Mr. Ruben L. Almadro

October 13, 1997 Mr. Ruben L. Almadro Philippine Stock Exchange Phil. Stock Exchange Centre, Exchange Road Ortigas Center, Pasig City, Metro Manila S i r : This refers to your letter dated October 3, 1997 seeking clarification of the Commission's opinion of March 3, 1997, quoted in part hereunder, regarding the states of the unsurrendered/unconverted certificates of shares of stocks of Republic Resources and Development Corporation (REDECO) "This is being the case, we are of the opinion that certificates not converted should be deemed as cancelled and no longer qualified for any kind of negotiations ." A " certificate of stock " is merely an evidence certifying that the person named therein is the owner of the stated number of shares of stock in a corporation. Therefore, a corporation cannot by itself cancel a recorded ownership of shares of stock just because the stockholder failed to comply with a directive to surrender for replacement the old stock certificate evidencing the ownership of the shares. The Commission, on several occasions, has opined that subscribed shares of the corporation whose owners cannot be identified or located, cannot be cancelled or forfeited. If the notice by publication proves to be futile in identifying the owners of the shares, a " trust relation " is impliedly created between the corporation and the unknown stockholders. The Corporation is duty bound to exhaust all available means in identifying the owners of the subscribed/issued shares. If all means prove to be futile, it is nevertheless the fiduciary duty of the corporation to continuously hold said shares as trustee for the owners thereof, until the shares are escheated in accordance with law. Accordingly, while the old certificates of REDECO can no longer be negotiated for transfer as stated in our previous letter on the matter, the corporation, even after the deadline set for the surrendered thereof, is still duty bound to issue new certificates in lieu of the old certificates held by bona fide stockholders if presented for replacement. Very truly yours, (SGD.) PERFECTO R. YASAY, JR. Chairman