Philippine Ports Authority Charter PD 857

Policy, purpose, and public interest

Government development programs require alternative financing sources to prosecute desirable infrastructure projects that complement the national development effort.
The government shall tap private sector potential resources to reduce dependence on additional domestic and foreign borrowings and to utilize government guarantee or security.
Collection of toll fees for the use of certain public improvements should be authorized to allow a reasonable rate of return on investments.
Toll fees collection and operation by the private sector must be closely supervised and regulated in the public interest.
The TRB regulates toll operations to protect the public while enabling private investment through toll facility franchises.

Coverage: toll facilities under TOC/TOA

These rules apply to the construction, operation, and maintenance by the private sector of toll facilities under a TOC or a TOA authorized under P.D. No. 1112.
These rules apply to the turn-over of toll facilities at no cost to the government upon expiration of the TOC/TOA.
Facilities for turnover include all operation and maintenance equipment and facilities directly related to toll operations and maintenance.
A TOA and a TOC may be issued/entered into through public bidding or negotiations as provided in these rules.

Core definitions established

Toll Operations cover the development, improvement, upgrading, expansion, rehabilitation, reconstruction, modernization, and/or construction/building, plus operation and maintenance of toll facilities, according to TRB requirements.
Toll Facility includes national highways, roads, bridges, and public thoroughfares directly used by users who are charged tolls as authorized under P.D. No. 1112.
TOC is an authority granted to Filipino citizens or to Philippine corporations/associations qualified under the Constitution and authorized by law to engage in toll operations, to develop, construct/build, and operate and maintain a toll facility, with turnover to government without cost at the end of the franchise.
A TOC has a fixed term not to exceed fifty (50) years.
A TOC may be amended, modified, or revoked when the public interest so requires by TRB, subject to just compensation and/or the procedure under Section 12.17.
TOA is a contractual arrangement entered into by TRB in behalf of the Republic of the Philippines with persons or entities qualified to engage in toll operations, subject to Presidential approval, with turnover to government without cost at the end of the franchise.
A TOA has a fixed term not to exceed fifty (50) years.
A TOA may be amended upon agreement of the TOA signatories, subject to Presidential approval.
TRB is the regulatory body created under P.D. No. 1112 for regulation of toll facilities, including the powers listed in these rules.

TRB powers, toll rate control, and supervision

TRB determines the kind, type, and nature of public improvements to be constructed and/or operated as toll facilities.
TRB may condemn private property for public use subject to existing laws.
TRB issues, modifies, and promulgates toll rates charged to direct users of toll facilities.
Toll-rate increases require notice and hearing, and TRB decisions on increase petitions are appealable to the Office of the President within ten (10) days from promulgation.
An appeal from a toll-rate increase decision shall not suspend the imposition of new rates; however, the petitioner must deposit in a trust fund amounts necessary to reimburse affected toll payers if the TRB decision is reversed.
TRB issues rules and regulations to carry out the purposes of P.D. No. 1112.
TRB provides technical supervision over project construction, operation, and maintenance activities through inspection and verification of compliance with approved plans, specifications, standards, and costs.

Priority projects and approval process

TRB adopts a list of specific priority projects that may be developed under these rules.
If a project requires government appropriations and/or credit enhancements, TRB must secure approval of the ICC or the NEDA Board as described in these rules before adopting the project for implementation.
Projects not requiring government appropriations and/or credit enhancements are submitted to the ICC for information/notation.
Proposed toll facility projects involving government appropriations and/or credit enhancements are approved as follows:
- For government appropriations and/or credit enhancements less than P 300M, submission is to the ICC of the NEDA Board for approval.
- For government appropriations and/or credit enhancements reaching or exceeding P 300 million, submission is to the NEDA Board for approval upon the recommendation of the ICC.
The ICC and the NEDA Board must act on proposed projects within thirty (30) working days upon satisfactory compliance by TRB of requirements.
If the ICC or NEDA Board does not act within the prescribed period, TRB may proceed with solicitation of proposals unless otherwise notified in writing.
TRB must provide wide publicity to the priority-project list:
- Individual approved projects must be published once every six (6) months in a national newspaper of general circulation.
- The list may also be published in an international newspaper when applicable and at TRB discretion.

Bidding machinery: PBAC formation and authority

TRB constitutes a Prequalification, Bids and Awards Committee (PBAC) from TRB staff and DPWH for projects to be bid.
PBAC composition includes:
- Executive Director as Chairman
- Legal Officer as Member-Secretary
- One technical officer designated on a project-to-project basis as Member
- One finance officer as Member
- One management/operation officer designated on a project-to-project basis as Member
- Two private-sector representatives as Observers (non-voting) (one from a recognized contractors association; one from either facility users or a duly recognized accounting association)
- A representative from the Commission on Audit as Observer (non-voting)
PBAC executes, subject to Board approval, all aspects of prequalification, bid, and award process, including tender documents, publications, prequalification, pre-bid conferences, supplemental notices, bidding interpretation, bid evaluation, dispute resolution between bidders, and recommendation for acceptance and/or award.
PBAC quorum is a simple majority of voting members; the Chairman votes only in case of a tie.
TRB may solicit consultants to assist PBAC, selected in accordance with existing laws, rules, and regulations, including NEDA Board guidelines on procurement of consulting services for government projects.

Tender documents: required contents

TRB prepares bid/tender documents including:
- Instructions to Bidders
- Minimum design and performance standards/specifications and economic parameters
- Bid Form
- Forms of Bid and Performance Securities
- Other documents deemed necessary by TRB
Instructions to Bidders must be clear, comprehensive, and fair, and include:
- General description and objectives, including that the project shall be prosecuted under these rules
- Draft TOC/TOA and conditions under which the project is undertaken
- Bid submission procedures and requirements (manner of submission, number of copies, place of submission, deadline, permissible mode of transmission, etc.)
- Investment incentives under Rule 13
- Validity period for bid security
- Milestone bonding
- Method and criteria for evaluation of technical and financial bids, including minimum equity evaluation method and criteria for financial proposals
- Formula and indices for adjustments of tolls/fees/rentals/charges when applicable, taking into account reasonableness to users
- Monetary rules for foreign exchange and remittances
- Revenue sharing arrangements, if any
- Expected commissioning date
Minimum design/performance standards/specifications (including environmental standards as prescribed by DENR) must be clearly defined; non-conformity renders bids non-responsive.
Economic parameters must include:
- Discount rate and foreign exchange rate as prescribed by TRB
- Maximum period of project construction
- Fixed term for project operation and collection of tolls/fees/rentals/charges
- Formula and price indices for adjusting tolls/fees/rentals/charges
Draft TOC/TOA must clearly define obligations and authorities of grantee and TRB, and must include (where applicable) bonds, guarantees, insurance, liquidated damages, taxes and duties, milestone bonding schedule and amounts, price indices, governing laws, force majeure, effects of changed circumstances (including new laws/regulations or government policy changes affecting financial viability), contract termination, and dispute resolution including arbitration procedures.

Prequalification: eligibility, timelines, and requirements

Participation in prequalification is open to any individual, partnership, corporation, or firm, whether local or regional (including joint ventures/consortia of local, foreign, or both), subject to limits in these rules.
TRB publishes an invitation to prequalify and bid:
- Once every week for three (3) consecutive weeks
- In at least two (2) newspapers of general circulation
Prequalification documents:
- Must be allowed at least thirty (30) calendar days from the last publication date.
- For projects costing at least P 300 million, the preparation period must be at least forty-five (45) calendar days from the last publication date.
- Submission deadline is indicated in the invitation.
Prequalification requirements include:
- Legal requirements
  - Proponent and facility operator must be Filipino, or if a corporation, registered with SEC and owned at least sixty percent (60%) by Filipinos
  - Joint venture/consortium must submit a sworn statement undertaking joint and several responsibility for TOC/TOA obligations; if members organize as a Philippine corporation, liabilities follow Philippine law
  - If contractor for construction needs pre-identification and is Filipino, it must be duly licensed and accredited by PCAB; if foreign, it must secure PCAB licenses required for foreign contractors
- Experience/track record
  - Successful execution of projects similar or related to the subject infrastructure/development project, either by itself, member firms in joint venture/consortium, or contractor(s) engaged
  - Joint venture/consortium evaluated based on individual or collective experience of member firms and engaged contractor(s)
  - Joint venture/consortium must submit a business plan identifying members and their roles, including which member is lead, financing arm, and contractor(s) (if pre-identified) and/or facility operator(s)
  - Key personnel must have sufficient relevant experience
- Financial capability
  - Proof of ability to provide minimum project equity
  - Letter testimonial from reputable banks attesting good financial standing and adequate resources
  - TRB determines on a project-to-project basis, before prequalification, the minimum equity required
PBAC marks applicants as “Prequalified” or “Predisqualified,” countersigned by PBAC Chairman, for TRB review and approval.
TRB informs prequalified applicants within seven (7) calendar days after approval.
Disqualified applicants must be informed of grounds and may appeal within fifteen (15) working days from receipt.
TRB must act on appeals within forty-five (45) calendar days from receipt.
TRB’s decision on appeal is final and immediately executory.
All applicants must submit a statement accepting prequalification criteria and waiving rights to seek an injunction/prohibition or restraining order to stop the prequalification process, bidding, award, or implementation.
The waiver preserves the disqualified or losing bidder’s right to question lawfulness of disqualification or bid rejection through administrative or judicial processes that do not involve a writ of injunction/prohibition or restraining order.
TRB makes tender documents available to all prequalified bidders as soon as practicable to allow adequate time for review and bid preparation.

Supplemental notices and pre-bid conferences

A prospective bidder is solely responsible for examining bidding documents for costs, duration, execution/operation requirements affecting bid preparation.
TRB does not assume responsibility for erroneous interpretations or conclusions by prospective bidders from data furnished or indicated in the bidding documents.
If a bidder is in doubt about any data or requirement, the bidder may submit a written request for interpretation with sufficient time for TRB reply before bid submission.
Substantive interpretations are issued as Supplemental Notices furnished to all prospective bidders.
TRB may also issue Supplemental Notices to clarify bidding document provisions during bid preparation.
Each bidder must acknowledge receipt of Supplemental Notices prior to bid submission, and bidders must reflect acknowledgments in their bids.
Pre-bid conference statements do not modify bidding document terms unless issued as a written amendment; amendments are issued to all bidders within a reasonable time for bid preparation and must be acknowledged in the bid.
A summary of pre-bid conference proceedings is issued to prospective bidders.
Attendance at the pre-bid conference is not mandatory.

Bid submission and bid security rules

Bids are submitted on or before the deadline in the Instructions to Bidders using the two-envelope system.
Bids must be delivered in two separate sealed envelopes addressed to PBAC of TRB and marked “Do Not Open Before” the specified opening date and time.
The first envelope must be labeled “Technical Proposal” and include:
- Operational feasibility (organization, methods, procedures for construction, operation, and maintenance)
- Technical soundness/preliminary engineering design (including proposed timeline)
- Preliminary environmental assessment (adverse effects and mitigating measures)
- Project cost (operating and maintenance cost requirements and financing plan, including equity and debt)
- Bid security in acceptable forms with amounts and validity
- Other documents supporting the technical proposal
Bid security must be posted according to the estimated construction cost thresholds:
- Less than P 5.0 B: not less than 2.0%
- P 5.0 B to P 10.0 B: not less than 1.0% and at least P 150 million (for the “at least” threshold stated)
- Not less than P 100 million applies to the 1.5% bracket: not less than 1.5% of estimated cost of construction but at least P 100 million
- P 10.0 B and above: not less than 1.0% of estimated cost of construction but at least P 150 million
Bid security guarantees that within seven (7) calendar days from receipt of Notice of Award, the bidder must comply with award terms, accept the TOC, or sign the TOA, and furnish required performance security within the prescribed time.
Bids and bid securities are valid for a period prescribed in the bidding documents but in no case beyond one hundred and eighty (180) calendar days from date of opening of bids.
The second envelope must be labeled “Financial Proposal” and include:
- Proposed user tolls/fees/rentals/other charges
- Present worth of proposed user charges over the fixed term based on the prescribed discount rate and foreign exchange rate
Late bids submitted after the submission deadline are considered late and are returned unopened.
PBAC opens only the first envelope at the bid opening time:
- PBAC checks completeness and validates required bid security form, amount, and validity period
- Names and addresses of required witnesses are recorded
- Bidders present sign a register of bid opening
Bids with incomplete technical submissions or missing/invalid bid security are automatically rejected; second envelopes are returned unopened.
PBAC opens second envelopes only for bidders that pass the first-stage evaluation, and bidders failing the first stage do not proceed; their second envelopes are returned unopened with reasons for disqualification.
Withdrawal and/or modification is allowed only upon written notice prior to opening of first envelopes; modification/withdrawal after the opening time is not allowed.
Withdrawal after bid opening causes forfeiture of bid security.
Bid modifications received after the permitted period are treated as late and returned unopened.

Bid evaluation and award criteria

Bids are evaluated in two (2) stages.
First stage evaluation assesses technical, operational, environmental, and financing viability against prescribed requirements and minimum standards.
Only bids passing the first stage are qualified for the second stage.
First stage technical evaluation criteria include:
- Technical Soundness: design conforms to minimum standards; engineering surveys/plans/estimates within +/- 20% of final quantities; feasible or “doable” construction methods and schedules
- Operational Feasibility: organization/methods/procedures defined, conform to performance standards, workable, and where feasible provide technology transfer
- Environmental Standards: design and technology conform to environmental standards acceptable to DENR, and adverse effects must be properly identified with mitigating measures
- Project Financing: financing plan adequately meets construction and operating/maintenance costs
- Enhancements: terms offered to make proposals more attractive, including government revenue sharing or reduction in level of government undertakings/support
PBAC completes first stage technical evaluation within thirty (30) calendar days from the date bids are opened.
Second stage evaluation compares financial proposals using present value of proposed tolls/fees/rentals/other charges over the fixed term.
TRB awards TOC/TOA to the bidder with the lowest present value.
PBAC completes second stage evaluation within thirty (30) calendar days from completion of first stage evaluation.
TRB may reject any or all bids, waive minor defects, and accept the offer most advantageous to the government.

Notice of award, clearance, and contract formation

Within thirty (30) calendar days from completion of second-stage evaluation, TRB decides whether to award a TOC/TOA.
If awarding, TRB approves the Notice of Award within seven (7) calendar days from the decision date.
The Notice of Award is issued/transmitted to the grantee within seven (7) calendar days from approval.
For projects with government appropriations or credit enhancements more than P 300 Million, TRB must submit the draft TOC/TOA to ICC for clearance on a no-obligation basis before approving the Notice of Award.
ICC clearance scope focuses on the extent of government undertaking; if within earlier ICC-approved scope, ICC submission is for information.
If additional provisions differ from earlier ICC-approved scope, ICC reviews the draft TOC/TOA.
ICC acts on the final draft TOC/TOA within fifteen (15) working days on submission of complete documentation; absent written notice to TRB otherwise, failure to act within the period allows TRB to proceed with award.
TRB approves the Notice of Award within seven (7) calendar days after receipt of ICC no-objection clearance, and the Notice of Award is issued within seven (7) calendar days from approval.
Withdrawal of a member/contractor prior to actual award/implementation may cancel the award and forfeit the bid security; TRB may still proceed if remaining members are capable or provide a suitable acceptable substitute with equal or better qualifications.
PBAC prepares a detailed evaluation/assessment report for the Board, incorporated into findings and final recommendations.
The Notice of Award states the time for submission of performance security, proof of equity commitment, and indications of financing resources; joint ventures must submit agreement on joint and several responsibility.
The award must be within the bid validity period; bid security remains valid up to one hundred and eighty (180) calendar days following opening of bids.
Bid securities are returned to unsuccessful bidders as soon as TOC is approved by the Board or TOA is approved by the President in accordance with the approval provisions for TOA/TOC.
Extension of bid validity requires written request to bidders before expiry; bidders cannot modify price or substantial aspects.
Bidders may refuse to extend validity without forfeiting bid security; bidders willing to extend must provide suitable extension of bid security.
Acceptance and execution:
- The successful bidder must comply with Notice of Award terms and accept TOC or execute TOA within seven (7) calendar days from receipt.
- If the lowest complying bidder refuses/fails to comply, TRB cancels award and forfeits that bidder’s bid security, then cancels and awards the next complying qualified bid, repeating until compliance is obtained, a TOC is accepted, or a TOA is executed.
- If TRB cannot obtain compliance from bidders considered (due to refusal), the project is subject to rebidding.
Unsuccessful bidders are notified through official communications, and Notices of Award are made available to the public when requested.
If no complying bids are received, bidding is declared a failure and the project is subjected to rebidding.

Negotiated award and unsolicited proposal system

Direct negotiation applies when only one complying bidder remains, including scenarios after advertisement/prequalification/bidding where only one tender is complying.
Disqualified bidders under direct negotiation may appeal to TRB within fifteen (15) working days; TRB acts within forty-five (45) days from receipt; TRB’s decision is final and immediately executory.
Unsolicited proposals may be accepted on a negotiated basis when requirements are met.
Unsolicited proposals require all conditions:
- Project involves a new concept or technology and/or is not part of TRB’s adopted list
- No direct government appropriations, guarantee, subsidy, or equity is required
- TRB invites comparative/competitive proposals once every week for three (3) consecutive weeks in a newspaper of general circulation, and comparative/competitive proposals are awaited for sixty (60) working days
- If another proponent submits a lower price proposal, the original proponent may match within thirty (30) working days; if not matched, award goes to lowest price tenderer; if matched, award goes to original proponent
- Proponent undertakes economic and financial viability assessment via a pre-Feasibility Study
Acceptance of an unsolicited proposal does not diminish the proponent’s responsibility and does not transfer responsibility to TRB.
Proponents for unsolicited proposals must comply with prequalification requirements in Section 5.4 before proposals are considered.
New technology must include information allowing TRB evaluation, and it must have at least one attribute such as cost reduction, faster execution, improved safety/performance, extended economic life, reduced maintenance/operations costs, reduced negative environmental impacts, reduced social/economic disruptions, exclusive rights process, or proprietary/Intellectual property rights held by the proponent or consortium/association.
ICC clearance for unsolicited proposals is required only upon official endorsement by TRB; ICC approves project scope using its guidelines, and projects not requiring government support are submitted to ICC for information.
Invitation for comparative proposals in unsolicited proposal process must state where tender documents may be obtained and must specify a deadline sixty (60) calendar days from last publication date; no proposals are accepted after the deadline.
Tender documents for unsolicited proposals follow the same format as those for regular bids; proprietary information must be respected, protected, and kept confidential and must not form part of tender documents.
Bid security is required for all bidders; original proponent must post bid security on or before the sixty (60) days deadline for others’ comparative/competitive proposals.

TOC/TOA approval, franchise grant, and timing

TOC approvals:
- TOCs for projects under these rules must be approved by the Board subject to conditions including:
  - Submission of required performance security under Section 12.9
  - Proof of sufficient equity and firm commitments from reputable financial institutions for sufficient credit lines covering total estimated project cost
  - Joint venture/consortium sworn undertaking of joint and several responsibility for project proponent obligations
  - For negotiated TOCs, TRB approval of proposed tolls/fees/rentals/charges
  - Such other conditions imposed by TRB
- Failure to submit required items within the time stated in the Notice of Award results in cancellation/disqualification and forfeiture of bid security.
TOA approvals:
- The Board may enter into a TOA with the winning proponent subject to conditions mirroring TOC conditions, including performance security, equity and credit line commitments, joint and several responsibility undertaking for joint ventures/consortia, TRB approval of negotiated tolls/fees/rentals/charges, and other TRB conditions.
- Failure to comply within the Notice of Award time results in cancellation/disqualification and forfeiture of bid security.
Presidential approval is required for TOA.
TOC/TOA franchise grant:
- The approved TOC/TOA authorizes the grantee to construct, operate, and maintain the toll facility, including collection of tolls/fees/rentals/other charges according to schedules in the approved TOC/TOA.
Notice to Proceed:
- TRB issues Notice to Proceed not later than fifteen (15) calendar days from Board approval of TOC or President approval of TOA.
Other government approvals:
- TOC/TOA approval does not relieve TRB or grantee from obtaining other government approvals under existing laws.
- The grantee must secure environmental clearances from DENR prior to actual project execution in accordance with existing laws.
- TRB may provide assistance to the proponent in securing required clearances.

Construction, design approval, and performance security

Detailed engineering design:
- The grantee prepares detailed engineering designs/plans based on prescribed minimum standards and submits to TRB.
- TRB reviews compliance and approves if acceptable prior to actual construction.
- Approval does not diminish grantee’s sole responsibility for integrity of designs and plans.
Project construction:
- Grantee builds according to approved detailed engineering design and prescribed standards/specifications.
- Grantee may engage foreign and/or Filipino contractors complying with the legal requirements of Section 5.4.a.
- Foreign contractors must employ Filipino labor in construction phases where Filipino skills are available.
Performance guarantee for construction works (for projects involving government appropriations/credit enhancements):
- The grantee posts performance security in favor of TRB within prescribed time, in forms such as cash, manager’s/cashier’s checks, bank drafts/confirmed guarantees by a local bank (foreign bidders bonded by a foreign bank), letter of credit by a reputable bank, or surety bond callable on demand from GSIS or accredited surety/insurance companies under Office of the Insurance Commissioner, or combinations.
- Performance security amounts are set as:
  - Twenty percent (20%) of total estimated government appropriations/credit enhancements for cash/manager’s/cashier’s checks/irrevocable letter of credit/bank draft
  - Thirty percent (30%) for bank guarantee
  - Fifty percent (50%) for surety bond

Project supervision, milestones, damages, and repair reserve

TRB technical supervision:
- TRB inspects and checks compliance with approved plans/specifications/standards/costs.
- If deviations or non-compliance are found, TRB directs corrective actions.
- Failure to correct within TRB-prescribed time may ground rescission/termination under Section 12.18.b.
- TRB supervision does not reduce grantee’s singular responsibility.
Milestone bonding: