Mr. Reynaldo Samantila

June 2, 1989 Mr. Reynaldo Samantila Trade Unions of the Philippines and Allied Services Rm. 203-204 MED-DIS Bldg. cor. Solana and Real Streets Intramuros, Manila Sir : This refers to your letter dated April 5, 1989, calling the attention of the Commission of the alleged anticipated formation of another corporation by Sony Service Center Solid Electronics, Inc. in order to evade the company's liability to its workers who are asserting their constitutional rights. In connection therewith, it is worth mentioning that under Section 10 of the Corporation Code, the formation of a corporation is a matter of right, provided that the registration of such corporation is in accordance with the Code. Likewise, Section 17 of the Corporation Code provides: "SECTION 17. Grounds when the articles of incorporation or amendment may be rejected or disapproved . The Securities and Exchange Commission may reject the articles of incorporation or disapprove any amendment thereto if the same is not in compliance with the requirements of this Code; Provided, That the Commission shall give the incorporators a reasonable time within which to correct or modify the objectionable portions of the articles or amendment. The following are grounds for such rejection or disapproval : 1. That the articles of incorporation or any amendment thereto is not substantially in accordance with the form prescribed herein; 2. That the purpose or purposes of the corporation are patently unconstitutional, illegal, immoral, or contrary to government rules and regulations; 3. That the Treasurer's Affidavit concerning the amount of capital stock subscribed and/or paid is false; 4. That the required percentage of ownership of the capital stock to be owned by citizens of the Philippines has not been complied with as required by existing laws or the Constitution. xxx xxx xxx." Thus, for as long a the articles of incorporation of a proposed corporation substantially complies with the provisions of the Corporation Code, and meets the guidelines established by the Commission, its registration as a juridical entity cannot be restrained. However, if you have any objection to the registration of a particular corporation, a formal written opposition relative thereto may be filed and a corresponding investigation may be conducted by the Commission. prcd Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman