Atty. Fredderick A. Vida

June 18, 1998 Atty. Fredderick A. Vida Unit 1409 Philippine Stock Exchange Centre (East Tower) Exchange Road, Ortigas Center, Pasig City S i r : This refers to your letter dated May 26, 1998 regarding the intention of the Philippine Airport and Ground Services, Inc., an existing 60% Filipino-40% foreign owned corporation, to organize a "private security agency" by creating a substantially owned subsidiary corporation to engage in said line of business. Please be advised that the Commission, on several occasions, has ruled that while a 60% Filipino - 40% Foreign owned corporation may be considered a " Philippine National " for purposes of investment in another corporation, it is not qualified to invest in business activities the ownership of which under the Constitution or other special laws are limited to Filipino citizens only. Sec. 4 of RA 5487, as amended, entitled "An Act to Regulate the Organization and Operation of Private Detective, Watchmen, or Security Guards Agencies", quoted hereunder, clearly requires that a "private security agency" shall be 100% Filipino owned . "SECTION 4. Who May Organize a Security or Watchman Agency . Any Filipino Citizen or a corporation, partnership, or association, with a minimum capital of five thousand pesos, one hundred per cent of which is owned and controlled by Filipino Citizens may organize a security or watchman agency; . . . ." (Emphasis supplied) Accordingly, the investment proposal described in your letter wherein an existing corporation with foreign equity participation intends to subscribe to the capital stock of the proposed private security agency corporation is not legally feasible. cdll Very truly yours, (SGD.) PERFECTO R. YASAY, JR. Chairman