SEVENTEENTH SANGGUNIANG PANLUNGSOD )spgensantos.ph/wp-content/uploads/2014/06/CR17_217.pdf ·...

MADAM PRESIDENT:

Respectfully submitted:

HON. BRIX T. TAN

Councilor/ Presiding Officer

Committee on Trade, Commerce & Industry

HON. RAMON R. MELLIZA

Councilor / Chairperson

Committee on Laws, Rules and Review of Brgy.

Ordinances & Executive Orders

RECOMMENDING APPROVAL FOR ITEM NO. 1

Dates of Hearing: March 20, 2014, March 24, 2014, March 31, 2014, April 01, 2014, April 08, 2014, April 23,

2014 & May 15, 2014.

SANGGUNIANG PANLUNGSOD

GENERAL SANTOS CITY

COMMITTEE REPORT NO. 17-140

Submitted by the COMMITTEE ON TRADE COMMERCE AND INDUSTRY AND COMMITTEE ON LAWS,

RULES AND REVIEW OF BARANGAY ORDINANCES AND EXECUTIVE ORDERS

Re: SPPO. 2014-0985

RECOMMENDATIONTITLE

1. SPPO NO. 2014-0985: “AN ORDINANCE

ADOPTING THE CODE OF PUBLIC-PRIVATE

PARTNERSHIP (PPP) APPROACH IN THE FINANCING,

CONSTRUCTION, OPERATION, AND MAINTENANCE OF

LOCAL GOVERNMENT INFRASTRUCTURE OR

DEVELOPMENT PROJECTS, CREATING THE GENERAL

SANTOS CITY PUBLIC-PRIVATE PARTNERSHIP BOARD

(GSCPPPB), PROVIDING APPROPRIATIONS AND

INCENTIVES THEREFOR, AND FOR OTHER PURPOSES.”

APPROVED AS AMENDED ON COMMITTEE

LEVEL, SUBJECT TO STYLE & TO BE

CALENDARED FOR SECOND READING

have considered the same and have the honor to report it back to the August Body with the foregoing

recommendation.

SEVENTEENTH SANGGUNIANG PANLUNGSOD )

48TH

REGULAR SESSION )

Principal Sponsors: Councilor Brix T. Tan & Councilor Ramon R. Melliza

The Committee on Trade, Commerce and Industry and the Committee on Laws,Rules and Review of

Barangay Ordinances and Executive Orders, to which were referred this ordinance:

Committee on Trade, Commerce and Industry and Committee on Laws, Rules and Review of Brgy. Ordinances and Executive Orders

(Date of Hearings: 03-20-14, 03-24-14, 03-31-14, 04-01-14, 04-08-14, 04-23-14 and 05-15-14)

Minutes-Joint Hearing of the Committee on Laws, Rules and Review of Barangay Ordinances and Executive Orders and Committee on Trade, Commerce, and Industry March 20, 2014 Page 1

MINUTES OF THE JOINT HEARING OF THE COMMITTEE ON LAWS, RULES, AND REVIEW OF BARANGAY ORDINANCES AND EXECUTIVE ORDERS AND COMMITTEE ON TRADE, COMMERCE, AND INDUSTRY OF THE 17TH SANGGUNIANG PANLUNGSOD OF THE CITY OF GENERAL SANTOS.

Thursday, March 20, 2014 10:40 a.m.-12:34 p.m.

City Vice Mayor’s Conference Room 2nd Floor, Legislative Building

corner Roxas Street and City Hall Drive General Santos City

MEMBERS/COUNCILORS PRESENT: City Councilor Ramon R. Melliza (Chairperson-Committee on Laws, Rules, and Review of Barangay Ordinances and Executive Orders), City Councilor Brix T. Tan (Chairperson-Committee on Trade, Commerce, and Industry and Member-Committee on Laws, Rules, and Review of Barangay Ordinances and Executive Orders), and City Councilor Shandee Theresa L. Pestaño (Member- both Committee on Laws and Trade) GUESTS/RESOURCE PERSONS: (Please see the attached attendance sheet.) AGENDUM SPPO NO. 2014-0985.-AN ORDINANCE ADOPTING THE CODE OF PUBLIC-PRIVATE PARTNERSHIP (PPP) APPROACH IN THE FINANCING, CONSTRUCTION, OPERATION, AND MAINTENANCE OF LOCAL GOVERNMENT INFRASTRUCTURE OR DEVELOPMENT PROJECTS, CREATING THE GENERAL SANTOS CITY PUBLIC-PRIVATE PARTNERSHIP BOARD (GSCPPPB), PROVIDING APPROPRIATIONS AND INCENTIVES THEREFOR, AND FOR OTHER PURPOSES. (Hon. Brix T. Tan & Hon. Ramon R. Melliza-Authors)

At the outset, the chair expressed his gratitude to the representatives from CEMCDO,

City Engineer’s Office, and other agencies that participated in the drafting of this proposed ordinance. Thereupon he decided to tackle this measure provision by provision.

Observing that most of the invitees were from the government agencies, City Councilor

Tan asked if there’s a need to invite the private sector particularly the Chamber of Commerce to which Ms. Meriam L. Buguis, head of CEMCDO suggested to have a multi-sectoral coordinative meeting for the private sector. But the chair deemed it proper that the private sector be given a copy of this measure to serve as a guide where to place its inputs. Ms. Buguis then manifested that her office can possibly help in the distribution of the same.

She also informed that a copy of which was already submitted to the PPP Center

showing the differences that they accordingly saw in the models that they looked into. The PPP Center management gave its comments which were submitted to the City Legal Office whereby Atty. Taniegra gave a seemingly marginal notes serving as her comments that were subsequently submitted to the committee.

Following the instruction of the chair to spell out all the acronyms used for the first time

was his query if his line of thinking was correct that the Public-Private Partnership (PPP) Code is in accordance with the BOT law to which Ms. Buguis answered it affirmatively. She stressed that this local PPP Code must actually be aligned with the BOT law.

Moreover, the chair informed that during the preparatory meeting on this matter in the

REPUBLIC OF THE PHILIPPINES

SANGGUNIANG PANLUNGSOD GENERAL SANTOS CITY


Sangguniang Panlungsod, there were already questions raised. One of which was whether or not the public market be improved or even abolished. Then as he recalled City Councilor Nuñez stated that this is really needed in the public market in order for it to be improved but not in the City Hospital because it practically speaks of a hands-on in rendering social services.

As to the query of the chair, Ms. Buguis said the Chamber of Commerce is very positive

on this drafted PPP Code. She also explained that the PPP is a strategy that the national government has adopted to really bring in capital or resource from somewhere by using different Build-Operate-Transfer modalities for the most needed infra projects that the government should implement. In fact, she said they are already using some of these modalities like the Dialysis Center that they worked for the City Hospital. It is basically making available the Dialysis equipment. In the process of bidding, they are to look for someone who can bring in the dialysis machine equipment including the needed resources/supplies for the day to day operation of the center with the least pass-on price to the consumers on a per use basis. Finally, she said they are to look for someone who can offer more benefits to the city government.

Ensuing further deliberations, she made clear to City Councilor Tan that in the PPP, the

management of the project would depend on the contract and the modality that the city will be adopting. Before the city can embark on the PPP project, it has to have a pipeline of various PPP projects that it wanted to push. Once the city has already a pipeline, it has to do either a business case or a pre-feasibility study to determine whether or not the project would provide the basic services needed by the constituents. It’s very important for the management or leadership of the city government that it understands the risk that it is absorbing, passing on or sharing with the private sector. The chair at this point reiterated to really spell out all acronyms used for the first time. After which, Section 3.9 regarding Principles was tackled. There were several inputs raised on the use of the word, “may”. Though the PPP Center accordingly recommended the use of the word, “must” instead of “may,” it was finally decided to maintain the word, “may” because using the word, “must or shall” connotes that it is mandatory; and besides, not all PPP projects can qualify in the Investment Code. In Section 4, the chair deemed it proper to make it plural that it be instead read as Purposes.

With the given information that the PPP is a strategy that resources and expertise would come in, the chair queried if it is much better than borrowing from the bank. Ms. Buguis clarified that it doesn’t imply that when the city engages in the PPP, there will be no more borrowings. The PPP is basically equated to A+B=AB formula wherein the resource of the government and that of the private sector is combined to arrive at the end result. Once the project is properly implemented, certainly the needed services of the constituents can be provided. As to the query if the government would really enjoy a profit, Ms. Buguis responded that it would depend on the modality. Regarding the observation that the city used to subsidize the public market yet a lot people are earning out of it instead of the local government, the chair asked Ms. Buguis to give an example of a certain project which is in public-private partnership that really enjoys a profit. Ms. Buguis after sharing the same observation cited the public market of Mandaluyong, a three- storey building which is under the PPP and Build-Operate-Transfer scheme. The land is owned by the city which runs the wet market in the ground floor; it’s indeed earning. The winning bidder running both the 2nd and 3rd floor and definitely paying taxes to the city of Mandaluyong is indicative that its city is really earning.

However, she emphasized that under the BOT, there’s no sharing of income. But the private sector is allowed to recover its investment for a certain number of years before turning over the facility to the city.


As to further queries, Ms. Buguis first explained the words, credit enhancement, by way of giving an example which is a corporation borrowing money from the bank. Its credit limit will be enhanced if the corporation will offer a collateral which will eventually serve as its guarantee that the money it borrowed will not turn into naught. Credit enhancement actually minimizes credit risk on the part of the creditor of not being paid back by the borrower.

As to the importance of a PPP, Ms. Buguis stated it can attract investors to a lot of investment priority areas. She expounded that per mandate of the local government units based on the local government code, the public market is supposed to be under the LGU. Should the city need to build more facilities but does not want to borrow or does not have the capacity to borrow then the city has to find means where to get resources. Hence, this is practically what the PPP is all about.

As to another inquiry of the chair, Ms. Buguis clarified that they used the Davao City

model wherein it has five (5) representatives from the private sector. She said if the city will adopt such model, the 5 representatives who may have individual expertise on finance, law, business, infrastructure development or service delivery can already be pre-identified as long as they operate here in the city.

Although City Councilor Tan suggested some names of organizations and institutions to

comprise the five (5) representatives, the chair deemed it proper to just give the power to the city mayor to choose so that their term would eventually be co-terminus to the term of the city mayor. City Councilor Pestaño supported the same by saying that it should be the prerogative of the incumbent city mayor as regards to this matter so that it would not be difficult for him to enlist his priority projects.

Upon motion of City Councilor Pestaño, duly seconded by City Councilor Tan, letter h

under Sectrion 10. Functions and Powers of the PPP Board was ruled deleted because this is synonymous to letter g. Therefore, letter I would become letter h.

In letter e, the words, General Santos City Council was changed to Sangguniang

Panlungsod. The chair thereupon believed that if the Board is a government entity, it should always

be entitled to emoluments in which Ms. Boguis subscribed to his idea. In Section 13, PPP Project Technical Working Group (TWG), it was emphasized that the

project shall really be facilitated and assisted by a project-based TWG. If the kind of project to be evaluated involves infra then it’s proper that it’s the Committee on Infra that should provide technical support. If it’s about septage, it should be the CEO. Their work would start from the preparation of the business case or pre-FS up to the time that the project would be ready for bidding. People who are to be sent for the internship training should be involved in this kind of work.

She added that with the five trainings in the PPP Center where there are many

participants, she suggested to reduce the number of participants as well as the number of days from ten to five for cost cutting purposes. But the names of the councilors concerned were put in the list because it is basic for them to understand the topics on evaluation, viability, risk management, contracts, bidding process, documentation, and the like. She also said that they are contemplating that the conduct of trainings be localized, be only held here in the city.

Ensuing further deliberations, the chair noting that it’s already lunchtime declared that

they would just discuss the untackled items on Monday. He then requested the CEMCDO head to be present during the presentation of this measure in the plenary on April 1, 2014.

However, Ms. Buguis declared that April 1 is their target date for the ceremonial signing

of the internship agreement during the SP session. To establish the budget for this, they are


now finalizing the list of participants including the ones from the various departments for the City Mayor’s approval.

She also deemed it proper that before presenting this measure in the plenary, there

must be a consultation to this effect with the private sector in which the chair thereupon suggested to invite the private sector on Monday. City Councilor Tan likewise suggested that all the proposed members of the TWG under Section 13.1a-k be invited in the next hearing. Thereafter, the chair ruled the joint hearing on recess until Monday @ 2:00 o’clock in the afternoon.

RECESS: 12: 34 p.m.

Prepared by: JERLYN L. MALUPA JOYCE A. CORUÑA

Stenographic Reporter III Stenographic Reporter IV

Edited by: Noted by:

CARMELITA A. GENOTA LOLITA P. PEDRO

Stenograpic Reporter III Board Secretary IV/Division Chief Journal and Minutes Division Attested:

ATTY. RAMON R. MELLIZA Councilor/Chairperson Committee on Laws, Rules, and Review of Barangay Ordinances & Executive Orders BRIX T. TAN City Councilor, Chairperson Committee on Trade, Commerce, & Industry

Joint - Committees on Laws and Trade - March 24, 2014 Page 1 of 4

MINUTES OF THE JOINT COMMITTEE HEARING OF THE COMMITTEE ON LAWS, RULES AND REVIEW OF BARANGAY ORDINANCES AND EXECUTIVE ORDERS AND COMMITTEE ON TRADE, COMMERCE AND INDUSTRY OF THE 17TH SANGGUNIANG PANLUNGSOD

March 24, 2014, Monday 2:22 P.M. - 5:04 P.M.

Learning Resource Center, Ground Floor, Legislative Building, corner Roxas Street and City Hall Drive, General Santos City

MEMBERS/COUNCILORS PRESENT: Hon. Ramon R. Melliza (Chairperson-Committee on Laws), Hon. Brix T. Tan (Chairperson-Committee on Trade), Hon. Rogelio Pacquiao, Hon. Shandee Theresa O. Llido-Pestaño (Member) GUESTS/RESOURCE PERSONS: (Please refer to the attendance sheet.)

AGENDUM:

SPPO NO. 2014-0985.- AN ORDINANCE ADOPTING THE CODE OF PUBLIC-PRIVATE PARTNERSHIP (PPP) APPROACH IN THE FINANCING, CONSTRUCTION, OPERATION, AND MAINTENANCE OF LOCAL GOVERNMENT INFRASTRUCTURE OR DEVELOPMENT PROJECTS, CREATING THE GENERAL SANTOS CITY PUBLIC-PRIVATE PARTNERSHIP BOARD (GSCPPPB), PROVIDING APPROPRIATIONS AND INCENTIVES THEREFOR, AND FOR OTHER PURPOSES. (Hon. Brix T. Tan & Hon. Ramon R. Melliza - Authors)

The joint hearing of the aforementioned committees was called to order by Councilor

Ramon R. Melliza who thereafter acknowledged the representatives of the different departments and other government agencies. The chair stated to have a separate meeting with the private sector, such as vendors association in the public market who have apprehension that the city’s public market will be privatized.

At this juncture, there was a Powerpoint presentation about Public-Private Partnership

taken from www.unece.org. The chair stated that the local government unit may enter into a joint venture

agreement with a private sector but there is a guideline to be observed. There will also be a safety net, a TWG and a Board. Under Section 3.9, he recalled that it was mentioned last meeting by Ms. Meriam L. Buguis of the City Economic Management and Cooperative Development Office (CEMCDO) that along this principle, this may lead to re-study of the Investment Code and the Local Tax Code.

As to the query of Councilor Pacquiao, Ms. Dianne Acharon of CEMCDO apprised that

there are incentives offered to the enterprises under the Investment Code. In the PPP Code, it was stated that PPP projects may be supported but it’s not automatic as they need to apply for incentives. Whatever incentives, tax exemptions or taxes will still be discussed in the contract.

Ms. Medina G. Herezo of National Economic and Development Authority (NEDA)

informed that PPP has 18 modalities. Eight of which is under the BOT law. She clarified that there is no existing PPP law, only BOT Law. There was also JV or Joint Venture guidelines




crafted by NEDA. She pointed out that it is sometimes misunderstood that entering into PPP only involves infrastructure.

As to the advantage of having a PPP Code, Ms. Herezo stated that this may be the bible

of the city on PPP, wherein the existing laws on incentives can be incorporated therein. Councilor Tan added that this will serve as guideline of the city on BOT and joint venture especially with the projects to be entered into by the investors with the local government, like the Integrated Food Terminal. In addition, Ms. Acharon further explained that the PPP Code was come up because Gensan is looking into PPP modalities to attract investors and to provide infrastructure facilities needed by the constituents and investors of General Santos City.

Mr. Guillermo Manrique, Jr. of NEDA asked why only the NEDA is included in the Board while the other agencies are not. Ms. Acharon explained that the function of the Board is more on planning and approval and the DILG is in the Selection or Evaluation Committee. NEDA was included in the Board to make sure that the city’s projects are aligned with the national development/direction. Thereafter, it was agreed after some discussion to include the DILG under Section 9, but a non-voting member only.

Having observed that the City Planning and Development Office is included only in the

technical working group, Mr. Manrique pointed out that it must be included as member of the PPP Board as its role is very critical because of its knowledgeable of the city’s development direction, investment and land use. It determines whether the City Development or Investment Plan is anchored on the national or regional development programs/plans. With this, Ms. Acharon informed that in the revised draft, the department head of the CPDO was already included as member of the PPP Board.

At this juncture, Councilor Melliza relinquished the chair to Councilor Brix Tan. Ms. Rilimin Sandoval of DILG considered it proper that the DILG which is the supervisory

agency or arm of the LGUs should be considered member of the Board because there are some information, laws and mandates that they will give to the LGUs from time to time. She raised her concern regarding the DILG issuance of the Memorandum Circular in 2011 on the establishment of Public-Private Partnership sub-committee in the Local Development Council and on how they are going to relate the TWG on this committee. Ms. Acharon stated that regarding the city’s Competitiveness Committee, the city has already created the sub-committee.

Responding to the query raised regarding Section 10, item G, To perform contract

management functions such as partnership management, performance management, risk management, and contract administration for all the PPPs arrangements entered into by the CITY, Mr. Darla B. Solano of CEMCDO stated that this was discussed last time and the suggestion of the City Legal Office was to delete, however, they found it necessary because the PPP contract must be monitored because if there is a default on the part of the signing partner which is the private sector, so it is the Board who is going to recommend whether they are going to terminate or resolve the same. The purpose is to manage the partnership agreement.

Ensuring further deliberation, Section 10, subparagraph (g) was amended, to read as: “To ensure the performance of contract management functions such as partnership management, performance management, risk management, and contract administration for all the PPPs arrangements entered into by the City.”

Section 10, subparagraph (h), “To set and monitor the tariff and administer the subsidy pursuant to the PPP contract,” was agreed by the body to be deleted.

Having noticed that there are functions listed under the powers in Section 10, Functions and Powers of the PPP Board, Engr. Emerald Signar of the Office of the Building Official suggested to lump the same, to read as “The PPP Board shall:” and the functions and powers shall then be enumerated, to which the committee took note of the same.


On Section 13.1, the City Agriculturist’s Office will be included. Under Section 12, Meetings and Quorum, the honorarium for the Board was discussed. This concern was not yet resolved in the previous committee hearing. Further deliberation ensued, the committee agreed to put a provision for giving honorarium, to which the representative of the City Accountant’s Office as well as the City Budget Office will be invited in the next meeting to give comments whether giving honorarium to PPPTWG is reasonable. Councilor Melliza then expressed that he is inclined in giving honorarium considering that this involves a big task. At this juncture, Mr. Ronan Villagonzalo, staff of Councilor Tan presented to the body the structure/organizational chart of the PPPPTWG and the Board. Thereafter, the body agreed that the same will be subject to modification/suggestions depending on the actual wordings of the proposed Code. On Section 13.2.1, the NEDA representative inquired as to whoever will identify the project considering that this section speaks about preparation. Mr. Villagonzalo referred him to Section 10 of the proposed Code as well as in letter (a) wherein one of the power is to request the CPDO and the City Development Council for the pipeline of PPP projects. 13.2.1 Development Phase

An amendment was introduced to insert the words “may” and “outsource” on letter

(a), to read as: “May prepare and conduct pre-investment activities such as pre-feasibility studies, business case, feasibility studies, to outsource among others.”

On 13.2.2, Approval Phase, the phrase “Local Chief Executive (LCE) of letters (a

and b)” was changed to “City Mayor”, to read as: a.) Prepare the necessary documents that may be required by the approving

body, including coordination with the Sangguniang Panlungsod for the needed solution, ordinance, endorsement of the project, and authority to the City Mayor for the project;

b.) Submit to the City Mayor the project for endorsement to the appropriate approving body pursuant to Section 20 of this code.

Letter (C) of 13.2.3, Competition Phase, was deleted. Mr. Manrique from NEDA suggested that the Board should have a quarterly meeting that

the monitoring and evaluation of the implementation of PPP projects will be done quarterly or as often as it is needed.

On Section 13.2.4, the chair observed the need to fine tune the Cooperation Phase of

the ordinance. Under Section 14.1, the phrase “the City Economic Management and Cooperative

Development Office (CEMCDO)” was changed to “its General Santos City Investment Promotion Center”, to read as: Administrative Control and Staff Complement – The City Government, through its General Santos City Investment Center shall exercise administrative control and shall provide the necessary personnel for the operation of the General Santos City PPP-CC.

Ms. Acharon informed that the function for PPP Coordinating Center was included in the

plan. The existing Investment Promotion Center is also under the CEMCDO that will serve as PPP Coordinating Center.


As to the additional personnel, a representative from CEMCDO said that she is in favor that it should be silent in the ordinance. It’s the prerogative of the Board as to the additional personnel in doing secretariat work.

On Section 16 - Composition of the PPP-SC, an amendment was introduced to add letter

k, to read as: “Local Economic Investment Promotion Officer.” Ms. Acharon informed that Director Canilao will be in Gensan on April 1, 2014 for the

signing of the Internship Program Agreement. Thereafter, it was resolved to conduct another consultation on April 1, 2014 to be held

at the session hall with Director Canilao. Everyone is encouraged to be present. Private stakeholders are also invited during the said consultation.

There being no more matter to discuss, the joint committee hearing was declared on

recess at 5:04 o’clock in the afternoon. RECESS: 5:04 P.M.

Prepared by:

JERLYN L. MALUPA LOIDA D. ASAN Stenographic Reporter III Stenographic Reporter III

JULIET A. DELA TORRE Stenographic Reporter III


JANET B. ZABALA LOLITA P. PEDRO Stenographic Reporter III Division Chief, Journal & Minutes

Attested:

ATTY. RAMON R. MELLIZA City Councilor & Chairperson

Committee on Laws and Rules and Review of Barangay Ordinances and Executive Orders

BRIX T. TAN City Councilor & Chairperson

Committee on Trade, Commerce and Industry

Minutes of the Joint Hearing of the Committee on Laws and Committee on Trade dated March 31, 2014

Page 1

MINUTES OF THE JOINT HEARING OF THE COMMITTEE ON LAWS, RULES AND REVIEW OF BARANGAY ORDINANCES AND EXECUTIVE ORDERS AND THE

COMMITTEE ON TRADE, COMMERCE, AND INDUSTRY OF THE 17TH SANGGUNIAN

Monday, March 31, 2014

10:30 A.M. –12:29 p.m. & 4:05 p.m.-5:30 p.m. Session Hall; Vice Mayor’s Conference Room, respectively

2/F Legislative Building, City Hall Drive, City of General Santos MEMBERS/COUNCILORS PRESENT: Hon. Ramon R. Melliza, (Chairperson, Committee on Laws) and Hon. Brix T. Tan, (Chairperson, Committee on Trade) GUESTS/RESOURCE PERSONS: See attached attendance sheet.

AGENDUM:

SPPO NO. 2014-0985: AN ORDINANCE ADOPTING THE CODE OF PUBLIC-PRIVATE PARTNERSHIP (PPP) APPROACH IN THE FINANCING, CONSTRUCTION, OPERATION AND MAINTENANCE OF LOCAL GOVERNMENT INFRASTRUCTURE OR DEVELOPMENT PROJECTS, CREATING THE GENERAL SANTOS CITY PUBLIC-PRIVATE PARTNERSHIP BOARD (GSCPPPB), PROVIDING APPROPRIATIONS AND INCENTIVES THEREFOR, AND FOR OTHER PURPOSES. At the outset, Councilor Brix T. Tan opened the committee hearing and thereafter, he relinquished the chair to Councilor Melliza, being the chairperson of the Committee on Laws. At this point, Section 9. Composition of the PPP Board was discussed. Thereafter, the Chairperson of the Committee on Climate Change Adaptation and Mitigation was included as a member of the board because of the ordinance mainstreaming the climate change adaptation and mitigation issues in the City. Hence, Councilor Bagonoc moved for the inclusion of the said committee and the same was subsequently inserted as No. 4 with adjustments on the succeeding numbers being reflected.

Councilor Melliza said that all amendments approved on committee level will be incorporated in the ordinance so that copies submitted to the plenary will be discussed.

As to the suggestion of Councilor Melliza to establish distinction between the board and the selection committee for easy explanation in the plenary, Mr. Villagonzalo explained that selection board is more focused on the policy direction while the selection committee will screen out those who would bid out as proponents of the PPP projects approved just like the function of the local BAC. However, the selection committee will be specializing on PPP projects only. It is clearly stipulated on Chapter IV Public-Private Partnership Selection Committee (PPP-SC), Mr. Ronan Villagonzalo explained that Section 15 is consistent with Rule 3 of the Implementing Rules and Regulations of R.A. No. 7718 thereby created a Public-Private Partnerships Selection Committee (PPP-SC).

Regarding the concern of Councilor Bagonoc on the functions of the board, technical working group (TWG) and the selection committee, Mr. Villagonzalo clarified that it is the board which shall approve the applications. Further, the former suggested that specific functions should be explicitly explained to avoid overlapping of functions. However, Mr. Villagonzalo clarified that the powers and functions of the PPP Board are clearly stipulated under Section 10.




Page 2

On the other hand, Engr. Francisco Provido, head of the City Engineering Office informed that one of the functions of the TWG is to serve as the technical arm of the Selection Committee based on Section 13.2.3 in the Competition Phase, viz: a. Assist the PPP-SC in preparing tender documents including pre-qualification and bidding documents and draft contract; b. Assist the PPP-SC in the conduct of pre-qualification bidding, evaluation of bids and recommendation for award; c. Facilitate the compliance of all the requisite permits and approval prior to implementation. As discussions went on, Mr. Villagonzalo clarified that if the TWG needs to hire consultants, it will pass through the regular BAC because the very delineation between the regular BAC and the PPP-Selection Committee states that bidding under Procurement Act is covered by the regular BAC procedures. On the other hand, the bidding under Build-Operate and Transfer (BOT) Law is under the PPP-SC wherein the selection is more focused on the capability, both technical and financial of the would- be partners of a specific project duly approved under the PPP modality. Atty. Taniegra suggested that simple flow chart of the process/activities should be

included as one of the annexes of the code to serve as a reference specifically stating the

activities to be undertaken for proper guidance of the implementers and general public, to

which Councilor Melliza was amenable. However, Councilor Bagonoc believed that

suggestions/observations will be considered provided it remains consistent with the provisions

to be incorporated under Section 31, which involves the formulation of the IRR.

In Section 13.1 Composition of the PPP Project TWG, the sentence, “However, the

Committee Chair of the Committee on Climate Change Adaptation and Mitigation shall be a

member of the Technical Working Group (TWG) would be added in Letter K after the word,

“Board”.

Atty. Taniegra inquired if the body agreed under the scope of application to include

everything in partnership with private entities under the PPP guidelines covering projects below

P50 Million or the minimum amount required under RA 7718. Mr. Villagonzalo clarified that

there is no minimum under the PPP Law but the maximum under the City Development Council

for projects is only up to P50 Million. Hence, everything below P50 Million projects can be

included under PPP modality while those projects more than P50 Million need permission from

the Regional Development Council (RDC) based on the BOT Law. In the Local Code, it is

reflected under Section 20, Letter C. On the other hand, if the project is 200 Million and above,

it will be approved through the NEDA’s Investment Coordination Committee (ICC). Indeed, the

process of the PPP is somewhat more tedious as compared to the usual bidding process in the

sense that it requires feasibility study or business case study. But, the good thing about this

PPP modality, is that after the bidding and if the project is already awarded, the actual

implementation will be managed by the private partner which will provide everything, from

procurement to labor until the project is completed.

As to the Dialysis Center project, Ms. Diane Acharon of the City Economic Management

Council and Development Office informed that a joint venture scheme agreement was already

considered but since there are no guidelines yet to follow, the NEDA has come up with

guidelines covering only the national projects for a joint venture agreement. The latest update

for the Dialysis Center undertaken through lease, affermage agreement or contracts shall be

governed by the Procurement Act. So that even in the absence of PPP Code, the City can still

proceed with the Dialysis Center Leasing Project.

As regards the duration of the internship training, Ms. Diane Acharon informed that the

entire module would be up to two months and for the councilors, it would depend on the topic

that they would choose. The PPP Center which will spearhead the trainings might conduct it in

other LGUs which have PPP cases under study to cover some aspects of the requirements or in


Page 3

some cases, trainings will be held at the PPP Center. So far, there is no LGU in SOCSARGEN

area that have projects being implemented under the PPP modality. Accordingly, Gensan is the

first to have this project with the PPP Center. This training program is truly valuable because

the participants may be tapped as PPP specialist or a consultant for that matter. It was also

suggested that the technical staff will also attend the same internship which will be paid by

their office of origin. Per information, the budget for this training was already included in the

AIP.

Mr. Villagonzalo imparted to the body a particular study submitted by the USAID

wherein the TWG that is drafting the City’s Investment Code could be as comprehensive as

possible so as to dispense with the formulation of the IRR. He is insinuating that the same can

be adopted or applied in the drafting of this PPP Code, incorporating all the necessary

provisions being comprehensive enough as vital components and relevant procedures are

defined so that it will no longer require the IRR. He said if the committee finds that the code is

indeed truly comprehensive; there is no need to make the IRR for the said PPP code.

The chair said that if all additional items or the process flow to be included can be

inserted in the code itself, then there’s no need to draft a separate IRR for it in which Atty.

Taniegra and Councilor Bagonoc agreed with the reiteration that provisions for the creation of

the process flow and other necessary provision should be included therein and that she

(Councilor Bagonoc) believed that Section 31 has to be deleted consequently.

The chair then asked if the needed provisions can be available this afternoon at 3:00

p.m. in which Mr. Villagonzalo confirmed.

With the assurance that the additional provision to make the code comprehensive

enough will be available at 3:30 in the afternoon, the chair was contemplating to have another

hearing for it.

Moreover, Engr. Provido invited the attention of the body to Section 18- Responsibility

of the Bids and Awards Committee Secretariat. Looking at it, there was no mention of Bids and

Awards Committee. He inquired if this can be renamed as the PPP-SC Secretariat because they

will be working with the PPP-Selection Committee. And so as not to hurdle the function of the

BAC Secretariat considering the bulk of work they have, Engr. Provido suggested creating a

separate secretariat to focus on the functions of this PPP-SC.

Mr. Villagonzalo agreed to the suggestion of Engr. Provido, and the former likewise

suggested for the creation of the PPP Coordinating Center.

Atty. Taniegra attested that it is in fact the BAC Secretariat which actually does the

entire bidding process while the BAC only approves resolutions or otherwise denies to that

effect. Hence, the bulk of the work is being done by the BAC Secretariat. Such that, to expedite

the implementation of the PPP projects, Atty. Taniegra would go for the retention of the BAC

Secretariat considering their expertise in the routine procedures being observed; however, the

number of personnel shall be complemented so that their regular functions will not be

hampered.

Councilor Bagonoc manifested her apprehensions that RA 7718 and the Procurement

Law will not clash in defining which particular office has the authority to conduct the bidding

processes otherwise the role of the BAC under the procurement law will be degraded.

Mr. Villagonzalo clarified that the joint venture IRR also created a pre-bid and bid and

awards committee (PBAC) everything under the BOT Law has to pass through some kind of a

special Bids and Awards Committee that’s why the Selection Committee was created under the


Page 4

PPP modalities. The would- be partners will submit the sealed bids which will be opened by the

Selection Committee. When it is opened, it will be referred to the PPP board for information

and eventual deliberation to whom a particular PPP project would be awarded.

Atty. Taniegra viewed that the intent of the code is that the PPP-SC will act as the BAC

of PPP which is a special BAC but they will be utilizing the same Secretariat under the regular

BAC as promulgated under the procurement law for purposes maybe of simplifying the training

process in the procurement of would- be partners. The submitted bids are not just simply a

letter of intent for partnership, but there would be plans or designs and technical specifications

as well as materials to be used being indicated therein for the whole project. She then

reiterated that additional manpower will have to be considered.

Ms. Diane Acharon said that there still a need to consult the BAC Secretariat as to the

needed personnel so that it can be incorporated in the code. Hence, the BAC Secretariat as

presently constituted shall be invited for this afternoon’s meeting. She explained further the

that PPP has a lot of modalities: it can be Service Contract which is governed by RA 9184,

Affermage of which the city will only pay the pass- on amount to consumer and there’s a

sharing on revenues dependent on the number of treatments that will be used, the BOT or the

Build-Operate Transfer in which this has a lot of modalities that were discussed under RA 7718.

And then the joint venture is also governed by the NEDA joint venture guidelines and the

existing laws on partnership. Other modalities are governed by the procurement acts.

Continuing with the discussion, Mr. Villagonzalo reiterated that the BAC secretariat will

be assisting in the selection process of the would-be partners. All participating bidders will

undergo the pre-bidding process in which there will be a meeting in every step of the way from

pre-bid to award; the BAC Secretariat will assist in the selection committee.

Furthermore, Councilor Bagonoc noticed the conflicting provisions of Sections 14, 14.1,

14.2 and 18 in which she said there should be consistency in the provision.

Due to lack of material time, the chair declared a recess and to convene at 3:00 o’clock

this afternoon.

Before the recess, Mr. Villagonzalo announced that the signing between the Local

Government and PPP center will not push through but the public consultation after the session

will push through.

RECESS: 12:29 PM RESUMED: 4:05 PM

Upon resumption, the chair queried on the number of secretariat in which the lady representative from CEMCDO said there are two secretariats; namely: General Santos City PPP Coordinating Center (CEMCDO) which is the secretariat of the Board and the BAC secretariat which will serve as the secretariat of the Selection Committee. And as accordingly suggested by Atty. Taniegra, there must be additional manpower to complement the Bids and Awards secretariat.

The chair thereupon clarified that Section 18-PPP Selection Committee (PPP-SC) was

retained because the matters that will be addressed by the group will be about bidding wherein the process is the same as that of the regular BAC under RA 9184. The existing BAC should be the one to assist the PPP-SC as it has relatively necessary expertise.

Ms. Emilda Romera, BAC secretariat head said they will assist in the procurement

process and bidding documents, and they need two additional personnel for the purpose. Mr. Ronan Villagonzalo of SP also clarified that the TWG works on its own expertise to assist the BAC secretariat regarding bid requirements. He furthered that Section 13.2 concerning mandate


Page 5

and functions of the TWG is on the technical side of the bid documents while the BAC secretariat is on the procedural side to complement the function of the TWG.

When the chair queried if what would this “administrative support” mean, Mr.

Villagonzalo responded it is more on the bidding process as to documentation, and the like. Ms. Romera added by giving clear description of the role of the BAC Secretariat which is so vital to be stipulated in the proposed draft.

In Section 13.2.2a, the words, “local chief executive” shall be changed to “city

mayor”. In Section 13.2.2b, the words, “local chief executive” shall be changed to “PPP Board”. Mr. Villagonzalo clarified that more of the role of the TWG is provided, but the relationship between the BAC Secretariat is not shown. However, he said more of the work of the technical working group that is connected with that of the BAC secretariat can be found in Section 13.2.3.

As the chair went on reading the provision as stipulated in 13.2.4c, he deemed it proper

that the “Approving Body” should be the PPP Board. The former realizing that the PPP Center has always the role, Mr. Villagonzalo on the other hand manifested that it’s in the national IRR that all PPP-related local or national projects, the PPP Center shall always be informed.

After the chair read Section 13.2.4d-Cooperation Phase, Mr. Villagonzalo when queried

where to place the former’s concern as regards to the PPP-SC, the latter proposed that in both letters a and b of 13.2.3 Competition Phase, there shall be inserted a phrase, “in coordination with the Bids and Awards Committee of the city government …..” after the words, “Assist the PPC-SC”. Thus, 13.2.3 Competition Phase, letter “a” shall be read as, “Assist the PPP-SC, in coordination with the Bids and Awards Committee of the city government, in preparing tender documents including pre-qualification and bidding documents and draft contract.” Letter “b” of which shall be read as, “Assist the PPP-SC, in coordination with the Bids and Awards Committee of the city government, in the conduct of pre-qualification, bidding, evaluation of bids and recommendation for award.”

After which, Section 18 had an amendment wherein there shall be added another

paragraph after no. 5 to read as, “The city mayor, and only for the purpose of expediting the procurement process on PPP projects, shall provide the BAC secretariat with two competent personnel, ” subject to refinement.

Mr. Villagonzalo promised to give the chair a copy of the ordinance with all the

amendments incorporated before the start of the public consultation tomorrow wherein they will be having the graphical presentation for Sections 20 and 21. There is no need for some additional provisions, but they can add the graphical presentation as an annex as part of the Code. Since they were not able to make an outline, they just adopted the flow chart that will be revised today so that the local version of it will be submitted to the committee tomorrow in accordance with the Code. He viewed that the presentation tomorrow will start with the project identification and preparation. It would be the role of the PPP Board to adopt and plan what projects are to be submitted to the City Development Council.

As Mr. Villagonzalo continued the presentation, he explained that after the PPP Board

has identified the project and has found the development of the project that it will not reach P50 million then the PPP Board submits the project to the City Development Council as shown in Box no. 2 of the flow chart captioned, Evaluation and Approval of Proposal. If the project exceeds P50 million, the same will be submitted to the Regional Development Council (RDC), but if it exceeds P200 million, the Board will submit the project to the NEDA. In the event the CDC and RDC approve the project, it’s now the discretion of the Sanggunian or the NEDA to proceed with the final approval and review of the contract by the City Legal Office which is shown in the 3rd box.


Page 6

The 4th box captioned, Advertisement to Pre-qualify and to Bid was explained that this should be expanded. It must be more detailed in the flow chart because he said it will fall in this box the project technical group, selection committee with the BAC secretariat.

In the public consultation to be conducted, Mr. Villagonzalo suggested to the committee

to only give the general updates instead of presenting the entire Code because he was apprehensive that the private sector might give its inputs when the government is not yet finished discussing the same.

However, the chair clarified that the purpose of the public consultation is to allay the

fears of the public sectors. They should be informed that there is a national law giving the local government unit an option on how to run projects in the city. One of which is the public and private partnership but not obligatory.

To update all unfinished projects of the city, the chair scheduled a consultative meeting

on Thursday, April 3, 2014 at 2:00 o’clock in the afternoon together with the Committees on Laws, Finance, Trade and Industry inviting also a representative from the City Planning and Development Office, the City Administrator, and Contractor of Landfill. Thereafter, the chair declared a recess at 5:30 in the afternoon.

RECESS- 5:30 P.M.

Prepared by:

LORELIE B. CALUBAD INOCENCIA J. TUMBAGA Stenographic Reporter III Stenographic Reporter III

JOYCE A. CORUÑA DINA B. MURING Stenographic Reporter IV Stenographic Reporter III

Edited by: Edited by:

SERAPION L. BUENO, JR. CARMELITA A. GENOTA Board Secretary II Stenographic Reporter III

Noted by:

LOLITA P. PEDRO Board Secretary IV

Attested:

ATTY. RAMON R. MELLIZA BRIX T. TAN City Councilor/Chairperson City Councilor/Chairperson

Committee on Laws Committee on Trade

MINUTES JOINT CONSULTATIVE HEARING COMMITTEE ON LAWS, RULES & REVIEW OF BRGY. ORDINANCES & EXE. ORDERS & COMMITTEE ON TRADE, COMMERCE & INDUSTRY DATED APRIL 01, 2014 Page 1 of 5

MINUTES OF THE JOINT CONSULTATIVE HEARING OF THE COMMITTEE ON LAWS, RULES AND REVIEW OF BRGY. ORDINANCES & EXECUTIVE ORDERS AND COMMITTEE ON TRADE, COMMERCE & INDUSTRY OF THE 17TH SANGGUNIAN PANLUNGSOD.

April 01, 2014 2:35 P.M. - 4:56 P.M.

Sangguniang Panlungsod Session Hall City Hall Drive, City Of General Santos

COUNCILORS PRESENT: Hon. Ramon R. Melliza and Hon. Brix T. Tan. GUEST/RESOURCE PERSONS: (Please see attached attendance sheet)

The joint consultative hearing was called to order by Councilor Ramon R. Melliza, purposely to discuss “An Ordinance Adopting the Code of Public-Private Partnership (PPP) Approach in the Financing, Construction, Operation and Maintenance of Local Government Infrastructure or Development Projects, Creating the General Santos City Public-Private Partnership Board (GSCPPPB), Providing Appropriations and Incentives There for, and for Other Purposes”. This is in compliance to the requirements of conducting a public consultation with the different sectors to firm up the provisions of the local PPP ordinance.

Ms. Merriam Buguis, head of the CEMCDO gave an overview of what is Public-Private

Partnership all about. Accordingly, the PPP Code aims to provide the basic guidelines on how the local government unit engaged with private sector. She clarified that it is not privatization but a public-private partnership. There is already a national law of PPP which has to be translated into local requirements on how to actually do it in the local government units specifically in General Santos City. The PPP Code is under review and drafted by the Committee on Trade and Laws in consultation with CEMCDO, City Legal Office and PPP Center. The bottom line is to define functions and processes on how will the local government engaged with private sector in so many interests including infrastructure support to be in placed in the city to strengthen the move towards becoming the transport hub, the trade center, entry and exit point of cargo and people. She affirmed we need to strengthen those directions for the city government is to engage with private sector considering that the City’s capability especially in terms of providing capital for infrastructural investments being a local government unit is not as great as other prime cities in the country. But if there is more capital in the private sector, a lot of infrastructural supports are actually revenue-generating; hence, the same can be negotiated under the PPP modality. After a study if the proposed project is viable then the city government can operate under PPP. Now, they have to describe how to make all things very clear and to provide order of whatever arrangements the local government will be doing in the future. The PPP is not privatization and it has so many modalities to be explained in the presentation by the Committee on Trade. She encouraged everybody to listen and scrutinize it after which add some inputs to make it more appropriate to the requirements of the city.

At this point, Mr. Ronan Villagonzalo (a Councilor Assistant for the Committee on Trade) informed that there were already four (4) committee hearings conducted on the ongoing review of the draft PPP Code. The public consultation is to give the general overview to the private sector of what is happening. In a video presentation, a general overview was provided of what is PPP all about. The two key words in the presentation are; it is not privatization and stable government or policy environment. Subsequently, a PowerPoint presentation followed highlighting the major difference of privatization and PPP modalities and what was presented is a combined article prepared by a lawyer at PPP Center and a writer for an investment agency in Unites States.




Occasionally, Councilor Melliza would seek clarification on the rumors that the public market, the businessmen and vendors thereat will be removed.

Ms. Buguis clarified that the public market was not proposed in privatization but in PPP it would

mean that the ownership would still be under the LGU even if the building will undergo rehabilitation. In the PPP the city government does not intend to dislocate businesses which would result in unemployment. This was the first concern and it is one of the requirements in the terms and conditions once it will pass the bidding.

Responding to the apprehension made by a stallholder from the public market that the PPP

might open the floodgates for the uncontrolled increase of the public market lease or rental rates, Ms. Buguis explained that the PPP is a contract between the city and private sector whenever it is opted as a mode of financing a project, a MOA shall be made thereto and the terms and conditions being agreed will be specified in the contract. The risks on regulations are handled by the LGU such as the fear on dislocations, unemployment and the rental rates or lease if increased will be placed in the terms and conditions before the bidding. The Chair reiterated that the objective of the committee is to get the concerns of private sector while the CEMCDO is on technical aspect.

In answer to the query of Councilor Tan about the rental rate of a space in public market, Mr.

Buguis said it will be placed in the contract. The big investment usually comes from the private partners like rehabilitation of the building. The difference between privatization and PPP is that in privatization the government is paid for selling the asset while in PPP the government pay the private sector or the capital is returned to the private sector with a reasonable returns on investment then the management is turnover to the government at the period specified in the contract except when the agreement is Build, Operate and Owned (BOO) modality or when it is a joint venture where the partnership that depends on the life of corporation created for example 50 years then both parties will discuss after 50 years. The example of PPP is in Mandaluyong where the first floor of its public market is managed by the city government while the second and third floor is under PPP.

Councilor Tan asked if the sanitary landfill can be included in the PPP, Ms. Buguis stated that it

practically depends on how viable is the project in terms of its revenue-generating potential. Under the PPP modalities, the city government has to look at what projects can be offered to the private sector. The number one concern in relation to the government is recycling component which she discussed with the City Mayor wherein the waste energy is to be converted into power whereby the same could be revenue generating. However, waste to energy ratio that has to be studied what is the volume of waste needed to generate megawatts of power needed by the City or its neighboring LGUs.

Councilor Melliza observed that in barangay the garbage are segregated but when the collectors

come they just throw it up the truck, the garbage are already mixed. Further, Ms. Buguis elucidated that in the draft of PPP code they are actually trying to establish

on how to make it local to Gensan. There is no specific agency in the government to make the potential PPP projects like what can be done to sanitary landfill. In the PPP code, a government agency can be established that will look into the concerns on public market, terminal, sewerage, sanitary landfill and the like.

Mr. Mike Mariano, President of Maranao Cooperative at the public market asked if what would

happen to them once the public market will be rehabilitated or privatized. Ms. Buguis reiterated that the public market will not be privatized. The preparation of documents in public market for PPP has not yet started and in doing so the stallholders and vendors she said shall be consulted. Meantime, they have to discuss the local PPP guidelines so that their fears will be addressed. The PPP code will assure the protection of the small businessmen and the interest of the government whose top concern is the community. The PPP is a strategy and an approach adopted by the national government purposely to partner with private sector that has enough capital to finance big infrastructure but the top priority of the government is to ensure the safety and welfare of the community through the terms and conditions which shall be reflected in MOA.


Mr. Villagonzalo to clarify salient point stated by Ms. Buguis added some presentation to alleviate fears of those stallholders in the public market where its accountability fundamentally belongs to the government. One process inside the GSC PPP Code is the adoption of the National BOT law involving several stages which are: project identification and preparation, approval of the project, selection of investor/private partner, contract implementation.

As regard to the query of Councilor Melliza if identification of partner will undergo bidding, Ms.

Buguis explained that the bidding process for PPP is defined in the BOT law which has an IRR. It is not the usual bidding being undertaken under the procurement act. The project is not automatically approved to be included in the PPP it should pass PPP committee which is under the City Development Council and if it is less than P50 million, its final approval is in the SP, over P50 million up to P200 million, the approval shall pass through the Regional Development Council, and if it is more than P200 million the Investment Coordinating Council of the NEDA will approve it under the Office of the President.

At this point, Ms. Buguis gave an overview on how to come up the business study/plan being

conducted by the city government regarding the Dialysis Center as the city’s latest PPP project and its fundamental objectives. The term and conditions of the projects would be discussed considering the constituents of the city will benefit from it in return. Councilor Melliza asked if the PPP system would eradicate the selling of rights at the public market without consulting the city government, Ms. Buguis reply positively considering the new system will be introduced. The former appealed to help the city government so that public market will be managed orderly since the city is providing millions of annual subsidy to public market but not getting any profit at all. He further explained that PPP projects can be entered into private partnership contract but the ownership of a facility still belongs to the city. Mr. Wee said that PPP system is one of the priority projects of PNoy and it has been an issue so far because during the implementation few businessmen availed the program due to their financial capability. They will be affected as they wanted to participate and take part of the PPP program. Besides, he wanted to know the basis in terms of project whether local or national. Ms. Buguis clarified that local projects will be considered if it is within the mandate of the local government like the city roads or the public market owned by the city government regardless of the amount of investment required. The project is not based on the investment but it is based on mandates of the government offices. In addition, Ms. Buguis clarified that PPP Law is a national law but based on experience there are problems encountered by other local government. In order to avoid the same, the city wanted to have a local PPP Law based on the existing national law for its orderly implementation at the local level and consequently that will also be good for the business community, given the areas of investment whereby the private sector could diversify. Further, Mr. Wee expressed his apprehension on the unfair treatment during the bidding considering that some bidders have considerable influence or connections in the local government. Hence, safety nets should be provided in order that prevalent activities will not be a part of the system under the local PPP. Ms. Buguis explained that before a certain project will be included as an approved PPP, its pre-feasibility study will be checked whether the project is viable or not. If the project is not viable it will not be allowed under PPP. They have to ensure first that the project is viable. Usually in the pre-FS, there will be initial reviews or study on the possible risks that will be encountered in the project. The risk could be social, environment, related to peace and order which virtually affect the project viability itself. These are usually included in the contract and specifically defined who will handle or absorbed the identified risks. All the risks are really contained in the contract. Brother Mc Govern observed that local government is learning on how to work with the private sector in which the learning process is taking place by helping many NGOs with certain projects being left to the community. However, the private sector has different ‘modus-operandi’ compared to the government.


Councilor Melliza assured that safety nets will be spelled out in the MOA between the private partner and the city government wherein its primary mandate is to protect and promote the general welfare of the people. He also supported the statement of Brother Mc Govern that LGUs is learning how to handle matters in partnership with some NGOs. In return, the city government is very grateful to many NGOs that exerted efforts and shared precious time in serving the people especially in the field of social services. Discussions went on and Ms. Buguis instructed Mr. Ronan Villagonzalo to proceed with the presentation on the salient features of the local code in order to identify whether the ventilated concerns are properly addressed in the code. Thereafter, he presented the overview on the whole PPP process prepared by the PPP Center. Ms. Buguis clarified that what was discussed was based on the BOT Law and its Implementing Rules and Regulation (IRR) to which the former was amenable, however, the specifics as it applies to the local government is not yet in placed but Councilor Melliza clarified that these will be provided in the PPP Code. At this point, Mr. Ronan Villagonzalo presented another overview of the organizational structure based on the draft of the GSC PPP Code. One important feature about the General Santos PPP Code is the creation of the General Santos City PPP Board wherein the members is a mixture of public and private persons. The implied wisdom of that provision of the Code is to help the Local Chief Executive to effectively decide on priority projects to be considered for PPP modalities. Ms. Buguis advised to furnish a soft copy of the draft code through email so that inputs will be considered as it will really help if the draft code will be read ahead of time. Councilor Melliza reminded that the membership of the Chair of the Committee on Climate Change Adaptation and Mitigation in the GSC-PPP Board because of the approved ordinance mainstreaming the climate change concerns in the City. Regarding the concern raised by a participant that there is a need to add one (1) more representative for the private sector to be member in the GSC-PPP Board as its ratio will be at least one-third (1/3) of the total members of the said board to which Mr. Villagonzalo was amenable and assured to increase the representative from private sector. As to the observation of Mr. Ruba on the draft provisions, Councilor Melliza advised to do it in writing and submit it to the committee for consideration. Insofar as the concern of Mr. Raymond Salangsang on Section 21, paragraph 3, Councilor Melliza assured that the committee will consider and discuss the matter. In the case of parallel bidding or conflict of interests among the bidders, Councilor Melliza suggested that the provisions shall be provided to address such similar problems and avoid delays in the bidding process itself. Further, Councilor Melliza stated that people in the Selection Board should be fair, honest and impartial; otherwise the PPP modalities will not be as distinctive as it should be. In the PPP Code, the selection committee will be assisted by the PBAC and the SP will exercise its oversight function/check and balance like calling the agency concern for updates of the projects. Mr. Bernie Cortez from CENRO has apprehensions on the possibility of monopoly of an individual or corporation who has big capital becomes the lowest bidder and shall simultaneously be awarded many projects under PPP modalities. In fact it can be observed in the PBAC that big corporations have won many biddings. Hence, there should be safety measure in the PPP code to avoid the monopoly of PPP projects.

Ms. Buguis commented that it is collusion and is actually a violation of the law. That cannot be done in the PPP projects because experts in various fields of endeavor will sit in the bidding committee to help review on the technical side.

Bro. McGovern reacts on the comment to be very realistic when it comes to bidding of the

projects. In the stage of bidding, it talks paper works, costing, and other stuff. Indeed, the bidders can win a contract on paper works but the delivery of service is quite a different story. It is particularly true that it’s getting bias of just hiring local or GSC bidders and contract the project with someone who does not do good work very often. He added that to be honest in trying to come up with guidelines to direct


contracting, the quality of workmanship of local men are more often sub-standard that needs to be improved to attract investors. If we don’t improve, it has to be properly documented that nobody abides by the standards set for a particular project. Brother McGovern opined that he goes along with the idea of community support but he observed in actuality that local people more often do not measure up with the quality of service being expected.

Councilor Melliza and Ms. Buguis are of the same opinion that the pre-qualification is very strict

that includes the performance history. The latter then reiterated that those who attended and failed to come be provided copy of the draft of national PPP code and IRR if possible through e-mail and give them time to submit their comments in writing.

There being no matter to be discussed the consultative hearing was adjourned at 4:56 in the

afternoon.

ADJOURNED Prepared by:

DALISAY F. IGNACIO Stenographic Reporter III

LORELIE B. CALUBAD Stenographic Reporter III


SERAPION L. BUENO, JR. LOLITA P. PEDRO Board Secretary II Division Chief, Journal and Minutes

Attested:

ATTY. RAMON R. MELLIZA City Councilor & Chairperson Committee on Laws, Rules and Review of Brgy. Ordinances

& Executive Orders


Committee on Trade, Commerce & Industry

Minutes of the Joint Hearing of the Committee on Laws and Committee on Trade Page 1

MINUTES OF THE JOINT HEARING OF THE COMMITTEE ON LAWS, RULES, AND REVIEW OF BARANGAY ORDINANCES AND EXECUTIVE ORDERS AND COMMITTEE

ON TRADE, COMMERCE, AND INDUSTRY OF THE 17TH SANGGUNIAN

Tuesday, April 8, 2014 2:55 P.M. – 4:10 P.M.

Sangguniang Panlungsod Session Hall 2/F Legislative Building, City Hall Drive, City of General Santos

MEMBERS/COUNCILORS PRESENT: City Councilor Ramon R. Melliza, (Chairperson, Committee on Laws) and City Councilor Brix T. Tan, (Chairperson, Committee on Trade) GUESTS/RESOURCE PERSONS: Please see attached attendance sheet.

AGENDUM:

SPPO NO. 2014-0985: AN ORDINANCE ADOPTING THE CODE OF PUBLIC-PRIVATE PARTNERSHIP (PPP) APPROACH IN THE FINANCING, CONSTRUCTION, OPERATION AND MAINTENANCE OF LOCAL GOVERNMENT INFRASTRUCTURE OR DEVELOPMENT PROJECTS, CREATING THE GENERAL SANTOS CITY PUBLIC-PRIVATE PARTNERSHIP BOARD (GSCPPPB), PROVIDING APPROPRIATIONS AND INCENTIVES THEREFOR, AND FOR OTHER PURPOSES. (Hon. Brix T. Tan and Hon. Ramon R. Melliza-Authors)

Upon resumption, the chair recalled that last time there was a concern raised if there’s still a need for an IRR in the Code wherein Ms. Buguis said if there are provisions in the Code that have two different interpretations then an IRR is needed. But if the Code is really explicit and clear then no need to which City Councilor Tan confirmed that this was really her previous statement.

Thereafter, City Councilor Melliza made clear that any contract that may be signed by

the mayor must be anchored on the authority of the SP. With the concern also of City Councilor Bagonoc that if they are to wait yet the IRR, it may cause delay. So, the chair was of the opinion that they may not put provisions on IRR provided the Code must be made simple as possible that the terms used can be easily correlated with its different chapters. However, with the exchange of brilliant ideas, the chair later realized the significance of the IRR specifically on trivial matters.

Further deliberations ensued and after which, Mr. Villagonzalo recalled that Atty.

Taniegra had a suggestion to put an annex in the flow chart and in the organizational structure. There was already a draft made, and the same was presented last time. In fact, copies of a table/process flow were already distributed, but they are still polishing the same for the next presentation .

Regarding Section 20, Atty. Rochelle Mahinay-Sero, OIC City Director of DILG had to

see the connection if who is really going to identify possible projects for the Board to be able to consider in which Mr. Villagonzalo remarked that this is generic. The Development and Investment Program connotes a development plan, but it can also be made a specific PPP. Actually, he said the process in the general rule is connected with Section 10.a as to functions of the Board which states, “To request the City Planning and Development Office (CPDO), the City Development Council (CDC), and other appropriate and concerned offices of the City Government to develop as pipeline of PPP infrastructure projects for prioritization by the PPP




Board.” With the foregoing, Atty. Sero after giving some explanations approached Mr. Villagonzalo to clarify her suggestion for consideration.

As to the inquiry of the chair, Mr. Villagonzalo clarified that Section 31, Formulation of

the Implementing Rules and Regulations was not removed in the ordinance. But even without the IRR, the law is still effective.

Regarding Section 35. Effectivity, it was amended and shall be instead read as, “This

Ordinance shall take effect fifteen (15) days from publication in one (1) local newspaper circulating within General Santos City.” Mr. Villagonzalo thereupon informed that all revisions of the ordinance were already incorporated. City Councilor Melliza then advised him to provide the members of the City Council in the plenary copies of the ordinance with the underlined complete amendments for their easy identification.

Ms. Buguis at this point believed that they need the IRR to which Mr. Villagonzalo

assured to consider the same as it was already suggested during the previous hearing. The former also observed that Section 18 would create a lot of confusion especially on the statement that the existing city government BAC secretariat shall assist and guide the PPP-SC by providing administrative support, by safekeeping and filing of all records, etc. She believed that these are works that could be actually done by the Coordinating Center. This would just complicate the works of the existing BAC Secretariat as it supports the regular Bids and Awards Committee of the city in its regular procurement. The procurement that will happen in the PPP is not the same as that of the regular procurement like buying computers, cars, and others. The work basically is purely clerical. Thereafter, she suggested to delete Section 18 thereby transferring Nos. 2,3, and 4 to Section 14. GSC PPP Coordinating Center (PPP-SC).

However, Mr. Villagonzalo after some discussions requested to retain the aforesaid

section but be reworded to give an emphasis that the GSC PPP Coordinating Center shall serve as the secretariat of the Selection Committee in which Ms. Buguis was amenable.

As to the concern of Ms. Magante regarding an NGO applicant that had been

engaged in the city in the past years, the chair had to ascertain if such process will follow the Executive Order or the PPP Code. Ms. Meriam Buguis explained that the relationship is considered public-private partnership since it speaks of a government plus an NGO which is private. The big difference is on the resources. In this Code, the city is getting resource from the private sector as it will have a revenue generating center because the investment should be recovered. In the other kind of relationship such as the festival which the city is creating, it’s the city that provides the resource. It only allows the NGO to manage it without any revenue center. Actually, it’s only buying services. Everything has to pass through the usual/normal procurement procedure of the city government.

With the foregoing, the chair believed that it would be impossible if the PPP will not

work out well as there are already two parties involved on this especially that the city itself sees to it that its interest will not be hampered. Anyway, he said everything will be spelled out in the Implementing Rules and Regulations.

Thereafter, Atty. Sero said under principle and policy, they should also look into the

possibility that the PPP could also be a tool for the plan implementation for the delivery of all basic services like garbage collection, tourism, and all aspects of local governance. It should not only be limited to economic and revenue generation since this can be included in Section 3. The amendment in Section 3.3 was to insert the words, “other relevant” before the words, “services to the public” to which the chair ruled the same approved.

There being no more further discussion, the chair ruled to set another hearing on April 23, 2014 at 2:00 p.m. to finalize the PPP Code. The chair then declared the hearing on recess at 4:10 p.m.


HEARING – ON RECESS

Prepared by: LORELIE B. CALUBAD JOYCE A. CORUÑA Stenographic Reporter III Stenographic Reporter IV Edited by: Noted by: CARMELITA A. GENOTA LOLITA P. PEDRO Stenographic Reporter III Board Secretary IV Attested : ATTY. RAMON R. MELLIZA BRIX T. TAN City Councilor/Chairperson City Councilor/Chairperson Committee on Laws, Rules, and Committee on Trade,

Review of Barangay Ordinances Commerce & Industry and Executive Orders

Minutes Joint Committee Hearing dated April 23, 2014 Page 1 of 5

MINUTES OF THE JOINT COMMITTEE HEARING OF THE COMMITTEES ON LAWS, RULES, AND REVIEW OF BARANGAY ORDINANCES, AND EXECUTIVE ORDERS AND COMMITTEE ON TRADE, COMMERCE AND INDUSTRY OF THE 17TH SANGGUNIANG PANLUNGSOD OF THE CITY OF GENERAL SANTOS.

April 23, 2014 2:40 P.M.4:59 P.M.

Session Hall, 2nd Floor, Legislative Building, corner Roxas Street and City Hall Drive, General Santos City

MEMBERS/COUNCILORS PRESENT: HON. RAMON R. MELLIZA, (CHAIR), HON. BRIX T. TAN (CHAIR) HON. DOMINADOR S. LAGARE, HON. FRANKLIN M. GACAL (MEMBERS) GUESTS/RESOURCE PERSONS: (PLEASE SEE THE ATTACHED ATTENDANCE SHEET)

The joint hearing of the aforementioned committees was called to order by its chairperson, City Councilor Brix T. Tan to discuss SPPO NO. 2014-0985.-AN ORDINANCE ADOPTING THE CODE OF PUBLIC-PRIVATE PARTNERSHIP (PPP) OPERATION AND MAINTENANCE OF LOCAL GOVERNMENT INFRASTRUCTURE OR DEVELOPMENT PROJECTS, CREATING THE GENERAL SANTOS CITY PUBLIC PRIVATE PARTNERSHIP BOARD (GSCPPB) PROVIDING APPROPRIATIONS AND INCENTIVES THEREFOR, AND OTHER PURPOSES. (Hon. Brix T. Tan & Hon. Ramon R. Melliza-Authors) At the outset, the chair acknowledged everybody’s presence. Thereafter, City Councilor Brix Tan relinquished the chair to City Councilor Melliza. Councilor Melliza, now acting as the chair, stated that there is an improved version of the PPP Code but he was informed this afternoon that there was a proposal coming from the PPP Coordinating Center. The chair stated that there are still hearsays especially in the public market that this PPP Code will really dislocate them as stall holders despite the fact that Ms. Meriam Buguis has very well explained and elucidated such issues during the previous hearings. The chair emphasized that this proposed ordinance doesn’t intend to privatize the public market, terminal, hospital, etc. However, the proposed measure will serve only as a guide insofar as the conduct of our local government in addressing the budgetary constraints in to effectively implement various projects. Practically, there are bigger projects which the city could not afford to finance unless the same shall borrow from the private sector or other financing institutions. He stated that some of the cities now were developed because there were capitalists who readily extended help in their respective cities. The Chair further explained that it is possible that sooner or later if they will see that the Public Private Partnership will be beneficial for the public market then this can be applied as well. Nonetheless, he said if ever there are oppositions regarding the proposal that perhaps the public market shall be managed under the Public Private Partnership (PPP) modality. If the same will be considered later, then the council will listen to their sentiments and Councilor Gacal urged the participants must have to weigh if such issues ventilated are reasonable. At this juncture, City Councilor Gacal concurred to the statement of the chair. He disclosed that the Public Market of the City of General Santos is losing and that every year the city is subsidizing the GSC Public Market. He stated that the Public Market being an economic enterprise is supposed to generate income while the stall owners derive profit therefrom. He went on elaborating that there are stall owners who have twenty (20) stalls and they are the ones earning much more. Councilor Gacal said that it is possible that the PPP modality may be opted to supplant the current management set up in the GSC public market to make it more viable. Such that, he advised to the attendees to be vigilant and critically examine together with




the City Officials the provisions of the proposed GSC PPP Code so that when time comes that the PPP can be applied to Public Market, terminal, slaughterhouse and food terminal nobody will be blamed. He cited the Mandaluyong Public Market as an example under the PPP modality and both the City of Mandaluyong and the stall owners are generating substantial income. Ms. Raquel Rola of the Public Market retorted the claim that the GSC Public Market is really losing and asked for a copy of a financial statement to substantiate such claim that indeed, the local government is subsidizing the same. On the other hand, Ms. Rola maintained that with the availability of such financial statements, the members of her respective association may be properly guided regarding their concerns relevant to the management of the public market. City Councilor Gacal stated that the public record is open always for the general public and he said to the participants to personally inform him in case they will not be given the information being sought which may be of public concern so that the good councilor could file a corresponding case to this effect. Atty. Enrico Go concurred to the statement of the chair that there was an apprehension to the proposed ordinance that it will be immediately implemented to the public market. He said that he will explain to the group that they are still on the process of creating the PPP Code and there is no project yet being identified by the board that the GSC public market is certainly to be rebuilt under the PPP modality. He suggested that they will study first the proposed measure before they could comment on the provisions that are not acceptable or tolerable that is the time for them to oppose, or otherwise propose alternatives. In contrast with the perception of Atty. Go, the chair emphasized that the proposed ordinance is not a privatization and elaborated that the PPP as an option to finance any viable project will involve partnership with the local government and private sector which has the financial and technical capability to implement the project. Ms. Buguis further explained that the PPP and the privatization are distinct from each other wherein in the privatization, the ownership of a certain public infrastructure and the land or any project under consideration is transferred to the private sector while under the PPP modality the city will not lose its ownership of the asset such as the land and after a reasonable period the ownership of a facility or infrastructure will be returned back to the local government. She said that the PPP is a means to generate resources to do the projects in order to give quality service to the community. She cited also an example of the toll gate projects under the PPP in Olongapo City to elucidate further the distinction of the PPP against the ones being privatized. City Councilor Lagare explained regarding the Public Private Partnership. Councilor Lagare premised his arguments on the apparent lack or inadequacy of the local government’s resources on the likelihood to opt for the PPP modality to finance big projects He said that the PPP Code, being a fundamental basis on how to implement under the PPP schemes will not only protect the constituents of General Santos City but also for the local government to be guided on how to appropriately maintain and build mutual partnership with the private sectors. Hadji Muztafah Sindab of the Maranao Community asserted that how come the public market is losing when they are paying. It is high time now that the LGU should have a second look as to how the public market is being run by its managers if it is really losing because despite of the economic crisis facing the businessmen there was actually an increase in rental of stalls On the other hand, he concurred with the observations of City Councilor Gacal that indeed, there are several men who owned several stalls. Further, he said that they are not against some sort of expansion or modernization, and the PPP itself. But he suggested to clean first the public market, institute appropriate reforms and evaluate on how it is being managed consequently and to focus on this to come up with the real situation. City Councilor Gacal reiterated that they are not saying that the public market will be certainly redesigned under the PPP scheme but what they are doing right now is creating a law which will govern matters involving PPP modality. He stressed that the principle and policy of the government is not to wipe out their livelihood but rather to improve the quality of services being rendered to the general public. He emphasized that if the PPP will be applied to the public market then that’s the time to discuss the concerns relating to it.


The chair assured the body that after this hearing there will have a discussion with the CEMCDO and other local government agencies including the City Treasurer’s Office with that information brought out by Hadji Sindab. When given the floor, Ms. Rhesababes Sumalpong of City Treasurer’s Office concurred with the earlier statement of Councilor Gacal that the City’s economic enterprise and in particular the public market is actually losing and is being subsidized around P 1 to 2 million annually. Ms. Fely Into of the Producer’s Group commented that she is optimistic to the implementation of the PPP because of the change in management. Dr. Salarda of Mindanao State University stated that there are two aspects that he could derive in the PPP modality. First, it is an implication that the government failed in their management. Second, the government wants to improve their management practices. This PPP as an approach to financing government projects have a lot of benchmark already and this PPP will really accelerate our economic progress and the enhance standardization of public services in the city. At this point, Ms. Buguis stated that they could not possibly resolve all the concerns raised which is more on the operational component in the management of the GSC public market and this is not the right forum to discuss about it but she is suggesting to the City Administrator’s Office or maybe a committee of the Sanggunian may organize a forum to discuss their problems exclusively. The chair manifested and reassured the participants that all inputs will be considered during the finalization of the draft before the committee will decide whether to approve the proposed measure in the committee level or not at all, and all the relevant issues raised will be considered by all the members of the committee. He also manifested that they have exhaustively tackled various issues and what is lacking in the proposed PPP ordinance is to fine tune what has been contributed. Hence, chair stated that they are now ready to huddle in a committee members to discuss among themselves and then after that they will come up with a final draft. However, Honorable Gacal suggested that they will give a public market associations or groups at least one week to submit to the committee their proposal to further enhance the PPP code particularly the provisions which may be affecting them. He advocated that they have to carefully study the proposed ordinance in order that they could properly protect the interests of the stall owners. With the statement of City Councilor Gacal, Atty. Go expressed his thanks for the opportunity. He said that he will take that matter to the board of directors and if there is any proposal they will submit within the week. Mr. Sindab manifested that Maranaos are partners of the city government in development in fact, comparing Phase A and B building of public market today which is more improved than in the previous years, wherein the stalls are made of wood only. Should the public market would be redesigned under PPP modality, they are proposing that whatever their expenses on the stall improvement or renovations they have incurred, it should be reimbursed in the form of deductions on their monthly stall rentals, even just 50% of the total cost on improvements. Commenting on the abovementioned manifestation, Hon. Tan stated that PPP Code is only a guideline for every project. Should the public market be under PPP project, there is a contract and said contract would be laid down to everybody’s concerned so as to include the consideration of sentiments of the tenants/leaseholders. Ms. Buguis added that PPP Code Ordinance is applicable to all project of the city government that uses PPP as a strategy and not only for public market alone. She then commented on Mr. Sindab’s manifestation that if ever the public market would be under PPP, it does not mean privatization of the public market. Accordingly, should the public market be under PPP, the manifestation of Hadji Sindab could be specifically stipulated in one of the


provision of the contract but not in this proposed ordinance inasmuch as this ordinance will be applied for all projects of the city that will be under PPP strategy. At this juncture, Hon. Gacal suggested to add to the last word of every membership of the board, the phrase or its permanent duly authorized representative so that the apprehension on mustering quorum be solved, to which, the body agreed. Hon. Melliza then moved that the Committee on Laws, Rules be deleted in the membership of the board. Further, by motion of Hon. Lagare, duly seconded by Hon. Tan, the Committee on Climate Change Adaptation was ruled transferred to Section 13, PPP Project Technical Working Group as mandatory member of the TWG.

The composition of the board now would be, eleven (11) members from the government but one member which is the DILG would seat as sort of a consultant and counted as non-voting member making it ten (10) and five (5) members from the private sector, making the whole voting member of the board into 15 all in all.

Section 9.14, the five representatives from the private sector was made general and it will be the prerogative of the City Mayor to appoint them, however, in one of the meetings the academe was suggested to be included among the five (5) however it was not expressly stipulated in the code. Ms. Buguis manifested that academe is part of the service delivery group, to which Hon. Melliza stated that academe is of big help in the planning stage of the project.

On section 10.10, the setting of tariff and subsidy was part of the function of the board, however, it was considered unnecessary considering that tariff monitoring and setting can be written down on the contract, to which, Hon. Gacal suggested to reinstate it back as one of the function of the board inasmuch as the removal of the said power as an amendment could be interpreted as a fact that this power is now lodged in another body or another person, to avoid as subsequently manifested, it became definitive that the said power is lodged in board. By Hon. Gacal motion to re-include Section 10.10, seconded by Hon. Lagare, the same was ruled approved by the chair. It was moved by Hon. Lagare that the Committee on Climate Change adaptation be deleted as a member of the board as said concern of the committee already answered by such other local agencies like the City Planning and Development Office (CPDO) and CENRO, being concurrent members of the proposed GSC-PPP Board.

Going back to the original list of TWG members, Ms. Meriam Buguis said that letter b is the Sangguniang Panlungsod which is silent as to what committee is being represented because the representation of the SP is also on a per project basis. Mr. Ronan Villagonzalo added that any of the chairperson’s committee staff can be designated to monitor/sit in the TWG and not necessarily the chairperson himself for that purpose. The chair then ruled the same deleted under the presumption that the City Planning Office and CENRO will always consider the concern of climate change mitigation and adaptation in the TWG.

Mr. Villagonzalo enumerated the amendments introduced in the previous hearings regarding the mandate and functions of the TWG. Further, it was added therein in the development phase the phrase “and/or facilitates such through engagement with outsourced consultants”. This provision was included in anticipation of the possibility that LGU technical personnel may not have sufficient expertise to evaluate the PPP project. Hence, it can be an option to hire or outsource consultants to study the PPP project. The Local Chief Executive (LCE) was changed to “City Mayor”; letter b under 13.2.2 LCE was also changed to PPP Board. Some of the functions of the TWG had been transferred to the PPP Coordinating Center. Section 14 – there is a creation of PPP Coordinating Center which will be a hub of all sub-organizations that will handle the works of PPP where they will be the PPP Board Secretariat and PPP Selection Committee. The name of CEMCDO was also changed into a generic term “the Investment Center” which is in consideration with the undergoing revision of the Investment Code.


The next group that is organized to function under the PPP Code is the PPP Selection Committee which is some sort of a specialized Bids and Awards Committee that will handle only PPP projects where he cited RA 9184 to that effect. Under Section 16 – the composition of the Selection Committee was made generic and the only specific members are under letter b, City Legal Officer, c. City Engineer and d. Local Economic and Investment Promotion Officer of the city. The other members are just described like in letter e – (1) Technical Officer knowledgeable with technical aspects or requirements of the project and one technical officer knowledgeable with aspects or requirements of the project in a project to project basis. One comment regarding letter F, a public officer knowledgeable in finance to be appointed by the “City Mayor”. Section 18 was deleted but it was reworded to emphasize that Coordinating Center will serve as the secretariat of the Selection Committee.

On provisions under General Rules and Guidelines most of it were retained and there was a suggestion to reword the same “to favor contractors that are based in General Santos City instead of a Filipino comparing it to a foreigner. However, the chair disclosed that said proposal was contradicted by Bro. McGovern as this might shun away other interested parties to come in.

Ms. Meriam Buguis said since they are trying to review again the PPP code draft there are provisions which are no longer necessary where most of it will require confirmation of PPP Center inasmuch as the LGU as stated in the Local Government Code has its own corporate power to engage or to enter into agreement. Hence, they have to revise the portion of the code especially when it comes to the approval system of the projects. She proposed to integrate their comments just like the public market and the same will be submitted on Friday.

Thereafter, the chair reminded that they have to await the public market proposal and CEMCDO within a week to be submitted to the staff of Councilor Brix Tan which the same be distributed to the committee concerned before the next hearing on May 7 at 2:00 P.M. The chair then ruled the hearing on recess.

RECESS: 4:59 P.M.

Prepared by: JERLYN L. MALUPA LOIDA D. ASAN JOYCE A. CORUÑA Stenographic Reporter III Stenographic Reporter III Stenographic Reporter IV Edited by: Noted by: SERAPION L. BUENO, JR. LOLITA P. PEDRO Board Secretary II Board Secretary IV Attested: BRIX T. TAN ATTY. RAMON R. MELLIZA

Chairperson, Committee on Trade, Chairperson, Committee on Laws, Rules & Commerce & Industry Review of Barangay Ordinances & Executive

Orders

Minutes Joint Committee Hearing Committee on Trade, Commerce & Industry and Committee on Laws, Rules, and Review of Brgy. Ordinances & Exe. Orders dated May 15, 2014 Page 1 of 8

Office of the Sangguniang Panlungsod

General Santos City

MINUTES OF THE JOINT COMMITTEE HEARING OF THE COMMITTEE ON TRADE, COMMERCE AND INDUSTRY AND THE COMMITTEE ON LAWS, RULES AND REVIEW OF BARANGAY ORDINANCE AND EXECUTIVE ORDERS OF THE 17TH SANGGUNIANG PANLUNGSOD OF THE CITY OF GENERAL SANTOS.

May 15, 2014, Thursday 3:45 pm to 5:49 pm

Session Hall, 2/F Legislative Building General Santos City

COUNCILORS PRESENT: COUNCILOR BRIX T. TAN (Chairperson, Committee on Trade Commerce & Industry; COUNCILOR RAMON R. MELLIZA (Chairperson, Committee on Laws, Rules, & Review of Brgy. Ordinances & Exe. Orders); COUNCILOR ROSALITA T. NUÑEZ, MNSA, PH.D; and (COUNCILOR ELIZABETH B. BAGONOC (Member, Committee on Trade Commerce & Industry)

PARTICIPANTS/ATTENDEES (PLEASE SEE ATTACHED ATTENDANCE SHEET).

The hearing was formally opened by Honorable Brix Tan. Thereafter, the Chair requested the

staff to read the names of the participants for proper recognition and documentation. The agendum to

be discussed pertains to proposed GSC PPP Code with the SPPO NO. 2014-0985 or otherwise

known as “AN ORDINANCE ADOPTING THE CODE OF PUBLIC-PRIVATE PARTNERSHIP

(PPP) APPROACH IN THE FINANCING, CONSTRUCTION, OPERATION, AND MAINTENANCE

OF LOCAL GOVERNMENT INFRASTRUCTURE OR DEVELOPMENT PROJECTS, CREATING THE

GENERAL SANTOS CITY PUBLIC-PRIVATE PARTNERSHIP BOARD (GSCPPPB), PROVIDING

APPROPRIATIONS AND INCENTIVES THEREFOR, AND FOR OTHER PURPOSES.”

Before the discussion continued, the Chair manifested that during the previous hearing Atty.

Go, the legal counsel representing the Public Market Sector and Ms. Buguis of CEMCDO were present.

Although they were not around today but the staff of Atty. Go had informed the committee that they

have no more additional inputs to be added for the PPP Code while the CEMCDO was well-represented

by its staff to elucidate further their proposed amendments to the GSC PPP Code.

It was further manifested by Mr. Villagonzalo, the assistant of Councilor Tan that during the

previous hearing it was suggested that there will be two sectors that will give inputs on the proposed

PPP Code, the private sector represented by Atty. Go and the local government represented by

CEMCDO. Meanwhile, he concurred to the statement of the Chair that the Public Market Sector as

represented by Atty. Go have no more additional inputs in the proposed GSC-PPP Code. However, the

CEMCDO has some additional inputs to the provisions as displayed on the screen being highlighted with

yellow color. Further, he informed that there were some portions of the Code which was suggested to

be deleted by the CEMCDO to firm up the proposed measure.

As he continued with the power point presentation, Mr. Villagonzalo read the additional inputs

as proposed by the CEMCDO in the WHEREAS clause which accordingly may strengthen the rationale in

passing the proposed ordinance. The additional provisions proposed by the CEMCDO are as follows:

“WHEREAS, the Department of Interior and Local Government (DILG) Legal Opinion

No. 8, S. 2014 declared that “there is no specific statute on PPP nor guidelines on joint

ventures for local governments” and that a “duly enacted local legislation (PPP Code) must

be complied with in undertaking (its) PPP projects.”


Further, some additional portions read under in Section 2. Declaration of Policy.

2.6. It also states, under Section 18 of the of Republic Act No. 7160 of the Local

Government Code of 1991 (1991 LGC), the City may to acquire, develop, lease,

encumber, alienate, or otherwise dispose of real or personal property held by them in

their proprietary capacity and to apply their resources and assets for productive,

developmental, or welfare purposes.

Section 3. Principles

This related to the manifestation of Atty. Sero to ensure the public considerations particularly

the non-financial components of the PPP modalities considering the fact that the LGU is primarily a

public service provider of the City.

3.5 PPP Projects must provide economic and social benefits and should be evaluated on this basis rather than on purely financial considerations. The City remains responsible for services provided to the public, without necessarily being responsible for corresponding investment.

3.6 PPP Projects must give consideration for empowerment of Filipino citizens as a strategy for economic growth and sustainability and must thus provide for the participation of local investors to the furthest extent practicable given the nature of the project. The City shall also ensure the hiring and employment of local labor in the PPP venture.

Section 5. Scope of Application.

It was specified herein that, for BOT variants, the provisions of R.A. No. 6957 as amended

by R.A. No.7718 and its Implementing Rules and Regulations (IRRs) shall be observed in undertaking

PPP projects under the contractual arrangements covered by such Act. The provisions of R.A. No. 7718

and the Revised National Economic Development Authority (NEDA) Guidelines on JVAs shall also apply

suppletorily to projects undertaken through Joint Venture Agreements (JVA), Management Contracts

(MC), or Lease/Affermage Contracts and other PPP contractual arrangements as may be deemed

applicable unless otherwise provided in this Code.

Additional term added and defined:

7.11 PPP Sub-Committee-Refers to the Sub-Committee under the City Development Council created through DILG Memorandum Circular 2011-16.

This sub-committee actually exists under the City Development Council and under the

competitiveness committee, a mixture of both local and private representatives.

At this juncture, Councilor Tan acknowledged the arrival of Honorable Ramon Melliza. Having

been apprised about the additional inputs by the CEMCDO and updates as to the group of Atty. Go,

Councilor Tan relinquished the chair to Councilor Melliza as the good councilor will be attending

another hearing.

Honorable Melliza informed the body of the communication received from MEBA Group wherein

MEBA has reiterated their apprehensions that this PPP Code is favorable only to the rich people but

may displace them in the future. Further, it was also emphasized therein that since PPP partnership

had flopped from other countries, it is possible also that it may happen here in the public market of

Gen. Santos City. The chair manifested that he understood the concern of MEBA because of the

apprehension that their means of livelihood may be in peril despite the repeated explanation given by

Ms. Buguis elucidating that the PPP modalities is not a actually privatization as they presupposed.


The Chair, reminding the body with the inputs from the previous hearings, wherein Bro. Mc

Govern actually welcomed this proposed PPP ordinance because even now without this local PPP Code,

yet but the city government is already engaging in partnership with private entities like in the Mother

and Child Clinic and Business Resource Center of Notre Dame of Dadiangas University (NDDU). In fact,

the city has even increased its financial aids to these institutions. Just in case the Private and Public

Partnership (PPP) modality will be opted for public market, the MEBA would be given an opportunity to

express their side in the Sangguniang Panlungsod. After further explanations about this Code,

Honorable Melliza said, aside from what he had mentioned earlier, that in the MEBA manifesto it was

also emphasized that at present the MEBA Group is against it in the strongest sense.

Ms. Acharon of CEMCDO added that aside from the MEBA having expressed their fears on the

proposed PPP Code, however, the gist of the communication also expressed 100 % support of MEBA if

the PPP Code is pro-development to which the Chair agreed. The presentation then continued on the

provisions that were amended.

7.13.8 Joint Venture Agreements (JVA). A contractual arrangement whereby the Project Proponent and the City Government contribute money/capital, services, assets (including equipment, land or intellectual property), or a combination of any or all of the foregoing or other legal consideration, and share risks to jointly undertake the financing, construction, rehabilitation, and/or operation, maintenance and management of a new and/or existing infrastructure or development facility. It involves a community or pooling of interests in the performance of the service, function, business or activity, with each party having a right to direct and govern the policy in connection therewith, and with a view to sharing both profits and losses, subject to agreement by the parties. A JV may be Contractual JV, or a Corporate JV.

i. JV Company. An entity registered with the Securities and

Exchange Commission (SEC) by the JV partners that shall

perform the primary functions and obligations of the JV as

stipulated under the JV agreement. The JV Company shall

possess the characteristics stipulated under this Code.

ii. Contractual JV. A legal binding arrangement under which the JV

partners shall perform the primary functions and obligations

under the JV Agreement without forming a JV Company.

7.16 Reasonable Rate of Return. Refers to the rate of return that a Project Proponent shall be entitled to, as determined by the City Government subject to review by the PPP Board, and that for projects under any BOT variants, final approval of: (a) the Sangguniang Panlungsod for PPP Projects costing up to Php 200 million, or (b) by the NEDA-ICC for PPP Projects costing above Php 200 million, by taking into account, among others, the prevailing cost of capital (equity and borrowings) in the domestic and international markets, risks being assumed by the Project Proponent and the extent of Government Undertaking extended for the project; Provided, that in the case of Negotiated Contracts, such rate of return shall be determined by the concerned body prior to negotiation and/or call for proposals; Provided, further, that for Negotiated Contracts for public utilities projects which are monopolies, the rate of return on rate base shall be determined by existing laws, which in no case shall exceed twelve percent (12%).

As per suggestion of the CEMCDO Head Ms. Buguis, in the new draft, the enhanced role of the

Board will be to actually perform the sequential procedures of contract management and not just to

oversee contract management as originally provided in Section 8.

Section 8. The General Santos City Public-Private Partnerships Board (GSCPPPB). The

GSCPPPB is hereby created to perform contract management, for all PPP arrangements

entered into by the City, and such other functions provided in this Code.


Mr. Villagonzalo further informed that the role of the Board as stated under Section 10.2 and

10.3, whereby the said role suggesting to the City Development Council projects to be implemented

under private and public partnership will be taken from the Board and will become the role of the PPP

sub-committee as the same is already a member of the City Development Council.

Honorable Melliza after knowing that the extent of the contract management is from negotiation

up to the singing of the contract, he was comforted of the fact that CEMCDO representing the city may

reconsider the concerns posed by the MEBA because it is really his concern that the interests and

welfare of the constituents in the city will be truly protected. With the foregoing, he postulated that it

may be possible that MEBA will be represented in the Board or in the TWG under a project framework

as touching the concerns on public market.

10.9 To perform contract management functions such as partnership management,

performance management (i.e., corporate governance, communication and information

sharing, and dispute resolution), performance or service delivery management (i.e., risk

management and performance management), and contract administration (i.e., variation

management, contract maintenance and financial administration) for all the PPP

arrangements entered into by the city;

Having discussed the provisions under consideration for revision, Mr. Villagonzalo also

presented some issues under Chapter V which deals more on the general rules and guidelines under

the PPP modalities.

CHAPTER V

GENERAL RULES AND GUIDELINES

Section 20.PPP Procedures. –The following procedures shall apply:

Additional inputs added under this chapter, the CEMCDO has separated the PPP modalities into

two groups as enumerated under section 20, a & b.

a. For BOT variants, the City must comply with the procedures set forth in Republic Act No. 6957 as amended by R.A. No 7718 and its Implementing Rules and Regulations

b) For Management Contracts, Joint Ventures, and Leases or Affermage, the procedures specified herein shall govern.

Under letter a, it has included the BOT variants wherein PPP modalities must conform to the

national law, RA 7718. But if there are PPP modalities not covered by the BOT arrangements as

enumerated in letter b, the local ordinance will apply to ease processes involved therein. As

manifested earlier concerning the deleted portions, such paragraphs highlighted with blue were

deleted because the same are already reflected in the national law.

Section 21. Prioritization and Approval of PPP Projects. PPP Sub-Committee shall include in

the Development and Investment Program of the City Government those priority projects that may be

financed, constructed, operated, and maintained by the private sector under the provisions of this

Code. It shall be the duty of the PPP-CC to give wide publicity to the List of Priority Projects

proposed for implementation/financing under this code, including publication of the following;

a. a national newspaper of general circulation once every six (6) months; b. where applicable, international newspaper of general circulation; and c. the website of the General Santos City Government, if available.

The list of priority projects proposed for implementation under any contractual


arrangement BOT Law shall be submitted prior to final approval for confirmation to:

Section 23.Public Bidding of PPP Projects.

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 detailed

procedures outlined in the Implementing Rules and Regulations of the BOT Law shall apply.

For JV Agreements, the preferred mode of implementation shall be through a JV company

to be formed by the City Government and the Project Proponent, under the following

parameters:

a. The JV Company shall be registered as a stock corporation in accordance with the provisions of the Corporation Code, as amended, and the prevailing and applicable rules and regulations promulgated by the SEC;

b. Ownership and nationality requirements under the Constitution and other pertinent laws should be complied with; provided, that the City Government Entity’s equity contribution in the JV Company shall only be less than fifty percent (50%) of the outstanding capital stock of the latter. City Government’s contribution may be through assets (including money, equipment, land, intellectual property or anything of value) which shall be subject to a 3rd party independent valuation. For as long as the City Government is involved in the JV undertaking, the Project Proponent shall not sell/transfer its interest in the JV Company without the express written consent of the City Government;

c. The City Government shall be represented in the Board of the JV Company in proportion to its investment;

d. The JV Company shall be permitted to derive income from the activities authorized under the JV Agreement thereof during the term thereof. The City Government and the project proponent shall be entitled to receive dividends and/or any other form of share from net profits earned by the JV Company in accordance with the JV Agreement. The determination of net profits shall be subject to a verification process for allowable operations and management expenses specified therein;

e. The JV Company is encouraged to stipulate a fixed period for the participation of the Government Entity. This period shall be determined by the attainment of the Government Entity’s objective in pursuing the investment, or when the project proponent is projected to be able to proceed with the JV activity without further need of government support. Further, the withdrawal of the City Government capital contribution before the expiration of the said period is likewise encouraged; provided, that the divestment is made through competitive selection, initial public offering (IPO), or any other means that promote competition, fairness and transparency. The foregoing factors shall be accorded greater importance than the financial impact or financial benefit of the proposed investment to the City Government.

f. In drafting the incorporation documents of the JV Company and other contracts governing the relationship between the City Government and the Project proponent, the parties should consider the following guidelines: (1) clearly defined business objectives; (2) specified degree of participation and the management roles of each party in the JV Activity; (3) defined contribution of capital and ownership rights to property; (4) specified division of the profits and losses; (5) identified dispute mechanism to avoid management impasses that may produce deadlock or litigation; (6) specified termination/liquidation of the JV Company and indicate buy-out provisions; (7) specified confidentiality terms; and (8) stipulated indemnification mechanisms.


g. If the formation of a JV Company is not the best mode to implement a JV Activity as determined by the Government Entity, it may opt to implement the JV project through a contractual agreement. Prior to entering into a Contractual JV, the parameters similar to those governing JV Companies under Section 6.2 (f) herein are to be observed. The Public Bidding and PPP Projects was referred to the national law or BOT Law when the

modality is under the BOT variants. But in case of other variants or modalities especially Joint Ventures, Mr. Villagonzalo manifested that these stipulations were taken from the NEDA revised guidelines on Joint Venture being applied in this ordinance since the NEDA revised guidelines does not automatically apply to local government. Therefore, there is a need to reflect the words from the NEDA guidelines in this proposed ordinance in order that the city will have its own law governing the local JV variants. He reiterated that added inputs highlighted with yellow color were based on NEDA JV guidelines.

As to mode of procurement, the CEMCDO representative Ms. Acharon clarified that for BOT

variants RA 7718 will be followed but for other modalities this Code will be followed in reference to the national guidelines.

Councilor Melliza and Councilor Nuñez were very much concern on this aspect since as observed

the present procurement process of the city is very slow. With this proposed PPP Code Mr. Lacap was apprehensive as to its implementation because per

experience in the recent project of the city which is the GSC Transport and Commercial Complex that has also passed NEDA test and the Office of the President was not actually materialized.

On Section 23, Mode of Procurement, Mr. Ronan Villagonzalo informed that all the provisions

highlighted in yellow color as presented are taken from several sections in the NEDA guidelines under the Joint Venture Agreements (JVA) variants respectively.

Section 23.Mode of Procurement.

1. Open Competition/Competitive Selection. The process for the conduct of bidding process for projects to be undertaken through Joint Ventures, Management Contracts, Lease and Affermage agreements shall be stipulated under Annex A of this Code. In the conduct of the Open Competition process, the City Government shall ensure the following:

i. All activities during the competitive selection, award, and final approval are conducted in a transparent and competitive process that promotes accountability and efficiency; and

ii. the competitive selection parameters are clearly defined and shall include the parameters as approved by the Head of the Government Entity.

2. Negotiated Contracts. Detailed guidelines for the conduct of direct negotiations shall be stipulated under Annex B of this code. Direct negotiations may be entered under the following circumstances:

As shown above, these provisions had been introduced by CEMDCO in two types of mode, one

is open competition/competitive selection based on Annex A of the NEDA guidelines and the other one are those negotiated contracts which shall be considered as Annex B. Further, Mr. Villagonzalo manifested that the proposed annexes of the said NEDA guidelines would be included in the IRR instead rather than in the code. Councilor Melliza suggested to consider the double entry for the phrase, all activities in Section 23, paragraph i, to which the former noted.

Regarding the inquiry raised by Councilor Nuñez on how the Local Investment Code would be

reconciled with the PPP Code, Ms. Buguis clarified that there will be no apparent complications or overlapping with the two codes. The Investment Code will specify that all those PPP projects being approved in the pipeline will be included as the investment priority areas and the same may avail of the


local incentives being offered by the City under the said investment code. Further, investment priorities will pass through the proper approval procedures. On the other hand, the PPP Code does not concern so much in offering any incentives, which is more comprehensively covered in the Local Investment Code with a view of accelerating the aggregate level of private investments in the city to further boost its economic development.

Ms. Mahinay-Sero of DILG supported the observation of Ms. Buguis that there will be no conflict

of provisions in the Investment Code and on this proposed GSC-PPP Code. Indeed, it will actually complement each other to make the PPP modalities more attractive for investors because of incentives given.

On the other hand, Ms. Buguis informed that the basic requirement for a project to qualify

under PPP scheme is the project viability. A project under consideration should be proven viable by conducting a separate feasibility study or by referring with the most recent studies pertaining it.

As to the concern raised by Councilor Melliza on big companies not only in the city for non-

payment of obligation for not doing sales activities in the city, Mr. Lacap clarified that in the old Investment Code, they have already provided provisions to address that concern. The big companies will have no room to escape from their obligation. Just in case their incentives expired or lapsed, out rightly they will begin paying their business taxes to the city. He added that big companies refused to pay because of some loopholes in the Local Tax Code, wherein they may opt to pay their taxes in the locality where their central or main offices are located and that concern was covered by Section 150, Rule 2 of the Local Government Code. However, this must be addressed in the Investment Code in order to protect the interest of the city and shall consider the same during the planned revision of the City’s Local Revenue Code since it was also concurrently being provided for in the said tax code.

On the provision with respect to the so called ‘unsolicited proposal’, Ms. Buguis clarified that

unsolicited proposal are actually projects not listed as priority projects in the City Development Plan (CDP) of the city government. The proposal may actually come from a private entity or other national line agencies or GOCCS which may be interested in putting a novel and distinctive project that can be engaged with under the JVA variant or other PPP modalities. In an unsolicited proposal, the interested proponent usually provides a pre-feasibility or full feasibility of the project to convince the local government that they are the most reliable partners to be reconsidered for the project being proposed. Ensuing further discussion, Councilor Nuñez believed that preferential treatment will be given to the original proponent for the projects falling under ‘unsolicited proposal’. Ms. Buguis added that the process of evaluation under PPP modalities could be very stringent, more particularly in the management of risks on financial and technical components of the project.

After further discussion, Ms. Buguis suggested to the technical staff of Councilors Melliza and

Councilor Tan to look at the national law for comparison including the IRR before distributing the final draft of the proposed GSC-PPP Code to which Mr. Villagonzalo noted. Councilor Melliza clarified that minor changes in the terminology may be needed specifically on the phrase ‘Mode of Procurement’ to avoid any misnomer on the provisions. Subsequently, Ms. Buguis suggested the phrase “Mode of Partner’s Selection” replacing the Mode of Procurement, as noted by the chair.

Further, Ms. Magante of the CSWDO suggested on Section 23 that the term used in the

succeeding paragraph on the process for the conduct of bidding process or projects to be undertaken through joint venture should be restated to conform to the proposed amendment on the heading. Councilor Melliza concurred with the suggestion for the reason that it will avoid legal complications in the future as the same may be assailed or challenged in court by other instrumentalities of the national government if the provisions that are reflected thereat may be absurd.

Mr. Villagonzalo clarified that most of the references by PPP Center or NEDA, the selection is

usually on the project per se and in particular in the mode of partnership that they are offering, and not on the personality of the proponent. It may be so that each proponent is offering individual project but the selection criteria is actually more on the merits of the proposed modalities of the project not on the merits of the proponents. However, Councilor Melliza suggested still that the word partners and projects should be reflected to reinforce the thematic harmony on the provisions of the ordinance


As discussions went on, Mr. Villagonzalo manifested that there are no other changes from Section 24 up to the final provisions of the proposed ordinance.

Upon motion of Councilor Tan and duly seconded by Councilor Nuñez, the chair, upon hearing

no objection on the motion, ruled the proposed PPP Code approved on committee level as amended,

subject to style and will be calendared for second reading after two weeks.

With the suggestion of Councilor Nuñez that the corrected form will be given to the Sanggunian

members, Councilor Melliza also added to include the original draft for comparison.

As to the proposal of Councilor Tan to provide also the BOT Law, Ms. Buguis said that it is

already incorporated in the proposed PPP Code including the JVA Guidelines of the NEDA. The soft

copy of PPP manual may be provided for LGU’s reference.

The secretariat was advised to submit a copy of the final draft on Tuesday to the four

councilors present (Councilor Melliza, Tan, Nuñez and Bagonoc) for preliminary correction regarding the

style. After their correction, the final copy will be distributed to all councilors thereafter.

Councilor Nuñez requested to give all councilors at least one (1) week to study the final copy

before endorsing the proposed measure for second reading.

APPROVED ON COMMITTEE LEVEL-FOR SECOND READING

There being no matter to be discussed the committee hearing was adjourned at 5:49 in the

afternoon.

ADJOURNED

Prepared by:

DINA B. MURING LORELIE B. CALUBAD DALISAY F. IGNACIO Stenographic Reporter III Stenographic Reporter III Stenographic Reporter III


SERAPION L. BUENO, JR. LOLITA P. PEDRO Board Secretary II Division Chief, Journal & Minutes

Attested:

ATTY. RAMON R. MELLIZA City Councilor & Chairperson Committee on Laws, Rules, and Review of Brgy. Ordinances & Executive Orders


Committee on Trade, Commerce and Industry

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