Atty. Demosthenes B. Donato, Esq.

March 25, 1997 Atty. Demosthenes B. Donato, Esq. Donato, Em & Santos Unit 1201 Herrera Tower 98 Herrera cor. Valero Sts. Salcedo Village, Makati City S i r : This refers to your letter requesting reconsideration of the Commission' s previous opinion dated November 12, 1996 stating that a " holding company " is deemed a " domestic market enterprise " subject to the minimum capitalization in the amount equivalent of US $200,000.00 as required under R.A. No. 7042 otherwise known as the Foreign Investments Act of 1991, as amended by R.A. 8179. cdll To summarize, it is your contention among others, that a " holding company " is excluded from the definition of " domestic enterprise " for purposes of the coverage of the required minimum paid-up capital, there having no indication of legislative intent to exclude them from its coverage. Please be advised that the exception of a "holding company" in the definition of a "domestic market enterprise" under the old Implementing Rules and Regulations of the Foreign Investments Act (FIA) is now deleted under the present Amended Rules and Regulations . The reason for such deletion is that the FIA itself does not provide for such exception. Take note that "holding companies" are not included in the exceptions enumerated under Sec. 4 of FIA quoted hereunder: "SECTION 4. Scope . This Act shall not apply to banking and other financial institutions which are governed and regulated by the General Banking Act and other laws under the supervision of the Central Bank." It is a generally accepted principle in statutory construction that "The express mention of one thing in a law will, as a general rule, mean the exclusion of others not expressly mentioned. "Thus, the Implementing Rules and Regulations was amended deleting the exception of a "holding company" and instead, inserted the phrase "or otherwise engages in any business in the Philippines." The pertinent provision now reads: "K Domestic market enterprise shall mean an enterprise which produces goods for sale, renders service or otherwise engages in any business in the Philippines." (Emphasis supplied) Further, the formation of a "holding company" is not covered under the phrase " mere investment as a shareholder " as contemplated by the Foreign Investments Act for purposes of exemption under the term " doing business . " A mere " investment " can easily be differentiated from the business of a " holding company " in terms of control. In the former transaction, the investor merely aims at the employment of funds for profit without having the intention to assume direct responsibilities of control and management. Whereas the dominant character of a "holding company" is the ownership of securities coupled with an element of control and power to influence the policies and management of one or more operating companies in a particular field of enterprise. In other words in the case of a "holding company" the intention is not merely to invest in securities but to put up a corporation engaged in the business of owning, operating and managing its subsidiaries or affiliates . In the light of the foregoing arguments, the above-mentioned request for reconsideration is hereby denied. LibLex Very truly yours, (SGD.) PERFECTO R. YASAY, JR. Chairman