Deep dive into PPPs (5)

All PPP projects are subject to audit by the Commission on Audit, particularly government revenues, shares, or receipts from any PPP contract, to ensure proper accounting and remittance.

Dean Nilo Divina·8 May 2025, 10:00 pm·1 MIN READ

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Protest mechanism

The PPP Code IRR allows protests on three specific grounds: (1) the tender documents or procurement process did not comply with the PPP Code or its IRR; (2) the private partner selection process violated the same; or (3) there is evidence of corruption, bribery, collusion, fraud, or abuse of authority during procurement.

If any of these grounds exist, the aggrieved proponent may file a motion for reconsideration with the PBAC within five days of receiving the notice of resolution. The PBAC must resolve the motion within five days. No second motion is allowed.

Should the motion be denied, the proponent may appeal to the Head of the Implementing Agency within five days from receipt of the PBAC’s decision, along with the applicable appeal fee. The head has 10 days to decide. If the head is not a Department Secretary, a further appeal to the Secretary may be made within five days of the decision, subject to the same appeal fee. The Secretary has 15 days to decide; otherwise, the appeal is deemed denied.

For local PPP projects, the timeline remains the same for filing a motion for reconsideration, but the PBAC has 10 days to resolve it. The proponent may appeal to the local chief executive within 10 days of receiving the PBAC decision. The chief executive has 20 days to decide. The appeal fee, set by the PBAC, is refundable if the appeal is granted.

Project implementation

Once the contract is executed, the Implementing Agency must adopt a contract management plan. This includes a project execution plan, conflict resolution strategies, and risk mitigation measures. To guarantee compliance, the private partner is required to post a performance bond.

An Independent Consultant must be hired within 30 days of signing the contract. This consultant, jointly funded by the Implementing Agency and the private partner, provides impartial advice and monitors compliance with the design, construction, and performance obligations of both parties.

Any proposed changes to the project — through variation, expansion, or extension of the contract — require the Head of the Implementing Agency to exercise due diligence. These allowable changes must be stated in the Project Tender Committee (PTC) documents. However, approval from the appropriate approving body is required if the changes involve: (1) tariff rates or formulas; (2) a reduction in government revenue or profit share; (3) modifications to scope, standards, or services; (4) extension of the contract term; or (5) increased financial liability for the government. Any variation without approval is void and cannot be implemented.

Other salient provisions

PPP projects, whether solicited or unsolicited, may qualify for investment incentives, subject to existing laws. National incentives are granted only to registered business enterprises with projects under the Strategic Investment Priority Plan. Local incentives follow local investment codes.

All PPP projects are subject to audit by the Commission on Audit (CoA), particularly government revenues, shares, or receipts from any PPP contract, to ensure proper accounting and remittance.

The PPP Code and its IRR provide penalties for violations, including imprisonment of 3 to 6 years and fines ranging from P1 million to P5 million. Each violation is treated independently and penalized accordingly.

Given the complexity of PPP laws and regulations, it is strongly recommended to seek legal and technical expertise when navigating any stage of a PPP project.

For more of Dean Nilo Divina’s legal tidbits, please visit www.divinalaw.com. For comments and questions, please send an email to cad@divinalaw.com.