- Conventus Law: What has been the impact of the recent amendments to the Build-Operate-Transfer (BOT) Law and its IRR had on the structuring of PPP projects in the Philippines?
SyCipLaw: Republic Act No. 11966 or the Public-Private Partnership Code (the “PPP Code”) did not just amend the BOT Law and its IRR, the PPP Code repealed them. It consolidated the fragmented public-private partnership (“PPP”) regulations in the Philippines into a unified legal PPP framework, including: (i) BOT projects and variance thereof under the BOT Law and (ii) joint venture transactions pursuant to the National Economic Development Authority (“NEDA”, now Department of Economy, Planning and Development (“DepDEV”) JV Guidelines and PPP legislations of local government units. It also revoked the power of government agencies to issue their own guidelines relating to PPP projects.
While the past administration appears to favor infrastructure projects financed through foreign loans and the Official Development Act (“ODA”), the Marcos administration’s thrust appears to fully utilize PPP initiatives under the PPP Code and its implementing rules and regulations (the “PPP Code IRR”), and thus, it is expected that more infrastructure projects will be undertaken through various PPP modes. As of July 2025, the Philippines has 230 PPP projects in its pipeline, with a total estimated value of PhP2.86 trillion.
- Conventus Law: How can legal and regulatory hurdles be mitigated during the procurement stage of infrastructure projects contractually or procedurally?
SyCipLaw: The PPP Code provides for a clear and transparent approval process, including the approving authorities at various levels and all other entities involved in the review process, timelines and procedures for procurements. During the procurement stage, the terms of reference and the draft contract already provide for the risk allocation between the private proponent and the government relating to the projects (including legal and regulatory risks). These features of the PPP Code address legal and regulatory hurdles in the procurement of infrastructure projects.
- Conventus Law: In the context of hybrid PPPs and increased government funding, how is risk allocation evolving between public and private sectors in infrastructure contracts?
SyCipLaw: We understand “hybrid PPPs” as those referring to projects where the government finances the construction of the infrastructure project using public funds or ODA, while its operation and maintenance (and possibly, rehabilitation) will be bid out to the private sector. While there is no specific provision of the PPP Code providing for hybrid PPPs, Section 2 of the PPP Code provides that the State will “pursue a policy of financing infrastructure and other development projects and services through all means available to effectively meet the objectives of the government. These may include appropriations, official development act (ODA), and PPPs, as well as combinations and variations thereof.”
The development of infrastructure projects under a hybrid PPP arrangement provides a balance of risk allocation where construction risk is borne by the government while the operational and commercial risks are borne by the private sector. A hybrid arrangement provides for more efficient implementation of projects where government already secured funding but does not have the capacity to operate and manage the project.
- Conventus Law: How would you assess the current regulatory environment for foreign contractors and investors participating in large-scale infrastructure projects, especially in light of the amended Public Service Act?
SyCipLaw: The current regulatory environment, particularly the amendment of the Public Service Act (“PSA”), provides a positive shift to encourage participation of foreign investors in large-scale infrastructure projects. PPPs involving public utilities require, among others, compliance with nationality restrictions by the private partner to get a franchise or a certificate of authorization to operate a public utility. The amendment to the PSA limited the definition of public utilities to those that operate, manage or control for public use: (i) distribution of electricity, (ii) transmission of electricity, (iii) petroleum and petroleum products pipeline transmission systems, (iv) water pipeline distribution systems and water pipeline systems, including sewerage pipeline systems, (v) seaports, and (vi) public utility vehicles. The PSA amendment provided more avenues for foreign investors to participate in other infrastructure projects previously characterized as public utilities (e.g., airports).
Having said this, there remains some regulatory hurdles that foreign investors and contractors need be conscious of in terms of structuring participation in large-scale infrastructure projects, including nationality restrictions as to ownership of land and contractor licensing requirements by the Philippine Contractors Accreditation Board (as applicable).
“The current regulatory environment, particularly the amendment of the Public Service Act (“PSA”), provides a positive shift to encourage participation of foreign investors in large-scale infrastructure projects.”
SyCipLaw
- Conventus Law: What are your recommendations for navigating right-of-way acquisition and resettlement issues, particularly in compliance with the Right-of-Way Act and applicable environmental and social safeguards?
SyCipLaw: The Right-of-Way Act provides the framework for acquisition of private property for national government infrastructure projects, which mandates, among others, that right-of-way (“ROW”) acquisition should primarily be done through negotiated sale, with expropriation as a last resort, and with just compensation for landowners and affected communities.
Detailed due diligence on the ROWs and land requirements for the project should be made so that appropriate environmental and social safeguards can be made, including the preparation of resettlement action plans, engagement of key stakeholders, and alignment of the plans with regulatory requirements, in terms of implementation. PPP contracts usually provide that the obligation to deliver ROWs lies with government party, thus, they should also expressly include provisions on time-bound commitments for the delivery of ROWs and remedies if delays occur.
- Conventus Law: Are there significant legal trends in arbitration or dispute resolution for infrastructure and construction contracts in the Philippines? Have you observed a shift in how claims are being resolved?
SyCipLaw: Yes. In fact, the PPP Code mandates that provisions on the use of dispute avoidance and Alternative Dispute Resolution (“ADR”) mechanism under the Alternative Dispute Resolution Act of 2004 (the “ADR Act”) be included in PPP agreements, thereby signaling that arbitration and ADR have become the preferred mode of dispute resolution in large infrastructure and PPP projects. PPP agreements usually also specify international arbitration, which is particularly good for foreign investors which may want to ensure neutrality of the arbitration body and enforceability of the arbitral award under the New York Convention on Enforcement of Arbitral Awards. Of course, construction disputes continue to be governed by the rules of the Construction Industry Arbitration Commission, given that this is a Philippine legal requirement.
We also see a trend on tiered dispute resolution mechanisms in concession agreements, including provisions relating to the constitution of project dispute resolution boards and mediation proceedings. These provide parties with means to resolve disputes at their early stages, and to possibly avoid proceeding to arbitration.
- Conventus Law: Do private sector players need to follow any best practices when engaging with government agencies like the DPWH, DOTr, or LGUs to ensure project viability and regulatory compliance?
SyCipLaw: Yes. The private sector should absolutely follow best practices when working with government agencies like DPWH, DOTr, or LGUs. The most basic is understanding each agency’s approval processes, regulatory mandates, jurisdiction and roles in infrastructure projects. In addition, the private sector should ensure that the proposed projects align with national and local development plans, including those in the Consolidated List of Investment Programs to ensure faster approval process.
- Conventus Law: In what ways does Philippine infrastructure law address environmental sustainability and climate resilience, especially in projects involving coastal development or renewable energy integration?
SyCipLaw: Various Philippine laws address environmental sustainability and climate resilience not just for infrastructure projects but for project development in general. For example, major projects must comply with the Environmental Impact Statement System under Presidential Decree No. 1586. The PPP Code also mandates that climate resilience and sustainability as well as social and environmental safeguards should be considered in developing PPP projects. The feasibility study for PPP projects, should, at the minimum, include social and environmental analysis, including project safeguards regarding, among others, environmental quality, natural resources sustainability, climate change and hazards, equity in development benefits, gender equality, disability, and social inclusion, disability and accessibility, and health. In practice, this means that whether the project involves developing a coastal infrastructure project or renewable energy, the Philippine legal framework requires that both environmental integrity and climate resilience are built into the project.
- Conventus Law: In your experience, how effective has the Anti-Red Tape Authority (ARTA) been in streamlining approvals and permits for infrastructure projects? Is there any legal recourse available in the event of unreasonable delays?
SyCipLaw: Since ARTA’s creation under Republic Act No. 11032 or the Ease of Doing Business Act, it has helped streamline approvals by providing for, among others, regulations requiring green lanes for business permits, including infrastructure and renewable energy, which can significantly cut down processing time for permitting requirements.
If there are delays beyond the prescribed timelines under the Ease of Doing Business Act or any other related concerns, the private sector can escalate the same to ARTA through its complaint mechanisms. These complaints may even be filed online, through ARTA’s e-Reklamo portal. Parties may also file administrative or even criminal cases against erring officials under the Ease of Doing Business Act.
Contractual remedies in PPP agreements may also be triggered if government obligations are not met. As an example, the denial of, the refusal to renew, an unreasonable delay in the granting or renewal of, or the imposition of any onerous conditions on the grant or renewal of any relevant consent required for a PPP project without fault on the part of the private party is considered a material adverse government action which can entitle the private party to relief in certain obligations and compensation.
“Since ARTA’s creation under Republic Act No. 11032 or the Ease of Doing Business Act, it has helped streamline approvals by providing for, among others, regulations requiring green lanes for business permits, including infrastructure and renewable energy, which can significantly cut down processing time for permitting requirements.”
SyCipLaw
- Conventus Law: Looking ahead, what legal reforms or institutional changes would you recommend to strengthen the Philippine infrastructure framework and attract long-term private investment?
SyCipLaw: To preface our response, the enactment of PPP Code has been a great development with respect to strengthening Philippine infrastructure framework. Having said this, improvements can still be made in certain aspects relating to infrastructure projects. First, we believe it is still possible to further streamline permitting and right-of-way processes, as these remain major roadblocks to project implementation and cause major project risks. Second, rules clarifying allowable government undertakings (subsidies, guarantees, etc.) in PPP projects will be very helpful in making projects more attractive. Lastly, a stronger emphasis on applying ESG standards in infrastructure projects may be codified in regulations, to ensure that these projects are bankable, given that financiers have recently become very particular with funding only ESG-compliant projects.
https://ppp.gov.ph/in_the_news/pipelined-ppp-projects-hit-p2-86-trillion-as-of-july
