. Under the principle of Additionality, the increased
economic benefits to consumer welfare of having needed public
services/ infrastructure accessible now because of the PPP, rather
than having to wait until the Municipality could provide the public
services much later. PPP would also encourage the accelerated
implementation of local projects.

(b)

PPPs can be adopted to avoid costs and public borrowing. By


contracting with the private sector to undertake a new infrastructure
project, scarce Government capital budgets can be directed to other
priority sectors such as social services, education, and health care.

(c)

PPPs allow for technology transfer, and improved efficiency and


quality of service. These could be valuable contribution of the private
sector in local governance.

(d)

PPPs should be feasible and affordable. From the onset, the project
should be feasible, demonstrating the need for the project, broad
level project costs estimation, and indicative commercial viability. The
assessment of affordability will need to be the cornerstone for all PPP
projects, both to the Municipality and the general public.

(e)

PPP Projects should be bankable. PPPs should be bankable as


financiers will be reluctant to commit funding when a project entails
high participation costs, unreasonable risk transfer or lengthy and
complex contract negotiations. PPP projects will remain attractive to
the private sector through cost recovery pricing policy. This is critical
to ensure that the project developer/ investor are assured of steady
and predictable tariffs over the life of the project in order to guarantee
service delivery.

(f)

PPP Projects should provide Value for Money as far as practicable.


PPPs should provide value for money to the Municipality and good
economic value and includes allocating risks to the party best able to
control and manage them, and maximizing the benefits of private
sector efficiency, expertise, flexibility and innovation.

(g)

Risk allocation should be based on the party most capable to


manage the risk. PPPs always comprise a higher level of risk due to
the magnitude of the financial stakes involved, uncertainties over
construction and operating costs, and revenue related uncertainties.

PPPs rely on balancing the allocation of risk, and enables transfer of


the same to the private party when the said party is better able to
mitigate/ manage the risk than the public authority. In return, the
public party significantly reduces its risk exposure while overseeing
project optimization efforts. The private party expects a return that is
in line with the risks it shall undertake.
(h)

PPP Projects should provide economic and social benefits. PPP


projects should always be evaluated for economic and social benefits
rather than focus on the financial considerations. PPPs underlying
principle stems from the fact that the public authority remains
responsible for services provided to the public, without necessarily
being responsible for corresponding investment.

(i)

PPP Projects should have due consideration for empowerment of


Filipino citizens. The implementation of PPP projects should have
due consideration for the empowerment of the citizens as a strategy
for economic growth and sustainability. As such, PPP undertakings
need to provide for the participation of local investors.

(j)

Procurement of PPP Projects should be competitive. PPP Projects


should be procured through open competitive bidding. However,
where competitive bidding is not applied, arrangements shall be
made to introduce competition into the process in order to ensure
both transparency and economically efficient outcome.

(k)

PPP is an essential part of the overall infrastructure reform policy of


the Municipality. By encouraging performance-based management of
the delivery of public services applying commercial principles and
incentives whenever possible, by introducing competition in and for
the market, and by involving users and stakeholders in the decisionmaking process, infrastructure and regulatory reform shall be
achieved.

(l)

The regulation of the PPP shall be pursuant to the PPP contract and
exercised by the appropriate regulatory authority.

Sec. 5. Definition of Terms. As used in this Code, the following terms shall
mean:
(a)

Build-Operate-Transfer Law Schemes Under Republic Act No.


6957 as amended by RA No. 7718, the following are the BOT
variants:
(i) Build-and-Transfer (BT) - A contractual arrangement whereby the
Project Sector Proponent (PSP) undertakes the financing and
construction of a given infrastructure or development facility, and
after its completion, turns it over to the Municipality, which shall pay

the PSP, on an agreed schedule, its total investment expended on


the project, plus a Reasonable Rate of Return thereon.
(ii) Build-Lease-and-Transfer (BLT) - A contractual arrangement
whereby a PSP is authorized to finance and construct an
infrastructure or development facility and upon its completion, turns
it over to the Municipality on a lease arrangement for a fixed period,
after which ownership of the facility is automatically transferred to
the Municipality.
(iii) Build-Operate-and-Transfer (BOT) A contractual arrangement
whereby the PSP undertakes the construction, including financing,
of a given infrastructure facility, and the operation and maintenance
thereof. The PSP operates the facility over a fixed term, during
which it is allowed to charge facility users appropriate tolls, fees,
rentals, and charges not exceeding those proposed in its bid, or as
negotiated and incorporated in the contract, to enable the PSP to
recover its investment, and its operating and maintenance
expenses in the project. The PSP transfers the facility to the
Municipality at the end of the fixed term which shall not exceed fifty
(50) years. This build, operate and transfer contractual
arrangement shall include a supply- and-operate scheme, which is
a contractual arrangement whereby the supplier of equipment and
machinery for a given infrastructure facility, if the interest of the
Municipality so requires, operates the facility, providing in the
process, technology transfer and training to Filipino nationals.
(iv) Build-Own-and-Operate (BOO) - A contractual arrangement
whereby a PSP is authorized to finance, construct, own, operate
and maintain an infrastructure or development facility from which
the PSP is allowed to recover its total investment, operating and
maintenance costs plus a reasonable return thereon by collecting
tolls, fees, rentals or other charges from facility users. Under this
project, the proponent who owns the assets of the facility may
assign its operation and maintenance to a facility operator. The
divestiture or disposition of the asset or facility shall be subject to
relevant rules of the Commission on Audit.
(v) Build-Transfer-and-Operate (BTO) - A contractual arrangement
whereby the Municipality contracts out the construction of an
infrastructure facility to a PSP such that the contractor builds the
facility on a turnkey basis, assuming cost overruns, delays, and
specified performance risks. Once the facility is commissioned
satisfactorily, title is transferred to the Municipality. The PSP,
however, operates the facility on behalf of the Municipality under an
agreement.

(vi) Contract-Add-and-Operate (CAO) - A contractual arrangement


whereby the PSP adds to an existing infrastructure facility which it
is renting from the Municipality and operates the expanded project
over an agreed franchise period. There may or may not be a
transfer arrangement with regard to the added facility provided by
the PSP.
(vii) Develop-Operate-and-Transfer (DOT) - A contractual
arrangement whereby favorable conditions external to a new
infrastructure project to be built by a PSP are integrated into the
arrangement by giving that entity the right to develop adjoining
property, and thus, enjoy some of the benefits the investment
creates, such as higher property or rent values.
(viii) Rehabilitate-Operate-and-Transfer (ROT) - A contractual
arrangement whereby an existing facility is turned over to the PSP
to refurbish, operate and maintain for a franchise period, at the
expiry of which the legal title to the facility is turned over to the
Municipality.
(ix) Rehabilitate-Own-and-Operate (ROO) A contractual
arrangement whereby an existing facility is turned over to the PSP
to refurbish and operate, with no time limitation imposed on
ownership. As long as the operator is not in violation of its
franchise, it can continue to operate the facility in perpetuity.
(b)

Competitive Challenge or Swiss Challenge An alternative selection


process wherein third parties or challengers shall be invited to submit
comparative proposals to an unsolicited proposal. Accordingly, the
PSP who submitted the unsolicited proposal, or the original
proponent, is accorded the right to match any superior offers given by
a comparative PSP as provided in Chapter 6 hereof.

(c)

Competitive Selection or Bidding or Open Competition Refers to a


method of selection or procurement initiated or solicited by the
Municipality, based on transparent criteria, which is open to
participation by any interested party as provided in Chapter 4 hereof.

(d)

Concession A contractual arrangement whereby the financing and


construction of a new facility and/ or rehabilitation of an existing
facility is undertaken by the PSP after its turnover thereof to the PSP,
and includes the operation, maintenance, management and
improvement, if any, of the facility for a fixed term during which the
PSP generally provides service directly to facility users and is
allowed to charge and collect the approved tolls, fees, tariffs, rentals
or charges from them. The Municipality may receive a concession or
franchise fee during the term of the contract and/ or other

consideration for the transfer, operation or use of any facility. There


may be a transfer of ownership of the asset or facility after the
concession period has ended subject to rules of the Commission on
Audit.
(e)

Corporatization Refers to transformation of a public entity or quasimunicipal corporation established by the Municipality into one that
has the structure and attributes of a private corporation, such as a
board of directors, officers, and shareholders, and having it
registered with the Securities and Exchange Commission as a stock
corporation. The process involves the establishment of a distinct
legal identity for the company under which the Municipalitys role is
clearly identified as owner; segregation of the companys assets,
finances, and operations from other Municipality operations; and
development of a commercial orientation and managerial
independence while remaining accountable to the government or
electorate.

(f)

Credit Enhancement - This shall refer to direct and indirect support to


a development facility by the PSP and/or Municipality, the provision
of which is contingent upon the occurrence of certain events and/or
risks, as stipulated in the PPP contract. Credit enhancements are
allocated to the party that is best able to manage and assume the
consequences of the risk involved. Credit enhancements may include
but are not limited to government guarantees on the performance or
the obligation of the Municipality under its contract with the PSP,
subject to existing laws on indirect guarantees. Indirect Guarantees
shall refer to an agreement whereby the Municipality assumes full or
partial responsibility for or assists in maintaining the financial
standing of the PSP or project company in order that the PSP/ project
company avoids defaulting on the project loans, subject to fulfillment
of the PSP/ project company of its undertakings and obligations
under the PPP contract.

(g)

Development Projects- Projects normally financed, and operated by


the public sector, but which will now be wholly or partly financed,
constructed and operated by the PSP; projects that will advance and
promote the general welfare; and other infrastructure and
development projects as may otherwise be authorized by the
Municipality.

(h)

Direct Municipality Government Equity Refers to the subscription by


the Municipality of shares of stock or other securities convertible to
shares of stock of the special purpose vehicle or single-purpose
project company, whether such subscription will be paid by money or
assets.

(i)

Direct Municipality Government Guarantee Refers to an agreement


whereby the Municipality guarantees to assume responsibility for the
repayment of debt directly incurred by the PSP in implementing the
project in case of a loan default.

(j)

Direct Municipality Government Subsidy Refers to an agreement


whereby the Municipality shall:
(i) defray, pay or shoulder a portion of the PPP project cost or the
expenses and costs in operating and maintaining the project;
(ii) condone or postpone any payments due from the PSP;
(iii) contribute any property or assets to the project;
(iv) waive or grant special rates on real property taxes on the
project during the term of the contractual arrangement; and/ or
(v) waive charges or fees relative to the business permits or
licenses that are to be obtained for the construction of the project,
all without receiving payment or value from the PSP or operator for
such payment, contribution or support.

(k)

Divestment or Disposition Refers to the manner or scheme of


taking away, depriving, withdrawing of title to a property owned by a
Municipality or PSP and vesting ownership thereof to another party.

(l)

Feasibility Study/Project Description A study prepared by the


Municipality in a competitive selection or a PSP when submitting an
unsolicited proposal containing a needs analysis, affordability
assessment, value for money assessment, preliminary risk
assessment, stakeholder assessment, human resource assessment,
bankability assessment, legal viability assessment, PPP mode
selection, market testing if relevant, indicative transaction
implementation plan, and draft PPP contract. The study shall be
supported by the results of the appropriate willingness-and-ability-topay survey.

(m) Franchise Refers to the right or privilege affected with public


interest which is conferred upon a PSP, under such terms and
conditions as the Municipality may impose, in the interest of public
welfare, security and safety.
(n)

Joint Venture (JV) A contractual arrangement whereby a PSP or a


group of private sector entities on one hand, and the Municipality on
the other hand, contribute money/capital, services, assets (including
equipment, land, intellectual property or anything of value), or a
combination of any or all of the foregoing. The Municipality shall be a

minority equity or shareholder while the PSP shall be majority equity


or shareholder. Each party shall be entitled to dividends, income and
revenues and will bear the corresponding losses and obligation in
proportion to its share. Parties to a JV share risks to jointly undertake
an investment activity in order to accomplish a specific, limited or
special goal or purpose with the end view of facilitating private sector
initiative in a particular industry or sector, and eventually transferring
ownership of the investment activity to the PSP under competitive
market conditions. It involves a community or pooling of interests in
the performance of the service, function, business or activity, with
each party having a right to direct and govern the policy in connection
therewith, and with a view of sharing both profits and losses, subject
to agreement by the parties.
(o)

Lease or Affermage A contractual arrangement providing for


operation, maintenance, and management services by the PSP,
including working capital and/ or improvements to an existing
infrastructure or development facility leased by the PSP from the
Municipality for a fixed term. Under a lease, the PSP retains revenue
collected from customers and makes a specified lease payment to
the Municipality. Under an affermage, the parties share revenue from
customers wherein the PSP pays the contracting authority an
affermage fee, which varies according to demand and customer
tariffs, and retains the remaining revenue. The Municipality may
provide a purchase option at the end of the lease period subject to
rules of the Commission on Audit.

(p)

Management Contract A contractual arrangement involving the


management or provision by the PSP of operation and maintenance
or related services to an existing infrastructure or development facility
owned or operated by the Municipality. The project proponent may
collect tolls/ fees/ rentals and charges which shall be turned over to
the Municipality and shall be compensated in the form of a fixed fee
and/ or performance based management or service fee during the
contract term.

(q)

Negotiated Projects Refer to instances where the desired project is


the result of an unsolicited proposal from a PSP or, where the
Municipality has failed to identify an eligible private sector partner for
a desired activity when there is only one qualified bidder after
subjecting the same to a competitive selection or bidding as provided
under Chapter 5 hereof.

(r)

New Technology Refers to having at least one of the following


attributes: a. A recognized process, design, methodology or
engineering concept which has demonstrated its ability to
significantly reduce implementation of construction costs, accelerate

project execution, improve safety, enhance project performance,


extend economic life, reduce costs of facility maintenance and
operations, or reduce negative environmental impact or
social/economic disturbances or disruptions during either the project
implementation/construction phase or the operation phase; or b. A
process for which the project proponent or any member of the
proponent joint venture/consortium possesses exclusive rights, either
world-wide or regionally; or c. A design, methodology or engineering
concept for which the proponent or a member of the proponent
consortium or association possesses intellectual property rights.
(s)

Private Sector Proponent (PSP) - Refers to the private sector entity


which shall have contractual responsibility for the project and which
shall have an adequate track record in the concerned industry, as
well as technical capability and financial base consisting of equity
and firm commitments from reputable financial institutions, to provide,
upon award, sufficient credit lines to cover the total estimated cost of
the project to implement the said project.

(t)

Public-Private Partnerships (PPP) PPP is a form of legally


enforceable contract between the Municipality and PSP, which
requires new investments from the PSP and which transfers key risks
to the PSP in which payments are made in exchange for
performance, for the purpose of delivering a service traditionally
provided by the public sector. PPP shall also include disposition of an
asset, facility, project owned or entity created by the Municipality to a
PSP; assumption by a PSP of a proprietary function of the
Municipality; grant of a concession or franchise to a PSP by the
Municipality; or usage by the PSP of public property owned or
possessed by the Municipality.

(u)

Reasonable Rate of Return (RROR) Refers to the rate of return


that a PSP shall be entitled to, as determined by the PPP Regulatory
Authority taking into account, among others, the prevailing cost of
capital (equity and borrowings) in the domestic and international
markets, risks being assumed by the PSP and the level of
Municipality undertakings extended for the project.

(v)

Service Contract A contractual arrangement whereby the PSP shall


provide a particular service to the Municipality involving the
Municipalitys proprietary authority or to entities or corporation
created by the Municipality. The PSP shall be entitled to pay a fee per
unit of work done during the term of the contract.

(w) Unsolicited Proposal Refers to project proposals submitted by a


PSP to the Municipality to undertake Development Projects without a
formal solicitation issued by the Municipality.

(x)

Value for Money (VfM) Refers to the concept that over the wholelife of a project financed-PPP project, governments total
expenditures (i.e., its payments to the private sector), adjusted for the
risks that have been transferred to the private sector, will be less, on
a Net Present Value (NPV) basis, than if the government will perform
the services itself. VfM considers monetary and non-monetary factors
such as: (i) risk transfer; (ii) reduced whole life costs; (iii) speed of
implementation; and (iv) quality and reliability of service.

(y)

Viability Gap Funding (VGF) Refers to an explicit subsidy that is


performance-driven (i.e., based on private party achieving
measurable outputs) and targeted to socio-economically
disadvantaged users or groups of users.

Sec. 6. Rules of Interpretation. This Code and the provisions hereof shall be
liberally interpreted to accomplish the policy and objectives set forth in Sections
2, 3 and 4 hereof.
Sec. 7. Authorities.
(a)

This Code is being adopted pursuant to the Municipalitys


constitutional and statutory authorities enumerated under Section 3
hereof.

(b)

In pursuing BOT Variants, the Municipality shall comply with Republic


Act No. 6957 as amended by RA No. 7718 and its Implementing
Rules and Regulations.

(c)

In entering into Management and Service Contracts, the Municipality


shall comply with Republic Act 9184 and its Implementing Rules and
Regulations.

(d)

For Dispositions, Commission on Audit Circular No. 89-296


(January27, 1989) shall govern.

(e)

For Competitive Selection, Competitive Challenge/Swiss Challenge,


Limited Negotiations shall be governed by Chapters 4, 5 and 6
respectively of this Ordinance.

(f)

For all other PPP Modalities, by the provisions of this Ordinance.

Chapter 2. PPP Projects and PPP Modes


Sec. 8. PPP Projects. The Municipality, through the appropriate and viable PPP
mode, may undertake Development Projects including but not limited to, power
plants, highways, ports, airports, canals, dams, hydropower projects, water
supply, sewerage, irrigation, telecommunications, railroad and railways, transport
systems, land reclamation projects, industrial estates or townships, housing,

government buildings, tourism projects, public markets, slaughterhouses,


warehouses, solid waste management, information technology networks and
database infrastructure, education and health facilities, sewerage, drainage,
dredging, prisons, and hospitals.
Sec. 9. List of Priority Projects. The Municipality may, at its option, identify
specific priority projects that may undertaken under any of the PPP Modalities
defined under Sec. 10 hereof.
Sec. 10. PPP Modalities. In undertaking specific PPP Projects, the Municipality
may adopt and pursue the following PPP Modalities:

(a) Build-and-Transfer (BT);


(b) Build-Lease-and-Transfer (BLT);
(c) Build-Operate-and-Transfer (BOT);
(d) Build-Own-and-Operate (BOO);
(e) Build-Transfer-and-Operate (BTO);
(f)

Contract-Add-and-Operate (CAO);

(g) Develop-Operate-and-Transfer (DOT);


(h) Rehabilitate-Operate-and-Transfer (ROT);
(i)

Rehabilitate-Own-and-Operate (ROO);

(j)

Concession Arrangement;

(k) Joint Venture (JV);


(l)

Lease or Affermage;

(m) Management Contract;


(n) Service Contract;
(o) Divestment or Disposition; and
(p) Corporatization.
Sec. 11. General Requirements.
(a)

Undertaking a PPP for a Development Project must be premised on


any or all of the reasons and drivers mentioned in Section 4 hereof.

(b)

Unsolicited proposals may be accepted even if the project is included


in the List of Priority Projects or whether the same features a new
concept or technology or not.

(c)

The prohibition for unsolicited proposals under Republic Act No. 6957
as amended by RA No. 7718 on providing Direct Municipality
Government Guarantee, Direct Municipality Government Subsidy and
Direct Municipality Government Equity only applies to BOT variants.

(d)

For Concession Arrangements, Leases or Affermage, Management


and Service Contracts, and Joint Ventures, the Municipality may
provide Direct Municipality Government Guarantee, Direct
Municipality Government Subsidy, Direct Municipality Government
Equity, or Viability Gap Funding; provided, that the Municipality may
use a portion of its general fund, its development fund comprising
20% of it annual share in the Internal Revenue Allotment, or its
equitable share in the proceeds of the utilization and development of
the national wealth found within its territory for this purpose; provided
further, that any amount used for subsidy or equity for a PPP project
shall be deemed for development purposes and for the direct benefits
of the inhabitants pursuant to Sections 287 and 289 of the 1991 LGC
respectively.

(e)

For all PPP Modalities, the Municipality may provide Credit


Enhancements.

(f)

Official Development Assistance (ODA) as defined in R.A. 8182,


otherwise known as the ODA Act of 1996, as amended by R.A. 8555
may be availed of for PPP projects where there is difficulty in
sourcing funds; provided, that ODA financing shall not exceed 50% of
the project cost, the balance to be provided by the PSP.

(g)

Any subsidy that will be extended by the Municipality must be


targeted, transparent and efficiently administered.

(h)

Each PPP Modality adopted for a specific PPP project must


specifically provide and adopt a tariff- mechanism such as but not
limited to cash-needs, price cap, revenue cap, rate of return, hybrid
of the foregoing, or any other appropriate scheme.

(i)

The Municipality shall have the option to form or allow the formation
of a special purpose vehicle or single- purpose project company to
implement the PPP project as may be appropriate under the chosen
PPP Modality.

(j)

In participating in PPPs, the Municipality may, subject to Sections 16,


17, 18, 19 and 20 of the 1991 LGC, exercise police power, perform
devolved powers, apply and generate resources, expropriate and

reclassify and provide zoning regulations.


Sec. 12. Government-to-Government Joint PPP Undertakings. The Municipality
by mutual agreement in a Government-to-Government arrangement with other
local governments, national government agencies, government-owned and controlled corporations, government instrumentalities and government corporate
entities, may implement PPP Projects for projects located within the
Municipalitys territory or those projects that will benefit the Municipality and its
community even if the project site is outside the Municipalitys territory; provided,
that the collaborating or partner government entity jointly undertakes with the
Municipality the selection of the PSP using the appropriate PPP Modality.

Chapter 3. PPP Procedures


Sec. 13. PPP Procedures.
(a)

For BOT variants, the Municipality must comply with the procedure
set forth in Republic Act No. 6957 as amended by RA No. 7718 and
its Implementing Rules and Regulations.

(b)

For Management and Service Contracts, the Municipality shall


comply with Republic Act 9184 and its Implementing Rules and
Regulations.

(c)

For Concessions, Joint Ventures, and Leases or Affermage, the


procedures specified herein shall govern.

(d)

For Divestment or Disposition of a property, Commission on Audit


Circular No. 89-296 (January 27, 1989) shall be applicable.

(e)

For the Divestiture of a subsidiary or corporation incorporated by the


Municipality under Corporatization, the sale may be pursued via a
public offering or through a public auction or other relevant schemes
under Commission on Audit Circular No. 89-296 (January 27, 1989).

(f)

If the Municipality opts to select a PSP using the Competitive


Selection or Competitive Challenge approach, the Municipality in the
first approach and the PSP in the second approach must prepare and
submit a Feasibility Study or Project Description.

(g)

All recommendations of the PPP Selection Committee shall be


submitted to the Mayor for consideration and approval.

(h)

All PPP contracts must be signed by the Mayor with prior


authorization by the Sangguniang Bayan.

(i)

After the signing of the PPP Contract by the Mayor, the PPP-SC shall
issue the Notice of Award to the PSP.

(j)

The Sangguniang Bayan has to ratify all PPP Contracts.

Sec. 14. PPP Selection Committee and the PPP OFFICE.


(a)

There is hereby a Public Private Partnership Selection Committee or


PPP-SC for purposes of selecting a PSP for a specific PPP Project.
The PPP-SC shall be composed of the following:
(i)

[TO BE DETERMINED BY THE SB]

A quorum of the PPP-SC shall be composed of a simple majority of


all voting members. The Chairperson shall vote only in case of a tie.
The PPP-SC may invite observers from the national government
agencies, regulatory agencies, Public Private Partnership Center,
National Economic Development Authority, Department of Interior
and Local Governments, private sector, non-governmental and
peoples organization to observe in the proceedings of the PPP-SC;
and form a support staff composed of employees and staff of the
Municipality.
(b)

The PPP-SC shall be responsible for all aspects of the pre-selection


and selection process, including, among others, the preparation of
the Feasibility Study, selection/ tender documents; determine the
minimum designs, performance standards/ specifications, economic
parameters and reasonable rate of return or tariff-setting mechanism
appropriate to the PPP Modality; drafting or evaluation of the PPP
contract; publication of the invitation to apply for eligibility and submit
proposals or comparative proposals; define the eligibility
requirements, appropriate form and amount of proposal securities,
and schedules of the selection and challenge processes; prequalification of prospective PSPs, bidders or challengers; conduct of
pre-selection conferences and issuance of supplemental notices;
interpretation of the rules regarding the selection process; the
conduct of the selection or challenge process; evaluation of the legal,
financial and technical aspects of the proposals; resolution of
disputes between PSPs and challengers; defining the appeals
mechanisms; and recommendation for the acceptance of the
proposal and/ or for the award of the contract.
The PPP-SC shall have the authority to adopt and prescribe the
appropriate schedules and timelines for each PSP selection process:
provided that the periods are reasonable and will not undermine free
competition, transparency and accountability.

(c)

The PPP-SC shall hold office in the PPP Office, which shall be
provided by the Municipality, and have adequate space and security
to hold all pertinent documents and to enable it to conduct its
business.

Chapter 4. Competitive Selection


Sec. 15. Competitive Selection.
(a)

The Competitive Selection procedure shall consist of the following


steps: advertisement, issuance of instructions and tender documents,
pre-bid conference, eligibility screening of prospective bidders,
receipt and opening of bids, posting of proposal securities, evaluation
of bids, post-qualification, and award of contract as detailed in this
Chapter.

(b)

The Mayor shall approve the tender documents and the draft
Contract before they are issued to the prospective PSPs/ bidders.
Tender documents shall be released upon the cash payment of the
non-refundable bid document fee which shall not be less than 1% of
the Project Cost or as determined by the PPP-SC. Notwithstanding,
the PPP-SC at its discretion may adjust said non-refundable bid
document fee as may be appropriate for the nature, scope, size, and
complexity of the proposed JV activity. Provided, that the principles of
transparency, competition and accountability are observed.

Sec. 16. Selection/Tender Documents. The PPP-SC shall prepare the


selection/tender documents, which shall include but not limited to the following:
(a)

Instructions to Private Sector Participants;

(b)

Minimum Design, Performance Standards/Specifications, and other


Financial and Economic Parameters, where applicable, among
others;

(c)

Feasibility Study or a Business Case/Pre-feasibility Study/ Project


Description of the Proposed Project;

(d)

Draft Contract reflecting the terms and conditions in undertaking the


JV activity, including, among others, the contractual obligations of the
contracting parties;

(e)

Selection Form reflecting the required information to properly


evaluate the technical and financial proposal;

(f)

Forms of technical and financial proposals and performance


securities;

(g)

Other documents as may be required by the PPP-SC suitable for a


particular contract/project.

Sec. 17. Instructions to Private Sector Participants. The instructions to private


sector participants, which establish the rules of the selection process, shall be
clear, comprehensive and fair to all private sector participants and shall, as far as
necessary and practicable, include the following information:
(a)

General description and objectives of the JV activity;

(b)

Proposal submission procedures and requirements, which shall


include information on the manner of proposal submission, the
number of copies of the technical and financial proposal to be
submitted, where the proposals are to be submitted, the deadline for
the submission of proposals, permissible mode of transmission of
technical and financial proposals, etc.;

(c)

Amount and form of proposal security and proposal security validity


period;

(d)

Milestones;

(e)

Method, parameters and criteria for the evaluation of the proposals;

(f)

Minimum amount of equity of the prospective JV partner;

(g)

Requirements of concerned regulatory bodies;

(h)

Revenue sharing arrangement, if any;

(i)

Nationality and ownership requirements as, required by law; and

(j)

Other information as may be included by the PPP-SC suitable for a


particular contract/project.

Sec.18. Minimum Designs, Performance Standards/Specifications and Economic


Parameters. Minimum design and performance standards/specifications,
including appropriate environmental standards by the regulatory agencies shall
be clearly defined and shall refer more to the desired quantity and quality of the
outputs of the JV activity and should state that non-conformity with any of these
minimum requirements shall render the proposals as non-responsive. Likewise,
for the purpose of evaluating proposals, the following economic parameters,
among others and where applicable, shall be prescribed:
(a)
(b)
(c)

discount rate, foreign exchange rate and inflation factor;


maximum period of project construction;
fixed term and price indices to be used in the adjustments of
tolls/fees/rentals/charges, if applicable; and

(d)

minimum period of repayment, if applicable.

Sec. 19. Draft Contract. The draft contract should clearly define the basic and
legal relationship between the parties and their rights and responsibilities
including specific Government Undertakings to be provided by the Municipality
relative to the JV activity, if any. Specifically, the draft contract shall also contain
provisions on the following matters, as far as practicable:
(a)

the date on which the agreement is established, executed, and


considered effective;

(b)

the names, addresses and identification of the parties, including the


type of business of each members of the JV;

(c)

the name under which the JV will do business;

(d)

the principal place of business of the JV;

(e)

purpose, term and scope of the JV;

(f)

project specifications and features;

(g)

a statement that the parties are actually co-venturers for the project,
whether or not the contract is in the name of all members;

(h)

the establishment of a fund by the parties to finance the work,


together with the amounts to be contributed by each party, with the
fund being deposited in a special bank account under dual control,
and all progress payments and other revenues being deposited in
such account;

(i)

procedure for additional capital infusions, if required;

(j)

a declaration of the participation of the parties and percentage in


which profits and losses are shared, in proportion to the contributions
of the party to the working fund. The amount of contribution of funds
by parties can be increased or decreased, depending on the
contributions of equipment or expertise;

(k) if equity other than cash is to be contributed, a statement as to how the


property will be valuated, and the ownership of the property during
and after the effectivity of the JV Agreement;
(l)

designation of one of the parties as general manager of the project,


with authority to bind the JV Company/Partnership/Parties; or, in the
alternative, the constitution of a management committee, with a
provision for remuneration. Management duties, other duties of the
co-venturers and procedures to be followed in dealing with unusual

situations or problems that may develop, should be specified;


(m) implementation milestones, regular meeting schedules, financial and
periodic JV and progress reporting procedure;
(n)

establishment of a JV bank account, and the appointment of a


chartered accountant and lawyer;

(o)

provide for the acquisition of licenses in the name of the JV or each


co-venturer, as required;

(p)

type of insurance carried by the JV and clearly defined liabilities to be


insured against by each participant;

(q)

definition of items which are to be considered as costs to the JV for


the purpose of determining profit or loss, and a description of items
which are not reimbursable to members of the JV;

(r)

confidentiality of trade information passed between the co-venturers;

(s)

ownership or retention of patents, technology, and consultant reports;

(t)

performance security requirements of the project and the bonding


obligations of the co-venturers;

(u)

undivided pro-rata interests held by the co-venturers on all assets of


the JV;

(v)

restriction regarding assignment of private sector participants


undivided prorate interests in assets of the JV;

(w) cost recovery scheme;


(x)

indemnification and liquidated damages;

(y)

performance and warranty bonds;

(z)

minimum insurance coverage;

(aa) acceptance tests and procedures;


(bb) warranty period and procedures;
(cc) grounds for and effects of contract termination including modes for
settling disputes and procedures for handling guarantees, defects,
and insurance after termination;
(dd) the manner and procedures for the resolution of warranty against
corruption;

(ee) compliance with all other laws, rules and regulations;


(ff) procedure for exit of the Municipality and Substitution or addition of
parties;
(gg) payout of funds;
(hh) disputes arbitration clause; and
(ii)

Other information as may be included by the PPP-SC suitable for a


particular contract/project

Sec. 20. Publication of Invitation to Apply for Eligibility and to Submit a Proposal
(IAESP).
a. The IAESPs shall be advertised once in a newspaper of general
nationwide circulation, and posted continuously for a period of seven
(7) calendar days, starting on date of advertisement, at the Website
of the Municipality and any conspicuous place within the Municipality.
b. Private sector participants shall be given at least thirty (30) calendar
days from the date of publication of the IAESP to apply for eligibility
and to submit a proposal. Notwithstanding, the PPP-SC at its
discretion may adjust said period as may be appropriate for the
nature, scope, size, and complexity of the proposed JV activity.
Provided, that the principles of transparency, competition and
accountability are observed.
Sec. 21. Eligibility Requirements
(i)

Legal Requirements. If the JV activity requires a public utility


franchise, the private sector participant must be duly registered with
the SEC and be at least 60% Filipino-owned. For projects other than
these, prospective private sector participant shall comply with
nationality and ownership requirements under the Constitution and
other applicable laws and issuances.
For JV activities to be operated by the prospective JV Partner or a
facility operator where operation of the facility does not require a
public utility franchise, the JV partner or facility operator or
concessionaire may be Filipino or foreign-owned, as maybe allowed
under applicable laws, rules, and regulations.

(ii)

Technical Requirements. The prospective JV Partner, or any of its


contractors, must have completed a similar or related project costing
at least 50% of the JV activity subject of the selection process within
the relevant period as determined by the Government Entity. The
prospective JV Partner and its contractor shall submit a statement of

all its ongoing and completed government and private contracts


similar or related to the JV activity subject of the selection process,
including contracts awarded but not yet started, if any.
Notwithstanding, the PPP-SC at its discretion may adjust said
technical requirements as may be appropriate for the nature, scope,
size, and complexity of the proposed JV activity. Provided, that the
principles of transparency, competition and accountability are
observed.
(iii) Financial Capability. The PPP-SC shall determine before evaluation
of eligibility, the minimum amount of equity needed for the JV activity.
The following documents shall be submitted by the prospective JV
Partner: (a) Audited financial statements for the past three calendar
years. If the prospective JV Partner is Filipino, the audited financial
statements to be submitted must be stamped received by the BIR
or its duly accredited and authorized institutions; and (b) Latest tax
returns, if the JV Partner is Filipino.
(iv) In case of consortia, the member entities of the prospective JV
Partner shall submit the above legal, technical and financial eligibility
requirements to determine the overall capability of the consortia for
the JV undertaking.
(v)

Acceptance of Criteria and Waiver of Rights to Enjoin JV Activity. In


addition to the above, all prospective private sector participants shall
be required to submit, as part of their qualification documents, a
statement stipulating that the private sector participant (i) has
accepted the qualification criteria established by the JV-SC of the
Government Entity concerned; and (ii) waives any right it may have
to seek and obtain a writ of injunction or prohibition or restraining
order against the Municipality or its PPP-SC to prevent or restrain the
qualification proceedings related thereto, the award of the contract to
a successful private sector participant, and the carrying out of the
awarded contract. Such waiver shall, participant to question the
lawfulness of its disqualification or the rejection of its proposal by
appropriate administrative or judicial processes not involving the
issuance of a writ of injunction or prohibition or restraining order.

(vi) Financial capability shall be measured in terms of: (a) proof of ability
of the prospective JV Partner to provide a minimum amount of equity
to the JV activity, measured in terms of the net worth of the company,
or a deposit equivalent to the minimum equity required set aside or
ear-marked for the proposed JV Activity; and (b) a letter from a
domestic universal/commercial bank, or an international bank with a
subsidiary/branch in the Philippines, or any international bank
recognized by the BSP, attesting that the prospective JV Partner is
one of its current clients, and is in good financial standing.

Sec. 22. Eligible and Ineligible. The PPP-SC shall within a period of fifteen (15)
calendar days after the deadline set for the submission of the eligibility
documents, complete the evaluation of the eligibility documents of the
prospective JV Partners, and determine which among them are eligible and
ineligible. Accordingly, the PPP-SC shall duly inform the eligible JV Partners
within seven (7) calendar days after approval thereof. Ineligible private sector
participants shall be similarly given notice of such ineligibility, stating therein the
grounds for ineligibility within the same period.
Those ineligible may appeal their ineligibility to the Municipal Mayor, within seven
(7) calendar days from receipt of the notice of ineligibility. The selection process
will be suspended for a maximum period of thirty (30) calendar days while the
appeal is being evaluated. The Municipal Mayor or his authorized representative
shall act on the appeal within the thirty (30) calendar day period of suspension of
the selection process. The decision of the Municipal Mayor or his authorized
representative on the appeal shall be final and immediately executory. If the
appeal is not resolved within said period, the appeal is deemed denied, and the
selection process will proceed.
Sec. 23. Issuance of Tender Documents. The PPP-SC concerned shall make
available the related competitive selection documents to all eligible private sector
participants as soon as practicable to provide respective private sector
participants ample time to examine the same and to prepare their respective
proposals prior to the date of opening of the proposals. Tender documents shall
be released to prospective challengers upon payment of the non- refundable bid
document fee which shall not be less than 1% of the Project Cost or as
determined by the PPP-SC. Notwithstanding, the PPP-SC at its discretion may
adjust said non-refundable bid document fee as may be appropriate for the
nature, scope, size, and complexity of the proposed JV activity. Provided, that the
principles of transparency, competition and accountability are observed.
Sec. 24. Responsibility of the Private Sector Participant. The prospective private
sector participant shall be solely responsible for having taken all the necessary
steps to carefully examine and acquaint himself with the requirements and terms
and conditions of the selection documents with respect to the cost, duration, and
execution/operation of the project as it affects the preparation and submission of
its proposal. The PPP-SC concerned shall not assume any responsibility
regarding erroneous interpretations or conclusions by the prospective private
sector participant out of data furnished or indicated in the competitive selection
documents.
Sec. 25. Supplemental Notices. A prospective private sector participant may
submit a written request to the PPP-SC on or before the Pre-Selection
Conference as to the meaning of any data or requirements or any part of the
selection documents. Any substantive interpretation given by the PPP-SC shall
be issued in the form of a Supplemental Notice, and furnished to all prospective
private sector participants. The PPP-SC may also issue Supplemental Notices to

all prospective private sector participants at any time for purposes of clarifying
any provisions of the selection documents, provided that the same is issued
within a reasonable period to allow all private sector participants to consider the
same in the preparation of their proposals. Receipt of all Supplemental Notices
shall be duly acknowledged by each private sector participants prior to the
submission of his proposal and shall be so indicated in the proposal.
Sec. 26. Pre-Selection Conference. Pre-selection conference shall be conducted
by the Municipality at least fifteen (15) calendar days before the deadline for the
submission of proposals.
Sec. 27. Submission and Receipt of Proposals
a.

Requirements for Submission of Proposals. Private sector


participants shall be required to submit their proposals on or before
the deadline stipulated in the Instructions to Participants. For
eligible participants, proposals shall be submitted in two (2) separate
sealed envelopes, the first being the technical proposal and the
second the financial proposal. The technical proposal shall contain
the following, as applicable:
(i)

compliance statements with regard to the technical parameters


as stated in the tender documents;

(ii)

operational feasibility;

(iii) technical soundness, including proposed project timeline;


(iv) preliminary environmental assessment;
(v)

cost and financing plan of the JV activity; and

(vi) proposal security in accordance with the following schedule

Cost of JV activityas estimated by the government entity


Required Proposal Security
Less than PhP 5.0 billion
1.0% of the cost of the JV activity
PhP 5.0 billion or more, to less than PhP 10.0 billion
0.75% of the cost of the JV activity

PhP 10.0 billion or more


0.50% of the cost
f the JV activity or PhP 150 million, whichever is higher

(v)

other documents to support the private sector participants


technical proposal, as may be required by the PPP-SC.

b. The financial proposal shall contain the following, as the case may be:
(i)

compliance statements with regard to the financial parameters


stated in the tender documents

(ii)

proposed cost of the JV activity, operation and maintenance


cost, the amount of equity to be infused and debt to be obtained
for the project, sources of financing, and all other related costs

(iii) financial proposal corresponding to the parameters set by the


PPP-SC.
Fifty percent (50%) of the equity to be provided by the private sector entity
should as much as possible come from its own resources and not
borrowed. The PPP-SC is not precluded from specifying other
requirements for the technical and financial proposals that are best suited
for the specific JV activity.
Sec. 28. Submission of late proposals. Proposals submitted after the deadline for
submission prescribed in the Instructions to Private Sector Participants shall be
considered late and shall be returned unopened.
Sec. 29. Opening and Evaluation of Proposals
a.

Opening of the envelope for the technical proposal. At the date and
time of the proposal opening stipulated in the Instructions to Private
Sector Participants, the PPP-SC shall open only the first envelope
containing technical proposal and ascertain (a) whether the same is
complete in terms of the data/information required above; and (b)
whether the same is accompanied by the required proposal security
in the prescribed form, amount, and period of validity. All private
sector participants, or their representatives, present at the opening of
the envelopes containing the technical proposal shall sign a register
of the proposal opening.

b.

Evaluation of the technical proposal. The evaluation of the first


envelope containing the technical proposal shall involve the
assessment of the technical, operational, environmental, and
financing viability of the proposal, vis--vis the prescribed
requirements and criteria/minimum standards, and basic parameters
prescribed in the competitive selection documents. The PPP-SC shall
complete the evaluation of the technical proposal within fifteen (15)
calendar days from the date the proposals are opened. Only those
proposals that have been determined to have positively passed the
evaluation of the technical proposal shall be qualified and considered
for the evaluation of the financial proposal.

c.

Opening of the envelope for the financial/technical proposal. Only the


financial proposals of private sector participants who passed the
evaluation shall be opened for further evaluation. The financial
proposals tendered by private sector participants who failed the
technical proposal evaluation shall not be considered further, and
shall be returned unopened, together with a notice stating the
reasons for disqualification from further consideration.
The PPP-SC shall notify the private sector participants qualifying for
the second stage of evaluation of the date, time and place of the
opening of the envelopes for the financial proposal. The opening
thereof shall follow the same procedure prescribed for the opening of
the envelopes containing technical proposals.

d.

Evaluation of the financial proposal. The evaluation of the financial


proposal shall involve the assessment and comparison of the
financial proposals against the financial parameters stated in the
tender documents and proposal parameters set by the PPP-SC. The
proposed financing plan must show that the same adequately meets
the costs relative to the JV activity. The second stage evaluation of
financial proposals shall be completed by the PPP-SC within fifteen
(15) calendar days.

e.

Simultaneous evaluation of the technical and financial proposals.


Subject to the determination of the PPP-SC wherein the nature of the
JV activity shall warrant the appreciation of both the technical and
financial proposals as a whole in order to determine the best
proposal, simultaneous evaluation of the technical and financial
proposals may be resorted to. Provided, that, said evaluation
procedure shall be explicitly stated in the proposal documents.
Simultaneous evaluation of the technical and financial proposals shall
be completed within thirty (30) calendar days from the date the
proposals are opened.

f.

Prescriptive periods. The periods stated for the evaluation of the

technical and financial proposals are prescriptive. The PPP-SC may


adjust said periods as may be appropriate for the nature, scope, size,
and complexity of the proposed JV activity. Provided, that the
principles of transparency, competition and accountability are
observed.
g.

Rejection of proposals. Non-compliance to the information required


on either the first or second envelope shall be grounds for rejection of
proposals.

h.

Withdrawal and/or modification of proposals. Withdrawal and/or


modification of proposals may be allowed upon written notice by the
private sector participant concerned, to the PPP-SC prior to the time
and date set for the opening of the envelope containing the technical
proposal as specified in the Instructions to Private Sector
Participants. No proposals shall thereafter be modified or withdrawn.
Proposal modifications received after said period shall be considered
late and will be returned unopened. Withdrawal of proposals after the
proposal opening date shall cause the forfeiture of the private sector
participants proposal security.

i.

Right to Reject All Proposals. The PPP-SC concerned reserves the


right to reject any or all proposals, waive any minor defects therein
and accept the offer it deems most advantageous to the government.

Sec. 30. Award and Approval of Contract


a.

Recommendation to Award. Within seven (7) calendar days from the


date the evaluation procedure adopted is completed, the PPP-SC
shall submit the recommendation of award to the Municipal Mayor.
The PPP- SC shall include as part of its recommendation, a detailed
evaluation/assessment report on its decision regarding the evaluation
of the proposals, and explain in clear terms the basis of its
recommendations

b.

Decision to Award. Within seven (7) calendar days from the


submission by PPP-SC of the recommendation to award, the
Municipal Mayor shall approve or reject the same. The approval
shall be manifested by signing and issuing the Notice of Award to
the winning private sector participant within seven (7) calendar days
from approval thereof.
All participating private sector participants shall be informed of the
award in writing. Such decision shall be made available to the public
upon request.

c.

Notice of Award. The Notice of Award to be issued by the Municipal

Mayor, shall contain among others, an instruction to the winning


private sector participant to comply with conditions precedent for the
execution of the JV Agreement and to submit compliance statements
with regard thereto, within fifteen (15) calendar days from receipt of
the Notice of Award, or for a longer period as may be determined
proper by the PPP-SC.
d.

Failure to comply with the conditions precedent for the execution of


the contract within the prescribed fifteen (15)-calendar day period or
as such period as determined by the PPP-SC will result in
confiscation of the proposal security. Within seven (7)- calendar days
from receipt of the compliance statements from the winning private
sector participant, the Municipal Mayor shall determine the
sufficiency of the same, and notify the winning private sector
participant accordingly.

e.

Validity of Proposals/Return of Proposal Security. The execution of


the JV Agreement shall be made within the period of the validity of
the proposal security. The required proposal security shall be valid for
a reasonable period, but in no case beyond one hundred eighty (180)
calendar days following the opening of the proposals. Proposal
securities shall be returned to the unsuccessful private sector
participants upon signing of the JV Agreement by the winning private
sector participant.

f.

Extension of Validity of Proposals. When an extension of validity of


proposals is considered necessary, those who submitted proposals
shall be requested in writing, to extend the validity of their proposals
before the expiration date of the same. However, private sector
participants shall not be allowed to modify or revise the price or other
substantial aspect of their proposals.
Private sector participants shall have the right to refuse such an
extension without forfeiting their proposal security. As a condition of
the extension of the validity of their proposals, participating private
sector participants must correspondingly extend the validity of their
proposal security.

Sec. 31. Failure of Competitive Selection. There shall be a failure of competitive


selection in any of the following instances:
a)

If there is only a single party who submits eligibility documents within


the deadline stipulated in Invitation to Apply for Eligibility and to
Submit a Proposal;

b)

If at any time prior to the issuance of the notice of eligibility, should


interested parties withdraw from the competitive selection process

with the effect that there is only a single interested party remaining;
c)

If there is only a single interested party who is determined to be


eligible to submit a proposal;

d)

If at any time after the issuance of the notice of eligibility until


deadline for submission of proposals, should eligible private sector
participants withdraw from the competitive selection process with the
effect that there is only a single eligible private sector participant
remaining and eligible to submit a proposal;

e)

If there is only a single eligible private sector participant that submits


a proposal;

f)

Should no Technical Proposal be rated passed;

g)

If there is be only a single eligible private sector participant whose


Technical Proposal is rated passed, but whose Financial Proposal
does not meet the financial parameters set for in the Tender
Documents;

h)

Should no Financial Proposal of any eligible private sector participant


whose Technical Proposal is rated passed, meets the financial
parameters set forth in the Tender Documents; and

i)

No proposals were received or no private sector entity is found


qualified for the JV undertaking.

In the event of a failed competitive selection brought about by instances


stipulated under items a., b., c., d., e, g. and h. above, the JV Activity, at
the sole decision of the Municipal Mayor upon recommendation by PPPSC, may be subjected to a competitive selection once more, or, may be
the subject of limited negotiations in accordance with Chapter 5 hereof. In
the event of a failed competitive selection brought about by an instance
stipulated under item f above, a competitive selection shall be conducted
again by the PPP-SC. In the event of a failed competition brought about
by item (i) above, the PPP-SC may seek private sector entities for the JV
undertaking subject to Chapter 6 hereof.
Sec. 32. Execution/Approval of the JV Agreement. The authorized signatory(ies)
of the winning private sector participant and the Municipal Mayor shall execute
and sign the JV Agreement, within seven (7) calendar days from receipt by the
winning private sector participant of the notice of award. Consistent with Article
1159 of the New Civil Code, said JV Agreement is considered the law between
the parties, and the parties shall perform their respective prestations, obligations,
and undertakings thereunder with utmost good faith, with a view to attaining the
objective thereof. An original signed copy of the contract shall be submitted for
ratification to the Sangguniang Bayan.

In the event of refusal, inability or failure of the winning private sector participant
to enter into contract with the Municipality, within the time provided therefore, the
Municipality shall forfeit its proposal security. In such event, the Municipality shall
consider the private sector participant with the next ranked complying proposal
as the winning private sector participant, and notify said private sector participant
accordingly. If the next ranked complying private sector participant shall likewise
refuse or fail to enter into contract with the Municipality, its proposal security shall
likewise be forfeited and the Municipality shall consider the next ranked
complying proposal, and so on, until a contract shall have been entered into. In
the event that the Municipality is unable to execute the contract with any of the
complying private sector participants, a failure of competitive selection will be
declared and the JV may be subjected to a competitive selection again.
Sec. 33. Other Approvals for Contract. The entity tasked under the JV Agreement
shall, as may be required under existing laws, rules and regulations, secure any
and all other approvals for the contract, or the implementation thereof, from
government agencies or bodies. The Municipality may provide the necessary
assistance to its JV partner in securing all the required clearances. The contract
shall provide milestones in securing such other approvals required for the
implementation of the contract.
Sec. 34. Appeals Mechanism. Decisions of the PPP-SC with respect to conduct
of the competitive selection process may be appealed in writing to the Municipal
Mayor. Provided, however, that a prior motion for reconsideration should have
been filed by the party concerned, and the same has been resolved by the PPPSC. The appeal must be filed within seven (7) calendar days from receipt by the
party concerned of the resolution of the PPP-SC denying its motion for
reconsideration. An appeal may be made by filing a verified position paper with
the Municipal Mayor, accompanied by the payment of a non-refundable appeal
fee. The non-refundable appeal fee shall be in an amount equivalent to no less
than one-half (1/2) of .01% of the project cost or as determined by the PPP-SC.
Notwithstanding, the PPP-SC at its discretion may adjust said non-refundable
appeal fee as may be appropriate for the nature, scope, size, and complexity of
the proposed JV activity. Provided, that the principles of transparency,
competition and accountability are observed.
Sec. 35. Contract Effectivity. The contract shall be effective upon ratification
thereof by the Sangguniang Bayan.
Chapter 5. Limited Negotiations
Sec. 36. Limited Negotiations. Where the Municipality has failed to identify an
eligible PSP for a desired PPP activity when there is only one qualified bidder
after subjecting the same to a competitive selection or bidding or where the
desired PPP project is the subject of an unsolicited proposal from a PSP, Limited
Negotiations may take place. The negotiations will cover all the technical and
financial aspects of the PPP project or activity; provided, that the minimum

designs, performance standards/ specifications and economic parameters stated


in the Feasibility Study/Project Description and Terms of Reference for the
Competitive Selection are complied with. The Mayor shall approve the terms of
the Limited Negotiations prior to the award of the contract to the PSP.
The PPP-SC shall set the timetable of the various activities for the limited
negotiations. The PPP-SC may terminate the limited negotiations should the
party it is negotiating with fail to observe the said timetable. The negotiations
shall be in accordance with the procedures below.
Sec. 37. Should there be a failure of competitive selection brought about by
instances stipulated under Section 31(a) and Section 31 (b) as outlined in
Chapter 4 hereof with the effect that there is only one (1) interested party
remaining, the following procedure shall be observed:
(a)

The PPP-SC concerned shall proceed with the determination of the


eligibility of the sole private sector entity;

(b) The sole private sector entitys eligibility documents shall be evaluated
in accordance with the rules set forth in Chapter 4 hereof;
(c)

If the eligibility documents are found to be insufficient and rated


failed, the PPP-SC concerned shall terminate the negotiations. In
the event the negotiations are terminated, the Municipal Mayor, at its
sole option, may conduct again a competitive selection or decide to
pursue the proposed activity through alternative routes other than JV;

(d)

If the eligibility documents are found sufficient and rated passed,


the PPP-SC shall give the sole private sector entity the draft tender
documents in accordance with Chapter 4 hereof;

(e) The sole private sector entity shall submit a proposal in accordance
and compliance with Chapter 4 hereof;
(f) The PPP-SC concerned shall simultaneously evaluate the technical
and financial proposals of the sole private sector entity in accordance
with Chapter 4 hereof;
(g)

If the proposal of the sole private sector entity is rated failed, the
PPP-SC shall terminate the negotiations and, the Municipal Mayor, at
its sole option, may conduct again a competitive selection or decide
to pursue the proposed activity through alternative routes other than
JV.

(h)

Should the proposal of the sole private sector entity meet the
parameters set forth in the tender documents, the Municipality shall
enter into the JV Agreement with the sole private sector entity
concerned. In the event that an agreement is not reached,

negotiations shall be terminated.


Sec. 38. Should there be a failure of competitive selection brought about by
instances stipulated under Section 31 (c) and Section 31 (d) as outlined in
Chapter 4 hereof with the effect that there is only one (1) interested party
remaining and eligible to submit a proposal the following procedure shall be
observed:
(a)

The sole eligible party shall be instructed to submit a proposal.

(b)

The process outlined in I(d) to (h) above shall then be observed and
followed.

Sec. 39. Should there be a failure of competitive selection brought about by


Section 31 (e) as outlined in Chapter 4 hereof such that only one (1) proposal is
received by the Municipality, the process outlined in Section 37 (a)(vii) to Section
37 (a)(viii) above shall then be observed and followed.
Sec. 40. Should there be a failure of competitive selection brought about by
Section 31 (g) and Section 31 (h) as outlined in Chapter 4 hereof the following
procedure shall be observed:
(a)

The negotiation shall be on a Financial Proposal only basis. The


Technical Proposal shall remain valid and binding.

(b)

The eligible private sector participant/s whose Technical Proposal/s


was/were rated passed but whose Financial Proposal/s is/are noncompliant with the Financial Parameters outlined in the Tender
Documents, shall be asked to submit a revised Financial Proposal.

(c)

Should there be more than one revised Financial Proposal, the


revised Financial Proposal/s shall be evaluated in accordance with
Chapter 4 hereof.

(d)

Should the revised Financial Proposal meet the Financial Parameters


outlined in the Tender Documents, the Municipality shall enter into
the JV Agreement with the eligible Private sector participant (if there
is only one remaining) or with the eligible private sector participant
submitting the most advantageous Financial Proposal, in accordance
with Chapter 4 hereof. Should the eligible private sector participant
still fail to meet the Financial Parameters outlined in the Tender
Documents, the PPP-SC concerned shall terminate the negotiations
with the said eligible private sector participant/s, and, the Municipal
Mayor, at its sole option, may conduct another round of competitive
selection, or decide to pursue the proposed activity through
alternative routes other.

Chapter 6. Competitive Challenge or Swiss Challenge

Sec. 41. Competitive Challenge Procedure. In all cases where the Municipality
directly negotiates with a private sector participant for a proposed JV
undertaking, the negotiated terms shall be subjected to a competitive challenge
wherein other private sector entities shall be invited to submit comparative
proposals, to ensure that JV Agreements are entered into under a transparent
and competitive process that promotes accountability in government
transactions. Negotiated JV Agreements shall be subjected to a three-stage
process, summarized hereunder.
Sec. 42. Stage One A private sector entity submits an unsolicited proposal to
the Municipality, or the Municipality seeks out a JV partner after failed
competition for a JV activity deemed manifestly advantageous to Government.
The private sector entity submits a proposal to the Municipality for a projected JV
activity/undertaking. The PPP-SC is tasked with the initial evaluation of the
proposal. Upon completion of the initial evaluation, the Municipal Mayor, upon
recommendation of the PPP-SC, shall either issue an acceptance or nonacceptance of the proposal. The Municipality concerned shall act on the proposal
within ten (10) working days upon submission of complete documents by the
private sector entity. An acceptance shall not bind the Municipality to enter into
the JV activity but shall mean that authorization is given to proceed with detailed
negotiations on the terms and conditions of the JV activity. In case of nonacceptance, the private sector entity shall be informed of the reasons/grounds for
non-acceptance.
Sec. 43. Stage Two The parties negotiate and agree on the terms and
conditions of the JV activity. The following rules shall be adhered to in the
conduct of detailed negotiations and the preparation of the proposal documents
in case of a successful negotiations:
(a)

Both parties shall negotiate on, among others, the purpose, terms
and conditions, scope, as well as all legal, technical, and financial
aspects of the JV activity;

(b)

The PPP-SC shall determine the eligibility of the private sector entity
to enter into the JV activity in accordance with Sec. 21 (Eligibility
Requirements) under Chapter 4 hereof.

(c)

Negotiations shall comply with the process, requirements and


conditions as stipulated under this Ordinance.

(d)

Once negotiations are successful, the Municipal Mayor and the


authorized representative of the private sector entity shall issue a
signed certification that an agreement has been reached by both
parties. Said certification shall also state that the Municipality has
found the private sector participant eligible to enter into the proposed
JV activity and shall commence the activities for the solicitation for
comparative proposals.

(e)

However, should negotiations not result to an agreement acceptable


to both parties, the Municipality shall have the option to reject the
proposal by informing the private sector participant in writing stating
the grounds for rejection and thereafter may accept a new proposal
from private sector participants, or decide to pursue the proposed
activity through alternative routes other than JV. The parties shall
complete the Stage Two process within thirty (30) calendar days
upon acceptance of the proposal under Stage One above

(f)

After an agreement is reached, the contract documents, including the


selection documents for the competitive challenge are prepared.

Sec. 44. Stage Three Once the negotiations have been successfully
completed, the JV activity shall be subjected to a competitive challenge, as
follows:
(a)

The PPP-SC shall prepare the tender documents pursuant to Section


16, 17, 18 and 19 of Chapter 4 hereof. The eligibility criteria used in
determining the eligibility of the private sector entity shall be the
same as those stated in the tender documents. Proprietary
information shall, however, be respected and protected, and treated
with confidentiality. As such, it shall not form part of the tender and
related documents. The Municipal Mayor shall approve all tender
documents including the draft contract before the publication of the
invitation for comparative proposals.

(b)

Within seven (7) calendar days from the issuance of the Certification
of a successful negotiation referred to in Stage Two above, the PPPSC shall publish the notice of unsolicited proposal and invitation for
comparative proposals (NUPICP) once in a newspaper of general
nationwide circulation, and posted continuously for a period of seven
(7) calendar days, starting on date of advertisement, at the Website
of the Municipality and any conspicuous place within the Municipality.

(c)

Tender documents shall be released upon payment of the nonrefundable bid document fee which shall not be less than 1% of the
Project Cost or as determined by the PPP-SC. Notwithstanding, the
PPP-SC at its discretion may adjust said non-refundable bid
document fee as may be appropriate for the nature, scope, size, and
complexity of the proposed JV activity. Provided, that the principles of
transparency, competition and accountability are observed.

(d)

Private sector participants shall be given at least thirty (30) calendar


days from the date of publication of the NUPCIP to apply for eligibility
and to submit a proposal. Notwithstanding, the PPP-SC at its
discretion may adjust said period as may be appropriate for the
nature, scope, size, and complexity of the proposed JV activity.

Provided, that the principles of transparency, competition and


accountability are observed.
(e)

The private sector entity shall post the proposal security or bank
guarantee at the date of the first day of the publication of the
invitation for comparative proposals in the amount and form stated in
the tender documents.

(f)

The procedure for the determination of eligibility of comparative


proponents/private sector participants, issuance of supplemental
competitive selection bulletins and pre-selection conferences,
submission and receipt of proposals, opening and evaluation of
proposals shall follow the procedure stipulated under Chapter 4
hereof. In the evaluation of proposals, the best offer shall be
determined to include the original proposal of the private sector
entity.

(g)

If the PPP-SC determines that an offer made by a comparative


private sector participant other than the original proponent is superior
or more advantageous to the government than the original proposal,
the private sector entity who submitted the original proposal shall be
given the right to match such superior or more advantageous offer
within thirty (30) calendar days from receipt of notification from the
PPP- SC of the results of the competitive selection. Notwithstanding,
the PPP-SC at its discretion may adjust said period as may be
appropriate for the nature, scope, size, and complexity of the
proposed JV activity. Provided, that the principles of transparency,
competition and accountability are observed.

(h)

Should no matching offer be received within the stated period, the JV


activity shall be awarded to the comparative private sector participant
submitting the most advantageous proposal. If a matching offer is
received within the prescribed period, the JV activity shall be
awarded to the original proponent. If no comparative proposal is
received by the Government Entity, the JV activity shall be
immediately awarded to the original private sector proponent.

(i)

Within seven (7) calendar days from the date of completion of the
Competitive Challenge, the JV-SC shall submit the recommendation
of award to the Municipal Mayor. Succeeding activities shall be in
accordance with Sections 30, 32, 33, 34 and 35 of Chapter 4 hereof.

Chapter 7. Final Provisions


Sec. 45. Application of Other PPP Laws and Regulations. Whenever relevant
and appropriate as determined by the Municipal Mayor, upon recommendation
of the PPP-SC, the provisions of Republic Act No. 6957 as amended by R.A. No.

7718 or the BOT Law, R.A. 9184 or the Government Procurement Reform Act,
Executive Order No. 301 (26 July 1987), Commission on Audit Circular No. 89296 (January 27, 1989), and their applicable rules and regulations, and the 2008
Joint Venture Guidelines adopted by the National Economic Development
Authority shall apply in a suppletory manner.
Sec. 46. Receipt. All fees and other bonds received by the Municipality under
this Ordinance shall be acknowledged by the Municipal Treasurer through proper
receipts of the fees or acknowledgment of the bonds.
Sec. 47. Separability Clause. If, for any reason, any section or provision of this
Code or any part thereof, or the application of such section, provision or portion
is declared invalid or unconstitutional, the remainder thereof shall not be affected
by such declaration.
Sec. 48. Repealing Clause. All ordinances and resolutions or parts thereof
inconsistent with the provisions of this Code are hereby repealed or modified
accordingly.
Sec. 49. Effectivity. This Code shall take effect after passage by the
Sangguniang Bayan, approval by the Honorable Municipal Mayor and one (1)
day after posting in conspicuous places in the Municipality.