PRESIDENTIAL DECREE NO.

1152
[PHILIPPINE ENVIRONMENT CODE]

WHEREAS, the broad spectrum of environment has become a matter of vital concern to the
government;

WHEREAS, the national leadership has taken a step towards this direction by creating the
National Environment Protection Council under Presidential Decree No. 1121;

WHEREAS, it is necessary that the creation of the Council be complemented with the launching
of a comprehensive program of environmental protection and management;

WHEREAS, such a program can assume tangible and meaningful significance only by
establishing specific environment management policies and prescribing environment quality
standards in a Philippine Environment Code.

NOW, THEREFORE, I, Ferdinand E. Marcos, President of the Republic of the Philippines, by

virtue of the powers vested in me by the Constitution, do hereby order and decree:

Section 1
Short Title

This decree shall be known and cited as "The Philippine Environment Code."

TITLE I
AIR QUALITY MANAGEMENT

Section 2
Purposes

The purposes of this Title are:

a. to achieve and maintain such levels of air quality as to protect public health; and

b. to prevent to the greatest extent practicable, injury and/or damage to plant and animal life and
property, and promote the social economic development of the country.

Chapter I
Standards

Section 3
Ambient Air Quality Standards

There shall be established ambient air quality standards which shall prescribe the maximum
concentration of air pollutants permissible in the atmosphere consistent with public health,
safety and general welfare.
In the establishment of ambient air quality standards, factors such as local atmospheric
conditions, location and land use, and available technology, shall be considered among others.

Section 4
National Emission Standards

There shall be established national emission standards for new and existing stationary and
mobile sources of pollution which shall consider among others such factors as type of industry,
practicable control technology available, location and land use, and the nature of pollutants
emitted.

Section 5
Community Noise Standards

Appropriate standards for community noise levels shall be established considering, among
others, location, zoning and land use classification

Section 6
Standards for Noise-Producing Equipment

There shall be established a standard for noise-producing equipment such as construction

equipment, transportation equipment, stationary engines, and electrical or electronic equipment
and such similar equipment or contrivances. The standard shall set a limit on the acceptable
level of noise emitted from a given equipment for the protection of public health and welfare,
considering among others, the magnitude and condition of use, the degree of noise reduction
achievable through the application of best available technology and the cost of compliance.

The installation of any noise-producing equipment shall conform with the requirements of
Presidential Decree No. 1096 and other applicable laws as well as their implementing rules and
regulations.

Section 7
Aircraft Emission and Sonic Booms

Appropriate government agencies shall encourage research studies on the harmful effects of
aircraft emissions in the environment in order to establish permissible emission standards.

Research and studies shall also be undertaken to mitigate and/or minimize the effects of sonic
booms in the environment.

Chapter II
Regulation and Enforcement

Section 8
Air Quality and Noise Standards

National Pollution Control Commission in coordination with appropriate government agencies

shall be responsible for the enforcement of ambient air quality emission and noise standards,
including the monitoring and surveillance of air pollutants, licensing and permitting of air
pollution control facilities, and the promulgation of appropriate rules and regulations.

Existing air quality emission and noise standards may be revised and/or modified consistent
with new development and technology.

Section 9
Aircraft Noise

Community noise standards around airports shall be implemented by the Civil Aeronautics
Administration in coordination with the National Pollution Control Commission.

Section 10
Vehicular Emission

The Land Transportation Commission, in coordination with the National Pollution Control
Commission, shall implement emission standards for vehicles and may deputize other
appropriate law enforcement agencies for the purpose.

Section 11
Radioactive Emissions

The release and emission of radioactivity into the environment incident to the establishment or
possession of nuclear energy facilities and radioactive materials, handling, transport,
production, storage, use and disposal of radio active materials shall be regulated by the
Philippine Atomic Energy Commission in coordination with other appropriated government
agencies.

Chapter III
Monitoring

Section 12
Air Quality Monitoring

The National Pollution Control Commission in coordination with appropriate government

agencies, shall establish to the greatest extent practicable an air quality monitoring network.
Such air quality monitoring network shall put to maximum use the capabilities of these agencies.

The National Environmental Protection Council shall be furnished with the results of air quality
monitoring activities.

Section 13
Weather Modification

The Philippine Atmospheric, Geophysical and Astronomical Services Administration shall

monitor regularly meteorological factors affecting environmental conditions in order to effectively
guide air pollution monitoring activities.

Activities relating to weather modification such as rainfall stimulation and storm seeding
experiments shall be undertaken in consultation or coordination with the Philippine Atmospheric,
Geophysical and Astronomical Services Administration.

TITLE II
WATER QUALITY MANAGEMENT

Section 14
Purpose

It is the purpose of this Title to prescribe management guidelines aimed to protect and improve
the quality of Philippine water resources through:

a. classification of Philippine waters;

b. establishment of water quality standards;

c. protection and improvement of the quality of Philippine water resources; and

d. responsibilities for surveillance and mitigation of pollution incidents.

Chapter I
Classification Standards

Section 15
Classification of Philippine Waters

The National Pollution Control Commission, in coordination with appropriate government

agencies, shall classify Philippine waters, according to their best usage. In classifying said
waters, the National Pollution Control Commission shall take into account, among others, the
following:

a. the existing quality of the body of water at the time of classification;

b. the size, depth, surface area covered, volume, direction, rate of flow, gradient of stream; and

c. the most beneficial uses of said bodies of water and lands bordering them for residential,
agricultural, commercial, industrial, navigational, recreational, and aesthetic purposes.

Section 16
Reclassification of Waters
Based on Intended Beneficial Use

Where the public interest so requires, the National Pollution Control Commission, in
coordination with appropriate government agencies, shall reclassify a body of water based on
the intended beneficial use and take such steps as may be necessary to upgrade the quality of
said water. Other government agencies may adopt higher standards for a particular body of
water, subject to the approval of the National Pollution Control Commission.

Section 17
Upgrading of Water Quality

Where the quality of water has deteriorated to a degree where its state will adversely affect its
best usage, the government agencies concerned shall take such measures as may be
necessary to upgrade the quality of such water to meet the prescribed water quality standards.

Section 18
Water Quality Standards

The National Pollution Control Commission shall prescribe quality and effluent standards
consistent with the guidelines set by the National Environmental Protection Council and the
classification of waters prescribed in the preceding sections, taking into consideration, among
others, the following:

a. the standard of water quality or purity may vary according to beneficial uses; and

b. the technology relating to water pollution control.

Chapter II
Protection and Improvement of Water Quality

Section 19
Enforcement and Coordination

The production, utilization, storage and distribution of hazardous, toxic and other substances
such as radioactive materials, heavy metals, pesticides, fertilizers, and oils, and disposal,
discharge and dumping of untreated wastewater, mine-tailings and other substances that may
pollute any body of water of the Philippines resulting from normal operations of industries,
water-borne sources, and other human activities, as well as those resulting from accidental
spills and discharges shall be regulated by appropriate government agencies pursuant to their
respective charters and enabling legislations. In the performance of the above functions, the
government agencies concerned shall coordinate with the National Environmental Protection
Council and furnish the latter with such information as may be necessary to enable it to attain its
objectives under Presidential Decree No. 1121.

Section 20
Clean-up Operations

It shall be the responsibility of the polluter to contain, remove and clean-up water pollution
incidents at his own expense. In case of his failure to do so, the government agencies
concerned shall undertake containment, removal and clean-up operations and expenses
incurred in said operations shall be charged against the persons and/or entities responsible for
such pollution.

Section 21
Water Quality Monitoring and Surveillance

The various government agencies concerned with environmental protection shall establish to
the greatest extent practicable a water quality surveillance and monitoring network with
sufficient stations and sampling schedules to meet the needs of the country. Said water quality
surveillance network shall put to maximum use the capabilities of such government agencies.
Each agency involved in such network shall report to the National Environment Protection
Council the results of these monitoring activities as the need arises.

TITLE III
LAND USE MANAGEMENT

Section 22
Purposes

The purposes of this Title are:

a. to provide a rational, orderly and efficient acquisition, utilization and disposition of land its
resources in order to derive therefrom maximum benefits; and

b. to encourage the prudent use and conservation of land resources in order to prevent an
imbalance between the nation’s needs and such resources.

Section 23
National Land Use Scheme

The Human Settlements Commission, in coordination with the appropriate agencies of the
government, shall formulate and recommend to the National Environmental Protection Council a
land use scheme consistent with the purpose of this Title.

The Land Use Scheme shall include, among others, the following:

a. a science-based and technology-oriented land inventory and classification system;

b. a determination of present land uses, the extent to which they are utilized, under-utilized,
rendered idle or abandoned;

c. a comprehensive and accurate determination of the adaptability of the land for community
development, agriculture, industry, commerce, and other fields of endeavor;

d. a method of identification of areas where uncontrolled development could result in irreparable

damage to important historic, or aesthetic values, or nature systems or processes of national
significance;
e. a method for exercising control by the appropriate government agencies over the use of land
in area of critical environmental concern and areas impacted by public facilities including, but
not limited to, airports, highways, bridges, ports and wharves, buildings and other infrastructure
projects;

f. a method to ensure the consideration of regional development and land use in local
regulations;

g. a policy for influencing the location of new communities and methods for assuring appropriate
controls over the use of land around new communities;

h. a system of controls and regulations pertaining to areas and development activities designed
to ensure that any source of pollution will not be located where it would result in a violation of
any applicable environmental pollution control regulations; and

i. a recommended method for the periodic revisions and updating of the national land use
scheme to meet changing conditions.

Section 24
Location of Industries

In the location of industries, factories, plants, depots and similar industrial establishments, the
regulating or enforcing agencies of the government shall take into consideration the social,
economic, geographic and significant environmental impact of said establishments.

TITLE IV
NATURAL RESOURCES MANAGEMENT AND CONSERVATION

Section 25
Purposes

The purpose of this Title are:

a. to provide the basics on the management and conservation of the country’s natural resources
to obtain the optimum benefits therefrom and to preserve the same for the future generations;
and

b. to provide general measures through which the aforesaid policy may be carried out
effectively.

Chapter I
Fisheries and Aquatic Resources

Section 26
Management Policy

The National government, through the Department of Natural Resources, shall establish a
system of rational exploitation of fisheries and aquatic resources within the Philippine territory
and shall encourage citizen participation therein to maintain and/or enhance the optimum and
continuous productivity of the same.

Section 27
Measures for Rational Exploitation

Measures for the rational exploitation of fisheries and other aquatic resources may include, but
shall not be limited to, the following:

a. undertaking manpower and expertise development;

b. acquiring the necessary facilities and equipment;

c. regulating the marketing of threatened species of fish or other aquatic resources;

d. reviewing all existing rules and regulations on the exploitation of fisheries and aquatic
resources with a view to formulating guidelines for the systematic and effective enforcement
thereof; and

e. conserving the vanishing species of fish and aquatic resources such as turtles, sea snakes,
crocodiles, corals, as well as maintaining the mangrove areas, marshes and inland areas, coral
reef areas and islands serving as sanctuaries for fish and other aquatic life.

Chapter II
Wildlife

Section 28
Management Policy

The National Government, through the Department of Natural Resources, shall establish a
system of rational exploitation and conservation of wildlife resources and shall encourage citizen
participation in the maintenance and/or enhancement of their continuous productivity.

Section 29
Measures for Rational Exploitation

Measures for rational exploitation of wildlife resources may include, but shall not be limited to,
the following:

a. regulating the marketing of threatened wildlife resources;

b. reviewing all existing rules and regulations on the exploitation of wildlife resources with a view
of formulating guidelines for the systematic and effective enforcement thereof; and

c. conserving the threatened species of fauna, increasing their rate of production, maintaining
their original habitat, habitat manipulation, determining limits, population control in relation to the
carrying capacity of any given area, banning of indiscriminate and/or destructive means of
catching or hunting them.

Chapter III
Forestry and Soil Conservation

Section 30
Management Policy for Forestry

The National Government, through the Department of Natural Resources shall undertake a
system of rational exploitation forest resources and shall encourage citizen participation therein
to keep the country’s forest resources at maximum productivity at all times.

Section 31
Measures for Rational Exploitation
of Forest Resources

Measures for the rational exploitation of forest resources may include, but shall not be limited to
the following:

a. regulating the marketing of threatened forest resources;

b. reviewing all existing rules and regulations on the exploitation of forest resources with a view
of formulating guidelines for the systematic and efficient enforcement thereof;

c. conserving threatened species of flora as well as increasing their rate of propagation; the
banning of destructive modes of exploitation, kaingin making or shifting cultivation,
indiscriminate harvesting of minor forest products, the recycling methods of waste materials;
and

d. carrying out a continuing effort on reforestation; timber stand improvement; forest protection;
land classification; forest occupancy management; agri-silviculture; range management; agri-
silvicultural/kaingin management; multiple use forest; timber management; and forest research.

Section 32
Management Policy on Soil Conservation

The National Government, through the Department of Natural Resources and the Department
Agriculture, shall likewise undertake a soil conservation program including therein the
identification and protection of critical watershed areas, encouragement of scientific farming
techniques, physical and biological means of soil conservation, and short-term and long-term
researches and technology for effective soil conservation.

Section 33
Use of Fertilizers and Pesticides

The use of fertilizers and pesticides in agriculture shall be regulated, prescribing therefore a
tolerance level in their use. Their use shall be monitored by appropriate government agencies to
provide empirical data for effective regulation.

Chapter IV
Flood Control and Natural Calamities

Section 34
Measures in Flood Control Program

In addition to the pertinent provisions of existing laws, the following shall be included in a soil
erosion, sediment and flood control program:

a. the control of soil erosion on the banks of rivers, the shores or lakes and the sea-shores;

b. the control of flow and flooding in and from rivers and lakes;

c. the conservation of water which, for purposes of this Section shall mean forms of water, but
shall not include captive water;

d. the needs of fisheries and wildlife and all other recreational uses of natural water;

e. measures to control the damming, diversion, taking, and use of natural water, so far as any
such act may affect the quality and availability of natural water for other purposes; and

f. measures to stimulate research in matters relating to natural water and soil conservation and
the application of knowledge thereby acquired.

Section 35
Measures to Mitigate Destructive
Effects of Calamities

The national government, through the Philippine Atmospheric, Geophysical and Astronomical
Services Administration, shall promote intensified and concerted research efforts on weather
modification, typhoon, earthquake, tsunami, storm surge, and other tropical natural phenomena
in order to bring about any significant effect to mitigate or prevent their destructive effects.

Chapter V
Energy Development

Section 36
Policy

Consistent with the environmental protection policies, the national government, through the
Energy Development Board, shall undertake an energy development program encouraging
therein the utilization of invariant sources such as solar, wind and tidal energy.

Section 37
Measures for Energy Development

Measures for energy development program may include, but shall not be limited to, the
following:

a. setting up pilot plants utilizing invariant sources of energy;

b. training of technical personnel for purposes of energy development; and

c. conducting researches aimed at developing technology for energy development.

Section 38
Safety Measures on Energy Development

Rules and regulations shall be promulgated to prevent or mitigate the adverse effects of energy
development on the environment. For this purpose, all nuclear powered plants and plants
exploring and utilizing geothermal energy, whether owned or controlled by private or
government entities shall:

a. observe internationally accepted standards of safely; and

b. provide safety devises to ensure the health and welfare of their personnel as well as the
surrounding community.

Chapter VI
Conservation and Utilization
of Surface Ground Waters

Section 39
Management Policy

In addition to existing laws, the national government through the National Water Resources
Council in coordination with other appropriate government agencies, shall prescribe measures
for the conservation and improvement of the quality of Philippine water resources and provide
for the prevention, control and abatement of water pollution.

Chapter VII
Mineral Resources

Section 40
Management Policy

The National Government, through the Department of Natural Resources, shall undertake a
system of gainful exploitation and rational and efficient utilization of mineral resources and shall
encourage citizen participation in this endeavor.

Section 41
Measures for Exploitation
and Utilization of Mineral Resources

Measures for the gainful exploitation and rational and efficient utilization of such mineral
resources may include, but shall not be limited to, the following:

a. increasing research and development in mineral resources technology;

b. training of additional technical manpower needed in geology, geophysics, mining engineering,

and related fields;

c. regulating the exploitation of identified mineral reserves;

d. accelerating the exploitation of undiscovered mineral deposits; and

e. encouraging the establishment of processing plants for refined metal.

TITLE V
WASTE MANAGEMENT

Section 42
Purposes

The purposes of this Title are:

a. to set guidelines for waste management with a view to ensuring its effectiveness;

b. to encourage, promote and stimulate technological, educational, economic and social efforts
to prevent environmental damage and unnecessary loss of valuable resources of the nation
through recovery, recycling and re-use of wastes and waste products; and

c. to provide measures to guide and encourage appropriate government agencies in

establishing sound, efficient, comprehensive and effective waste management.

Chapter I
Enforcement and Guidelines

Section 43
Waste Management Programs

Preparation and implementation of waste management programs shall be required for all
provinces, cities and municipalities. The Department of Local Government and Community
Development shall promulgate guidelines for the formulation and establishment of waste
management program.

Every waste management program shall include the following:

a. an orderly system of operation consistent with the needs of the area concerned;

b. a provision that the operation will not create pollution of any kind or will constitute public
nuisance;

c. a system for safe and sanitary disposal of waste;

d. a provision that existing plans affecting the development, use and protection of air, water or
natural resources shall be considered;

e. schedules and methods of implementing the development, construction and operation of the
plan together with the estimated costs; and

f. a provision for the periodic revision of the program to ensure its effective implementation.

Section 44
Responsibility of Local Government

Each province, city or municipality shall provide measures to facilitate collection, transportation,
processing and disposal of waste within its jurisdiction in coordination with other government
agencies concerned. For this purpose, the national government shall provide the necessary
subsidy to local governments upon request made through the National Environmental Protection
Council and subject to such terms and conditions as the latter may provide.

Chapter II
Methods of Solid Waste Disposal

Section 45
Solid Waste Disposal

Solid waste disposal shall be by sanitary landfill, incineration, composting, and other methods
as may be approved by competent government authority.

Section 46
Sanitary Landfills

Local governments, including private individuals, corporations or organizations may operate or

propose to operate one or more sanitary landfills. An entity proposing to operate a sanitary
landfill shall submit to the appropriate government agency an operational work plan showing,
among other things, a map of the proposed work location, disposal areas for rubbish, garbage,
refuse and other waste matter; and the equipment or machinery needed to accomplish its
operations. In no case shall land-fill or work locations under this Section be located along any
shore or coast-line, or along the banks of rivers and streams, lakes, throughout their entire
length, in violation of any existing rules and regulations.

Section 47
Incineration and Composting Plants
The installation and establishment of incineration or composting plants, or the
alteration/modification of any part thereof shall be regulated by the local governments
concerned in coordination with the National Pollution Control Commission.

Section 48
Disposal Sites

The location of solid waste disposal sites shall conform with existing zoning, land use standards,
and pollution control regulations.

Section 49
Dumping into the Sea and Other Navigable Waters

The dumping or disposal of solid wastes into the sea and any body of water in the Philippines,
including shore-lines and river banks, where the wastes are likely to be washed into the water is
prohibited. However, dumping of solid wastes or other materials into the sea or any navigable
waters shall be permitted in case of immediate or imminent danger to life and property, subject
to the rules and regulations of the Philippine Coast Guard and the National Pollution Control
Commission.

Government agencies and private entities which are undertaking solid waste management
programs shall make consultations with the government agencies concerned with respect to the
effects of such dumping to the marine environment and navigation.

Chapter III
Methods of Liquid Waste Disposal

Section 50
Liquid Waste Disposal

Wastewater from manufacturing plants, industries, community, or domestic sources shall be

treated either physically, biologically or chemically prior to disposal in accordance with the rules
and regulations promulgated by proper government authority.

Section 51
Applicability of Section 49

The provisions of Section 49 hereof shall likewise apply to the dumping or disposal of liquid
waste into the sea and other bodies of water.

TITLE VI
MISCELLANEOUS PROVISIONS

Section 52
Population Environment Balance
In the assessment of development projects, the National Environmental Protection Council,
hereinafter referred to in this Title as the Council, shall take into consideration their effect on
population with a view to achieving a rational and orderly balance between man and his
environment.

Section 53
Environment Education

The Department of Education and Culture shall integrate subjects on environmental education
in its school curricula at all levels. It shall also endeavor to conduct special community education
emphasizing the relationship of man and nature as well as environmental sanitation and
practices.

The Council and other government agencies implementing environmental protection laws in
coordination with public information agencies of the government shall undertake public
information activities for the purpose of stimulating awareness and encouraging involvement in
environmental protection.

Section 54
Environmental Research

The Council shall undertake and/or promote continuing studies and research programs on
environmental management and shall, from time to time, determine priority areas of
environmental research.

Section 55
Monitoring and Dissemination of Environmental Information of Foreign Origin

The Council shall keep itself informed of current environmental developments by obtaining
information and literature from foreign sources through the Department of Foreign Affairs,
government agencies and other entities, both domestic and foreign. Such information and
literature shall be given the widest dissemination possible.

Section 56
Incentive

To operate the installation and the utilization of pollution control facilities, the following
incentives are hereby granted:

a. exemption to the extent of fifty (50) percent of tariff duties and compensating tax for
importation of pollution control equipment, devices, spare parts and accessories for a period of
five (5) years from the effectivity of this Decree subject to the conditions that will be imposed by
the Council;

b. a tax credit equivalent of fifty (50) percent of the value of the compensating tax and tariff
duties that would have been paid on the pollution control equipment, devices, spare parts and
accessories had these items been imported shall, within a period of seven (7) years from the
effectivity of this Decree, be given to the person or firm who or which purchases them from a
domestic manufacturer, and another tax credit equivalent to twenty-five (25) percent thereof
shall be given to said manufacturer, subject to such conditions as may be imposed by the
Council; and

c. deductions equivalent to fifty (50) percent of the expenses actually incurred on research
projects undertaken to develop technologies for the manufacture of pollution control equivalent
which have been proven effective and commercially reproducible, from the taxable income of
the person or firm actually undertaking such projects subject to the conditions that may be
imposed by the Council.

The pollution control equipment, devices, spare parts and accessories acquired under this
Section shall not be sold, transferred or disposed within five (5) years from the date of
acquisition without the prior approval of the Council otherwise the importer or purchaser shall
pay twice the amount of the tax exemption or tax credit granted.

Section 57
Financial Assistance/Grant

Financial assistance/grant for the study, design and construction of environmental protection
facilities especially for waste disposal in favor of cities, municipalities, small and medium scale
industries may be granted on a case-to-case basis subject to such conditions as may be
imposed by the Council.

Section 58
Participation of Local Government Units
and Private Individuals

It shall be the responsibility of local government units as well as private individuals to actively
participate in the environmental management and protection programs of the government.

Section 59
Preservation of Historic
and Cultural Resources and Heritage

It shall be the duty of every person to help preserve the historic and cultural resources of the
country such as sites, structures, artifacts, documents, objects, memorials, and priceless trees.

Section 60
Government Offices Performing
Environmental Protection Functions

Government agencies vested by laws to exercise environmental management powers, shall

continue to function as such within their respective jurisdictions. The Council may, however, in
the exercise of its powers and functions under Presidential Decree No. 1121, inquire into any
action or issue of environmental significance.
Section 61
Public Hearings

The Council may, whenever it deems necessary, conduct public hearings on issue of
environmental significance.

Section 62
Definition of Terms

As used in this Code.

a. Ambient Air Quality means the average atmospheric purity as distinguished from discharge
measurements taken at the source of pollution. It is the general amount of pollution present in a
broad area.

b. Emission means the act of passing into the atmosphere an air contaminant, pollutant, gas
stream and unwanted sound from a known source.

c. Water Quality means the characteristics of water which define its use in terms of physical,
chemical, and biological contents; hence, the quality of water for domestic use is different from
industrial use.

d. Water Quality Surveillance means a close and continuous supervision of the water quality to
detect development, movement, or charges in the characteristics of the water.

e. Water Quality Standard means a plan that is established by governmental authority as a

program for water pollution prevention and abatement. Such standard may include water
classification and the criteria to support the uses of the water.

f. Effluent Standards means restrictions established to limit levels of concentration of physical,

chemical, and biological constituents which are discharged from point sources.

g. Clean-up Operations refers to activities conducted in removing the pollutants discharged or

spilled in water to restore it to pre-spill condition.

h. Accidental Spills refers to spills of oil or other hazardous substances in water that result from
accidents such as collisions and groundings.

i. Areas of Critical Environmental Concern are areas where uncontrolled development could
result in irreparable damage to important historic, cultural, or aesthetic values or natural
systems or processes of national significance.

j. Hazardous Substances means elements or compounds which when discharged in any

quantity present imminent or substantial danger to public health and welfare.

k. Areas Impacted by Public Facilities refers to areas where the introduction of public facilities
may tend to induce development and urbanization of more than local significance or impact.
l. Environmental Impact is the alteration, to any degree, of environmental conditions or the
creation of a new set of environmental conditions, adverse or beneficial, to be induced or
caused by a proposed project.

m. Government Agencies refers to national, local and regional agencies and instrumentalities
including government-owned or controlled corporations.

TITLE VII
FINAL PROVISIONS

Section 63
Separability of Provisions

If any provision of this Code, or the application of such provisions to any person or
circumstances, is declared unconstitutional, the remainder of the Code or the application of
such provisions to other persons or circumstances shall not be affected by such declaration.

Section 64
Effectivity

This Code shall take effect upon its approval.

Done in the City of Manila, this 6th day of June, the year of our Lord, nineteen hundred and
seventy-seven.

Approved: June 6, 1977

[REPUBLIC A CT N O . 9729]
AN ACT MAINSTREAMING CLIMATE CHANGE INTO GOVERNMENT POLICY
FORMULATIONS, ESTABLISHING THE FRAMEWORK STRATEGY AND PROGRAM ON
CLIMATE CHANGE, CREATING FOR THIS PURPOSE THE CLIMATE CHANGE
COMMISSION, AND FOR OTHER PURPOSES

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

assembled:

SECTION 1. Title. – This Act shall be known as the “Climate Change Act of 2009”.

SEC . 2. Declaration of Policy. – It is the policy of the State to afford full protection and the
advancement of the right of the people to a healthful ecology in accord with the rhythm and
harmony of nature. In this light, the State has adopted the Philippine Agenda 21 framework
which espouses sustainable development, to fulfill human needs while maintaining the quality of
the natural environment for current and future generations.

Towards this end, the State adopts the principle of protecting the climate system for the benefit
of humankind, on the basis of climate justice or common but differentiated responsibilities and
the Precautionary Principle to guide decision-making in climate risk management. As a party to
the United Nations Framework Convention on Climate Change, the State adopts the ultimate
objective of the Convention which is the stabilization of greenhouse gas concentrations in the
atmosphere at a level that would prevent dangerous anthropogenic interference with the climate
system which should be achieved within a time frame sufficient to allow ecosystems to adapt
naturally to climate change, to ensure that food production is not threatened and to enable
economic development to proceed in a sustainable manner. As a party to the Hyogo Framework
for Action, the State likewise adopts the strategic goals in order to build national and local
resilience to climate change-related disasters.

Recognizing the vulnerability of the Philippine archipelago and its local communities, particularly
the poor, women, and children, to potential dangerous consequences of climate change such as
rising seas, changing landscapes, increasing frequency and/or severity of droughts, fires, floods
and storms, climate-related illnesses and diseases, damage to ecosystems, biodiversity loss
that affect the country’s environment, culture, and economy, the State shall cooperate with the
global community in the resolution of climate change issues, including disaster risk reduction. It
shall be the policy of the State to enjoin the participation of national and local governments,
businesses, nongovernment organizations, local communities and the public to prevent and
reduce the adverse impacts of climate change and, at the same time, maximize the benefits of
climate change. It shall also be the policy of the State to incorporate a gender-sensitive, pro-
children and pro-poor perspective in all climate change and renewable energy efforts, plans and
programs. In view thereof, the State shall strengthen, integrate, consolidate and institutionalize
government initiatives to achieve coordination in the implementation of plans and programs to
address climate change in the context of sustainable development.

Further recognizing that climate change and disaster risk reduction are closely interrelated and
effective disaster risk reduction will enhance climate change adaptive capacity, the State shall
integrate disaster risk reduction into climate change programs and initiatives.
Cognizant of the need to ensure that national and subnational government policies, plans,
programs and projects are founded upon sound environmental considerations and the principle
of sustainable development, it is hereby declared the policy of the State to systematically
integrate the concept of climate change in various phases of policy formulation, development
plans, poverty reduction strategies and other development tools and techniques by all agencies
and instrumentalities of the government.

SEC . 3. Definition of Terms. – For purposes of this Act, the following shall have the
corresponding meanings:

(a) “Adaptation” refers to the adjustment in natural or human systems in response to actual or
expected climatic stimuli or their effects, which moderates harm or exploits beneficial
opportunities.

(b) “Adaptive capacity” refers to the ability of ecological, social or economic systems to adjust to
climate change including climate variability and extremes, to moderate or offset potential
damages and to take advantage of associated opportunities with changes in climate or to cope
with the consequences thereof.

(c) “Anthropogenic causes” refer to causes resulting from human activities or produced by
human beings.

(d) “Climate Change” refers to a change in climate that can be identified by changes in the
mean and/or variability of its properties and that persists for an extended period typically
decades or longer, whether due to natural variability or as a result of human activity.

(e) “Climate Variability” refers to the variations in the average state and in other statistics of the
climate on all temporal and spatial scales beyond that of individual weather events.

(f) “Climate Risk” refers to the product of climate and related hazards working over the
vulnerability of human and natural ecosystems.

(g) “Disaster” refers to a serious disruption of the functioning of a community or a society

involving widespread human, material, economic or environmental losses and impacts which
exceed the ability of the affected community or society to cope using its own resources.

(h) “Disaster risk reduction” refers to the concept and practice of reducing disaster risks through
systematic efforts to analyze and manage the causal factors of disasters, including through
reduced exposure to hazards, lessened vulnerability of people and property, wise management
of land and the environment, and improved preparedness for adverse events.

(i) “Gender mainstreaming” refers to the strategy for making women’s as well as men’s
concerns and experiences an integral dimension of the design, implementation, monitoring, and
evaluation of policies and programs in all political, economic, and societal spheres so that
women and men benefit equally and inequality is not perpetuated. It is the process of assessing
the implications for women and men of any planned action, including legislation, policies, or
programs in all areas and at all levels.

(j) “Global Warming” refers to the increase in the average temperature of the Earth’s near-
surface air and oceans that is associated with the increased concentration of greenhouse gases
in the atmosphere.

(k) “Greenhouse effect” refers to the process by which the absorption of infrared radiation by the
atmosphere warms the Earth.

(l) “Greenhouse gases (GHG)” refers to constituents of the atmosphere that contribute to the
greenhouse effect including, but not limited to, carbon dioxide, methane, nitrous oxide,
hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride.

(m) “Mainstreaming” refers to the integration of policies and measures that address climate
change into development planning and sectoral decision-making.

(n) “Mitigation” in the context of climate change, refers to human intervention to address
anthropogenic emissions by sources and removals by sinks of all GHG, including ozone-
depleting substances and their substitutes.

(o) “Mitigation potential” shall refer to the scale of GHG reductions that could be made, relative
to emission baselines, for a given level of carbon price (expressed in cost per unit of carbon
dioxide equivalent emissions avoided or reduced).

(p) “Sea level rise” refers to an increase in sea level which may be influenced by factors like
global warming through expansion of sea water as the oceans warm and melting of ice over
land and local factors such as land subsidence.

(q) “Vulnerability” refers to the degree to which a system is susceptible to, or unable to cope
with, adverse effects of climate change, including climate variability and extremes. Vulnerability
is a function of the character, magnitude, and rate of climate change and variation to which a
system is exposed, its sensitivity, and its adaptive capacity.

SEC . 4. Creation of the Climate Change Commission. – There is hereby established a Climate
Change Commission, hereinafter referred to as the Commission.

The Commission shall be an independent and autonomous body and shall have the same
status as that of a national government agency. It shall be attached to the Office of the
President.

The Commission shall be the sole policy-making body of the government which shall be tasked
to coordinate, monitor and evaluate the programs and action plans of the government relating to
climate change pursuant to the provisions of this Act.

The Commission shall be organized within sixty (60) days from the effectivity of this Act.

SEC . 5. Composition of the Commission. – The Commission shall be composed of the

President of the Republic of the Philippines who shall serve as the Chairperson, and three (3)
Commissioners to be appointed by the President, one of whom shall serve as the Vice
Chairperson of the Commission.

The Commission shall have an advisory board composed of the following:

(a) Secretary of the Department of Agriculture;

(b) Secretary of the Department of Energy;

(c) Secretary of the Department of Environment and Natural Resources;

(d) Secretary of the Department of Education;

(e) Secretary of the Department of Foreign Affairs;

(f) Secretary of the Department of Health;

(g) Secretary of the Department of the Interior and Local Government;

(h) Secretary of the Department of National Defense, in his capacity as Chair of the National
Disaster Coordinating Council;

(i) Secretary of the Department of Public Works and Highways;

(j) Secretary of the Department of Science and Technology;

(k) Secretary of the Department of Social Welfare and Development;

(l) Secretary of the Department of Trade and Industry;

(m) Secretary of the Department of Transportation and Communications;

(n) Director-General of the National Economic and Development Authority, in his capacity as
Chair of the Philippine Council for Sustainable Development;

(o) Director-General of the National Security Council;

(p) Chairperson of the National Commission on the Role of Filipino Women;

(q) President of the League of Provinces;

(r) President of the League of Cities;

(s) President of the League of Municipalities;

(t) President of the Liga ng mga Barangay;

(u) Representative from the academe;

(v) Representative from the business sector; and

(w) Representative from nongovernmental organizations.

At least one (1) of the sectoral representatives shall come from the disaster risk reduction
community.

The representatives shall be appointed by the President from a list of nominees submitted by
their respective groups. They shall serve for a term of six (6) years without reappointment
unless their representation is withdrawn by the sector they represent. Appointment to any
vacancy shall be only for the unexpired term of the predecessor.

Only the ex officio members of the advisory board shall appoint a qualified representative who
shall hold a rank of no less than an Undersecretary.

SEC . 6. Meetings of the Commission. – The Commission shall meet once every three (3)
months, or as often as may be deemed necessary by the Chairperson. The Chairperson may
likewise call upon other government agencies for the proper implementation of this Act.

SEC . 7. Qualifications, Tenure, Compensation of Commissioners. – The Commissioners must

be Filipino citizens, residents of the Philippines, at least thirty (30) years of age at the time of
appointment, with at least ten (10) years of experience on climate change and of proven
honesty and

integrity. The Commissioners shall be experts in climate change by virtue of their educational
background, training and experience: Provided, That at least one (1) Commissioner shall be
female: Provided, further, That in no case shall the Commissioners come from the same sector:
Provided, finally, That in no case shall any of the Commissioners appoint representatives to act
on their behalf.

The Commissioners shall hold office for a period of six (6) years, and may be subjected to
reappointment: Provided, That no person shall serve for more than two (2) consecutive terms:
Provided, further, That in case of a vacancy, the new appointee shall fully meet the
qualifications of a Commissioner and shall hold office for the unexpired portion of the term only:
Provided, finally, That in no case shall a Commissioner be designated in a temporary or acting
capacity.

The Vice Chairperson and the Commissioners shall have the rank and privileges of a
Department Secretary and Undersecretary, respectively. They shall be entitled to corresponding
compensation and other emoluments and shall be subject to the same disqualifications.

SEC . 8. Climate Change Office. – There is hereby created a Climate Change Office that shall
assist the Commission. It shall be headed by a Vice Chairperson of the Commission who shall
act as the Executive Director of the Office. The Commission shall have the authority to
determine the number of staff and create corresponding positions necessary to facilitate the
proper implementation of this Act, subject to civil service laws, rules and regulations. The
officers and employees of the Commission shall be appointed by the Executive Director.

S EC . 9. Powers and Functions of the Commission. – The Commission shall have the following
powers and functions:

(a) Ensure the mainstreaming of climate change, in synergy with disaster risk reduction, into the
national, sectoral and local development plans and programs;

(b) Coordinate and synchronize climate change programs of national government agencies;

(c) Formulate a Framework Strategy on Climate Change to serve as the basis for a program for
climate change planning, research and development, extension, and monitoring of activities on
climate change;

(d) Exercise policy coordination to ensure the attainment of goals set in the framework strategy
and program on climate change;

(e) Recommend legislation, policies, strategies, programs on and appropriations for climate
change adaptation and mitigation and other related activities;

(f) Recommend key development investments in climate- sensitive sectors such as water
resources, agriculture, forestry, coastal and marine resources, health, and infrastructure to
ensure the achievement of national sustainable development goals;

(g) Create an enabling environment for the design of relevant and appropriate risk-sharing and
risk-transfer instruments;

(h) Create an enabling environment that shall promote broader multi-stakeholder participation
and integrate climate change mitigation and adaptation;

(i) Formulate strategies on mitigating GHG and other anthropogenic causes of climate change;

(j) Coordinate and establish a close partnership with the National Disaster Coordinating Council
in order to increase efficiency and effectiveness in reducing the people’s vulnerability to climate-
related disasters;

(k) In coordination with the Department of Foreign Affairs, represent the Philippines in the
climate change negotiations;

(l) Formulate and update guidelines for determining vulnerability to climate change impacts and
adaptation assessments and facilitate the provision of technical assistance for their
implementation and monitoring;

(m) Coordinate with local government units (LGUs) and private entities to address vulnerability
to climate change impacts of regions, provinces, cities and municipalities;
(n) Facilitate capacity building for local adaptation planning, implementation and monitoring of
climate change initiatives in vulnerable communities and areas;

(o) Promote and provide technical and financial support to local research and development
programs and projects in vulnerable communities and areas; and

(p) Oversee the dissemination of information on climate change, local vulnerabilities and risks,
relevant laws and protocols and adaptation and mitigation measures.

S EC . 10. Panel of Technical Experts. – The Commission shall constitute a national panel of
technical experts consisting of practitioners in disciplines that are related to climate change,
including disaster risk reduction.

The Panel shall provide technical advice to the Commission in climate science, technologies,
and best practices for risk assessment and enhancement of adaptive capacity of vulnerable
human settlements to potential impacts of climate change.

The Commission shall set the qualifications and compensation for the technical experts. It shall
provide resources for the operations and activities of the Panel.

SEC . 11. Framework Strategy and Program on Climate Change. – The Commission shall,
within six (6) months from the effectivity of this Act, formulate a Framework Strategy on Climate
Change. The Framework shall serve as the basis for a program for climate change planning,
research and development, extension, and monitoring of activities to protect vulnerable
communities from the adverse effects of climate change.

The Framework shall be formulated based on climate change vulnerabilities, specific adaptation
needs, and mitigation potential, and in accordance with the international agreements.

The Framework shall be reviewed every three (3) years, or as may be deemed necessary.

SEC . 12. Components of the Framework Strategy and Program on Climate Change. – The
Framework shall include, but not limited to, the following components:

(a) National priorities;

(b) Impact, vulnerability and adaptation assessments;

(c) Policy formulation;

(d) Compliance with international commitments;

(e) Research and development;

(f) Database development and management;

(g) Academic programs, capability building and mainstreaming;

(h) Advocacy and information dissemination;

(i) Monitoring and evaluation; and

(j) Gender mainstreaming.

SEC . 13. National Climate Change Action Plan . – The Commission shall formulate a National
Climate Change Action Plan in accordance with the Framework within one (1) year after the
formulation of the latter.

The National Climate Change Action Plan shall include, but not limited to, the following
components:

(a) Assessment of the national impact of climate change;

(b) The identification of the most vulnerable communities/areas, including ecosystems to the
impacts of climate change, variability and extremes;

(c) The identification of differential impacts of climate change on men, women and children;

(d) The assessment and management of risk and vulnerability;

(e) The identification of GHG mitigation potentials; and

(f) The identification of options, prioritization of appropriate adaptation measures for joint
projects of national and local governments.

SEC . 14. Local Climate Change Action Plan. – The LGUs shall be the frontline agencies in the
formulation, planning and implementation of climate change action plans in their respective
areas, consistent with the provisions of the Local Government Code, the Framework, and the
National Climate Change Action Plan.

Barangays shall be directly involved with municipal and city governments in prioritizing climate
change issues and in identifying and implementing best practices and other solutions. Municipal
and city governments shall consider climate change adaptation, as one of their regular
functions. Provincial governments shall provide technical assistance, enforcement and
information management in support of municipal and city climate change action plans. Inter-
local government unit collaboration shall be maximized in the conduct of climate- related
activities.

LGUs shall regularly update their respective action plans to reflect changing social, economic,
and environmental conditions and emerging issues. The LGUs shall furnish the Commission
with copies of their action plans and all subsequent amendments, modifications and revisions
thereof, within one (1) month from their adoption. The LGUs shall mobilize and allocate
necessary personnel, resources and logistics to effectively implement their respective action
plans.

The local chief executive shall appoint the person responsible for the formulation and
implementation of the local action plan.

It shall be the responsibility of the national government to extend technical and financial
assistance to LGUs for the accomplishment of their Local Climate Change Action Plans.

The LGU is hereby expressly authorized to appropriate and use the amount from its Internal
Revenue Allotment necessary to implement said local plan effectively, any provision in the Local
Government Code to the contrary notwithstanding.

SEC . 15. Role of Government Agencies. – To ensure the effective implementation of the
framework strategy and program on climate change, concerned agencies shall perform the
following functions:

(a) The Department of Education (DepED) shall integrate climate change into the primary and
secondary education curricula and/or subjects, such as, but not limited to, science, biology,
sibika, history, including textbooks, primers and other educational materials, basic climate
change principles and concepts;

(b) The Department of the Interior and Local Government (DILG) and Local Government
Academy shall facilitate the development and provision of a training program for LGUs in
climate change. The training program shall include socioeconomic, geophysical, policy, and
other content necessary to address the prevailing and forecasted conditions and risks of
particular LGUs. It shall likewise focus on women and children, especially in the rural areas,
since they are the most vulnerable;

(c) The Department of Environment and Natural Resources (DENR) shall oversee the
establishment and maintenance of a climate change information management system and
network, including on climate change risks, activities and investments, in collaboration with
other concerned national government agencies, institutions and LGUs;

(d) The Department of Foreign Affairs (DFA) shall review international agreements related to
climate change and make the necessary recommendation for ratification and compliance by the
government on matters pertaining thereto;

(e) The Philippine Information Agency (PIA) shall disseminate information on climate change,
local vulnerabilities and risk, relevant laws and protocols and adaptation and mitigation
measures; and

(f) Government financial institutions, shall, any provision in their respective charters to the
contrary notwithstanding, provide preferential financial packages for climate change- related
projects. In consultation with the Bangko Sentral ng Pilipinas (BSP), they shall, within thirty (30)
days from the effectivity of this Act, issue and promulgate the implementing guidelines therefor.

The Commission shall evaluate, recommend the approval of loans and monitor the use of said
funds of LGUs.

SEC . 16. Coordination with Various Sectors. – In the development and implementation of the
National Climate Change Action Plan, and the local action plans, the Commission shall
coordinate with the nongovernment organizations (NGOs), civic organizations, academe,
people’s organizations, the private and corporate sectors and other concerned stakeholder
groups.

SEC . 17. Authority to Receive Donations and/or Grants. – The Commission is hereby
authorized to accept grants, contributions, donations, endowments, bequests, or gifts in cash, or
in kind from local and foreign sources in support of the development and implementation of
climate change programs and plans: Provided, That in case of donations from foreign
governments, acceptance thereof shall be subject to prior clearance and approval of the
President of the Philippines upon recommendation of the Secretary of Foreign Affairs: Provided,
further, That such donations shall not be used to fund personal services expenditures and other
operating expenses of the Commission.

The proceeds shall be used to finance:

(a) Research, development, demonstration and promotion of technologies;

(b) Conduct of assessment of vulnerabilities to climate change impacts, resource inventory, and
adaptation capability building;

(c) Advocacy, networking and communication activities in the conduct of information campaign;
and

(d) Conduct of such other activities reasonably necessary to carry out the objectives of this Act,
as may be defined by the Commission.

SEC. 18. Funding Allocation for Climate Change. – All relevant government agencies and LGUs
shall allocate from their annual appropriations adequate funds for the formulation, development
and implementation, including training, capacity building and direct intervention, of their
respective climate change programs and plans. It shall also include public awareness
campaigns on the effects of climate change and energy-saving solutions to mitigate these
effects, and initiatives, through educational and training programs and micro-credit schemes,
especially for women in rural areas. In subsequent budget proposals, the concerned offices and
units shall appropriate funds for program/project development and implementation including
continuing training and education in climate change.

SEC . 19. Joint Congressional Oversight Committee. – There is hereby created a Joint
Congressional Oversight Committee to monitor the implementation of this Act. The Oversight
Committee shall be composed of five (5) Senators and five (5) Representatives to be appointed
by the Senate President and the Speaker of the House of Representatives, respectively. The
Oversight Committee shall be co-chaired by a Senator and a Representative to be designated
by the Senate President and the Speaker of the House of Representatives, respectively. Its
funding requirement shall be charged against the appropriations of Congress.
SEC . 20. Annual Report. – The Commission shall submit to the President and to both Houses
of Congress, not later than March 30 of every year following the effectivity of this Act, or upon
the request of the Congressional Oversight Committee, a report giving a detailed account of the
status of the implementation of this Act, a progress report on the implementation of the National
Climate Change Action Plan and recommend legislation, where applicable and necessary.
LGUs shall submit annual progress reports on the implementation of their respective local action
plan to the Commission within the first quarter of the following year.

SEC . 21. Appropriations. – The sum of Fifty million pesos (Php50,000,000.00) is hereby
appropriated as initial operating fund in addition to the unutilized fund of the Presidential Task
Force on Climate Change and the Office of the Presidential Adviser on Global Warming and
Climate Change. The sum shall be sourced from the President’s contingent fund.

Thereafter, the amount necessary to effectively carry out the provisions of this Act shall be
included in the annual General Appropriations Act.

SEC . 22. Implementing Rules and Regulations. – Within ninety (90) days after the approval of
this Act, the Commission shall, upon consultation with government agencies, LGUs, private
sector, NGOs and civil society, promulgate the implementing rules and regulations of this Act:
Provided, That failure to issue rules and regulations shall not in any manner affect the executory
nature of the provisions of this Act.

SEC . 23. Transitory Provisions. – Upon the organization of the Commission, the Presidential
Task Force on Climate Change created under Administrative Order No. 171 and the Inter-
Agency Committee on Climate Change created by virtue of Administrative Order No. 220, shall
be abolished: Provided, That their powers and functions shall be absorbed by the Commission:
Provided, further, That the officers and employees thereof shall continue in a holdover capacity
until such time as the new officers and employees of the Commission shall have been duly
appointed pursuant to the provisions of this Act. All qualified regular or permanent employees
who may be transferred to the Commission shall not suffer any loss in seniority or rank or
decrease in emoluments. Any employee who cannot be absorbed by the Commission shall be
entitled to a separation pay under existing retirement laws.

SEC. 24. Separability Clause. – If for any reason any section or provision of this Act is declared
as unconstitutional or invalid, the other sections or provisions hereof shall not be affected
thereby.

SEC . 25. Repealing Clause. – All laws, ordinances, rules and regulations, and other issuances
or parts thereof which are inconsistent with this Act are hereby repealed or modified
accordingly.

SEC . 26. Effectivity. – This Act shall take effect fifteen (15) days after the completion of its
publication in the Official Gazette or in at least two (2) national newspapers of general
circulation.

Approved,
PROSPERO C. NOGRALES
Speaker of the House of Representatives

JUAN PONCE ENRILE

President of the Senate

This Act which is a consolidation of Senate Bill No. 2583 and House Bill No. 5982 was finally
passed by the Senate and the House of Representatives on August 25, 2009 and September 2,
2009, respectively.

MARILYN B. BARUA -YAP

Secretary General
House of Representatives

EMMA LIRIO -R EYES

Secretary of the Senate

Approved:

GLORIA MACAPAGAL-ARROYO
President of the Philippines
REPUBLIC ACT NO. 7718
AN ACT AMENDING CERTAIN SECTIONS OF REPUBLIC ACT NO. 6957, ENTITLED "AN
ACT AUTHORIZING THE FINANCING, CONSTRUCTION, OPERATION AND
MAINTENANCE OF INFRASTRUCTURE PROJECTS BY THE PRIVATE SECTOR, AND FOR
OTHER PURPOSES"

SECTION 1.

Section 1 of Republic Act No. 6957 is hereby amended to read as follows:

"Sec. 1. Declaration of Policy. — It is the declared policy of the State to recognize the
indispensable role of the private sector as the main engine for national growth and development
and provide the most appropriate incentives to mobilize private resources for the purpose of
financing the construction, operation and maintenance of infrastructure and development
projects normally financed and undertaken by the Government. Such incentives, aside from
financial incentives as provided by law, shall include providing a climate of minimum
government regulations and procedures and specific government undertakings in support of the
private sector."

SECTION 2.

Section 2 of the same Act is hereby amended to read as follows:

"Sec. 2. Definition of Terms. — The following terms used in this Act shall have the meanings
stated below:

"(a) Private sector infrastructure or development projects — The general description of

infrastructure or development projects normally financed and operated by the public sector but
which will now be wholly or partly implemented by the private sector, including but not limited to,
power plants, highways, ports, airports, canals, dams, hydropower projects, water supply,
irrigation, telecommunications, railroads and railways, transport systems, land reclamation
projects, industrial estates or townships, housing, government buildings, tourism projects,
markets, slaughterhouses, warehouses, solid waste management, information technology
networks and database infrastructure, education and health facilities, sewerage, drainage,
dredging, and other infrastructure and development projects as may be authorized by the
appropriate agency pursuant to this Act. Such projects shall be undertaken through contractual
arrangements as defined hereunder and such other variations as may be approved by the
President of the Philippines.

"For the construction stage of these infrastructure projects, the project proponents may obtain
financing from foreign and/or domestic sources and/or engage the services of a foreign and/or
Filipino contractor: Provided, That in case an infrastructure or a development facility's operation
requires a public utility franchise, the facility operator must be Filipino or if a corporation, it must
be duly registered with the Securities and Exchange Commission and owned up to at least sixty
percent (60%) by Filipinos: Provided, further, That in the case of foreign contractors, Filipino
labor shall be employed or hired in the different phases of the construction where Filipino skills
are available: Provided, finally, That subjects which would have difficulty in sourcing funds may
be financed partly from direct government appropriations and/or from Official Development
Assistance (ODA) of foreign governments or institutions not exceeding fifty percent (50%) of the
project cost, and the balance to be provided by the project proponent.

"(b) Build-operate-and-transfer — A contractual arrangement whereby the project proponent

undertakes the construction, including financing, of a given infrastructure facility, and the
operation and maintenance thereof. The project proponent operates the facility over the fixed
term during which it is allowed to charge facility users appropriate tools, fees, rentals, and
charges not exceeding those proposed in its bid or as negotiated and incorporated in the
contract to enable the project proponent to recover its investment, and operating and
maintenance expenses in the project. The project proponent transfers the facility to the
government agency or local government unit concerned at the end of the fixed term which shall
not exceed fifty (50) years: Provided, That in case of an infrastructure or development facility
whose operation requires a public utility franchise, the proponent must be Filipino or, if a
corporation, must be duly registered with the Securities and Exchange Commission and owned
up to at least sixty percent (60%) by Filipinos.

"The build-operate-and-transfer shall include a supply-and-operate situation which is a

contractual arrangement whereby the supplier of equipment and machinery for a given
infrastructure facility, if the interest of the Government so requires, operates the facility providing
in the process technology transfer and training to Filipino nationals.

"(c) Build-and-transfer — A contractual arrangement whereby the project proponent undertakes

the financing and construction of a given infrastructure or development facility and after its
completion turns it over to the government agency or local government unit concerned, which
shall pay the proponent on an agreed schedule its total investments expended on the project,
plus a reasonable rate of return thereon. This arrangement may be employed in the construction
of any infrastructure or development project, including critical facilities which, for security or
strategic reasons, must be operated directly by the Government.

"(d) Build-own-and-operate — A contractual arrangement whereby a project proponent is

authorized to finance, construct, own, operate and maintain an infrastructure or development
facility from which the proponent 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: Provided, That all such projects, upon recommendation of the
Investment Coordination Committee (ICC) of the National Economic and Development Authority
(NEDA), shall be approved by the President of the Philippines. Under this project, the proponent
which owns the assets of the facility may assign its operation and maintenance to a facility
operator.

"(e) Build-lease-and-transfer — A contractual arrangement whereby a project proponent is

authorized to finance and construct an infrastructure or development facility and upon its
completion turns it over to the government agency or local government unit concerned on a
lease arrangement for a fixed period after which ownership of the facility is automatically
transferred to the government agency or local government unit concerned.
"(f) Build-transfer-and-operate — A contractual arrangement whereby the public sector contracts
out the building of an infrastructure facility to a private entity such that the contractor builds the
facility on a turn-key basis, assuming cost overrun, delay, and specified performance risks.

"Once the facility is commissioned satisfactorily, title is transferred to the implementing agency.
The private entity however, operates the facility on behalf of the implementing agency under an
arrangement.

"(g) Contract-add-and-operate — A contractual arrangement whereby the project proponent

adds to an existing infrastructure facility which it is renting from the government. It operates the
expanded project over an agreement franchise period. There may, or may not be, a transfer
arrangement in regard to the facility.

"(h) Develop-operate-and-transfer — A contractual arrangement whereby favorable conditions

external to a new infrastructure project which is to be built by a private project proponent 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.

"(i) Rehabilitate-operate-and-transfer — A contractual arrangement whereby an existing facility

is turned over to the private sector 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 government. The term is also
used to describe the purchase of an existing facility from abroad, importing, refurbishing,
erecting and consuming it within the host country.

"(j) Rehabilitate-own-and-operate — A contractual arrangement whereby an existing facility is

turned over to the private sector 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.

"(k) Project proponent — The private sector entity which shall have contractual responsibility for
the project and which shall have an adequate financial base to implement said project
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.

"(l) Contractor — Any entity accredited under the laws which may or may not be the project
proponent and which shall undertake the actual construction and/or supply of equipment for the
project.

"(m) Facility operator — A company registered with the Securities and Exchange Commission,
which may or may not be the project proponent, and which is responsible for all aspects of
operation and maintenance of the infrastructure or development facility, including but not limited
to the collection of tolls, fees, rentals or charges from facility users: Provided, That in case the
facility requires a public utility franchise, the facility operator shall be Filipino or at least sixty per
centum (60%) owned by Filipinos.

"(n) Direct government guarantee — An agreement whereby the government or any of its
agencies or local government units assume responsibility for the repayment of debt directly
incurred by the project proponent in implementing the project in case of a loan default.

"(o) Reasonable rate of return on investments and operating and maintenance cost — The rate
of return that reflects the prevailing cost of capital in the domestic and international markets:
Provided, That, in case of negotiated contracts, such rate or return shall be determined by the
ICC of the NEDA prior to the negotiation and/or call for proposals: Provided, further, That for
negotiated contracts for public utility projects which are monopolies, the rate of return on rate
base shall be determined by existing laws, which in no case shall exceed twelve per centum
(12%).

"(p) Construction — Refers to new construction, rehabilitation, improvement, expansion,

alteration and related works and activities including the necessary supply of equipment,
materials, labor and services and related items."

SECTION 3.

Section 3 of the same Act is hereby amended to read as follows:

"Sec. 3. Private Initiative in Infrastructure. — All government infrastructure agencies, including

government-owned and -controlled corporations and local government units are hereby
authorized to enter into contract with any duly prequalified project proponent for the financing,
construction, operation and maintenance of any financially viable infrastructure or development
facility through any of the projects authorized in this Act. Said agencies, when entering into such
contracts, are enjoined to solicit the expertise of individuals, groups, or corporations in the
private sector who have extensive experience in undertaking infrastructure or development
projects."

SECTION 4.

Section 4 of the same Act is hereby amended to read as follows:

"Sec. 4. Priority Projects. —

All concerned government agencies, including government-owned and -controlled corporations

and local government units, shall include in their development programs those priority projects
that may be financed, constructed operated and maintained by the private sector under the
provisions of this Act. It shall be the duty of all concerned government agencies to give wide
publicity to all projects eligible for financing under this Act, including publication in national and,
where applicable, international newspapers of general circulation once every six (6) months and
official notification of project proponents registered with them.

"The lists of all such national projects must be part of the development programs of the
agencies concerned. The list of projects costing up to Three hundred million pesos
(P300,000,000) shall be submitted to the ICC of the NEDA for its approval and to the NEDA
Board for projects costing more than Three hundred million pesos (P300,000,000). The list of
projects submitted to the ICC of the NEDA Board shall be acted upon within thirty (30) working
days.

"The list of local projects to be implemented by the local government units concerned shall be
submitted for confirmation to the municipal development council for projects costing up to
Twenty million pesos; those costing above Twenty up to Fifty million pesos to the provincial
development council; those costing up to Fifty million pesos to the city development council;
above Fifty million up to Two hundred million pesos to the regional development councils; and
those above Two hundred million pesos to the ICC of the NEDA."

SECTION 5.

A new section is hereby added after Section 4 of the same Act and numbered as Section 4-A, to
read as follows:

"Sec. 4.-A. Unsolicited Proposals. — Unsolicited proposals for projects may be accepted by any
government agency or local government unit on a negotiated basis: Provided, That, all the
following conditions are met: (1) such projects involve a new concept in technology and/or are
not part of the list of priority projects, (2) no direct government guarantee, subsidy or equity is
required, and (3) the government agency or local government unit has invited by publication, for
three (3) consecutive weeks, in a newspaper of general circulation, comparative or competitive
proposals and no other proposal is received for a period of sixty (60) working days: Provided,
further, That in the event another proponent submits a lower price proposal, the original
proponent shall have the right to match that price within thirty (30) working days."

SECTION 6.

Section 5 of the same Act is hereby amended to read as follows:

"Sec. 5. Public Bidding of Projects. — Upon approval of the subjects mentioned in Section 4 of
this Act, the head of the infrastructure agency or local government unit concerned shall forthwith
cause to be published, once every week for three (3) consecutive weeks, in at least two (2)
newspapers of general circulation and in at least one (1) local newspaper which is circulated in
the region, province, city or municipality in which the project is to be constructed, a notice
inviting all prospective infrastructure or development project proponents to participate in a
competitive public bidding for the projects so approved.

"In the case of a build-operate-and-transfer arrangement, the contract shall be awarded to the
bidder who, having satisfied the minimum financial, technical, organizational and legal
standards required by this Act, has submitted the lowest bid and most favorable terms for the
project, based on the present value of its proposed tolls, fees, rentals and charges over a fixed
term for the facility to be constructed, rehabilitated, operated and maintained according to the
prescribed minimum design and performance standards, plans and specifications. For this
purpose, the winning project proponent shall be automatically granted by the appropriate
agency the franchise to operate and maintain the facility, including the collection of tolls, fees,
rentals, and charges in accordance with Section 5 hereof.

"In the case of a build-and-transfer or build-lease-and-transfer arrangement, the contract shall

be awarded to the lowest applying bidder based on the present value of its proposed schedule
of amortization payments for the facility to be constructed according to the prescribed minimum
design and performance standards, plans and specifications: Provided, however, That a Filipino
contractor who submits an equally advantageous bid with exactly the same price and technical
specifications as those of a foreign contractor shall be given preference.

"In all cases, a consortium that participates in a bid must present proof that the members of the
consortium have bound themselves jointly and severally to assume responsibility for any
project. The withdrawal of any member of the consortium prior to the implementation of the
project could be a ground for the cancellation of the contract.

"The public bidding must be conducted under a two-envelope/two-stage system: the first
envelope to contain the technical proposal and the second envelope to contain the financial
proposal. The procedures for this system shall be outlined in the implementing rules and
regulations of this Act.

"A copy of each contract involving a project entered into under this Act shall forthwith be
submitted to Congress for its information."

SECTION 7.

A new section is hereby added after Section 5 of the same Act and numbered as Section 5-A, to
read as follows:

"Sec. 5-A. Direct Negotiation of Contracts. — Direct negotiation shall be resorted to when there
is only one complying bidder left as defined hereunder:

"(a) If, after advertisement, only one contractor applies for prequalification and it meets the
prequalification requirements, after which it is required to submit a bid/proposal which is
subsequently found by the agency/local government unit (LGU) to be complying.

"(b) If, after advertisement, more than one contractor applied for prequalification but only one
meets the prequalification requirements, after which it submits bid/proposal which is found by
the agency/LGU to be complying.

"(c) If, after prequalification of more than one contractor, only one submits a bid which is found
by the agency/LGU to be complying.

"(d) If, after prequalification, more than one contractor submit bids but only one is found by the
agency/LGU to be complying: Provided, That, any of the disqualified prospective bidder may
appeal the decision of the implementing agency/LGUs prequalification bids and awards
committee within fifteen (15) working days to the head of the agency, in case of national
projects or to the Department of the Interior and Local Government, in case of local projects
from the date the disqualification was made known to the disqualified bidder: Provided,
furthermore, That the implementing agency/LGUs concerned should act on the appeal within
forty-five (45) working days from receipt thereof."

SECTION 8.

Section 6 of the same Act is hereby amended to read as follows:

"Sec. 6. Repaying Scheme. — For the financing, construction, operation and maintenance of
any infrastructure projects undertaken through the build-operate-and-transfer arrangement or
any of its variations pursuant to the provisions of this Act, the project proponent shall be repaid
by authorizing it to charge and effect reasonable tolls, fees, and rentals for the use of the project
facility not exceeding those incorporated in the contract and, where applicable, the proponent
may likewise be repaid in the form of a share in the revenue of the project or other non-
monetary payments, such as, but not limited to, the grant of a portion or percentage of the
reclaimed land, subject to the constitutional requirements with respect to the ownership of land:
Provided, That for negotiated contracts, and for projects which have been granted a natural
monopoly or where the public has no access to alternative facilities, the appropriate government
regulatory bodies, shall approve the tolls, fees, rentals, and charges based on a reasonable rate
of return: Provided, further, That the imposition and collection of tolls, fees, rentals, and charges
shall be for a fixed term as proposed in the bid and incorporated in the contract but in no case
shall this term exceed fifty (50) years: Provided, furthermore, That the tolls, fees, rentals, and
charges may be subject to adjustment during the life of the contract, based on a predetermined
formula using official price indices and included in the instructions to bidders and in the contract:
Provided, also, That all tolls, fees, rentals, and charges and adjustments thereof shall take into
account the reasonableness of said rates to the end-users of private sector-built infrastructure:
Provided, finally, That during the lifetime of the franchise, the project proponent shall undertake
the necessary maintenance and repair of the facility in accordance with standards prescribed in
the bidding documents and in the contract. In the case of a built-and-transfer arrangement, the
repayment scheme is to be effected through amortization payments by the government agency
or local government unit concerned to the project proponent according to the scheme proposed
in the bid and incorporated in the contract."

SECTION 9. Section 7 of the same Act is hereby amended to read as follows:

"Sec. 7. Contract Termination. — In the event that a project is revoked, cancelled or terminated
by the government, through no fault of the project proponent or by mutual agreement, the
Government shall compensate the said project proponent for its actual expenses incurred in the
project plus a reasonable rate of return thereon not exceeding that stated in the contract as of
the date of such revocation, cancellation or termination: Provided, That the interest of the
Government in these instances shall be duly insured with the Government Service Insurance
System or any other insurance entity duly accredited by the Office of the Insurance
Commissioner: Provided, finally, That the cost of the insurance coverage shall be included in
the terms and conditions of the bidding referred to above.
"In the event that the government defaults on certain major obligations in the contract and such
failure is not remedied or if remediable shall remain unremedied for an unreasonable length of
time, the project proponent/contractor may, by prior notice to the concerned national
government agency or local government unit specifying the turn-over date, terminate the
contract. The project proponent/contractor shall be reasonably compensated by the
Government for equivalent or proportionate contract cost as defined in the contract."

SECTION 10.

Section 8 of the same Act is hereby amended to read as follows:

"Sec. 8. Regulatory Boards. — The Toll Regulatory Board which was created by Presidential
Decree No. 1122 is hereby attached to the Department of Public Works and Highways with the
Secretary of Public Works and Highways as Chairman."

SECTION 11.

Section 9 of the same Act is hereby amended to read as follows:

"Sec. 9. Project Supervision. — Every infrastructure project undertaken under the provisions of
this Act shall be in accordance with the plans, specifications, standards, and costs approved by
the concerned government agency and shall be under the supervision of the said agency or
local government unit in the case of local projects."

SECTION 12.

A new section to be numbered as Section 10 is hereby added to read as follows:

"Sec. 10. Investments Incentives. — Among other incentives, projects in excess of One billion
pesos (P1,000,000,000) shall be entitled to incentives as provided by the Omnibus Investments
Code, upon registration with the Board of Investments."

SECTION 13.

Section 10 of the Same Act is hereby renumbered as Section 11 to read as follows:

"Sec. 11. Implementing Rules and Regulations. — A committee composed of one (1)
representative each from the Department of Public Works and Highways, the Department of
Transportation and Communications, the Department of Energy, the Department of
Environment and Natural Resources, the Department of Agriculture, the Department of Trade
and Industry, the Department of Finance, the Department of the Interior and Local Government,
the National Economic and Development Authority, the Coordinating Council of the Philippine
Assistance Program, and other concerned government agencies shall, within sixty (60) days
from the effectivity of this Act, formulate and prescribe, after public hearing and publication as
required by law, the implementing rules and regulations including, among others, the criteria
and guidelines for evaluation of bid proposals, list of financial incentives and arrangements that
the Government may provide for the project, in order to carry out the provisions of this Act in the
most expeditious manner.

"The chairman of this committee shall be appointed by the President of the Philippines from its
members.

"From time to time the committee may conduct, formulate and prescribe after due public hearing
and publication, amendments to the implementing rules and regulations, consistent with the
provisions of this Act."

SECTION 14.

A new section to be numbered as Section 12 is hereby added to read as follows:

"Sec. 12. Coordination and Monitoring of Projects. — The Coordinating Council of the Philippine
Assistance Program (CCPAP) shall be responsible for the coordination and monitoring of
projects implemented under this Act.

"Regional development councils and local government units shall periodically submit to CCPAP,
information on the status of said projects.

"At the end of every calendar year, the CCPAP shall report to the President and to Congress on
the progress of all projects implemented under this Act."

SECTION 15.

Sections 11, 12, and 13 of the same Act are hereby renumbered as Sections 13, 14, and 15,
respectively.

SECTION 16. Repealing Clause. —

All laws or parts of any law inconsistent with the provisions of this Act are hereby repealed or
modified accordingly.

SECTION 17. Separability Clause. —

If any provision of this Act is held invalid, the other provisions not affected thereby shall continue
in operation.
SECTION 18. Effectivity Clause. —

This Act shall take effect fifteen (15) days after its publication in at least two (2) newspapers of
general circulation.

Approved: May 5, 1994

REPUBLIC ACT NO. 6957
AN ACT AUTHORIZING THE FINANCING, CONSTRUCTION, OPERATION AND
MAINTENANCE OF INFRASTRUCTURE PROJECTS BY THE PRIVATE SECTOR, AND FOR
THE OTHER PURPOSES

SECTION 1. Declaration of Policy. —

It is the declared policy of the State to recognize the indispensable role of the private sector as
the main engine for national growth and development and provide the most appropriate
favorable incentives to mobilize private resources for the purpose.

SECTION 2. Definition of Terms. —

The following terms used in this Act shall have the meanings stated below:

Build-operate-and-transfer scheme. — A contractual arrangement whereby the contractor

undertakes the construction, including financing, of a given infrastructure facility, and the
operation and maintenance thereof. The contractor operates the facility over a fixed term during
which it is allowed to charge facility users appropriate tolls, fees, rentals, and charges sufficient
to enable the contractor to recover its operating and maintenance expenses and its investment
in the project plus a reasonable rate of return thereon. The contractor transfers the facility to the
government agency or local government unit concerned at the end of the fixed term which shall
not exceed fifty (50) years. For the construction stage, the contractor may obtain financing from
foreign and/or domestic sources and/or engage the services of a foreign and/or Filipino
constructor: Provided, That the ownership structure of the contractor of an infrastructure facility
whose operation requires a public utility franchise must be in accordance with the Constitution:
Provided, however, That, in the case of corporate investors in the build-operate-and-transfer
corporation, the citizenship of each stockholder in the corporate investors shall be the basis for
the computation of Filipino equity in the said corporation: Provided, further, That, in the case of
foreign constructors, Filipino labor shall be employed or hired in the different phases of the
construction where Filipino skills are available: Provided, furthermore, That the financing of a
foreign or foreign-controlled contractor from Philippine government financing institutions shall
not exceed twenty percent (20%) of the total cost of the infrastructure facility of project:
Provided, finally, That financing from foreign sources shall not require a guarantee by the
Government or by government-owned or controlled corporations. The build-operate-and-transfer
scheme shall include a supply-and-operate situation which is a contractual arrangement
whereby the supplier of equipment and machinery for a given infrastructure facility, if the interest
of the Government so requires, operates the facility providing in the process technology transfer
and training to Filipino nationals.

Build-and-transfer scheme. — A contractual arrangement whereby the contractor undertakes

the construction, including financing, of a given infrastructure facility, and its turnover after
completion to the government agency or local government unit concerned which shall pay the
contractor its total investment expended on the project, plus a reasonable rate of return thereon.
This arrangement may be employed in the construction of any infrastructure project including
critical facilities which, for security or strategic reasons, must be operated directly by the
Government.

SECTION 3. Private Initiative in Infrastructure. —

All government infrastructure agencies, including government-owned and controlled

corporations and local government units, are hereby authorized to enter into contract with any
duly prequalified private contractor for the financing, construction, operation and maintenance of
any financially viable infrastructure facilities through the build-operate-and-transfer or build-and-
transfer scheme, subject to the terms and conditions hereinafter set forth.

SECTION 4. Priority Projects. —

All concerned infrastructure agencies, including government-owned and controlled corporations

and local government units, shall include in their infrastructure programs those priority projects
that may be financed, constructed, operated and maintained by the private sector under the
provisions of this Act. It shall be the duty of all concerned infrastructure agencies to give wide
publicity to all projects eligible for financing under this Act, including publication in national
newspapers of general circulation once every six (6) months and official notification of
contractors registered with them. The lists of all such national projects must be part of the
medium-term infrastructure programs of the agencies concerned and must be duly approved by
Congress. Local projects funded and implemented by the local government units concerned
shall be submitted to the local development councils for confirmation or approval.

SECTION 5. Public Bidding of Projects. —

Upon approval of the projects mentioned in Section 4 of this Act, the concerned head of the
infrastructure agency or local government unit shall forthwith cause to be published, once every
week for three (3) consecutive weeks, in at least two (2) newspapers of general circulation and
in at least one (1) local newspaper which is circulated in the region, province, city or municipality
in which the project is to be constructed a notice inviting all duly prequalified infrastructure
contractors to participate in a public bidding for the projects so approved. In the case of a build-
operate-and-transfer arrangement, the contract shall be awarded to the lowest complying bidder
based on the present value of its proposed tolls, fees, rentals, and charges over a fixed term or
the facility to be constructed, operated, and maintained according to the prescribed minimum
design and performance standards, plans, and specifications. For this purpose, the winning
contractor shall be automatically granted by the infrastructure agency or local government unit
the franchise to operate and maintain the facility, including the collection of tools, fees, rentals,
and charges in accordance with Section 6 hereof.

In the case of build-and-transfer arrangement, the contract shall be awarded to the lowest
complying bidder based on the present value of its proposed schedule of amortization payments
for the facility to be constructed according to the prescribed minimum design and performance
standards, plans and specifications: Provided, however, That a Filipino constructor who submits
an equally advantageous bid shall be given preference.

A copy of each build-operate-and-transfer or build-and-transfer contract shall forthwith be

submitted to Congress for its information.

SECTION 6. Repayment Scheme. —

For the financing, construction, operation, and maintenance of any infrastructure project
undertaken pursuant to the provisions of this Act, the contractor shall be entitled to a reasonable
return of its investment and operating and maintenance costs in accordance with its bid
proposal as accepted by the concerned contracting infrastructure agency or local government
unit and incorporated in the contract's terms and conditions. In the case of a build-operate-and-
transfer arrangement, this repayment scheme is to be effected by authorizing the contractor to
charge and collect reasonable tools, fees, rentals, and charges for the use of the project facility
not exceeding those proposed in the bid and incorporated in the contract: Provided, That the
government infrastructure agency or local government unit concerned shall approve the fairness
and equity of the tolls, fees, rentals and charges except in case of tolls for national highways,
roads, bridges and public thoroughfares which shall be approved by the Toll Regulatory Board:
Provided, further, That the imposition and collection of tolls, fees, rentals and charges shall be
for a fixed term as proposed in the bid and incorporated in the contract but in no case shall this
term exceed fifty (50) years: Provided, finally, That during the lifetime of the franchise, the
contractor shall undertake the necessary maintenance and repair of the facility in accordance
with standards prescribed in the bidding documents and in the contract. In the case of a build-
and-transfer arrangement, the repayment scheme is to be effected through amortization
payments by the government infrastructure agency or local government unit concerned to the
contractor according to the scheme proposed in the bid and incorporated in the contract.

In the case of land reclamation or the building of industrial estates, the repayment scheme may
consist of the grant of a portion or percentage of the reclaimed land or industrial estate built,
subject to the constitutional requirements with respect to the ownership of lands.

SECTION 7. Contract Termination and Adjustment. —

In the event that a project is revoked, cancelled or terminated by the Government through no
fault of the contractor or by mutual agreement, the Government shall compensate the said
contractor for its actual expenses incurred in the project plus a reasonable rate of return thereon
not exceeding that stated in the bidding documents and in the contract as of the date of such
revocation, cancellation or termination: Provided, That the interest of the Government in these
instances shall be duly insured with the Government Service Insurance System or any other
insurance entity duly accredited by the Office of the Insurance Commissioner: Provided, finally,
That the cost of the insurance coverage shall be included in the terms and conditions of the
bidding referred to above. The tolls, fees, rentals and charges on the facility are subject to
adjustment according to a formula related to official government price indices which shall be
defined before the bidding, through the bidding documents, and incorporated in the contract.
SECTION 8. Toll Regulatory Board. —

The Toll Regulatory Board is hereby attached to the Department of Public Works and Highways
with the Secretary of Public Works and Highways as Chairman.

SECTION 9. Project Supervision. —

Every infrastructure project undertaken under the provisions of this Act shall be constructed,
operated and maintained by the contractor concerned in accordance with the plans,
specifications, standards, and costs approved by the concerned government infrastructure
agency and under the technical supervision of the said agency.

SECTION 10. Implementing Rules and Regulations. —

A committee composed and representatives from the Department of Public Works and
Highways, the Department of Finance, the Department of Local Government, the National
Economic and Development Authority, and duly accredited organizations representing the
private Philippine construction industry shall formulate and prescribe, after public hearing and
publication as required by law, the implementing rules and regulations, including, among others,
the criteria and guidelines for evaluation of bid proposals, provisions to subject the facility
collections to audit by the Commission on Audit, and conditions for the cancellation of contracts,
in order to carry out the provisions of this Act.

SECTION 11. Repealing Clause. —

All laws or parts of any law inconsistent with the provisions of this Act are hereby repealed or
modified accordingly.

SECTION 12. Separability Clause. —

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

SECTION 13. Effectivity. —

This Act shall take effect fifteen (15) days after its publication in at least two (2) newspapers of
general circulation.

Approved: July 9, 1990