Enano-Bote vs Alvarez, GR 223572, Nov. 10, 2020*

Doctrine:
The trust fund doctrine or theory has been, perhaps, most often applied to the case where a creditor of an insolvent corporation seeks to compel a stockholder to pay a balance claimed to be due on stock for which the par value has never been paid to the corporation. As long as a corporation remains solvent the subscriber's only liability runs to the corporation.
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.
A corporate creditor cannot immediately invoke the trust fund doctrine to proceed against unpaid subscriptions of stockholders of the debtor corporation without alleging and proving the corporation's insolvency or any of the other acceptable grounds where the trust fund doctrine, theory or principle has been applied. The observation that a corporation has the beneficial or equitable as well as the legal title of its capital stock and is in business to make money for itself and its stockholders and not for its creditors is well taken. As well, the capital stock of a corporation is a trust to be managed during its corporate life for the benefit of stockholders. It is only in the event of its dissolution or insolvency, does the capital stock become a trust fund for the benefit of its creditors
Facts:
●     On   February  3,    1999,      plaintiff-appellee     Subic      Bay
Metropolitan Authority (SBMA for brevity) entered into a
Lease Agreement with defendant/third-party plaintiff Centennial Air, Inc. (CAIR for brevity), represented by defendant Roberto Lozada (Lozada for brevity), for the lease of Building 8324
●     For the duration of the lease, CAIR became delinquent and was constantly remiss in the payment of its obligations.
Despite repeated demands, CAIR still failed to comply.
●     SBMA was compelled to file a Complaint against the former and its stockholders asking for the payment of its outstanding obligation in the total amount of
US$163,341.89.
●     Enano-Bote, et al. filed their Answer denying any liability to SBMA. They argued that they were no longer stockholders of the corporation at the time the Lease Agreement was executed between [CAIR] and SBMA on February 3, 1999.
○ Allegedly, on December 1, 1998, they entered into a Deed of Assignment of Subscription Rights with third-party defendant-appellee Jose Ch. Alvarez, whereby they assigned, transferred, and conveyed their aggregate subscription of [400,000] shares, representing [100%] of the outstanding capital stock of CAIR, in favor of Alvarez.
○ Since they ceased to be stockholders of the corporation, they were no longer parties to the Lease Agreement, thus they cannot be held liable for any breach thereof.
●     the CA affirmed the RTC's invocation of Halley v. Printwell,
Inc. to justify the application of the trust fund doctrine
○ the RTC is convinced that petitioners may be held liable up to the extent of their unpaid subscription for the payment of CAIR's outstanding obligation to SBMA.

Issue: Whether or not the trust fund doctrine is applicable in the case at bar.

Held:
●     NO
●     Halley v. Printwell recognized two instances when the creditor is allowed to maintain an action upon any unpaid subscriptions based on the trust fund doctrine: (1) where the debtor corporation released the subscriber to its capital stock from the obligation of paying for their shares, in whole or in part, without a valuable consideration, or fraudulently, to the prejudice of creditors; and (2) where the debtor corporation is insolvent or has been dissolved without providing for the payment of its creditors.
○ It is the second instance which SBMA, as creditor, may invoke to collect from CAIR's stockholders for their unpaid subscriptions and apply the same to CAIR's unpaid rentals. But, as stressed in Halley: "To make out a prima facie case in a suit against stockholders of an insolvent corporation to compel them to contribute to the payment of its debts by making good unpaid balances upon their subscriptions, it is only necessary to establish that the stockholders have not in good faith paid the par value of the stocks of the corporation."
●     SBMA has not even pleaded either insolvency of CAIR or its dissolution. What is evident in SBMA's complaint is that it is a simple collection suit.
●     SBMA failed to either allege or prove any of the two grounds recognized in Halley when the trust fund doctrine may be applied to compel the stockholders to contribute to the payment of CAIR's debts by compelling them to pay the unpaid balances upon their subscriptions.
●     With the Court's finding that the CA erred in applying the trust fund doctrine to make the stockholders liable to SBMA for their unpaid subscriptions to the extent of CAIR unpaid obligations to SBMA, and without any evidence to controvert the total amount of US$163,341.89, plus legal interest, adjudged by the lower courts in favor of SBMA, only CAIR should be solely liable therefor.