Director Justiniano Y. Ascaño

March 1, 1984 Director Justiniano Y. Ascao Legal Department Board of Investments Industry & Investments Bldg. 385 Buendia Avenue Extension Makati, Metro Manila Sir : This refers to your letter dated January 30, 1984 requesting for opinion on the following queries: 1. Whether a proposed joint venture agreement for a subdivision project wherein a foreign company shall invest 63.31% of the total outstanding capital stock of an existing enterprise (Ciudad Real Development, Inc.) but the dividend declaration shall be on 60-40% ratio in favor of Filipino investors, is legally possible; and 2. Whether a 60% Filipino 40% foreign owned firm may engage in real estate development activity. Section 9, Article XIV of the Philippine Constitution provides, as follows: "SECTION 9. The disposition, exploration, development, exploitation, or utilization of any of the natural resources of the Philippines shall be limited to citizens of the Philippines, or to corporations or associations at least sixty per centum of the capital of which is owned by such citizens." ...(emphasis supplied) On the basis of the foregoing constitutional limitation, your first query is answered in the negative and the second, in the affirmative. Consistently with our opinion, a real estate development corporation may be formed with 60% Filipino-40% foreign ownership, where the actual investment of the foreign company is 63.31% of the total investment (meaning that the foreign investor is paying a premium for its 40% shares). Please be advised accordingly. Very truly yours, (SGD.) MANUEL G. ABELLO Chairman