Philippine Overseas Drilling and Oil Development Corporation

November 16, 1982 Philippine Overseas Drilling and Oil Development Corporation Philex Bld.,Brixton & Fairlane Sts. Pasig, Metro Manila Attention : Mr . I . O . Elegado Asst . Secretary Gentlemen: This has reference to your letter dated November 15, 1982 seeking the opinion of this Commission on the query posed therein. It appears therein that a stockholder who owns Philodrill shares on June 15, 1976 entitles him to subscribe one share for every share held at P0.02/share, first 25% installment payable on or before October 1, 1976. The 2nd 25% installment was called payable on or before December 2, 1977 and if not paid on said date will be subject to 12% interest per annum, provided however, that if this second installment is not paid by March 31, 1978, the same may be declared delinquent. The 2nd installment payment was further deferred up to December 31, 1978. "A" a stockholder, paid the first 25 but failed to pay the 2nd 25% installment on December 31, 1978 which made him a delinquent subscriber. You now want to know up to what extent is "A" entitled to vote at the stockholders' meeting on November 17, 1982. In reply thereto, please be informed that this Commission in a previous opinion ruled that "no stock delinquent for unpaid subscription shall be voted or entitled to vote or represented at any stockholders' or directors: meeting, or for any corporate purpose whatsoever." ( Ltr. to Mr. Remigio Albano Sanches dtd. November 21, 1978 citing Sec. 50 of the Corporation Law, now Sec. 71 of the Corporation Code.) Furthermore, in a previous opinion, this Commission held that: "If delinquent members shall be allowed the same voting rights as members of good standing, the latter will cease to have interest in paying promptly, inimical to the best interest of the corporation. Such suspension from voting can follow only after due notice to the delinquent member in the same manner as that provided for a dropping a delinquent member from the membership roster." ( Ltr. to the Philippine Institute of Certified Public Accountants dated June 14, 1962 ) Considering the aforequoted ruling and considering further that Sec. 64 of the Corporation Code sets forth the doctrine of indivisibility of subscription, the fact that "A" has paid the first 25% installment is of no moment inasmuch as he can only be issued a certificate of stock once he has paid in full the amount of his subscription. Corollary thereto, Section 67 provides that "failure to pay on such date shall render its entire balance due and payable . . . If within thirty (30) days from the said date no payment is made all stocks covered by said subscription shall thereupon become delinquent and shall be subject to sale as hereinafter provided". . . The partial payment made by "A" 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. Please be guided accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Associate Commissioner