Keller & Co. Ltd vs COB Group Marketing Inc.
141 SCRA 86 [GR No. L-68097 January 16, 1986]
Facts: Edward A. Keller & Co. Ltd appointed COB Group Marketing Inc. as exclusive distributor of its household products, Brite and Nuvan in Panay and Negros, as shown in the sales agreement dated March 14, 1970. Under that agreement sold by Keller on credit its products to COB Group Marketing. As security for COB Group Marketing’s credit, purchases up to amount of Php35,000, one Asuncion Manahan mortgaged her land to Keller. Manahan assumed solidarity with COB Group the faithful performance of all terms and conditions of the sales agreement. In July 1970 the parties executed a second sales agreement whereby COB Group Marketing’s territory was extended to Northern and Southern Luzon. As security for the credit purchases up to Php25,000 of COB Group Marketing for that area, Tomas C. Lorenzo Jr. and his father executed a mortgage on their land in Nueva Ecija. Like Manahan, the Lorenzos were solidarily liable with COB Group Marketing for its obligations under the sales agreement. The credit purchases of COB Group Marketing, which started on October 15, 1969, limited up to January 22, 1971. On May 8, the board of directors of COB Group Marketing where apprised by Jose E. Bax, the firm’s president and general manager, that the firm owed Keller about Php179,000. Bax was authorized to negotiate with Keller for the settlement of his firm’s liability.
Issue: Whether or not the stockholders of COB Group Marketing can be held personally liable for the credit.
Held: No. As to the liability of the stockholders, it is settled that a stockholder is personally liable for the financial obligations of a corporation to the extent of his unpaid subscription.