Lopez, Evangelista, Agravante & Company

August 2, 1984 Lopez, Evangelista, Agravante & Company Suite 502, Pacific Bank Bldg. Ayala Avenue, Makati Metro Manila Attention : Restituto T . Lopez Managing Partner Gentlemen: This refers to your letter dated April 16, 1984 requesting for the opinion of this Commission on the queries posed therein. It appears that a group of investors shall form a realty and development company with an authorized capital of P10 Million with subscription to be paid in cash and property. There shall be seven (7) incorporators; six Filipinos and one Saudi National. The number of directors shall be five including the foreigner who will act as treasurer-in-trust while the company is in the process of incorporation. With the above facts, the following queries are presented: 1. Will the Securities and Exchange Commission (SEC) approve the incorporation of the company following the initial agreement reached among the investors? 2. Will the use of the corporate name which reads as follows "( surname of foreigner ) Realty and Development Corporation " be allowed by the SEC? 3. Will a "Deed of Assignment in exchange for shares of stocks of the company" suffice for the real estate investment of the Filipino? What other documents will the SEC require? 4. Will the foreigner who is holder of a special investor visa be allowed to assume any of the following key positions: Chairman of the Board or President, or Chairman of the Board and Treasurer, or Vice-President Finance or General Manager. 5. What other documents will the SEC need other than those mentioned in the SEC checklist for companies that are to be incorporated? We answer the above queries in the order they are propounded: 1. The primary purpose quoted for the proposed corporation is not appropriate for one which shall engage in realty and development business. We suggest the following primary purpose: "To buy, purchase, acquire, lease, hold, sell and exchange or otherwise deal in real estate and any interest on any kind whatsoever therein; to improve, develop and manage any real estate or property so acquired, owned, leased or held; to erect or cause to be erected such buildings and other structures with their appurtenance thereon as shall be deemed advisable for the betterment of such real estate; to lease, mortgage and encumber the same; to enlarge, rebuild, alter, improve any buildings or structures now or hereafter erected on any lands so owned, held, leased or occupied by the corporation; to subdivide or plot real estate and sell the same in lots for cash or installments; and in general, to do, conduct and perform general real estate business." Please submit your proposed articles of incorporation to this Commission together with all the supporting papers for processing to determine whether said documents are in accordance with our rules and regulations. 2. The existing policy of the Commission does not allow the use of the surname of a non-resident alien who is merely a minority stockholder in the corporate name of domestic corporations. 3. For payment of subscription by property, a copy of the deed of assignment of property duly presented for primary entry in the office of the Register of Deeds where the property is located should be submitted as evidence that the subscriber concerned has transferred his real estate to the corporation. For the additional requirements, please submit: a. Appraisal report of real property being assigned; b. OCT or TCT or copies thereof duly certified by its official custodian (Register of Deeds); and c. Real estate tax declaration(s) and latest real estate tax payment receipt(s) 4. Anent your fourth query, please be informed that this Commission, in a previous opinion has ruled that, "In firms engaged in wholly or partially nationalized activities, aliens are banned from being appointed to management positions such as president, vice-president, treasurer, auditor , etc. of the same companies pursuant to a ruling of the Ministry of Justice, although they can be elected directors in proportion to their allowable participation or share in the capital of such activities in accordance with the Anti-Dummy Law, as amended by Presidential Decree No. 715." ( Letter to Judge Pio Marcos, dated July 1, 1983 ). Emphasis supplied) Corporations engaged in partially nationalized activities which includes real estate development, are those organized under the laws of the Philippines of which, at least 60% of the capital stock outstanding and entitled to vote is owned and held by citizens of the Philippines. Moreover, the Commission on Immigration and Deportation, in its 2nd Indorsement dated July 27, 1984, xerox copy hereto attached, answering SEC query on the rights and obligations of a holder of "special investor visa" states that Presidential Decree No. 1623 has no provision which allows holder of said visa to assume the position of Chairman of the Board and Treasurer, or Vice-President, Finance or General Manager. prcd 5. All the documents required for the registration of corporations are stated in the attached checklist. Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Associate Commissioner