Guevarra Law Office

February 22, 1983 Guevarra Law Office Rms. 315-317 Don Santiago Bldg., 1344 Taft Avenue, Manila Sir : This has reference to your letter-query dated January 4, 1983 requesting for the opinion of this Commission on the queries posed therein. LibLex It appears therein that a client of yours, husband and wife, wish to transfer all of their real estate properties to a proposed new corporation, in direct exchange for shares of stock, so much so that after the transfer, they will be owning more than 50% of the corporation and all of their real estate properties will be transferred to said corporation. Some of these real estate properties are covered by Torrens title while several are not covered thereby. You now posed the following queries: 1. Would the SEC allow the transfer of the untitled real estate properties, in direct exchange for shares of stock in this new corporation? 2. If the answer is in the affirmative, what conditions does the SEC imposed on this transfer of untitled properties in direct exchange for shares of stock? The second paragraph of Sec. 11 of the Guidelines in the Formation and Organization of a Private Stock Corporation issued by this Commission is quoted hereunder: "If the paid-up capital consist of property verification of its ownership, physical existence and reasonableness of the valuation at which it is being transferred to the corporation is made by the Commission. Documents to support ownership such as original/transfer certificate of Title, and tax Declaration with respect to land , . . . are required to be submitted. (Emphasis supplied) From the foregoing, it can be gleaned that only registered real properties may be transferred to the Corporation in exchange for shares of stock considering that only registered properties are covered by original and transfer certificates of title. Please be guided accordingly. Very truly yours, (SGD.) JESUS J. VALDES Associate Commissioner