Lufthansa German Lines

March 25, 1986 Lufthansa German Lines Legaspi Park View Condominium Legaspi corner Alvarado Sts. Legaspi Vill., Makati, MM Attention : Mr . Herbert Raff Finance Administration Manager Gentlemen: This refers to your letter, dated January 6, 1986, inquiring about the status of your previous letter to this Commission, dated February 6, 1984, requesting for a certificate of exemption from the security deposit requirements of Section 126 of the Corporation Code, and enclosing with the former a xerox copy each of the letters of the Board of Investments (B.O.I.), dated December 28, 1983 and November 5, 1982. It appears that on April 2, 1982, you were issued a Certificate of Authority No. 1419 by the BOI authorizing you to expand your business activity to engage as on-line carrier by operating scheduled passenger, cargo and mail services between Germany and the Philippines, subject, among others, to the condition that you shall post a bond or bank guaranty in the sum of P100,000.00 to answer for your liabilities to resident creditors. However, the BOI, in its letter dated December 28, 1983, officially informed you of the Board's decision in its meeting of October 26, 1982, granting your request for a waiver of the requirement to post said bond or bank guaranty as imposed under condition No. 6 of your C.A. No. 1419, subject to your submission of proof of compliance with SEC requirement pursuant to the provisions of Section 126 of the Corporation Code of the Philippines . If you will note, condition No. 6 of your Certificate of Authority No. 1419 granted by the BOI as well as the security deposit requirements under paragraph 2, Section 126 of the Corporation Code, are both geared for the protection of your creditors. Apparently, therefore, you were granted an exemption by the Board in order to avoid a duplicity in the posting of security deposits both aimed for the benefit of your present and future creditors. Hence, the waiver granted you by the BOI was premised on the condition that you will comply with the requirements of Section 126 of the Corporation Code. Accordingly, we regret to inform you that we cannot grant your request for exemption from the requirement of said provision of the Code. Thus, your attention is called to the following provision of our "Guidelines for the Investment Requirement of Foreign Corporations under Section 126 of the Corporation Code of the Philippines," to wit: "SECTION 1. Scope of Applicability . Presently existing foreign corporations duly licensed to do business in the Philippines as of May 1, 1980 shall deposit securities satisfactory to the Philippine Securities and Exchange Commission with an actual market value of P100,000.00 by May 1, 1982. Other foreign corporations duly licensed after May 1, 1980 and such foreign corporations as may hereafter be licensed in the future shall also deposit similar securities with an actual market value of P100,000.00 within sixty (60) days from the issuance of license to do business in the Philippines. xxx xxx xxx The above deposit shall not only be for the benefit of present and future creditors of the licensee-foreign corporations but also to compel said foreign corporations to invest in or buy Philippine securities in order to foster the social and economic development of the country. (Sec. 2, SEC Guidelines, Supra.) Please be guided accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Associate Commissioner