Opinion No. 07-10 RE : Creation of subsidiary corporation

r. (J Republic of the Philippines Department of Finance Securities and Exchange Commission SEC Bldg. EDSA, Greenhills, Mandaluyong City 24 May 2007 It SEC-OGC Opinion No. 07-10 Creation of subsidiary corporation MOVIE WORKERS WELFARE FOUNDATION, INC. 66 Rosario Drive, Ctibao Quezon City Attention: Mr. Emilio R Dollete Assistant to the Executive Director Gentlemen: This refers to your' letter dated 08 August 2006 addressed to Director Benito A, Cataran of the Company Registration and Monitoring Department wherein you listed several queries regarding the creation of a subsidiary corporation by mere resolution of the members of the Movie Workers Welfare Foundation, Inc. ("Mowelfund"). Section 2 of the Corporation Code provides that "a corporation is an artificial being created by operation of law." This means that a corporation, be it a subsidiary or a principal corporation, cannot come into existence by mere agreement of the parties. The consent of the State is required before a corporation can be created. The State gives its consent to persons wishing to organize a corporation (called incorporators) after they comply with all the registration requirements prescribed by the Corporation Code, the law which governs the formation and organization of the private corporations in the Philippines. It is only after the issuance by this Commission of a Certificate of Registration that a corporation acquires juridical personality __ a personality separate and distinct from its incorporators, stockholders, directors or officers. In your case, the subsidiary corporation will have a personality separate and distinct from Mowel£und. Thus, the By-Laws of Mowelfund need not limit or restrict the creation, management of properties or purpose of the subsidiary corporation. Your query therefore is answered in the negative. Q http://www.sec.gov.ph if (632) 726-09-31 to39

\ .. ' • • 2 Without'registration with thisCornmission, whatis created is a mere association which cannot perform corporate acts like enter into contracts or acquire properties under its name.1 For your reference, attached herewith is a copy of the Citizen's Manual for the Registration of Corporation and Partnerships. Your other queries are rendered academic by the above answer .. It shall be understood that the opinion rendered is based solely on the facts disclosed in the query and relevant solely to the particular facts raised therein and shal~ not be used in the nature of a standing rule binding upon the Commission in other cases whether of similar' or. dissimilar circumstances.2 Very truly yours, . .. '~. . .. VERNETTE G. UMALI-PACO General Counsel 1 SEC Opinion dated 28 May 1991 addressed to Ms. Erminda C. Cruz, Ed.D. 2 SEC Memorandum Circular No. 15 (2003).

u. MINIMUM PAID.UP CAPITAL REQUIREMENT >- •.... 0 TABLE 3 a: 0 0 Based onlndustrv: S ::t: U ::t: REQUIRED DOCUMENTS FOR a: ), FOREIGN CORPORATIONS (In Addition to those in Table 2) C (ij CD ::l U z ~ U. 0 C- W - o ::t: Break Bulk Agent Cargo Consolidator p P 250,000.00 400,000.00 I : H'?roofof Inward Remittance by Non-Resident Aliens or Partners U) m a: a: Financing Company Metro Manila and other 1S1 class cities P 10,000,000.00 '<I '<I '<I '<I Other classes of cities P 5,000,000.00 I:Form F-100 '<I Municipalities P 2,500,000.00 REPUBLIC OF THE PHILIPPINES i Form F-103 '<I Freight Forwarders SECURITIES AND EXCHANGE COMMISSION .Form F-104 ~ Domestic P 250,000.00 Intemational P 2,000,000.00 Application for .Regional Headquarters (RHQ) IRegional Operating '<I Foundations (Non-stock corporatioos) P 1,000,000.00 Headouarters(ROHQI ! Autheoticated Board Resolution authorizing establishment of office in the 1W0rkinaCaoitall Phil.; designating R.e>.sident Agent, and stipulating that in absence of Resident Health Maintenance Oraanization P 10,000,000.00 '<I '<I , Agent or upon cessation of business in the Phil., any summons may be Insurance i served to SEC as if same is made uoon corooration at its home office. A CITIZEN'S MANUAL FOR THE Insurance Broker P 250,000.00 i Authenticated Financial Statement of Applicant certified by independent CPA '<I ~ General Agent P 250,000.00 i in home counlrv Reinsurance Broker P 500,000.00 i Authenticatedcopies of Articles of Incorporation and By-Iews of applicant '<I ~ Investment Adviser/Manaaer P 10,000,000.00 REGISTRA TION Resident Agent's Acceptance of Appointment (if not signatory in application Investment Comoanv P 50.000,000.00 '<I '<I i forml i: Affidavit that mother company is solvent and of sound financial condition ~ Investment House P 300,000,000.00 OF Minina P 2,500,000.00 " Authenticated Certification that it is engaged in international trade with i affiliates, subsidiaries, or branch offices in the Asia-Pacific region and other '<I Non-Vessel Operatina Common Carrier Pawnshop P 4,000,000.00 P 100,000.00 CORPORA TIONS , areas il Authenticated Certification from principal office. of foreign entity that it was i aulh0rized by its Board of Directors or governing body to establish RHQ or '<I Pre-Need Plan Issuer Pre-Need Plan Aaent P 100,000,000.00 P 5,000,000.00 & ! RHOa iii the Phil. Recruitment for Local Employment Corporation P 500,000.00 PARTNERSHIPS Partnership P 200.000.00 TABLE 4 : ACTMTIES WITH ENDORSEMENTS' Recruitment for Overseas Employment P 2,000,000.00 a. Air Trans or! Civil Aeronautics Board Retail Trade with Foreign Equity US$ 2,500,000.00 b. Banks, Pawnshops or other Financial Intermediaries with Quasi-Bankin Functions School (for stock corporation) c. Charitable Institutions Elementary Education ,. P 1,000.000.00 (PAMPHLET* NO.2) Elementary & secondary Education P 2,500,000.00 04 X 2006 d. Educationallnslitutions: (for slock or non-stock) Elementary, Secondary, Tertiary P 5,000,000.00 Elementary to High school Post/Graduate Education College, Tertiary Course SecUlltV Aaency P 500,000.00 Technical Vocational Course Securities BrokerlDealer P 100,000,000.00 Electric Power Plants Has italslHealth Maintenance 0 anizations Insurance Professional Associations INew/SRO-Memberl Securities BrokerlDealer IExistina/SRO-Memberl Securities Broker/Dealer in Proprietary Shares (Non- P 10,000,000.00 P 5,000,000.00 SECBuilding, EDSA, Greenhills Mandaluyong City -0 Radio,TV, telephone SRO-Memberl Special Purpose Vehicle P 31,250,000.00 Tel. Nos. 726-0930 to 39 k. Recruitment for Overseas Employment Transfer Agent P 1,000,000.00 http://www.sec.gov.ph m. , n. * Pursuant to R.A 6713 and W.emorandumCircular 35 s. 2003 issued by the US$ 200,000.00 Presidenton 17 March 2003, the SEC disseminates differentoamphletsthatM Philippine National Police (PNP) P 5,000.00 information about its mandate and functions. regiSlrationand reportorial reguirements.fees and chames and ot~er relevant laDiesfor l!1eauidance of o. US$ 200,000.00 investorsandthe general public. P 5,000.00 Department of National Defense (DND) "$fEC at 70: Serr;ice, 'EJrJ;e{knceana Competence q'(zroUfJIi tli.e 'Yean •..• US$ 200,000.00 P 3,000.00 US$ 30,000.00 11lvestarslnjonnatioll Assistance & Publication Division US$ 50,000.00 Economic Research and Information Department US$ 200,000.00