LOST OR DESTROYED CERTIFICATES
such form and with such sureties as may be
What if nawala ang Certificate of stocks mo?
Pwede bang mag-affidavit of loss na lang?
so, here is the procedure:
Sec. 73. Lost or destroyed certificates. - The
following procedure shall be followed for the
issuance by a corporation of new certificates of
stock in lieu of those which have been lost,
stolen or destroyed:
1. The registered owner of a certificate 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 of stock which has been lost,
stolen or destroyed and issue in lieu thereof
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
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 of stock which has
been lost, stolen or destroyed, the issuance of
the new certificate of stock in lieu thereof shall
be suspended until the final decision by the
court regarding the ownership of said certificate
of stock which has been lost, stolen or
destroyed.
Except in case of fraud, bad faith, or negligence
on the part of the corporation and its officers,
no action may be brought against any
corporation which shall have issued certificate
of stock in lieu of those lost, stolen or destroyed
pursuant to the procedure above-described. (R.
A. 201a)
Discussion: Ang certificate mo, isa lang yan.
HIndi yan per share. The corporation will only
issue you one. It is not per share. It is per
stockholder. Pwede bang magkaroon ang isang
tao with maraming certificates? Pwede. For
example, may benenta sa iyo na Certificates
from different persons na nakapangalan na sa
iyo. But initially, isa lang talaga yang i-issue sa
iyo kahit ilang shares pa yan ang gusto mo
unless nabili mo from different persons. Hindi
nila pwede i-consolidate ang shares kasi may
sariling serial number ka.
With regard sa paragraph 2, what if ayaw ko na
magantay ng 1 year, pwede ba akong
magpaissue ng certificate of stock? Pwede.
Nasa provision ang answer: 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. What is the rationale? Because
if the Certificates are not really lost, destroyed,
or stolen, the real owner of the Certificate has
a cause of action against the corporate
secretary.
This provision is really important. If the
procedure is not followed, the corporate
secretary, officers, members of the board
consenting to issue certificates in violation of
this procedure will be liable.
RULE ON UNCERTIFICATED SHARES
SECURITIES REGUALATION CODE
SECTION 43.1
SEC. 43. Uncertificated Securities. -
Notwithstanding Section 63 of the Corporation
Code of the Philippines:
43.1. A corporation whose securities are
registered pursuant to this Code or listed on a
securities Exchange may:
(a) If so resolved by its Board of Directors and
agreed by a shareholder, investor or securities
intermediary, issue shares to, or record the
transfer of some or all of its shares into the
name of said shareholders, investors or,
securities intermediary in the form of
uncertificated securities. The use of
uncertificated securities in these circumstances
shall be without prejudice to the rights of the
securities intermediary subsequently to require
the corporation to issue a certificate in respect
of any shares recorded in its name; and
(b) If so provided in its articles of incorporation
and by-laws, issue all of the shares of a
particular class in the form of uncertificated
securities and subject to a condition that
investors may not require the corporation to
issue a certificate in respect of any shares
recorded in their name.
DISCUSSION:
Hindi lahat may tangible certificate shares of
stock especially if you are listed because the is
an expedite process of transfer of shares of
stock. Kaya siya "uncertificated".
Can a uncertificated shares of stock be pledged?
Yes, but you have to look for an intermediate. In
relation to stock exchange.
43.3. Transfers of securities, including an
uncertificated securities, may be validly made
and consummated by appropriate book-entries
in the securities accounts maintained by
securities intermediaries, or in the stock and
transfer book held by the corporation or the
stock transfer agent and such bookkeeping
entries shall be binding on the parties to the
transfer. A transfer under this subsection has
the effect of the delivery of a security in bearer
form or duly indorsed in blank representing the
quantity or amount of security or right
transferred, including the unrestricted
negotiability of that security by reason of such
delivery. However, transfer of uncertificated
shares shall only be valid, so far as the
corporation is concerned, when a transfer is
recorded in the books of the corporation so as
to show the names of the parties to the transfer
and the number of shares transferred.
CORPORATE BOOKS AND RECORDS
Section 74. Books to be kept; stock transfer
agent. – Every corporation shall keep and
carefully preserve at its principal office ALL
INFORMATION RELATIVE TO THE CORPORATION
INCLUDING, BUT NOT LIMITED TO: (a) THE
ARTICLES OF INCORPORATION AND BY-LAWS
OF THE CORPORATION AND ALL THEIR
AMENDMENTS, (b) THE CURRENT OWNERSHIP
STRUCTURE AND VOTING RIGHTS OF THE
CORPORATION, INCLUDING LISTS OF
STOCKHOLDERS OR MEMBERS, GROUP
STRUCTURES, INTRA-GROUP RELATIONS,
OWNERSHIP DATA, AND BENEFICIAL
OWNERSHIP, (c) THE NAMES AND ADDRESSES
OF ALL THE MEMBERS OF THE BOARD OF
DIRECTORS OR 1 TRUSTEES AND OF THE
EXECUTIVE OFFICERS, (d) a record of all
business transactions, (e) A RECORD OF THE
RESOLUTIONS OF THE BOARD OF DIRECTORS
OR TRUSTEES AND OF THE STOCKHOLDERS OR
MEMBERS, (f) COPIES OF THE LATEST
REPORTORIAL REQUIREMENTS SUBMITTED TO
THE COMMISSION, and (g) THE minutes of all
meetings of stockholders or members, or of the
board of directors or trustees, SUCH MINUTES
in which shall be set forth in detail, AMONG
OTHERS: the time and place of holding the
meeting, how authorized, the notice given, THE
AGENDA THEREFOR, whether the meeting was
regular or special, if special its object, those
present and absent, THE VOTING AND VOTE
TABULATION PROCEDURES USED AND THE
RESULTS OF ALL VOTING DONE, THE
OPPORTUNITY GIVEN TO STOCKHOLDERS OR
MEMBERS TO ASK QUESTIONS, AS WELL AS A
RECORD OF THE QUESTIONS THEY ASKED AND
THE ANSWERS RECEIVED, and every act done or
ordered done at the meeting. Upon the
demand of any director, trustee, stockholder or
member, the time when any director, trustee,
stockholder or member entered or left the
meeting must be noted in the minutes; and on a
similar demand, the yeas and nays must be
taken on any motion or proposition, and a
record thereof carefully made. The protest of
any director, trustee, stockholder or member
on any action or proposed action must be
recorded in full on his demand.
The FORGOING records SHALL BE RATAINED
FOR SUCH PERIODS AS THE COMMISSION MAY
PRESCRIBE BY RULE AND, REGARDLESS OF THE
FORM IN WHICH THEY ARE STORED, shall be
open to inspection by any director, trustee,
stockholder or member of the corporation, IN
PERSON OR BY COUNSEL OR OTHER
REPRESENTATIVE POSSESSING AND EXHIBITING
DUE AUTHORITY, at reasonable hours on
business days and he may demand, in writing,
for a COPIES of SUCH RECORDS OR excerpts
from said records , at his expense. THE
INSPECTING OR REPRODUCING PARTY UNDER
THIS SECTION SHALL REMAIN BOUND BY
CONFIDENTIALITY UNDER PREVAILING LAWS.
IF A REQUEST FOR INSPECTION AND/OR
REPRODUCTION IS DENIED, THE AGGRIEVED
PARTY MAY REPORT THE DENIAL TO THE
COMMISSION. WITHIN FIVE (5) DAYS FROM
RECEIPT OF SUCH REPORT, THE COMMISSION
SHALL CONDUCT A SUMMARY INVESTIGATION
AND ISSUE AN ORDER EITHER DIRECTING THE
INSPECTION/REPRODUCTION REQUESTED OR
FINDING THAT THE REQUESTING PARTY, NOT
BEING A STOCKHOLDER OR MEMBER OF
RECORD, IS NOT ENTITLED TO THE RIGHT.
Any officer or agent of the corporation who
shall refuse to allow, THE INSPECTION AND/OR
REPRODUCTION OF RECORDS in accordance
with the provisions of this Code, shall be liable
to such director, trustee, stockholder or
member for damages, and in addition, shall be
guilty of an offense which shall be punishable
under Section 144 of this Code: Provided, That
if such refusal is made pursuant to a resolution
or order of the board of directors or trustees,
the liability under this section for such action
shall be imposed upon the directors or trustees
who voted for such refusal.
THE DIRECTOR, TRUSTEE, STOCKHOLDER OR
MEMBER WHOSE RIGHT TO INSPECTION
AND/OR REPRODUCTION OF RECORDS WAS
DENIED MAY FILE, BEFORE A COURT OF
COMPETENT JURISDICTION, AN ACTION TO
COMPEL INSPECTION OF CORPORATE
RECORDS SHOWING THAT, DESPITE THE LAPSE
OF FIVE (5) DAYS FROM RECEIPT OF HIS
WRITTEN REQUEST OR DEMAND AND DESPITE
HAVING BEEN ORDERED BY THE COMMISSION
TO DO SO, THE CORPORATION, OR AN OFFICER
OR AGENT THEREOF, REFUSED TO ALLOW THE
INSPECTION AND/OR REPRODUCTION OR
FAILED TO REPLY TO THE WRITTEN REQUEST
OR DEMAND OR THE ORDER OF THE
COMMISSION. THE COURT MAY, AFTER
SUMMARY PROCEEDINGS, ORDER THE
CORPORATION TO PERMIT THE INSPECTION
AND/OR REPRODUCTION OR ISSUE ANY SUCH
OTHER OR FURTHER RELIEF AS IT MAY DEEM
JUST AND PROPER.
Stock corporations must also keep a book to be
known as the “stock and transfer book”, in
which must be kept a record of all stocks in the
names of the stockholders alphabetically
arranged; the installments paid and unpaid on
all stock for which subscription has been made,
and the date of payment of any installment; a
statement of every alienation, sale or transfer
of stock made, the date thereof, and by and to
whom made; and such other entries as the by-
laws may prescribe. The stock and transfer book
shall be kept in the principal office of the
corporation or in the office of its stock transfer
agent and shall be open for inspection by any
director or stockholder of the corporation at
reasonable hours on business days.
No stock transfer agent or one engaged
principally in the business of registering
transfers of stocks in behalf of a stock
corporation shall be allowed to operate in the
Philippines unless he secures a license from the
Securities and Exchange Commission and pays a
fee as may be fixed by the Commission, which
shall be renewable annually: Provided, That a
stock corporation is not precluded from
performing or making transfer of its own stocks,
in which case all the rules and regulations
imposed on stock transfer agents, except the
payment of a license fee herein provided, shall
be applicable.; PROVIDED, FURTHER, THAT THE
COMMISSION MAY (not compulsory) REQUIRE
AN INDEPENDENT TRANSFER AGENT IN THE
CASE OF STOCK CORPORATIONS WHICH
TRANSFER AND/OR TRADE STOCKS IN
SECONDARY MARKETS.
Discussion: Saan tinatago ang corporate books
and records? Sa Principal Office. Ang mga
important information na nakalagay sa
corporate books and records can be found in
the General Information Sheet. The holding or
keeping of the corporate books is called
Corporate House Keeping. Kaya every meeting
dapat nandyan talaga ang corporate secretary
to record all the agenda and agreements in the
meeting called for the purpose.
Section 75. Right to financial statements.
Within ten (10) days from receipt of a written
request of any stockholder or member, the
corporation shall furnish to him its most recent
financial statement, IN THE FORM AND
SUBSTANCE OF THE FINANCIAL REPORTING
REQUIRED BY THE COMMISSION.
At the regular meeting of stockholders or
members, the board of directors or trustees
shall present to such stockholders or members
a financial report of the operations of the
corporation for the preceding year, which shall
include financial statements, duly signed and
certified IN ACCORDANCE WITH THIS CODE AND
THE RULES THE COMMISSION MAY PRESCRIBE.
However, if the TOTAL ASSETS OR TOTAL
LIABILITIES of the corporation ARE less than
P500,000.00 OR SUCH HIGHER AMOUNT AS
MAY BE LATER SET BY THE COMMISSION, the
financial statements may be certified under
oath by the CORPORATION’S INTERNAL
AUDITOR, AND SHALL BE ACCOMPANIED BY
THE FURTHER CERTIFICATION BY THE
CORPORATION’S OFFICERS AS REQUIRED
UNDER SECTION 180 OF THIS CODE.
Discussion: Kailangan ba ang financial
statement audited? Look at the provision.
STOCKHOLDERS AND MEMEBERS: RIGHTS OF
STOCKHOLDERS
Pre-emptive Right
A preemptive right is a privilege that may be
extended to certain shareholders of a
corporation that grants them the right to
purchase additional shares in the company prior
to shares being made available for purchase by
the general public in the event of a seasoned
offering, which is a secondary issuing of stock
shares. A preemptive right, also referred to as
preemption rights, anti-dilution provisions, or
subscription rights, is written into the contract
between the stock purchaser and the company,
although a few states grant preemptive rights
as a matter of law unless specifically negated in
a company's articles of incorporation. A
preemptive right does not, however, function
like a put option that gives a shareholder the
right to sell back their stock at a specified price.
All stockholders have pre-emptive rights, unless
there is a specific denial of this right in the
articles of incorporation or an amendment
thereto. They shall have the right to subscribe
to the capital stock of the corporation. The
Articles of Incorporation may lay down the
specific rights and powers of shareholders with
respect to the particular shares they hold, all of
which are protected by law so long as they are
not in conflict with the Corporation Code.
Discussion: When a majority shareholder of a
company, or a shareholder committing large
amounts of capital to a startup company,
purchases stock shares, he often wants to
ensure his ownership interest or voting power
as a shareholder cannot be diminished or
diluted by a secondary stock offering where the
company issues a substantial amount of new
shares with voting rights. By securing
preemptive rights at the time of his initial stock
purchase, the shareholder can make sure he is
able to prevent any seasoned offering from
diluting his ownership percentage.
The preemptive right grants the shareholder an
opportunity, but does not confer an obligation,
to buy an amount of shares prior to a seasoned
offering that is proportionate to his existing
equity ownership percentage - therefore it
operates similarly to an option, although it is
more like a right of first refusal. Here is a simple
example: assume a company's initial stock
offering consists of 100 shares, and an
individual purchases 10 of the shares, giving
him a 10 percent equity interest in the
company. At a later point in time, the company
makes a secondary (seasoned) offering of 500
additional shares. If the original shareholder
holds a preemptive right, he must be granted
the opportunity to purchase up to 50 shares of
the new offering, which maintains his 10
percent equity interest in the company.
MAJORITY STOCKHOLDERS OF RUBY
INDUSTRIAL CORPORATION, Petitioners, vs.
MIGUEL LIM, in his personal capacity as
Stockholder of Ruby Industrial Corporation and
representing the MINORITY STOCKHOLDERS
OF RUBY INDUSTRIAL CORPORATION and the
MANAGEMENT COMMITTEE OF RUBY
INDUSTRIAL CORPORATION, Respondents. [J.
Villarama, 2011]
Facts: RUBY has been experiencing severe
liquidity problem. The majority stockholders
wanted to infuse more capital into the
corporation through issuance of additional
shares. Hence, the Revised BENHAR/RUBY
Rehabilitation Plan of the majority stockholders
proposed to call for subscription of unissued
shares for P11.814M. This led to the special
meeting of RUBY’s board meeting whose
resolution authorized the issuance of the
unissued portion of the authorized capital
stocks of the corporation in the form of
common stocks. However, the minority
stockholders contended, among others, that
they were not given notice as required and
reasonable time to exercise their pre-emptive
rights. Hence, the minority stockholders wanted
to nullify the acts of the majority stockholders
in implementing the capital infusion. Pre-
emptive right refers to the right of a
stockholder of a stock corporation to subscribe
to all issues or disposition of shares of any class,
in proportion to their respective shareholdings.
SC ruled in favor of the minority stockholders.
Issue: WON the additional capital infusion is
valid? [No because the issuance of additional
shares was done in breach of trust by the
controlling stockholders. Here, the majority
sought to impose their will and, through
fraudulent means, attempt to siphon off Ruby’s
valuable assets to the great prejudice of Ruby
itself, as well as the minority stockholders and
the unsecured creditors.]
Holding: The SEC remained indifferent to the
reliefs sought by the minority stockholders,
saying that the issue of the validity of the
additional capital infusion was belatedly raised.
Even assuming the October 2, 1991 board
meeting indeed took place, the SEC did nothing
to ascertain whether indeed, as the minority
claimed: (1) the minority stockholders were not
given notice as required and reasonable time to
exercise their pre-emptive rights; and (2) the
capital infusion was not for the purpose of
rehabilitation but a mere ploy to divest the
minority stockholders of their 40.172%
shareholding and reduce it to a mere 25.25%.
Pre-emptive right under Sec. 39 of the
Corporation Code refers to the right of a
stockholder of a stock corporation to subscribe
to all issues or disposition of shares of any class,
in proportion to their respective shareholdings.
The right may be restricted or denied under the
articles of incorporation, and subject to certain
exceptions and limitations. The stockholder
must be given a reasonable time within which
to exercise their preemptive rights. Upon the
expiration of said period, any stockholder who
has not exercised such right will be deemed to
have waived it.
The validity of issuance of additional shares may
be questioned if done in breach of trust by the
controlling stockholders. Thus, even if the pre-
emptive right does not exist, either because the
issue comes within the exceptions in Section 39
or because it is denied or limited in the articles
of incorporation, an issue of shares may still be
objectionable if the directors acted in breach of
trust and their primary purpose is to perpetuate
or shift control of the corporation, or to “freeze
out” the minority interest. In this case, the
following relevant observations should have
signaled greater circumspection on the part of
the SEC -- upon the third and last remand to it
pursuant to our January 20, 1998 decision -- to
demand transparency and accountability from
the majority stockholders, in view of the illegal
assignments and objectionable features of the
Revised BENHAR/RUBY Plan, as found by the CA
and as affirmed by this Court:
There can be no gainsaying the well-established
rule in corporate practice and procedure that
the will of the majority shall govern in all
matters within the limits of the act of
incorporation and lawfully enacted by-laws not
proscribed by law. It is, however, equally true
that other stockholders are afforded the right to
intervene especially during critical periods in the
life of a corporation like reorganization, or in
this case, suspension of payments, more so,
when the majority seek to impose their will and
through fraudulent means, attempt to siphon
off Ruby’s valuable assets to the great prejudice
of Ruby itself, as well as the minority
stockholders and the unsecured creditors.
Certainly, the minority stockholders and the
unsecured creditors are given some measure of
protection by the law from the abuses and
impositions of the majority, more so in this
case, considering the give-away signs of private
respondents’ perfidy strewn all over the factual
landscape. Indeed, equity cannot deprive the
minority of a remedy against the abuses of the
majority, and the present action has been
instituted precisely for the purpose of
protecting the true and legitimate interests of
Ruby against the Majority Stockholders. On this
score, the Supreme Court, has ruled that:
“Generally speaking, the voice of the majority of
the stockholders is the law of the corporation,
but there are exceptions to this rule. There
must necessarily be a limit upon the power of
the majority. Without such a limit the will of the
majority will be absolute and irresistible and
might easily degenerate into absolute tyranny.
x x x”[67] (Additional emphasis supplied.)
Lamentably, the SEC refused to heed the plea of
the minority stockholders and MANCOM for the
SEC to order RUBY to commence liquidation
proceedings, which is allowed under Sec. 4-9 of
the Rules on Corporate Recovery. Under the
circumstances, liquidation was the only hope of
the minority stockholders for effecting an
orderly and equitable settlement of RUBY’s
obligations, and compelling the majority
stockholders to account for all funds, properties
and documents in their possession, and make
full disclosure on the nullified credit
assignments.
Discussion: Merong breach of trust. It was done
maliciously. Dito there is no restriction of pre-
emptive right sa AOI.
DATU TAGORANAO BENITO, petitioner,
vs.
SECURITIES AND EXCHANGE COMMISSION and
JAMIATUL PHILIPPINE-AL ISLAMIA,
INC., respondents.
Facts: On February 6, 1959, the Articles of
Incorporation of respondent Jamiatul
Philippine-Al Islamia, Inc. (originally Kamilol
Islam Institute, Inc.) were filed with the
Securities and Exchange Commission (SEC) and
were approved on December 14, 1962. The
corporation had an authorized capital stock of
P200,000.00 divided into 20,000 shares at a par
value of P10.00 each. Of the authorized capital
stock, 8,058 shares worth P80,580.00 were
subscribed and fully paid for. Herein petitioner
Datu Tagoranao Benito subscribed to 460
shares worth P4,600.00.
On October 28, 1975, the respondent
corporation filed a certificate of increase of its
capital stock from P200,000.00 to
P1,000,000.00. It was shown in said certificate
that P191,560.00 worth of shares were
represented in the stockholders' meeting held
on November 25, 1975 at which time the
increase was approved. Thus, P110,980.00
worth of shares were subsequently issued by
the corporation from the unissued portion of
the authorized capital stock of P200,000.00. Of
the increased capital stock of P1,000,000.00,
P160,000.00 worth of shares were subscribed
by Mrs. Fatima A. Ramos, Mrs. Tarhata A.
Lucman and Mrs. Moki-in Alonto.
On November 18, 1976, petitioner Datu
Tagoranao filed with respondent Securities and
Exchange Commission a petition alleging that
the additional issue (worth P110,980.00) of
previously subscribed shares of the corporation
was made in violation of his pre-emptive right
to said additional issue and that the increase in
the authorized capital stock of the corporation
from P200,000.00 to P1,000,000.00 was illegal
considering that the stockholders of record
were not notified of the meeting wherein the
proposed increase was in the agenda. Petitioner
prayed that the additional issue of shares of
previously authorized capital stock as well as
the shares issued from the increase in capital
stock of respondent corporation be cancelled;
that the secretary of respondent corporation be
ordered to register the 2,540 shares acquired by
him (petitioner) from Domocao Alonto and
Moki-in Alonto; and that the corporation be
ordered to render an accounting of funds to the
stockholders.
In their answer, respondents denied the
material allegations of the petition and, by way
of special defense, claimed that petitioner has
no cause of action and that the stock
certificates covering the shares alleged to have
been sold to petitioner were only given to him
as collateral for the loan of Domocao Alonto
and Moki-in Alonto.
Issue: W/N (1) the issuance of the 11,098 shares
without the consent of the stockholders or of
the Board of Directors, and in the absence of
consideration, is null and void; (2) the increase
in the authorized capital stock from
P200,000.00 to P1,000,000.00 without the
consent or express waiver of the stockholders,
is null and void
Holding: As aptly stated by the Securities and
Exchange Commission in its decision:
xxx xxx xxx
... the questioned issuance of the unsubscribed
portion of the capital stock worth P110,980.00
is ' not invalid even if assuming that it was made
without notice to the stockholders as claimed
by petitioner. The power to issue shares of
stocks in a corporation is lodged in the board of
directors and no stockholders' meeting is
necessary to consider it because additional
issuance of shares of stocks does not need
approval of the stockholders. The by-laws of the
corporation itself states that 'the Board of
Trustees shall, in accordance with law, provide
for the issue and transfer of shares of stock of
the Institute and shall prescribe the form of the
certificate of stock of the Institute. (Art. V, Sec.
1).
Petitioner bewails the fact that in view of the
lack of notice to him of such subsequent
issuance, he was not able to exercise his right of
pre-emption over the unissued shares.
However, the general rule is that pre-emptive
right is recognized only with respect to new
issue of shares, and not with respect to
additional issues of originally authorized
shares. This is on the theory that when a
corporation at its inception offers its first
shares, it is presumed to have offered all of
those which it is authorized to issue. An original
subscriber is deemed to have taken his shares
knowing that they form a definite proportionate
part of the whole number of authorized shares.
When the shares left unsubscribed are later re-
offered, he cannot therefore claim a dilution of
interest. (Campos and Lopez-Campos Selected
Notes and Cases on Corporation Law, p. 855,
citing Yasik V. Wachtel 25 Del. Ch. 247,17A. 2d
308 (1941). (pp. 33-34, Rollo)

Discussion: Let's say your existing capital stock

is 1 Million. Tapos may subscribed and fully-
paid kang 500. So may certificate of stock na.
Now, gusto nilang mag-increase ng
capitalization, let's say 5 Million. So all in all,
magkano i-increase nila? 4. So inincrease nila
na 4, ang gagawin nila, isususcribe nila ang
remaining. 500 and a portion of 5 Million, let's
say 2 Million.