Mr. Ricardo Lumanlan

July 16, 1986 Mr. Ricardo Lumanlan 150 Merced Drive San Bruno, California 94066 Sir : This relates to your letter dated December 11, 1985, requesting the opinion of this Commission on the following queries: 1. Does the Commission allow the contribution of properties, located in the Philippines as well as in the United States, to the capital of a proposed corporation? 2. What is the maximum value of the land that we allow to be contributed to the capital of the corporation? 3. How does the Commission arrive at the valuation of the following real properties: a) A piece of sugarland which produces 100 piculs per hectare. b) A piece of sugarland which is projected to yield an income of P30,000 per annum. c) Agricultural lands which have non-metallic minerals. Inquiry is further requested on the schedule of fees required of a proposed corporation by this Commission. Relative to your first query, please be advised that in determining the right of a corporation to take and hold real property and the extent of that right, inquiry should be directed at the outset to the constitution and statutory provisions affecting the corporation's power and capacity in this respect. (6A Fletcher Cyc. Corp., 1950 Rev. Vol., sec. 2786). Our law on the matter is found in Section 36 of the Corporation Code which provides that every corporation incorporated under this Code has the power and capacity, among others to received, purchase, take hold, or otherwise deal with such real properties as the transaction of the lawful business of the corporation may reasonably and necessarily require, subject to the limitations prescribed by law and the Constitution . To some extent, express powers of this kind are merely declaratory of the common-law right of the corporation and confer upon the corporation power to purchase or acquire real property necessary or convenient to enable it to carry into effect the legitimate objects of its incorporation. (Fletcher, Supra.,citing Gratton v. Gratton's Estate, 133 Ore 65, 283 Pac. 747).When the corporation is thus expressly authorized to acquire and own real property, there can be no question as to its right or capacity to do, if the property purchased or held by it comes within the terms of the authorization and the corporation continues in the exercise of the powers to which such real property is incident. (Fletcher, Supra.) The right of a corporation in taking and holding real property may be treated by the purpose for which it was acquired and the ever present intention of devoting it to a proper and necessary corporate use. Consideration should be given, in determining the right, to the object of acquisition, the intention with which the property is held, and the use to which it may be and is designed to be put, and the power of the corporation is to be limited to such real property as is reasonably necessary to such corporate purposes and uses. (Fletcher, sec. 2788, citing Clesapeake & O. R. Co. v. Commonwealth, 189 Ky. 465, 225 S.W. 145; Brown v. Hogg, 14 I11. 219). cdll Thus, properties located in the Philippines may be contributed to the capital of a proposed corporation, provided that said properties are necessary or convenient to carry out the legitimate object of incorporation. In line with this, and in view of the generality of the provision of Section 36(7) of the Corporation Code on corporate acquisition of real properties, implying that properties located anywhere may be contributed to the capital of the corporation, properties located in the United States as may be extremely needed to pursue legitimate corporate objectives may be contributed to the capital of a proposed corporation .In this connection, however, the law of the place where the property is located should be considered, specifically, as to whether a foreign corporation may own realty in a given state. Anent the second query, our law does not contain any express provision regarding the amount or value of realty which the corporation may acquire and hold. Where no such express limitations exist, the matter is referable to the power of the corporation to acquire real property suitable to its business or purposes, and in quantities and amounts reasonably sufficient to those ends. (Fletcher, sec. 2800, citing Cynthians & Raven Creek Turnpike Co. v. Hutchinson, 22 Ky. L. Rep. 233, 60 S.W. 378; Hallam v. Bailey, 66 Okla. 46, 166 Pac. 874).There is, in such case, no limitation upon the quantity or value of the property which the corporation may obtain and own, other than such as results from the rule that it cannot hold property for the purpose which is foreign to the objects for which it was created. (Fletcher, Supra.,citing Market St. Ry. Co. v. Hellman, 109 Col. 571, 590, 42 Pac. 225; Andrews v. Andrews, 110 Ill. 223). Regarding the third query, regardless of the quantum of income which a piece of agricultural land is projected to yield, should the assigned value of the realty do not exceed the market value as appearing in latest tax declaration of the property, the Commission uses tax declaration as basis in approving the valuation given to said realty. However, should the assigned value of the real estate exceeds the market value as appearing in the tax declaration of the property, the Commission is guided by the Appraisal Report prepared by a real estate appraiser. In the case of mineral lands, the Commission in evaluating the assigned value of said property is guided by a valuation report rendered by the Bureau of Mines on said property. Finally, please be informed that the examining and filing fees for the articles of incorporation of a proposed corporation as per our schedule of revised fees and charges, are as follows: Stock Corporations 1/10 of 1% of the authorized capital stock, with par value shares but not less than P200.00 nor more than P100,000.00 Stock Corporations 1/10 of 1% of the authorized capital stock without par value shares but not less than P200.00 nor more than P100,000.00 For purposes of computing the registration fee of stock corporations whose shares are without per, the total number of the authorized capital stock are given an assigned value of P100.00 per share. prcd Furthermore, a legal research fee amounting to 1% of the registration fee, which in no case be less than P10.00, is required to be remitted. Please be advised accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Chairman