Mr. Salvador T. Dizon

August 19, 1996 Mr. Salvador T. Dizon 2205 Mendiola St., Quiapo, Manila S i r : This refers to your letter dated July 31, 1996 inquiring among others, whether a corporation can sell stock rights without the approval of the SEC. As stated, Liberty Mines, Inc. offered stock rights for three (3) consecutive years in 1974, 1975 and 1976. Allegedly, you availed of such offering from Ansaldo Godines & Co., Inc. of which you were issued receipts of payment. However, on July 15, 1996 when you inquired from Ansaldo Godines & Co. about the shares, you were informed that the SEC did not approve the stock rights offerings, and hence, you were advised that your payment to such stock rights will be returned to you. The pertinent provision of the " Amended Rules Governing Pre-emptive and Other Subscription Rights and Declaration of Stock Or Cash Dividends Of Corporations Whose Securities Are Registered Under the Revised Securities Act Or Listed In The Stock Exchanges " provides: "SECTION 9. All funds received by the corporation from subscribers to an increase in authorized capital stock shall be properly receipted, deposited in a banking institution and shall be utilized exclusively in accordance with the work program submitted in relation to its application for increase or registration or for the purposes for which the increase or registration was made; Provided that the proposal project shall be related to the corporation's principal business. No amount shall be granted as loans or advances to subscribers, officers/directors of the Corporation or any of its affiliated companies, and provided further that in case of listed issues, the shares shall be listed in the Exchanges, otherwise , the corporation shall, within ninety (90) days from date of approval of the registration of securities, return to the subscribers their subscription deposits . In all cases, the Commission shall be duly informed in writing." (Emphasis supplied) Thus, in the event a stock right is not approved, the corporation is duty bound to return to the subscribers their subscription deposits. Regarding the rest of the issues raised, the Commission opts to refrain from making any further comments thereon inasmuch as they become matters of evidence, and therefore, justiciable issues which could only be clarified and determined after proper investigation and/or hearing. However, please be advised that, on even date, we referred the matter to our Brokers and Exchanges Department for further investigation. A copy of said referral is herewith attached for ready reference. You may therefore communicate directly with said Department. Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner