Mr. David Tan

September 30, 1993 Mr. David Tan Edison Global Electric Limited 2700 Vicwood Plaza, 199 Des Voeux Rd., Central Hongkong S i r : This refers to your letter of August 31, 1993 requesting opinion relative to the proposed business undertaking in the Philippines of Edison Global Electric Limited (Edison),a corporation organized and existing under the laws of Hongkong. LexLib As slated, Edison, pursuant to the bilateral agreements entered into by it with Export Processing Zone Authority (EPZA) and National Power Corporation (NAPOCOR),shall develop, finance, construct, operate and maintain a 58 MW base-load Diesel Power Station (bunker-C fired) in Mariveles, Bataan. Edison will supply the requirements of Bataan EPZ of 40 Million kwh annually and will make into electricity (about 329 Million kwh).Through an Accession Undertaking, Edison (Bataan) Cogeneration Corporation (Edison Cogen),a domestic corporation and subsidiary of Edison, shall become a party to the Agreement and shall perform and comply with all obligations of Edison which necessarily have to be performed in respect of the development, construction, and operation of the Power Plant. This project is a partial replacement of the cancelled operating lease of power barges and is part of NAPOCOR's high-priority requirement to ensure the President's promise of a "brown-out" free Christmas. On the basis of the foregoing facts, you would like to request for an opinion to the effect that Edison is not required to obtain a license to do business in the Philippines taking into consideration the emergency nature of the aforementioned project, it being a pioneer business activity that cannot be readily and adequately filled by Philippine nationals. The Commission, on several instances, ruled that foreign corporations which will engage only in an isolated business or transaction is not considered doing business or transacting business within the meaning of Section 123 of the Corporation Code. However, said ruling is not absolute. The Commission has to determine, on a case to case basis, whether or not a foreign corporation engaged in a particular isolated or limited business undertaking can be exempted from licensing requirement under the Corporation Code and Foreign Investments Act of 1991. A business activity is considered an isolated transaction only if the company has no intention to repeat the same and indicates no element of continuity of conduct in that respect. R.A. 7042, otherwise known as the Foreign Investments Act of 1991 defines "doing business" to include among others, any "other act or acts that imply a continuity of commercial dealings or arrangements, and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and progressive prosecution of, commercial gain or of the purpose and object of the business organization".Thus, if a foreign corporation is doing a continuing business activity, the amount or value of the business done is immaterial and a single act of that character may constitute doing business. In the present case, the underlined phrases in the above proposed transaction implies a continuity of the arrangement and contemplates the continuing performance of acts. The Accession Agreement between Edison and Edison (Bataan) Cogeneration Corporation does not affect the continuing nature of the activity taking into consideration that under the Agreement, both companies are jointly and severally liable for the performance of the obligations to be undertaken. In effect, the agreement would be tantamount to a joint venture agreement between the foreign company and the domestic company. It is to be noted that before a foreign company can enter into a joint venture with a domestic company to undertake a particular undertaking, the former must obtain a license to transact business in this country. Likewise, the emergency nature of the aforementioned project is not a sufficient reason for allowing it to enjoy the privilege to carry out the transaction without being required to submit to regulatory measures. It is not among the exceptions enumerated under the Foreign Investments Act of 1991 and its Implementing Rules and Regulations. It is well-settled under the principle of "Expressio Unius Est Exclusio Alterius" that the express mention of one thing in a law will, as a general rule, mean the exclusion of others not expressly mentioned, (Statutes, by Alcantara, sec. 41) and that exception is subject to the rule of strict construction that any doubt will be resolved in favor of the general provision and against the exception. (Crawford, Statutory Construction, sec. 229) Moreover, the nature of the proposed transaction requires the necessity of a license in order to place the company under the regulatory power of the Government to protect the interest of the latter and the public in general. In view of the foregoing observations, subject company is deemed to be "doing business", and therefore, the same is required to obtain a license pursuant to the provisions of the Corporation Code and Foreign Investments Act of 1991 before it can legally carry out the proposed transaction. Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman