Opinion No. 24-39 Re: Definition and Composition of Paid-Up Capital Under the Retail Trade Liberalization Act of 2000, as Amended

Securities and Exchange Commission

:TC

OFFICE OF THE GENERAL COUNSEL

26 November 2024

SEC 0GC Opinion No. 24-39 Re: Definition and Composition of Paid-up Capital Liberalization Act of 2000, As Amended under the Retail Trade

4th and 6th Floors, BDO Towers Paseo, 8741 Paseo de Roxas SIGUION REYNA MONTECILLO & ONGSIAKO Makati City 1226, Philippines

Attention: ATTYS. Nicanor N. Padilla, Elita Joy G. Pinga-Quicho, and Abigail V. Go.

Re: Request for Opinion

Dear Attorneys:

opinion on whether the definition of "paid-up capital" under Category B, Section 5 of Republic Act ("R.A.") No. 8762, otherwise known as the "Retail Trade Liberalization Act of 2000 ('2000 RTLA')," as amended,2 includes additional paid-in capital ("APIC") This refers to your lettert requesting, on behalf of Electrolux Philippines Inc. ("Electrolux"), for an

allowing it to engage in retail trade. The Certificate was issued in the implementation of the 2000 RTLA3 Pre-qualification Requirements No. 001-2013 on 29 January 2013 (the "Certificate") for the purpose of and its Implementing Rules and Regulations ("2000 IRR").4 As disclosed, the Board of Investments ("BOI") issued Electrolux a Certificate of Compliance with

Registration and Monitoring Department to file an application to amend its Articles of Incorporation to allow retail activities in its primary purpose. Having secured the Certificate, Electrolux now intends to proceed before the Commission's Company

3 Section 8. Qualification of Foreign Retailers. - No foreign retailer shall be allowed to engage in retail trade in the Philippine unless all 1 Dated 28 February 2014. 2 Amended by R.A. No. 11595, 10 December 2021. Hereafter, the "2021 RTLA. the following qualifications are met: (a) A minimum of Two hundred million US dollars (US$200,000,000.00) net worth in its parent corporation for Categories B (b) Retailing branches or franchises in operation anywhere c} {d} Five (5)-year track record in retailing; and Only nationals from, or juridical entities formed or incorporated in Countries which allow the entry of Filipino retailers shail be allowed to engage in retail trade in the Philippines. a0l1 Ind C, and Fifty million US dollars (US$50,000,000.00) net worth in its parent corporation for category D; ized at a min mum of Twenty-five million US doilars (US$25,000,000.00): und the word uniess such retailer has at least one (1) store

The DTI is hereby authoriz business in the Philippines ed to pre-qualify all foreign retailers, subject to the provisions of this Act, before they are allowed to conduct

The DTI shall keep a record of Qualified foreign retaile It shall ensure that parent retail trading company of the foreign investor complies with the qualifications on capitalization and track record prescribed in this section. (Section 8, 2000 RTLA) (10) working days from submission of all necessary documents, after evaluation and verification, a Certification that the foreigr date of issuance. (2000 IRR) retailer meets the qualifications prescribed by law. The Certificate of Compliance shall be valid for a period of one (1) year from the Rule IV. Section 3. Issuance of Certificate of Compliance with Pregualification - The Board of Investments (BOI), shall issue, within ter whomay.uponc ompliance with law, establish retail stores in the Philippines

The 2000 IRR was amended on 09 March 2022 and shall hereafter be referred to as the "2022 IRR."

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issued and fully paid. Also, Electrolux's Audited Financial Statements ("AFS") for the year ended 21 December 2012 reflects that it has a capital of 125,000,000.00, inclusive of share premium. The AFS capital stock of 102,000 shares, with a par value of 100.00 each, of which all 102,000 shares have been reflects the amount of 10,200,000.00 as share capital and 114,800,000.00 as share premium. According to you, Electrolux's General Information Sheet ("GIS") shows that it has an authorized

held by shareholders and is treated as an addition to and part of Electrolux's operating capital. subscriptions into APIC or paid-in surplus, pursuant to Bureau of Internal Revenue Ruling DA-560-04. The said ruling confirms that the share premium is in the nature of an additional price paid for shares of stock You also stated that the share premium reflects the conversion of deposits for future capital

2021 RTLA) should include share premium or the APIC for purposes of determining compliance with the of paid-up capital in the 2000 IRR (now 2022 IRR) of the 2000 RTLA; and (b) the standard GIS prescribed by the Commission, on the page for "capital structure" and under the portion for "paid-up capital" contains two (2) different columns--both "par/stated value" and "amount," implying that share premium is minimum paid-up capital requirement thereto, considering that: (a) the par value, together with the share premium or APIC, comprises the total investment into the corporation, in accordance with the definition considered as paid-up capital. Relative thereto, it is your position that the definition of "paid-up capital" under the 2000 RTLA (now

Hence, your request for confirmation of your position.

A Definition of Paid-Up Capital under the

relevant IRRs of the RTLA vis-a-vis the Corporation Code.

retail trade, viz: Section 5 of the 2000 RTLA provides paid-up capital requirements for foreign entities engaged in

DTI, engage or invest in the retail trade business, subject to the following categories. (SEC) and the Department of Trade and Industry (DTh), or in case of foreign owned single proprietorships, with the and organized under the laws of the Philippines may, upon registration with the Securities and Exchange Commission Section 5. Foreign Equity Participation. - Foreign-owned partnerships, associations and corporations formed

X X X

of this Act wherein foreign participation shall be limited to not more than sixty percent (60%) of total equity.5 x x x million five hundred thousand US dollars (US$2,500,000.00) but less than Seven million five hundred thousand US dollars (US$7,500,000.00) may be wholly owned by foreigners except for the first two (2) years after the effectivity Category B - Enterprises with a minimum paid-up capital of the equivalent in Philippine Pesos of two

the 2022 IRR, the latest IRR on the matter issued on 09 March 2022. For ease of reference, provided below is the definition of paid-up capital in both the 2000 IRR and

investment in a business that has been paid-in a investment in a business that has been paid-in in the case of foreign corporations.6 corporation or partnership or invested in a single a proprietorship, which may be in cash or in property. It shall also refer to assigned capital in (l) "Paid-up Capital" shall mean the total Section 1(l), 2000 IRR partnerships and single proprietorships; assigned....capital corporations or its branch offices.7 corporation; (j) "Paid-Up Capital" shall mean the total Section 1(j),2022 IRR or in the working case capital of foreign for or

6 Emphasis and underscoring supplied. 7 Emphasis and underscoring supplied. 5 Emphasis and underscoring supplied.

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requirement for all corporations, thus: On the other hand, Section 13 of the then Corporation Code ("Code")9 provides for the paid-up capital

twenty-five percent (25%) of the authorized capital stock as stated in the articles of incorporation must be subscribed at the time of incorporation, and at least twenty-five (25%) per cent of the total subscription must be paid upon subscription, the balance to be payable on a date or dates fixed in the contract of subscription without need of call, or in the absence of a fixed date or dates, upon call for payment by the board of directors: Provided, however, That in no case shall the paid-up capital be less than five Thousand (P5,000.00) pesos. Section 13. Amount of capital stock to be subscribed and paid for the purposes of incorporation. - At least

Commission,1o discussed what constitutes paid-up capital, to wit: The Supreme Court, in the case of Central Textile Mills, Inc.., v. National Wages and Productivity

it files a petition to increase its capitalization and a certificate of fling of increase of capital stock is approved and its capital stock has not yet been legally increased. Thus, its authorized capital stock in the year when exemption from W0 No. NCR-02 was sought stood at P128,000,000.00, which was impaired by losses of nearly 50%. Such payments constitute deposits on future subscriptions, money which the corporation will hold in trust for the subscribers until issued by the SEC. These payments cannot as yet be deemed part of petitioner's paid-up capital, technically speaking, because

incorporation, the term and concept "paid-up capital" survives and is still applicable under the fourth (4th) paragraph of Section 3711 of the RCC relative to increase of capital stock. ("RCC") as the mandatory capitalization for corporations was removed for corporations in general, subject only to exceptions provided by law. While minimum paid-up capital is no longer required upon The foregoing provision, however, was no longer reproduced in the Revised Corporation Code

been subscribed and paid. Thus, paid-up capital under the Code refers to that portion of the authorized capital stock which has

a separate and distinct definition from paid-up capital. On the other hand, APIC, previously referred to as additional paid-in capital surplus, had long gained

shares with par value are sold, the proceeds should be credited to the capital stock accounts to the extent of the par value of the shares with any excess being reflected as additional paid-in capital. In an Opinion dated April 15, 1991 issued to Mr. Salvador, Jr., the Commission opined that when

subscriptions in excess of par. Bengson, the Commission reiterated that "paid-in capital" should be construed as to include payments on In another Opinion dated April 23, 1991 issued to Bengzon Zarraga Narciso Cudala Pecson &

difference between the 2000 and 2022 IRR of the RTLA, and the Code. From the foregoing, as to the definition of paid-up capital, there is a marked and fundamental

B. Legislative History of the RTLA and the Intent of the Legislature.

investments in the Philippines that would bring down the price of goods or services for Filipinos by means of allowing foreign participation and encouraging market competition, thus: We note that the RTLA was enacted in 2000 with the end in view of attracting and promoting

promoting and welcoming productive investment that will bring down price for the Filipino consumer, create more Section 2. Declaration of Policy. - It is the policy of the State to promote ner welfare in attracting

8 Batasang Pambansa Blg. 68. 10 G.R. No. 104102, 7 August 1996 11 x x x Provided, That the Commission shall not accept for filing any certificate of increase of capital stock unless accompanied by a least twenty-five percent (25%) of the increase in capital stock has been subscribed and that at least twenty-five percent (25%) of the Sworn statement of the treasurer of the corporation lawfully holding office at the time of the filing of the certificate, showing that at amount subscribed has been paid in actual cash to the corporation or that property, the valuation of which is equal to twenty-five percent (25%) of the subscription, has been transferred to the corporation. x x x Emphasis and underscoring supplied.

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jobs, promote tourism, assist small manufacturers, stimulate economic growth and enable Philippine goods and services to become globally competitive through the liberalization of the retail trade sector.

services and wider choices.1 retail trade sector in the interest of empowering the Filipino consumer through lower prices. higher quality goods, better Pursuant to this policy, the Philippine retail industry is hereby liberalized to encourage Filipino and competitive

collaborated and coordinated with the Commission, Bangko Sentral ng Pilipinas ("BSP") and the National investment in a corporation or partnership or invested in a single proprietorship, which may be made in Economic and Development Authority ("NEDA") to define paid-up capital in the 2000 IRR as the total cash or property.13 In order to implement Section 5 of the 2000 RTLA, the Department of Trade and Industry ("DTI"Y

investment and participation of foreign entities in retail trade. Accordingly, the interpretation and implementation of the law must then be consistent with the policies that are being set.14 A cursory review of the 2000 RTLA and its 2000 IRR reveaIs the intent of the Legislature to invite

RTLA, clearly demonstrates the aforementioned legislative intent as it encourages and bolsters economic competitiveness, thereby enhancing economic efficiency, all the while protecting Filipino businesses: To illustrate, the Explanatory Note to House Bill ("H.B.") No. 23, which subsequently became the 2000

been quite encouraging. Competition has contributed to enhancing economic effciency while beneftting the liberalization and economic competitiveness. It has pursued liberalization and deregulation in the areas of banking. consumers in the form of better quality of goods and services at lower prices."15 power, foreign exchange, insurance, infrastructure, telecommunications and transportation. The outcome so far, has "x x x The thrust of the Philippine government is to adopt economic reforms that are attuned to

Osmenia I1, the principal sponsor of the Senate Bill ("S.B.") No. 153, highlighted the abovementioned intent of the 2000 RTLA and the effect that it sought to bring about, thus: Complementary to the foregoing, in the Session Proceedings of the Senate, then Senator Sergio R.

investors that our country is serious about liberalizing our economy. It will also fulfill the commitment made by Pres. Joseph E. Estrada in the ASEAN Summit in Hanoi in November last year. The liberalization of the retail sector was the only bold measure that our President could offer.16 SEN. OSMENA: x x x The passage of this bill, Mr. President, will therefore send strong signals to foreign

House and Senate Bills to amend the 2000 RTLA, the Committee reiterated the policy of the law when they lowered the barrier of entry for foreign equity participation even further: Subsequently, during the Bicameral Conference Committee on the Disagreeing Provisions of the

don't think... of course, from the beginning testing muna sila ng market, puwedeng isang store. Pero, eventually, they'll want to put up more stores and we want that for more employment, more investments. CHAIRPERSON TIANCO. x x x And the rationale behind that is all the foreign retailers when they come here, I

X X X X X X X X X

Migz. Kasi iyong ating mga franchise actually they are exporting already eh, the concepts as we know they're employment. x x x17 penetrating active markets. So we believe po that they are... and it will be good, the more investors, the more MR LOPEZ. x x x We believe that the medium can, more or less face competition, with due respect Boss Senator

when the 2000 RTLA and the 2000 IRR were amended in 2021 and 2022, respectively, and the Legislature made no change to the definition of paid-up capital within the context of the RTLA as the relevant IRRs The legislative intent to encourage and allow foreign participation was made all the more certain

13 Rule I, Section 1 (l) of the 2000 IRR 14 Philippine International Trading Corporation v. Commission on Audit. G.R. No. 183517, 22 June 2010. Is Emphasis and italics supplied. 16 Emphasis and italics supplied. 12 Italics and underscoring supplied L7 Emphasis and italics supplied. M The SEC Headquarters, 7907 Makati Avenue www.sec.gov.ph ] (+63 2) 5322 7696 Salcedo Village, Bel-air, Makati City 1 imessagemo@sec.gov.ph IN PEPLE INVESTORS We TUvRheinland WCERTIF N EE S0 9 1:201 B 0

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still expressly and unequivocally state total investment. Verily, in what is now Section 1 (j) of the 2022 IRR of the RTLA, paid-up capital still encapsulates the total investment in a business that has been paid-in in a corporation.

the 2021 RTLA, where it lowered the minimum paid-up capital needed for foreign-owned retail enterprises and correspondingly removed the categories for pre-qualification, viz: The Legislative Branch intended to lower the barrier for entry in retail trade as seen in Section 2 of

Section 2. Section 5 of Republic Act No. 8762 is hereby amended to read as follows:

registration with the Securities and Exchange Commission (SEC), or in case of foreign-owned single proprietorships, upon registration with the Department of Trade and Industry (DTI), engage or invest in the retail trade business, under the following conditions Section 5. Foreian Eauity Particination. Foreign-owned partnerships, associations, and corporations may, upon

"(a) A foreign retailer shall have a minimum paid-up capital of Twenty-five million pesos (P25,000,000.00);

"(b) The foreign retailer's country of origin does not prohibit the entry of Filipino retailers; and

investment per store must be at least Ten million pesos (P10,000,000.00): Provided, That this requirement shall not "(c) In the case of foreign retailers comply with the minimum investment per store at the time of the effectivity of this Act: Provided, further, That proof of qualification to apply to foreign investors and foreign retailers who are legitimately engaged in retail trade and were not required to Submitted to the DTI. ngage in retail trade under Republic Act No. 8762 and its implementing rules and regulations is engaged in retail trade thro Ouoh ore thar ne (1) physical store, the minimum

"The foreign retailer shall be required to maintain in the Philippines at all times the paid-up capital of Twenty-five of its intention to repatriate its capital and cease operations in the Philippines. The actual use in Philippine operations million pesos (P25,000,000.00), unless the foreign retailer has notified the SEC or the DTI, whichever is appropriate, of the minimum paid-up capital shall be monitored by the SEC, or by the DTI, whichever is appropriate.

"Failure to maintain in the Philippines the paid-up capital required in the preceding paragraph, pric of the SEC or the DTI, whichever is appropriate, shall subject the foreign retailer to penalties or restrictions on any future trading activities/business in the Philippines. notificatio

certifying that is capital investment is deposited and maintained in a bank in the Philippines." "For purposes of registration with the SEC or DTI, the foreign retailer shall submit a certification from the Bangko Sentral ng Pilipinas (BSP) of the inward remitt nce of its capital investment, or in lieu thereof, such other proof

C. Interpretation of Paid-Up Capital under the context of the RTLA.

has a settled technical meaning, citing a 1997 case decided by the Supreme Court, MSCl-Nacusip Local Chapter v. National Wages and Productivity Commission et al.19 viz: The Commission previously clarified18 that paid-up capital as defined under Section 13 of the Code

been both subscribed and paid. To illustrate, where the authorized capital stock of a corporation is worth P1 million and the total subscription amounts to P250,000.00, at least 25% of this amount, namely, F62,500.00 must be paid up capital stock. per Section 13. The latter, 62,500.00, is the paid-up capital or what should more accurately be termed as "paid-up By express provision of Section 13, paid-up capital is that portion of the authorized capital stock which has

X X X X X X X X X

technical signification in Corporation Law. Such must form part of the authorized capital stock of the corporation, subscribed and then actually paid. Not all funds or assets received by the corporation can be considered paid-up capital, for this term has a

19 G.R. No. 125198, 03 March 1997 citing Agbayani, Commentaries and Jurisprudence on the Commercial Laws of the Philippines, Vol. 18 SEC-OGC Opinion No. 19-40 dated 16 September 2019, addressed to Mr. Jose Ma. L. Quiaoi Il1, 1984 ed., p.153.

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subsequently reiterated under Section 2 of SEC Memorandum Circular No. 11, Series of 2008,20 to wit: On the other hand, as previously discussed, paid-in capital has its own meaning which was

premium over the par value of shares. Paid-In Capital - the amount of outstanding capital stock and additional paid-in capital or premium or

be interpreted according to the meaning which has been previously used.21 An exception to this is if there is a qualification or intention to the contrary by the Legislature.22 Pursuant to the rules on statutory construction, words that have been used in a technical sense must

2000 IRR (and subsequently in the 2022 IRR) where there exists a definition of paid-up capital, which includes share premium or APIC in order to comply with the requirements for foreign investors to engage in retail trade. Here, the 2000 and 2021 RTLA are both bereft of any definition on paid-up capital. It is only in the

for the purposes of achieving the policies of the law. Thus, it is to be presumed that the Legislature saw no inconsistency between the 2000 RTLA and the 2000 IRR that would make it necessary to define paid-up capital in the 2021 RTLA. To reiterate, even under the 2021 RTLA, there was no attempt by the Legislature to define the same

participate in retail trade and thereby allowing Filipinos more options of products as well as favorable prices therefor.23 As such, it allows leeway for a definition that permits a lower barrier of entry for competition to

People,24 illuminated on the principle regarding the action of the Legislature to delegate matters that require technical expertise to administrative agencies, viz: Apropos to the foregoing, the Supreme Court, in Rodrigo Jr. et al. v. Sandiganbayan, Ombudsman, and

agencies. With their specialized knowledge, administrative agencies are more up to tasks involving their this cumber expertise. The reason Congress delegated the administration of the System to the DBM is precisely to relieve itself of ome task, leaving to the DBM the preparation of the Index of powers by the legislature to administrative

this power, administrative bodies may implement the broad policies laid down in a statue by "flling in" the competence to provide the required direct and efficacious, not to say, specific solutions. These solutions may. however, be expected from it delegates, who are supposed to be experts in the particular fields assigned to them. With details which the Congress may not have the opportunity or competence to provide.25 . . To [sic] many of the problems attendant upon present-day undertakings, the legislature may not have the

BSP and the NEDA. To reiterate for emphasis, the intent of the law is to ease the restrictions in the allowance of foreign participation in retail trade in the Philippines. This intent was also reinforced when the Legislature sought to lower the amount of paid-up capital in the 2021 RTLA. Hence, while the term paid. As applied, the 2000 and 2022 IRR were drafted by the DTI in collaboration with the Commission

21 Krivenko v. Register of Deeds. G.R. No. L-630, 15 November 1947. 23 See Sections 2 and 11 of the 2000 RTLA. Section 2. Declaration of Policy. - It is the policy of the State to promote consumer welfare the interest of empowering the Filipino consumer through lower prices, higher quality goods, better services and wider choices. 20 Guidelines on the Determination of Retained Earnings Available for Dividend Declaration, 05 December 2008. in attracting promoting and welcoming productive investment that will bring down price for the Filipino consumer, create more jobs, Pursuant to this policy, the Philippine retail industry is hereby liberalized to encourage Filipino and competitive retail trade sector in 22 Munoz & Co. v. Hord. G.R. No. L-4832, 28 January 1909 promote tourism, assist small manufacturers, stimulate economic growth and enable Philippine goods and services to become globally competitive through the liberalization of the retail trade s

Section 11. Implementing Agency: Rule and Regulations. - The monitoring and regulation of foreign sole proprietorships, partnerships. associations or corporations allowed to engage in retail trade shall be the responsibility of the DTI. This shall include resolution of conflicts.

24 G.R. No. 125498, 02 July 1999 The DTI, in coordination with the SEC, the NEDA and the BSP, shall formulate and issue the implementing rules and regulations 2s Emphasis and italics supplied. essary to implement this Act within'ninety (90) days after its approval.

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up capital has been used to have a technical meaning in the context of retail trade, the technical meaning of the word no longer obtains in order to achieve the policy set out by the Legislature as earlier discussed. In short, the definition of paid-up capital in the IRR's is less restrictive and thus in keeping with the intent of the law.

by the Supreme Court in Gamboa v. Teves,26 to wit: Further, guidance in interpretation can also be found by using extraneous aids in construction as held

of the Constitution, then resort to extraneous aids has become imperative. The Court can utilize the following extraneous aids, to wit: (1) proceedings of the convention; (2) changes in phraseology; (3) history or realities existing at the time of the adoption of the Constitution; (4)_prior laws and judicial decisions: (5) contemporaneous construction; and (6) consequences of alternative interpretations. x x x 2 When the seeming ambiguity on the meaning of "capital" cannot be threshed out by looking at the language

known as the "Foreign Investments Act of 1991 ('FIA')." as amended,28 their IRRs follow the same definition No. 8556, otherwise known as the "Financing Companies Act of 1998 ('FCA')" and R.A. No. 7042, otherwise of paid-up capital as in the 2000 and 2022 IRR of the RTLA. In this connection, it is significant to note that from a perusal of other economic statutes, such as R.A

the following for compliance order to boost the economy. Here, the IRR of the FIA in keeping with the policy of liberalization, required Under the FIA, the policy being put forward is the invitation of foreign investors to the Philippines in

in in a corporation or partnership or invested in a sole proprietor which may be in cash or in property. It shall also refer to inward remittance or assigned capital in the case of foreign corporations.29 Section 1 x x x hh) Paid-in equity capital shall mean the total investment in a business that has been paid-

existing under the laws of the Philippines and duly recorded in the enterprise's stock and transfer book, or any equivalent registry of ownership; it includes both original and additional investment whether made directly as in stock subscription, or indirectly through the transfer of equity from one investor to another as in stock purchase. x x 3 Section 1 x x x z) Investment shall mean the paid in equity participation in any enterprise organized or

require paid-up capital, its IRR may define the same as the total investment in a business. Section 6 of the FCA provides to wit,31: More on point is the case of the FCA. Similar to the RTLA, the FCA shows that while the law may

of the capital be owned by citizens of the Philippines within one year from the date of said approval.32 partnerships at least sixty per centum of the capital of which is owned by citizens of the Philippines and shall have ? paid-up capital of not less than five hundred thousand pesos: Provided, however, That financing companies duly existing and operating before the approval of this Act shall comply with the requirement that sixty (60%) per centum Form of Organization. Financing companies shall be organized in the form of stock corporations or general

made in a business, thus: However, the IRR of the FCA provides that paid-up capital should constitute the total investment

the amount paid in excess of par value.' Section I x x x. k) "Paid-up capital" refers to the amount of the subscription of stock in a corporation includina

definition in the IRR which includes share premium or APIC. Therefore, while "paid-up capital" is used in the law, the implementation thereof can encapsulate a

32 Emphasis supplied. 28 Amended by R.A. No.11647. Approved on 02 March 2022 29 Emphasi, italics, and underscoring supplied. 31 Section 6 of the FCA 33 Emphasis, italics, and underscoring supplied. 26 G.R. No. 176579, 09 October 2012 27 Emphasis and underscoring supplied 30 Emphasis, italics, and underscoring supplied.

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excess of the par of issued shares, forms part of capital. llustrative is the Commission's Opinion stating that APIC, once received by the corporation, forms part of the capital, to wit,34: It is also emphasized that once infused into the corporation, APIC by its nature as the amount in

With regard to your third query, the Commission previously opined that

does not inquire into it The "moment the borrowed money is contributed as payment to subscriptions and upon may, in their own personal capacity and acting in good faith, borrow money for payment of their subscriptions. The loan agreement between the borrowers and"the creditor Bank is a private contract between them of which the proposed corporation is not a party. What the SEC requires for purposes of registration is that the statutory paid up incorporation, the ownership thereof is transferred to the new corporation. Accordingly, upon the issuance by the SEc of the certificate of registration, the corporation, being now the owner of the funds, can already withdraw and disburse the same for the operation of its business; xxx 3 capital reguirement must be actually paid. As to where the amount used for payment comes from. the SEc normally x x x Applying the above corporate principle on the present case, the subscribers of the proposed corporation

operation of its business, such as for acquisition of land x x x transferred to the corporation, and the corporation, being now the owner of the funds, can disburse the same for the Based on the foregoing, from the moment the corporation receives the pr emium paid, ownership thereof is

Otherwise or nullified. This was highlighted by the Supreme Court in the case of Robinsons Appliances Corp. v. Secretary of the Department of Trade and Industry,36 where it ruled that IRRs have the force and effect of law unless set aside, to wit: Lastly it bears stressing that the RTLA IRR has the force and effect of law unless judicially held

proceeding must be filed questioning the validity of the IRR, and without such, the presumption of its validity stands. constitutionality and legality until it is set aside with finality in an appropriate case by a competent court. As such, the validity and constitutionality thereof cannot be collaterally attacked in the present Rule 45 Petition. A direct At any rate, the IRR of DAO No, 4-2008 having the force and effect of law, enjoys the presumption of

D. Conclusion.

2021 RTLA clearly envisions the total investment put into a corporation or business where share premium and APIC must be taken into consideration for investors. Prescinding from the foregoing, the definition of paid-up capital contemplated under the 2000 and

Thus, we confirm your position.

whether of similar or dissimilar circumstances.37 If, upon further inquiry or investigation, it will be disclosed that the facts relied upon are different, this opinion shall be rendered void. and documents disclosed/submitted and relevant solely to the particular issue raised therein. It shall not be used in the nature of a standing rule binding upon the Commission in other cases or upon the courts It shall be understood that the foregoing opinion is rendered based solely on the facts, circumstances

Please be guided accordingly.

Very truly yours.

.. R8'huald qPadilla General dounsel

34 SEC-OGC Opinion No. 24-36 dated 19 November 2024 issuc 36 G.R. No. 264196, 28 May 2024 37 Paragraph 7, SEC Memorandum Circular No. 15, Series of 2003. 35 SEC Opin In dated 8 October 1993 addressed to Mr. Edwin V. Patricio. to SeniorProperties Corporation.

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