Bautista Picazo Buyco Tan & Fider

July 25, 1997 Bautista Picazo Buyco Tan & Fider 8th Flr., Singapore Airlines Building 138 H.V. dela Costa St., Salcedo Village Makati City Attention : Atty . Alex Erlito S . Fider S i r : This refers to your letter dated May 15, 1997, requesting confirmation that the issuance of approximately 450,000 common shares for an initial public offering (IPO) by Smart Communications, Inc. (SMART), an enfranchised public utility company engaged in providing telecommunication services, is exempt from the registration requirements under the Revised Securities Act (RSA). LibLex The RSA provides: "SECTION 6. Exempt transactions . (a) The requirement of registration under subsection (a) of Section four of this Act shall not apply to the sale of any security in any of the following transactions: xxx xxx xxx. (11) Any issuance of any security by a public utility or service corporation which, in compliance with or pursuant to law, regulation or decree, is intended to broaden its equity base as well as to finance a part of the capital investment thereof through the issuance and sale of stocks. (Emphasis supplied) It is quite clear from the above provisions that if the issuance of shares by a "public of utility " is in compliance with a statutory directive, it is exempt from the registration requirements under the RSA. In the case of SMART, the issuance of the shares is made pursuant to the following provisions of Republic Act Nos. 7925 and 7294, which laws are both designed to widen the ownership base of telecommunications company. "SECTION 21. Public Ownership . In compliance with the Constitutional mandate to democratize ownership of public utilities, all telecommunications entities with regulated types of services shall make a bonafide public offering through the stock exchanges of at least thirty percent (30%) of the aggregate common stocks within a period of five (5) years from effectivity of this Act or the entity's first start of commercial operations, whichever date is later. The public offering shall comply with the rules and regulations of the Securities and Exchange Commission. (RA No. 7925, otherwise known as the "Public Telecommunications Policy Act of the Philippines") "SECTION 13. Listing of Shares . The grantee shall list , subject to the requirements of the Securities and Exchange Commission and the stock exchange concerned, and make a public offering through the stock exchange of the shares representing at least thirty per centum (30%) of its authorized capital stock in any securities exchange in the Philippines within two (2) years from the effectivity of this Act." (RA 7294) On the basis of the foregoing, we confirm your opinion that the issuance of shares by SMART in connection with its initial public offering falls within the purview of Section 6, paragraph a (11) of the RSA, and is therefore exempt from the registration requirements under the RSA. However, it has to be emphasized that it is subject to the reporting requirements under the SEC Disclosure Rules. Please be advised accordingly. Very truly yours, (SGD.) SONIA M. BALLO Corporate and Legal Dept. Director