Ayala International Phils., Inc.

September 3, 1984 Ayala International Phils., Inc. 5th Floor, Enzo Building 399 Gil J. Puyat Avenue Makati, Metro Manila Gentlemen: This refers to your letter, dated July 20, 1984, requesting for a reconsideration of the action of this Commission in disapproving your amended articles of incorporation. It appears that Ayala International Phils., Inc. was registered with this Commission on December 16, 1983, primarily "to acquire (by purchase, exchange or otherwise), sell, market and distribute, at wholesale or retail , as well as to import and export for its own account, merchandise, and chattels of every kind and description." (Emphasis supplied). It has an authorized capital stock of P20,000,000.00 divided into 2,000,000 shares of par value of P10.00 each. On June 22, 1984, subject corporation filed its amended articles of incorporation, amending Article VII thereof, reclassifying its authorized capital stock into 1,200,000 Class "A" shares and 800,000 Class "B" shares, with the following restrictions among others, to wit: "ARTICLE VII. . . . a. Class "A" shares may be owned by, transferred to or subscribed by citizens of the Philippines only or corporations, partnership or associations 70% of the voting stock or voting power of which is owned and controlled by citizens of the Philippines. Class "B" shares may be issued, transferred or sold to any person, corporation, partnership or association regardless of nationality. xxx xxx xxx The pertinent law of Republic Act No. 1180 was passed by the defunct Philippine Congress to nationalize the retail trade by vesting into the hands of Filipino citizens or to associations, partnerships or corporations wholly owned by Filipino citizens the retail business. Section 1 thereof explicitly provides as follows: "No person who is not a citizen of the Philippines, and no association, partnership or corporation the capital of which is not wholly owned by citizens of the Philippines, shall engage directly or indirectly in the retail business." cdll The law, therefore, clearly provides that corporations, whose capital are not wholly owned by citizens of the Philippines are barred from engaging "directly or indirectly" is indeed of paramount importance for it underscores the policy of the state to exclude corporations not wholly owned by Filipinos from engaging in retail business under any scheme, form or devise. ( SEC Opinion, dated July 21, 1977 ). Considering that the proposed re-classification of your shares would allow aliens to own shares of stock of the Corporation up to 30% of the total subscription, the same would run counter to the legal requirement of RA 1180, otherwise known as the Retail Trade law, as amended. The Commission therefore reaffirms its position in disapproving the amended articles of incorporation of that corporation. Very truly yours, (SGD.) MANUEL G. ABELLO Chairman