Professional Documents
Culture Documents
Corpo Case Digests - Set15 PDF
Corpo Case Digests - Set15 PDF
VESAGAS
vs.
CA
Then,
in
a
resolution
rendered
on
March
16,
2000,
it
similarly
denied
G.R.
No.
142924
–
December
5,
2001
their
motion
for
reconsideration.
FACTS:
Petitioner’s
Contention:
The
respondent
spouses
Delfino
and
Helenda
Raniel
are
members
in
good
standing
of
the
Luz
Village
Tennis
Club,
Inc.
(club).
They
alleged
1. Petitioners
contend
that
since
its
inception
in
the
1970's,
the
that
petitioner
Teodoro
B.
Vesagas,
who
claims
to
be
the
club's
duly
club
in
practice
has
not
been
a
corporation.
They
add
that
it
elected
president,
in
conspiracy
with
petitioner
Wilfred
D.
Asis,
who,
in
was
only
the
respondent
spouses,
motivated
by
their
own
turn,
claims
to
be
its
duly
elected
vice-‐president
and
legal
counsel,
personal
agenda
to
make
money
from
the
club,
who
summarily
stripped
them
of
their
lawful
membership,
without
due
surreptitiously
caused
its
registration
with
the
SEC.
They
then
process
of
law.
Thereafter,
respondent
spouses
filed
a
complaint
with
assert
that,
at
any
rate,
the
club
has
already
ceased
to
be
a
the
SEC
on
March
26,
1997
against
the
petitioners.
corporate
body.
Therefore,
no
intra-‐corporate
relations
can
arise
as
between
the
respondent
spouses
and
the
club
or
any
In
this
case,
respondents
asked
the
Commission
to
declare
as
illegal
of
its
members.
Stretching
their
argument
further,
petitioners
their
expulsion
from
the
club
as
it
was
allegedly
done
in
utter
insist
that
since
the
club,
by
their
reckoning
is
not
a
disregard
of
the
provisions
of
its
by-‐laws
as
well
as
the
requirements
corporation,
the
SEC
does
not
have
the
power
or
authority
to
of
due
process.
They
likewise
sought
the
annulment
of
the
inquire
into
the
validity
of
the
expulsion
of
the
respondent
amendments
to
the
by-‐laws
made
on
December
8,
1996,
changing
the
spouses.
annual
meeting
of
the
club
from
the
last
Sunday
of
January
to
2. They
claim
in
gratia
argumenti
that
while
the
club
may
have
November
and
increasing
the
number
of
trustees
from
nine
to
fifteen.
been
considered
a
corporation
during
a
brief
spell,
still,
at
the
Finally,
they
prayed
for
the
issuance
of
a
Temporary
Restraining
Order
time
of
the
institution
of
this
case
with
the
SEC,
the
club
was
and
Writ
of
Preliminary
Injunction.
The
application
for
TRO
was
already
dissolved
by
virtue
of
a
Board
resolution.
denied
by
SEC
Hearing
Officer
Soller
in
an
Order
dated
April
29,
1997.
ISSUE:
Before
the
hearing
officer
could
start
proceeding
with
the
case,
Whether
or
not
a
corporation
may
be
dissolved
by
a
mere
resolution?
however,
petitioners
filed
a
motion
to
dismiss
on
the
ground
that
the
SEC
lacks
jurisdiction
over
the
subject
matter
of
the
case.
The
motion
HELD:
was
denied.
Their
subsequent
move
to
have
the
ruling
reconsidered
NO.
The
Corporation
Code
establishes
the
procedure
and
other
formal
was
likewise
denied.
They
filed
a
petition
for
certiorari
with
the
SEC
En
requirements
a
corporation
needs
to
follow
in
case
it
elects
to
dissolve
Banc
seeking
a
review
of
the
hearing
officer's
orders.
The
petition
was
and
terminate
its
structure
voluntarily
and
where
no
rights
of
again
denied
for
lack
of
merit,
and
so
was
the
motion
for
its
creditors
may
possibly
be
prejudiced,
thus:
reconsideration
in
separate
orders,
dated
July
14,
1998
and
November
17,
1998,
respectively.
Dissatisfied
with
the
verdict,
petitioners
"Sec.
118.Voluntary
dissolution
where
no
creditors
promptly
sought
relief
with
the
CA
contesting
the
ruling
of
the
are
affected.
—
If
dissolution
of
a
corporation
does
Commission
en
banc.
The
appellate
court,
however,
dismissed
the
not
prejudice
the
rights
of
any
creditor
having
a
petition
for
lack
of
merit
in
a
Decision
promulgated
on
July
30,
1999.
claim
against
it,
the
dissolution
may
be
effected
by
majority
vote
of
the
board
of
directors
or
trustees
board
members'
certification.
Lastly,
and
most
important
of
all,
the
and
by
a
resolution
duly
adopted
by
the
affirmative
SEC
Order
of
Dissolution
was
never
submitted
as
evidence.
vote
of
the
stockholders
owning
at
least
two-‐thirds
(2/3)
of
the
outstanding
capital
stock
or
at
least
ADDITIONAL
INFO:
The
Court
upheld
the
jurisdiction
of
the
SEC
as
two-‐thirds
(2/3)
of
the
members
at
a
meeting
to
be
the
present
dispute
is
intra-‐corporate
in
character,
the
parties
involved
held
upon
call
of
the
directors
or
trustees
after
are
officers
and
members
of
the
Corporation
and
the
conflict
relates
to
publication
of
the
notice
of
time,
place
and
object
of
this
relation,
the
case
at
bar
should
now
be
referred
to
the
appropriate
the
meeting
for
three
(3)
consecutive
weeks
in
a
RTC.
The
jurisdiction
to
resolve
intra-‐corporate
controversies
has
been
newspaper
published
in
the
place
where
the
transferred
to
the
courts
of
general
jurisdiction
under
RA
8799.
Finally,
principal
office
of
said
corporation
is
located;
and
if
on
the
alleged
failure
of
respondents
to
implead
the
club
to
the
case,
no
newspaper
is
published
in
such
place,
then
in
a
the
remedy
thereof
is
to
implead
the
non-‐party
claimed
to
be
newspaper
of
general
circulation
in
the
Philippines,
necessary
or
indispensable.
after
sending
such
notice
to
each
stockholder
or
member
either
by
registered
mail
or
by
personal
GELANO
vs.
CA.
delivery
at
least
30
days
prior
to
said
meeting.
A
G.R.
No.
L-‐39050
–
February
24,
1981
copy
of
the
resolution
authorizing
the
dissolution
shall
be
certified
by
a
majority
of
the
board
of
FACTS:
directors
or
trustees
and
countersigned
by
the
Private
respondent
Insular
Sawmill,
Inc.
is
a
corporation
organized
on
secretary
of
the
corporation.
The
Securities
and
September
17,
1945
with
a
corporate
life
of
fifty
(50)
years
(up
to
Exchange
Commission
shall
thereupon
issue
the
September
17,
1995),
with
the
primary
purpose
of
carrying
on
a
certificate
of
dissolution."
general
lumber
and
sawmill
business.
To
carry
on
this
business,
private
respondent
leased
the
paraphernal
property
of
petitioner-‐wife
We
note
that
to
substantiate
their
claim
of
dissolution,
petitioners
Guillermina
M.
Gelano
at
the
corner
of
Canonigo
and
Otis,
Paco,
Manila
submitted
only
two
relevant
documents:
the
Minutes
of
the
First
for
P1,200.00
a
month.
It
was
while
private
respondent
was
leasing
the
Board
Meeting
held
on
January
5,
1997,
and
the
board
resolution
aforesaid
property
that
its
officers
and
directors
had
come
to
know
issued
on
April
14,
1997
which
declared
"to
continue
to
consider
petitioner-‐husband
Carlos
Gelano
who
received
from
the
corporation
the
club
as
a
non-‐registered
or
a
non-‐corporate
entity
and
just
a
cash
advances
on
account
of
rentals
to
be
paid
by
the
corporation
on
social
association
of
respectable
and
respecting
individual
the
land.
members
who
have
associated
themselves,
since
the
1970's,
for
the
purpose
of
playing
the
sports
of
tennis
.
.
.
."
Obviously,
these
Between
November
19,
1947
to
December
26,
1950
petitioner
Carlos
two
documents
will
not
suffice.
The
requirements
mandated
by
Gelano
obtained
from
private
respondent
cash
advances
of
P25,950.00.
the
Corporation
Code
should
have
been
strictly
complied
with
The
said
sum
was
taken
and
received
by
petitioner
Carlos
Gelano
on
by
the
members
of
the
club.
The
records
reveal
that
no
proof
the
agreement
that
private
respondent
could
deduct
the
same
from
the
was
offered
by
the
petitioners
with
regard
to
the
notice
and
monthly
rentals
of
the
leased
premises
until
said
cash
advances
are
publication
requirements.
Similarly
wanting
is
the
proof
of
the
fully
paid.
Out
of
the
aforementioned
cash
advances
in
the
total
sum
of
P25,950.00,
petitioner
Carlos
Gelano
was
able
to
pay
only
P5,950.00
thereby
leaving
an
unpaid
balance
of
P20,000.00
which
he
refused
to
court
was
not
notified
of
the
amendment
shortening
the
corporate
pay
despite
repeated
demands
by
private
respondent.
Petitioner
existence
and
no
substitution
of
party
was
ever
made.
Guillermina
M.
Gelano
refused
to
pay
on
the
ground
that
said
amount
was
for
the
personal
account
of
her
husband
asked
for
by,
and
given
to
RTC:
Rendered
decision
in
favor
of
the
private
respondents
him,
without
her
knowledge
and
consent
and
did
not
benefit
the
CA:
Modified
the
decision
of
the
RTC
by
holding
petitioner
spouses
family.
jointly
and
severally
liable
on
respondents
claim.
On
various
occasions
from
May
4,
1948
to
September
11,
1949
After
petitioners
received
a
copy
of
the
decision
on
August
24,
1973,
petitioners
husband
and
wife
also
made
credit
purchases
of
lumber
they
came
to
know
that
the
Insular
Sawmill
Inc.
was
dissolved
way
materials
from
private
respondent
with
a
total
price
of
P1,120.46
in
back
on
December
31,
1960.
Hence,
petitioners
filed
a
motion
to
connection
with
the
repair
and
improvement
of
petitioners'
residence.
dismiss
the
case
and/or
reconsideration
of
the
decision
of
the
Court
of
On
November
9,
1949
partial
payment
was
made
by
petitioners
in
the
Appeals
on
grounds
that
the
case
was
prosecuted
even
after
amount
of
P91.00
and
in
view
of
the
cash
discount
in
favor
of
dissolution
of
private
respondent
as
a
corporation
and
that
a
defunct
petitioners
in
the
amount
of
P83.00,
the
amount
due
private
corporation
cannot
maintain
any
suit
for
or
against
it
without
first
respondent
on
account
of
credit
purchases
of
lumber
materials
is
complying
with
the
requirements
of
the
winding
up
of
the
affairs
of
the
P946.46
which
petitioners
failed
to
pay.
corporation
and
the
assignment
of
its
property
rights
within
the
required
period.
On
July
14,
1952,
in
order
to
accommodate
and
help
petitioners
renew
previous
loans
obtained
by
them
from
the
China
Banking
Corporation,
ISSUE:
private
respondent,
through
Joseph
Tan
Yoc
Su,
executed
a
joint
and
Whether
or
not
a
corporation
whose
corporate
life
had
ceased
by
the
several
promissory
note
with
Carlos
Gelano
in
favor
of
said
bank
in
the
expiration
of
its
term
of
existence,
could
still
continue
prosecuting
and
amount
of
P8,000.00
payable
in
sixty
(60)
days.
For
failure
of
Carlos
defending
suits
after
its
dissolution
and
beyond
the
period
of
three
Gelano
to
pay
the
promissory
note
upon
maturity,
the
bank
collected
years
provided
for
under
the
Corporation
law,
to
wind
up
its
affairs,
from
the
respondent
corporation
the
amount
of
P9,106.00
including
without
having
undertaken
any
step
to
transfer
its
assets
to
a
trustee
interests,
by
debiting
it
from
the
corporation's
current
account
with
or
assignee?
the
bank.
Petitioner
Carlos
Gelano
was
able
to
pay
private
respondent
the
amount
of
P5,000.00
but
the
balance
of
P4,106.00
remained
HELD:
unsettled.
Guillermina
M.
Gelano
refused
to
pay
on
the
ground
that
she
The
court
ruled
in
the
affirmative.
had
no
knowledge
about
the
accommodation
made
by
the
corporation
in
favor
of
her
husband.
Section
77
of
the
Corporation
Law
(now
Sec.
122)
provides
that
the
corporation
shall
"be
continued
as
a
body
corporate
for
three
(3)
years
In
the
meantime,
private
respondent
amended
its
Articles
of
after
the
time
when
it
would
have
been
...
dissolved,
for
the
purpose
of
Incorporation
to
shorten
its
term
of
existence
up
to
December
31,
1960
prosecuting
and
defending
suits
By
or
against
it
...,"
so
that,
thereafter,
only.
The
amended
Articles
of
Incorporation
was
filed
with,
and
it
shall
no
longer
enjoy
corporate
existence
for
such
purpose.
For
this
approved
by
the
Securities
and
Exchange
Commission,
but
the
trial
reason,
Section
78
of
the
same
law
(Sec.
122,
2nd
par.)
authorizes
the
corporation,
"at
any
time
during
said
three
years
...
to
convey
all
of
its
property
to
trustees
for
the
benefit
of
members,
Stockholders,
PHILIPPINE
VETERANS
BANK
EMPLOYEES
UNION
vs.
VEGA
creditors
and
other
interested,"
evidently
for
the
purpose,
among
G.R.
No.
105364
–
June
28,
2001
others,
of
enabling
said
trustees
to
prosecute
and
defend
suits
by
or
against
the
corporation
begun
before
the
expiration
of
said
period.
FACTS:
The
Central
Bank
of
the
Philippines
filed
with
the
Regional
Trial
Court
When
Insular
Sawmill,
Inc.
was
dissolved
on
December
31,
1960,
of
Manila
a
Petition
for
Assistance
in
the
Liquidation
of
the
Philippine
under
Section
77
(now
122)
of
the
Corporation
Law,
it
still
has
the
Veterans
Bank.
Thereafter,
the
Philippine
Veterans
Bank
Employees
right
until
December
31,
1963
to
prosecute
in
its
name
the
present
Union-‐N.U.B.E.,
herein
petitioner,
represented
by
petitioner
Perfecto
V.
case.
After
the
expiration
of
said
period,
the
corporation
ceased
to
exist
Fernandez,
filed
claims
for
accrued
and
unpaid
employee
wages
and
for
all
purposes
and
it
can
no
longer
sue
or
be
sued.
benefits
with
said
court.
After
lengthy
proceedings,
partial
payment
of
the
sums
due
to
the
employees
were
made.
However,
due
to
the
However,
a
corporation
that
has
a
pending
action
and
which
cannot
be
piecemeal
hearings
on
the
benefits,
many
remain
unpaid.
Petitioners
terminated
within
the
three-‐year
period
after
its
dissolution
is
moved
to
disqualify
the
respondent
judge
from
hearing
the
above
case
authorized
under
Section
78
(122,
2nd
par.)
to
convey
all
its
property
to
on
grounds
of
bias
and
hostility
towards
petitioners.
In
January
1992
trustees
to
enable
it
to
prosecute
and
defend
suits
by
or
against
the
the
Congress
enacted
Republic
Act
No.
7169
providing
for
the
corporation
beyond
the
Three-‐year
period
although
private
rehabilitation
of
the
Philippine
Veterans
Bank.
Thereafter,
petitioners
respondent
(did
not
appoint
any
trustee,
yet
the
counsel
who
filed
with
the
labor
tribunals
their
residual
claims
for
benefits
and
for
prosecuted
and
defended
the
interest
of
the
corporation
in
the
instant
reinstatement
upon
reopening
of
the
bank.
Sometime
in
May
1992,
the
case
and
who
in
fact
appeared
in
behalf
of
the
corporation
may
be
Central
Bank
issued
a
certificate
of
authority
allowing
the
PVB
to
considered
a
trustee
of
the
corporation
at
least
with
respect
to
the
reopen.
Despite
the
legislative
mandate
for
rehabilitation
and
matter
in
litigation
only.
Said
counsel
had
been
handling
the
case
when
reopening
of
PVB,
respondent
judge
continued
with
the
liquidation
the
same
was
pending
before
the
trial
court
until
it
was
appealed
proceedings
of
the
bank.
Moreover,
petitioners
learned
that
before
the
Court
of
Appeals
and
finally
to
this
Court.
We
therefore
hold
respondents
were
set
to
order
the
payment
and
release
of
employee
that
there
was
a
substantial
compliance
with
Section
78
(122,
2nd
par.)
benefits
upon
motion
of
another
lawyer,
while
petitioners'
claims
have
of
the
Corporation
Law
and
as
such,
private
respondent
Insular
been
frozen
to
their
prejudice.
Sawmill,
Inc.
could
still
continue
prosecuting
the
present
case
even
beyond
the
period
of
three
(3)
years
from
the
time
of
its
dissolution.
Petitioners
argue
that
with
the
passage
of
R.A.
7169,
the
liquidation
court
became
functus
officio,
and
no
longer
had
the
authority
to
The
trustee
may
commence
a
suit
which
can
proceed
to
final
continue
with
liquidation
proceedings.
The
Supreme
Court
resolved
to
judgment
even
beyond
the
three-‐year
period.
No
reason
can
be
issue
a
Temporary
Restraining
Order
enjoining
the
trial
court
from
conceived
why
a
suit
already
commenced
By
the
corporation
itself
further
proceeding
with
the
case.
during
its
existence,
not
by
a
mere
trustee
who,
by
fiction,
merely
continues
the
legal
personality
of
the
dissolved
corporation
should
not
ISSUE:
be
accorded
similar
treatment
allowed
—
to
proceed
to
final
judgment
Whether
or
not
the
RTC
should
not
have
continued
the
liquidation
and
execution
thereof.
after
RA
7169
had
been
enacted.
HELD:
reinstate
the
corporation
to
its
former
position
of
successful
operation
Yes.
Pursuant
to
said
R.A.
No.
7169,
the
Rehabilitation
Committee
and
solvency.
submitted
the
proposed
Rehabilitation
Plan
of
the
PVB
to
the
Monetary
Board
for
its
approval.
Meanwhile,
PVB
filed
a
Motion
to
Terminate
It
is
crystal
clear
that
the
concept
of
liquidation
is
diametrically
Liquidation
of
Philippine
Veterans
Bank
dated
March
13,
1992
with
the
opposed
or
contrary
to
the
concept
of
rehabilitation,
such
that
both
respondent
judge
praying
that
the
liquidation
proceedings
be
cannot
be
undertaken
at
the
same
time.
To
allow
the
liquidation
immediately
terminated
in
view
of
the
passage
of
R.A.
No.
7169.
On
proceedings
to
continue
would
seriously
hinder
the
rehabilitation
of
April
10,
1992,
the
Monetary
Board
issued
Monetary
Board
Resolution
the
subject
bank.
No.
348
which
approved
the
Rehabilitation
Plan
submitted
by
the
Rehabilitation
Committee.
Thereafter,
the
Monetary
Board
issued
a
ADDITIONAL:
Certificate
of
Authority
allowing
PVB
to
reopen.
On
June
3,
1992,
the
Anent
the
claim
of
respondents
Central
Bank
and
Liquidator
of
PVB
liquidator
filed
A
Motion
for
the
Termination
of
the
Liquidation
that
R.A.
No.
7169
became
effective
only
on
March
10,
1992
or
fifteen
Proceedings
of
the
Philippine
Veterans
Bank
with
the
respondent
(15)
days
after
its
publication
in
the
Official
Gazette;
and,
the
judge.
contention
of
intervenors
VOP
Security,
et
al.,
that
the
effectivity
of
said
law
is
conditioned
on
the
approval
of
a
rehabilitation
plan
by
the
As
stated
above,
the
Court,
in
a
Resolution
dated
June
8,
1992,
issued
a
Monetary
Board,
among
others,
the
Court
is
of
the
view
that
both
temporary
restraining
order
in
the
instant
case
restraining
respondent
contentions
are
bereft
of
merit.
judge
from
further
proceeding
with
the
liquidation
of
PVB.
On
August
3,
1992,
the
Philippine
Veterans
Bank
opened
its
doors
to
the
public
While
as
a
rule,
laws
take
effect
after
fifteen
(15)
days
following
the
and
started
regular
banking
operations.
completion
of
their
publication
in
the
Official
Gazette
or
in
a
newspaper
of
general
circulation
in
the
Philippines,
the
legislature
has
Clearly,
the
enactment
of
Republic
Act
No.
7169,
as
well
as
the
the
authority
to
provide
for
exceptions,
as
indicated
in
the
clause
subsequent
developments
has
rendered
the
liquidation
courtfunctus
"unless
otherwise
provided."
officio.
Consequently,
respondent
judge
has
been
stripped
of
the
authority
to
issue
orders
involving
acts
of
liquidation.
In
the
case
at
bar,
Section
10
of
R.A.
No.
7169
provides:
CDAEHS
Liquidation,
in
corporation
law,
connotes
a
winding
up
or
settling
Sec.
10.Effectivity.
—
This
Act
shall
take
effect
upon
with
creditors
and
debtors.
It
is
the
winding
up
of
a
corporation
so
its
approval.
that
assets
are
distributed
to
those
entitled
to
receive
them.
It
is
the
process
of
reducing
assets
to
cash,
discharging
liabilities
and
dividing
Hence,
it
is
clear
that
the
legislature
intended
to
make
the
law
surplus
or
loss.
effective
immediately
upon
its
approval.
It
is
undisputed
that
R.A.
No.
7169
was
signed
into
law
by
President
Corazon
C.
Aquino
on
January
2,
On
the
opposite
end
of
the
spectrum
is
rehabilitation
which
connotes
1992.
Therefore,
said
law
became
effective
on
said
date.
Assuming
for
a
reopening
or
reorganization.
Rehabilitation
contemplates
a
the
sake
of
argument
that
publication
is
necessary
for
the
effectivity
of
continuance
of
corporate
life
and
activities
in
an
effort
to
restore
and
R.A.
No.
7169,
then
it
became
legally
effective
on
February
24,
1992,
the
date
when
the
same
was
published
in
the
Official
Gazette
and
not
on
March
10,
1992,
as
erroneously
claimed
by
respondents
Central
Collector
decided
that
the
Central
Syndicate
was
the
importer
and
Bank
and
Liquidator.
original
seller
of
the
surplus
goods
in
question
and,
therefore,
the
one
liable
to
pay
the
sales
tax.
TAN
TION
BIO
vs.
CIR
G.R.
No.
L-‐
15778
–
April
23,
1962
Central
Syndicate
elevated
the
case
to
the
Court
of
Tax
Appeals
questioning
the
ruling
of
the
Collector
which
denies
its
claim
for
FACTS:
refund.
In
1946,
Central
Syndicate,
a
corporation
organized
under
the
laws
of
the
Philippines,
thru
its
General
Manager,
Sycip,
sent
a
letter
to
the
CIR
Collector
filed
a
motion
requiring
the
syndicate
to
file
a
bond
to
advising
the
latter
that
it
purchased
from
Dee
Hong
Lue
the
entire
guarantee
the
payment
of
the
tax
assessed
against
it
which
motion
was
stock
of
surplus
properties
which
Dee
bought
from
the
Foreign
denied
by
the
Court
of
Tax
Appeals
on
the
ground
that
that
cannot
be
Liquidation
Commission,
and
that
as
it
assumed
Dee’s
obligation
to
pay
legally
done
it
appearing
that
the
syndicate
is
already
a
non-‐existing
the
3.5%
sales
tax
on
said
surplus
goods,
it
was
remitting
the
sum
of
entity
due
to
the
expiration
of
its
corporate
existence.
In
view
of
this
P43,750.00
in
his
behalf
as
deposit
to
answer
for
the
payment
of
said
development,
the
Collector
filed
a
motion
to
dismiss
the
appeal
on
the
sales
tax
with
the
understanding
that
it
would
later
be
adjusted
after
ground
of
lack
of
personality
on
the
part
of
the
syndicate.
the
determination
of
the
exact
consideration
of
the
sale.
The
Court
of
Tax
Appeals
dismissed
the
appeal
primarily
on
the
ground
In
1948,
syndicate
again
wrote
the
Collector
requesting
the
refund
of
that
the
Central
Syndicate
has
no
personality
to
maintain
the
action
P1,103.28
representing
alleged
excess
payment
of
sales
tax
due
to
the
then
pending
before
it.
adjustment
and
reduction
of
the
purchase
price
in
the
amount
of
P31,522.18.
Said
letter
was
referred
to
an
agent
for
verification
and
From
this
order
the
syndicate
appealed
to
the
Supreme
Court
wherein
report.
it
intimated
that
the
appeal
should
not
be
dismissed
because
it
could
be
substituted
by
its
successors-‐in-‐
interest,
to
wit:
Tan
Tiong
Bio,
Yu
Khe
Thai,
Alfonso
Sycip,
Dee
Hong
Lue,
Lim
Shui
Ty,
Sy
Seng
Tong,
Sy
Agent
reported
(1)
that
Dee
Hong
Lue
purchased
the
surplus
goods
as
En,
Co
Giap
and
David
Sycip.
This
Court
ruled
against
the
dismissal.
In
trustee
for
the
Central
Syndicate
which
was
in
the
process
of
permitting
the
substitution,
this
Court
labored
under
the
premise
that
organization
at
the
time
of
the
bidding;
(2)
that
it
was
the
said
officers
and
directors
"may
be
held
personally
liable
for
the
representative
of
the
Central
Syndicate
that
removed
the
surplus
unpaid
deficiency
assessments
made
by
the
Collector
of
Internal
goods
from
their
base
at
Leyte
on
February
21,
1947;
(3)
that
the
Revenue
against
the
defunct
syndicate."
syndicate
must
have
realized
a
gross
profit
of
18.8%
from
its
sales
thereof;
and
(4)
that
if
the
sales
tax
were
to
be
assessed
on
its
gross
After
trial,
the
Court
of
Tax
Appeals
affirmed
CIR’s
ruling.
sales
it
would
still
be
liable
for
the
amount
of
P33,797.88
as
deficiency
sales
tax
and
surcharge
in
addition
to
the
amount
of
P43,750.00
which
the
corporation
had
deposited
in
the
name
of
Dee
Hong
Lue
as
ISSUE:
estimated
sales
tax
due
from
the
latter.
The
Central
Syndicate
having
already
been
dissolved
because
of
the
expiration
of
its
corporate
existence,
WON
the
sales
tax
in
question
can
be
enforced
against
its
successors-‐in-‐interest
who
are
the
present
Considering
that
the
Central
Syndicate
realized
from
the
sale
of
the
petitioners.
surplus
goods
a
net
profit
of
P229,073.83,
and
that
the
sale
of
said
goods
was
the
only
transaction
undertaken
by
said
syndicate,
there
HELD:
being
no
evidence
to
the
contrary,
the
conclusion
is
that
said
net
profit
Yes.
It
was
petitioners
themselves
who
caused
their
substitution
as
remained
intact
and
was
distributed
among
the
stockholders
when
the
parties
in
the
present
case,
being
the
successors-‐in-‐interest
of
the
corporation
liquidated
and
distributed
its
assets
on
August
15,
1948,
defunct
syndicate,
when
they
appealed
this
case
to
the
Supreme
Court.
immediately
after
the
sale
of
the
said
surplus
goods.
They
cannot,
therefore,
be
now
heard
to
complain
if
they
are
made
responsible
for
the
tax
liability
of
the
defunct
syndicate
whose
Petitioners
are
therefore
the
beneficiaries
of
the
defunct
corporation
representation
they
assumed
and
whose
assets
were
distributed
and
as
such
should
be
held
liable
to
pay
the
taxes
in
question.
However,
among
them.
there
being
no
express
provision
requiring
the
stockholders
of
the
corporation
to
be
solidarily
liable
for
its
debts
which
liability
must
be
There
is
good
authority
to
the
effect
that
the
creditor
of
a
dissolved
express
and
cannot
be
presumed,
petitioners
should
be
held
to
be
corporation
may
follow
its
assets
once
they
passed
into
the
hands
of
liable
for
the
tax
in
question
only
in
proportion
to
their
shares
in
the
the
stockholders.
Thus,
recognized
are
the
following
rules
in
American
distribution
of
the
assets
of
the
defunct
corporation.
jurisprudence:
The
dissolution
of
a
corporation
does
not
extinguish
the
debts
due
or
owing
to
it.
A
creditor
of
a
dissolved
corporation
may
OTHERS:
follow
its
assets,
as
in
the
nature
of
a
trust
fund,
into
the
hands
of
its
SYNDICATE
IS
AN
IMPORTER.
Person
who
buys
surplus
goods
from
stockholders.
And
it
has
been
stated,
with
reference
to
the
effect
of
the
Foreign
Liquidation
Commission
and
who
removes
the
goods
dissolution
upon
taxes
due
from
a
corporation,
"that
the
hands
of
the
bought
from
the
U.S.
Military
Bases
in
the
Philippines
is
considered
an
government
cannot,
of
course,
collect
taxes
from
a
defunct
corporation,
importer
of
such
goods
and
is
subject
to
the
sales
tax
or
compensation
it
loses
thereby
none
of
its
rights
to
assess
taxes
which
had
been
due
tax
as
the
case
may
be.
The
Central
Syndicate
as,
owner
of
the
"Mystery
from
the
corporation,
and
to
collect
them
from
persons,
who
by
reason
Pile"
before
its
removal
from
Base
K
and
as
the
one
which
actually
took
of
transactions
with
the
corporation,
hold
property
against
which
the
delivery
thereof
and
removed
the
same
from
the
U.S.
Military
Base,
is
tax
can
be
enforced
and
that
the
legal
death
of
the
corporation
no
more
the
importer
within
the
meaning
of
Section
186
of
the
Revenue
Code,
prevents
such
action
than
would
the
physical
death
of
an
individual
as
it
stood
before
the
enactment
of
Republic
Act
No.
594,
and
its
sales
prevent
the
government
from
assessing
taxes
against
him
and
of
the
surplus
goods
are
the
original
sales
taxable
under
said
section
collecting
them
from
his
administrator,
who
holds
the
property
which
and
not
the
sale
to
it
by
Dee
Hong
Lue.
the
decedent
had
formerly
possessed".
Bearing
in
mind
that
our
corporation
law
is
of
American
origin,
the
foregoing
authorities
have
REBOLLIDO
vs.
CA
persuasive
effect
in
considering
similar
cases
in
this
jurisdiction.
This
G.R.
No.
81123
–
February
28,
1989
must
have
been
taken
into
account
when
this
Court
said
that
petitioners
could
be
held
personally
liable
for
the
taxes
in
question
as
FACTS:
successors-‐in-‐interest
of
the
defunct
corporation.
On
August
7,
1984,
the
petitioners
filed
Civil
Case
No.
8113
for
damages
against
Pepsi
Cola
Bottling
Company
of
the
Philippines,
Inc.
(hereinafter
referred
to
as
Pepsi
Cola)
and
Alberto
Alva
before
the
Earlier
or
in
June
1983,
the
Board
of
Directors
and
the
stockholders
of
Regional
Trial
Court
of
Makati.
Pepsi
Cola
adopted
its
amended
articles
of
incorporation
to
shorten
its
corporate
term
in
accordance
with
Section
120
of
the
Corporation
The
case
arose
out
of
a
vehicular
accident
on
March
1,
1984,
involving
Code
following
the
procedure
laid
down
by
Section
37
(power
to
a
Mazda
Minibus
used
as
a
schoolbus
with
Plate
Number
NWK-‐353
extend
or
shorten
the
corporate
term)
and
Section
16
(amendment
of
owned
and
driven
by
petitioners
Crisostomo
Rebollido
and
Fernando
the
articles
of
incorporation)
of
the
same
Code.
Immediately
after
such
Valencia,
respectively
and
a
truck
trailer
with
Plate
Number
NRH-‐522
amendment
or
on
June
16,
23
and
30,
1983,
Pepsi
Cola
caused
the
owned
at
that
time
by
Pepsi
Cola
and
driven
by
Alberto
Alva.
(p.
37,
publication
of
a
notice
of
dissolution
and
the
assumption
of
liabilities
Rollo)
by
the
private
respondent
in
a
newspaper
of
general
circulation.
On
September
21,
1984,
the
sheriff
of
the
lower
court
served
the
Realizing
that
the
judgment
of
the
lower
court
would
eventually
be
summons
addressed
to
the
defendants.
It
was
received
by
one
Nenette
executed
against
it,
respondent
PEPSICO,
Inc.,
opposed
the
motion
for
Sison
who
represented
herself
to
be
the
authorized
person
receiving
execution
and
moved
to
vacate
the
judgment
on
the
ground
of
lack
of
court
processes
as
she
was
the
secretary
of
the
legal
department
of
jurisdiction.
The
private
respondent
questioned
the
validity
of
the
Pepsi
Cola.
service
of
summons
to
a
mere
clerk.
It
invoked
Section
13,
Rule
14
of
the
Rules
of
Court
on
the
manner
of
service
upon
a
private
domestic
Pepsi
Cola
failed
to
file
an
answer
and
was
later
declared
in
default.
corporation
and
Section
14
of
the
same
rule
on
service
upon
a
private
The
lower
court
heard
the
case
ex-‐parte
and
adjudged
the
defendants
foreign
corporation.
jointly
and
severally
liable
for
damages
On
August
14,
1985,
the
lower
court
denied
the
motion
of
the
private
On
August
5,
1985,
when
the
default
judgment
became
final
and
respondent
holding
that
despite
the
dissolution
and
the
assumption
of
executory,
the
petitioners
filed
a
motion
for
execution,
a
copy
of
which
liabilities
by
the
private
respondent,
there
was
proper
service
of
was
received
no
longer
by
the
defendant
Pepsi
Cola
but
by
private
summons
upon
defendant
Pepsi
Cola.
The
lower
court
said
that
under
respondent
PEPSICO,
Inc.,
on
August
6,
1985.
At
that
time,
the
private
Section
122
of
the
Corporation
Code,
the
defendant
continued
its
respondent
was
already
occupying
the
place
of
business
of
Pepsi
Cola
corporate
existence
for
three
(3)
years
from
the
date
of
dissolution.
at
Ricogen
Building,
Aguirre
Street,
Legaspi
Village,
Makati,
Metro
Manila.
Private
respondent,
a
foreign
corporation
organized
under
the
On
August
27,
1985,
the
private
respondent
filed
a
special
civil
action
laws
of
the
State
of
Delaware,
USA,
held
offices
here
for
the
purpose,
for
certiorari
and
prohibition
with
the
respondent
court
to
annul
and
among
others,
of
settling
Pepsi
Cola's
debts,
liabilities
and
obligations
set
aside
the
judgment
of
the
lower
court
and
its
order
denying
the
which
it
assumed
in
a
written
undertaking
executed
on
June
11,
1983,
motion
to
vacate
the
judgment,
for
having
been
issued
without
preparatory
to
the
expected
dissolution
of
Pepsi
Cola.
jurisdiction.
The
dissolution
of
Pepsi
Cola
as
approved
by
the
Securities
and
On
December
29,
1986,
the
Court
of
Appeals
granted
the
petition
on
Exchange
Commission
materialized
on
March
2,
1984,
one
day
after
the
ground
of
lack
of
jurisdiction
ruling
that
there
was
no
valid
service
the
accident
occurred
of
summons.
The
appellate
court
stated
that
any
judgment
rendered
against
Pepsi
Cola
after
its
dissolution
is
a
"liability"
of
the
private
respondent
within
the
contemplation
of
the
undertaking,
but
service
of
".
.
.
shall
nevertheless
be
continued
as
a
body
corporate
for
three
(3)
summons
should
be
made
upon
the
private
respondent
itself
in
years
after
the
time
when
it
would
have
been
so
dissolved,
for
the
accordance
with
Section
14,
Rule
14
of
the
Rules
of
Court.
It
remanded
purpose
of
prosecuting
and
defending
suits
by
or
against
it
and
the
case
to
the
lower
court
and
ordered
that
the
private
respondent
be
enabling
it
to
settle
and
close
its
affairs,
to
dispose
of
and
convey
its
summoned
and
be
given
its
day
in
court.
property
and
to
distribute
its
assets,
but
not
for
the
purpose
of
continuing
the
business
for
which
it
was
established."
ISSUE:
Whether
or
not
Pepsi
Cola,
the
dissolved
corporation,
is
the
real
party
in
interest
to
whom
summons
should
be
served
in
the
civil
case
for
In
American
jurisprudence,
a
similar
provision
in
the
Corporate
Act
of
damages.
1896
was
construed
with
respect
to
the
kinds
of
suits
that
can
be
prosecuted
against
dissolved
corporations:
HELD:
Yes.
(Sorry
mahaba
importante
kse
ang
discussion
ng
SC
baka
itanong
xxx
xxx
xxx
ni
Sir
eh).
".
.
.
The
words
'defending
suits
against
them'
mean
suits
at
law
or
in
For
purposes
of
valid
summons,
the
dissolved
Pepsi
Cola
was
the
real
equity,
in
contract
or
tort,
or
of
what
nature
soever,
and
whether
party
in
interest-‐defendant
in
the
civil
case
filed
by
the
petitioners
not
begun
before
or
after
dissolution."
(Hould
v.
John
P.
Squire
and
Co.
only
because
it
is
the
registered
owner
of
the
truck
involved
but
also
[1911]
81
NJL
103,
79
A
282)
because,
when
the
cause
of
action
accrued,
Pepsi
Cola
still
existed
as
a
corporation
and
was
the
party
involved
in
the
acts
violative
of
the
legal
The
rationale
for
extending
the
period
of
existence
of
a
dissolved
right
of
another.
corporation
is
explained
in
Castle's
Administrator
v.
Acrogen
Coal,
Co.
(145
Ky
591,
140
SW
1034
[1911])
as
follows:
The
petitioners
had
a
valid
cause
of
action
for
damages
against
Pepsi
Cola.
A
cause
of
action
is
defined
as
"an
act
omission
of
one
party
in
"This
continuance
of
its
legal
existence
for
the
purpose
of
enabling
it
to
violation
of
the
legal
right
or
rights
of
the
other;
and
its
essential
close
up
its
business
is
necessary
to
enable
the
corporation
to
collect
elements
are
a
legal
right
of
the
plaintiff,
correlative
obligation
of
the
the
demands
due
it
as
well
as
to
allow
its
creditors
to
assert
the
defendants
and
an
act
or
omission
of
the
defendant
in
violation
of
said
demands
against
it.
If
this
were
not
so,
then
a
corporation
that
became
legal
right."
involved
in
liabilities
might
escape
the
payment
of
its
just
obligations
by
merely
surrendering
its
charter,
and
thus
defeat
its
creditors
or
The
law
provides
that
a
corporation
whose
corporate
term
has
ceased
greatly
hinder
and
delay
them
in
the
collection
of
their
demands.
This
can
still
he
made
a
party
to
suit.
Under
paragraph
1,
Section
122
of
the
course
of
conduct
on
the
part
of
corporations
the
law
in
justice
to
Corporation
Code,
a
dissolved
corporation:
cdrep
persons
dealing
with
them
does
not
permit.
The
person
who
has
a
valid
claim
against
a
corporation,
whether
it
arises
in
contract
or
tort
xxx
xxx
xxx
should
not
be
deprived
of
the
right
to
prosecute
an
action
for
the
enforcement
of
his
demands
by
the
action
of
the
stockholders
of
the
corporation
in
agreeing
to
its
dissolution.
The
dissolution
of
a
corporation
does
not
extinguish
obligations
or
liabilities
due
by
or
to
"Service
upon
private
domestic
corporation
or
partnership.
—
If
the
it."
(Emphasis
supplied)
defendant
is
a
corporation
organized
under
the
laws
of
the
Philippines
or
a
partnership
duly
registered,
service
may
be
made
on
the
In
the
case
at
bar,
the
right
of
action
of
the
petitioners
against
Pepsi
president,
manager,
secretary,
cashier,
agent
or
any
of
its
directors.
Cola
and
its
driver
arose
not
at
the
time
when
the
complaint
was
filed
but
when
the
acts
or
omission
constituting
the
cause
of
action
accrued
The
case
of
Castle's
Administrator
v.
Acrogen
Coal
Co.
(supra),
is
i.e.
on
March
1,
1984
which
is
the
date
of
the
accident
and
when
Pepsi
illustrative
of
the
manner
by
which
service
can
nevertheless
be
made
Cola
allegedly
committed
the
wrong.
despite
the
death
of
the
entity:
LibLex
On
the
second
and
main
issue
of
whether
or
not
the
service
of
"[W]hen
an
action
that
might
have
been
instituted
against
a
foreign
or
summons
through
Ms.
Nenette
C.
Sison,
upon
Pepsi
Cola
operates
to
domestic
corporation
while
it
was
a
going
concern
is
instituted
after
its
vest
jurisdiction
upon
private
respondent,
it
is
important
to
know
the
dissolution,
process
in
the
action
may
be
served
upon
the
same
person
circumstances
surrounding
the
service.
At
the
time
of
the
issuance
and
upon
whom
the
process
could
be
served
before
the
dissolution."
(p.
receipt
of
the
summons,
Pepsi
Cola
was
already
dissolved.
The
Court
is
1036).
of
the
opinion
that
service
is
allowed
in
such
a
situation.
In
the
American
case
of
Crawford
v.
Refiners
Co-‐operative
Association,
Therefore,
service
upon
a
dissolved
corporation
may
be
made
through
Incorporation
(71
NM
1,
375
p
2d
212
[1962]),
it
was
held
that
a
any
of
the
persons
enumerated
in
Section
13,
Rule
14.
"defendant
corporation
is
subject
to
suit
and
service
of
process
even
though
dissolved."
The
fact
that
the
summons
was
received
through
Miss
Sison
is
not
disputed
by
the
parties.
For
which
corporation
was
she
acting?
After
Nowhere
in
the
Corporation
Code
is
there
any
special
provision
on
the
dissolution
and
during
the
pendency
of
the
case
below,
private
how
process
shall
be
served
upon
a
dissolved
defendant
corporation.
respondent
PEPSICO
held
office
at
the
same
address
of
Pepsi
Cola
The
absence
of
any
such
provision,
however,
should
not
leave
where
Miss
Sison
was
working.
The
petitioners
argue
that
summons
petitioners
without
any
remedy,
unable
to
pursue
recovery
for
wrongs
was
served
through
the
secretary
of
the
legal
department
who
acted
as
committed
by
the
corporation
before
its
dissolution.
Since
our
law
agent
of
Pepsi
Cola.
On
the
other
hand,
it
is
contended
by
private
recognizes
the
liability
of
a
dissolved
corporation
to
an
aggrieved
respondent
PEPSICO
that
Miss
Sison
works
for
its
legal
department
creditor,
it
is
but
logical
for
the
law
to
allow
service
of
process
upon
a
and
not
of
Pepsi
Cola.
So
that,
private
respondent
avers,
there
was
no
dissolved
corporation.
Otherwise,
substantive
rights
would
be
lost
by
valid
service
upon
Pepsi
Cola
since
Miss
Sison
acted
in
PEPSICO's
the
mere
lack
of
explicit
technical
rules.
behalf
(p.
64,
Rollo)
Even
assuming
this
contention
to
be
true,
the
private
respondent
had
the
obligation
to
act
upon
the
summons
The
Rules
of
Court
on
service
of
summons
upon
a
private
domestic
received
and
to
defend
Pepsi
Cola
pursuant
to
the
undertaking
it
corporation
is
also
applicable
to
a
corporation
which
is
no
longer
a
executed
on
June
11,
1983.
going
concern.
According
to
the
undertaking
executed
in
favor
of
Pepsi
Cola,
private
Section
13,
Rule
14
mandates:
respondent
assumed:
xxx
xxx
xxx
Therefore,
we
rule
that
the
private
respondent
is
bound
to
satisfy
the
judgment
by
default
which
has
become
final
and
executory.
The
lower
".
.
.
[A]ll
the
debts,
liabilities
and
obligations
(collectively,
the
court
did
not
abuse
its
discretion
in
denying
the
motion
of
the
private
'Liabilities')
of
PBC,
whether
firm
or
contingent,
contractual
or
respondent
to
vacate
judgment.
otherwise,
express
or
implied,
wherever
located,
and
of
whatever
nature
and
description
(including,
but
without
limiting
the
generality
WHEREFORE,
the
petition
is
hereby
GRANTED.
The
decision
of
the
of
the
foregoing,
liabilities
for
damages
and
taxes),
hereby
agrees
and
Court
of
Appeals
is
REVERSED
and
SET
ASIDE.
The
judgment
of
the
undertakes
(i)
to
pay
or
cause
to
be
paid
or
otherwise
discharge
or
lower
court
and
its
order
denying
the
motion
to
vacate
judgment
are
cause
to
be
discharged
all
of
the
Liabilities
of
PBC,
which
Liabilities
REINSTATED.
may
be
enforced
against
the
Corporation
to
the
same
extent
as
if
the
said
Liabilities
had
been
incurred
or
contracted
originally
by
the
SO
ORDERED.
Corporation
.
.
.
and
(iv)
not
to
prejudice
in
any
way
the
rights
of
creditors
of
PBC."
(p.
46,
Rollo;
Emphasis
supplied)
It
is
clear
that
private
respondent
is
aware
that
the
liabilities
of
Pepsi
Cola
are
enforceable
against
it
upon
the
dissolution
of
Pepsi
Cola.
As
correctly
stated
by
the
Court
of
Appeals,
by
virtue
of
the
assumption
of
the
debts,
liabilities
and
obligations
of
Pepsi
Cola,
"any
judgment
rendered
against
Pepsi
Cola
after
its
dissolution
is
a
'liability'
of
PEPSICO,
Inc.,
within
the
contemplation
of
the
undertaking."
Hence
it
was
incumbent
upon
respondent
PEPSICO,
Inc.,
to
have
defended
the
civil
suit
against
the
corporation
whose
liabilities
it
had
assumed.
Failure
to
do
so
after
it
received
the
notice
by
way
of
summons
amounts
to
gross
negligence
and
bad
faith.
The
private
respondent
cannot
now
invoke
a
technical
defect
involving
improper
service
upon
Pepsi
Cola
and
alleged
absence
of
service
of
summons
upon
it.
There
is
the
substantive
right
of
the
petitioners
to
be
considered
over
and
above
the
attempt
of
the
private
respondent
to
avoid
the
jurisdiction
of
the
lower
court.
In
view
of
the
above,
the
valid
service
of
summons
upon
Pepsi
Cola
operated
as
a
sufficient
service
of
summons
upon
the
private
respondent.
The
lower
court
can
enforce
judgment
against
the
private
respondent.