Mr. Ramon P. Ereneta, Jr.

August 24, 1981 Mr. Ramon P. Ereneta, Jr. 5th Floor, ITC Building 337 Buendia Avenue Extension Makati, Metro-Manila Sir : This refers to your request for assistance and comment regarding the feasibility of implementing the following arrangement: 1. A number of small construction corporations shall enter into a joint venture agreement for the purpose only of jointly undertaking overseas projects. The agreement shall contain the terms and conditions which will govern the relationship of the parties and the duration of its existence. LexLib 2. The resulting joint venture company shall have a board of directors which shall be entrusted with the management of the company as well as a set of officers. 3. The contracting parties shall contribute money, property and services needed by the company to undertake overseas projects. 4. The liabilities of the contracting parties shall not be limited to their contribution but may extend to their properties and assets in order to make the joint venture company more bankable. 5. The joint venture company shall have its own name and shall be registered with the Securities and Exchange Commission to obtain legal personality. From the foregoing, it is evident that you would like to form a joint venture partnership with the small construction corporations as partners therein. As a rule, only natural persons are considered capable of entering into a contract of partnership but there have been cases where the Securities and Exchange Commission has allowed corporations to enter into partnerships, provided the following conditions have been imposed: 1. That all the corporation-partners must be managing partners; 2. That their charters must expressly allow the corporations to enter into partnership. The corporation-partners shall embody the terms and conditions of their relationship in the partnership agreement and upon approval thereof by the Securities and Exchange Commission, the partnership shall attain a juridical personality separate and distinct from the corporation-partners. The liability of the corporation-partners, as stated in your letter, shall not be limited to their contributions and even the dissolution of a corporation-partner does not terminate a joint venture to which it is a party so as to relieve the corporation of obligations incurred by reason of its entering into the venture. LexLib This Commission will give due course to the registration of the joint venture partnership provided that all the legal requirements are complied with. Very truly yours, (SGD.) ROSARIO N. LOPEZ Associate Commissioner