2017-12-29

NPM No. 131-2017

Requesting Entity: VALIDATION GROUP

Issues Concern: Separate Personality of a Partnership and Corporation

 

Details

Whether or not the Medical Gallery Trading Company, a duly registered partnership, may still use its completed contracts if it will convert the entity into a corporation.


[P]lease note that in government procurement, a bidder is awarded the contract based on its qualification and compliance with the legal, technical and financial requirements of the procurement project. The completed contracts of the partnership are personal to it and could neither be credited nor recognized in favor of the newly created corporation and its stockholders, even if the corporation is composed of the same officers operating the partnership. It is well settled under Art. 1768 of the Civil Code that a partnership "has a juridical personality separate and distinct from that of each of the partners."


Hence, the track record of the partnership, whose partners will become directors or officers of a new corporation cannot be used by the latter for purposes of proving or showing the latter`s legal, technical and financial capacity in a procurement opportunity.


On the other hand, basic in corporation law is the principle that a corporation has a separate personality distinct from its stockholders and from other corporations to which it may be connected. Thus, the doctrine on separate personality applies to a partnership and a corporation, to which the track records or the completed contracts of the partnership cannot be used by the corporation.