Mr. Carlos A. Rosales

November 21, 1991 Mr. Carlos A. Rosales Basic Petroleum and Minerals, Inc. Basic Petroleum Building C. Palanca Street, Legaspi Village Makati, Metro Manila S i r : This refers to your letter of November 20, 1991 requesting opinion on the query posed therein. As stated, 1,000 shares with par value of P0.01 per share were declared delinquent and sold at public auction. The amount due for the entire subscription is P100.00 and accrued interest and other expenses amounted to P50.00 or a total of P150.00. In public auction, the following were the bids: NO. OF SHARES AMOUNT Bidder A 900 shares P150.00 Bidder B 1,000 shares 170.00 Bidder C 1,000 shares 180.00 Your query is, should the sale be awarded to A who bid for the amount due and for the smallest number of shares or to C who bid for the highest amount? The pertinent provision of the Corporation Code provides: "SECTION 68. Delinquency sale . xxx xxx xxx Unless the delinquent stockholder pays to the corporation, on or before the date specified for the sale of the delinquent stock, the balance due on his subscription, plus accrued interest, costs of advertisement and expenses of sale, or unless the board of directors otherwise orders, said delinquent stock shall be sold at public 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 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 remaining shares if any shall be credited in favor of the delinquent stockholder who shall likewise be entitled to the issuance of a certificate of stock covering such shares. ..." (Emphasis supplied) From the above underlined words, it appears that Bidder A is considered the highest bidder. The 900 shares will be transferred to him and the remaining 100 shares will be retained by the delinquent stockholder. Thereafter, all the 1,000 shares will be considered as fully paid. Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman