Atty. Venustiano Roxas

November 3, 1981 Atty. Venustiano Roxas Philippine Raisers Marketing, Inc. Pandi, Bulacan Dear Atty. Roxas: This is in connection with your letter-query dated July 28, 1981 requesting opinion on whether or not it is legally feasible for the Philippine Raisers Marketing, Inc. to issue additional fully-paid shares of stock worth P110,000.00 to one of its directors/stockholders who will not pay in cash but only in kind by mortgaging his real estate situated in the province of Laguna worth about P3,000,000.00 more or less as collateral for a contemplated loan of the corporation in the amount of P2,500,000.00. You are also asking whether such "accommodation" or "service" in procuring a loan for it may lawfully be considered as valid consideration for the issuance of shares of stock, considering that it is the only way by which the corporation can possibly achieve its plans to fully operate the business and no stockholders would object to such an arrangement because they are also aware of the sacrifice and risks that said director will assume for allowing the use of one of his properties as collateral for the loan of the corporation. The pertinent provision of the Corporation Code provides the following consideration for the issuance of stocks: "SECTION 62. Consideration for Stocks . Stocks shall not be issued for a consideration for less than the par or issued price thereof. Consideration for the issuance of stock may be any or combination of any two or more of the following: 1. Actual cash paid to the corporation; cdll 2. Property, tangible or intangible, actually received by the corporation and necessary or convenient for its use and lawful purposes at a fair valuation equal to the par or issued value of the stock issued; 3. Labor performed for or services actually rendered to the corporation; 4. Previously incurred indebtedness by the corporation; 5. Amounts transferred from unrestricted retained earnings to stated capital; and 6. Outstanding shares exchanged for stocks in the event of reclassification or conversion. It appears from your letter-query that the consideration for the issuance of shares of stock in favor of one of its directors/stockholders is the use of the latter's real properties for loan purposes of the corporation. As the said consideration does not fall under any of the above enumerations, we regret to inform you that our answer to your query is in the negative. Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Associate Commissioner