FRAMEWORK OF THE JOINT INVESTMENT AGREEMENTS OF THE PROVINCIAL GOVERNMENT OF CEBU The National Economic Development Authority (NEDA)

issued a GUIDELINES AND PROCEDURES FOR ENTERING INTO JOINT VENTURE (JV) AGREEMENTS BETWEEN GOVERNMENT AND PRIVATE ENTITIES which took effect on April 17, 2008. However, Local Government Units (LGUs) are excluded from the coverage of the above JV guidelines and procedures. The Provincial Board of the Cebu enacted an Ordinance No. 2009-04, through a Resolution No. 2010-2009, PRESCRIBING THE PROCEDURE BY WHICH THE CEBU PROVINCIAL GOVERNMENT MAY ENTER INTO A JOINT INVESTMENT WITH OTHER ENTITIES. The ordinance is otherwise known as Joint Investment Ordinance (JIO), patterned with the NEDAs JV guidelines and procedures with deviations from it.

A. SIMILARITIES AND DIFFERENCE 1. Definition: The NEDAs guidelines and procedures for entering into a JV Agreement defines Joint Venture (JV) as a contractual arrangement whereby a private sector entity or a group of private sector entities on one hand, and a Government Entity or a group of Government Entities on the other hand, contribute money/capital, services, assets (including equipment, land or intellectual property), or a combination of any or all of the foregoing. Parties to a JV share risks to jointly undertake an investment activity in order to accomplish a specific, limited or special goal or purpose with the end view of facilitating private sector initiative in a particular industry or sector, and eventually transferring ownership of the investment activity to private sector under competitive market conditions. It involves a community or pooling of interest in the performance of the service, function, business or activity, with each party having a right to direct and govern the policy in connection therewith, and with a view of sharing both profits and losses, subject to agreement by the parties. A JV may be contractual JV, or a corporate JV. The JIO of the Province of Cebu defines Joint Investment (JI) as a contractual arrangement whereby the CEBU Provincial Government on one hand, and another local government unit, or another government agency or a private sector entity, on the other hand, contribute money/capital, services, assets (including equipment, land or intellectual property), or a combination of any or all of the foregoing. It involves a community or pooling of interest in the performance of the service, function, business or activity, with each party having a right to direct and govern the policy in connection therewith, and with a view of sharing both profits and losses, subject to agreement by the parties. A JI may be contractual JI, or a corporate JI. 2. Similarities 1. As to nature:

a. JV under the NEDAs guidelines and procedures and JI under the JIO of the Provincial Government of Cebu both are contractual agreement wherein the parties contributes money/capital, services, assets (including equipment, land or intellectual property), or a combination of any or all of the foregoing in an investment activity; b. JV and JI both involves a community or pooling of interest in the performance of the service, function, business or activity, with each party having a right to direct and govern the policy in connection therewith, and with a view of sharing both profits and losses, subject to agreement by the parties; c. JV and JI both may be contractual or corporate; and d. JV and JI both promotes accountability and transparency.

3. Differences 1. As to parties: a. Parties in a JV are the National Government, government-owned and/or controlled corporations (GOCCs), government corporate entities (GCEs), government instrumentalities with corporate powers GICPs), government financial institutions (GFIs), state universities and colleges (SUCs) on one hand, and a private sector entity or a group of private sector entities on the other hand; While in a JI the parties are local government units on one hand, and another local government unit, or another government agency or a private sector entity, on the other hand; 2. As to transfer of interest: a. In JV there is an eventual transfer of interest of the government to the private sector entity or group of private sector entities; While in JI, in general, there is no transfer of interest of the one party to the other and vice versa; 3. As to duration: a. Investment activity under JV its duration may be dependent upon the accomplishment of a specific, limited or special goal or purpose, hence, in general, of limited duration because of eventual transfer of interest of the government to private entity; While in JI it is a continuing undertaking because, in general, there is no transfer of interest of LGUs to the other party or parties.