February 29, 1980

Mr. Antonio E. Librea

Acting Director, Legal Service
Office of the Minister
Ministry of Public Highways
Manila

Dear Sir:
This has reference to your letter dated October 29, 1979 requesting information
on whether or not two or more medium-size corporations (contractors) may
enter into a partnership or joint venture/consortium for the purpose of qualifying
in terms of capitalization and equipment in large-scale projects of the Ministry of
Public Highways through competitive bidding.
This Commission hereby reiterates its previous opinions that the weight of
authority is to the effect that a corporation cannot ordinarily enter into a
contract of partnership with another corporation or individual, to wit:
"According to the prevailing view, a corporation has no implied power to
become a partner with an individual or another corporation. This limitation
is based on public policy, since in a partnership the corporation would be
bound by the acts of persons who are not duly appointed and authorized
agents and officers, which would be entirely inconsistent with the policy
of the law that the corporation shall manage its own affairs, separately
and exclusively". (Am Jur par. 823)

"It is fairly well-settled that corporations cannot ordinarily enter into

partnerships with other corporations or individuals, for, in entering into a
partnership the identity of the corporation is lost or merged with that of another
and the direction of the affairs is placed in other hands than those permitted by
the law of its creation. A corporation can act only through its duly authorized
agents and is not bound by the acts of anyone else, while in a partnership each
member binds the firm when acting within the scope of the partnership." (6
Fletcher, Cyc Corps. Section 2520; Cf. SEC Opinion dated Dec. 22, 1966, SEC
Folio p. 279).
Exceptions to the application of this general rule may be allowed by this
Commission, provided that the following conditions are adequately met:
1. The articles of incorporation of the corporations involved must
expressly authorize the corporation to enter into contracts of
partnership with others in the pursuit of its business;
2. The agreement or articles of partnership must provide that all the
partners will manage the partnership; and
3. The articles of partnership must stipulate that all the partners are
and shall be jointly and severally liable for all the obligations
of the partnership.
This Commission will not therefore interpose any objection to the recording of
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 the said articles of partnership which must be accompanied by the proper SEC
verification slip regarding the proposed partnership name; the written
undertaking to change the partnership name in the event that another person,
firm or entity has acquired a prior right to the use of said name or is misleading
or confusingly similar to it; the Data Sheet of the registrant partnership and the
recording fee of 1/10 of 1% of the partnership's capital but not less than P100.00
or more than P50,000.00.
Moreover, two or more corporations may enter into a joint venture/consortium if
the nature of the venture is in line with the business authorized by its charter
through a contract or voluntary agreement between the said parties. Please note
that no independent legal entity is borne out of it and the same need not be
registered with the Commission. However when the joint venture/consortium
would result in the formation of a corporation or partnership, the same has to be
registered with the Commission and the conditions and requirements above-
mentioned should be complied with.
Please be advised accordingly.

Very truly yours,

(SGD.) ROSARIO N. LOPEZ

Director
Corporate and Legal Department

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