Castillo, Laman, Tan & Pantaleon

January 19, 1982 Castillo, Laman, Tan & Pantaleon Salcedo Center, 138 H.V. Dela Costa St. Salcedo Village, Makati, Metro Manila Attention : Attorneys Leonardo F . Balmeo and Noe B . Baga Gentlemen: This has reference to your letter of December 21, 1981 requesting confirmation of this Commission, under the facts stated therein taken together with P.D. No. 1648, as amended, Executive Order No. 725 and the Guidelines Governing the Establishment and Development of Industrial Tree Plantations (Ministry Administrative Order No. 5 ) that the "National Industrial Tree Corporation" ("NITC") a proposed subsidiary wholly-owned by the National Development Corporation ("NDC") will not be required to register as a financing company pursuant to the provision of Republic Act No. 5980 implemented by the Securities and Exchange Commission. Section 11 of the Executive Order No. 725 issued by the President on September 9, 1981 states: "SECTION 11. The Government, thru the National Development Company (NDC) may participate in the equity of the new ITP corporation, in joint venture with the ITP lessee ; PROVIDED, That the Minister of Natural Resources and the Director of the Bureau of Forest Development or their duly authorized representatives, shall sit as non-voting ex-officio members in the Board of Directors of the new corporation to assure that Government Forest Conservation Policies and Objectives are carried out. Furthermore, the NDC , the Development Bank of the Philippines, Central Bank of the Philippines, and other government financing institutions shall extend assistance to ITP projects in obtaining long term and low interest loans . (Emphasis supplied) To carry into effect said Executive Order No. 725, the "NDC", a government corporation organized under the Commonwealth Act No. 182 , as amended by P.D. No. 1648, intends to organize a wholly-owned subsidiary to be known as National Industrial Tree Corporation ("NITC"), the basic formation of which shall be (1) to invest in the equity of joint venture ITP corporations and (2) to extend credit assistance to said corporations. Under aforesaid P.D. No. 1648, the NDC is empowered to: "SECTION 4. Powers and Functions of the Company . . . . (1) Engage or invest in or extend loans and guarantee to, or enter into joint ventures with Filipino and foreign investors, whether in the majority or minority position in commercial, industrial, mining, agricultural and other enterprises, which may be necessary or contributory to the economic development of the country, or important to the public interest; . . . LexLib (16) Organize subsidiary companies to undertake any of the activities mentioned in Section 4 hereof." In addition, Sec. 24 of the "Guidelines Governing the Establishment and Development of Industrial Tree Plantations" issued by the Minister of Natural Resources on October 23, 1981 provides: "SECTION 24. Credit Assistance . Holders of ITP Lease Agreements may apply with the National Development Company, . . . for assistance in obtaining long term and low interest loans; PROVIDED, That the lessee may assign the Lease Agreement as a collateral for loans which may be granted or guaranteed by such government financial institution." In view of the foregoing, we confirm your position that the proposed National Industrial Tree Corporation need not register as a financing company under R.A. No. 5980. cdll Very truly yours, (SGD.) ROSARIO N. LOPEZ Associate Commissioner