Mr. Victor SA. Andrada

March 13, 1985 Mr. Victor SA. Andrada Office of the Presidential Assistant for Legal Affairs Office of the President Malacaang, Manila Sir : This refers to your first indorsement Letter dated January 18, 1985 requesting for comments on the query of the Philippine National Construction Corporation dated December 3, 1984 inquiring as to whether said corporation may issue loan or debt guarantees. Under LOI No. 1366, government-owned or controlled corporations are prohibited to issue guarantees to secure foreign loans and other foreign obligations of the private sector. The LOI provides, thus: "1. All government financial institutions and other government-owned or controlled corporations shall not extend or issue guarantees , counter-guarantees, standby letters of credit and other forms of guarantees to secure foreign loans and other foreign obligations of the private sector ." (Emphasis supplied) Likewise, it is well settled that a corporation may only engage in the business or businesses for which it is lawfully organized as expressly stated in its articles of incorporation. A verification of the articles of incorporation of subject corporation disclosed that nowhere in the purpose clause thereof do we find a provision authorizing the same to issue loan or debt guarantees. In view thereof, the same cannot legally pursue such line of business. Please be advised accordingly. Very truly yours, (SGD.) MANUEL G. ABELLO Chairman