Mr. Nestor M. Santos

March 29, 1990 Mr. Nestor M. Santos 5th Flr. Producers Bank Bldg. 371 Senator Gil J. Puyat Ave. Makati, Metro Manila Dear Mr. Santos: This refers to your letter dated January 26, 1990 requesting opinion on the queries posed therein: It appears that you are a holder of a stock certificate for one qualifying share worth P100.00 which was lost and despite exerted effort can no longer be retrieved. The Corporate Secretary is insisting that replacement will only be issued upon compliance with Section 73 of the Corporation Code notwithstanding your plea that the expense of publication is more costly than the value of the lost certificate. Hence, these queries: 1. Whether or not Section 73 of the Code can be dispensed with in your particular case. 2. What would be the immediate remedy for a lost stock certificate? 3. Whether the Commission can resolve the impasse between you and the corporate secretary. Quoted hereunder is Section 73 of the Corporation Code of the Philippines for ready reference. " Lost or destroyed certificates . The following procedure shall be followed for the issuance by a corporation of new certificate(s) of stock in lieu of those which have been lost, stolen or destroyed: 1. The registered owner of certificate(s) of stock in a corporation or his legal representative shall file with the corporation an affidavit in triplicate setting forth, if possible, the circumstances as to how the certificate was lost, stolen or destroyed, the number of shares represented by such certificate, the serial number of the certificate and the name of the corporation which issued the same. He shall also submit such other information and evidence which he may deem necessary; 2. After verifying the affidavit and other information and evidence with the books of the corporation, said corporation shall publish a notice in a newspaper of general circulation published in the place where the corporation has its principal office, once a week for three (3) consecutive weeks at the expense of the registered owner of the certificate of stock which has been lost, stolen or destroyed. The notice shall state the name of said corporation, the name of the registered owner and the serial number of said certificate, and the number of shares represented by such certificate and that after the expiration of one (1) year from the date of the last publication, if no contest has been presented to said corporation regarding said certificate of stock, the right to make such contest shall be barred and said corporation shall cancel in its books the certificate(s) of stock which have been lost, stolen or destroyed and issue in lieu thereof a new certificate of stock, unless the registered owner files a bond or other security in lieu thereof as may be required, effective for a period of one (1) year, for such amount and in such form and with such sureties as may be satisfactory to the board of directors, in which case a new certificate may be issued even before the expiration of the one (1) year period provided herein: Provided, That if a contest has been presented to said corporation or if an action is pending in court regarding the ownership of said certificate(s) of stock in lieu thereof shall be suspended until the final decision of the court regarding the ownership of said certificate(s) of stock which have been lost, stolen or destroyed." The foregoing procedure should be complied with prior to the replacement of the lost certificate. The fact that the lost certificate covered only share is not an excuse. The above quoted provision does not make any qualification. When the language of the law is clear and unequivocal, the law must be taken to mean exactly what it says. (Statutory Construction by Martin). Moreover, the conditions prescribed are for the protection of the corporation, which cannot be made liable to any claimant of the shares until the procedure provided for in the Code has been complied with. (Corporation Code, Comments, Notes and Selected Cases by Campos and Lopez-Campos, page 765) As to your second query, Section 73 likewise provides the answer, which reads: "...,unless the registered owner files a bond or other security in lieu thereof as may be required, running for a period of one (1) year for a sum and in such form and with such sureties as may be satisfactory to the board of directors, in which case a new certificate may be issued even before the expiration of the one (1) year period provided herein: ...." Thus, even before the expiration of one year from the last publication thereof a new certificate may be issued in lieu of the lost one provided you file a bond or other security acceptable to the board of directors. With regards to your third query, the Code has specifically laid down the procedure and the Commission's role is to ensure its compliance. It is therefore advised that you observe the same. Very truly yours, (SGD.) RODOLFO L. SAMARISTA Associate Commissioner