Non-Policy Opinions

2011-11-11

NPM 020-2011

Requesting Entity: Philippine National Police

Issues Concern: Requirements for a Joint Venture Agreement

 

Details

1.Clarification on the required place and manner of execution of the Notarized Statement and the joint Venture Agreement (JVA), including the necessary documents to support the authority of the signatory to the JVA.

Republic Act No. (RA) 9184, otherwise known as the Government Procurement Reform Act, and its revised Implementing Rules and Regulations (IRR) do not provide for specific rules relative to the place, manner and formalities in the execution of the notarized statement and the JVA. xxx. For this purpose, Article 17 of the Civil Code of the Philippines may be consulted to determine the applicable law relative to the place and manner of execution of the notarized statement and JVA.

Insofar as the submission of the relevant document to support the authority of the signatory to the JVA, i.e., Board Resolution, Secretary's Certificate, etc., the procurement law and its associated IRR are likewise silent on this matter. Be that as it may, the procuring entity is mandated to verify, validate and ascertain all statements made and documents submitted by the bidder during the post-qualification stage.

2.Clarification on the need to state that the capitalization of the joint venture is sixty percent (60%) Filipino and forty percent (40%) foreign.

As an eligibility criterion, procuring entities, through the BAC, are required to check on the bidders, compliance with the 60% ownership or interest requirement. Absence of such information may be ground for the disqualification of the JV entity in light of the non-discretionary pass/fail rule in the examination, evaluation and post-qualification of bids.

It is our considered view that the JVA should clearly state that the Filipino ownership or interest over the joint venture is at least sixty percent (60%) regardless of the form of contribution by which such ownership or interest was obtained.

3.Clarification on the need for the JV to register with the Securities and Exchange Commission (SEC).

[I]n an earlier Non-Policy Opinion (NPM No. 004-2005), it is discussed that unlike in a corporation or partnership existence, no other formal requirement other than a JVA is necessary before individuals and/or entities can establish a JV among themselves. What is essential is that a contract embodying the agreement of partnership of the co-ventures and defining their rights and obligations under such agreement is submitted. In other words, mere submission of the valid joint venture agreement of the parties is sufficient compliance of the requirements under RA 9184. Hence, the requirement of registration from the SEC is not necessary to make a JV valid in light of RA 9184.