Mr. Augusto P. Quirino

September 9, 1994 Mr. Augusto P. Quirino Philippine Oil and Geothermal Energy, Inc. S i r : This refers to your letter of July 15, 1994 requesting advice as to whether the receiver of E. Santamaria & Company, Inc. can vote the shares owned by the company in Philippine Oil and Geothermal Energy, Inc.. As stated, Philippine Oil and Geothermal Energy, Inc. (POGEI) is in the process of reviving and is planning to decrease its authorized capital stock from P100M to P10M and subsequently increase the same to P500M. The change in the capital structure requires a vote of the stockholders of POGEI representing at least two-thirds (2/3) of the outstanding capital stock. E. Santamaria & Company, Inc. which holds a substantial number of shares in POGEI and whose shares are necessary to effect the said change in the capital structure of POGEI, is presently under receivership. Hence, the following queries: (1) Whether the receiver of E. Santamaria can vote the shares owned by the Company in POGEI; (2) How many shares are held by the receiver of E. Santamaria & Company, Inc.'s account? In determining the effect of the appointment of a receiver on the power of the corporation to exercise corporate functions, distinction should be made between receivers appointed as incidental relief and pendente lite merely to preserve the property and not to run the business and receivers appointed for the purpose of taking over the business and running it for an indefinite time or for the purpose of winding up the business . In the former case, the corporation continues to have the power to exercise many of its functions. In the latter case, it is generally held that the corporate powers are for the most part vested exclusively in the receiver , so that the corporation cannot act in its corporate capacity independently of the receiver. (16 Fletcher Sec. 7775 citing several cases) The appointment of a general receiver for a corporation substantially terminates the powers of the corporate officers with respect to the property in possession of the receiver. A general receiver succeeds to all of the rights of the board of directors, managers and officers. But a different rule prevails where the receiver is appointed merely for the preservation of particular property pending a suit in reference to it. Obviously, where the purpose of the receivership is not a general one, or is not for a winding up or dissolution of the company, a variety of corporate acts and functions may still be performed by the corporation as long as they are not of a character or nature calculated to interfere with, hamper or impede the management and control by the receiver of the property in the receiver's hand. (16 Fletcher, sec. 7784, citing several cases) Records on file with the Commission disclosed that the receivership of E. Santamaria, Inc. is for purposes of dissolution and liquidation of the corporation. Therefore, it shall be represented by the appointed liquidating receiver in the stockholders' meeting of corporations of which it is a stockholder. The second query should be addressed to the appointed liquidating receiver of the corporation. A copy of the SEC Order on the matter of receivership of E. Santamaria, Inc. is herewith attached for ready reference. Please be advised accordingly. Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner