November 12, 1990

Asset Marketing Corporation

151 Paseo de Roxas, Makati
Metro Manila
Attention : Mr. H. R. Cabilao
Treasurer

Gentlemen :

This refers to your letter dated October 19, 1990 seeking opinion relative to
the plan of Asset Marketing Corporation to declare cash dividends to its
stockholders during the interim period out of the unrestricted retained earnings of
the company as of July 31, 1990. llcd

As stated, the corporation proposes to declare P4,370,000.00 as cash

dividends out of its retained earnings as of July 31, 1990 amounting to P6,398,479,
broken down as follows:
Balance per audited
financial statement
as of December 31, 1989 P2,852,682.00
Accumulated depreciation
on appraisal increment
charged to operation
as of July 31, 1990 1,636,781.00
Net Income from operation
for the seven months ended
July 31, 1990 1,909,016.00
——————
TOTAL P6,398,479.00
===========
You further stated that judging from its performance in the recent years, the
company envisions that it will continue to be profitable as the first semester of
1990 and no losses are expected at all.

Anent thereto, the Corporation Code provides in part:

"The board of directors of a stock corporation may declare dividends

out of the unrestricted retained earnings which shall be payable in cash, in
property, or in stock to all stockholders on the basis of outstanding stock
held by them. . . .." (Section 43, Corporation Code)

Copyright 1994-2018 CD Technologies Asia, Inc. Securities and Exchange Commission 2018 First Release 1
 "Retained earnings represent the balance of net profits, income, gains and
losses of a corporation from the time of its incorporation after deducting
distribution therefrom to shareholders and transfers therefrom to capital stock or
capital surplus or capital surplus accounts. For all practical purposes, the term has
the same meaning as earned surplus." (Ballantine & Sterling, Vol. 1 (1982 ed.), et
141.26 (3)) The board of directors, may, in its discretion, appropriate retained
earnings or portions thereof for designated purposes, in which case they will not be
available for dividends. These appropriations may be for various purposes:
expansion, possible future loss and other contingencies. Restrictions may also be
imposed by law. All these constitute restrictions on retained earnings which render
the amount represented by such appropriations unavailable for dividends. The
retained earnings which are not so appropriated are what are referred to as
unrestricted retained earnings, the only fund out of which dividends can be legally
paid. (Campos, Campos, The Corporation Code "Comments, Notes and Selected
Cases", 1981 ed., p. 773)

While it is a normal corporate practice to declare dividends after the end of

the fiscal year when the company could definitely determine whether it made
profits and the amount thereof, the Commission, on several occasions, has ruled
that a corporation may declare dividends even before the end of its fiscal year,
provided it has sufficient earned surplus for the purpose which will not be
impaired by losses, whether expected or not, during the remaining period of the
fiscal year.

Thus, considering that the corporation allegedly has the retained earnings to
cover the dividend declaration, the Commission interposes no objection to the
above proposal, subject to the provisions of Section 43 of the Corporation Code,
and subject further to the following conditions:

1. That the amount of dividends involved would not be impaired

by losses during the remaining period of 1990;

2. That projected income statement of the company for the

remaining period of the year as well as the basis and
assumption used therein shall be submitted for the valuation of
this Commission, showing that the Corporation will not sustain
losses that would impair the existing earnings to be declared as
dividends; and

3. That should the company sustain losses during the year, cash
distributed to the stockholders of records must be
correspondingly refunded to the Corporation. LibLex

Please be advised accordingly.

Copyright 1994-2018 CD Technologies Asia, Inc. Securities and Exchange Commission 2018 First Release 2
 (SGD.) RODOLFO L. SAMARISTA
Associate Commissioner

Copyright 1994-2018 CD Technologies Asia, Inc. Securities and Exchange Commission 2018 First Release 3