September 3, 1984

Mr. Romeo D. Orsolino

352-I M. F. Jhocson Street
Sampaloc, Manila
Sir:
This refers to your letter dated April 18, 1984 requesting the opinion of this Commission on the
following queries:
1. Can a foreign corporation be a partner of a Filipino individual in a partnership? cdlex
2. Can a resident agent sign for and in behalf of the foreign corporation in a partnership
contract?
3. Can a foreign corporation represented by its resident agent be a general partner?
4. If there are only two (2) partners in the partnership — the foreign corporation represented
by its resident agent and the Filipino individual, who will act as Manager?
5. If the above partnership is allowed, what are the papers/documents required to be
submitted?
The above queries are answered in the order they are propounded:
1. The Commission in its previous opinions ruled that the weight of authority is to the effect
that a corporation cannot become a partner in a partnership, citing the following legal jurisprudence
on the matter:
"According to the prevailing view a corporation has no implied power to become a partner with
an individual or another person. This limitation is based on public policy, since in a partnership
the corporation would be bound by the acts of person who are not its 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." (13 Am. Jun., par. 823).
"It is fairly well settled that corporations cannot ordinarily enter into partnership with other
corporations or with 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 provided 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 2520).
It would thus appear from the foregoing quotations that the general rule is that a corporation cannot
ordinarily enter into partnership with other corporations or with individuals. This general rule,
however, has been liberalized in that a corporation may now ordinarily enter into partnership with
another person, provided it is authorized to do so by statute or charter. (SEC opinion, dated
December 22, 1966). Thus, if the corporation is expressly authorized under its articles of
incorporation, it can enter into a partnership or joint venture agreement with a Filipino individual.
cdrep
Considering, however, that one of the partners in your proposed partnership is a foreign
corporation, the Commission imposes the following restrictions to safeguard the interests of those
who might deal with the company:
a. The foreign corporation must obtain a license to transact business in the country in
accordance with the Corporation Code of the Philippines.
b. The articles of partnership of the proposed company must expressly stipulate that all
partners are and shall be jointly and severally liable for all the obligations of the partnership in the
Philippines. (SEC Opinion dated December 22, 1966)
2. Anent your second query, "when the charter of a corporation requires that its contracts shall
be made or other acts done by particular officers or agents, or in a certain mode, the provisions of
the charter must be complied with when it acts in other states, for such a requirement is a limitation
upon its powers, and it is the general rule that persons dealing with a foreign corporation are bound
to take notice of charter powers and limitations," (17 Fletcher Cyclopedia Corp., sec. 8322, p. 99
1959 Rev. Ed.) Thus a foreign corporation can be represented by a resident agent in the signing of
partnership contract for as long as no other officer or agent is authorized to do so under the charter
of the foreign corporation.
As a matter of policy this Commission further requires the submission of a board resolution on the
matter and a special power of attorney in favor of the agent authorizing him to sign in behalf of
the corporation. These documents, if executed abroad must be properly authenticated in
accordance with Act No. 2103. (copy of which is attached herewith for your information)
3. As regards your third and fourth queries, please be informed that this Commission has
previously opined that where the partnership is composed of juridical entities, the members of the
partnership shall participate jointly in its management and shall be jointly and severally liable for
all its obligations, so that the argument against surrendering the management of corporate interest
to other will not apply. (SEC opinions, dated December 22, 1966; April 5, 1976). Hence, in your
proposed partnership the foreign corporation represented by its resident agent can be a general
partner, who together with the individual partner may execute all acts of administration. llcd
4. For the registration of the proposed partnership, please submit the following requirements:
a. Articles of Partnership
b. Board Resolution and Power of Attorney mentioned in number 2.
c. Registration data sheet.
d. Undertaking to change partnership name in the event another person, firm or entity has
acquired a prior right to the use of the same name or similar to it.
e. Duly accomplished BOI Form 504 if foreign equity is 30% or less of the capital.
f. BOI Certificate of Authority if foreign equity is more than 30% of the capital.
g. Proof that the Filipino partner has the financial capability to invest the amount contributed
to the partnership.
For the filing fees the following should be paid to the Commission:
Articles of Partnership — 1/10 of 1% of
the capital of the partnership
Miscellaneous Fees:
SEC Bulletin P10.00
Legal Research Fee 1% of the filing fee
For further particulars, you may communicate with the Board of Investments (BOI) with business
address at Buendia Avenue, Makati, Metro Manila, the government agency charged with the
implementation of P.D. 1789, (Omnibus Investments Code), the law regulating the entry of foreign
investments in the Philippines.
Please be advised accordingly. cdtai
Very truly yours,
(SGD.) MANUEL G. ABELLO
Chairman