Tan, Sapalo, Manzano & Velez Law Offices

July 28, 1986 Tan, Sapalo, Manzano & Velez Law Offices 11th Floor, Pacific Bank Building 6776 Ayala Avenue, Makati Metro Manila Gentlemen: This refers to your letter, dated June 19, 1986 requesting the opinion of this Commission on the following queries: 1. Whether a bank certification that the treasurer-in-trust of a corporation in the process of incorporation has made a deposit in his account of a certain amount in U.S. dollars would be acceptable instead of the usual bank certification stating that the amount deposited is in pesos corresponding to the paid-up capital of said corporation. It appears therein that the proposed corporation intends to convert the dollar deposit into peso as soon as the incorporation is approved by this Commission. cdll 2. Is it required that the treasurer be a resident of the Philippines? In relation to your first query, the pertinent provision of the Corporation Code provides thus: "SECTION 14. Contents of articles of incorporation . All corporations organized under this Code shall file with the Securities and Exchange Commission articles of incorporation in any of the official languages, duly signed and acknowledged by all of the incorporators, containing substantially the following matters, except as otherwise prescribed by this Code or by special laws. xxx xxx xxx 8. If it be a stock corporation, the amount of its authorized capital stock in lawful money of the Philippines ,the number of shares into which it is divided, and in case the shares are par value shares, the par value of each, the names, nationalities and residences of the original subscribers, and the amount subscribed and paid by each on his subscription, and if some or all of the shares are without par value, such fact must be cited. xxx xxx xxx (emphasis supplied) Likewise, Section 15 of the Code partly provides as follows: "Form of articles of incorporation. Unless otherwise prescribed by special law, articles of incorporation of all domestic corporations shall comply substantially with the following form: ARTICLES OF INCORPORATION OF _________________________ (name of corporation) Know All Men By These Presents: The undersigned incorporators, all of legal age and a majority of whom are residents of the Philippines, have this day voluntarily agreed to form a (stock) (non-stock) corporation under the laws of the Republic of the Philippines: prcd AND WE HEREBY CERTIFY: xxx xxx xxx SEVENTH: That the authorized capital stock of the corporation is __________________________________________ (P_____________) Pesos in lawful money of the Philippines, divided into _____________ shares with a par value of __________________________ (P__________) Pesos per share xxx xxx xxx (emphasis supplied) Considering the foregoing, the authorized capital stock of the proposed corporation should be in lawful currency of the Philippines which is represented by the "Peso".At least 25% of the authorized capital stock as stated in the articles of incorporation must be subscribed at the time of incorporation, and 25% of the total subscription should be fully paid-up. In this connection, it is the policy of the Commission to require the cash capital to be deposited with a bank in the name of the proposed corporation or its treasurer, as trustee therefor, and the corresponding certificates of deposit issued by the depository bank presented to this commission. For purposes of complying with the above policy, it is advised that the U.S. dollars representing the payment on subscription of the proposed corporation be duly converted in Philippine Peso so the same may be treated as payment in "cash".Otherwise, the U.S. dollars shall be considered payment by way of property, in which event, you have to comply with our usual requirements when properties are assigned to a corporation in exchange for shares. (See attached Checklist). Anent your second query, the following authorities pertinent thereto are cited: "The treasurer of a private business corporation is ordinarily the custodian of its funds with authority to disburse them in a proper case; this power he has by virtue of his office. (2 Fletcher, Cyc. Corp.,1969 Rev. Vol.,sec 654. p. 806).The treasurer of a corporation is the proper officer, and the only proper officer in the absence of express provision to the contrary, to receive and keep the moneys of the corporation. (Fletcher Supra.,citing Abro Mining and Milling Co. v. Chinn, 20 Colo. App. 238, 77 p. 1097; Danbury & M.R. Co. v. Wilson, 22 Conn. 435, and others),and he is bound to disburse the corporate funds, under, and only under the orders of the directors or other officers in charge of the corporate business. (Alin Mathieson Chemical Corp. v. Planters Corp. 236 SC 318, 114 SE 2d 321).He has authority to receive the receipt of moneys due the corporation".(Brown v. Winnisimmet Co.,11 Allen 326). LibLex Thus, while it is true that the Corporation Code does not impose a Philippine residency requirement of a treasurer, nevertheless, considering the nature of his functions as hereinabove set forth, good corporate practice dictates that the treasurer must be a resident of the Philippines. Please be advised accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Acting Chairman