CORPORATION LAW | CASE DIGESTS

NATIONAL ABACA AND OTHER FIBERS CORPORATION vs. APOLONIA PORE

August 16, 1961Concepcion, J.SUMMARY: National Abaca filed a collection suit against Pore. When the lower court rendered a judgment, National filed an appeal. Pore argues that National has no legal capacity to sue because it was already abolished by E0 372. National argued that the E0 gave it 3 yrs within which it can file suits. The SC that after the expiration of the 3-yr period, National can no longer proceed with the case even if it was instituted within the period.

DOCTRINE: In the absence of statutory provision to the contrary, pending actions by or against a corporation are abated upon expiration of the period allowed by law for the liquidation of its affairs

FACTS: In a collection suit filed by National Abaca against Pore, the former insisted that Pore was not able to account for the cash advances it gave for the purchase of hemp.

The CFI ruled and National tried to appeal judgment. Pore filed an MTD to this on the ground that:

plaintiff has no legal capacity to sue, it having abolished by Executive Order No. 372 of the President of the Philippines, dated November 24,1950 National responded and stated that

It shall nevertheless be continued as a body corporate for a period of three (3) years from the effective date" of said executive order, which was November 30, 1950, "for the purpose of prosecuting and defending suits by or against it and of enabling the Board of Liquidators" thereby created "gradually to settle and close its affairs", . . . and that this case was begun on November 14, 1953, or before the expiration of the period aforementionedISSUE:

whether an action, commenced within three (3) years after the abolition of plaintiff, as a corporation, may be continued by the same after the expiration of said period - NORATIO: In the absence of statutory provision to the contrary, pending actions by or against a corporation are abated upon expiration of the period allowed by law for the liquidation of its affairs.

Our Corporation Law contains no provision authorizing a corporation, after three (3) years from the expiration of its lifetime, to continue in its corporate name actions instituted by it within said period of three (3) years. in fact, section 77 of said law provides that the corporation shall "be continued as a body corporate for three (3) years after the time when it would have been . . . dissolved,for the purposed of prosecuting and defending suits by or against it. . .", so that, thereafter, it shall no longer enjoy corporate existence for such purpose. For this reason, section 78 of the same law authorizes the corporation, "at any time during said three years . . . to convey all of its property to trustees for the benefit of members, stockholders, creditors and other interested", evidently for the purpose, among others, of enabling said trustees to prosecute and defend suits by or against the corporation begun before the expiration of said period. Obviously, the complete loss of plaintiff's corporate existence after the expiration of the period of three (3) years for the settlement of its affairs is what impelled the President to create a Board of Liquidators, to continue the management of such matters as may then be pending. DISPOSITIVE