Bay Sunset Tours & Travel Corporation

January 6, 1983 Bay Sunset Tours & Travel Corporation Ground Floor, Silahis International Hotel Roxas Blvd.,Manila Attention : Mr . Leonides Respicio Gentlemen: This refers to your letter dated November 3, 1982, requesting opinion the queries quoted hereunder. "1. May a stockholder/subscriber transfer or assign part of his/her subscription (not yet fully paid) in view of the so-called indivisibility of subscription" principle? 2. In the election of a maximum of five (5) directors, how many more votes can a stockholder with 100 votes give to the other 4 candidates when he has already given 100 votes to the first candidate?" Anent your first query, Section 64 of the Corporation Code of the Philippines provides, and we quote: "Issuance of stock certificates. No certificate of stock shall be issued to a subscriber until the full amount of his subscription together with the interest and expenses (in case of delinquent shares),if any is due, has been paid." The above-cited provision sets forth the doctrine that a subscription is one, entire and indivisible whole contract. It cannot be divided into portions, so that the stockholder shall not be entitled to a certificate of stock until he has paid the full amount of his subscription together with interest and expenses, if any is due. Accordingly, our answer to your first query is in the negative. The reply to your second query is found in Section 24 of the Corporation Code which reads, thus: "Election of directors/trustees. ...In stock corporations, every stockholder entitled to vote shall have the right to vote in person or by proxy the number of shares of stock standing at the time fixed in by-laws, in his own name on the stock books of the corporation, or where the by-laws are silent, at the time of the election; and said stockholders may vote such number of shares for as many persons as there are directors to be elected or he may cumulate said shares and give one candidate as many votes as the number of directors to be elected multiplied by the number of his shares shall equal, or he may distribute them on the same principle among as many candidates as he shall see fit: Provided, that the total number of votes cast by him shall not exceed the number of shares owned by him as shown in the books of the corporation multiplied by the whole number of directors to be elected: .. To illustrate, supposing that a stockholder has 100 shares of X, Inc. registered in his name, and five (5) directors are to be elected. In such a case, he has 500 votes, this being the product of 100 (shares) multiplied by 5 (directors).He may cast the total of 500 votes for only one candidate, or in answer to your query, he may cast 100 votes for each of the five candidates, or 100 votes for one candidate and distribute the remaining 400 votes among as many candidates as he may deem fit. This is known as the cumulative voting, which is a method of concentrating votes devised to give a sufficient minority of opportunity to secure representation in the board of directors. (Agbayani, Commercial Laws of the Philippines, Vol. III, p. 243, citing Ballantine 404). Please be advised accordingly. Very truly yours, (SGD.) JESUS J. VALDES Associate Commissioner