Financing Contracts with Private Persons.
Section 9
SEC. 9. Financing Contracts with Private Persons.—(a) Any provincial, city or municipal government may enter into, and bind itself by, contract with any private person, natural or juridical, for financing such self-liquidating or income-producing projects as the construction of toll roads and bridges, the installation of telephone systems, the acquisition of land and water transport systems, as well as the operation and maintenance of such projects, subject to the approval of the National Economic and Development Authority, upon recommendation of the Secretary of Finance: Provided, That the aggregate amounts of financing contracts that a local government may enter into by virtue of this Section shall not exceed the legal borrowing capacity and said local government as certified to by the Commission on Audit. The construction and prosecution of projects under the authority of this Section shall be subject to the following terms and conditions: The provincial, city or municipal engineer, as the case may be, upon formal request in writing by the local chief executive, shall prepare the plans and specifications for the proposed projects, which shall be subject to the approval of the local board or council. In the absence of a municipal engineer, the plans and specifications of the proposed project shall be prepared by the provincial engineer. Upon approval by the local board or council of the project plans and specifications, the provincial, city or municipal engineer concerned shall forthwith cause to be published once every week for three consecutive weeks in at least two newspapers of general circulation, a notice inviting all eligible contractors to participate in a public bidding or the projects so approved. The contract shall be awarded to the lowest qualified bidder: Provided, That the winning bid shall not exceed by fifteen per cent the estimated cost of the project as computed by the local engineer. The conduct of public bidding and award of contracts for local government projects under this Section shall be in accordance with existing laws and pertinent rules and regulations. Any contractor who shall undertake the prosecution of any project under this Section shall post bonds to project the interest of the province, city or municipality in such amounts as may be fixed by the local board or council and the provincial, city or municipal engineer of the locality shall not allow any contractor to initiate the prosecution of projects under this Section unless such contractor shall present proof or evidence that he has posted the required bond. The contractor shall be entitled to the contract price based on the winning bid plus interest on the unpaid balance thereof not exceeding twelve per cent per annum. The provincial municipal or city government concerned is authorized to charge and collect reasonable tolls or fees, in the presence of a duly authorized representative of the contractor, for the use of finished projects, which collections shall be turned over to the contractor at the end of every week for a period not exceeding twenty years. In the case of roads or bridges constructed pursuant to this Section, tolls shall be collected only on motor vehicles using the same and automatic traffic counters shall be installed in the entrance, terminal and intermediate toll gates. The tolls or fees that will be charged for the use of roads, bridges, telephone systems, land transport systems, ferries and watercraft constructed installed or acquired in accordance with this Section shall be levied in an appropriate local tax ordinance which shall be enacted by the local board or council, approved by the local chief executive and reviewed by the Secretary of Finance or the Provincial Treasurer pursuant to the pertinent provisions of the Local Tax Code, as amended. Any change in the schedule or rates of such tolls and fees shall likewise be made through the enactment of an appropriate local tax ordinance. Collections from the tolls or fee authorized to be collected under this Section shall first be applied to the interest and the remainder to the principal in the accounting of the receipts from such tolls or fees. The imposition and collection of tolls or fees shall be discontinued after the principal expended on the project, and the interest thereof, shall have been collected as certified to by the provincial, city and municipal treasurer concerned, and from that time the contract for such project shall be deemed extinguished The projects undertaken under this Section shall be prosecuted under the supervision of the provincial, city or municipal engineer of the province, city or municipality, as the case may be, or if there be no municipal engineer, by the provincial engineer of the province to which the municipality belongs, in accordance with the plans and specifications of the project as approved by the local board or council. The Provincial Attorney or City Legal Officer or Municipal Attorney, as the case may be, shall pass upon contracts executed pursuant to this Section to determine their legality and correctness of form. In the absence of the above-named officials, the responsibility shall devolve upon the provincial or city fiscal concerned. It shall be unlawful for any public official or employee in the provincial, city or municipal government, or their relatives within the fourth civil degree of con sanguinity or affinity, to enter into, or be in any way interested in, the contract for the construction, prosecution, acquisition, operation or maintenance of any project awarded pursuant to the provisions of this Section or for the furnishing of any supplies, materials or equipment of any kind, to be used in the project. Any person who violates the provisions of this Section shall be removed from office, any provisions of law to the contrary not withstanding, and suffer imprisonment not exceeding five years.