Section 11Sec./Art. 11

Joint Ventures (JV). - A JV may be undertaken through a contractual JV or by creating a JV company: Provided, That:

(a) The formation of a JV company shall be in accordance with the legal mandate of the Implementing Agency and provisions of the Revised Corporation Code of the Philippines and other applicable laws, rules, and regulations. The Implementing Agency shall, subject to the approval of the appropriate Approving Body, determine the minimum PTCs of the JV PPP contract including veto rights in favor of the government.

(b) Subject to pertinent laws, rules and regulations, the equity contribution, including contribution of assets, properties and rights, and other allowable Government Undertakings, of the government in a JV PP contract shall:

(1) In no case exceed fifty percent (50%) of the Project Cost in the case of a contractual JV; or

(2) Fifty percent (50%) of the outstanding capital stock of the JV company. All equity contribution of the government and the Private Partner shall be subject to fair valuation by a third-party appraiser.

(c) The formation of the JV between the Implementing Agency and the Private Partner shall not prevent the parties from entering into other JV PPP contracts with other parties or from profitably entering into other business ventures or markets: Provided, That such other ventures shall not compete with the first JV for the same product and geographic market.

(d) The cost of producing the particular product, conducting the activity, or of performing the service shall be efficient and potentially efficient towards earning potential profits for the Implementing Agency and the Private Partner.

(e) The shares of the Implementing Agency and the Private Partner in the profits, losses, assets acquired and/or constructed, and any other interests derived from the JV shall be proportionate to their respective contributions: Provided, That the parties may agree to a higher return for the government as compared to the actual percentage of government contribution in the JV. The Implementing Agency may also accept any other more favorable terms as may be agreed upon with the Private Partner in the JV PPP contract.

(f) At the end of the JV PPP contract, all properties covered by such agreement shall be transferred or shall revert to the Implementing Agency. In cases where the government deems hat divestment from the JV is in the best interest of the public, JV PPP contracts may allow the private sector to take over the undertaking of the project in its entirety. Such takeover shall be in accordance with the laws, rules, and regulations governing privatization. For purposes of monitoring the JV PPP contract, the Implementing Agency shall inform the PPP Center in writing of such takeover.

(g) Formation of JV between the Implementing Agency and the Private Partner shall not change the nature or alter the mandate of the Implementing Agency entering into such JV. The Implementing Agency's governmental responsibility shall not be diminished and shall not be a reason to avoid compliance with and coverage of existing laws, rules, or regulations.