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Toaz - Info Phil Trust Vs Rivera PR

1) Cooperativa Naval Filipina was incorporated with P100,000 capital divided into 100 shares. Marciano Rivera subscribed to 450 shares (P45,000). The company became insolvent and Philippine Trust became its assignee in bankruptcy. 2) Rivera argues he does not need to pay the remaining balance on his shares because the shareholders passed a resolution reducing capital by 50%, cancelling 50% of subscriptions. 3) The Supreme Court held the resolution reducing capital was invalid and ineffective because it withdrew capital creditors relied on, did not comply with statutory requirements for capital reduction, and did not file the required certificate with the proper authority. Rivera remains liable for the unpaid balance on his shares.

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30 views1 page

Toaz - Info Phil Trust Vs Rivera PR

1) Cooperativa Naval Filipina was incorporated with P100,000 capital divided into 100 shares. Marciano Rivera subscribed to 450 shares (P45,000). The company became insolvent and Philippine Trust became its assignee in bankruptcy. 2) Rivera argues he does not need to pay the remaining balance on his shares because the shareholders passed a resolution reducing capital by 50%, cancelling 50% of subscriptions. 3) The Supreme Court held the resolution reducing capital was invalid and ineffective because it withdrew capital creditors relied on, did not comply with statutory requirements for capital reduction, and did not file the required certificate with the proper authority. Rivera remains liable for the unpaid balance on his shares.

Uploaded by

Gilda Ostol
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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# 101

PHILIPPINE TRUST COMPANY, vs .MARCIANO RIVERA


G.R. No. L-19761 January 29, 1923

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.
PhilTrust sought to recover ½ of the stock subscription of Rivera, which admittedly, has never been paid. Rivera
contends that he never paid because the stockholders of Naval issued a resolution shortly after the company’s
incorporation, stating that the capital shall be reduced by 50%. As a result, Rivera contends that the subscribers were
released from the obligation to pay any unpaid balance of their subscription in excess of 50% of their subscriptions.
Rivera further contends 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 such reduction of the capital stock is valid.

Held: No. SC held that the said resolution is without effect for being:
1. An attempted withdrawal of so much capital from the fund which the company’s creditors were entitled
ultimately to rely, and
2. For having been effected without compliance with the statutory requirements of § 17 of the Corporation Law
regarding reduction of capital stock, and
3. For failure to file a certificate with the Bureau of Commerce and Industry, showing such reduction.

Thus, stockholder is still liable for the unpaid balance of his subscription.

Ratio: 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, w/o a valuable
consideration for such release; and as against 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 AOI. Moreoever, strict
compliance with statutory regulations is necessary.

Note: that for reasons 2 and 3, Campos says that § 17 has been replaced by § 38, and now, even if all the
requirements are complied with, if creditors are prejudiced by such reduction, it is most unlikely that the SEC will
approve it.

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