September 7, 2021
Mr. CARLOS PEREZ SERRANO
[email protected]
Dear Mr. SERRANO:
Greetings!
Thank you for your request dated August 31, 2021, under Executive Order No. 2 (s. 2016) on Freedom of Information in the Executive Branch.
Your request
You requested for answers to the following questions that concerns you when bidding for the University of the Philippines - Philippine General Hospital (UP-PGH) Diliman and UP-PGH Cancer Center Projects:
1. Is it established in Philippine law that for PPP procedures, at least 60% of the SPV should be under control by local companies, meaning that it remains only 40% for foreign companies?
2. Is there any minimal participation required for a company to be part of this SPV? In example, 5%, 10%?
Response to your request
Thank you for your interest in the UP-PGH Diliman and UP-PGH Manila Cancer Center Projects.
In response to your query, please refer to the 2012 Implementing Rules and Regulations (IRR) of the Philippine Build-Operate-Transfer (“BOT”) Law (Republic Act No. 6957, as amended by Republic Act No. 7718). Section 5.1 of the IRR states that any individual, partnership, corporation, or firm, whether local or foreign, including consortia of local, foreign, or local and foreign firms can participate or apply for pre-qualification or simultaneous qualification for
projects. However, under Section 5.4 of the IRR, for projects requiring a public utility franchise for its operation, the private sector proponent and/or the facility operator must be duly registered with the Securities and Exchange Commission (SEC) of the Philippines and owned up to at least sixty percent (60%) by Filipinos, or, if a consortium of local, foreign, or local and foreign firms, Filipinos must have at least sixty percent (60%) interest in said consortium. For projects that do not require a public utility franchise for its operation, the private sector
proponent or the facility operator may be Filipino or foreign-owned.
The BOT Law and its IRR do not prescribe a minimum participation for consortium members, but the Implementing Agency may require a minimum equity contribution for the consortium for certain members (e.g. lead member). Further, according to Section 11.5 of the IRR, in forming the Special Purpose Company (SPC) or Special Purpose Vehicle (SPV), the winning private sector proponent subscribes to and pays for a significant/principal shareholding or
controlling interest in the corporation, subject to the nationality and ownership requirements under the Philippine Constitution and other applicable laws.
For a consortium, all members thereof shall present proof of contractual or other legally binding ties to or relationships with the corporation for the development and implementation of the project in accordance with their submitted business plan. For example, for facility owners/developers/equity investors, this includes subscription to and payment for a significant number of shares in the corporation.
The specific nationality and consortium requirements, including the required share ownership, are included in the Instructions to Prospective Bidders or the tender documents of a particular project. For UP-PGH Diliman and the UP-PGH Manila Cancer Center Projects, the respective tender documents are still unavailable as of the date of this letter.
We hope that you find this information helpful. For updates on the UP-PGH Diliman and UPPGH Manila Cancer Center Projects, you may visit the PPP Center website.
Your right to request review
If you are unhappy with this response to your FOI request, you may ask us to carry out an internal review of the response by writing to the Office of the Executive Director. Your review request should explain why you are dissatisfied with this response, and should be made within 15 working days from the date you received this letter. We will complete the review and tell you the result within 30 working days from the date we receive your review request.
If you are not satisfied with result of the review, you then have the right to appeal to the Office of the Secretary of the National Economic and Development Authority and thereafter, to the Office of the President pursuant to Administrative Order No. 22 (s. 2011).
Thank you.
Respectfully,
ELEAZAR E. RICOTE
FOI Decision Maker
