Mr. Henry P. Agupitan

December 4, 1995 Mr. Henry P. Agupitan Tropical Exploration Philippines, Inc. 59 Sampaguita St., Valle Verde II Pasig City S i r : This refers to your letter dated December 1, 1995 requesting opinion on the following queries: 1. Whether or not a foreign-owned parent corporation is considered separate and distinct from its wholly owned domestic subsidiary, and 2. If so, can the parent corporation, under RA 7942, otherwise known as the Philippine Mining Act of 1995, also avail of a maximum Financial or Technical Assistance Agreement (FTAA) contract area of 1,000 meridional blocks, separately and independently from its wholly owned domestic subsidiary who has availed of the maximum FTAA contract area? As a general rule , a "holding company" or "parent company" has a separate corporate existence , and is to be treated as a separate entity, unless such corporate existence is a mere sham, or has been used as an instrument for concealing the truth, or where the organization or control are shown to be such as that it is but an instrumentality or adjunct of another corporation. So a holding company is generally held not to be doing or transacting business through its subsidiary where the corporate separate entities are maintained. By the same token, the creation of a holding company does not affect the separate and continuing existence of the corporation whose stock it holds; nor is the situation altered simply because the stockholders, directors and other officers of the two companies are identical. Thus, consistent with the foregoing general principle on parent subsidiary relationship , the Commission previously opined that if properly used to perform legitimate functions , each subsidiary and affiliate may maintain its separate juridical personality distinct from its controlling corporation or stockholder, and the liabilities of each corporation will be confined to each of them. (SEC Opinion dated September 10, 1980 addressed to Atty. Abbas M. Basman) Please take note that a foreign corporation formed, organized or existing under any law other than those of the Philippines shall have the right to transact business in the Philippines only after it shall have a obtained a license to transact business in this country in accordance with the provisions of the Corporation Code and the Foreign Investments Act of 1991. Relative to the second query, it is not within the Commission's authority or jurisdiction to determine whether, for purposes of availment of FTAA under the Philippine Mining Act of 1995 , the parent and subsidiary corporations are to be treated us separate or one entity. The Commission does not have the authority to grant permits for the exploration and/or exploitation of natural resources owned by the State. It is therefore suggested that the issue raised therein be referred directly to the Mines and Geosciences Bureau under the Department of Environment and Natural Resources, which pursuant to Section 9 of the Philippine Mining Act 1995 shall have the direct charge in the administration and disposition of Philippine mineral lands and mineral resources. cdlex Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner