Mr. Efren C. Gutierrez

March 18, 1996 Mr. Efren C. Gutierrez Filinvest Development Corporation 173 O. Gomez St., San Juan Metro Manila S i r : This refers to your letter dated February 23, 1996 requesting opinion on whether FILINVEST DEVELOPMENT CORPORATION can be classified as a " holding company ." LibLex It is your opinion that subject corporation should be treated as a holding company as it is actually engaged in the business of holding investments in a number of corporations. The Commission, in a letter dated December 19, 1995 addressed to Atty. Tomas F. Tuason IV of the Philippine Stock Exchange, Inc. previously opined that the corporation can be a holding company, but only as an incident to its "real estate development" business, a xerox copy of which is herewith attached for ready reference. Said opinion was rendered on the basis of the xerox copy of the Articles of Incorporation of subject corporation attached to the previous similar query where the second page thereof authorizing the corporation to engage in other lines of business or secondary purposes, was missing and inadvertently overlooked . It thus appeared from the documents submitted that the corporation had only one line of business. Therefore, it was presumed and construed that all business activities stated in the purpose clause, including its holding business activity, were intended to be carried out only in connection with its real estate development business under Paragraph (a) of page one of the Articles of Incorporation. However , a verification from the corporate records of the corporation on file with the Commission disclosed that the purpose clause of the Articles of Incorporation of the corporation provides for other lines of business or secondary purposes other than realty development business. In view thereof, its " holding business activity " (ownership of shares in other companies) under paragraph (b) of the primary purpose clause and paragraphs (i) and (j) in the secondary purpose clause may cover other businesses. Therefore, subject corporation, under its articles of incorporation , may also be treated as a " holding company " in any other businesses other than in realty development business. Accordingly, the above-mentioned previous opinion on the matter is hereby modified and superseded. Please take note, however that by a ''holding company" is meant one which controls another as a subsidiary by the power to elect its management. In other words, a holding company is a parent company which holds substantial shares of stocks in other corporations to enable it to control the management and policies of the corporation. Thus, for as long as the element of control is present, subject corporation can be classified as a "holding company". Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner