Atty. Vernon T. Nava

January 15, 2004 SEC OPINION NO. 02-04 Atty. Vernon T. Nava Paras & Manlapaz Lawyers 1402 Equitable Bank Tower 8751 Paseo de Roxas, Makati City 1227 Sir : This refers to your letter dated December 15, 2003 inquiring on whether or not the activities of your client THALES Information Systems would constitute as "doing business" within the meaning of the term as defined under the Foreign Investments Act. As mentioned in your letter, your client has entered into a contract with the Department of Transportation and Communication for its Third Airports Development Project. Pursuant to the contract, THALES is required to supply and install the Aeronautical Fixed Telecommunications Network and Airport Information System facilities for various airports within the Philippines. The contract stipulates that the period for implementation of the project is one (1) year. Under the Foreign Investments Act of 1991 (RA 7042), "doing business" would imply continuity of commercial dealings with performance of acts normally incident to the corporate purpose. On the other hand, the SEC has consistently ruled that a foreign corporation is deemed not doing business and thus exempt from the requirement of a license if its commercial dealing is limited to a single agreement or is isolated or an occasional transaction and indicates no element of continuity of conduct in that respect. (SEC Opinion dated September 30, 1993 addressed to Mr. David Tan) It appearing that THALES Information Systems will not engage in any activity other than the execution of its undertakings and obligations under the Third Airports Development Project with the Department of Transportation and Communication, the corporation is deemed not doing business in the Philippines. Hence, it does not have to apply for a license under Section 123 of the Corporation Code. It is understood, however, that THALES Information Systems will not engage in any other business or economic activity without securing the corresponding license from the Securities and Exchange Commission. Please be advised accordingly. aCSEcA Very truly yours, (SGD.) VERNETTE G. UMALI-PACO General Counsel