Opinion No. 19-23 Re: SEC Approval of Issuance of Cash and Stock Dividends.

Securities and Exchange Commission Republic of the Philippines Department of Finance

OFFICE OF THE GENERAL COUNSEL

June 17, 2019

SEC-OGC Opinion No. 19-23 Re: SEC Approval of Issuance of Cash and Stock Dividends

TOYOTA MANHLA BAY CORPORATION Roxas Boulevard cor. EDSA Extensior Boulevard 2000, Pasay City 1308

Attention: MR. ALBERT JAMES C. ALIGADA AND MR. HIROYA MIYAHARA

Gentlemen:

it is necessary to wait for the written approval/advice of the Securities and Exchange Commission (SEC) before Toyota Manila Bay Corporation (TMBC), an unlisted corporation, can validly issue cash and stock dividends to its stockholders. This refers to your letter dated 02 January 2019 requesting an opinion on whether

further disclosed that TMBC has already submitted the documentary requirements as stockholders not later than 31 December 2018, as approved by a majority vote of its enumerated in SEC's website. Hence, your query. Board of Directors and two-thirds (2/3) vote of its outstanding capital stock. It was You stated that TMBC declared the issuance of both cash and stock dividends to its

Paragraph 1, Section 42 of the Revised Corporation Code (RCC)1 provides:

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of a stock corporation may declare dividends out of the unrestricted retained earnings which shall be payable in cash, property, or in stock to all stockholders on the basis of outstanding stock held by them: Provided, That any cash dividends due on "Section 42. Power to Declare Dividends. The board of directors

withheld from the delinquent stockholders until their unpaid delinquent stock shall first be applied to the unpaid balance on the subscription plus costs and expenses. while stock dividends shall be subscription is fully paid: Provided, further, That no stock dividend shall_be..issued without the prior approval of stockholders representing at least two-thirds (2/3) of the outstanding_capital stock at a regular or special meeting duly called for the purpose." (Emphasis ours)

1 Republic Act No. 11232 otherwise known as An Act providing for the Revised Corporation Code of the Philippines

SEC-OGC Opinion No. Re: SEC Approval of Issuance of Cash and Stock Dividends t9-23 Page 2 of 2

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Based on the above provision, it is not mandatory for the corporation to seek prior

following are complied with: approval/advice from the Commission to declare cash and stock dividend provided the

A. For cash dividend declaration:

Sufficient unrestricted retained earnings as of the last fiscal or calendar Board of Directors approval of the cash dividend declaration; and 3

year.

:B. For stock dividend declaration:

K 3 1. 2. Sufficient unrestricted retained earnings as of the last fiscal or calendar Stockholders' approval representing at least two-thirds (2/3) of the outstanding capital and sufficient portion of the present authorized Board of Directors approval of the stock dividend declaration; capital; and

year.

their declaration of the cash and/or stock dividend out of the unissued portion of their they avail of such option, they are required to submit the documentary requirements stated in the SEC's website (Other Applications -- Documentary Requirements) and pay previously approved authorized capital stock for whatever legal purpose it may serve. If the applicable filing fee. However, corporations may, at their option, apply for acknowledgment notice of

pursuant to Section 37 (Section 38 of the Corporation Code) of the RCC. capital stock, an application therefor is mandated to be filed with the Commission Further, if the stock dividend declaration requires an increase of authorized

facts and circumstances disclosed and relevant solely to the particular issue raised therein. It shall not be used in the nature of a standing rule binding upon the circumstances.2 if, upon further inquiry or investigation, it will be disclosed that the facts relied upon are different, this opinion shall be rendered void. Commission in other cases or upon the courts whether of similar or dissimilar It shall be understood that the foregoing opinion is rendered based solely on the

Please be guided accordingly.

CAMILU S.CORREA

General Counsel

2 SEC Memorandum Circular 2003-15, No.7