REBURIANO vs. CA

Alright here we go. Back to the old drawing board.

RTC rendered judgment in favor of Pepsi Cola Bottling Co. ordering a certain James Reburiano and his brother to pay the amount of P55,000 with interest for the unpaid bottles of softdrinks it received from the company. Why only 55,000? well this happened around late 70s to early 80s.   Back when what? we were all sucking pacifiers in our mouths learning to walk in big smiles and all for having our first taste of cold bottled Pepsi Cola even if its just a teeny weeny drop from the bottle just because some stupid crazy adult neared it to our mouth just to see our reaction? :)  Well what can I say, weve been uncontrollable since then.

So the writ of execution was issued.  However, it appeared that prior to the promulgation of the decision of the trial court, private respondent PEPSI COLA, AMENDED ITS ARTICLES OF INCORPORATION TO SHORTEN ITS TERM OF EXISTENCE to July 8, 1983.

Actually the amended articles of incorporation was approved by the SEC. The thing was, the trial court was not notified of this fact. 

Reburiano moved to quash the writ of execution on the grounds that when RTC rendered its decision, the Pepsi Cola  was no longer in existence and had no more juridical personality and so, as such, it no longer had the capacity to sue and be sued; and since Pepsi lost its existence and juridical personality, lawyer for Pepsi therefore had no more client in this case and so his appearance in this case was no longer possible and tenable. 

Private respondent Pepsi of course opposed petitioners' motion. It argued that the jurisdiction of the court as well as the respective parties capacity to sue had already been established during the initial stages of the case.  And that when the complaint was filed in 1982, private respondent was still an existing corporation.  The mere fact that it was dissolved at the time the case was yet to be resolved did not warrant the dismissal of the case or oust the trial court of its jurisdiction. 

Question: What was the purpose therefore of the dissolution?  Private respondent explained that its dissolution was effected in order to transfer its assets to a new firm of almost the same name and was thus only for convenience. Private respondent argues that petitioners knew that it had ceased to exist during the course of the trial of the case but did not act upon this information until the judgment was about to be enforced against them; hence, the filing of a Motion to Quash and the present petition are mere dilatory tactics resorted to by petitioners. 

Pepsi Cola likewise cites the ruling in Gelano v. Court of Appeals that the counsel of a dissolved corporation is deemed a trustee of the same for purposes of continuing such action or actions as may be pending at the time of the dissolution.

RTC denied Reburiano’s petition to quash the writ of execution.  An appeal was made.  CA likewise dismissed the appeal.  Hence, this petition for review on certiorari.

ISSUE: 

Whether or not Pepsi still had juridical personality to pursue its case against Reburiano after a shortening of its corporate existence.

RULING: 

Yes. Petitioner Reburiano etc. are in error in contending that "a dissolved and non-existing corporation could no longer be represented by a lawyer and concomitantly a lawyer could not appear as counsel for a non-existing judicial person.”

The only reason for their refusal to execute the same is that there is no existing corporation to which they are indebted. Such argument is fallacious. The law specifically allows a trustee to manage the affairs of the corporation in liquidation. Consequently, any supervening fact, such as the dissolution of the corporation, repeal of a law, or any other fact of similar nature would not serve as an effective bar to the enforcement of such right.

Remember there is a 3 Year Period Rule in Corporate Dissolution and Liquidation Process?

Sec. 122 of the Corporation Code provides:  Corporate Liquidation. — Every Corporation whose charter expires by its own limitation or is annulled by forfeiture or otherwise, or whose corporate existence for other purposes is terminated in any other manner, shall nevertheless be continued as a body corporate for three (3) years after the time when it would have been so dissolved, for the purpose of prosecuting and defending suits by or against it and enabling it to settle and close its affairs, to dispose of and convey its property and to distribute its assets, but not for the purpose of continuing the business for which it was established.

At any time during said three (3) years, said corporation is authorized the empowered to convey all of its property to trustees for the benefit of stockholders, members, creditors, and other persons in interest. From and after any such conveyance by the corporation of its property in trust for the benefit of its stockholders, members, creditors and others in interests, all interests which the corporation had in the property in terminates, the legal interest vests in the trustees, and the beneficial interest in the stockholders, members, creditors or other persons in interest.

With regard to the Trustee Issue: 

In the GELANO Case, the counsel of the dissolved corporation was considered a trustee. Likewise in a later case titled CLEMENTE vs. CA, the court held that the Board of Directors may be permitted to complete the corporate liquidation by continuing as "trustees" by legal implication.

Under Sec. 145 of the Corpo Code - "No right of remedy in favor or against any corporation shall be removed or impaired either by:

1. Subsequent dissolution od said corporation or
2. By any subsequentAmendment or repeal of this code

This provision safeguards the rights of a corporation which is dissolved pending litigation. Since the law specifically allows a trustee to manage the affairs of the corporation in liquidation, any supervening fact, such as

1. Dissolution of the corporation
2. Repeal of the law
3. any other fact of similar nature

would not serve as an effective bar to the enforcement of such right.

Pepsi Cola wins this case.