Mr. Leonides S. Respicio

August 4, 1982 Mr. Leonides S. Respicio Corporate Secretary MANILA CENTRAL LINE CORPORATION 2170 Kanluran St.,Balut, Tondo Metro Manila Sir : This has reference to your letter dated July 19, 1982, seeking our opinion on the application and interpretation of Article 8 of your amended Articles of Incorporation. With regards the first question, we believe that Article 8 applies to subscriptions which are both fully paid or partially paid since said article does not make any distinctions as to whether the subscription is fully or partially paid. In fact, it provides that " ...the subscription for the ownership of ALL SHARES OF STOCK ...are made and taken upon the condition ..." As regards the second question, the Commission opines that the restriction in Article 8 also applies to both spouses and immediate members of the family since the said article does not state that it shall not apply to the spouse or immediate members of the family apart from other buyers of the shares of stock. Our answer to your third query is in the affirmative, as a change in the designation of the subscriber in favor of his/her spouse of some or all subscription would, in effect, make the transferee the subscriber of the shares of stock transferred in his/her name. Your fourth query is answered in the negative, and finds support under Corporation Code of the Philippines which provides in part: "SECTION 41. A stock corporation shall have the power to purchase or acquire its own shares for a legitimate corporation purpose or purposes ...Provided, that the corporation has unrestricted retained earnings in its books to cover the shares to be purchased or acquired." In this connection, unrestricted retained earnings may be defined as earnings of the corporation above the legal capital and the total of the liabilities of the Corporation (Agbayani, Aguedo, Commercial laws of the Philippines; 1980, p. 342) Very truly yours, (SGD.) JULIO A. SULIT, JR. Associate Commissioner