Mr. Lino R. Peñaflor

March 3, 1982 Mr. Lino R. Peaflor Manager Cooperative Rural Bank of Lanao del Norte, Inc. Tubod, Lanao del Norte Sir : This has reference to your letter dated October 7, 1981 requesting information on whether the subscribers of the above-named rural bank can validly released from their unpaid subscriptions relative to the reduction of the bank's authorized capital stock from P10 million to P5 million. prcd The management of a corporation may release a subscriber from liability on his subscription, in whole or in part, only with the express or implied consent of all the shareholders, and if there is no fraud upon existing or subsequent creditors. There must be an adequate consideration for such a release. (Ballantine 460). In a Philippine case, the court rules that a "corporation has no power to release an original subscriber to its capital stock from the obligation of paying his shares, without a valuable consideration". (Phil. Trust Co. v. Rivera, GR No. 19761, Jan. 29, 1923, 44 Phil. 469, 471). In view of the foregoing, this commission shall allow the amendment of your bank's articles of incorporation reflecting the reduction of its capital stock provided the above-mentioned conditions are implied with. As to the documentary requirements, please submit the following documents to this Commission for processing: 1. Amended Articles of Incorporation 2. Certificate of decrease of the authorized capital stock 3. Latest audited financial statements 4. Long form audit report of the certifying auditors 5. If it would appear in the financial statements that there are existing creditors, secure their consent. 6. Indorsement from the Central Bank. Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Associate Commissioner