Mr. Joseph E. Hayes

March 27, 1984 Mr. Joseph E. Hayes Embassy of the United States of America Manila, Philippines Sir : This refers to your letter dated March 8, 1984 inquiring on whether the Class "B" stock certificates issued by Benguet Exploration Company in favor of Mrs. Alice C. Boone, who recently died can be sold or redeemed; and the procedures to be followed in liquidating these certificates so that the money can be used to pay hospital and burial expenses. llcd The instant case does not fall under any of the expressly authorized corporate acquisition of own shares under Section 41 of the Corporation Code. Hence, the prevailing rule that stockholders cannot demand refund of their investments applies. This is in conformity with the general rule that upon acceptance of a previously made stock subscription by a corporation after coming into existence, the subscription becomes a binding contract which the subscriber cannot withdraw. (SEC Opinion dated October 6, 1982 addressed to Mr. Alejandro E. Santos citing 13 Am. Jur. 233). "The underlying reason for limiting share purchases springs from the necessity of imposing safeguards against the depletion of a corporation of its assets and the impairment of its capital needed for the protection of creditors. This is sometimes expressed in terms of the trust fund doctrine." (Ballantine on Corporations p. 605). The Corporation, therefore, cannot be compelled to return the investments made by subscribers to its capital stock. Under Section 63 of the Corporation Code, however, stockholders are allowed to transfer their shareholdings. The law provides, thus: "SECTION 63. Certificates of Stock and transfer of shares . ...Shares of stock so issued are personal property and may be transferred by delivery of the certificate or certificates indorsed by the owner of his attorney-in-fact or other person legally authorized to make the transfer. No transfer, however, shall be valid, except as between the parties, until the transfer is recorded in the books of the corporation so as to show the names of the parties to the transaction, the date of the transfer, the number of the certificate or certificates and the number of shares transferred." On the basis of the foregoing provisions, the legal executor of the estate of the deceased stockholder may sell or transfer the shares of stocks she owned in Benguet Exploration Company. Considering that the corporation's securities are listed in the stock exchanges, her shares may be sold thru the same (Makati or Manila Stock Exchange). LibLex Please be advised accordingly. Very truly yours, (SGD.) GONZALO T. SANTOS, JR. Associate Commissioner