Mr. Ernesto S. Buan

May 5, 1983 Mr. Ernesto S. Buan M.H. del Pilar Street Nagcarlan, Laguna Sir : This has reference to your letter dated January 3, 1983, requesting the opinion of this Commission on the queries posed therein. llcd It appears therein that you are a stockholder of Philippine corporation that issued share of stock with stated or par value per share. It appears further that during the calendar year 1980, 1981 and 1982, the corporation incurred tremendous losses in its operation which losses brought down the value of the stock to zero value per share. You now posed the following queries: 1. In the forthcoming annual stockholders' meeting of the Corporation where the President will report on the result of operation for the year 1982, how will a quorum be determined a) Will it be, as usual, by the number of shares and proxies held by each stockholder present even if all the shares of stock have no value as of the balance sheet date December 31, 1982, or b) Can it be by head count of all the stockholders present and of record as of a given date, it appearing that, a zero value stockholders' equity per share, the number of shares held losses its effectiveness as a material and controlling force in the affair of the Corporation and in the determination of a quorum? In reply thereto, please be informed that Sec. 47 of the Corporation Code provides, and we quote, SECTION 47. Contents of by-laws . Subject to the provisions of the Constitution, this Code, other special laws, and the articles of incorporation; private corporation may provide in its by-laws for: xxx xxx xxx "3. The required quorum in meetings of stockholders or members and the manner of voting therein." Sec. 5 of Art. II of your by-laws provides thus: "SECTION 5, ARTICLE II. Three or more stockholders representing more than 1/2 the total subscribed stock shall constitute a quorum for the transaction of business at any stockholders' meeting properly called, except as otherwise provided by law." (Emphasis supplied) Furthermore, this Commission, in a previous opinion is held that: "The number of shares necessary to constitute a majority as fixed in the by-laws or in the Corporation Law (now Code) is based on the total subscription of the stockholders and not on the amount paid by him on account thereof. This is so for the reason that the entire subscription of a stockholder represents his holding in the corporation for which he thereby becomes indebted to the corporation for the full amount of the subscription and pays interest on any unpaid portion thereof." ( Ltr. to Mrs. G. J. Abesamis dtd. June 16, 1977 ) Please be advised accordingly. Very truly yours, (SGD.) JESUS J. VALDES Associate Commissioner