100. Case Title: Case Title: Salido, Jr. v. Aramaywan Metals Development Corp.

G.R. No. 233857, March 18, 2021

Syllabi: Intra-Corporate Dispute, Rule 45

Q: This case is an intra-corporate dispute involving two different factions within Corporation C,
faction A and faction B. They entered into an Agreement to Incorporate (Agreement), wherein it
was stipulated that B would advance the paid-up subscription for Corporation C amounting to
P2,500,000.00 and would assure the payment of the subscription of the capital stock of D
Mining. In exchange, B would own 55% of the stocks of Corporation C and 35% of the stocks of
D Mining. In line with the said Agreement, B then advanced the P2,500,000.00 paid-up
subscription of Corporation C. B's 55% share are divided into 3 between X, Y his wife and Z his
daughter, while the remaining 35% represented B. However, A claimed that the rest of the
P2,500,000.00 remained undelivered as it remained under B's name. Thus, faction A claimed
that B was in breach of his undertaking to advance the payment of Corporation C's capital
stock. Because of these supposed breaches under the Agreement, A made a proposal to reduce B's
shares in Corporation C from 55% to 15%. Several meetings were called by faction A, whereby
faction B questioned said meetings and the approved acts therein. Faction B, on the other hand, in
its belief that it still had control over the corporation, called for stockholders' and board meetings and
approved supposed corporate acts. Both contending parties then submitted to the SEC conflicting
General Information Sheets. Thereafter, B filed with the RTC of Pasig a complaint which sought to
invalidate the acts of faction A. The RTC dismissed the complaint filed by faction B. The CA affirmed
the ruling of the RTC that the reduction of B's shares was valid. (1) Is the petition for review under
Rule 45 proper; (2) Is the reduction of B's shares in the intra-corporate dispute valid?

A: (1) No, under Rule 45 of the Rules of Court, only questions of law may be raised. The reason
behind this is that this Court is not a trier of facts and will not re-examine and re-evaluate the
evidence on record. While it is true that there are exceptions to this rule, such as is in this case
where the findings of fact of the CA differ from those of the trial court, A did not attach any
minutes of the relevant meetings to aid the Court in understanding and verifying his factual
allegations. It was incumbent upon him as the petitioner to attach "such material portions of the
record as would Support the petition." For these reasons alone, the Petition should be
dismissed.
(2) No, requirements under the Corporation Code were not met in the reduction of B's shares.
The records are bereft of any showing that Corporation C had unrestricted retained earnings in
its books at the time the reduction of shares was made. Neither was it shown that it did not have
creditors or that they were already paid before the agreement to release B was made.
Moreover, it must be emphasized that B's subscriptions have already been fully paid by him,
and as such, Corporation C cannot validly reduce B’s shares without giving a corresponding
return of investment. Besides, if it were true that B had unpaid subscriptions, the Corporation
Code has provided a procedure for the demand of such payment and the holding of a
delinquency sale in case of continued non-payment. Thus, even assuming it was true that B had
unpaid subscriptions, simply agreeing in a meeting for their reduction, thereby releasing the
stockholder from his obligation to pay the unpaid subscriptions, cannot be the mode by which
said unpaid subscriptions are settled. To allow corporations to do such an act would violate the
trust fund doctrine in corporation law. It is established doctrine that subscriptions to the capital of
a corporation constitute a fund 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.