Ms. Aileen A. Bayucan

COMPANY REGISTRATION AND MONITORING DEPARTMENT April 16, 2001 MS. AILEEN A. BAYUCAN Kingcom International, Inc., Rm. 802 Gaisano Tower, No. 328 Palanca St., Quiapo, Manila M a d a m : This has reference to your dated March 23, 2001, requesting opinion on whether or not to file an application for amendment of the aforenamed corporation's articles of incorporation to increase its capital stock from P1,000,000.00 to P 1,500,000.00. The intended amendment is to reflect the actual expenses incurred for the branch which is being required by the Department of Trade and Industry Roxas Branch before the corporation's application for a branch operation shall be approved by the mentioned government agency. In reply, please be informed that this Office refrains from commenting on the propriety of the requirement of a co-equal and coordinate government agency like the DTI. For information purpose on corporate matters, please be further informed that since the amount of P1,500,000.00 was funded by third party and involved expenses incurred for the construction/improvement of the leased company's store in Roxas City, the said expenses should be treated by the company as leasehold improvement and advances/loans payable. However, if the DTI requires that the capital should be equal to the actual cost defrayed for the branch, the same should be capitalized by converting the advances/payable into equity which must be correspondingly reflected in the articles of incorporation as its authorized, subscribed and paid-up capital. In which event, the articles must be amended accordingly considering that the amount spent for the branch exceeds the authorized capital of the corporation by P500,000.00 and the paid-up capital by P1,250,000.00. TAaEIc Very truly yours, BENITO A. CATARAN Director