Mr. Rolando Padilla, M.D.

July 11, 1996 Mr. Rolando Padilla, M.D. Iloilo Golf and Country Club, Inc. Rm. 301 TRB Bldg. J.M. Basa-Mapa Sts.,Iloilo City S i r : This refers to your letter dated July 3, 1996 requesting clarification on whether or not the shares of stock covering the proposed increase of capital stock of Iloilo Golf and Country Club, Inc. with a par value of P1,000.00 per share can be sold at P30,000.00 per share based an a pro rata share of the total estimated cost of the development and improvement program of the Club. prcd The pertinent provision of the Corporation Code provides: "SECTION 62. Consideration of stocks . Stocks shall not be issued for a consideration less than the par or issued price thereof. ..." (Emphasis supplied) It is quiet clear from the above provision that the corporation may issue shares of stock at any price ,provided it is not less than par .The par value does not necessarily reflect the present true value of shares of stock inasmuch as the book/actual market value thereof fluctuates. The primary function of the par value is to fix a minimum price of the shares, or original issue price of the share. (Ballantine on Corp. Sec. 200) Thus, it was held that "An agreement by subscribers to pay more than the par for their stock is not ultra vires as an attempt to increase the par value of the stock, but is valid and enforceable according to its terms." (11 Fletcher 5183, citing Grove v. Economic Life Ins. Co. (Del. Ch) 80 A809; Ergen v. Smith, 113 Iowa 25, 84 NW 954) Conformably to this corporate principle, 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, the Club may grant to its stockholders an option to subscribe to the proposed increase of capital stock at different consideration higher than the par value as may be fixed by the board of directors. However ,it has to be emphasized that where the corporation intends to have two different par value of shares, P1,000.00 for the original authorized capital stock and P30,000.00 for the proposed capital stock, the difference in par requires an amendment of the articles of incorporation. Take note further that in the event the shares will be sold to more than twenty (20) stockholders, the same would require registration under the Revised Securities Act, unless exempted pursuant to Section 6 (b) of said Act. Likewise, the sale of contracts involving the sale of proprietary rights in golf courses and clubs is subject to the "SEC Rules and Registration and Sale of Proprietary Rights in Golf Courses and Clubs, Resort Facilities and Similar Projects". Very truly yours, (SGD.) PERFECTO R. YASAY, JR. Acting Chairman