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Phil Trust Co Vs Rivera Case Digest

1) Cooperativa Naval Filipina was incorporated with P100,000 capital divided into 100 shares of P100 each. Marciano Rivera subscribed to 450 shares (P45,000) but did not pay. 2) Shortly after incorporation, the stockholders issued a resolution reducing the capital by 50% and releasing subscribers from paying amounts over 50% of their subscriptions. Rivera claims he was released from paying half. 3) The court ruled the release was invalid and the assignee in insolvency could require Rivera to pay the unpaid portion of his subscription. A corporation cannot release original subscribers from payment obligations without consideration and any capital reduction must follow statutory procedures.

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Phil Trust Co Vs Rivera Case Digest

1) Cooperativa Naval Filipina was incorporated with P100,000 capital divided into 100 shares of P100 each. Marciano Rivera subscribed to 450 shares (P45,000) but did not pay. 2) Shortly after incorporation, the stockholders issued a resolution reducing the capital by 50% and releasing subscribers from paying amounts over 50% of their subscriptions. Rivera claims he was released from paying half. 3) The court ruled the release was invalid and the assignee in insolvency could require Rivera to pay the unpaid portion of his subscription. A corporation cannot release original subscribers from payment obligations without consideration and any capital reduction must follow statutory procedures.

Uploaded by

Raje Paul Artuz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Philippine Trust Company vs.

Marciano Rivera
GR # L-19761 January 29, 1923
Case Under: Trust Fund Doctrine
Facts:
Cooperativa Naval Filipina was duly incorporated with a capital of
P100,000, divided into 100 shares at a par value of P100 each. Among its
incorporators was Marciano Rivera, who subscribed for 450 shares representing a
value of P45,000. The company however became insolvent. Philippine Trust
became its assignee in bankruptcy. Phil Trust sought to recover ½ of the stock
subscription of Rivera, which admittedly, has never been paid. Rivera
contended that he never paid because the stockholders of the company issued a
resolution shortly after the company’s incorporation that the capital shall be
reduced by 50% and the subscribers released from the obligation to pay any unpaid
balance in excess of 50% of their subscription. He further averred that the
subscriptions of the subscribers were 50% cancelled, and certificates of shares of
stock were issued for the said remaining 50% of the subscriptions.

Issue:
Whether or not the releasing of 50% of the subscription and issuance of full
payment for one-half of his fully paid original subscription is valid?

Ruling:
No. Subscriptions to the capital of a corporation constitute a fund to which
creditors have a right to look for satisfaction of their claims and that the assignee in
insolvency can maintain an action upon any unpaid stock subscription in order to
realize assets for the payment of its debts. A corporation has no power to release an
original subscriber to its capital stock from the obligation of paying for his shares,
without a valuable consideration for such release; and as against the creditors a
reduction of the capital stock can take place only in the manner and under the
conditions prescribed by the statute or the charter or the articles of incorporation.
Moreover, strict compliance with the statutory regulations is necessary.

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