Section 3Sec./Art. 3

Definition of Terms. - As used in this Code:

(a) Approving Body refers to an entity authorized to approve PPP Projects, in accordance with Section 7 of this Code;

(b) Availability Payments refer to predetermined payments by the Implementing Agency to the Private Partner in exchange of delivering an asset or service in accordance with the PPP contract. Availability Payments shall not be construed as Government Undertakings, Subsidy, or government contribution;

(c) Construction refers to new construction, rehabilitation, improvement, expansion, alteration, and related works and activities including the necessary design, supply, installation, testing and commissioning of equipment, systems, plants, materials, labor and services, and related items needed to build or rehabilitate an infrastructure or development facility;

(d) Contingent Liability refers to an obligation that may arise from events specified in a PPP contract, the occurrence, timing, and amount of which are uncertain. These events include, but are not limited to, regulatory action, force majeure, breach of government warrantless, and material Adverse Government Action, among others;

(e) Contractor refers to any entity allowed and duly registered and licensed under Philippine laws, which may or may not be Private Partner, that shall be responsible for the Construction and/or supply of equipment or services for PPP Projects;

(f) Facility Operator refers to any entity allowed and duly registered and licensed under Philippine laws, which may or may not be the Private Partner, that shall be responsible for operating and/or maintaining a facility;

(g) Financial Close refers to the specific milestone in a PPP contract where the Private Partner successfully secures all necessary protect and financing agreements. The achievement of such milestone confirms that all prior conditions have been met, allowing the Private Partner to draw down the financing to commence work on the PPP Project;

(h) Generic Preferred Risk Allocation Matrix (GPRAM) refers to the document issued by the Investment Coordination Committee of the National Economic and Development Authority Board (NEDA Board - ICC), to guide government entities and the private sector in the optimal allocation of risks in structuring PPP Projects;

(i) Government Financial Institutions (GFIs) refer to financial institutions or corporations in which the government directly or indirectly owns majority of the capital stock and which are either: (i) registered with or directly supervised by the Bangko Sentral ng Pilipinas; or (ii) collecting or transacting funds or contributions from the public and places them in financial instruments or assets such as deposits, loans, bonds and equity including, but not limited to, the Government Service Insurance System, the Social Security System, and the Maharlika Investment Corporation;

(j) Government Instrumentalities with Corporate Powers (GICPs)/Government Corporate Entities (GCEs) refer to instrumentalities or agencies of the government, which are neither corporations nor agencies of the government, which are neither corporations nor agencies integrated within the departmental framework, but vested by law with special functions or jurisdiction, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy usually through a charter;

(k) Government-owned or -controlled corporation (GOCC) refers to any agency organized as a stock or nonstock corporation, vested with functions relating to public needs whether governmental or proprietary in nature, and owned by the Government of the Republic of the Philippines directly or through its instrumentalities either wholly or, where applicable as in the case of stock corporations, to the extent of at least a majority of its outstanding capital stock, as defined in Republic Act No. 10149, otherwise known as the "GOCC Governance Act of 2011", including GICPs, GCEs, GFIs, water districts, and economic zone authorities, which are hereby authorized to undertake PPP Projects with a Private Partner in accordance with the provisions of this Code;

(l) Government Undertakings refer to any form of contribution and/or support, which the government may extend to a Private Partner for the implementation of PPP Projects, as provided under this Code;

(m) Green Financing refers to investments that create environmental benefits in support of green growth, low-carbon, carbon avoidance, and sustainable development, and the use of alternative assets such as carbon credits, such as those pursuant to Article VI of the Paris Agreement, or ecosystem services;

(n) Guarantee on Demand refers to an agreement where the Implementing Agency undertakes to assume the market demand risks associated with the PPP Project: provided, That the adoption of availability-based schemes and Availability Payments shall not be considered as Guarantee on Demand;

(o) Guarantee on Loan Repayment refers to an agreement where the Implementing Agency guarantees to assume responsibility for the repayment of debt indirectly incurred by the Private Partner in implementing the PPP Project in case of loan default. As an exemption, government repayment of debt as part of Termination Payments shall not be considered as Guarantee on Loan Repayment;

(p) Guarantee on Private Sector Return refers to an agreement where the Implementing Agency guarantees to provide a predetermined rate of return on the investment of the Private Partner. This shall not cover Termination Payments arising from government events of default;

(q) Implementing Agency refers to a department, bureau, office, instrumentality, commission, authority of the national government, state university and college (SUC), local university and college (LUC), LGU, and GOCC;

(r) Joint Venture (JV) refers to a national or local PPP contractual arrangement, whether solicited or unsolicited, where both the Implementing Agency performing its proprietary function and the Private Partner pool resources comprising of capital, services, or assets, including equipment, land, or intellectual property, to jointly undertake a specific investment activity within a specific period of cooperation to deliver an infrastructure or development project typically provided by the public sector;

(s) Land Value Capture Strategies refer to a set of mechanisms used to recover and re-invest land-based value increases that arise in the catchment area pf public infrastructure investments. For purposes of this Code, Land Value Capture Strategies may be employed to optimize the financial and economic efficacy of a PPP Project;

(t) Local Public-Private Partnership (PPP) Project refers to a PPP Project that is undertaken by LGUs and LUCs;

(u) Local Universities and Colleges (LUCs) refer to Commission on Higher Education (CHED)-accredited public Higher Education Institutions (HEIs) established by LGUs through an enabling ordinance, financially supported by the LGU concerned, and compliant with the policies, standards, and guidelines of the CHED;

(v) Material Adverse Government Action (MAGA) refers to any act of the government which the Private Partner has no knowledge of, or could not be reasonably expected to have had knowledge of, prior to the effectivity of the PPP contract, and that occurs after the effectivity of the PPP contract, other than an act which is authorized or permitted under the PPP contract, which (1) specifically discriminates against the sector, industry, or project, and (2) has a significant negative effect on the ability of the Private Partner to comply with any of its obligations under the approved PPP contract. MAGA may include unanticipated regulatory risks;

(w) Most Responsive Bid refers to the bid that conforms, in all material respects, to the bid solicitation requirements and approved bid parameters, and the one that is most advantageous to the government;

(x) National Public-Private Partnership (PPP) Project refers to a PPP Project that is undertaken by the National Government, SUCs, and GOCCs;

(y) Original Proponent refers to the private sector entity determined to be financially, legally, and technically capable to undertake obligations under an awarded PPP contract;

(aa) Private Proponent refers to the private sector entity which has submitted bid in relation to a Solicited Project, or a private sector entity which has submitted an Unsolicited Proposal. The Private Proponent may be Filipino or foreign-owned, and may engage the services of a foreign Contractor or foreign Facility Operator, subject to requirements and limitations provided under the Constitutions, existing laws, rules, and regulations;

(bb) Project Cost refers to the total cost to be expended to plan, develop, and construct the project to completion stage, including cost of feasibility studies, engineering and design, construction, equipment, land/right-of-way (ROW), taxes imposed on said cost, and development cost. For Operations and Maintenance (O & M) PPP Projects without initial capital expenditures, the present value of costs incurred in delivering the contracted service, including any reinvestment requirements, shall be considered as the Project Cost;

(cc) Public-Private Partnership (PPP) Project refers to any public infrastructure or development projects and services implemented under this Code;

(dd) Reasonable Rate of Return refers to the net gain of an investment over a specified time period, expressed as an annualized percentage as prescribed by the appropriate Approving Body and reflected in the PPP contract: provided, That where the realized rate of return exceeds the prescribed Reasonable Rate of Return, the excess shall be remitted to the National Treasury;

(ee) State Universities and Colleges (SUCs) refer to public HEIs established by the National Government and are governed by their respective independent Boards of Trustees or Regents;

(ff) Solicited Project refers to a PPP Project identified by an Implementing Agency as part of its list of PPP Projects that is subjected to a public bidding as provided in Section 9 of this Code;

(gg) Subsidy refers to an agreement where the Implementing Agency will: (1) defray, pay for, or shoulder a portion of the Project Cost or the expenses and costs in operating or maintaining the project; (2) bear a portion of capital expenditures associated with the establishment of an infrastructure or development projects and services; (3) contribute any property or assets to the project; and/or (4) waive charges or fees relative to business permits or licenses that are to be obtained for the Construction of the project: Provided, That items (1) to (4) shall not be considered as Subsidy if the government receives payment or remuneration from the Private Partner for such: Provided further, That subsidy falling under items (1) and (2) shall not exceed fifty percent (50%) of the Project Cost: Provided, finally, That in the case of solicited proposals, the expenses for existing ROW or ROW to be acquired shall not included in the said cap.

Subsidy shall also include Visibility Gap Funding (VGF) which may be extended by the government to make an economically viable revenue-based PPP Project financially viable: Provided, That government payments for ROW, and resettlement shall not be considered as VGF;

(hh) Termination Payment refers to the amount payable by the government or the Private Partner on the occurrence of an event or series of events provided for in the PPP contract that results in the termination of said contract;

(ii) Unsolicited Proposal refers to a project proposal made by a Private Proponent to undertake a PPP Project pursuant to Section 10 of this Code; and

(jj) Value for Money (VFM) refers to the effective, efficient, and economic use of resources, which requires the evaluation of relevant costs and benefits, along with an assessment of risks, and of non-price attributes and/or life cycle costs, as appropriate. Price alone may not necessarily represent VFM.