CORPORATION LAW

TOPIC Modes of Liquidation

CASE TITLE RAMON E. REYES and CLARA R. PASTOR v. BANCOM DEVELOPMENT

CORP
GR. NO. 190286 DATE January 11, 2018
DOCTRINE a defunct corporation loses the right to sue and be sued in its name upon
the expiration of the three-year period provided by law. 36 Jurisprudence,
however, has carved out an exception to this rule. In several cases, this
Court has ruled that an appointed receiver, 37 an assignee, 38 or a
trustee 39 may institute suits or continue pending actions on behalf of the
corporation, even after the winding-up period

FACTS A Continuing Guaranty was executed by the Reyes group (petitioner) in

favor of BANCOM (respondent) to guarantee the full and due payment of
obligations incurred by Marbella under an Underwriting Agreement with
BANCOM.
Upon default of Marbella, BANCOM filed a complaint for Sum of Money
against Marbella as the principal debtor and the Reyes group as the
guarantors. In the course of the proceedings, the counsel for BANCOM
move to withdraw its appearance in the case. The law firm asserted that it
had totally lost contact with BANCOM
Petitioners contended that the action must be considered abated since the
certificate of registration of BANCOM was revoked by the SEC and the latter
confirmed for such revocation.

ISSUES WHETHER OR NOT THE CASE SHOULD BE ABATED?

RULING NO. A defunct corporation loses the right to sue and be sued in its name
upon the expiration of the three-year period provided by
law. 36 Jurisprudence, however, has carved out an exception to this rule. In
several cases, this Court has ruled that an appointed receiver, 37 an
assignee, or a trustee may institute suits or continue pending actions on
behalf of the corporation, even after the winding-up period
in the absence of a receiver or an assignee, suits may be instituted or
continued by a trustee specifically designated for a particular matter, such
as a lawyer representing the corporation in a certain case. In Clemente v.
Court of Appeals it was also held that the board of directors of the
corporation may be considered trustees by legal implication for the purpose
of winding up its affairs.
It is evident from the foregoing that the mere revocation of the charter of a
corporation does not result in the abatement of proceedings. Since its
directors are considered trustees by legal implication, the fact that Bancom
did not convey its assets to a receiver or assignee was of no consequence.
It must also be emphasized that the dissolution of a creditor-corporation
does not extinguish any right or remedy in its favor. (IN THIS CASE, THE
CLAIM OF BANCOM AGAINST PETITIONERS)

Notes: