Mr. Armando Celestino

April 12, 1982 Mr. Armando Celestino Northbay Boulevard Navotas, Metro Manila Sir : This refers to your letter dated February 26, 1982 requesting opinion relative to the Brick Oven Food Products Corporation, on several queries posed therein. In answer to your first query as to whether or not prior approval of the Commission in cases wherein sale of stocks by a stockholder to another stockholder is necessary, please be informed that under the law, an owner of a stock has an absolute and legal right, as an incident of his ownership, to sell and transfer the same. Compliance however, is necessary with regards to the reasonable restrictions upon the transfer of stock which are necessary and convenient to the attainment of the objects for which the company was incorporated may be allowed. Therefore, considering that there exist restrictions in the transfer of shares in the Articles of Incorporation of said corporation specifically article 7 thereof, the same should be strictly complied with. In cases of fully paid shares, the vendor-stockholder merely endorses the stock certificate in favor of the transferee, and the latter presents the same to the secretary of the corporation who in turn effects the transfer to the stock and transfer book of the company, issues a new stock certificate in favor of the transferee, and cancels the former stock. As for the shares subscription not fully paid, it is necessary that a Deed of Assignment be made, stating therein the subscription rights sold and an undertaking of the transferee to assume payment of the unpaid balance to the corporation. This Deed of Assignment must, however, be submitted to the Board of Directors of the corporation for approval. (See Hager vs. Bryan, GR No. L-6230, March 21, 1911, 19 Phil. 138 and Bank of P.I. vs. Caridad Estate, 40 O.C. Supp. 4-14 pp. 265-277). Relative to your second query, in cases of fully-paid shares, portions of the same may be sold to third parties, under such conditions and restrictions which may lawfully be imposed by the corporation. In this respect, the corporation should be notified, the original stock certificate and Deed of Sale must be presented to the secretary corporation should be notified, the original stock certificate and Deed of Sale must be presented to the secretary of the corporation for its annotation in the corporate books. Corresponding stock certificate shall then be issued and the former one canceled. LibLex Please be advised accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Associate Commissioner