8ALA V SILANG 1kAIIIC CC (1942) conLracL of sale noL subscrlpLlon

uocLrlne WheLher a parLlcular conLracL ls a subscrlpLlon or a sale of sLock ls a maLLer of consLrucLlon

and depends upon lLs Lerms and Lhe lnLenLlon of Lhe parLles
SecLlon 61 relncorporaLlon subscrlpLlon A subscrlpLlon for shares of sLock of a corporaLlon sLlll Lo be
formed shall be lrrevocable for a perlod of aL leasL slx (6) monLhs from Lhe daLe of subscrlpLlon unl ess
al l of Lhe oLher subscrl bers consenL Lo Lhe revocaLl on or unl ess Lhe l ncorporaLl on of
sal d corporaLlon falls Lo maLerlallze wlLhln sald perlod or wlLhln a longer perlod as may be sLlpulaLed ln
Lhe conLracL of subscrlpLlon rovlded 1haL no prelncorporaLlon subscrlpLlon may be revoked afLer Lhe
submlsslon of Lhe arLlcles of lncorporaLlon Lo Lhe SecurlLles and Lxchange Commlsslon
lacLs
Sofronlo 8ayla and oLher peLlLloners lnsLlLuLed Lhls acLlon ln Lhe Cll of CavlLe agalnsL Sllang 1rafflc
CorporaLlon ln order Lo recover a sum of money Lhey pald Lo Lhe corporaLlon on accounL of shares of
sLock Lhey each agreed Lo Lake and pay for under Lhe condlLlon LhaL lf Lhe subscrlber falls Lo pay any of
Lhe lnsLallmenLs when due or lf Lhey are levled upon by Lhe credlLors of Lhe sald subscrlber Lhe shares
were Lo reverL Lo Lhe seller and Lhe paymenLs already made wlll also be forfelLed Lo Lhe seller and LhaL
Lhe laLLer may Lake possesslon wlLhouL courL proceedlngs
1he followlng people agreed Lo purchase Lhe followlng number of shares and up Lo Aprll 30 1937 had
pald Lhe followlng amounLs
Sofronlo 8ayla 8 shares hp360
venanclo 1oledo 8 shares hp373
!osefa naval 13 shares hp673
az 1oledo 13shares hp673

1he 8oard of ulrecLors of Lhe CorporaLlon lssued a resoluLlon on AugusL 1 1937 resclndlng Lhe
agreemenL hence 8ayla and Lhe oLher peLlLloners lnsLlLuLed Lhls acLlon 1he corporaLlon alleged LhaL
Lhe resoluLlon ls noL appllcaLlon Lo 8ayla and Lhe oLhers because Lhelr subscrlbed shares of sLock had
already auLomaLlcally reverLed Lo Lhe coporaLlon and Lhe lnsLallmenLs made by Lhem were already
forfelLed and LhaL Lhe Aug 1 1937 resoluLlon was cancelled by a subsequenL resoluLlon
lssues
1 WheLher Lhe conLracL ls a conLracL of subscrlpLlon
2 WheLher Lhe fallure of 8ayla and Lhe oLhers Lo pay any lnsLallmenL can auLomaLlcally glve rlse Lo
forfelLure of Lhe amounLs and Lhe reverslon of Lhe shares Lo Lhe corporaLlon
3 WheLher Lhe Aug 1 2937 resoluLlon was valld
Peld
1 nC 1he conLracL ls one of sale noL subscrlpLlon
1he sald agreemenL ls enLlLled AgreemenL for lnsLallmenL Sale of Shares ln Lhe Sllang 1rafflc
Co" and whlle Lhe purchaser ls deslgnaLed as Lhe subscrlber" and Lhe corporaLlon seller" Lhe
agreemenL was enLered lnLo ln 1933 long afLer Lhe lncorporaLlon and organlzaLlon of Lhe
corporaLlon whlch Look place ln 1927 1he purchase was Lo be payable ln quarLerly lnsLallmenLs
for flve years 1he lower courL falled Lo see Lhe dlsLlncLlon beLween a subscrlpLlon and a
purchase A subscrlpLlon properly speaklng ls Lhe muLual agreemenL of Lhe subscrlbers Lo Lake
and pay for Lhe sLock of a corporaLlon whlle a purchase ls an lndependenL agreemenL beLween
Lhe lndlvldual and Lhe corporaLlon Lo buy shares of sLock from lL aL sLlpulaLed prlce

2 nC
1he conLracL acLually provlded for an lnLeresL of 6 pa on deferred paymenLs whlch would noL
have been presenL lf Lhe lnLenLlon of Lhe parLles was Lhe auLomaLlc forfelLure and cancellaLlon
of Lhe conLracL Also Lhe conLracL dld noL expressly provlde LhaL demand shall noL be necessary
ln order LhaL defaulL may arlse
3 ?es
Slnce Lhe conLracL ls one of purchase Lhere ls no legal lmpedlmenL Lo lLs resclsslon by
agreemenL of Lhe parLles ln Lhe flrsL resoluLlon Lhe reclsslon was made for Lhe good of Lhe
corporaLlon and ln order Lo LermlnaLe Lhe Lhen pendlng clvll case lnvolvlng Lhe valldlLy of Lhe sale of
Lhe shares ln quesLlon among oLhers 8ayla and Lhe oLhers agreed Lo Lhe resclsslon as shown by
Lhelr demand for Lhe refund of Lhe amounLs Lhey had pald as provlded ln sald resoluLlon 8uL Lhe
subsequenL revocaLlon of Lhe resclsslon ln Lhe flrsL resoluLlon ls lnvalld as lL was noL agreed Lo by Lhe
parLles