Gelano vs. Court of Appeals, G.R. No. L-39050, February 24, 1981
Subject: Obligations and Contracts
FACTS
Carlos and Guillermina Gelano,
were sued by the private respondent, Insular Sawmill, Inc., for the recovery of
P11,736.40. The private respondent is a corporation that was organized on
September 17, 1945 with a corporate life of fifty (50) years. On November 20,
1960, the private respondent amended its Articles of Incorporation to shorten
its term of existence up to December 31, 1960 only. However, the private
respondent failed to notify the trial court of the amendment and no
substitution of party was ever made.
On November 20, 1964, the trial
court rendered a decision in favor of the private respondent. The petitioners
appealed the decision to the Court of Appeals, but the Court of Appeals
affirmed the decision of the trial court.
The petitioners filed a petition
for certiorari with the Supreme Court, arguing that the private respondent
could no longer sue or be sued after its dissolution.
ISSUE
Whether or not a corporation,
whose corporate life had ceased by the expiration of its term of existence,
could still continue prosecuting and defending suits after its dissolution and
beyond the period of three years provided for under Act No. 1459, otherwise
known as the Corporation law, to wind up its affairs, without having undertaken
any step to transfer its assets to a trustee or assignee.
RULING
Yes.
Under Section 77 of the
Corporation Law, when Insular Sawmill, Inc. was dissolved on December 31, 1960,
it still has the right until December 31, 1963, to prosecute in its name the
present case. After the expiration of said period, the corporation ceased to
exist for all purposes, and it can no longer sue or be sued.
However, a corporation that has a
pending action and which cannot be terminated within the three-year period
after its dissolution is authorized under Section 78 to convey all its property
to trustees to enable it to prosecute and defend suits by or against the
corporation beyond the three-year period although Insular Sawmill did not
appoint any trustee, yet the counsel who prosecuted and defended the interest
of the corporation in the instant case and who in fact appeared in behalf of
the corporation may be considered a trustee of the corporation at least with
respect to the matter in litigation only.
From the above quoted commentary
of Justice Fisher, the trustee may commence a suit which can proceed to final
judgment even beyond the three-year period. No reason can be conceived why a
suit already commenced By the corporation itself during its existence, not by a
mere trustee who, by fiction, merely continues the legal personality of the
dissolved corporation should not be accorded similar treatment allowed — to
proceed to final judgment and execution thereof.
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