Angara Concepcion Regala & Cruz

April 22, 1983 Angara Concepcion Regala & Cruz 5th Floor, ACCRA Building 122 Gamboa St., Legaspi Village Makati, Metro Manila Gentlemen: This refers to your letter dated April 11, 1983, requesting opinion of the Commission on the query posed therein. prcd It appears therein that your client proposes to establish jointly with two other foreign corporations a new company which shall engage in the development of natural resources. At present, almost 40% of your client's capital is of foreign ownership. In the light of the constitutional limitations on equity ownership in Corporations engaged in the development of natural resources, you now pose the query as to whether your client may legally subscribe to 60% of the new corporation, the balance of 40% to be owned by foreign corporations. Pursuant to Section 7 of our " Rules To Implement The Requirement Of The Constitution and Other Laws That The Controlling Interest In Enterprises Engaged In The Exploitation Of Natural Resources Shall Be Owned By Filipino Citizens ", shares belonging to corporations or partnerships of which at least 60% of the capital is owned by Filipino citizens, shall be considered of Philippine nationality. But, if the percentage of Filipino ownership in the corporation or partnership is less than 60%, only the number of shares corresponding to such percentage shall be considered to be of Filipino nationality. ( SEC Opinion dated March 20, 1972 ). Accordingly, if at least 60% of the capital of your client is owned by Filipino citizens, all of said shares shall be recorded as owned by Filipinos. Thus, your client's investment in the proposed corporation would be considered as an investment of Philippine nationality. It is believed, however, that this rule would not apply in other cases where the law requires a higher percentage of Filipino ownership. (SEC opinion, supra). Please be advised accordingly. llcd Very truly yours, (SGD.) JESUS J. VALDES Associate Commissioner