G.R. No. L-45493; April 21, 1939
GERARDO GARCIA, plaintiff-appellee, vs. ANGEL SUAREZ, defendant-appellant.

FACTS

Defendant-appellant Angel Suarez subscribed to 16 shares of stock in Compañia Hispano-Filipina, Inc. in 1924 but only paid for 4 shares. Plaintiff-appellee Gerardo Garcia was appointed receiver of the corporation in 1931 and demanded payment of the unpaid balance. After a prior dismissed case, Garcia filed this collection suit in 1935. Suarez defended on the grounds of prescription (arguing the 10-year prescriptive period started from the 1924 subscription date) and release (claiming he was released from the obligation by a letter from the corporation’s acting president).

ISSUE

1. Whether the action to collect the unpaid stock subscription had prescribed.
2. Whether the defendant was validly released from his obligation to pay the balance of his subscription.

RULING

1. No, the action had not prescribed. The obligation to pay a stock subscription arises upon subscription but becomes demandable only when the corporation (or its receiver) calls for payment. Under Section 38 of the Corporation Law, the board of directors (or a receiver exercising its powers) must declare the unpaid subscriptions due and payable. The prescriptive period commenced only on June 18, 1931, when the receiver made the demand, not from the 1924 subscription date. The suit filed in 1935 was within the 10-year prescriptive period.
2. No, the defendant was not validly released. A corporation cannot release a subscriber from the obligation to pay for shares without valuable consideration and the express consent of all stockholders. The acting president had no authority to grant such a release, and no such stockholder consent or by-law authorization was proven. The release was therefore invalid.
The appealed judgment ordering Suarez to pay the balance was affirmed.

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