Ms. Olivia Limpe AW

December 17, 1993 Ms. Olivia Limpe AW Destileria Limtuaco & Co.,Inc. 1830 E. Delos Santos Ave., Quezon City M a d a m : This refers to your letter of December 3, 1993 inquiring whether the existing "Receivables" of Destileria Limtuaco & Co.,Inc. can be used as initial paid-up capital of its proposed new subsidiary. The pertinent provision of the Corporation Code provides: "SECTION 62. Consideration for stocks . ...Consideration for the issuance of stock may be any or a combination of any two or more of the following: 1. Actual cash paid to the corporation; 2. Property ,tangible or intangible, actually received by the corporation necessary or convenient for its use and lawful purposes at a fair valuation equal to the par or issued value of the stock issued; xxx xxx xxx." (Emphasis supplied) The above provision requires that consideration in exchange for shares of stock must be actually received by the corporation. Under the Civil Code, the thing shall be understood as delivered, when it is placed in the control and possession of the transferee. Therefore, "receivables" cannot be treated as cash actually received since the actual payment of the shares would still be in the future. However, the Commission, in its meeting of December 16, 1993 allows the same to be treated as property payment subject to the following: a.) Verification by this Commission of their existence and collectibility b.) Since non-payment of the stocks may still be possible in the event that the creditors of the parent company fail to pay their obligations, the shares to be issued in consideration thereof shall be held in escrow until the actual payment of the amount. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman