Mr. Danny Barican

August 25, 1993 Mr. Danny Barican Exclusive E. Stancia Resort Hotel Zoniel Brgy. San Jose, Tagaytay City S i r : This refers to your letter of July 16, 1993 requesting opinion whether "Exclusive" E. Stancia Resort Hotel, a sole proprietorship, can sell membership shares to the public for the exclusive use of its facilities. Please be advised that contracts involving sale of proprietory rights in resort facilities which provide for the enjoyment of the facilities of the issuer are investment contracts within the meaning of Section 2 of the Revised Securities Act. Hence, no such contracts shall be sold to the public, unless they are first registered with, and/or licensed by the Securities and Exchange Commission, except when exempted under the "SEC Rules on Registration of and Sale of Proprietary Rights in Golf Courses and Clubs, Resort Facilities and Similar Projects." Under said SEC Rules, the following are exempted from the requirements of registration and/or licensing. "(a) All existing entities which have constructed their golf courses and clubs, resorts, recreational or athletic facilities, and are not raising funds from the public. Provided, however, that existing entities which are still selling membership certificates, units or rights on the date of effectivity of these rules are covered by these regulations. (b) Sales to less than twenty (20) persons. (c) Sales to persons who are closely connected with the enterprise, such as employees of the issuer, as well as personnel of a sister or affiliated company who know the affairs of the issuer, or sales under circumstances where prior registration of the proprietary rights is unnecessary to protect investors, such as private offerings to friends and/or persons, who are in a position to know the projects of the issuer. Provided, that, in either of such cases no compensation, remuneration or commission is paid or given in connection with the offering of the proprietary right. In any of the foregoing exceptions, a Fact Sheet signed and verified by the President or other responsible officer of the issuer shall be filed with the SEC, and its statement or certificate of exemption secured. llcd Please be guided accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman