Miranda vs Tarlac Rice Mill (1932) Power of Attorney shows intent to use land to cover the entire P10k

[Vickers, J.] In one paragraph of the power of attorney it is stated that the attorneys-
in-fact of Alberto Miranda are authorized to mortgage or convey the
I. FACTS property in any way convenient to them in the amount not to exceed
P10,000. It seems to be the intention of the parties that the property
June 1926. Miranda executed a written contract whereby he should be mortgaged immediately for a sum not to exceed P10,000,
subscribed for 100 shares. with par valueP100) of the capital stock of not only for the purpose of paying the subscription agreement of
Tarlac Rice Mill, a company organized to operate a rice mill in Tarlac, Alberto Miranda, but also for the purpose, as stated in the power of
said corporation to be known as Tarlac Rice Mill. In the subscription attorney, of increasing the capital of the corporation, not the
agreement, he agreed to pay the P10k in yearly installments until 1930. capital stock, in order to carry out the purposes for which it was to be
July 1926. Miranda executed a power of attorney wherein he organized
appointed the president, and 2 VPs, jointly with C. M. Dizon, to be his Subsequent conduct supports such intention
attorneys-in-fact and they could, in his behalf, transfer/mortgage his
parcel of land, for an amount not to exceed P10k. The contracts After the officers contracted the loan, nothing in the records shows that
provides that the exercise of the power should be “in accordance with Miranda attempted to recover any part of the P10k. The loan was
the subscription contract voluntary executed by me, for or to increase contract in 1927, and paid for by Miranda in 1929. He did not attempt
the capital of the said Tarlac Rice Mill Company, Inc., in order to carry to evade liability by claiming that the officers exceeded the authority
out the purposes for which such firm is to be organized.” given to them. The phrase "in accordance with the subscription
contract" found in the power of attorney probably was intended to
Feb 1927. The officers of the company and Dizon borrowed P10k from mean "in pursuance of the subscription agreement", that is, it referred
Mariano Tablante and mortgaged the said parcel of land, with the lloan to the obligation, and had no particular reference to the dates when
proceeds retained by the corporation. the different installments were to be paid.
Feb 1928. Tablante’s loan became due and the company did not pay Power of Board to demand payment for unpaid subscriptions
any amount therefore Miranda asked for an extension of time to pay.
Section 38 of the Corporation Law provides that the board of directors
Sometime 1928. Tarlac Rice Mill ceased to do business, and the other of every corporation may at any time declared due and payable to the
stockholders have not paid for their shares in accordance with their corporation unpaid subscriptions to the capital stock and may collect
subscription agreement, and that no action has been taken by the the same with interest accrued thereon or such percentage of said
corporation to require them to do so. unpaid subscriptions as it may deem necessary.
Juy 1929. Miranda sold the land under a pacto de retro to Vicente Justice Fisher, in his work “The Philippine Law of Stock Corporation”,
Panlilio for P10k, and used the proceeds to pay Tablante. expressed the opinion that this power of the directors is absolute and
May 1930. Miranda died (testate. Haha JK) and an action by the cannot be limited by the subscription contract, but this does not mean
administratix, Romana Miranda, was filed against the corporation to that the directors may not rely on the subscription contract it they see
recover what was paid by Miranda. fit to do so.

Miranda Argument: the officers of the corporation violated the terms When this action was filed, the last of the installments had already
of the power of attorney in mortgaging the land for P10k, because the become payable in accordance with the subscription agreement. It
only sum then due and payable by Alberto Miranda to the corporation must be borne in mind that this is not an action by the corporation to
was P3,000, and that when the remaining installments of the stock recover on a subscription agreement, but an action by the
subscription became due, Alberto Miranda was under no obligation to administratrix of a stockholder to recover what was paid in to the
pay them, because the corporation had already ceased to do business, corporation by the stockholder.
and it had taken no steps to compel the other stockholders to pay. à It does not appear from the evidence WON the corporation has any
à note that the company ceased to operate in 1928, but the debts. Neither the fact that the corporation has ceased to do business
subscription provides yearly installments until 1930. nor the fact that the other stockholders have not been required to pay
for their shares in accordance with their subscription agreement
CFI: Dismissed. The company did not violate the terms of the power justifies the ordering the corporation to return to the plaintiff the amount
of attorney and is not liable to the estate of Miranda for the P10k. paid in by Alberto Miranda.
II. ISSUE If the directors have failed to perform their duty with respect to the other
stockholders,the law provides a remedy therefor.
WON the company may be liable for the return of the P10k? No.
à Velasco vs. Poizat: The subscription is a contract between the
III. RATIONALE corporation and the subscriber, and courts will enforce it for or against
Miranda can pay the subscription prior to the dates agreed upon 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
The fact that Alberto Miranda agreed on June 8, 1926 to pay the any agreement to this effect is invalid.
amount of his subscription in installments on certain fixed dates did not
prevent him from authorizing the officers of the corporation as his IV. DISPOSITIVE
attorneys-in-fact to pay his subscription prior to the dates fixed in the The decision appealed from is affirmed, with the costs against the
subscription agreement appellant.