Mr. Romeo V. Alejandro

June 29, 1999 Mr. Romeo V. Alejandro National Power Corporation Internal Audit Department Cor. Quezon Avenue & Agham Road Diliman, Quezon City S i r : This refers to your letter dated June 18, 1999 requesting opinion on the alleged inclusion in the Interim Balance Sheet of AER Construction and Development Co. Inc. (AER) as of June 30, 1998 of the increase in the authorized capital stock of the corporation which was approved by this Commission only on January 7, 1999. cdll The Corporation Code provides: "SECTION 38. Power to increase or decrease capital stock ;... ...From and after the approval by the Securities and Exchange Commission and the issuance by the Commission of its certificate of filing, the capital stock shall stand increased or decreased ...." (Emphasis supplied) It is clear from the above provision that an increase in the authorized capital stock of a corporation shall be effective only upon the approval and issuance of its certificate of filing by the Commission. Accordingly, the increase in the authorized capital stock of AER mentioned in your letter can only be reflected in its financial statements effective January 7, 1999, the date of the approval by the Commission of the increase of authorized capital stock. Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner