Atty. Gonzalo T. Santos

December 5, 1998 Atty. Gonzalo T. Santos Chairman, Asset Privatization Trust North Davao Mining Corporation Bldg. 104 Gamboa Street, Legaspi Village Makati City S i r : This refers to your letter dated October 6, 1998 requesting confirmation of your position that APO Production Unit, Inc., a non-stock, non-profit corporation, may be converted into a stock-profit corporation by way of an amendment of its Articles of Incorporation and By-laws pursuant to a privatization scheme of the Asset Privatization Trust (APT). cdll Please be advised that the Commission, on the basis of Presidential Proclamation No. 50, dated Dec. 15, 1986 which allows conversion of non-stock corporations held in trust by APT into stock corporations, confirmed the above-stated opinion of APT in its meeting of December 4, 1998, subject however to the following conditions so as not to defeat the rationale behind the existing SEC policy of disallowing conversion of a non-stock, non-profit corporation into stock, profit corporation by mere amendment of its Articles of Incorporation. 1. Assets held by the corporation upon condition requiring return, transfer, or conveyance upon the occurrence of a condition by reason of the conversion should be returned, transferred or conveyed in accordance with the terms of the agreement; 2. Donated assets and assets received by the corporation subject to limitations permitting their use only for charitable, benevolent, educational or similar purposes, shall be transferred or conveyed to organizations engaged in those lines of activities; 3. A certification under oath showing compliance with the foregoing conditions should be submitted as supporting document to the application. Please be advised accordingly. Very truly yours, (SGD.) DANILO L. CONCEPCION Associate Commissioner