Mr. David PB Dulanas

February 18, 1980 Mr. David PB Dulanas Rural Bank of Katipunan (Zamboanga del Norte) Inc. Katipunan, Zamboanga del Norte Dear Mr. Dulanas: This is to acknowledge receipt of your letter inquiry dated November 26, 1979 relative to the appropriate basis for the distribution of dividends of a corporation. llcd This Commission has consistently adhered to the corporate principle that the distribution of dividends is based on the subscribed capital stock of the corporation (irrespective of whether fully paid or not) as the unpaid subscription thereon, if any, constitutes part of the assets of the corporation, unless all of the stockholders unanimously agree that the distribution of dividends be made only oh the basis of the paid-up stock or any other lawful mode. For your ready reference and guidance, this Office reiterates its ruling, as follows: "The participation of each stockholder on the profits is based on his total subscription and not on the amount paid by him on account thereof. This is for the reason that his entire subscription represents his holding in the corporation for which he pays interest on any unpaid portion and under Section 50 of the Corporation Law, as amended, all his shares are entitled to vote or representation in any stockholders meeting or for any corporate purpose, such as the distribution of dividends, unless delinquent in the payment of the unpaid subscription. This rule, however, is not absolute and is subject to the rule of consent. Thus, provided that the unanimous consent of the stockholders has been obtained, the distribution of dividends on the basis of paid-up stock or any mode which itself is lawful may be adopted by the Corporation." ( SEC Opinion, June 8, 1972 , CF 2 Fletcher, Cyc. of Corps. sec. 5352 and 5376). Please be advised accordingly. LexLib Very truly yours, (SGD.) ROSARIO N. LOPEZ Director Corporate and Legal Department