Mr. Jaime Diaz

February 2, 2001 MR. JAIME DIAZ Resident Agent Makino Asia (Phils.) Inc. Rm. 218 Maraudi Bldg. Aguinaldo Highway, Niog II Bacoor, Cavite S i r : This refers to your letters dated 04 December 2000 and 05 January 2001 requesting legal opinion on whether or not Makino Asia (Phils.) Inc., registered as a representative office under S.E.C. Reg No. A1997-22552, can issue local service invoice. In your second letter, you informed the Commission of your intention to conduct installation and warranty servicing of machines supplied by your office in Japan and Singapore to its customers in the Philippines. In its application for the establishment of a Representative Office it is explicitly required to state therein the specific "purpose or purposes" of the corporation which it intends to pursue in the transaction of its business in the Philippines. In your application and license, it is clearly stated therein that Makino Asia (Phils.) "proposes to establish a representative office in the Philippines to act as a liaison office for the advertisement of its products." Further, the implementing rules and regulations of Republic Act 7042, as amended, clearly defined a representative office or liaison office as distinguished from a branch office. the former deals directly with the client of the parent company but does not derive income from the host country and is fully subsidized by its head office while the latter carries out the business activities of the head office and derives income from the host country. Thus, your query is answered in the negative. The functions of a foreign corporation are limited to what is stated in its license and specifically, a Representative Office cannot generate income and carry out the business activities (which may include installation and warranty servicing of machines) of the head office from within the Philippines. Should you desire to include the installation and warranty servicing of machines and issue local service invoice as part of your business activities, you are hereby advised to file a petition with the Commission for the amendment of your license converting the representative office to a branch office and comply with the following requirement 1. Petition to amend license 2. Certified copy of the Board Resolution authorizing the conversion of the representative office to a branch office in the Philippines; 3. Proof of Inward remittance or credit advice (US$200,000.00) 4. Filing fee: 1% of the actual remittance (B) 5. CDMF For your information. Very truly yours, (SGD.) BENITO A. CATARAN Director Company Registration and Monitoring Department