Project Information Memorandum

REPUBLIC OF THE P HILIPPINES

DEPARTMENT OF TRANSPORTATION AND

COMMUNICATIONS

SOUTH INTEGRATED TRANSPORT SYSTEM

PROJECT

PROJECT INFORMATION MEMORANDUM

(PIM)

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 Project Information Memorandum

DISCLAIMER

The information contained in the Bidding Documents, Information Documents and any
other information, whether verbal or written, provided by the Department of
Transportation and Communications (“DOTC”) or any of its employees or advisors, or on
behalf of the DOTC, is provided to Bidders on the terms and conditions set out in the
Bidding Documents and such other terms and conditions subject to which such information
is provided.

The Bidding Documents and Information Documents are not agreements and are neither
offers nor invitations by the DOTC to the Bidders or any other person. The DOTC, its
employees and advisors are not bound by any of the contents of the Bidding Documents or
Information Documents. The purpose of the Bidding Documents and Information
Documents is to provide interested parties with information that may be useful to them in
making their Bids pursuant to the Bidding Documents. The Bidding Documents and
Information Documents include statements that reflect various assumptions and
assessments arrived at by the DOTC in relation to the Project. Such assumptions,
assessments and statements do not purport to contain all the information that each Bidder
may require. The Bidding Documents and Information Documents may not be appropriate
for all persons, and it is not possible for the DOTC, its employees or advisors to consider the
investment objectives, financial situation and particular needs of each party who reads or
uses the Bidding Documents and Information Documents. The assumptions, assessments,
statements and information contained in the Bidding Documents, Information Documents
and associated documents may not be complete, adequate, accurate or correct. Each Bidder
should therefore, conduct its own investigations and analysis and should check the
completeness, adequacy, accuracy, correctness, and reliability of the assumptions,
assessments, statements and information contained in the Bidding Documents and
Information Documents and obtain independent advice from appropriate sources.

Information provided in the Bidding Documents and the Information Documents is on a

wide range of matters, some of which may depend upon interpretation of law. The
information given is not intended to be an exhaustive account of statutory requirements
and should not be regarded as a complete or authoritative statement of law. The DOTC
accepts no responsibility for the accuracy or otherwise for any interpretation or opinion on
law expressed herein.

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 Project Information Memorandum

The DOTC, its employees and advisors make no undertaking, assurance, representation or
warranty and shall have no liability to any person, including any Bidder, under any law,
statute, rules or regulations, principles of restitution or unjust enrichment or otherwise, for
any loss, damages, cost or expense that may arise from or be incurred or suffered on
account of anything contained in the Bidding Documents, Information Documents or other
information provided to Bidders, including the completeness, adequacy, accuracy,
correctness, and reliability of the Bidding Documents, Information Documents and any
assessment, assumption, statement or information contained therein or deemed to form
part of the Bidding Documents, Information Documents or arising in any way from
participation in the Bidding Process.

The DOTC also accepts no liability of any nature, whether resulting from negligence or
howsoever caused, arising from reliance of any Bidder upon the statements contained in the
Bidding Documents or Information Documents.

The DOTC may, in its absolute discretion, but without being under any obligation to do so,
amend, update, or supplement the information, assessments or assumptions contained in
the Bidding Documents or Information Documents. However, the DOTC, its employees and
advisors shall not be liable to any Bidder (including the Winning Bidder) in respect of any
failure to (i) disclose or make available any information, documents or data; (ii) amend,
update, or supplement the Bidding Documents or Information Documents; or (iii) provide
any information regarding any inaccuracy, error, omission, defect or inadequacy in the
Bidding Documents or Information Documents.

The issuance of the Bidding Documents or Information Documents does not imply that the
DOTC is bound to select a Bidder or to appoint the selected Bidder, as the case may be, for
the Project, and the DOTC reserves the right to reject all or any of the Bidders or Bids
without assigning any reason whatsoever.

In purchasing the Bidding Documents, each Prospective Bidder accedes to the bid
parameters, terms and obligations provided therein. In no case shall any Prospective Bidder
be allowed to modify the bid parameters even if, in its opinion, it offers better terms than
that provided herein.

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 Project Information Memorandum

CONTENTS

1 Project Background ..................................................................................................... 6

2 Project Site Overview .................................................................................................. 8
2.1 About Metro Manila....................................................................................................................................... 8

2.2 About the Project Site ................................................................................................................................. 11

2.2.1 South ITS Project Site....................................................................................................................................................................................12

3 Overview of the Existing Demand ........................................................................... 14

3.1 Traffic at the ITS Terminal (Year 2012) ................................................................................................. 14

4 Scope and Structure of the PPP Project ................................................................. 20

4.1 Project Description ...................................................................................................................................... 20

4.2 Legal Framework for the South ITS Project .......................................................................................... 20

4.2.1 Procurement Process .....................................................................................................................................................................................21

4.3 Proposed Contractual Arrangement ....................................................................................................... 22

4.3.1 PPP Structure.......................................................................................................................................................................................................22

4.3.2 Implementing Agency ...................................................................................................................................................................................22

4.3.3 Concession Period.............................................................................................................................................................................................23

4.3.4 Incentives.................................................................................................................................................................................................................23

4.3.5 Project Site & Access Road ........................................................................................................................................................................24

4.3.6 Concessionaire Revenue ..............................................................................................................................................................................24

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 Project Information Memorandum

LIST OF ABBREVIATIONS

AADT Average Annual Daily Traffic

AO Administrative Order
BOI Board of Investments
BOT Build-Operate-and-Transfer
BTO Build-Transfer-Operate
BSP Bangko Sentral ng Pilipinas or Central Bank of the Philippines
DILG Department of Interior and Local Government
DMB Diosdado Macapagal Boulevard
DOTC Department of Transportation and Communications
DPWH Department of Public Works and Highways
EDSA Epifanio de los Santos Avenue
EO Executive Order
FTI Food Terminal Inc.
GDP Gross Domestic Product
IRR Internal Rate of Return
ITB Instructions to Bidders
ITS Integrated Transport System
LGU Local Government Unit
LTFRB Land Transportation Franchising and Regulatory Board
LTO Land Transportation Office
MMDA Metro Manila Development Authority
NCR National Capital Region
NEDA National Economic and Development Authority
PBAC Pre-Qualification, Bids and Awards Committee
PDP Philippine Development Plan
PIP Public Investment Program
PNR Philippine National Railway
PPP Public Private Partnership
PRA Philippine Reclamation Authority
PUV Public Utility Vehicle
RA Republic Act
ROW Right of Way
SLEX South Luzon Expressway

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 Project Information Memorandum

1 PROJECT BACKGROUND

The 2011-2016 Philippine Development Plan (“PDP”) prioritized the creation of an

integrated and multimodal transport and logistics system under a Public Private Partnership
(“PPP”) framework as the centerpiece strategy for infrastructure development. The PDP
identifies the need to fast-track the establishment of an efficient, reliable, seamless and
integrated mass transportation network/system to spur the country’s economic growth.

On 21 February 2012, the President issued Executive Order No. 67 (“EO 67”) entitled:
“Providing for the Establishment of the Integrated Transport System (ITS)”, which is an
integrated and multimodal transport and logistics system (“ITS Project”).

 Section 3 of EO 67 directs the Department of Transportation and Communications

(“DOTC”) to fast-track the implementation of the ITS Project with the cooperation of
all concerned agencies. The ITS Project must also be included by National Economic
and Development Authority (“NEDA”) in the 2011-2016 Public Investment Program
(“PIP”).
 Section 4 of EO 67 states that the ITS Project shall be structured under any of the
schemes allowed under the Philippine Build-Operate-and-Transfer (“BOT”) Law.

 Section 5 of EO 67 designated the DOTC as the lead agency in planning,

implementing and monitoring of the ITS Project. DOTC is empowered to formulate
and recommend national policies and guidelines for the preparation and
implementation of integrated and comprehensive transportation and
communication systems at the national, regional and local levels.
 Section 6 of EO 67 provides for the creation of an Inter-Agency Committee which
shall be an advisory body and consultative forum in matters relating to the planning,
implementation and monitoring of the ITS Project. The Inter-Agency Committee,
composed of members from DOTC, Metro Manila Development Authority
(“MMDA”), Department of Public Works and Highways (“DPWH”), Department of
Interior and Local Government (“DILG”), NEDA, Land Transportation Franchising and
Regulatory Board (“LTFRB”) and Land Transportation Office (“LTO”), shall provide for
a mechanism for coordination to fast-track the implementation of the ITS Project.
 Sections 6 and 7 of EO 67 mandate the Inter-Agency Committee to perform the
following principal functions of providing technical advice and recommendations to
DOTC:
- Overseeing the implementation of the ITS Project;

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 Project Information Memorandum

- Regulating the terminal fees that may be charged for the use of the transport
terminals and other facilities established under the ITS Project;
- Issuing the implementing rules and regulations, procedures, guidelines and
priority actions necessary to carry out the provisions of EO 67;
- Performing other functions as may be necessary to implement EO 67 and as may
be directed by the President.

On 16 July 2013, the President issued Administrative Order No. 40 (“AO 40”) entitled:
“Providing for the Establishment of the Interim Transport Terminals in preparation of the
Integrated Transport System under EO NO. 67 (s. 2012)”. Section 6 of the AO states that the
operation of interim transport terminal shall be ceased within sixty (60) days from the date
that DOTC has determined that the permanent ITS terminals are fully operational.

The ITS Project aims to maximize road usage by reducing vehicle volume and improving
traffic flow along Metro Manila’s major thoroughfares, particularly Epifanio de los Santos
Avenue (“EDSA”). The ITS Project aims to provide for the establishment of integrated
transport terminals to provide effective interconnections between different transport
modes and services thereby ensuring efficient and seamless travel for the commuting
public.

The ITS Project envisages the establishment of three (3) mass transportation intermodal
terminals at the outskirts of Metro Manila – one (1) in the north (of EDSA) serving
passengers to and from northern Luzon, one (1) in the south serving passengers to and from
the Laguna/Batangas side, and one (1) in the southwest serving passengers to and from the
Cavite side. The terminals will connect passengers from the province to other urban
transport systems such as the Philippine National Railway (“PNR”), city buses, taxis, and
other Public Utility Vehicles (“PUVs”) serving inner Metro Manila. The terminals will include
passenger terminal buildings, emergency maintenance areas (i.e. for minor repairs of buses
and other vehicles), arrival and departure bays, ticketing facilities, park-ride facilities, and
transfer facilities such as shuttles to provide seamless transport connections.

The DOTC invites bidders to submit Bids to finance, design, construct, operate and maintain
the South ITS Project (or the ”Project”).

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 Project Information Memorandum

2 PROJECT SITE OVERVIEW

2.1 About Metro Manila

Metropolitan Manila, the National
Capital Region (“NCR”), more
popularly known as Metro Manila, is
the metropolitan region encompassing
the City of Manila and its surrounding
areas in the Philippines. It is composed
of 16 cities, namely Manila, Caloocan,
Las Piñas, Makati, Malabon,
Mandaluyong, Marikina, Muntinlupa,
Navotas, Pasay, Pasig, Parañaque,
Quezon City, San Juan, Taguig, and
Valenzuela, and the Municipality of
Pateros.

The region is the political, economic,

social, cultural, and educational center
of the Philippines. As proclaimed by
Presidential Decree No. 940, Metro
Manila as a whole is the Philippines'
seat of government while the City of
Manila is the capital. The largest city in
the metropolis is Quezon City, while
the largest business district is the
Makati Central Business District.

Metro Manila is the most populous of

the twelve defined metropolitan areas Figure 2.1: Political Map of Metro Manila
in the Philippines and the 11th most
populous in the world. The region accounts for 37% of the Philippine gross domestic product
(“GDP”), 13% of employment, and contributes 41% of the country’s total tax collection. As
of the 2010 census, it had a population of 11,855,975 and holds the biggest concentration of
urban population among the major cities in the Philippines. The metropolis has a total area
of 63,600 hectares comprising about 0.2 percent of the total Philippine land area. The status
of Metro Manila’s land use is shown in Table 2.1.

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Table 2.1: Land Use Pattern in Metro Manila

Land Use Area (Hectares) % Share

Residential 24,530 38.57

Commercial 2,446 3.85

Industrial 3,129 4.92

Institutional 3,537 5.56

Utilities 665 1.05

Open Space/Vacant Areas 8,623 13.56

Agricultural 5,630 8.85

Fishponds 1,280 2.01

Parks/Cemetery 6,162 9.69

Race Track/Golf Course 778 1.22

Water Surface 1,022 1.61

Mountains/Hills 5,798 9.12

Total 63,600 100

In Metro Manila, the rapid growth in population and, as a consequence, motorization, have
caused many urban transportation and environmental problems. The resulting urban
pattern is one where an increasing number of people live at the fringes of the metropolitan
area but still need to travel to the city centers to work or study.

The urban transport sector in Metro Manila comprises primarily of an urban road network
and public transport system. EDSA is Metro Manila’s main thoroughfare stretching around
24 kilometers and connecting the north and south of the metropolis. Its average annual
daily traffic (“AADT”) is over 156,000 vehicles. Table 2.2 presents the past data on the
number of franchises and authorized units of road based public transportation in Metro
Manila.

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Table 2.2: Public Utility Vehicles in Metro Manila

As of As of As of As of As of
December 2009 December 2010 December 2011 December 2012 October 2013
Type of Service
No. of No. of No. of No. of No. of No. of No. of No. of No. of No. of
Franchise Units Franchise Units Franchise Units Franchise Units Franchise Units

Public City Buses 385 5,299 522 7,161 522 7,161 391 5,392 391 5,392
Utility
Buses Inter-Regional Buses 1,515 10,238 1,215 8,872 1,215 8,872 1,212 8,561 1,212 8,561

Mini City Buses 2 30 2 30 2 30 - - - -

Buses Inter-Regional Buses 50 103 50 103 50 103 32 62 32 62

Public Utility Jeepneys 57,505 60,564 57,326 59,938 57,537 60,149 57,931 60,876 57,935 60,880

Taxi 17,775 22,386 15,921 21,798 15,924 21,801 17,487 24,314 17,488 24,315

Vehicles for Hire 3,180 3,397 5,104 5,375 5,227 5,498 9,255 10,185 9,255 10,185

Shuttle Transport 1,289 2,291 1,155 2,197 1,156 2,198 1,179 2,332 1,179 2,332

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 Project Information Memorandum

2.2 About the Project Site

The identified site for the proposed Project is located in the south of Metro Manila at Food
Terminal Inc. (“FTI”) property in FTI Compound, Taguig City. Figure 2.2 illustrates the
location of the Project site within Metro Manila.

SOUTH ITS PROJECT

Figure 2.2: Location of the Project Site within Metro Manila

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 Project Information Memorandum

2.2.1 South ITS Project Site

Location of the The Project site is located in the southern part of Metro Manila
Project Site and it lies near the South Luzon Expressway (“SLEX”) which
connects Metro Manila to the province of Laguna.

Co-ordinates N 14°30'24.20791" E 121° 2'8.15618"

Site Area 5.57 Hectares

Access The site is presently accessible from the east service road of SLEX.
There are plans to link the site to the Skyway.

Maximum 67 Meters (above mean sea level)

Allowable Top
Elevation

The following plan illustrates the structure of the Project site and also shows the
developments in the context areas.

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 Project Information Memorandum

Figure 2.3: South ITS Project Site

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 Project Information Memorandum

3 OVERVIEW OF THE EXISTING DEMAND

Table 3.1 demonstrates the existing situation of the provincial traffic under various
parameters.
Table 3.1: Overview of the Provincial Bus and Passenger Traffic at the ITS Terminal
(Estimated at Year 2012)
Parameters (Year 2012) Arrival Departure
Provincial bus volume per day 1,902 2,167
Provincial Passenger volume per day 77,507 83,358

3.1 Traffic at the ITS Terminal (Year 2012)

Table 3.2 presents the hourly traffic of provincial buses and the provincial passengers on a
15-minute interval basis.
Table 3.2: Hourly Volume of Provincial Bus & Passenger Traffic at 15 Min. Interval
(Estimated at Year 2012)
Direction 1 (Arrivals) Direction 2 (Departures)
North bound buses via SLEX and South bound buses via SLEX and
Skyway Skyway
Time Period
Average Average
Number of Number of
passenger passenger
buses buses
occupancy/bus occupancy/bus
01:00 - 02:00 15 39 25 38
01:15 - 02:15 17 32 14 37
01:30 - 02:30 24 28 11 33
01:45 - 02:45 26 25 11 35
02:00 - 03:00 28 21 12 31
02:15 - 03:15 33 21 17 27
02:30 - 03:30 42 23 22 30
02:45 - 03:45 51 21 26 31
03:00 - 04:00 62 24 30 31
03:15 - 04:15 67 26 33 37
03:30 - 04:30 70 27 34 39
03:45 - 04:45 77 30 40 40
04:00 - 05:00 85 29 48 40
04:15 - 05:15 93 30 55 36
04:30 - 05:30 97 31 61 36

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 Project Information Memorandum

Direction 1 (Arrivals) Direction 2 (Departures)

North bound buses via SLEX and South bound buses via SLEX and
Skyway Skyway
Time Period
Average Average
Number of Number of
passenger passenger
buses buses
occupancy/bus occupancy/bus
04:45 - 05:45 103 35 66 34
05:00 - 06:00 107 39 66 35
05:15 - 06:15 122 42 77 38
05:30 - 06:30 142 44 92 40
05:45 - 06:45 149 46 87 42
06:00 - 07:00 162 47 95 45
06:15 - 07:15 164 47 87 46
06:30 - 07:30 157 49 77 47
06:45 - 07:45 160 49 88 45
07:00 - 08:00 158 50 90 43
07:15 - 08:15 147 51 88 44
07:30 - 08:30 145 51 101 43
07:45 - 08:45 128 49 114 42
08:00 - 09:00 109 48 111 42
08:15 - 09:15 107 47 122 39
08:30 - 09:30 115 46 121 35
08:45 - 09:45 112 48 111 33
09:00 - 10:00 111 47 104 31
09:15 - 10:15 106 45 101 31
09:30 - 10:30 85 45 106 33
09:45 - 10:45 84 45 108 33
10:00 - 11:00 80 46 126 32
10:15 - 11:15 83 49 124 34
10:30 - 11:30 86 49 121 33
10:45 - 11:45 82 49 128 32
11:00 - 12:00 86 48 121 32
11:15 - 12:15 76 47 131 31
11:30 - 12:30 70 47 129 31
11:45 - 12:45 80 47 130 31
12:00 - 13:00 78 45 130 30

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 Project Information Memorandum

Direction 1 (Arrivals) Direction 2 (Departures)

North bound buses via SLEX and South bound buses via SLEX and
Skyway Skyway
Time Period
Average Average
Number of Number of
passenger passenger
buses buses
occupancy/bus occupancy/bus
12:15 - 13:15 80 45 126 29
12:30 - 13:30 82 44 118 30
12:45 - 13:45 83 43 111 31
13:00 - 14:00 85 45 104 31
13:15 - 14:15 92 45 103 32
13:30 - 14:30 91 47 101 32
13:45 - 14:45 92 44 93 32
14:00 - 15:00 81 43 91 31
14:15 - 15:15 90 42 79 31
14:30 - 15:30 104 41 84 32
14:45 - 15:45 99 41 94 35
15:00 - 16:00 110 42 109 37
15:15 - 16:15 104 44 111 37
15:30 - 16:30 96 43 112 37
15:45 - 16:45 99 44 114 38
16:00 - 17:00 106 43 106 40
16:15 - 17:15 100 40 131 42
16:30 - 17:30 103 38 135 44
16:45 - 17:45 103 39 130 44
17:00 - 18:00 93 40 138 46
17:15 - 18:15 94 40 123 47
17:30 - 18:30 80 43 119 47
17:45 - 18:45 86 41 125 46
18:00 - 19:00 87 39 133 44
18:15 - 19:15 86 39 151 43
18:30 - 19:30 92 38 154 44
18:45 - 19:45 82 38 164 43
19:00 - 20:00 85 38 154 44
19:15 - 20:15 79 39 143 43
19:30 - 20:30 81 37 156 42

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 Project Information Memorandum

Direction 1 (Arrivals) Direction 2 (Departures)

North bound buses via SLEX and South bound buses via SLEX and
Skyway Skyway
Time Period
Average Average
Number of Number of
passenger passenger
buses buses
occupancy/bus occupancy/bus
19:45 - 20:45 67 37 145 42
20:00 - 21:00 59 34 131 43
20:15 - 21:15 53 34 134 45
20:30 - 21:30 39 33 121 48
20:45 - 21:45 40 31 105 50
21:00 - 22:00 37 30 101 50
21:15 - 22:15 44 29 82 46
21:30 - 22:30 51 28 63 43
21:45 - 22:45 51 27 64 44
22:00 - 23:00 50 26 62 43
22:15 - 23:15 40 23 56 44
22:30 - 23:30 30 21 56 43
22:45 - 23:45 26 21 51 43
23:00 - 24:00 21 17 45 44
23:15 - 00:15 17 20 42 46
23:30 - 00:30 14 19 39 46
23:45 - 00:45 10 19 33 44
24:00 - 00:00 7 25 35 42
00:15 - 01:15 8 29 40 37
00:30 - 01:30 6 33 41 33
00:45 - 01:45 12 35 41 27

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 Number of Buses

10
15
30
35
50
65
70
85
90

20
25
40
45
55
60
75
80
95

0
5
100
105
120
125
140
155
160

110
115
130
135
145
150
165

01:00 - 02:00
01:30 - 02:30
02:00 - 03:00
02:30 - 03:30
03:00 - 04:00
03:30 - 04:30
04:00 - 05:00
04:30 - 05:30
05:00 - 06:00
05:30 - 06:30
06:00 - 07:00
06:30 - 07:30
07:00 - 08:00
07:30 - 08:30
08:00 - 09:00
08:30 - 09:30
09:00 - 10:00
09:30 - 10:30
10:00 - 11:00
10:30 - 11:30
11:00 - 12:00
11:30 - 12:30
12:00 - 13:00
12:30 - 13:30
13:00 - 14:00
13:30 - 14:30

Time Period
14:00 - 15:00
14:30 - 15:30
15:00 - 16:00
15:30 - 16:30
16:00 - 17:00
16:30 - 17:30
17:00 - 18:00
17:30 - 18:30
18:00 - 19:00
18:30 - 19:30
19:00 - 20:00
19:30 - 20:30
20:00 - 21:00
20:30 - 21:30
21:00 - 22:00
21:30 - 22:30
22:00 - 23:00
22:30 - 23:30
23:00 - 24:00
Figure 3.1: Hourly Volume of Buses at 15 Min. Interval (Estimated at Year 2012), North Bound Direction via SLEX & Skyway

23:30 - 00:30
24:00 - 00:00
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00:30 - 01:30
Project Information Memorandum
 Number of Buses

10
15
30
35
50
65
70
85
90

20
25
40
45
55
60
75
80
95

0
5
100
105
120
125
140
155
160

110
115
130
135
145
150
165

01:00 - 02:00
01:30 - 02:30
02:00 - 03:00
02:30 - 03:30
03:00 - 04:00
03:30 - 04:30
04:00 - 05:00
04:30 - 05:30
05:00 - 06:00
05:30 - 06:30
06:00 - 07:00
06:30 - 07:30
07:00 - 08:00
07:30 - 08:30
08:00 - 09:00
08:30 - 09:30
09:00 - 10:00
09:30 - 10:30
10:00 - 11:00
10:30 - 11:30
11:00 - 12:00
11:30 - 12:30
12:00 - 13:00
12:30 - 13:30
13:00 - 14:00
13:30 - 14:30

Time Period
14:00 - 15:00
14:30 - 15:30
15:00 - 16:00
15:30 - 16:30
16:00 - 17:00
16:30 - 17:30
17:00 - 18:00
17:30 - 18:30
18:00 - 19:00
18:30 - 19:30
19:00 - 20:00
19:30 - 20:30
20:00 - 21:00
20:30 - 21:30
21:00 - 22:00
21:30 - 22:30
22:00 - 23:00
22:30 - 23:30
Figure 3.2: Hourly Volume of Buses at 15 Min. Interval (Estimated at Year 2012), South Bound Direction via SLEX & Skyway

23:00 - 24:00
23:30 - 00:30
24:00 - 00:00
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00:30 - 01:30
Project Information Memorandum
 Project Information Memorandum

4 SCOPE AND STRUCTURE OF THE PPP PROJECT

4.1 Project Description

The Project to be undertaken by the Concessionaire consists of:
a) the design, engineering, and construction of the ITS Terminal within eighteen (18)
months from the start of construction;
b) from its completion until the end of the concession period, the operation and
maintenance of the ITS Terminal in accordance with specified performance
standards;
c) the collection of terminal fee from users of the ITS Terminal on behalf of DOTC and
remitting the same to DOTC;
d) the financing of the above activities;
e) the designing, financing, engineering and construction of Commercial Assets,
carrying out of the Commercial Business (at the Concessionaire's option) and
collection of any revenues generated from the same; and
f) turn-over of the Project assets to the DOTC at the end of the Concession Period,
all in accordance with the Concession Agreement.

The accompanying work to be effected by the DOTC or for which the DOTC is responsible
consists of:
a) the provision or acquisition of the Project site;
b) the design, engineering and construction of the access road leading to the Project
site, on or before the Completion Date; and
c) the financing of the above activities;
all in accordance with the Concession Agreement.

4.2 Legal Framework for the South ITS Project

The bidding and implementation of the Project shall be conducted in accordance with
Republic Act (RA) No. 6957, as amended by RA No. 7718 ("BOT Law”), and its 2012 Revised
Implementing Rules and Regulations (“2012 Revised IRR”). The BOT Law is the primary law
governing PPP in the Philippines and provides the legal framework for government agencies
to enter into PPP contracts with qualified private sector proponents for the implementation
of government infrastructure and development projects.

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4.2.1 Procurement Process

The South ITS Project will be procured by a two-stage public bidding in accordance with the
rules and procedures for public bidding set out in the BOT Law and the 2012 Revised IRR.
The bidding will follow the solicited mode under the 2012 Revised IRR. Under the solicited
mode, prospective bidders are qualified based on minimum legal, technical and financial
eligibility requirements determined by the Pre-Qualification, Bids and Awards Committee
(“PBAC”) to be formed by the implementing agency. The qualification documents and the
bid of each prospective bidder will be evaluated based on their completeness, adequacy and
compliance with the prescribed evaluation criteria.
The general procedure for the procurement and bidding under the two-stage bidding
process will be as follows:
a) Prospective bidders will be invited by the PBAC to pre-qualify and bid by submitting
their qualification documents.
b) Prior to the submission of the qualification documents, the PBAC will conduct a pre-
qualification conference to which all prospective bidders will be invited. During the
pre-qualification conference, prospective bidders may seek clarification regarding
any qualification requirements.
c) On the deadline stipulated in the Instructions to Prospective Bidders, prospective
bidders will be asked to submit their qualification documents.
d) After reviewing the qualification documents, the PBAC will determine which of the
prospective bidders fulfil the prescribed qualification requirements and inform all
such pre-qualified bidders. The PBAC shall also inform all disqualified bidders in
writing of their failure to qualify and the reasons for their disqualification from the
bidding. Only the pre-qualified bidders will be invited and allowed to submit their
respective bids for the Project.
e) Upon completion of the pre-qualification of the prospective bidders, the PBAC will
announce the deadline for the submission of the bid proposals. Prior to bid
submission, a pre-bid conference shall be held, to which all pre-qualified bidders will
be invited. During the pre-bid conference, prospective bidders may seek clarification
on any issues regarding the Project and/or the terms and conditions of the bidding
documents.
f) Pre-qualified bidders will be asked to bid for the Project by submitting their bid
proposals. The pre-qualified bidders shall submit these in two envelopes containing
the technical proposal and the financial proposal, a bid security and other supporting
documents.

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g) The technical proposals of qualified bidders will be opened and evaluated by the
PBAC on a pass/fail basis. Qualified bidders will be informed as to whether their
technical proposals passed the evaluation. The financial proposals of qualified
bidders who fail to pass the technical evaluation shall be returned unopened upon
expiration of the period to file a Motion for Reconsideration/appeal or until the
Motion for Reconsideration/appeal is denied with finality.
h) The financial proposals of qualified bidders which pass the technical evaluation will
be opened and evaluated by the PBAC based on the most advantageous bid for the
government. The specifics of the criteria for the evaluation of the financial proposals
will be described in the Instructions to Bidders (“ITB”).
i) The pre-qualified bidder which passes the technical evaluation and with the financial
proposal which is most advantageous to the government based on the parameters
set in the ITB shall be considered for awarding the Project, subject to its compliance
with requirements prescribed in the ITB.

4.3 Proposed Contractual Arrangement

The sections below provide a brief outline of certain significant aspects of the Project
structure. The details will be provided in the draft Concession Agreement.

4.3.1 PPP Structure

The Project will be implemented using a Build-Transfer-Operate (“BTO”) arrangement,
which is a contractual arrangement whereby the implementing agency (DOTC) contracts out
the construction of an infrastructure facility (ITS Terminal) to a private entity
(Concessionaire) such that the private entity builds the facility on a turnkey basis, assuming
cost overruns, delays and specified performance risks. Once the facility is commissioned
satisfactorily, title over the facility is transferred to the implementing agency. The private
entity, however, operates the facility on behalf of the implementing agency in accordance
with specified performance standards and specifications set out in the PPP contract.

4.3.2 Implementing Agency

The implementing agency for the Project is the DOTC. The BOT Law provides the DOTC with
a valid and tested legal framework to undertake the Project. The law authorizes
infrastructure agencies such as the DOTC to enter into BOT contracts with qualified private
sector proponents for the implementation of public infrastructure or development projects.

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4.3.3 Concession Period

The PPP concession shall be for a period of 35 years.

4.3.4 Incentives
In accordance with the BOT Law, project proponents may avail of the investment incentives
under the Omnibus Investments Code as described below. The DOTC, however, does not
guarantee that the project proponent will be granted such incentives.

4.3.4.1 Incentives under Omnibus Investments Code

Project Proponents for PPP Projects are entitled to fiscal and non-fiscal incentives under the
Omnibus Investment Code of 1987, upon registration with the Board of Investments (“BOI”)
if:
a) the project cost exceeds 1 Billion Pesos; or
b) the project activity or sector is included in the current Investment Priorities Plan of
the BOI, even if the project cost does not exceed 1 Billion Pesos.
Every annual Investment Priorities Plan contain General and Specific Guidelines that provide
certain rules for the approval of the BOI registration of any enterprise and the entitlement
to incentives of such registrant to implement the general parameters indicated in the
Omnibus Investment Code.
One key incentive provided under the Omnibus Investments Code is the exemption from
payment of income taxes upon the scheduled start of commercial operations. Such tax
exemption may be for a period of six (6) years, for pioneer enterprises, or four (4) years for
non-pioneer enterprises from the start of commercial operations, as may be determined
under the Omnibus Investments Code.
The income tax holiday may be extended for another year, at the discretion of the BOI, as
long as the total exemption period does not exceed eight (8) years, in each of the following
cases:
a) compliance with the BOI’s prescribed ratio of capital equipment to the number of
workers for the project; or
b) utilization of indigenous raw materials at rates set by the BOI; or
c) net foreign exchange savings or earnings amount to at least US$500,000 annually
during the first three years of operation.
Other additional fiscal and non-fiscal incentives may also be available, such as:
a) simplification of customs procedures;

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b) unrestricted use of consigned equipment;

c) tax and duty exemptions on imported spare parts used on consigned equipment;
d) employment of foreign nationals in supervisory, technical or advisory positions for
five (5) years from the date of registration with the BOI, extendible for limited
periods at the discretion of the BOI; and
e) the positions of President, General Manager and Treasurer of foreign-owned
registered enterprises (majority foreign-owned) or their equivalent shall not be
subject to the 5-year limitation.

4.3.4.2 Incentives Extended by Local Governments

A Local Government Unit (“LGU”) may, in its discretion, provide tax incentives, exemptions
or relief to a PPP project proponent for projects implemented within its jurisdiction. The
precise incentives granted, however, will vary with each LGU.

4.3.4.3 Foreign Exchange

Foreign exchange may be traded freely and with few restrictions, brought into or sent out of
the country by foreign corporations operating in the Philippines. Foreign
investments/profits can also be repatriated in foreign exchange. Repatriation of foreign
exchange sourced from the banking system will need prior Bangko Sentral ng Pilipinas
(“BSP”) registration of inward remittance of the underlying investment.

4.3.5 Project Site & Access Road

The DOTC shall provide, at no cost to the project proponent, all the right-of-way and other
possessory rights over the Project site as may be necessary for the implementation of the
Project. In addition, the DOTC shall effect the construction, operation and maintenance of
the access road leading to the Project site.

4.3.6 Concessionaire Revenue

As a form of repayment for financing, constructing, operating and maintaining the South ITS
Project, the Concessionaire may be paid an Annual Grantor Payment during the Concession
Period. The Concession Agreement shall set out the Annual Grantor Payment that the
project proponent may receive for each year of the Concession Period. In addition, the
Concessionaire shall be entitled to construct commercial assets or to carry out commercial
businesses on the Project site and to collect and retain the revenues from these commercial
business undertakings for so long as such construction and businesses do not interfere with
the Project. Such commercial assets shall not include any residential property. For this

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purpose, the development of hotels and service apartments/hotel apartments shall not be
deemed to constitute residential property.

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