NPM 031-2013

Requesting Entity: HG-III Construction & Development Corporation

Issues Concern: Carrying Over of Experience of the Sole Proprietorship



Whether the construction experience/track record of GCEC, a sole proprietorship, which has put all its assets, personnel and resources to HG-III, a corporation, may be carried over to said corporation.

[I]t is settled that a corporation is invested by law with a personality separate and distinct from those of the persons composing it as well as from that of any other legal entity to which it may be related. Thus, a corporation should be treated as a separate entity from its owners, stockholders and other business entities.

A sole proprietorship does not possess a juridical personality separate and distinct from the personality of the owner of the enterprise. The law merely recognizes the existence of a sole proprietorship as a form of business organization conducted for profit by a single individual and requires its proprietor or owner to secure licenses and permits, register its business name, and pay taxes to the national government.

Given the established difference between a sole proprietorship and a corporation, it is clear that GCEC and HG-III are entirely distinct and separate entities. Thus, we are of the view that although GCEC has a proven construction experience/track record, this cannot be carried over to HG-III despite the fact that GCEC's assets, personnel and other resources have been infused into HG-III, inasmuch as the latter is a corporation which has a separate and distinct juridical personality from the former.