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29 FEBRUARY 1980 SEC Opinion Issued To Antonio Librea

Two or more medium-sized corporations can form a partnership or joint venture to jointly bid on large-scale public works projects, provided certain conditions are met. Generally, corporations cannot form partnerships that would merge their identities or place direction of affairs in other hands. Exceptions can be made if the corporate charters expressly authorize such partnerships, all partners manage the partnership, and all partners are jointly and severally liable for partnership obligations. Corporations can also enter joint ventures through voluntary agreements if the nature of the venture aligns with their business purposes.

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351 views1 page

29 FEBRUARY 1980 SEC Opinion Issued To Antonio Librea

Two or more medium-sized corporations can form a partnership or joint venture to jointly bid on large-scale public works projects, provided certain conditions are met. Generally, corporations cannot form partnerships that would merge their identities or place direction of affairs in other hands. Exceptions can be made if the corporate charters expressly authorize such partnerships, all partners manage the partnership, and all partners are jointly and severally liable for partnership obligations. Corporations can also enter joint ventures through voluntary agreements if the nature of the venture aligns with their business purposes.

Uploaded by

Rechine Defiesta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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DE FIESTA

CASE NO. 50
JOINT VENTURE
29 FEBRUARY 1980 SEC Opinion issued to Antonio Librea

This is only a letter

W/N 2 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.

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.

"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.

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.

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.

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