Atty. Eugenio V. Villanueva

April 25, 1994 Atty. Eugenio V. Villanueva Villanueva, Delfin, Delfin, Cabrera and Vidal Law Offices 301-304 Villanueva Bldg. 1207 Leon Guinto St., Ermita, Manila S i r : This refers to your letter of April 14, 1994 inquiring on the effect of issuance of shares of stock/stock certificates by Imus Rural Bank, Inc. without registration from the SEC. LexLib Please be advised that under Section 5 (a-3) of the Revised Securities Act, shares of stock of banking institutions are considered exempt securities. The Law provides: "SECTION 5. Exempt securities . (a) Except as expressly provided, the requirement of registration under Section four of this Act shall not apply to any of the following classes of securities: xxx xxx xxx (3) Any security issued or guaranteed by any banking institutions authorized to do business in the Philippines, the business of which is substantially confined to banking or a financial institution licensed to engage in quasi-banking, and is supervised by the Central Bank. . . . . (Emphasis supplied) Accordingly, registration of the shares of stock of subject Corporation with the SEC pursuant to the Revised Securities Act is not necessary. Relative to the stock certificates issued as evidence of ownership of stocks, the pertinent provisions of the Corporation Code provide: "SECTION 47. Contents of by-laws . Subject to the provisions of the Constitutions, this Code, other special laws, and the articles of incorporation, a private corporation may provide in its by-laws for: xxx xxx xxx 9. In case of stock corporations, the manner of issuing stock certificates . . . . (Emphasis supplied) "SECTION 63. Certificate of stock and transfer of shares . The capital stock of stock corporations shall be divided into shares for which certificates signed by the president or vice-president, countersigned by the secretary or assistant secretary, and sealed with the seal of the corporation shall be issued in accordance with the by-laws . . . . " (Emphasis supplied) Corollary to the above statutory provisions, the By-laws of subject Corporation on file with the Commission provide: "SECTION 1. Certificates of Stock . Ownership or proprietary interest in the assets of the Bank shall be evidenced by certificate of shares of the Capital Stock which shall be recorded on the books of the Bank, and shall be in such a form as the Monetary Board of the Central Bank of the Philippines may prescribe. Certificates of stocks shall be issued by the Secretary-Treasurer only after full payment of the value thereof, and shall be signed by the President and countersigned by the Secretary and sealed with the corporate seal. The registered holder of any share of stock of the Bank shall be regarded as the sole owner thereof for all purposes." (Article II) Therefore, the aforequoted provision of the by-laws of the Corporation must be observed in the issuance of certificates of stocks and prior registration thereof with the Commission is not necessary. Very truly yours, (SGD.) RODOLFO L. SAMARISTA Associate Commissioner