NPM No. 171-2015

Requesting Entity: Commission on Audit (COA)

Issues Concern: Deviations from the Requirements of RA 9184 and GPPB Rules and Regulations



1. Whether a "new establishment" with no experience and no audited FS can be awarded a government contract.

2. Whether the provisions of PPA's Administrative Order No. 04-2012 on the inclusion of new establishment and the use of APP/COE consistent with the provisions of RA 9184.

[I]n case of activities where the government entity partners with the private entity, where the former is set to earn or gain something rather than spend public funds which is commonly termed as PPP or JV, we propose for the review of the applicability of the Philippine BOT Law or JV Guidelines. Section 4.4 of the IRR states that the rules "[s]hall not apply to activities involving public-private sector infrastructure or development projects and other procurements covered by RA 6957, as amended by RA 7718, except those portions financed by the government".

Corollarily, since the provision of RORO services in PPA ports is akin to a PPP agreement and/or JV, the GPPB and its TSO is not in the position to render an opinion on the propriety of the award made to the "new establishment" as well as the acceptability of the latter's documentary submissions based on the PPA AO 04-2012 provisions.

3. Whether the Commission on Audit can use the said PPA AO 04-2012 as guidepost in the audit of procurement of RORO Service Providers in Ports under the PPA.

[I]n Caltex, Phils., Inc. v. COA, et al. , the Supreme Court rejected Caltex's argument that COA cannot make its own interpretation of the laws in the light of the determination of executive agencies which are entitled to great weight. Indeed, it is well within the jurisdiction of COA to determine whether or not the fiscal responsibility that rests directly with the head of the government agency has been properly and effectively discharged.