M E M O 

TO : CRTT 

FROM : AJLG/MID/CMDC 
RE : GUIDANCE ON POSSIBLE JOINT VENTURE BETWEEN CDC AND
HAUSLAND GROUP

DATE : 20 August 2021

I. Facts:

In April 1993, the Clark Development Corporation (CDC) was organized as a subsidiary of the
Bases Conversion Development Authority (BCDA) which is tasked to manage the Clark
Freeport Zone (CFZ) and Clark Special Economic Zone (CSEZ).

CDC which is a non-chartered GOCC is an agency organized as a stock or nonstock corporation,

vested with functions relating to public needs whether governmental or proprietary in nature, and
owned by the Government of the Republic of the Philippines directly or through its
instrumentahties and it is organized and operating under Batas Pambansa Bilang 68, or “The
Corporation Code of the Philippines”.

CDC oversees the day-to-day affairs in Clark and likewise aims to ensure that a viable business
environment is enjoyed in the area.  Further, CDC would like to invite the Hausland Group to
Submit a Proposal to solve their existing problem of the presence of Informal Settlers in the
Marcos Village. In other words, the Hausland Group shall submit a proposal to CDC with an end
goal to clear the Marcos Village of informal settlers.

Hausland Group envisions to build eight hundred (800) new housing units for the Informal
Settler Families at the Marcos Village which shall be included in their proposal.

II. Issues:

1. What is/are the mode/s that may be undertaken by the CDC and Hausland Group in
Relocating the informal settlers at Marcos Village?
2.  What are the procedures or requirements that Hausland Group should follow in the
respective modality?
3.

III. Discussion

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 1.A. Public-Private Partnership

One modality that may be undertaken by CDC and Hausland Group in the relocation of
the informal settlers at Marcos Village is a Public-Private Partnership (PPP). PPP can be broadly
defined as a contractual agreement between the Government and a private firm targeted towards
financing, designing, implementing and operating infrastructure facilities and services that were
traditionally provided by the public sector. It embodies optimal risk allocation between the
parties – minimizing cost while realizing project developmental objectives.

The situation in the case at hand evinces that Clark Development Corporation (CDC)
which is a non-chartered GOCC is allowed to enter into PPP pursuant to Section 2.1 of
Implementing Rules and Regulations of R.A. No. 6957 (BOT Law IRR), as amended by RA. No.
7718:

Sec. 2.1. Authorized Contracting Government Agencies/Units. - The following are

authorized to enter into contractual arrangements under this Act and these IRR:

a. All concerned government agencies, including government-owned or controlled

corporations, authorized by law or by their respective charters to undertake
infrastructure and/or development projects.

On the other hand, Hausland Group can participate or apply for pre-qualification under PPP by
making a Solicited proposal or an Unsolicited proposal.

In a solicited proposal, the Implementing Agency- (IA-CDC) formally solicits the submission of
bids from the public. The solicitation is done through the publication of an invitation for
interested bidders to submit bids, and selection of the private proponent is done through a public
competitive process.

Whereas, in an unsolicited proposal, Hausland Group shall submit a project proposal to an IA-
CDC without a formal solicitation from the government. An unsolicited proposal may be
accepted for consideration and evaluation by the IA-CDC, provided it complies with the
following conditions:

1. It involves a new concept or technology and/or it is not part of the list of priority projects
in the Philippine Investment Program (PIP) [Medium Term Public Investment Program,
Comprehensive and Integrated Infrastructure Program (CIIP)] and the Provincial/Local
Investment Plans;
2. It does not include a Direct Government Guarantee, Equity or Subsidy;
3. It has to go to Investment Coordination Committee of the National Economic and
Development Authority (NEDA) Board (ICC) for the determination of reasonable

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 Financial Internal Rate of Return (FIRR) and approval to negotiate with the Original
Proponent; and
4. After successful negotiation, proceed to publication and request for competitive proposals
according to Swiss Challenge Rules

Partnership between CDC and Hausland Group for infrastructure and development projects can
be made possible through a broad spectrum of contractual arrangements under the
amended Philippine BOT Law and its revised Implementing Rules and Regulations.

It bears stressing that the agreement being conceptualized by the Hausland Group is somehow
similar to but not exactly the same with Build-lease-and-transfer (BLT). BLT is contractual
arrangement whereby a project proponent is authorized to finance and construct an infrastructure
or development facility and upon its completion turns it over to the government agency or local
government unit concerned on a lease arrangement for a fixed period, after which ownership of
the facility is automatically transferred to the government agency or local government unit
concerned.

As discussed, the initial proposal of Hausland Group is that it will undertake to build 800 new
housing units in a specific place at Clark for the Informal Settler Families currently living at the
Marcos Village. In consideration of building housing facilities, CDC shall award an 11-hectare
flatland called Lower Pulang Lupa. In essence CDC shall compensate Hausland Group by way
of awarding a lease of facility, a parcel of property different from at a fixed period of fifty (50)
years, a

to us for lease, and whatever amount of money we injected will be deemed as advance payment for the
lease.

What types of projects can government undertake as a PPP project?

Under a PPP scheme, the private sector can build, operate and maintain public infrastructure
facilities and provide services traditionally delivered by government.

The BOT Law IRR enumerates the list of activities which may be undertaken under any of the
recognized and valid BOT contractual arrangements (PPP modalities) which include government
buildings, and housing projects, to wit:

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 Sec. 2.2. Eligible Types of Projects:(n.) Government buildings, housing projects;

Based on the amended Philippine BOT Law and its revised Implementing Rules and Regulations
CDC, which is government-owned or controlled corporations, may enter into PPP
regarding building of housing projects under the enumerated modalities.

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Joint Venture

Likewise, a Joint Venture may also be an alternative modality in case the parties would want a
unique arrangement which is not covered under the amended Philippine BOT Law and its
revised Implementing Rules and Regulations.

Source/ Legal Basis

On April 2008, the NEDA issued the Guidelines and Procedures for Entering into Joint Venture
Agreements Between Government and Private Entities (NEDA JV Guidelines). On May 2013,
the NEDA issued Revised Guideline and Procedures for Entering Into Joint Venture (JV)
Agreements Between Government and Private Entities.

What is a joint Venture?

Joint Venture (JV) is an 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, intellectual property
or anything of value), or a combination of any or all of the foregoing to undertake an investment
activity. The investment activity shall be for the purpose of accomplishing a specific goal with
the end view of facilitating private sector initiative in a particular industry or sector, and
eventually transfer the activity to either the private sector under competitive market conditions or
to the government.

The JV involves a community or pooling of interests in the performance of the investment

activity, and each party shall have the right to direct and govern the policies in connection
therewith with the intention to share both profits and, risks and losses subject to agreement by
the parties.

Kinds of JV which may be undertaken

A JV may be a Contractual JV or a Corporate JV (JV Company).

Contractual JV is a legal and binding agreement under which the JV Partners shall perform the
primary functions and obligations under the JV Agreement without forming a JV Company.

On the other hand, a JV Company is a stock corporation incorporated and registered in

accordance with the provisions of Batas Pambansa Bilang 68, otherwise known as the

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Corporation Code of the Philippines, as amended, and based on the prevailing rules and
regulations of the Securities and Exchange Commission (SEC) of which fifty percent (50%) or
less of the outstanding capital stock is owned by the government. The JV Company shall be
registered by the JV partners that shall perform the primary functions and obligations of the JV
as stipulated under the JV Agreement. The JV Company shall possess the characteristics
stipulated under these Guidelines.

What is the Process for Entering into JV Agreements?

Requirements/Conditions for JV Proposals. JV proposals shall comply with the following

requirements/conditions:

a.The JV activity is within the mandate and charter of the Government

Entity concerned;

b. The JV activity is responsive in meeting national or specific

development goals and objectives;

c.The JV proposal clearly describes the proposed investment,

including its total cost, activities, objectives, sources of funding,
extent and nature of the proposed participation of the Government
Entity concerned, and the relevant terms and conditions;

d. The JV proposal establishes all the components in

determining the over-all feasibility of the JV proposal which
include, among others, the technical, financial, economic, and legal
aspects; and

e.The terms and conditions of the approval of the Privatization

Council (PC), if applicable.

Approval of JV Proposals. The approval of JV proposals shall be in accordance

with the following:

a.Prior to submission of a JV proposal to the Approving Authority as

indicated in this Section, approval from concerned entities shall be
secured as indicated below:

i. Projects which involve divestment or transfer of government

assets or properties to the private sector partner or a private
sector/entity shall be required to secure approval/clearance from

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 the PC pursuant to EO No. 12 dated 14 August 1998, as
amended by EO No. 323 dated 06 December 2000;

ii. Projects which involve the formation of a JV company shall be

required to secure approval from GCG pursuant to RA No.
10149, otherwise known as the GOCC Governance Act of
2011; and

iii.Projects which involve divestment of government equity that is

not in the form of asset or property shall be required to secure
approval from GCG pursuant to RA No. 10149, otherwise
known as the GOCC Governance Act of 2011.

b.For the following projects, the Approving Authority shall be the

NEDA Board Investment Coordination Committee (ICC):

i. Infrastructure projects as defined under Section 5.9 of these

Guidelines with government contribution amounting One
Hundred Fifty Million Pesos (PhP 150 Million) and above;

ii. Projects that are public utilities as defined under Section 5.11 of
these Guidelines with government contribution amounting One
Hundred Fifty Million Pesos (PhP 150 Million) and above;

iii.Negotiated JVs that are initiated by a private sector proponent

with government contribution amounting One Hundred Fifty
Million Pesos (PhP 150 Million) and above; and

iv. Projects that are not related to primary corporate mandate with
government contribution amounting One Hundred Fifty Million
Pesos (PhP 150 Million) and above.

c.For the following projects, the Approving Authority shall be the

Head of the Government Entity concerned:

i. Projects that are related to primary corporate mandate and not

involving infrastructure projects as defined under Section 5.9 of
these Guidelines; and

ii. Projects not covered under Section 7.2.b of these Guidelines.

d.Project proposals that shall be submitted to NEDA ICC for approval

as indicated in this Section should include the following: (i)
endorsement of the JV proposal by the Head of the Government

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 Entity concerned; (ii) project details; (iii) draft JV Agreement; and
(iv) other documents and requirements as may be determined by the
NEDA ICC pursuant to its guidelines. The Government Entity
concerned shall furnish the Department of Finance (DOF) all the
documents submitted to the NEDA ICC for the approval of a JV
proposal;

e.The Approving Authority shall act on the JV proposal within a

period of thirty (30) calendar days upon submission of complete
documents.

Clearance/Approval of DOF and Department of Budget and Management

(DBM). For JV activity that will require national government undertakings,
subsidies or guarantees, clearance/approval of the DOF and/or the DBM, as the
case may be, shall be secured.

Approval for Registration of JV Company. All JV proposals which involve the

pursuit of the project through a JV Company shall be submitted to the GCG for
review and recommendation to the President of the Philippines for approval before
registering the same with the SEC pursuant to Section 27 of RA No. 10149.

Modes of Selecting a JV Partner. The following are the modes of selecting a JV

partner:
a. Competitive Selection.
b. Negotiated JVs

Approval of the JV Agreement. Upon approval of the JV proposal by the

Approving Authority, the Head of the Government Entity concerned shall approve
the draft contract or JV agreement. The Head of the Government Entity concerned
shall be responsible for ensuring the consistency of the tender/bid parameters and
the draft contract or JV agreement with the parameters, terms and conditions set
forth by the Approving Authority.

IPRA ACT OF 1997

Under the Indigenous Peoples’ Rights Act of 1997 (IPRA), self-delineation shall be the guiding
principle in identifying and delineating ancestral domains. As such, indigenous cultural
communities (ICC) and indigenous people (IP) shall have a decisive role in all activities
pertinent thereto.

The Sworn Statement of the Elders as to the scope of the territories and the agreements or pacts
made with neighboring ICCs/IPs, if any, will be essential in determining these traditional
territories. Meanwhile, the government shall take the necessary steps to identify lands which the

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ICCs/IPs concerned traditionally occupy and guarantee effective protection of their rights of
ownership and possession thereto.

Thus, ancestral lands or domains, which may be owned by ICCs/IPs, shall refer to its total
environment—that is, its physical environment, including the spiritual and cultural bonds to the
areas which they possess, occupy, and use, and to which they have claims of ownership.

In this regard, the indigenous concept of ownership generally holds that ancestral domains are
the ICC’s/IP’s private but community property, which belongs to all generations and thus, cannot
be sold, disposed, or destroyed. It likewise covers sustainable traditional resource rights.

The ICC’s/IP’s rights to their ancestral domain shall include the: (a) right of ownership over
lands, bodies of water traditionally and actually occupied by them, sacred places, traditional
hunting and fishing grounds, and improvements introduced thereon; (b) right to develop lands
and natural resources, subject to preexisting property rights within the ancestral domains; (c)
right to stay in their territories, except when they have given their free and prior informed
consent, and subject to the Philippines’ power of eminent domain; (d) right to be resettled in
suitable areas should they be displaced through natural catastrophes; (e) right to regulate entry of
migrants; (f) right to safe and clean air and water; (g) right to claim parts of reservations; and (h)
right to resolve land conflicts in accordance with the customary laws of the area where the land
is located.

Moreover, ICC’s/IP’s rights to their ancestral lands shall include the: (a) right to transfer land or
property rights among members of the same ICC or IP, subject to their customary laws and
traditions; and (b) should the land transfer to a non-member be tainted with vitiated consent, the
right of redemption within a period not exceeding 15 years therefrom.

Native Title Shall Be Recognized and Respected.

Nevertheless, the ICC’s/IP’s rights to their ancestral domains by virtue of native title shall be
recognized and respected. Formal recognition, when solicited by the ICC/IP, shall be embodied
in a CADT, which shall recognize their title over the territories identified and delineated.

Meanwhile, individual members of the ICC who, by themselves or through their predecessors-in-
interest, have been in continuous possession and occupation of their ancestral lands in the
concept of an owner since time immemorial or for a period of at least 30 years from the approval
of the IPRA, and uncontested by the other members of the same ICC, shall have the option to
secure title to their ancestral lands pursuant to the Land Registration Act of 1946, within 20 years
from the approval of the IPRA.

Ancestral lands that may be covered by this title shall be agricultural in character and actually
used for agricultural, residential, pasture, and tree farming purposes, including those with a slope
of 18 percent or more.

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Unauthorized And Unlawful Intrusion.

Unauthorized and unlawful intrusion upon, or any use of any portion of the ancestral domain, or
any violation of the rights thereto, shall be punished pursuant to the concerned ICC/IP’s
customary laws. But, the impossable penalty shall neither be cruel, degrading, or inhuman
punishment nor death penalty or excessive fines.

Upon conviction, the offender may be imprisoned for less than nine months but not more than 12
months, or fined for not less than P100,000 nor more than P500,000, or penalized with both
imprisonment and fine, upon the court’s discretion. Moreover, he shall be obliged to pay the
aggrieved ICC/IP whatever damage it may have suffered because of his unauthorized and
unlawful intrusion upon the ancestral domain.
(https://business.inquirer.net/294122/understanding-the-indigenous-peoples-rights-to-their-
ancestral-domain)

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