Mr. Caesar Z. Lanuza

April 22, 1981 Mr. Caesar Z. Lanuza Abaca Industry Development Authority Regina Bldg.,Legaspi Village Makati, Metro Manila Dear Mr. Lanuza: This has reference to your letter-query dated January 30, 1981 relative to the plan of the Lakbayan Foundation, Inc.,a non-stock, non-profit corporation, to issue mini certificates which are quasi-bonds in nature, in denominations of P1,000.00 each, whereby interested donors/lenders can lend the corporation the use of their funds for specific holding periods and interest-free, for the purpose of deriving income from the same in the form of interest earnings or dividends from placements for a proposed holding period of around three (3) years, provided that said certificates may be discounted in commercial banks at anytime that a donor wants his money back for special reasons. LibLex Obviously, non-stock corporations today are authorized to issue, create, incur or increase bonded indebtedness pursuant to Section 38 of the Corporation Code of the Philippines which reads as follows: "SECTION 38. Power to increase or decrease capital stock; incur, create or increase bonded indebtedness. ... Any increase or decrease in the capital stock or the incurring, creating or increasing of any bonded indebtedness shall require prior approval of the Securities and Exchange Commission . Non-stock corporations may incur or create bonded indebtedness, or increase the same, with the approval by a majority vote of the board of trustees and of at least two-thirds (2/3) of the members in a meeting duly called for the purpose. However, may we inform you that the Commission is presently in the process of promulgating rules and regulations for the implementation of the provisions of the Corporation Code of the Philippines, including the above-quoted provision. These rules will be presented to the public for proper hearing. In the interregnum and so that you may achieve your benevolent purposes, you are requested to submit a copy of the instrument/s involved for the proper evaluation, determination and approval of this Commission. Please include therein the means of repayment or redemption of the said bond and/or projected guarantors or sureties in order to safeguard also the interests of the public. Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Director Corporate and Legal Department