Philippine Contractors Accreditation Board

June 19, 1987 Philippine Contractors Accreditation Board 4th Flr., Trade & Industry Centre Tordesillas St., Salcedo Village Makati, Metro Manila Attention : Mr . Ramon P . Ereneta, Jr . Gentlemen: This refers to your letter, dated June 3, 1987, requesting certain information affecting Honeycomb Builders, Inc. (HBI) and Guevent Industrial Development Corporation. Conformably thereto, please be informed that Honeycomb Builders, Inc. (formerly: Abonos Manufacturing, Inc.) was registered with this Commission on June 3, 1976. It has an authorized capital stock of P20,000,000.00 divided into 2,000,000 shares of the par value of P10.00 each. Its subscribed capital stock amounts to P4,000,000.00 of which P1,000,000.00 was paid on account thereof. Records show that the company maintains the same amount of capital structure. The Commission has not received any application for increase of capital stock affecting the corporation. Likewise, please be informed that as per records of this Commission, Guevent Industrial Development Corporation does not appear to be under the provisional remedy of receivership. As to whether Guevent Industrial Development Corporation is authorized to condone a debt owing to it by Honeycomb Builders, Inc., please be advised that debts due to a corporation constitute a portion of its assets, and may be reached by creditors . (Agbayani, Commercial Laws of the Philippines, Vol. 3, 1984 ed., p. 457). As previously ruled in a number of cases under the "trust fund doctrine", the capital of a corporation, or the assets of an insolvent corporation representing its capital stock, is a trust fund for the benefit of the corporation's creditors. (15 A Fletcher Cyc. Corp., 1981 Rev. Vol., sec. 7369). As defined by Mr. Fletcher, "capital" refers to the "actual property or estate of the corporation, whether in money or property". (Fletcher, Cyc. Corps., Vol. II, p. 17, cited in Agbayani, Commercial Laws of the Phil., Vol. 3, p. 83). Such concept of capital includes all assets of the corporation derived from all sources. (Agbayani, Supra.). Corollary thereto, these assets may consist of property in the possession of the corporation, accounts receivables, choses in action, claims of various kinds, and others. (15 A Fletcher, sec. 7369). Hence, assets are held as trust fund to which creditors may follow and subject to the payment of their claims such part thereof wrongfully distributed or withdrawn by the stockholders, or paid or conveyed to third persons without consideration. (Fletcher, Supra.) Such gratuitous abandonment of right by the board of directors of Guevent Industrial Development Corporation if done to the prejudice of creditors and stockholders may constitute an ultra-vires act. Finally, please be informed that this administrative opinion rendered herein does not restrain or preclude judicial interpretation of the law should the issue raised therein be litigated in court. Very truly yours, (SGD.) JULIO A. SULIT, JR. Chairman