Atty. Vicente Aujero

June 21, 1989 Atty. Vicente Aujero Leyte Integrated Port Services Port Area, Tacloban City Sir : This refers to your letter dated May 18, 1989, requesting for opinion of the Commission on the query posed therein. LexLib It appears that "A" subscribed to 10 shares of the capital stock of "B" corporation at P100.00 per value. "A" initially paid P200.00 thereof. Subsequently, a call was made on the 25% of the unpaid subscription (25% of P800.00) to be paid on May 10, 1989. "A" failed to pay and so his subscription in accordance with the call was declared delinquent. Consequently, the Board declared the delinquent shares to be sold at public auction. Your query is: Will it be the whole 10 shares of "A" that will be sold at public auction or will it be only 2 shares (equivalent to 25% of the balance unpaid) that will be sold to public auction? The second paragraph of Section 67 of the Corporation Code is quoted hereunder: "...Payment of any unpaid subscription or any percentage thereto, together with the interest accrued if any shall be made on the date specified in the contract of subscription, or on the date stated in the call made by the board. Failure to pay on such a date shall render the entire balance due and payable and shall make the stockholder liable for interest at the legal rate on such balance, unless a different ratio of interest is provided in the by-laws, computed from such date until full payment. If within thirty (30) days from the said date no payment is made, all stock covered by said subscription shall thereupon become delinquent and shall be subject to sale as hereinafter provided ,unless the board of directors orders otherwise." (emphasis supplied) It is clear from the aforecited provision that the entire subscription shall become delinquent and subject to sale at public auction. Thus, the Commission previously opined that "partial payments shall be deemed forfeited and the whole subscription declared delinquent upon failure to pay on the date fixed in the contract or on the date fixed by the Board on call of directors." ( Ltr. to Atty. Adolfo Martinez, dated September 3, 1982, citing Ltr. to Mr. Gregorio Ponce, dated February 23, 1982 ) The reason for the above is because of the doctrine that a subscription is one, entire and indivisible whole contract as set forth by Section 64 of the Corporation Code, quoted hereunder: "No certificate of stock shall be issued to a subscriber until the full amount of his subscription together with interest and expenses),if any, is due, has been paid." In the light of the foregoing, all the 10 shares covered by "A's" subscription shall become delinquent and thus subject to sale at public auction. Please be advised accordingly. Very truly yours, (SGD.) RODOLFO L. SAMARISTA Associate Commissioner