VICENTE SABALVARO v. ERLANGER & GALINGER, INC. G.R. No. L-43045, August 17, 1937

VICENTE SABALVARO v. ERLANGER & GALINGER, INC.

G.R. No. L-43045, August 17, 1937

Corporation Law Case Digest by John Paul C. Ladiao (15 March 2016)

(Topic: Consideration for Stocks and Transfer)

FACTS:

The defendant corporation accepted the services of the plaintiff, as its employee, on April 16, 1920. A few months after the plaintiff had entered said defendant's service — the record is silent as to the said date — the defendant Feldstein, who was the vice-president thereof, offered to sell him the share which had originally been issued in the name of Serapio Estabaya and transferred by the latter to the corporation, for economic reasons. In view of the fact that the plaintiff had no money available to pay for the value of the share offered to him, which was P500, he by agreement with Feldstein signed a promissory note for said amount, with the understanding that it would be paid piecemeal with bonus thereafter to be given him monthly as dividends by the corporation, which was so done although not completed.

When the plaintiff voluntarily separated from the service of the defendant corporation on February 17m 1933, he asked the latter and the officers thereof to purchase his 10 shares in question as they previously purchased those of other employees. He likewise asked them to pay him 7 per cent of the value of his said shares, as interest, during the year 1932. He finally requested them to commute his accrued leave by paying him the value thereof, as they previously did to other employees of the corporation. He was granted nothing, however, except authority to sell to whomsoever he wished, 7 said 10 shares which he had in the corporation.

ISSUE:

Whether or not that the defendant corporation or its officer, who are the other defendants, under obligation or not to purchase from the plaintiff his ten shares of stock in the corporation, after the plaintiff separation from said defendant corporation?

HELD:

NO.

It is evident that in no contract may a contracting party be obligated to more than what he has really bound himself and that the contract should not be construed as including things and cases different from those with respect to which the persons interested intended to contract (art. 1283, Civil Code).

The second paragraph of Exhibit B which imposes upon the plaintiff the condition not to sell the two shares stated therein without first obtaining authority from the defendant Feldstein in the case said plaintiff should leave the employ of the corporation, does not mean that there is obligation on the part of said corporation, its officers or Feldstein himself to purchase from him the two shares in question. It should be borne in mind that said shares were not purchased by the plaintiff with his own money but with the dividend or profits earned by the same.

This court is of the opinion that the doctrine laid down in the case of Padgett vs. Badcock & Templeton, Inc. and Babcock ([1933], 59 Phil., 232), is applicable to the case at bar. In the absence of a contract, either express or implied, providing for the acquisition by a corporation or its officers of the shares of the stockholders thereof, they should not and cannot be obliged to acquire them. Therefore the answer to be given to the first question raised by the plaintiff must be in the negative.