1. A,B, and C are shareholders of XYZ Company.

A has an unpaid subscription

of P100,000.00. B’s chares are fully paid up, while C only owns nominal but
fully paid up shares and is a director and officer. XYZ Company becomes
insolvent and it is established that the insolvency is the result of fraudulent
practices within the company. If you were counsel for a creditor of XYZ
Company, would you advise legal action against A,B, and C? (1997 BAR)
ANSWER: (a) An action can be brought against A for P100,000.00 which is
the amount of his unpaid subscription. Since the corporation is insolvent,
the limit of a stockholder’s liability to the creditor is only up to the extent of
his unpaid subscription. (b) There is no cause of action against B because he
has already fully paid for his subscription. As stated earlier, the limit of the
stockholder’s liability to the creditor of the corporation, when the latter
becomes insolvent, is the extent of his unpaid subscription. (c) An action
can be filed against C, not as a stockholder because he has already paid up
his shares, but in his capacity as director and officer because of the
corporation’s insolvency being the result of fraudulent practices within the
company. Directors are liable jointly and severally for damages sustained by
the corporation, stockholders or other persons resulting from gross
negligence or bad faith in directing the affairs of the corporation. (Sec. 30,
Revised Corporation Code)