Judicial limits on PPP projects

With the recent enactment of Republic Act No. 11988, or the Public-Private Partnership Code of the Philippines, public-private partnership (PPP) projects in the country are expected to pick up speed.

Recognizing the indispensable role of the private sector in nation-building, the law requires the state to “… provide an enabling environment for the private sector to mobilize its resources to finance, design, construct, operate and maintain infrastructure or development projects and services.”

The 25-page law codified, in effect, the statutes, executive orders and administrative rules and regulations on PPP projects that have accumulated through the years.

From the way many of its provisions are written, it is evident there was a conscious effort to clarify some of the ambiguities and inconsistencies that marked the government’s earlier efforts to use the PPP system to address the country’s infrastructure needs.

The law also specifically declared the repeal or modification of nine sets of laws applicable to national and local government offices, including state universities and colleges, that have something to do with PPP projects.That action is significant because it would do away with the issue of “implied repeal” of existing laws or rulings, which is often a bone of contention among government offices that are antsy about perceived overlap or intrusion into their areas of authority and responsibility.

It is noteworthy the law has addressed an issue that, in the past, had adversely affected the ability of the government to make full use of the PPP system, i.e., resort to judicial processes by losing bidders or private organizations (citing legal, social, cultural and environmental reasons) to prevent the implementation of PPP projects.

This time, no court, other than the Supreme Court, may issue restraining orders, injunctions, environmental protection orders or similar provisional remedies against any government agency or its officials to prohibit or restrain the evaluation, acceptance and rejection of unsolicited proposals; bidding, rebidding or declaration of failure of bidding; awarding of any PPP contract; and acquisition, clearance and development of right-of-way sites.

Also included in the list are matters that relate to the construction, operation and maintenance of any PPP project; commencement, execution, implementation, termination or rescission of any PPP project; and undertaking or authorization of any other lawful activity necessary for such project.

There was a similar prohibition in the earlier law on PPPs, but it was loosely worded or was otherwise susceptible to varying interpretations, and so it enabled losing bidders to go to court to question the award.

Not anymore. The proscription is clear and unequivocal and there is no room for imaginative contrary legal arguments.

In case a judge issues any of those banned orders, his or her action shall be void and without any force and effect.

Worse, that overreaching judge shall suffer the penalty of suspension of at least 60 days without pay, on top of any civil and criminal liabilities that may arise from such action.

Judicial intervention will be allowed only when the matter is “of extreme urgency involving a constitutional issue, such that unless a temporary restraining order is issued, grave injustice and irreparable injury will arise.”

But there is a catch to that exception—the party who asks for that order has to put up a bond in an amount to be fixed by the court; if the court decides that the request has no merit, the bond shall be forfeited in favor of the government.

The rule of thumb in fixing the bond amount is it should be sufficient to answer for any damages that the counterparty may suffer as a result of the restraining order.

Considering the wide discretion given to the court, the bond amount may not come cheap because PPP projects in the coming days could run into billions of pesos.

This way, any person who believes he or she would suffer financial damage from a PPP project may have to think twice (or more) before taking that action. INQ