Mr. Fortunato P. Mendoza

September 6, 2002 SEC OPINION Mr. Fortunato P. Mendoza F.P.M. Corporation Central Business District II Bgy. Triangulo, 4400 Naga City Dear Mr. Mendoza, This refers to your letter dated August 20, 2002 inquiring on the scope of the charter of Daruanak Port Services Inc. Please be informed that the operation of bus terminal is clearly not covered in the primary purpose of subject corporation. Its business purpose as stated in the articles of incorporation is mainly to: "engage in arrastre, stevedoring and other allied services". Stevedoring is a special kind of service which involves the loading or unloading of cargo on or from a vessel on port. It consists of the handling of cargo from the hold of the ship to the dock, in case of pier-side unloading, or to a barge, in case of unloading at sea. Arrastre, on the other hand, involves the handling of cargo deposited on the wharf or between the establishment of the consignee or shipper and the ship's tackle. (Hijos De F. Escano, Inc., et al. vs. NLRC, G.R. No. 59229, Aug. 22, 1991) The operation of a bus terminal outside the pier or wharf is certainly not allied to such latter activities. Basic is the rule that a corporation is a creature of law and a creation of the sovereign rule-making power, which is the State. As such, it can only act according to the authority granted or conferred upon it by law. Usually, this authority is delineated in a document known as the "articles of incorporation." Without the express authority in its primary or secondary purposes, a corporation cannot engage in a particular area of business unless the same is germane to the general scope of the objects for which the corporation was created or is necessary or proper to carry into effect the object of its creation. (SEC Opinion dated October 4, 2001) aSECAD Very truly yours, (SGD.) BENITO A. CATARAN Director Company Registration and Monitoring Department