Opinion No. 13-09 Re:Whether stockholders of a previously dissolved corporation whose shares are held in trust by another in a new corporation may be considered as individual subscribers of the latter corporation

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SEC Building, EDSA, Greenhills, Mandaluyong City Securities and Exchange Commission Republic of the Philippines Department of Finance

OFFICE OF THE GENERAL COUNSEL

2 September 2013

SEC Opinion No. 13-09 Re: whetherstockholders of a previously dissolved corporation whose shares are held in trust by another in a new corporation may be considered as individual subscribers of the latter corporation

Atty. Marilou M. Dulalas-Pascual

PHINMA Properties Center No. 29 EDSA, Mandaluyong City Legal Officer

Dear Atty. Dulalas-Pascual,

stated the following: whether PHINMA Property Holdings Corporation (New PPHC)2 is considered a public corporation under law by virtue of its "reincorporation" with a stockholder holding shares in trust on behalf of 604 stockholders of a dissolved corporation. In your letter, you This refers to your Letter requesting a confirmation from the Commission on

Initially, PHINMA Property Holdings Corporation (Previous PPHC) The Previous PPHC is a result of several mergers with different corporations The Previous PPHC had more than 600 corporate as well as individual stockholders (for which reason it was considered a Public Corporation); The Previous PPHC's existence expired sometime in 2009 due to its inadvertence for failing to extend its 50 year corporate life; and has undertaken change of names through the years of its existence until it was finally named PHINMA Property Holdings Corporation; was registered with the Commission on 29 March 1956;3

3 SEC Registration No. 15083 1 Dated 14 February 2011. SEC Registration No. CS-201019568.

SEC Opinion No. 13-09

in trust by another may be considered as Re: whether stockholders of a previously dissolved corporation whose shares are held individual subscribers of a new corporation Page 2 of 3

The New PPHC was reincorporated with individual stockholders on 3 The Trustee of the Previous PPHC, representing all the stockholders of the The stockholders of the Previous PPHC had no intention to liquidate but Previous PPHC totaling more than 600, likewise subscribed to a total of intended that its regular business be continued; As a result thereof, the stockholders of the Previous Corporation representing 2/3 of its outstanding capital stock entered into a trust agreement on 25 November 2010 for the purpose of liquidating the assets of the Previous Corporation and investing the same in a reincorporated New PPHC; 5,000,000,000 shares. December 20[10];4

Further, Article VIII of the Articles of Incorporation of the New PPHC indicates that the expired Previous PPHC holding 5,000,000,000 shares and again Willy J. Uy holding Previous PPHC, it reveals that there were 604 stockholders who subscribed thereto. there are 12 subscribers thereto including Willie J. Uy in trust for the 604 stockholders of 1 share in his own name. Upon a closer evaluation of the 2010 General Information Sheet (GIS) of the

"public company" by virtue of the 604 stockholders of the expired Previous PPHC who are subscribers of the New PPHC represented by Willy J. Uy. The New PPHC is requesting for confirmation if it is a public corporation or

securities listed on an Exchange or with assets in excess of Fifty Million Pesos (Php 50,000,000.00) and having two hundred (200) or more HOLDERS, at least two hundred Supreme Court defined a "public company" as any corporation with a class of equity (200) of which are holding at least one hundred (100) shares of a class of its equity securities. The case of Philippine Veterans Bank v. Callangan is instructive. Here, the

5 The following persons have subscribed to the new PPHC: Willy J. Uy (in trust for the 604 6 Philippine Veterans" Bank v. Callangan, in her capacity as Director of the Corporation Finance 4 Certificate of Incorporation dated 3 December 2009. Department of the Securities and Exchange Commission and/or the Securities and Exchange stockholders of the previous expired PPHC), Oscar J. Hilado, Magdaleno B. Albarracin, Jr., Ramon R. del Rosario, Jr., Victor J. del Rosario, Roberto M. Lavina, Willy J. Uy, Jose Mari R. del Rosario Eduardo A. Mendoza, Guillermo D. Luchangco, Bernardo M. Villegas and Pythagoras L. Brion, Jr.

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Re: whether stockholders of a previously dissolved corporation whose shares are held individual subscribers of a new corporation SEC Opinion No. 13-09 in trust by another may be considered as Page 3 of 3

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holding corporate stock are regarded for all legal purposes as stockholders.8 However, proper cases.' In other words, even where legal title to stock is vested in a certain person, equity will treat him as a trustee holding it for the real and beneficial owners, in a proper the rights of a beneficial owner will, of course, be recognized and protected in equity in case. 10 A holder or stockholder includes a person holding stocks in trust' and trustees

the purchase of property and causes the conveyance to be made to him or to a third person, a trust is established by operation of law in favor of the person to whom the funds belong. Moreover, a trustee must not make investments of funds in their own names but always indicate that they are made in trust capacities.1 Article 1455 of the Civil Code provides that when any trustee uses trust funds for

considered a "public company". considered as stockholders of the New PPHC since a trust was established in their favor. Thus, it would appear that the New PPHC has more than 200 shareholders and is In which case, the 604 stockholders of the dissolved Previous PPHC are

therein, and shall not be used in the nature of a standing rule binding upon the Commission in other cases or upon the courts, whether of similar or dissimilar disclosed and described in the queries and relevant solely to the particular issues raised circumstances. It is understood that the foregoing opinion is rendered based solely on the facts

Very truly yours,

CAMILO S. CORREA

General Counsel

: Id., p. 33, citing Bay State Distributing Corp. v. Doran, 33 F2d 782. 1 I., p. 33, citing Clayton v. Smith, 131 Md 562, 102 A 925. 711 Fletcher Cyc Corp (Perm Ed), section 5085 [1976] p. 30, citing Bay State Distributing Corp. v. Doran, lTolentino, COMMENTARIES 'AND JURISPRUDENCE ON THE CIVIL CODE OF THE Id., p. 30, citing Clayton v. Smith, 131 Md 562, 102 A 925. Commission, G.R. No. 191995 (2011), citing Rule 3(1)(m) of the Amended Implementing Rules and PHILIPPINES VOL. V. (1992), p. 682, Central Professional Books, Inc., Quezon City, citing Springfield Safe Deposit v. First Unitarian Society, 200 N.E. 641. Regulations of the SRC. 33 F2d 782