Mr. Piorello C. Rimando

December 18, 1989 Mr. Piorello C. Rimando Kaiwi Sales & Industrial Corporation 1131 Del Monte, Quezon City Sir : This refers to your letter dated May 5, 1989, inquiring on whether real properties can be used as payment to the proposed increase of authorized capital stock of Kaiwi Sales & Industrial Corporation, and if so, the required documents to be submitted. The pertinent provision of the Corporation Code provides: "SECTION 62. Consideration for stocks . ....Consideration for the issuance of stock may be any or a combination of any two or more of the following: xxx xxx xxx 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; cdlex ...".(emphasis supplied) Real properties may therefore constitute valid consideration provided the said properties are necessary or convenient in carrying out the corporate purposes for which the corporation was organized. Enumerated hereunder are the requirements for increase of capital stock where the paid-up capital is in the form of real property: 1. Certificate of Increase of Capital Stock signed by at least a majority of the Directors of the Corporation and countersigned by the Chairman and the Secretary of the stockholders' meeting, setting forth: a) The amount of the increase of capital stock; b) The amount of capital stock on the increase actually subscribed, the names, nationalities and residences of the persons subscribing, the amount of capital stock subscribed by each, and the amount paid by each on his subscription; c) Any bonded indebtedness that has been incurred, created, or increased; d) The actual indebtedness of the corporation on the day of the meeting; e) The amount of stock represented at the meeting; and f) The vote authorizing the increase of the capital stock. 2. List of stockholders of record, as of the date of the stockholders' meeting approving the increase of capital stock certified correct by the Corporate Secretary, showing their subscribed and paid-up capital. 3. Treasurer's affidavit attesting that out of the increase in authorized capital stock, at least twenty five percent (25%) has been subscribed and of the amount subscribed, at least twenty five percent (25%) has been paid in the form of real property; 4. Certified true copy of the Transfer Certificate of Title (TCT); 5. Xerox copies of tax declaration sheet and official receipt on real property tax (current year); 6. "Appraisal report" on the property if the transfer value exceeds the market value of the property per tax declaration sheet. Conversely, if the transfer value is less than or equal to the market value per tax declaration sheet, the appraisal report is not necessary; 7. Deed of Assignment executed by the owner assigning his property in favor of the corporation in payment of his stock subscription on the capital increase. This Deed of Assignment must be presented to the Register of Deeds for primary entry; 8. Written Waiver of the Pre-Emptive Rights of stockholders not subscribing to the increase of capital stock, if any, or a board resolution giving preferential rights to non-subscribing stockholders to subscribe to the unissued shares; 9. Request for exemption from the registration requirements under the Revised Securities Act for subscriptions of non-stockholders of record; 10. Amended articles of incorporation to reflect the increase of authorized capital stock; and 11. Directors' Certificate certifying that the amendment to the articles of incorporation has been approved by the required vote of the stockholders and directors. Please be guided accordingly. Very truly yours, (SGD.) RODOLFO L. SAMARISTA Associate Commissioner