This is an article repost.
THE Department of Justice (DOJ) has granted the plea of Metro Pacific Investment Corp. (MPIC), headed by businessman Manuel V. Pangilinan, for the government to shoulder around P7-billion right-of-way costs for the road project that would connect the North Luzon and South Luzon expressways.
In her legal opinion No. 32, Justice Secretary Leila de Lima reversed her previous position that the government’s acquisition of right-of-way for MPIC’s “Connector Road Project” would constitute a direct government subsidy, which is prohibited in any unsolicited proposals as stated under Section 4A, or the build-operate-transfer (BOT) law.
The 13.2-km elevated road runs from MacArthur Highway in Valenzuela to Buendia in Makati City, via the Philippine National Railway tracks passing through Manila.
Section 4-A of the BOT law allows unsolicited proposals from the private sector, provided the project involves a new concept in technology and/or is not part of the list of priority projects; no direct government guarantee, subsidy or equity is required; and the proposal must be subjected to comparative or competitive proposals.
Acting on the request Metro Pacific Tollways Development Corp. (MPTDC), the infrastructure arm of MPIC, for the reconsideration of her legal opinion No. 17 issued on April 25, de Lima this time agreed with Pangilinan’s position that the proposed undertaking does not constitute a direct government subsidy because the government will receive a valuable consideration in exchange for the same.
Pangilinan, in his letter to the DOJ, which was endorsed by DPWH Secretary Rogelio Singson, said that aside from the transfer of ownership, the contract also includes “other fair, reasonable and beneficial terms and conditions that may be granted to the government under the negotiated contract.”
“Hence, DPWH may undertake to acquire the additional [right-of-way costs] and subsequently grant its use to the project proponent, provided that these would be for a valuable consideration, consisting of payment or value to the DPWH for such payment, contribution or support,” de Lima said.
“With the presence of valuable consideration, the proposed undertaking will no longer be deemed a direct government subsidy proscribed for unsolicited proposal under the BOT law,” she added.
De Lima said government subsidy is defined in Section 13.3 of its Implementing Rules and Regulations (IRR) as an agreement whereby the government agrees to shoulder a portion of the project cost, condone or postpone any payments due from the project proponent; in the case of local government waive or grant special rates on real-property taxes on the project; and/or waive charges, fees relative to business permits or licenses, all without receiving payment or value from the project proponent.
She noted that the provision is further supported by Section 10.4 of the IRR, which states that “the sale, lease, or grant, or usufruct, with consideration of government assets, including among others, right-of-way, to project proponents shall not be considered as direct subsidy or equity.” While the IRR does not specify what form or type of payment or value the government should receive from the project proponent, the justice chief said the value must be commensurate to the costs of the government’s undertaking in the project.
De Lima said it would be up to the DPWH to determine whether the valuable consideration stated by MPTDC in its letter is commensurate to the proposed government undertaking.
“This issue is within your competence and by settled practice and precedents, we have consistently refrained from expressing our views on matters which fall within the official competence of another government office out of respect and deference for the expertise of the office or agency having primary jurisdiction to resolve the matter and for its familiarity with the policy repercussions of the resolution of the questioned involved,” de Lima said.
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Source: Business Mirror, Aug. 7, 2011
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