Mr. Romeo D. Laig

October 1, 1999 Mr. Romeo D. Laig Alabang Country Club, Inc. Ayala Alabang S i r : This refers to your letter dated September 14, 1999 requesting opinion on the query posed therein relative to the " treasury shares " of Alabang Country Club Inc. As stated, some stockholders of the Club have assigned the privileges of their shares thru assignment of rights. This is allegedly a normal practice in the Club and assignments are processed officially by the Club's corporate office. Fees are charged based on schedule. Rentals are likewise paid to the assignors directly by the assignees. Your query is, whether the Club can do the same to the " treasury shares " held by the Club. The Corporation Code provides: "SECTION 137. Outstanding capital stock defined . The term "outstanding capital stock", as used in this Code, means the total shares of stock issued to subscribers or stockholders, whether or not fully or not fully or partially paid, (as long as there is a binding subscription agreement) except treasury shares ." (Emphasis supplied) Inasmuch as treasury shares are not considered as outstanding capital stock, they are not entitled to any right or privilege of a stockholder for as long as they remain in treasury. The reason is that when a corporation re-acquires it own stock, it does not become a subscriber thereof. The only right which a corporation has over treasury shares is to reissue the same for valuable consideration pursuant to the following provision of the Corporation Code. "SECTION 9. Treasury shares . Treasury shares are shares of stock which have been issued and fully paid for, but subsequently reacquired by the issuing corporation by purchase, redemption, donation or through some other lawful means. Such shares may again be disposed of for a reasonable price fixed by the board of directors ." (Emphasis supplied) Your query is therefore answered in the negative. LibLex Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner