Atty. Maurice C. Nubla

March 4, 1993 Atty. Maurice C. Nubla Nubla, Pedrosa & Associates 5th Floor, FIL-AM Resources Bldg. 231 Juan Luna St.,Binondo Manila S i r : This refers to your letter of February 18, 1993 requesting opinion whether a corporation can validly lease a portion of its real estate to a developer through a board resolution if it does so in good faith and in the legitimate furtherance of its corporate purposes without securing prior consent of the stockholders. Section 40 of the Corporation Code provides in part: "SECTION 40. Sale or other disposition of assets . ... Nothing in this section is intended to restrict the power of any corporation, without the authorization by the stockholders or members, to sell, lease ,exchange, mortgage, pledge or otherwise dispose of any of its property and assets if the same is necessary in the usual and regular course of business of said corporation or if the proceeds of the sale or other disposition of such property and assets be appropriated for the conduct of the remaining business." (Emphasis supplied) It is clear from the above provision that if the property to be leased is necessary to enable it to carry out the purpose(s) for which the corporation is organized, the Board of Directors, as it may deem expedient, may lease the same without the corresponding approval of the stockholders. The question of whether the transaction is necessary in the pursuit of the business of the corporation is for the Board of Directors to determine. It has to be emphasized, however, that any corporate transaction by the Board must not be tainted with bad faith or fraud or prejudicial to the interest of the Corporation or stockholders. Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman