Atty. Federico G. Noel, Jr.

March 26, 2001 ATTY. FEDERICO G. NOEL, JR. KSA Realty Corporation 24th Floor, SMPI Corporate Center St. Francis Square, Mandaluyong City Atty. Noel, This has reference to your letter dated November 29, 2001 requesting confirmation on the propriety of converting the advances of KSA's original shareholders, namely: Kuok Philippine Properties, Inc., San Miguel Properties, Inc., A. Soriano Corporation, Flory Company Ltd., ("original stockholders") into additional paid-in capital. Allegedly, KSA (a company engaged in business of property development), undertook the construction of a condominium project. Subsequently, it entered into an Investment Agreement with Rodamco Phil. B.V. (RPVB), wherein it was agreed that RPBV shall hold an equity interest in the company to the extent of twenty percent (20%) of KSA's outstanding capital stock. Pursuant to said agreement the original stockholders contributed money to finance the cost overruns for the completion and development of the condominium project. These cash advances made by the original stockholders are recorded in the books of KSA as "advances from investors". The corporation now intends to convert these cash advances to additional paid-in capital to provide KSA the ability to obtain loans from banks and other financial institutions in furtherance of corporate objectives. Hence, this request for confirmation. On this issue, we confirm that the conversion of the advances of KSA's stockholders into additional paid-in capital is in order. Generally accepted accounting principles on stockholders such as (a) amount of cash received, (b) face amount or sometimes the discounted present value of money claims received or liabilities cancelled, or (c) fair value of non-cash assets received including stock of an enterprise should be recorded at the fair value of the items received with the credit going to additional paid-in capital. If significant, such contributions may be designated as "donated capital". TaISDA Very truly yours, (SGD.) BENITO A. CATARAN Director, CRMD