In the realm of Philippine project development, a feasibility study (FS) is not merely a technical prerequisite; it is a legal safeguard. It serves as the bridge between conceptualization and implementation, ensuring that public and private resources are utilized efficiently, sustainably, and within the bounds of law.
Whether for a massive infrastructure project under the "Build Better More" program or a private commercial development, the legal basis for conducting feasibility studies is rooted in constitutional mandates, specific statutes, and administrative regulations.
I. The Constitutional and Policy Foundation
The overarching legal basis for feasibility studies stems from the 1987 Philippine Constitution, which mandates the state to promote a "just and dynamic social order" and to ensure the "equitable distribution of opportunities, income, and wealth."
- Article XII (National Economy and Patrimony): Requires the State to protect and advance the right of the people to a balanced and healthful ecology and to ensure that the use of property bears a social function. Feasibility studies provide the empirical data necessary to prove that a project aligns with these national interests.
- The Principle of Accountability: Under the doctrine that "Public Office is a Public Trust," any expenditure of public funds must be justified. A feasibility study serves as the primary evidence that a project is not "manifestly and grossly disadvantageous to the government," a standard often cited in the Anti-Graft and Corrupt Practices Act (R.A. 3019).
II. Legal Basis for Public Sector Projects
For government-led initiatives, the requirement for feasibility studies is explicit and strictly enforced by oversight agencies like the National Economic and Development Authority (NEDA) and the Department of Budget and Management (DBM).
1. Executive Order No. 230 (Reorganizing NEDA)
NEDA is the primary body responsible for formulating continuing, integrated, and coordinated programs for development. Under its guidelines, all "Major Capital Projects" must undergo a rigorous appraisal process, which includes:
- Technical Feasibility: Can it be built?
- Economic/Financial Feasibility: Is the Return on Investment (ROI) or Social Discount Rate acceptable?
- Legal/Institutional Feasibility: Does it comply with existing laws?
2. The Official Development Assistance (ODA) Act (R.A. 8182)
For projects funded by foreign loans or grants, R.A. 8182 requires that projects be subjected to a feasibility study to ensure they are consistent with the Philippine Development Plan (PDP) and have a high probability of success to ensure debt sustainability.
3. The Government Procurement Reform Act (R.A. 9184)
While R.A. 9184 focuses on bidding, its Implementing Rules and Regulations (IRR) require "Detailed Engineering" and "Pre-procurement Conferences." For complex projects, the "Conceptual Design" phase effectively necessitates a feasibility study to define the scope of work before a budget can be legally appropriated.
III. Legal Basis for Private and Public-Private Partnerships (PPP)
In the private sector, or where the private sector interfaces with the government, the legal requirements for feasibility studies are even more granular.
1. The Build-Operate-Transfer (BOT) Law (R.A. 6957, as amended by R.A. 7718)
This is the cornerstone of PPPs in the Philippines. The law requires that any project proposal—whether solicited or unsolicited—must be accompanied by a feasibility study.
- Section 4: Explicitly mentions that the project must be "technically sound and economically viable."
- Unsolicited Proposals: For a private entity to submit a "New Concept" to the government, they must provide a complete feasibility study to prove the project's "public advantage."
2. The Revised PPP Code of the Philippines (R.A. 11956)
Enacted recently to consolidate PPP rules, this law reinforces the FS requirement. It mandates that the Project Development and Monitoring Facility (PDMF) be used to fund high-quality feasibility studies to ensure that the risks are properly allocated between the State and the private proponent.
IV. Environmental and Social Mandates
Regardless of whether a project is public or private, two specific laws make feasibility-level assessment a legal "must-have":
- PD 1586 (Environmental Impact Statement System): This law requires an Environmental Impact Assessment (EIA) for projects in environmentally critical areas. The EIA is essentially a specialized feasibility study focusing on ecological sustainability. Without it, an Environmental Compliance Certificate (ECC) cannot be issued, rendering the project legally "frozen."
- The Local Government Code (R.A. 7160): Sections 26 and 27 require prior consultation with Local Government Units (LGUs) and affected communities. A feasibility study serves as the basis for these consultations, ensuring "Social Acceptability"—a legal prerequisite for project implementation.
V. Consequences of Omitting a Feasibility Study
Failure to conduct a proper feasibility study in the Philippine context can lead to severe legal repercussions:
| Legal Risk | Description |
|---|---|
| COA Disallowance | The Commission on Audit (COA) may tag the project as "wasteful or unnecessary expenditure," forcing officials to refund the money personally. |
| Graft Charges | Under R.A. 3019, entering into a contract without a study that proves its viability can be interpreted as giving "unwarranted benefits" to a contractor. |
| Contract Rescission | In the private sector, a lack of due diligence (which an FS provides) can lead to the nullification of contracts under the Civil Code due to "vitiated consent" or "fraud." |
Summary of Requirements
Conclusion
In the Philippines, the feasibility study is the legal bedrock of development. It transforms a political or commercial ambition into a legally defensible plan. By satisfying the requirements of NEDA, the BOT Law, and environmental regulations, the FS ensures that projects are not only built but are sustainable, legally compliant, and beneficial to the Filipino people.