Ms. Alma J. Yu

September 25, 1989 Ms. Alma J. Yu Iloilo Finance Corporation Mezzanine Floor C. Young Bldg. Solis Street, Iloilo City Madam : This refers to your letter dated September 13, 1989, inquiring on the applicability of the new Family Code of the Philippines on transfer of stock certificates. While shares of stock so issued are considered personal property and may be transferred by delivery of the certificate or certificates endorsed by the owner or his attorney-in-fact or other person legally authorized to make the transfer (Sec. 63 Corporation Code), yet it has to be emphasized that if the shares of stock constitute part of the "community property" or "conjugal partnership property" of the spouses, the transfer or disposition thereof shall be subject to the provisions of Executive Order No. 209, July 6, 1987, as amended by Executive Order No. 227, July 17, 1987, otherwise known as the "The Family Code of the Philippines" quoted hereunder: "SECTION 4. Ownership, Administration Enjoyment and Disposition of the Community Property ARTICLE 96. The administration and enjoyment of the community property shall belong to both spouses jointly. In case of disagreement, the husband's decision shall prevail, subject to recourse to the court by the wife for a proper remedy, which must be availed of within five years from the date of the contract implementing such decision. In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the common properties, the other spouse may assume sole powers of administration. These powers do not include the powers of disposition or encumbrance which must have the authority of the court or the written consent of the other spouse .In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors. (206a)". "SECTION 5. Administration of the Conjugal Partnership Property . ARTICLE 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly. In case of disagreement, the husband's decision shall prevail, subject to recourse to the court by the wife for a proper remedy, which must be availed of within five years from the date of the contract implementing such decision. In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the other spouse may assume sole powers of administration. These powers do not include the powers of disposition or encumbrance which must have the authority of the court or the written consent of the other spouse .In the absence of such authority or consent, the disposition or encumbrances shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors. (165a) " (emphasis supplied). Thus, if there is doubt on the regularity of the transfer of shares of stock because of non-compliance with the above-mentioned requisite for valid transfer of conjugal property, the corporation may properly refuse to register the transfer in the corporate books until the doubt has been finally settled. Please be advised accordingly. llcd Very truly yours, (SGD.) RODOLFO L. SAMARISTA Associate Commissioner