Atty. Salvador A. Camanian Jr.

October 4, 2001 SEC OPINION Atty. Salvador A. Camanian Jr. Assistant Government Corporate Counsel Office of the Government Corporate Counsel 3rd Floor, MWSS Administration Building, Katipunan Road, Balara, Quezon City S i r : This pertains to your letter dated July 18, 2001 requesting for an opinion on whether or not LA PAZ HOUSING AND DEVELOPMENT CORPORATION and LAGUNA MANAGEMENT AND SERVICE CORPORATION "can engage, operate or maintain waterworks whether domestic, industrial or commercial water service" even if the phrase does not appear in the primary or secondary purposes of either corporation. Basic is the rule that a corporation is a creature of law and a creation of the sovereign rule-making power, which is the State. As such, it can only act according to the authority granted or conferred upon it by law. Usually, this authority is delineated in a document known as the "articles of incorporation." Without the express authority in its primary or secondary purposes, a corporation cannot engage in a particular area of business unless the same is germane to the general scope of the objects for which the corporation was created or is necessary or proper to carry into effect the object of its creation. Upon verification of the articles of incorporation of the two subject corporations, copies of which are hereto attached for your perusal, it is shown that the business of waterworks, whether domestic, industrial or commercial water service does not appear in the primary nor secondary purposes of both corporations. Neither is the general business of waterworks germane to real estate development, which is the primacy purpose of La Paz Housing and Development Corporation. With respect to Laguna Management and Service Corporation, its business as a management company cannot be construed as bearing a manifest relation to commercial water service. We trust that this explanation satisfactorily answers your queries. Very truly yours, (SGD.) FE ELOISA C. GLORIA Commissioner