Atty. E. A. Fernandez

November 6, 1991 Atty. E. A. Fernandez Fernandez, Santos & Lopez 20th/21st Floors, Metro Plaza Sen. Gil J. Puyat Avenue Makati, Metro Manila S i r : This refers to your letter of October 30, 1991 requesting opinion whether NEWMAN PHILIPPINES, INC. can issue new certificates of stock in lieu of the lost or misplaced certificates: llcd As stated, Newman Philippines, Inc. is a corporation engaged in the manufacture and distribution of wigs and other cosmetic products. As part of the security for a loan it contracted, Newman delivered certain certificates of stock registered in the name of its officers, i.e. Stock Certificates Nos. 001, 002, 006, and 007 covering a total of 1,600 shares. The certificates of stock were endorsed in blank. After payment of the principal obligation, Newman demanded for the return of the certificates of stock. For one reason or another, the creditor, however, has refused to return the certificates of stock alleging that said certificates have been misplaced or lost. On the basis of this allegation, Newman wanted to cancel the certificates and issue new ones in replacement thereof. Thus, to comply with the procedure for cancellation, and issuance of new certificates for the 1,600 shares, it published a notice of loss of Certificates Nos. 001, 002, 006 and 007 with the Peoples Journal for three (3) consecutive weeks of July 27, 1990, August 27, 1990 and August 10, 1990. From the time the notice of loss was published up to the present which is already more than one year, Newman has not received any contest regarding the lost certificates. Based on the foregoing, you would like to know whether Newman may, after the lapse of more than one year from the last publication, legally cancel Certificate Nos. 001, 002, 006 and 007 covering 1,600 shares and issue new certificates in replacement thereof. The pertinent provision of the Corporation Code provides: "SECTION 73. Lost or destroyed certificates . The following procedure shall be followed for the issuance by a corporation of new certificate(s) of stock in lieu of those which have been lost, stolen or destroyed: 1. The registered owner of certificate(s) of stock in a corporation or his legal representative shall file with the corporation an affidavit in triplicate setting forth, if possible, the circumstances as to how the certificate(s) were lost, stolen or destroyed, the number of shares represented by each certificate, the serial number(s) of the certificate(s) and the name of the corporation which issued the same. He shall also submit such other information and evidence which he may deem necessary; 2. After verifying the affidavit and other information and evidence with the books of the corporation, said corporation shall publish a notice in a newspaper of general circulation published in the place where the corporation has its principal office, once a week for three (3) consecutive weeks at the expense of the registered owner of the certificate(s) of stock which have been lost, stolen or destroyed. The notice shall state the name of said corporation, the name of the registered owner and the serial number(s) of said certificate(s),and the number of shares represented by such certificate(s),and that after the expiration of one (1) year from the date of the last publication, if no contest has been presented to said corporation regarding said certificate(s) of stock, the right to make such contest shall be barred and said corporation shall cancel in its books the certificate(s) of stock which have been lost, stolen or destroyed and issue in lieu thereof new certificate(s) of stock, unless the registered owner files a bond or other security in lieu thereof as may be required, running for a period of one (1) year for a sum and in such form and with such sureties as may be satisfactory to the board of directors, in which case a new certificate may be issued even before the expiration of the one (1) year period provided herein: Provided, That if a contest has been presented to said corporation or if an action pending in court regarding the ownership and said Certificate(s) of stock which have been lost, stolen or destroyed, the issuance of the new certificate(s) of stock in lieu thereof shall be suspended until the final decision by the court regarding the ownership of said certificate(s) of stock which have been lost, stolen or destroyed. Except in case of fraud, bad faith, or negligence on the part of the corporation and its officers, no action may be brought against any corporation which shall have issued certificate(s) of stock in lieu of those lost, stolen or destroyed pursuant to the procedure above-described." Thus, for as long as the Corporation has complied with the above procedure, it can issue new certificates of stock in lieu of the lost or misplaced certificates. Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman