Election Series #2: Signatories to PPP contracts
Does the change in administration following an electoral exercise affect public-private partnership contracts entered into by their predecessors? Are PPP arrangements coterminous with the officials who signed them? Do elections affect the integrity of PPP contracts? Do newly elected officials have the license to unilaterally terminate or amend awarded PPP contracts?
The answer to all of these are no, technically.
- Real party to PPP contracts. PPP contracts should remain intact or must be respected by the successor administration, despite changes in leadership and the assumption into offices by new signatories. It is the implementing agency (IA) or government agency, i.e., national government agency (NGA), government-owned and -controlled corporation (GOCC), government instrumentality (GI), government financial institution (GFI) and local government unit, not the signatory, who is the real party to PPP contracts.
The heads of the IAs are just the representatives or agents of and acting for their respective IAs, not for themselves. PPP contracts, especially long-term agreements, and their benefits outlive their leaders.
- Classifying the signatories. In terms of manner by which they are installed into office, government signatories are either appointed by the president or elected by their respective constituencies. The secretaries of NGAs, and the presidents, administrators or general managers of GOCCs, GIs and GFIs are presidential appointees. The regional and
provincial governors, city and municipal mayors and punong barangays are elected through popular vote.
The members of the governing boards for GOCCs, GIs and GFIs, and local legislative councils are appointed or elected, respectively. These collegial bodies approve or ratify PPP contracts signed by the head of IA to bind the IA, otherwise, the head of agency will be personally liable.
- 2019 political exercise. Mark this on your calendar—May 13, 2019. The electorate will vote for 12 senators, 238 district representatives, 59 party-list representatives, one regional governor, 81 provincial governors, 145 city mayors and 1,489 municipal mayors.
The changes in PPP signatories, by June 30, 2019, shall be confined to LGU-PPP contracts. The new governor and mayor, however, cannot terminate or amend unilaterally the duly awarded PPP contract. Provisions for termination or modification of the PPP contract must be observed. Judicial intervention may, likewise, be sought.
There will be no PPP-related shifts in Congress because it is not an IA, and not with NGAs, GOCCs, GIs and GFIs because the heads and board members are appointed. This does not mean that we will not witness shifts in NGA-GOCC-GI-GFI signatories before, on and after May 13. They/we can be changed tomorrow. Cabinet secretaries, and the presidents, administrators or general managers and board directors of GOCCs, GIs and GFIs serve at the pleasure of the appointing authority. Heads of GOCCs, GIs and GFIs appointed in 2016 are now on holdover capacity.
Come 2022, there would be nationwide changing-of-the-guards since with the new president, in the exercise of his/her executive discretion, can make new political appointments.
So, if these are all clear, why did I qualify my answer to the preliminary questions with “technically?” Reality in the Philippines has taught us otherwise. Successor risk is the perceived No. 1 one risk.