Mr. Roberto B. Lugue

March 11, 1980 Mr. Roberto B. Lugue 4th Flr. Dominga Bldg. II 162 Legazpi St., Legazpi Village Makati, Metro-Manila Dear Mr. Lugue: This has reference to your letter dated February 6, 1979 requesting opinion on whether the Board of Directors of White Eagle Overseas Oil Company, Inc. may provide for the issuance of certificates of stock to the stockholders corresponding to the number of shares paid for even if the entire subscription were not fully paid, by mere resolution and without amending the by-laws. It appears that the practice of the corporation is to issue certificates of stock only after the total shares subscribed for are fully paid in accordance with Section 1 of Article V of the Amended By-Laws, which reads as follows: "SECTION 1. Issue And Transfer . The Board of Directors shall provide for the issue of the capital stock of the company and shall prescribe the form of the certificate of stock. Every owner of fully paid stock of the company shall be entitled to a certificate of stock , certifying the number of shares owned by him. . . . ." Pertinent to your query is the ruling of the Supreme Court in Baltazar v. Lingayen Gulf Electric Power Co., Inc.: ". . . A corporation may now, in the absence of provisions in their by-laws to the contrary , apply payment made by subscribers-stockholders, either as: (a) full payment for the corresponding number of shares of stock, the par value of each of which is covered by such payment; or (b) as payment pro-rate to each and all the entire number of shares subscribed for." (G.R. No. L-16236, June 30, 1965) Accordingly, in the absence of any provision in the by-laws, under the first alternative or method referred to above, a corporation may issue stock certificates to a stockholder corresponding to the number of shares which he has paid for even if the entire subscription were not fully paid, or under the second method, it may not issue stock certificates until the stockholder has paid for the entire subscription. Since your Amended By-Laws specifically provide, "Every owner of fully paid stock of the company shall be entitled to a certificate of stock . . . ", then it would not be legal to provide by mere resolution only for the issuance of certificates of stock to the extent of the stockholder's partial payment although he has not paid fully his entire subscription. "Fully paid stock" refers to stock which has been fully paid in so that nothing is due to the corporation thereon. (V Martin, Commercial Law of the Philippines, p. 1487). The subscription contemplated in your existing amended by-laws is considered one whole contract. It is deemed entire and indivisible and it cannot be divided into portions that will entitle the stockholder to a certificate of stock until he has paid the full amount of his subscription. However, the desired change may be effected by amending your by-laws in accordance with law and provided that all affected stockholders would give their corresponding consent thereto and that the same should be made applicable to all stockholders similarly situated. LexLib Please be advised accordingly. Very truly yours, For the Chairman: (SGD.) ROSARIO N. LOPEZ Director Corporate and Legal Department