Atty. Panfilo B. Enojas

November 24, 1980 Atty. Panfilo B. Enojas Suites 8, 9 & 12 Jamerlan Bldg. Iznart St., Iloilo City Sir : This has reference to your query dated March 27, 1980 arising out of the following facts: Golden Gate Corporation a duly registered corporation purchased three (3) parcels of land, including two big permanent buildings standing thereon known as the Hormillosa Buildings No. 1 & 2. The consideration for the purchase of the said properties consisted of 1,700 shares of stock of the corporation with the par value of P1,000.00 per share. Under these circumstances, the issues that you want to be resolved are as follows: 1. Was it required of Golden Gate Realty Corporation to first secure the corresponding authority from the SEC before it could purchase the properties above-mentioned in exchange for its shares of stocks? 2. If so, was the Golden Gate Realty Corporation granted such authority by the SEC? 3. According to existing laws, is the Deed of Sale valid? Every corporation desiring to issue shares out of its unissued capital stock must file with this Commission, in triplicate, the following papers: 1. A letter-petition signed by the President or his authorized agent applying for the issuance of its unissued shares stating the names of the particular purchasers and indicating opposite their respective names, the number of shares, the issue value thereof and the nature of the consideration, whether cash or property. 2. Copy of the resolution of the board of directors under oath authorizing the issuance or sale of the shares applied for. 3. Waiver of the non-subscribing stockholders. 4. If the consideration for the issuance of shares is real property, submit the following: (a) Deed of Assignment, a copy of which must be duly stamped by the Register of Deeds of the province where the property is located; and (b) valuation report of a licensed realtor; and (c) latest tax receipt. llcd 5. Remittance of exemption fee for an amount equivalent to one tenth of one percentum of the aggregate par or issued value of shares but not less than P100.00 or more than P20,000.00. Where payment to the shares consist of real property, this Commission shall determine whether the fair valuation of said property is equal to the par or issued value of the stocks to be issued. Accordingly, prior approval of this Commission of such issuance must be sought. As to the second query, the records of the subject corporation on file with this Office showed that the Commission has not granted any authority of said company relative to its purchase of the subject property. Consequently, any sale or issue of shares without securing the required exemption from this Commission would be violative of the Securities Act. We refrain from answering your third query because the facts presented before us are inadequate as basis for our conclusion. Very truly yours, For the Chairman: (SGD.) ROSARIO N. LOPEZ Director Corporate and Legal Department