Miranda v. Tarlac Rice Mill Co., Inc.

No. 35961
December 2, 1932

FACTS
1. Alberto Miranda executed a written contract whereby he subscribed for 100 shares of the capital stock of a
corporation to be organized, Tarlac Rice Mill Company, Inc.
2. The par value of each share was P100; and that Alberto Miranda obligated himself to pay to the treasurer of
the corporation the sum of P10,000, to be paid as follows:

On or before September 21, 1926 P1,000.00

On or before January 21, 1927 2,000.00
On or before January 21, 1928 2,000.00
On or before January 21, 1929 2,500.00
On or before January 21, 1930 2,500.00

3. July 10, 1926: in lieu of cash, Miranda assigned a parcel of land to and for the benefit of the Tarlac Rice Mill
Company, Inc
a. He appointed, either jointly Magbag, (President and Treasurer), Cabrera and Puno (Vice
Presidents), or anyone of the 3 named elected, jointly with Dizon to be his attorneys-in-fact to
transfer, mortgage, convey or confirm to any local or foreign bank, firm or individual in order to
obtain credit against his property in an amount not to exceed P10,000 in accordance with the
subscription contract to increase the capital of the Tarlac Rice Mill Company, Inc., in order to carry
out the purposes for which such firm is to be organized
4. The President and VP, on behalf of the company, agreed to repay said sum on or before February 19, 1928
a. Puno, Magbag, and Dizon & Co., Inc., jointly and severally guaranteed the payment of this sum;
b. President, VP and Dizon as attorneys-in-fact of Alberto Miranda mortgaged to Mariano
Tablante the aforementioned parcel of land to secure the payment of said promissory note
c. The sum of P10,000 obtained from Mariano Tablante was retained by the corporation
5. When the promissory note became due, Alberto Miranda arranged for an extension of time in which to pay it,
and on July 19, 1929 he sold the parcel of land under pacto de retro to Vicente Panlilio for P10,000, and
paid Mariano Tablante
6. The corporation ceased to do business from 1928, and that the other stockholders have not paid for their
shares in accordance with their subscription agreement, and that no action has been taken by the
corporation to require them to do so
7. Appellant: officers of the corporation violated the terms of the power of attorney in mortgaging the land on
February 19, 1927 for Pl0,000, because the only sum then due and payable by Alberto Miranda to the
corporation was P3,000, and that when the remaining installments of the stock subscription became
due, Alberto Miranda was under no obligation to pay them, because the corporation had already
ceased to do business, and it had taken no steps to compel the other stockholders to pay for the shares
for which they had subscribed

ISSUE: W/N the amount paid to the corporation may be recovered. NO

1. The fact that Alberto Miranda agreed to pay the amount of his subscription in instalments on certain fixed
dates did not prevent him from authorizing the officers of the corporation as his attorneys-in-fact to pay his
subscription prior to the dates fixed in the subscription agreement
2. Appellant: attorneys-in-fact of Alberto Miranda are authorized to mortgage or convey the property in any way
convenient to them in the amount not to exceed P10,000 in accordance with the subscription contract
a. SC: the phrase "in accordance with the subscription contract" is followed by "for or to increase the
capital of the said Tarlac Rice Mill Company, Inc., in order to carry out the purposes for which said
firm is to be organized."
b. It can hardly be contended that the power of attorney contemplated that the property should be
mortgaged three times, that is, each time that an instalment became due
3. It was the intention of the parties that the property should be mortgaged immediately for a sum not
to exceed P10,000, not only for the purpose of paying the subscription agreement of Alberto
Miranda, but also for the purpose, as stated in the power of attorney, of increasing the capital of the
corporation, not the capital stock, in order to carry out the purposes for which it was to be organized
4. Confirmed by subsequent conduct of the parties
 a. Although the corporation retained the full amount of the loan obtained from Mariano Tablante, and
Alberto Miranda had to pay that obligation, he never sought to recover from the corporation any
part of the sum of P10,000
b. From time of mortgage until he died (1927-1930), it does not appear that he ever sought to evade
the satisfaction of the mortgage by alleging that his attorneys-in-fact exceeded their authority in
mortgaging the property on February 19, 1927 for P10,000
c. On the contrary, he repaid to Mariano Tablante the amount which the officers of the corporation
had borrowed
d. He acquiesced to the acts of the corporation
5. The phrase "in accordance with the subscription contract" found in the power of attorney probably was in-
tended to mean "in pursuance of the subscription agreement", that is, it referred to the obligation, and had no
particular reference to the dates when the different instalments were to be paid
6. Sec. 38, Corporation Law: BOD of every corporation may at any time declare due and payable to the
corporation unpaid subscriptions to the capital stock and may collect the same with interest accrued thereon
or such percentage of said unpaid subscriptions as it may deem necessary
a. It is the duty of the subscriber to pay the subscription or installment thereof as soon as it is
due, without any call or demand, and, if he fails to do so, an action may be brought at any
time
7. When this action was filed on September 2, 1930, the last of the installments had already become payable
in accordance with the subscription agreement.
a. This is not an action by the corporation to recover on a subscription agreement, but an action by
the administratrix of a stockholder to recover what was paid in to the corporation by the stockholder
8. Neither the fact that the corporation has ceased to do business nor the fact that the other stockholders have
not been required to pay for their shares in accordance with their subscription agreement justifies the SC to
order the corporation to return to the plaintiff the amount paid in by Alberto Miranda
a. If the directors have failed to perform their duty with respect to the other stockholders, the law
provides a remedy therefor
9. Velasco vs. Poizat: a stock subscription is a contract between the corporation and the subscriber, and courts
will enforce it for or against either; that a corporation has no legal capacity to release a subscriber to its
capital stock from the obligation to pay for his shares, and that any agreement to this effect is invalid
10. ITC, it is not contended that Alberto Miranda cancelled his subscription agreement, or that the corporation
attempted to release him therefrom

For the foregoing reasons, the decision appealed from is affirmed, with the costs against the appellant.