Requesting Entity: National Irrigation Administration

Issues Concern: Applicability of the IRR-A of R.A. 9184 on Foreign Assisted Projects


Applicability of IRR-A of R.A. 9184 on Foreign Assisted Projects

It is in accordance with the decision to issue separate IRRs for R.A. 9184 on fully domestically funded procurement activities and foreign funded procurement activities, respectively, that IRR-A of R.A. 9184 was issued to cover the former. As such, another set of IRR, to be called as “IRR Part B” (“IRR-B”), would have to be issued for purposes of foreign funded procurement activities. In this regard, Section 1 of IRR-A of R.A. 9184 provides as follows:

x x x x

In view of the foregoing, considering the express language in the above-quoted provision, we confirm that IRR-A of R.A. 9184 only covers fully domestically funded procurement activities, and cannot therefore be made to apply to foreign assisted projects.

Rules Applicable to Foreign Assisted Projects

In the meantime that IRR-B of R.A. 9184 is pending issuance, we believe that, unless otherwise provided in the relevant loan agreements, the guidelines of the concerned International Financing Institutions (“IFIs”) would govern the implementation of foreign assisted projects. This view is based on the general objective to observe the integrity of treaties and international or executive agreements to which the Philippines is a signatory as expressly stated under Section 4 of R.A. 9184 absent any rule or regulation qualifying the same Section 4 of R.A. 9184 provides as follows:

x x x x

We wish to point out that the Department of Justice (“DOJ”), through Opinion No. 46, Series of 1987, opined that loan agreements such as those entered into with International Financing Institutions (“IFIs”) fall within the purview of the phrase “international agreements or commitments” under the Implementing Rules and Regulations of Presidential Decree No. 1594. We quote the relevant portion of Opinion No. 46 hereunder:

While the phrase “international agreements or commitments” is not defined in the said regulations, loan agreements with the IBRD and ADB undoubtedly fall within the purview of such phrase. For the term “international” is said to be a generic term pertaining to relations between nations and, when applied to business or transactions of private character, it imports dealing of some sort in matters or with people of different nations (W & P p. 368; 47 C.J.S. p. 1275). IBRD and ADB are international organizations and, therefore, any agreement with them is, broadly speaking, international in character.

In view of the above, we believe that loan agreements between the Philippine Government and IFIs are exempted from the application of R.A. 9184 since such agreements fall within the meaning of “international agreements.”

We hasten to add, however, that the General Appropriations Act of 2003 (“GAA”), specifically, Section 14 thereof, provides that “no project enumerated under Item II on Foreign-Assisted Projects shall be awarded above the approved agency estimate or approved budget for the contract” except those projects which have already been bid-out and awarded. The effectivity of this provision in connection with Section 4 of R.A. 9184, as quoted hereunder, was discussed by the Department of Justice (“DOJ”) in its Opinion No. 58, series of 2003 where it opined that the provisions of the GAA on foreign assisted projects should be contemplated as establishing a limitation to the application of the provision of Section 4 of R.A. 9184 since the former is a special law and the latter is a general law. At any rate, it should be noted, that the projects enumerated under Item II on Foreign-Assisted Projects and the above-mentioned Section 14, which is a Special Provision of the GAA, specifically pertains to the budget of the Department of Public Works and Highways (“DPWH”), and, therefore, may not necessarily be applicable to the National administration.