Mr. S. U. Salvador, Jr.

April 15, 1991 Mr. S. U. Salvador, Jr. SGV & Co. P.O. Box 589 S i r : This refers to your letter of March 8, 1991 requesting confirmation that the treatment as additional paid-in surplus of the excess of total obligations converted to equity over the par value of shares issued in favor of creditors is in conformity with SEC existing policy. Paragraph 2 of the Statement of Financial Accounting Standards No. 18 provides that when shares with par value are sold, the proceeds should be credited to the capital stock accounts to the extent of the par value of the shares with any excess being reflected as additional paid-in capital . Accordingly, any excess corporate liability converted to equity over the par value of shares issued in favor of creditors are properly classified as additional paid-in capital. LibLex Very truly yours, (SGD.) RODOLFO L. SAMARISTA Associate Commissioner