Article 27p. 27

COMMERCIAL LAWS NEGOTIABLE INSTRUMENTS, CORPORATION, INSURANCE, TRANSPORTATION, BANKING

6. Outstanding shares exchanged for stocks in the

event of reclassification or conversion.

Where the consideration is other than actual cash, or

consists

of

intangible

property

such

as

patents

of

copyrights,

the

valuation

thereof

shall

initially

be

determined by the incorporators or the board of directors,

subject to approval by the Securities and Exchange

Commission.

Shares of stock shall not be issued in exchange for

promissory notes or future service.

The same considerations provided for in this section,

insofar as they may be applicable, may be used for the

issuance of bonds by the corporation.

The issued price of no-par value shares may be fixed

in the articles of incorporation or by the board of directors

pursuant to authority conferred upon it by the articles of

incorporation or the bylaws, or in the absence thereof, by

the stockholders at a meeting duly called for the purpose

representing at least a majority of the outstanding capital

stock. (5 and 16)

SECTION 63. Certificate of Stock and Transfer of

Shares . — The capital stock of stock corporations shall be

divided into shares for which certificates signed by the

president

or

vice-president,

countersigned

by

the

secretary or assistant secretary, and sealed with the seal

of the corporation shall be issued in accordance with the

bylaws. Shares of stock so issued are personal property

and may be transferred by delivery of the certificate or

certificates indorsed by the owner or his attorney-in-fact

or other person legally authorized to make the transfer.

No transfer, however, shall be valid, except as between

the parties, until the transfer is recorded in the books of

the corporation so as to show the names of the parties to

the transaction, the date of the transfer, the number of

the certificate or certificates and the number of shares

transferred.

No shares of stock against which the corporation

holds any unpaid claim shall be transferable in the books

of the corporation. (35)

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

expenses (in case of delinquent shares), if any is due, has

been paid. (37)

SECTION

65.

Liability

of

Directors

for

Watered

Stocks .

—

Any

director

or

officer

of

a

corporation

consenting to the issuance of stocks for a consideration

less than its par or issued value or for a consideration in

any form other than cash, valued in excess of its fair value,

or who, having knowledge thereof, does not forthwith

express his objection in writing and file the same with the

corporate secretary, shall be solidarily liable with the

stockholder

concerned

to

the

corporation

and

its

creditors

for

the

difference

between

the

fair

value

received at the time of issuance of the stock and the par

or issued value of the same. (n)

SECTION 66. Interest on Unpaid Subscriptions . —

Subscribers for stock shall pay to the corporation interest

on all unpaid subscriptions from the date of subscription,

if so required by, and at the rate of interest fixed in, the

bylaws. If no rate of interest is fixed in the bylaws, such

rate shall be deemed to be the legal rate. (37)

SECTION 67. Payment of Balance of Subscription . —

Subject to the provisions of the contract of subscription,

the board of directors of any stock corporation may at any

time declare due and payable to the corporation unpaid

subscriptions to the capital stock and may collect the

same or such percentage of said unpaid subscriptions, in

either case with interest accrued, if any, as it may deem

necessary.

Payment

of

any

unpaid

subscription

or

any

percentage thereof, together with the interest accrued, if

any, shall be made on the date specified in the contract

of subscription or on the date stated in the call made by

the board. Failure to pay on such date shall render the

entire balance due and payable and shall make the

stockholder liable for interest at the legal rate on such

balance, unless a different rate of interest is provided in

the bylaws, computed from such date until full payment.

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, unless the board of directors

orders otherwise. (38)

SECTION 68. Delinquency Sale . — The board of

directors may, by resolution, order the sale of delinquent

stock and shall specifically state the amount due on each

subscription plus all accrued interest, and the date, time

and place of the sale which shall not be less than thirty

(30) days nor more than sixty (60) days from the date the

stocks become delinquent.

Notice of said sale, with a copy of the resolution, shall

be sent to every delinquent stockholder either personally

or by registered mail. The same shall furthermore be

published once a week for two (2) consecutive weeks in a

newspaper of general circulation in the province or city

where the principal office of the corporation is located.

Unless

the

delinquent

stockholder

pays

to

the

corporation, on or before the date specified for the sale of

the delinquent stock, the balance due on his subscription,

plus

accrued

interest,

costs

of

advertisement

and

expenses

of

sale,

or

unless

the

board

of

directors

otherwise orders, said delinquent stock shall be sold at

public auction to such bidder who shall offer to pay the

full amount of the balance on the subscription together

with

accrued

interest,

costs

of

advertisement

and

expenses of sale, for the smallest number of shares or

fraction of a share. The stock so purchased shall be

transferred

to

such

purchaser

in

the

books

of the

corporation and a certificate for such stock shall be issued

in his favor. The remaining shares, if any, shall be credited

in favor of the delinquent stockholder who shall likewise

be entitled to the issuance of a certificate of stock

covering such shares.

Should there be no bidder at the public auction who

offers to pay the full amount of the balance on the

subscription together with accrued interest, costs of

advertisement and expenses of sale, for the smallest

number of shares or fraction of a share, the corporation

may, subject to the provisions of this Code, bid for the

same, and the total amount due shall be credited as paid

in full in the books of the corporation. Title to all the

shares of stock covered by the subscription shall be

vested in the corporation as treasury shares and may be

disposed of by said corporation in accordance with the

provisions of this Code. (39a-46a)

SECTION 69. When Sale May Be Questioned . — No

action to recover delinquent stock sold can be sustained

upon the ground of irregularity or defect in the notice of

sale, or in the sale itself of the delinquent stock, unless the

party seeking to maintain such action first pays or

tenders to the party holding the stock the sum for which

the same was sold, with interest from the date of sale at

the legal rate; and no such action shall be maintained

unless it is commenced by the filing of a complaint

within six (6) months from the date of sale. (47a)

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, costs and expenses. (49a)

SECTION 71. Effect of Delinquency . — No delinquent

stock shall be voted for or be entitled to vote or to

representation at any stockholders' meeting, nor shall the

holder thereof be entitled to any of the rights of a

stockholder except the right to dividends in accordance

with the provisions of this Code, until and unless he pays

the

amount

due

on

his

subscription

with

accrued

interest, and the costs and expenses of advertisement, if

any. (50a)

© Compiled by RGL

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