Atty. Luciano S. Borja

September 17, 1990 Atty. Luciano S. Borja 6/F SEDCCO Bldg. Rada Cor. Legaspi Sts. Makati, Metro Manila S i r : This refers to your letter dated May 24, 1990 inquiring whether a shareholder in a stock corporation who subscribed to 50,000 shares with 25% paid-up subscription leaving an unpaid subscription of 37,500 shares, can retain 5,000 shares and assign the remaining shares, paid and unpaid, to the following: X 1 share Y 18,750 shares Z 18,749 shares The pertinent provision of the Corporation Code provides: "SECTION 64. Issuance of Stock Certificates . No certificate of stock shall be issued to a subscriber until the full amount of his subscription together with interest and expenses (in case of delinquent shares),if any is due, has been paid." The above-provision implicitly sets forth the doctrine that a subscription is one, entire and indivisible contract. It cannot be divided into portions so that the stockholder shall not be entitled to a certificate of stock until he has remitted the full payment of his subscription together with the interest and expenses if any is due. ( SEC letter dated January 6, 1983 addressed to Bay Sunset Tours & Travel Corporation ) Accordingly, if the stockholder has not paid the full amount of his subscription, he cannot transfer part of it in view of the indivisible nature of subscription contract. It is only upon full payment of the whole subscription that a stockholder can transfer the same to several transferees. However, the entire subscription although not yet fully paid, may be transferred to a single transferee . It is necessary, however, to secure the consent of the corporation since the transfer of subscription right contemplates a novation of contract which under Article 1293 of the Civil Code of the Philippines, cannot be made without the consent of the creditor. In view of the foregoing, your query is answered in the negative. (SGD.) ROSARIO N. LOPEZ Chairman