Ms. Ma. Cecilia Salazar-Santos

January 28, 1999 Ms. Ma. Cecilia Salazar-Santos Ishiwata Ngo & Associates No. 12 ADB Avenue, Ortigas Center 1550 Mandaluyong City, Metro Manila M a d a m : This refers to your letter dated January 5, 1999 inquiring whether or not the procedure for the issuance of new stock certificates laid down under Section 73 of the Corporation Code should be followed with respect to lost/stolen/destroyed stock certificates which must be surrendered and cancelled for purposes of paying out liquidating dividends. 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. One may own shares of stock without possessing a certificate thereof, which after all is but an evidence of owning the shares. The " stock and transfer book " is ordinarily admissible and generally regarded as the best evidence of stock ownership. 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 the stock certificate for replacement. Foreign jurisprudence is replete with authorities to the effect that a corporation may voluntarily issue a new certificate of stock in place of an original certificate which has been lost or destroyed and it can be compelled to issue a new certificate without any indemnity where, upon the facts, it is reasonably certain that the original certificate will not reappear. as where there is a clear proof that the original had been destroyed, or that it had been lost or stolen, not having an assignment by the owner, or where the certificate was lost by the corporation itself by carelessness, or if the corporation was otherwise protected, for in such a case the corporation could not incur any liability by reason of the original certificate. ( SEC Opinion dated May 27, 1996 addressed to Atty . Jose C . Castro citing 11 Fletcher Sec . 5180 ) Thus, the Commission previously opined that while Section 73 of the Corporation Code appears to be mandatory, the same admits exceptions, such that a corporation may voluntarily issue a new certificate in lieu of the original certificate of stock which has been lost without complying with the requirements under Section 73 of the Corporation Code, provided that the corporation is certain as to the real owner of the shares to whom the new certificate shall be issued. ( Ibid . citing Ltr. to Josephine A Batiller dtd. June 11, 1990 ). Accordingly, under the circumstances presented in your letter, the requirements under Section 73 of the Corporation Code may not be strictly complied with. It would be an internal matter for the corporation to find measures in ascertaining who are the real owners of stock for purposes of liquidation. It is well-settled that unless proven otherwise, the " stock and transfer book " of the corporation is the best evidence to establish stock ownership. LibLex Very truly yours, (SGD.) ROSALINDA U. CASIGURAN Associate Commissioner