Mr. Jose P. Llopis

September 12, 1989 Mr. Jose P. Llopis 164 P. Domingo St. B.F. Resort Village Las Pias, Metro Manila Sir : This refers to your letter dated August 23, 1989, requesting opinion on the following queries: 1. May a stockholder pay the balance of his subscription account even without a call for payment by the Board of Directors? 2. May a subscriber sell his entire subscription to two or more individuals? Would this violate or not the so-called Doctrine of Indivisibility of stock subscription accounts? llcd Relative to your first query, the Commission had previously opined that a stockholder can pay his unpaid subscribed shares of stock even if there is no call for his payment issued by the board of directors. The subscription contract creates a creditor-debtor relationship between the corporation and the subscriber. As such debtor, the subscriber can pay his unpaid subscription any time so as to discharge his obligation, and the corporation, as creditor, cannot refuse a valid tender of payment offered to it. ( Opinion dated December 7, 1967 addressed to Mr. Urbano Sanchez Caasi, Jr. ) Your first query is therefore answered in the affirmative. Anent your second query, Section 64 of the Corporation Code provides: "SECTION 64. Issuance of stock certificates . No certificate of stock shall be issued to a subscriber until the full amount of his subscription together with interest and expense (in case of delinquent shares) if any is due, has been paid." The above-quoted provision implicitly sets forth the doctrine that a subscription is one, entire and indivisible whole contract. It cannot be divided into portions so that the stockholders shall not be entitled to a certificate of stock until he has remitted the full payment of his subscription together with the interest and expenses if any is due. ( SEC letter dated January 6, 1989 addressed to Bay Sunset Tours & Travel Corporation ). Accordingly, if the stockholder has not paid the full amount of his subscription, he cannot transfer part of it in view of the indivisible nature of subscription contract. It is only upon full payment of the whole subscription that a stockholder can transfer the same to several transferees. However, the entire subscription , although not yet fully paid, may be transferred. It is necessary, however, to secure the consent of the corporation since the transfer of subscription right contemplates a novation of contract which under Article 1293 of the Civil Code of the Philippines, cannot be made without the consent of the creditor. Likewise, it has to be emphasized that under Section 63 of the Corporation Code, no transfer shall be valid except as between the parties, until the transfer is recorded in the books of the corporation. Please be advised accordingly. Very truly yours, (SGD.) RODOLFO L. SAMARISTA Associate Commissioner