Mr. Arsenio R. Reyes

September 5, 1983 Mr. Arsenio R. Reyes R-303 Roman R. Santos Plaza Lacson, Manila Sir : This is in connection with your letter dated August 20, 1983, asking the help of this Commission as to how you could enforce the writ of execution issued by the Regional Trial Court, National Capital Judicial Region, Quezon City, Branch LXXXVIII against the unpaid shares of stocks of the incorporators of Automotive Dies, Inc.,in the sum of P600,000.00. The Corporation Code provides for a remedy in the enforcement of payment of unpaid subscription after ordinary remedies cannot be had. The law provides, thus: "SECTION 70. Court Action to recover unpaid subscription . Nothing in this Code shall prevent the corporation from collecting by action in a court of proper jurisdiction the amount due on any unpaid subscription, with accrued interest, cost and expenses" (emphasis supplied). It would appear, therefore, that judicial action against the incorporators is necessary to enforce their liabilities of unpaid subscription. Thus, if the corporation does not enforce the liabilities of its stockholders, the creditors may do so inasmuch as unpaid subscription is an asset to which the corporation's creditors may look for payment under the so-called "trust fund theory". As to whether or not the Commission could revoke the permit of the corporation to operate in view of its failure to pay the alleged judgment ,Section 6 (1) * of P.D. 902-A, as amended, enumerates the grounds for revocation of certificates of registration of corporations. "(1) To suspend, or revoke, after proper notice and hearing, the franchise or certificates of registration of corporations, partnerships or associations, upon any of the grounds provided by law, including the following: LibLex 1. Fraud in procuring certificate of registration; 2. Serious misrepresentation as to what the corporation can do or is doing to the great prejudice of or damage to the general public; 3. Refusal to comply or defiance of any lawful order of the Commission restraining commission of acts which would amount to a grave violation of its franchise; 4. Continuous inoperation for a period of at least five (5) years; 5. Failure to file required reports in appropriate forms as determined by the Commission within the prescribed period." Considering that the ground for revocation stated in your letter is not among those enumerated above, we regret to inform you that the Commission cannot take cognizance thereof. LibLex Very truly yours, (SGD.) MANUEL G. ABELLO Chairman * Copied verbatim from documents obtained directly from the Securities and Exchange Commission .