Mr. Emigio M. Abalahin

August 20, 1982 Mr. Emigio M. Abalahin 2530-C P. Villanueva St. Pasay City Sir : This refers to your letter dated July 12, 1982, requesting for help in the recovery of your investment with the Manila Institute of Hotel and Restaurant Administration, Inc. amounting to P1,000.00. In connection therewith, please be advised that the Corporation Code of the Philippines does not confer upon any stockholder the right to demand refund of his investment conformably to the general rule that the subscription to the capital stock of a corporation constitutes a trust fund for the benefit of the creditors and no valid agreement can be made by which a subscriber can be released therefrom. (Fletcher Cyclopedia Corporations, Vol. 4, 1747 citing Leman v. Teter, 169 III App. 503). Moreover, "a contract of subscription is, at least in the sense which creates an estoppel, a contract among the several subscribers. For this reason, no one of the subscribers can withdraw from the contract without the consent of all the others and thereby diminish without the universal consent, the common fund in which all have acquired an interest". (Agbayani, Commentaries and Jurisprudence on the Commercial Laws of the Philippines, 1980 Edition p. 449, citing Lingayen Gulf Electric Power Co. v. Baltazar, GR No. L-4824, June 23, 1953, 49 OG 809). Considering the foregoing, it is our view that the investment made to the corporation in exchange for shares of stocks and which now forms part of the substantial assets of the corporation can only be withdrawn upon approval of the Board of Directors and stockholders respectively, provided that no creditors is prejudiced by said withdrawal and provided further that all laws, rules and regulations pertinent to said withdrawal is duly observed and complied with. This Commission, therefore, cannot legally compel the corporation to return your investment. Please be advised accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Associate Commissioner