Philippines Copyright 2008. All Rights Reserved.

Jose M. Layug, Jr.

University of the Philippines

College of Law
Diliman, Quezon City

Prof. J. M. Layug, Jr.

COURSE OUTLINE IN PROJECT DEVELOPMENT

AND FINANCE
Second Semester, AY 2011-2012

I.

Background
A.
General Concept of Project Finance An Overview
1.

Project Financing Defined

Read:

2.

Typical Structures and Trends

Read:

B.

Nevitt, Peter K., Project Financing (7th ed), pp. 1-27

(Handout No. 1)

The Guide to Financing Power Projects, Baker &

Mckenzie, pp. 1-20

Philippine Laws Governing Project Development and Finance in General

1.

1987 Philippine Constitution

Read: Article II, secs. 19-201

2.

3.
1

Anti-Dummy Law Issues

Read:

Commonwealth Act No. 108

Presidential Decree No. 715

Read:

Read:

Article XII, secs. 2, 3, 5, 7, 10, 16

Read:

Chavez vs. Public Estates Authority and Amari

Coastal Bay Development Authority, G.R. 133250,
July 9, 2002.
Manila Prince Hotel vs. GSIS, et al., G.R. 122156,
February 3, 1997.
La Bugal Blaan Tribal Association, et al. vs.
Ramos, WMC, et al., G.R. 127882, (final decision
after motion for reconsideration), December 2004.
Chavez vs. NHA, G.R. No. 164527, August 15,
2007.

Palacios vs. Ramirez, L-27952, Feb. 15, 1982

PBC v. Lui She, 21 SCRA 52 (1967).
Soriano v. Ong Hoo, et al., 103 Phil. 829 (1958).
Halili v. CA, 287 SCRA 465 (1998).

Corporation Code of the Philippines

These sections are flagship provisions for the Philippine economy recognizing the role of private initiative
and enterprise in a self-reliant and independent national economy effectively controlled by Filipinos.

Philippines Copyright 2008. All Rights Reserved.

Jose M. Layug, Jr.

Read:
4.

Republic Act No. 6957 (An Act Authorizing the Financing,

Construction, Operation and Maintenance of Infrastructure
Projects by the Private Sector, and for Other Purposes) and
Implementing Rules and Regulations (IRR) of R.A. 6957, as
amended.
Read:

5.

Tatad vs. Garcia, Jr., 243 SCRA 436-493 (1995).

MMDA vs. Jancom, G.R. No. 147465, Jan. 30,
2002. (Original Decision)
MMDA vs. Jancom, supra (Resolution on Motion
for Reconsideration)
Chavez vs. NHA, G.R. No. 164527, August 15,
2007.

Republic Act No. 7718, amending R.A. No. 6957

Read:

6.

Sections 2-6, 10-15, 17(2), 23, 24, 25, 140

Sec. 2 (Definitions) and corresponding provisions

of IRR
Comparative Analysis (Handout No. 3)

Foreign Investments Act of 1991

a.

What is a Philippine national?

b.

Doing Business in the Philippines

B. Van Zuiden Bros. vs. GTVL Manufacturing,
G.R. No. 147905. May 28, 2007.
Agilent Technologies Singapore vs. Integrated
Technology Phil. Corp., G.R. No. 154618. April 14,
2004.
Hahn vs. Court of Appeals, G.R. No. 113074.
January 22, 1997.

II.

7.

Omnibus Investments Code, Executive Order No. 226

8.

Other executive orders, presidential decrees, executive issuances

and memoranda

9.

Rules and regulations implementing various laws, executive

orders, presidential issuances.

Project Finance in the Philippine Context An Overview

A.

Parties
1.

Philippine Government
i.
Read:

Authorized Signatories
Book I, Chapter 12, Secs. 47-51, Administrative
Code of 1987 (E.O. 262)

Philippines Copyright 2008. All Rights Reserved.

Jose M. Layug, Jr.
Book IV, Chapter 5, Sec. 27, supra
Book IV, Chapter 13, Secs. 57-65, supra
ii.
2.

Limitations in Contractual Amounts

Project Proponent
Read:

Sec. 2(k), R.A. 7718 and corresponding provision of

IRR

Read:

Philippine Law Governing Joint Ventures,

Appendix C, Philippine Corporate Law, Cesar
Villanueva.
Heirs of Tan Eng Kee vs. Court of Appeals, G.R.
No. 126881, October 3, 2000.
JG Summit Holdings vs. Court of Appeals, G.R.
No. 124293, November 20, 2000.

3.

Contractors, suppliers and other parties

Read:

4.

Lending Institutions and Security Arrangements

Read:

B.

Sec. 2(l), R.A. 7718 and corresponding provision of

IRR

Civil Code of the Philippines, articles

2047-2141

Contracts
1.

Government Contracts
i.

Public Bidding Requirement

Read: Manila International Airport Authority, et al. vs.
Mabunay, G.R. 126151, January 20, 2000.
JG Summit Holdings vs. Court of Appeals, G.R.
124293, November 20, 2000.
Information Technology Foundation of the
Philippines, et al. vs. COMELEC, et al, G.R. No.
159139, January 14, 2004.
Oani vs. People of the Philippines, G.R. No.
139984. March 31, 2005.
Agan vs. PIATCO, G.R. Nos. 155001, 155547,
155641; May 5, 2003.
Sec. 5, R.A. 7718
Rule 3, IRR

ii.

Unsolicited Proposals and Direct Negotiation

Read: Secs. 4-A, 5-A, R.A. 7718
Rules 9 and 10, IRR

iii.

Government Procurement

Philippines Copyright 2008. All Rights Reserved.

Jose M. Layug, Jr.
Read: Republic Act No. 9184, Government Procurement
Reform Act
iv.
C.

IV.

Other Contracts to be discussed in Part IV

Sources of Financing
1.

Equity, Loans, Debt and Capital Markets

Read:
The Guide to Financing Oil and Gas Projects,
Milbank, Tweed, Hadley & McCloy, pp. 11-22.

2.

Multilateral Lending and Export Credit Agencies

Read:
The Guide to Financing Oil and Gas Projects,
Milbank, Tweed, Hadley & McCloy, pp. 11-22.

3.

The World Bank Group

Read:
Philippe Benoit, Project Finance at the World Bank,
pp. 19-35, 59-67, 69-78.

Project Finance in the Philippine Context Industry Specific

Power and Energy
A.

Upstream Energy Industry Exploration, Development and Utilization of

Resources
1.

Petroleum Oil and Gas

Read:
Article XII, Section 2, 1987 Constitution
Presidential Decree No. 87 (1972)
Proclamation No. 72
The Guide to Financing International Oil and
Gas Projects, Milbank, Tweed, Hadley &
McCloy, pp. 59-81.
Executive Order No. 66 (designating DOE as
lead agency for development of Philippine
natural gas industry)
Case Study: The Malampaya Deep Water Gas
to Power Project

2.

Geothermal
Read:

3.

Article XII, Section 2, 1987 Constitution

Presidential Decree No. 1442
Case Study: Tiwi-Makban Power Plant

Presidential Decree No. 972

Presidential Decree No. 1174

Coal Energy
Read:

4.

Alternative and Renewable Energy

Read:
Republic Act No. 7156
Executive Order No. 462
Executive Order No. 232

5.

Mining

Philippines Copyright 2008. All Rights Reserved.

Jose M. Layug, Jr.

Please see IV.E below.

B.

Midstream Energy Industry Power Generation and Distribution

1.

Power Generation Sector

i.

Independent Power Producers

Read: The Guide to Financing Power Projects, Baker &
Mckenzie, pp. 21-37.
Administrative Order No. 10, May 26, 2001,
Office of the President
R.A. No. 8975, Prohibiting Injunctions and TROs

ii.

Project Documentation
Read: The Guide to Financing Power Projects, Baker &
Mckenzie, pp. 37-65.

iii.

Philippine Power Industry

Read: Republic Act No. 9136, Electric Power Industry
Reform Act of 2001

iv.

Case Study

Quezon Power Plant

IMPSA
2.
3.
4.
C.

Distribution Sector
Transmission Sector
Supply Sector

Downstream Energy Industry

1.

Oil
Read:
Republic Act No. 8479
Garcia vs. Corona, G.R. No. 132451. December
17, 1999.

2.
3.

Compressed Natural Gas

Biofuels - Republic Act No. 9367 (Biofuels Act of 2006)
Transportation

D.

Transportation
1.

Secs. 2-3, Article XII, 1987 Philippine Constitution

2.

Revisit: Concept of Public Utility in Tatad case

3.

Case Study

Philippines Copyright 2008. All Rights Reserved.

Jose M. Layug, Jr.
i.

Metro Rail Transit Corporation

Land Registration Authority Consulta

ii.

Light Rail Transit 1 Cavite Extension Project

Read:

Request for Opinion of Department of

Justice (DOJ) re: Sec. 4-A, R.A. No. 7718
DOJ Opinion No. 075, September 4,
2002
Mining Resources

E.

The Mining Industry

a. General Background
Read:

R.A. No. 7942, Philippine Mining Act of 1995

La Bugal Blaan Tribal Association, et al. vs.
Ramos, WMC, et al., G.R. 127882, (final decision
after motion for reconsideration), December 2004.
Southeast Mindanao Gold Mining Corp. vs.
Balite Mining Corp., G.R. 135190, April 3, 2002.
Isagani Cruz, et al. vs. DENR Secretary, et al.,
G.R. No. 135395, December 6, 2000.
Republic vs. Marcopper Mining, G.R. No.
137174, July 10, 2000.

b. Case Study
i.
ii.

IV.

Western Mining Corporation

Anglo American Exploration (Philippines), Inc.

Selected Legal Issues in Project Financing

A.

Choice of Law Procedural and Substantive Law

B.

Dispute Resolution
Read:

C.

Project Finance: Selected Issues in Choice of Law,

Skadden, Arps, Slate, Meagher & Flom, pp. 63-70

Environmental Concerns
i.
ii.

Philippine Environmental Impact Statement System

Environmental Compliance Certificate
Read:

Presidential Decree No. 1586

Philippine EIS System Guide: Policies and
Procedures, EMB-DENR, pp. 1-29
R.A. No. 8749, Philippine Clean Air Act of 1999

Philippines Copyright 2008. All Rights Reserved.

Jose M. Layug, Jr.

V.

Privatization in the Philippines

A.

Introduction

B.

Regulatory Framework
Read:

C.

Proclamation No. 50; R.A. Nos. 7661, 7886 and

8758; Executive Order Nos. 298 (1996), 12 (1998), 323
(2000)

Privatization Council and Privatization Management Office