G.R. No. L-47076. April 25, 1941.
SALUD BALUYUT, in her capacity as judicial administratrix of the deceased Salustiano Guiao Suarez, petitioner and appellant, vs. THE BANK OF THE PHILIPPINE ISLANDS, as Assignee of the Involuntary Insolvency of Dizon & Co., Inc., respondent and appellee.

FACTS

This is an appeal via certiorari from a decision of the Court of Appeals. The case involves a claim filed by The Bank of the Philippine Islands, representing the insolvency estate of Dizon & Co., Inc., to collect from Salud Baluyut, as judicial administratrix of the estate of the deceased Salustiano Guiao Suarez, the amount of P4,225, representing the unpaid balance of a subscription to the capital stock of Dizon & Co., Inc. The Court of Appeals, reversing the decision of the Court of First Instance, ordered the defendant to pay the plaintiff Bank this claimed amount. The core issue revolves around whether Salustiano Guiao Suarez subscribed to the shares of Dizon & Co., Inc., or purchased them from the corporation. The document signed by Salustiano Guiao Suarez in relation to these shares expressly states a subscription, not a purchase. The terms of the document are clear and unequivocal, expressing the intention of the transaction. The Court agrees with the Court of Appeals that the signed document is one of subscription, not of sale.

ISSUE

Whether the transaction entered into by the deceased Salustiano Guiao Suarez with Dizon & Co., Inc., was a subscription to corporate shares or a purchase thereof, and consequently, whether the insolvency of the corporation bars the collection of the unpaid balance.

RULING

The Supreme Court affirmed the decision of the Court of Appeals. The Court held that the document signed by the deceased was clearly a subscription agreement. Therefore, the insolvency of Dizon & Co., Inc., does not prevent the corporation (through its assignee in insolvency) from demanding payment of the unpaid balance of the subscription price. Since the transaction was a subscription, the Court found it unnecessary to discuss the appellant’s argument that insolvency would bar collection if it were a sale. The Court also rejected the appellant’s ancillary arguments: (1) that the subscription should be declared null due to the corporation’s alleged violation of the Corporation Law ( Act No. 1459 , as amended) by issuing stock certificates for partial payments, noting the appellant’s own admission that the certificates for 31 shares were fully paid; and (2) that the corporation violated the Blue Sky Law ( Act No. 2581 ), ruling that the alleged infringing acts occurred after the subscription was made and could not affect the validity of the prior subscription. Costs were taxed against the appellant.