Mr. Bartolome D. Domingo

February 19, 1981 Mr. Bartolome D. Domingo Rural Bank of Pana-on (Misamis Occidental),Inc. Pana-on, Misamis Occidental Dear Mr. Domingo : This has reference to your letter-query dated November 28, 1980 requesting opinion on the legality of the proposed increase in authorized capital stock of the Rural Bank of Pana-on (Misamis Occidental) Inc. from P1,000,000.00 to P2,000,000.00, of which 5,000 shares worth P500,000 additional common stocks are proposed to be subscribed because all the 5,000 common stocks of the present capital had already been subscribed. You wish to know if the Bank can legally proceed with the proposed increase considering that there are still preferred shares in the present authorized capital stock that could be converted into common stocks and sold to private investors. In connection therewith, please be advised of the corporate principle that the entire authorized capital stock of a corporation need not be fully subscribed before an increase of capital stock may be effected ( SEC Opinion August 25, 1965 ,SEC Folio P. 241).In other words, the existence of unissued shares in the original authorized capital stock would not debar a corporation from proceeding with the increase in capital stock. In view thereof, our answer to your query is in the affirmative. However, all the requirements and formalities prescribed in Section 38 of Batas Pambansa Blg. 68, otherwise known as the Corporation Code of the Philippines and pertinent existing laws must be duly complied with. cdlex Please be guided accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Director Corporate and Legal Department