Hon. Amado D. Valdez

September 12, 2002 SEC OPINION Hon. Amado D. Valdez Office of the Government Corporate Counsel 3rd Flr.,MWSS Bldg.,Katipunan Road Balara, Quezon City S i r : This refers to your letter dated August 5, 2002 requesting for the certified true copies of the Articles of Incorporation and latest General Information Sheet of Crismor Company, Inc. and opinions on the queries posed therein. Relative thereto, transmitted herewith are the certified true copies of the requested documents. In connection with your first query, please be informed that the phrase "to engage, operate or maintain waterworks whether domestic, industrial or commercial water service" does not appear in the primary or secondary purposes of the articles of the aforenamed corporation. As to your second query, it may be stated that even if the aforestated phrase is not incorporated in the articles, the same may be covered by the general provision of paragraph (1) thereof reading: To operate, establish and/or maintain in or about the premises of its subdivision or housing projects, such facilities as the company may deem expedient and/or practicable to operate, establish and/or maintain, and in so far as may be permitted by law. (Emphasis ours) This Commission is of the belief that Crismor Company, Inc., may operate, establish and/or maintain in the subdivision premises or housing projects water facilities or utilities, for the consumption of the residents in the area subject to the existing laws, the rules and regulations of the Housing and Land Use Regulatory Board (HLURB) (P.D. 957), National Water Resources Board (NWRB) and Local Water Utilities Administration (LWUA) (P.D. 198), among others. It is to be stressed that water supply is a basic necessity that should be provided in any housing or subdivision projects. Hence, the establishment, operation, maintenance of water facilities or utilities within the subdivision or housing project to service the needs of the residents therein is a cognate activity, reasonably necessary for the accomplishment of its purpose or incidental in the furtherance of its real estate or subdivision business. The activity precisely falls within the purview of the proviso " such facilities as the company may deem expedient and/or practicable to operate, establish and or maintain ." (par. 1, Articles of Incorporation). The foregoing view finds support in the following opinions which are worth citing: SDECAI A purpose clause may be reasonably stretched or construed to cover matters or objects which could not have been expressly enumerated at the time of incorporation due to their huge number or due to constant changes in economic conditions but can be impliedly included therein. (SEC Opinion dtd. April 12, 1991 Mr. Libertad Lagman-Sy, cited in Lopez, The Corporation Code of the Philippines, Vol. 1, p. 206). There will always be instances when doubts may arise as to whether an act may be reasonably implied from the purposes of the corporation. These doubts will sometimes be due to poor draftsmanship or lack of foresight on the part of the original incorporators or their legal counsel or as in oftentimes the cause, situations or circumstances may come up which could not have been foreseen at the time of incorporation. Many times the purpose clause can be stretched as to impliedly cover these new and unexpected situations. ...(Ltr. to Mr. Amado J. Lansang, dated March 24, 1982 and Ltr. to Wire Rope Corporation of the Philippines dated September 24, 1992) Accordingly, both queries are answered in the affirmative. This opinion, however, is without prejudice to the ruling or other requirements of the appropriate agency regulating waterworks systems in accordance Presidential Decree No. 198, known and referred to as the " Local Water Utilities Administration Law " and its amendatory decrees and Presidential Decree No. 957 otherwise known as the Subdivision and Condominium Buyers' Protective Decree. Very truly yours, (SGD.) JESUS ENRIQUE G. MARTINEZ Commissioner