Re: Declaration of Cash Dividends

March 13, 2019SEC-OGC OPINION NO. 05-19RE: DECLARATION OF CASH DIVIDENDSSanno Philippines Manufacturing CorporationSpecial Export Processing ZoneBrgy. Jalavera, Gen. TriasCavite, PhilippinesAttention: Pres. Yoshimitsu SakumaGentlemen :This refers to your letter dated 06 January 2015, requesting confirmation that your company Sanno Philippines Manufacturing Corporation ("SPMC") can declare cash dividends from the Retained Earnings adjusted after the Reconciliation of Retained Earnings Available for Dividend Declaration taking into account unrealized foreign exchange gains and losses, as provided by SEC Memorandum Circular No. 11, Series of 2008 (the "Circular"). 1 You mentioned in your letter that in 2007, SPMC adopted Philippine Accounting Standards 21 ("PAS 21") — Effects of Changes in Foreign Exchange Rates in which it changed its functional currency from Philippine Peso (Php) to United States Dollars (USD). Consequently, the unrealized foreign exchange loss and net unrealized foreign exchange gains arising from such action caused balance deficit to the retained earnings of the corporation. You further stated that SPMC is planning to declare cash dividends but due to the deficit, it plans to treat the aforesaid items causing the...