Mr. G.M. Gellecanao

June 19, 1991 Mr. G.M. Gellecanao SGV & Co. P.O. Box 17 Iloilo City 5901 S i r : This refers to your letter of June 3, 1991 requesting opinion on whether a corporation may, at the request of a stockholder, issue stock dividend in the name of a third party who may or may not be an existing stockholder, instead of issuing the stock certificate in his name. It is well-settled that only stockholders of record are entitled to receive dividends, which right is inherent in the ownership of shares. They are the only ones who have the right to share ratably in the dividends in proportion to their respective shareholdings. The general rule for determining the person to whom dividend is payable in the absence of a record date is that, it belongs to the person recorded in the corporate books as stockholder at the time of declaration. Any existing stockholder who intends to transfer to another his ownership of the stocks issued to him as a result of the stock dividend declaration must comply with the procedure for transfer of shares laid down under Section 63 of the Corporation Code quoted in part hereunder: LexLib "...Shares of stocks issued are personal property and may be transferred by delivery of the certificate or certificates indorsed by the owner or his attorney-in-fact or other person legally authorized to make the transfer. No transfer, however, shall be valid, except as between the parties, until the transfer is recorded in the books of the corporation showing the names of the parties to the transaction, the date of the transfer, the number of the certificate or certificates and the number of shares transferred. ..." Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman