Opinion No. 16-09 Re: Issuance of Certificates of Stock Sold in Deliquency Sale

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

OFFICE OF THE GENERAL COUNSEI

26 April 2016

Sold in Delinquency Sale SEC-OGC Opinion No.16-09 Re: Issuance of Certificates of Stock

MR. WILLY Y. TIENG

Mandaluyong City 1552 Philippines c/o Solar Entertainment Corporation 3rd Floor, Worldwide Corporate Center Shaw Boulevard corner EDSA President

Sir:

regarding the recording and issuance of certificates of stock for shares sold in a delinquency sale. This refers to your letter dated December 28, 2015 requesting for an opinion

(MGDC), a registered corporation and engaged in real estate business development has peso each (P1.00). an authorized capital stock of One Billion (1, 000,000,000) shares with par value of One You stated in your letter that Manila Gold Coast Development Corporation

paid as of July 2011. registered subscriber of Fifty Million (50, 000,000) shares of stock of MGDC (Subject Shares), Twelve Million Five hundred Thousand Pesos (P12, 500,000) of which has been Top Sincere Investments, Ltd (Top Sincere), a foreign corporation, was the

delinquent on October 13, 2012 and subsequently scheduled for sale on November 12 2012. of all unpaid subscriptions of shares of stock until October 12, 2012. Top Sincere was not able to pay its unpaid subscription despite notice; hence the Subject Shares were declared On September 12, 2012, the board of directors of MGDC called for the payment

the Subject Shares and was declared as the highest bidder. MGDC sold the Subject Shares to LST for Thirty Seven Million Five Hundred Thousand Pesos (P37, 500,000)) During the delinquency sale, LST Development Corporation (LST) made a bid for

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LST has fully paid the balance of the subscription price and expenses of the delinquency sale, which MGDC acknowledged.

Subject Shares in its books and issue the corresponding certificate of stock in the name of LST. automatically register in its books and issue stock certificates for shares sold in a delinquency sale upon full payment of the bid price. Thus, MGDC can now register the From the foregoing, you ask for confirmation of your view that a corporation may

render categorical opinions on issues, such as yours, which involve the substantive and court in an intra-corporate 'and/or civil case if the opinion turns out to be adverse to their contractual rights of private parties who would, in all probability, contest the same in interest. Please be advised that the Commission does not, as a matter of settled policy,

However for purposes of information only, the following are imparted:

Section 68 of the Corporation Code, provides in part:

"Unless the delinquent stock holder pays to the corporation, on or before the date board of directors otherwise orders, said delinquent stock shall be sold at public specified for the sale of the delinquent stock, the balance due on his subscription. plus accrued interest, cost of advertisement and expenses of sale, or unless the auction to such bidder who shall offer to pay the full amount of the balance on the subscription together with accrued interest, costs of advertisement and expenses of sale, for the smallest number of shares or fraction of a share. The remaining shares, if any, shall be credited in favor of the delinquent stockholder such shares."(Emphasis supplied). stock so purchased shall be transferred to such purchaser in the books of the corporation and a certificate for such stock shall be issued in his favor. The who shall likewise be entitled to the issuance of a certificate of stock covering

highest bidder is the person offering at the sale to pay the full amount of the balance on certificate of stock shall be issued to the successful bidder if the full amount of the bid price, together with interest and expenses, has been paid at the time of the sale. 3The the subscription together with accrued interest, if any, cost of advertisement and expenses of sale, for the smallest number of shares or fraction of a share of stock so purchased. The stock so purchased shall be transferred to such purchaser in the books of the corporation and a certificate for such stock shall be issued in his favor." A stockholder has the right to In a previous Opinion of the Commission, it was held that in a delinquency sale, a

3 SEC-OGC Opinion No. 10-27, August 27, 2010, addressed to Atty. Alros B. Belloga 4 b id of general jurisdiction or the appropriate Regional Trial Courts intra-corporate disputes under Section 5 of Presidential Decree No. 902-A has been transferred to the courts 2 SEC Memorandum Circular No. 15, Series of 2003, No. 5.2 ' Pursuant to Section 5.2 of the Securities Regulation Code (SRC), the Commission's jurisdiction over all

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have proper certificate issued to him as soon as he has complied with the conditions (i.e. full payment of the bid price and expenses) which entitled him.5

Please be guided accordingly.

CAMOORREA General Counsel

Igatb'bg

5 R. Lopez, the Corporation Code of the Philippines, 1s Ed., p.798