Atty. Augusto C. Panlilio

March 25, 1987 Atty. Augusto C. Panlilio Panlilio Quiambao & Co. No. 7 Lachica Bldg., Marlim Ave. Diamond Subdivision Balibago, Angeles City, Philippines Sir : This has reference to your letter dated February 19, 1987, requesting opinion from this Commission as to whether or not prior SEC approval is necessary on the issuance of shares and the subsequent increase in the paid up capital of a newly incorporated corporation from the original subscribed capital as shown in the original articles of incorporation filed with our office. To illustrate, you cited the following example: X Corporation has an authorized capital stock of P1,000,000.00, P250,000.00 of which were subscribed at the time of the incorporation and as reflected in the articles of incorporation and out of which subscribed shares, P62,500.00 was paid up upon registration with the SEC. The question is, if the original incorporating stockholders will now pay the balance on their subscriptions of P187,500.00 to come up with a total of P250,000.00 paid up capital, is prior SEC approval necessary for this increase in the paid up capital? Relative to your query, please be informed that prior approval of this Commission to the stockholders' payment of the balance of their subscription is not necessary, provided such additional payment consist of cash. Otherwise, approval of the Commission is needed pursuant to the provisions of Section 62 of the Corporation Code which provides that where the consideration for stocks in other than actual cash or consist of intangible property such as patents or copyrights, the evaluation thereof shall initially be determined by the incorporators or the board of directors, subject to approval by the Securities and Exchange Commission. LibLex Very truly yours, (SGD.) JULIO A. SULIT, JR. Chairman