Mr. Leodegario F. Casal, Jr.

September 2, 1991 Mr. Leodegario F. Casal, Jr. L.F. Casal Realty & Development Corp. 3rd Floor, Raha Sulayman Building Benavides Street, Legaspi Village Quezon City S i r : This refers to your letter of May 8, 1991 requesting opinion on the queries posed therein. As stated, the outstanding stocks of Philippine Racing Club, Inc. are held by the following stockholders: 72% of the entire stock by the Reyes Family; 13% by Manila Jockey Club, Inc.;and the remaining 15% by the investing public. You would like to know how your client could acquire the remaining 15% held by the investing public, except their corporate liabilities, and how much would be the reasonable price per share of stock. Please note that shares of stock in a corporation are personal property. As such, the owner, as in the case of other personal property has, an absolute and inherent right as incident of his ownership, to sell and transfer the same at will except insofar as the right may be restricted by the charter of the corporation or the general law, or a valid agreement between him and the corporation, provided the transfer is in good faith, and to a person capable of assuming the obligations of a stockholder. Transfer of stock ownership carries with it not only the ownership in the assets of the corporation but also the assumption of corporate liabilities. Section 63 of the Corporation Code of the Philippines, partly quoted hereunder, prescribes the manner by which shares of stocks may be transferred: "Shares of stock so issued are personal property and may be transferred by delivery of the certificate or certificates indorsed by the owner or his attorney in-fact or other person legally authorized to make the transfer .No transfer, however, shall be valid, except as between the parties, until the transfer is recorded in the books of the corporation showing the names of the parties to the transaction, the date of the transfer, the number of the certificates and the number of shares transferred." (Emphasis supplied) Likewise, considering that the shares of the Corporation are registered under the Revised Securities Act, the proposed acquisition by your client of the 15% outstanding capital stock held by the public is subject to the provisions of said Act relative to "tender offers", particularly Section 33 thereof. Anent the second query, any stock which has been issued and fully paid for may be disposed of by its owner at any just and reasonable price without violating statutory provision regulating the issuance of stock and without rendering the purchaser liable beyond the price which they agree to pay. However, if the stockholder has not paid the full amount of his subscription, he cannot transfer part of it in view of the indivisible nature of subscription contract. However, the entire subscription, although not yet fully paid, may be transferred. It is necessary, however, to secure the consent of the corporation since the transfer of subscription right contemplates a novation of contract which under Article 1293 of the Civil Code of the Philippines, cannot be made without the consent of the creditor. Any transfer of shares not fully paid shall be approved by the Board and accompanied by an affidavit of assumption of the unpaid balance by the transferee. llcd Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman