Private Development Corporation of the Philippines

August 8, 1986 Private Development Corporation of the Philippines PDCP Building, 6758 Ayala Avenue Makati, Metro Manila Gentlemen: This relates to your letter dated August 7, 1986, requesting the formal ruling of the Commission on the issue posed therein. As stated therein, PDCP Provident Fund has offered to buy the Far East Bank & Trust Company (FEBTC) has offered to sell outstanding capital stock of Private Development Corporation of the Philippines held by FEBTC consisting of 6,006,974 Class "A" shares and 2,698, 566 class "B" shares or a total of 8,705,540 shares representing 87.05% of the outstanding and paid-in capital of PDCP at P0.30 per share. It is likewise stated that PDCP Provident Fund is a pension fund for PDCP officers and employees and has been favored to buy the shares. Upon acquisition of the PDCP shares, the Fund proposes to resell to the minority stockholders who holds 13% of the outstanding and paid-in capital of PDCP, 13% of the 8,705,540 shares in proportion to their respective shareholdings for the same price as that paid by the Fund for the shares subject to the condition that they shall not dispose of such shares within two (2) years from date of FEBTC sale to the PDCP Provident Fund. Hence, this present request for a formal ruling on whether the proposed purchase of FEBTC shareholding under the scheme set forth above will not violate any provision or law rule or regulation. It appears that the subject 8,705,540 shares of PDCP have been previously issued in favor of FEBTC, thus, the proposed sale or offer thereof to PDCP Provident Fund constitutes a secondary offering, and for which, prior approval of this Commission relative to the sale or offer is not required. Section 63 of the Corporation Code expressly provides that "shares of stock so issued are personal property and may be transferred by delivery of the certificate or certificates indorsed by the owner or his attorney-in-fact or other persons authorized to make the transfer." As such, the owner as in the case of other personal property has the absolute and inherent right, as an incident of his ownership, to sell and transfer the same at will except insofar as the right may be restricted by the charter of the corporation or the general law, or a valid agreement between him and the corporation, provided the transfer is made in good faith and to a person capable of assuming the obligations of a stockholder. (SEC Opinions dated March 6, 1984; November 10, 1976 ). Considering further that the securities of PDCP are duly registered and permitted to be sold within the Philippines under the Revised Securities Act, said shares may be sold or offered for sale even in the course of repeated and successive transactions. In view of the foregoing, it is informed that the sale or offer of PDCP shares by FEBTC adverted to above, does not violate any provision or law, rule or regulation enforced by this Commission. Please be advised accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Chairman