J. S. Zulueta & Co.

February 21, 1984 J. S. Zulueta & Co. M. Floor, Padilla Building Emerald Avenue Ortigas Commercial Center Pasig, Metro Manila Gentlemen: This refers to your letter dated February 9, 1984 requesting for confirmation of your opinion that a corporation, assuming that there is no bidder after complying with all the legal requirements for the sale of delinquent shares under Section 68 of the Corporation Code, can forfeit in its favor delinquent shares to be taken up in the corporation's books as treasury shares and available for sale or disposition by the corporation at whatever price it may deem to its best interest. prcd "A sale of stock by the corporation, after default in payments on a subscription, is to be distinguished from a forfeiture of stock, without a sale , on such non-payment and it has been held that a statutory or charter provision authorizing a sale does not authorize a forfeiture without sale." (Fletcher Cyclopedia Corporations, Vol. 4, p. 665). Under the Corporation Code of the Philippines, there are two remedies for the enforcement of liability of unpaid subscription. The first remedy given by the law consists in permitting the corporation to put up delinquent shares for sale under Section 68 thereof. Considering, therefore, that the Corporation Code authorizes sale of delinquent stocks, forfeiture without sale is not legally feasible. The unsuccessful attempt to follow the remedy by sale under Section 68 of the Corporation Code, however, will not bar an action in court to recover assessments of unpaid subscription under Section 70 of the Corporation Code. The law provides, thus: "SECTION 70. Court action to recover unpaid subscription . Nothing in this Code shall prevent the corporation from collecting by action in a court of proper jurisdiction the amount due on any unpaid subscription with accrued interest cost and expenses." (emphasis supplied) Please be advised accordingly. Very truly yours, (SGD.) MANUEL G. ABELLO Chairman