The Chairman

May 5, 1987 The Chairman Board of Investments Industry & Investments Bldg. 385 Sen. Gil Puyat Avenue Makati, Metro Manila Sir : This has reference to the letter dated March 17, 1987 of CBI Overseas, Inc., a regional headquarters requesting confirmation of its dormant or inactive status as of January 1, 1987 without forfeiting its license. Relative thereto, please be informed that the Commission in its meeting of April 23, 1987 approved said request in principle and conducted a review of Presidential Decree 218, as amended. Under Section 8 of said PD, referral to the Secretary of Trade is necessary only for application to establish regional headquarters, to quote: "SECTION 8. Any foreign business entity formed . . . . . . may establish a regional or area headquarters in the Philippines, after securing a license therefor from the Securities and Exchange Commission, upon the favorable recommendation of the Secretary of Trade." Moreover, a regional headquarters does not engage in any economic activity in the Philippines as expressly prohibited under PD 218, as amended, which has this provision: "(2) the headquarters will not derive any income from sources within the Philippines and will not participate in any manner in the management of any subsidiary or branch office it might have in the Philippines." (Sec. 8 (b)) In view of the foregoing, the Commission resolved to recommend to the Board a change in the current indorsement of applications of regional headquarters. It is suggested that except in original application for establishment of regional headquarters, all other applications, i. e. for dormant status and withdrawal of license shall be processed by the Commission subject to the condition that the BOI shall be properly informed of such action by the Commission for record purposes. Your prompt reply on this matter shall be appreciated. Very truly yours, (SGD.) JULIO A. SULIT, JR. Chairman