Garcia vs Lim Chu Sing

ase Digest on GARCIA VS LIM CHU SING A share of stock is not an indebtedness to the owner nor evidence of indebtedness and therefore not a credit. SHS are not creditors of the corp. The capital stock of a corp is a trust fund to be used more particularly for the security of the creditors of the corp, who presumably deal with it on the credit of its capital stock Instances where SH can be a creditor: 1) upon dissolution after corp debts are paid 2) when dividends declared Pre-Incorporation Subscription Sec 13 Amount of the Capital Stock to be Subscribed and Paid for Purposes of Incorporation – At least 25% of the authorized capital stock as stated in the articles of incorporation , and at least 25% of the total subscription must be paid upon subscription, the balance to be payable on the date(s) fixed in the contract of subscription without need of call, or in the absence of a fixed date or dates, upon call by the BOD: Provided, however, That in no case shall the paid up capital be less than P5,000 Effect of pre-incorporation subscription When a group of persons sign a subscription contract, they are deemed not only to make a continuing offer to the corp but also to have contracted with each other as well. No one of them may revoke the contract even prior to incorp without consent of all others Sec 61 Pre-Incorporation Subscription A subscription for shares of stock of a corp still to be formed shall be irrevocable for a period of at least 6 months from the date of subscription, unless all of the other subscribers consent to the revocation, or unless the incorporation of said corporation fails to materialize within said period as may be stipulated in the contract of subscription: Provided, That no pre-incorporation subscription may be revoked after the submission of AI to the SEC Once formed, not even the corp can release the subscriber from the obligation to pay unpaid subscription. The SH may however resist compliance if a diff corp as contemplated is formed, or there are serious defects in the incorp prejudicial to SH, unless the acts show estoppel, waiver or acquiescence If a pre-incorporation subscriber is not satisfied with the way the promoters are handling pre-incorporation matters, he is free to get out of the venture after such period, regardless of what other pre-incorporation subscribers feel about the matter. Post-Incorporation Subscription Corp Code erased distinction between subscription and purchase Sec 60 Subscription Contract - Any contract for the acquisition of unissued stock in an existing corp or a corp still to be formed shall be deemed a subscription within the meaning of this Title, notwithstanding the fact that the parties refer to it as a purchase or some other contract Sec 80 Rights of Unpaid Shares - Holders of subscribed shares are not fully paid which are not delinquent shall have all the rights of a SH Since a subscriber is a debtor to the corp, it remains liable to pay the balance of the subscription price even if the corp should subsequently become insolvent