Carpio Villaraza Barza & Cruz

December 16, 1983 Carpio Villaraza Barza & Cruz 5th Floor, LTA Building 118 Perea St.,Legaspi Village Makati, Metro Manila Attention : Atty . Antonio T . Carpio Gentlemen: This refers to your letter dated November 28, 1983 requesting the opinion of this Commission on whether or not a purchaser of subscription rights belonging to existing stockholders of Sicogon Development Corporation (SIDECO) can vote the shares of stock represented by such subscription rights during the forthcoming annual stockholders meeting of said corporation on December 19, 1983, despite the refusal of SIDECO's Corporate Secretary to issue new certificates of stock for said shares in the name of Monark. It appears from your letter that your client, Monark Middle East, Inc. (hereinafter referred to as Monark),acquired and purchased the subscription rights of two (2) existing stockholders in the corporation, namely: Messrs. Edgardo G. Sarrosa and Ramon L. Mapa covering their unpaid subscription to a total of Five Hundred Sixty One Thousand One Hundred (561,100) common shares of stock. The above-mentioned subscription have been fully and satisfactorily paid out of the advances made by your client to the creditor of SIDECO. The full payment of these subscriptions were duly approved by the Board of Directors of the corporation in a meeting held on June 21, 1983. Likewise, it appears that the transfer and issuances have been duly recorded in the books of SIDECO in accordance with Section 63 of the Corporation Code. It seems, however, that the Corporate Secretary of SIDECO refuses to issue to Monark the certificate of stocks covering the Five Hundred Sixty One Thousand One Hundred common shares. In reply to your query, please be informed that this Commission would not ordinarily render an opinion on the matter since the same might become a justiciable issue which could be clarified and determined in a proper proceeding. Like in other letter-queries of similar matter, the Commission has adopted the policy of not taking any action which will prejudice the outcome of the case if it will eventually be litigated in the future. However, for purposes of information only the following may be imparted. Ordinarily, a certificate of stock is not necessary to constitute one a stockholder, and the right of a person who owns a stock to vote the same is not affected by the fact that no certificate has been issued to him. (13 Fletcher 2027). And it is well settled, as a general rule of corporation law, that, in the absence of statutory or charter provisions or agreement to the contrary, a subscriber for stock in a corporation or a purchaser of stock becomes a stockholder as soon as his subscription is accepted by the corporation whether a certificate of stock is issued to him or not, and, although he may have no certificate, he is thereupon entitled to all the rights of a stockholder (11 Fletcher 5094). In fact, under Section 72 of the Corporation Code, even holders of unpaid shares enjoy all the privileges of a stockholder, including the right to vote, unless the shares have become delinquent. The law provides, thus: "SECTION 72. Rights of Unpaid Shares . Holders of subscribed shares not fully paid which are not delinquent shall have all the rights of a stockholder." From the foregoing, it can be concluded that the non-issuance by the Corporate Secretary of certificates of stocks covering shares duly purchased and which purchase has been approved by the Board of Directors and recorded in the stock and transfer book of the Corporation, will not affect the rights of the purchaser to vote all of said shares during the annual stockholders meeting of the corporation. Please be advised accordingly. Very truly yours, (SGD.) MANUEL G. ABELLO Chairman