Attys. Emmanuel Paras

May 10, 2002SEC OPINIONAttys. Emmanuel ParasAngel Salita, Jr.Philbert VaronaSycip Salazar Hernandez & GatmaitanSycipLaw-All Asia Capital Center,105 Paseo de Roxas, Makati CityDear Attys. Paras, et al.,This refers to your letter dated February 5, 2002 inquiring on the validity of the proposed capital restructuring of your client, Laguna AAA Water Corporation. As you propose, the Preferred shares are cumulative and convertible to Common "B" shares. The Preferred Shares are entitled to dividends at an agreed rate (plus dividends for any unpaid dividends at the same agreed rate from the time the unpaid dividends cumulated until they are actually paid). Such dividends (and dividends on the dividends) will be paid only if the Corporation has unrestricted retained earnings. Upon conversion of the Preferred Shares into Common "B" Share, if all or part of such dividends (and dividends on the dividend) remains unpaid, the Common "B" Shares will be entitled to receive such unpaid dividends (and dividends on the dividends) only if the Corporation has unrestricted retained earnings. Common "A" Shares (and Common "B" Shares) will be entitled to...