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    PHILIPPINE TRUST COMPANY v. MARCIANO RIVERA

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    Benjie Sales
    The Philippine Trust Company sued Mariano Rivera to recover half of the unpaid stock subscription for shares in the now insolvent Cooperativa Naval Filipina corporation. Rivera claimed a shareholders' resolution reduced the required capital contribution by 50%, releasing subscribers from paying the unpaid balance. However, the court ruled the resolution was invalid and creditors were entitled to the full subscription as a trust fund. A corporation cannot release subscribers from payment obligations without statutory compliance, and reducing capital requires following regulatory procedures. The court found for the plaintiff, as the resolution did not properly withdraw capital that creditors relied upon.

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    PHILIPPINE TRUST COMPANY v. MARCIANO RIVERA

    Uploaded by

    Benjie Sales
    86 views2 pages
    The Philippine Trust Company sued Mariano Rivera to recover half of the unpaid stock subscription for shares in the now insolvent Cooperativa Naval Filipina corporation. Rivera claimed a shareholders' resolution reduced the required capital contribution by 50%, releasing subscribers from paying the unpaid balance. However, the court ruled the resolution was invalid and creditors were entitled to the full subscription as a trust fund. A corporation cannot release subscribers from payment obligations without statutory compliance, and reducing capital requires following regulatory procedures. The court found for the plaintiff, as the resolution did not properly withdraw capital that creditors relied upon.

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    The Philippine Trust Company sued Mariano Rivera to recover half of the unpaid stock subscription for shares in the now insolvent Cooperativa Naval Filipina corporation. Rivera claimed a shareholders' resolution reduced the required capital contribution by 50%, releasing subscribers from paying the unpaid balance. However, the court ruled the resolution was invalid and creditors were entitled to the full subscription as a trust fund. A corporation cannot release subscribers from payment obligations without statutory compliance, and reducing capital requires following regulatory procedures. The court found for the plaintiff, as the resolution did not properly withdraw capital that creditors relied upon.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    86 views2 pages

    PHILIPPINE TRUST COMPANY v. MARCIANO RIVERA

    Uploaded by

    Benjie Sales
    The Philippine Trust Company sued Mariano Rivera to recover half of the unpaid stock subscription for shares in the now insolvent Cooperativa Naval Filipina corporation. Rivera claimed a shareholders' resolution reduced the required capital contribution by 50%, releasing subscribers from paying the unpaid balance. However, the court ruled the resolution was invalid and creditors were entitled to the full subscription as a trust fund. A corporation cannot release subscribers from payment obligations without statutory compliance, and reducing capital requires following regulatory procedures. The court found for the plaintiff, as the resolution did not properly withdraw capital that creditors relied upon.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    PHILIPPINE TRUST COMPANY v. MARCIANO RIVERA G.R. No.

    L-
    19761, January 29, 1923
    PHILIPPINE TRUST COMPANY v. MARCIANO RIVERA
    G.R. No. L-19761, January 29, 1923
    Corporation Law Case Digest by John Paul C. Ladiao (15 March 2016)
    (Topic: Trust Fund Doctrine)

    FACTS:

    In 1918 the Cooperativa Naval Filipina was duly incorporated under the laws of the Philippine
    Islands, with a capital of P100,000, divided into one thousand shares of a par value of P100
    each. Among the incorporators of this company was numbered the defendant Mariano Rivera,
    who subscribed for 450 shares representing a value of P45,000, the remainder of the stock
    being taken by other persons.

    In the course of time the company became insolvent and went into the hands of the Philippine
    Trust Company, as assignee in bankruptcy; and by it this action was instituted to recover one-
    half of the stock subscription of the defendant, which admittedly has never been paid.

    The reason given for the failure of the defendant to pay the entire subscription is, that not long
    after the Cooperativa Naval Filipina had been incorporated, a meeting of its stockholders
    occurred, at which a resolution was adopted to the effect that the capital should be reduced by
    50 per centum and the subscribers released from the obligation to pay any unpaid balance of
    their subscription in excess of 50 per centum of the same.

    ISSUE:

    Whether or not the resolution adopted to the effect that the capital should be reduced by 50 per
    centum and the subscribers are released from the obligation to pay any unpaid balance of their
    subscription in excess of 50 per centum?

    RULING:

    NO.

    It is established doctrine that subscription to the capital of a corporation constitute a find 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 creditors a reduction of the capital stock can take place only in the manner an under the
    conditions prescribed by the statute or the charter or the articles of incorporation. Moreover,
    strict compliance with the statutory regulations is necessary (14 C. J., 498, 620).

    In the case before us the resolution releasing the shareholders from their obligation to pay 50
    per centum of their respective subscriptions was an attempted withdrawal of so much capital
    from the fund upon which the company's creditors were entitled ultimately to rely and, having
    been effected without compliance with the statutory requirements, was wholly ineffectual.
    Posted by John Paul Claro Ladiao at 7:34 PM 

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