Messrs. Junichiro Motoyama

September 17, 2002 SEC OPINION Messrs. Junichiro Motoyama Takashi Okumura Masato Nomura 14th floor, 88 Corporate Center, Valero corner Sedeno Streets, Salcedo Village Makati City Gentlemen : This refers to your letter dated June 26, 2002 inquiring on whether or not a joint venture of non-resident foreign corporations, namely, KEI, PCI, and NK, that rendered services with the Bases Conversion and Development Authority (BCDA), a government-owned and controlled corporation, under a Consultancy Agreement should register with the Securities and Exchange Commission for purposes of complying with the requirements under Section 2.2.5.1 of the Implementing Rules and Regulations (IRR) of Executive O rde r No. 164, as amended. Under Section 123 of the Corporation Code, foreign corporations shall not be permitted to transact or do business in the Philippines until they have secured a license for that purpose from the Securities and Exchange Commission and a certificate of authority from the appropriate government agency. The Foreign Investments Act of 1991 (R.A. 7042) specifies what constitutes "doing business". In sum, doing business would imply continuity of commercial dealings with performance of acts normally incident to the corporate purpose. (Lopez, Corporation C od e of the Philippines, p. 1155) On the other hand, the SEC has consistently ruled that a foreign corporation is deemed not doing business and thus exempt therefrom if its commercial dealing is limited to a single agreement or is isolated or an occasional transaction and indicates no element of continuity of conduct in that respect. (Sec Opinion dtd September 30, 1993, Mr. David Tan) However, we regret to inform you that the above allowable exemption does not apply in the present case. Under the "Guidelines on the Hiring of Foreign Consultants For Government Projects", dated May 5, 1987, issued by the National Economic and Development Authority (NEDA) pursuant to Executive Order No. 164, foreign consultants for government projects are required to be licensed by the SEC as a pre-requisite to the awarding and/or approval of consultancy contracts involving foreign consultants. Accordingly, all foreign consultant firms of government projects, regardless of whether or not they are engaged in an isolated transaction, shall be required to secure a license from the Commission. ( SEC Opinion dtd. June 13, 1996, Attys. Dominguez and Sy ) ICTHDE Very truly yours, (SGD.) BENITO A. CATARAN Director Company Registration and Monitoring Department