Antonio C. Pastelero

August 26, 1983 Antonio C. Pastelero 5th Flr., Alexander House 132 Amorsolo Street Legaspi Village, Makati Metro Manila Sir : This has reference to your letter of 7 July 1983 requesting information as to whether or not Libra Agro-Industrial Corporation whose members of the Board of Directors are, in one way or another, related with Hydro Resources Contractors Corporation and Monark International, Inc., may validly engage in another line of activity which would consist of lending money to the employees of the latter two corporations and to any other persons, natural or juridical, who may in one way or another be related or involved directly or indirectly with the said firms only. Apropos thereto, please be informed that an examination of the articles of incorporation of subject corporation indicates that the corporation is not authorized to engage in such activity. Likewise, your letter does not seem to indicate that the corporation will undertake the business only in isolated cases in order that it may be allowed by the Commission. It can be deduced therefrom that the corporation will engage the business in a regular manner. Under R.A. 5980 otherwise known as "An Act Regulating the Organization and Operation of Financing Companies", the business of extending credit facilities, which under Section 1 (A & C) of its implementing Rules and Regulations , include lending money to other persons or consumers , is an undertaking which could be exercised only by corporations or partnerships, primarily engaged in the financing business. Likewise, Section 1, E (2) of said Rules and Regulations provides that " no corporation shall be allowed to include financing as one of its secondary purposes ". Considering that subject corporation is not "primarily" authorized to engage in financing business, it could not legally engage in the business of lending money to any persons, natural or juridical, even assuming that its members of the Board are related with the two aforementioned corporations in view of the rule of law that a corporation has a distinct and separate personality from that of its stockholders and directors. Please be guided accordingly. Very truly yours, (SGD.) GONZALO T. SANTOS, JR. Associate Commissioner