Mr. Manuel A. Mazo

December 22, 1988 Mr. Manuel A. Mazo c/o Admiral Finance Creditors Corp. Sir : This refers to your letter, dated August 1, 1988, requesting for the opinion of this Commission on the queries posed therein. It appears therein that you were duly appointed as receiver/liquidator of the Admiral Group of Companies. The companies under receivership, namely: Admiral Investment & Financing Co.,Inc.,Capital Funding & Finance Corp. and Capital Resources, have invested in the shares of Costa Del Sur, while Capital Funding & Finance Corporation has equity investments in Cresta Del Mar. cdlex You are exploring two options or possibilities of disposing of these assets in Costa Del Sur and Cresta Del Mar, and they are as follows: 1. To claim equity participation over the present assets and properties of the two (2) beach resorts; or 2. To distribute these shares to your creditors and investors as partial payment of their money market claim against the Admiral Group of Companies. Hence, certain queries were posed to this Commission for information and guidance. Conformably thereto, your queries are responded as follows: At the outset, the Commission pursuant to Section 6(c) of P.D. 902-A, as amended, may appoint one or more receivers of property which is the subject of an action pending before it in accordance with the pertinent provisions of the Rules of Court in cases whenever necessary in order to preserve the rights of the parties-litigants to and/or protect the interest of the investing public and creditors. In appropriate cases, the Commission may appoint a rehabilitation receiver of corporations not supervised or regulated by other government agencies who shall have in addition to the powers of a regular receiver under the Rules of Court,such functions and powers as are provided for in Section 6(d) of P.D. 902-A, as amended. Likewise, the Commission may appoint a rehabilitation receiver of corporations supervised or regulated by the other government agencies, upon request of the government agency concerned. Upon appointment of a rehabilitation receiver pursuant to P.D. 902-A, all actions for claims against corporations under receivership pending before any court, tribunal, board or body shall be suspended accordingly. A rehabilitation receiver shall have the power to take custody of and control over, all the existing assets and property of such entities under management; to evaluate the existing assets and liabilities earnings and operations of such corporations, in order to determine the best way to salvage and protect the interest of the investors and creditors. (Section 6, d, P.D. 902-A). Section 7, Rule 59 of the Rules of Court enumerates the general powers of receiver, to wit: "Subject to the control of the court in which the action is pending, a receiver shall have the power ...to take and keep possession of the property in controversy; ...to divide the money and other property that shall remain among the persons legally entitled to receive the same; and generally to do such acts respecting the property as the court may authorize. ..." Applying the foregoing to the query posed in letters A.1, B1, C and D of your letter, it is opined that while ownership of the subject certificate of stock remains with ADIFIC, nevertheless, its custody and disposition belongs to the legal representative, the rehabilitation receiver whose action is subject to the control of the court . Section 6(d) of P.D. 902-A explicitly provides that a rehabilitation receiver " shall report and be responsible to the Commission until dissolved by order of the Commission." In relation to the query posed in letters A.2 and B.2 of your letter, for purposes of the general information only and without going into the merits of the validity of the license or permit of Costa Del Sur to offer its securities to the public, the following may be imparted: A certificate of stock is an evidence of the holder's ownership of the stock and of his rights as a stockholder to the extent specified therein. (11 Fletcher, Cyc. Corp.,1986 rev. vol.,sec. 5092).If issued by a corporation having power under its charter to issue certificates in the form in which such certificate is issued, it is a continuing affirmation or representation that the stock described is valid and genuine, and that the person named is the owner of the stock represented by the certificate and has the capacity to transfer the same. (Fletcher, Supra.,sec. 5168). Under our jurisdiction, no certificate will be issued for any share until such share is fully paid. (Section 64, Corporation Code). On the assumption therefore that the 50 shares jointly and severally covered by one certificate of stock have been fully paid, said certificate may be presented to the corporation through the corporate secretary for an exchange into 50 individual stock certificates. Simultaneously, the old certificate of stock will be cancelled. Likewise, where a certificate of stock representing several shares is transferred, the assignment may indicate that all of the shares which it represents are to be transferred to one individual, or distributed among two or more individuals, or that only a part of the shares are to be transferred. An allotment clerk examines each old certificate of stock and places with it one or more new blank certificates of stock, of the proper class and denomination, to be used in completing the transfer. (Lillian Doris and Edith Friedman, Corporate Secretary's Encyclopedia, Vol. 3, p. 1039). Anent the query stated in letter A.3 of your letter, Section 6 of the Corporation Code is squarely in point: "The shares of stock of stock corporation may be divided into classes or series, or both, any of which classes or series of shares may have such rights, privileges or restrictions as may be stated in the articles of incorporation. ... Preferred shares of stock issued by any corporation may be given preference in the distribution of the assets of the corporation in case of liquidation and in the distribution of dividends, or such other preferences as may be stated in the articles of incorporation which are not violative of the provisions of this Code. . . . Except otherwise provided by the articles of incorporation and stated in the certificate of stock, such share shall be equal in all respects to every other share. LexLib xxx xxx xxx" Please be advised accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Chairman