Mr. Efren M. Javier

March 20, 1980 Mr. Efren M. Javier 1951 Taft Avenue Pasay City, Metro-Manila Dear Mr. Javier: This has reference to your letter-query dated May 3, 1979 requesting opinion of this Commission on the legality and validity of the resolution adopted by the stockholders representing the entire subscribed capital stock of the corporation which was immediately implemented by its Board of Directors by way of another resolution, which reads as follows: RESOLVED, That the corporation waive the collection of any interest on the unpaid subscriptions of each of the subscribers as appearing in the books of the corporation provided that said subscriptions payable be actually paid in full by them within five (5) years from the date of subscription, failing which the interest provided in Sec. 87 of the Corporation Law shall be payable thereon, provided, however that if the Board of Directors shall make a call on such unpaid subscriptions at any time within the said 5-years period, non-compliance with the call shall be penalized with a payment of the interest provided under Sec. 37 from the date mentioned in the call and until fully paid." (Stockholders' Resolution.) "RESOLVED, That the stockholders' resolution on even date in respect to the waiver of collection of interest on the unpaid subscriptions under certain conditions be noted, approved and implemented by the Board." (Board Resolution) However, there is no provision on the By-Laws of the corporation relative to such waiver of interest on the unpaid subscriptions. In this connection, pleased note that Section 36 of the Corporation Law, as amended, expressly provides that: "SECTION 36. Subscribers for stock shall pay to the corporation quarterly on all unpaid subscriptions interest from the date of subscription, at the rate of six percent per annum unless otherwise provided in the by-laws. ..." It is clear from the aforequoted provision of law that unpaid subscriptions to the capital stock of a corporation are required to pay interest from the date of subscription up to the time of payment at the rate of six per centum, unless otherwise specified in the by-laws. Necessarily, it follows that to be exempted from the payment of interest, the same must be explicitly embodied in the by-laws of a corporation. A mere resolution to that effect would not satisfy the mandate of the law. Relative to your question, what should therefore be done is to have the stockholders representing at least a majority of the subscribed capital stock approve and amend the by-laws so as to include a provision exempting the unpaid subscriptions from the payment of interest retroactive from the date of the subscriptions premised on the conditions stated in the stockholders' resolution. The Commission has no objection to the corporation's waiving the right to collect interest on the unpaid subscriptions, if it so desires, because it is a right which, it is believed, could be waived. (Cf. SEC Opinion dated March 11, 1969 ,SEC Folio, p. 566). LexLib Please be advised accordingly. Very truly yours, For the Chairman: (SGD.) ROSARIO N. LOPEZ Director Corporate and Legal Department