Mr. Raul S. Sison

August 23, 1989 Mr. Raul S. Sison Entrex Trading Corporation 76-53 85th Road, First Floor, Woodhaven, New York 11421 P.O. Box 7155, Flushing, N.Y. 11352 Sir : This refers to your letter, dated July 17, 1989, requesting the opinion of this Commission relative to the offer of Entrex Trading (Philippines),Inc.,a domestic corporation, to sell 51% of its capital stock to Entrex Trading Corporation, a corporation registered under the Laws of the State of New York, USA. A perusal of the articles of incorporation of Entrex Trading (Philippines),Inc. on file with the Commission disclosed that the corporation is engaged in "retail" business. The purpose clause of the articles of incorporation of subject corporation provides, thus: "To engage in, conduct, and carry on the business of buying, selling, distributing marketing at wholesale and retail insofar as may be permitted by law, all kinds of goods, commodities, wares and merchandise of every kind and description; ...".(emphasis supplied). Under Republic Act 1180, otherwise known as the Retail Trade Nationalization Law, corporations whose capital are not owned wholly by citizens of the Philippines are barred from engaging in "retail" business. The law provides: "SECTION 1. No person who is not a citizen of the Philippines, and no association, partnership, or corporation the capital of which is not wholly owned by citizens of the Philippines ,shall engage directly or indirectly in the retail business ..." (emphasis supplied). Thus, considering that Entrex Trading (Philippines) Inc. is engaged in "retail" business, it cannot sell any portion of its capital stock to a foreigner. Under Section 123 of the Corporation Code, Entrex Trading Corporation, although the majority stockholders thereof are Filipino citizens, is considered a "foreign corporation". As defined under the Code, a "foreign corporation" is one formed, organized, or existing under any laws other than those of the Philippines. The proposed investment of Entrex Trading Corporation in Entrex Trading (Philippines), Inc., therefore, would run counter to the legal requirement of the Retail Trade Nationalization Law. Please be advised accordingly. Very truly yours, (SGD.) RODOLFO L. SAMARISTA Associate Commissioner