June 9, 1992

RULES REGULATING THE ISSUANCE OF PROPERTY DIVIDENDS

Pursuant to the authority vested in this Commission as provided for under

Section 143 of the Corporation Code of the Philippines and in order to protect the
interest of stockholders and creditors in stock corporations, the following rules
regulating the issuance of property dividends are hereby promulgated. LexLib

SECTION 1. All corporations that have declared and/or issued property

dividends in accordance with the provisions of the Corporation Code of the Philippines
shall send notice of such dividends within thirty (30) days from the date of the
declaration thereof.
The notice of the declaration and/or issuance of the property dividends shall
show, in scheduled form, the nature of property declared as dividends, their individual
book values and market values, if any, and the manner in which such property are
distributed to the stockholders.
SECTION 2. The issuance of the property dividends shall conform with the
following conditions:
a) That the property to be distributed as dividends shall consist only of
property which are no longer intended to be used in the operation of
the business of the corporation and which are practicable to be
distributed as dividends;
b) That the issuance of the property dividends shall not result to an
inequitable distribution of property to the stockholders in terms of
the book values and market values, if any, of the property distributed;
and
c) That when the distribution of dividends is made where some
stockholders will receive cash and the others will receive property, the
prevailing market value of the property, as agreed upon by the
stockholders shall be considered in determining the equitable
distribution of the total dividends.
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SECTION 3. No property dividends in the form of land shall be issued to a

foreign individual or foreign-owned corporation which will violate the provision of the
constitution of the Philippines on Land ownership.
SECTION 4. No actual distribution of property dividends shall be made
unless approved by the Commission.
SECTION 5. The issuance of property dividend shall be supported by the
following:
a) board resolution approving the issuance of property dividend.
b) List of stockholders (certi ed by the Corporate Secretary) as of
record date showing the corresponding subscription of each
stockholder and the allocation of the proposed dividend.
c) Audited nancial statements as of the scal year prior to the
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 declaration of the dividend.
d) Detailed schedule of the property account, (certi ed by the company
accountant), which shall include the property to be distributed as
dividend, showing the cost and the book value of the property as of
the date coinciding with the aforecited audited financial statements.
e) When the distribution of dividend involves property and cash, such
that some stockholders will receive property and the others will
receive cash, the detailed schedule of the property account should
also include the prevailing market value of property as agreed upon by
the stockholders.
SECTION 6. Any violation of these rules shall be penalized by a ne of 1/10 of
1 per centum of the amount declared as dividend but not less than Two Thousand
(P2,000.00) Pesos and such other sanctions as provided for under Section 144 of the
Corporation Code of the Philippines. cdasia

SECTION 7. These rules shall take effect fteen (15) days after their
publication in two (2) newspapers of general circulation in the Philippines.

(SGD.) ROSARIO N. LOPEZ

Chairman

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