2005-01-19

NPM 004-2005

Requesting Entity: Bureau of Internal Revenue

Issues Concern: Application of Republic Act 9184 (R.A. 9184) and its Implementing Rules and Regulations Part A (IRR-A)

 

Details

1. Whether or not there is a necessity for registration with the Securities and Exchange Commission (SEC) and other regulatory agencies for the validity of Joint Venture Agreement (JVA) in light of R.A. 9184.

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-venturers 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 requirement under R.A. 9184. Hence, the requirement for registration from the SEC is not necessary to make a JV valid in light of R.A. 9184.

For the purpose of complying with the requirements of R.A. 9184 and its IRR-A, no standard form is prescribed nor specific terms and conditions should be spelled out in the joint venture agreement in order that it be valid. However, all JVAs are required to be notarized in order to be considered valid and binding to third persons, such as the procuring entity.

2. Whether or not it is sufficient for the procuring entity to accept delivery receipts, sales invoices and official receipts issued by the lead entity of the Joint Venture (JV).

[T]he acceptance by the procuring entity of delivery receipts, sales invoices and official receipts of the lead entity alone would suffice. Such acceptance is valid for as long as the lead entity or representative of the concerned JV has been clearly identified in the agreement among the co-venturers. In addition, it is advised that the JVA should specifically state therein the name of the person who is appointed as the lawful attorney-in-fact of the JV to sign the contract, if awarded.

However, it is to be noted that for purposes of compliance with R.A. 9184 and its IRR-A, the participating entities entering a JVA are to be treated as a single entity and the persons/entities forming themselves into a joint venture, expectedly intend themselves to be jointly and severally responsible or liable for the obligations and civil liabilities actually incurred by the particular JV