Philippine Supreme Court Jurisprudence


Philippine Supreme Court Jurisprudence > Year 1995 > March 1995 Decisions > G.R. No. 82407 March 27, 1995 - LUIS C. CLEMENTE, ET AL. v. COURT OF APPEALS, ET AL.:




PHILIPPINE SUPREME COURT DECISIONS

THIRD DIVISION

[G.R. No. 82407. March 27, 1995.]

LUIS C. CLEMENTE, LEONOR CLEMENTE DE ELEPAÑO, HEIRS OF ARCADIO C. OCHOA, Represented by FE O. OCHOA-BAYBAY, CONCEPCION, MARIANO, ARTEMIO, VICENTE, ANGELITA, ROBERTO, HERNANDO AND LOURDES, all surnamed ELEPAÑO, Petitioners, v. THE HON. COURT OF APPEALS, ELVIRA PANDINCO-CASTRO and VICTOR CASTRO, Respondents.


SYLLABUS


1. COMMERCIAL LAWS; CORPORATION CODE; DISSOLUTION; CAUSED BY EXPIRATION OF TERM OR CONTINUOUS INACTIVITY FOR FIVE YEARS; REQUIRED PROCEDURE; CASE AT BAR. — The Court invites attention to the various modes provided by the Corporation Code (see Secs. 117-122) for dissolving, liquidating or winding up, and terminating the life of the corporation. Among the causes for such dissolution are when the corporate term has expired or when, upon a verified complaint and after notice and hearing, the Securities and Exchange Commission orders the dissolution of a corporation for its continuous inactivity for at least five (5) years. The corporation continues inactivity for at least five (5) years. The corporation continues to be a body corporate for three (3) years after its dissolution for purposes of prosecuting and defending suits by and against it and for enabling it to settle and close its affairs, culminating in the disposition and distribution of its remaining assets. It may, during the three-year term, appoint a trustee or a receiver who may act beyond that period. The termination of the life of a juridical entity does not by itself cause the extinction or diminution of the rights and liabilities of such entity (see Gonzales v. Sugar Regulatory Administration, 174 SCRA 377) nor those of its owners and creditors. If the three-year extended life has expired without a trustee or receiver having been expressly designated by the corporation within that period, the board of directors (or trustees) itself, following the rationale of the Supreme Court decision in Gelano v. Court of Appeals (103 SCRA 90) may be permitted to so continue as "trustees" by legal implication to complete the corporate liquidation. Still in the absence of a board of directors or trustees, those having any pecuniary interest in the assets, including not only the shareholders but likewise the creditors of the corporation, acting for and in its behalf, might make proper representation with the Securities and Exchange Commission, which has primary and sufficiently broad jurisdiction in matters of this nature, for working out a final settlement of the corporate concerns.


D E C I S I O N


VITUG, J.:


In an action (Civil Case No. 467-83-C), entitled "Declaration of Ownership with Receivership," instituted before the Regional Trial Court, Fourth Judicial Region, Branch XXXIV, Calamba, Laguna, the plaintiffs (herein petitioners) sought to be declared the owners of a piece of land so described as —

"A PARCEL OF LAND (Lot No. 148-New subdivision plan Pls-502-D being a portion of Lot No. 148 of the cadastral survey of Calamba G.L.R.O. Records No. 8418), situated in the Barrio of Lecheria, Municipality of Calamba, Province of Laguna, Island of Luzon. Bounded on the Northeast by the Provincial Road, on the Southeast by Irrigation Ditch and Lot No. 1651 of Calamba Cadastre; on the Southwest by Lot No. 148-B of Plan Pls-502-D, and on the Northwest by Calle Burgos. Beginning at the point marked ‘I’ on the plan being North 71 degrees 88’m; 110.23 meters from BBML’s Calamba Cadastre, . . . containing an area of FIVE THOUSAND THREE HUNDRED FORTY NINE (5,349) SQUARE METERS, more or less." 1

Specifically, the complaint prayed that judgment be rendered —

"(a) declaring the plaintiffs to be owners of the property described in paragraph 8 of the complaint in the proportion of their respective stockholdings;

"(b) ordering the distribution of the rentals and other fruits of the property to the plaintiffs also in the proportion of their ownership; and

"(c) (for) such other reliefs which this Honorable Court may deem just and equitable under the premises." 2

The defendants (herein private respondents), in their answer, likewise claimed ownership of the property by virtue of acquisitive prescription.

During the hearing, only the plaintiffs came forward to prove their allegations, the defendants did not present any evidence despite the several opportunities accorded to them by the trial court.chanroblesvirtualawlibrary

Predicating itself on the averments of the complaint and assessing solely the evidence that had been submitted to it by the plaintiffs, the trial court stated its findings thusly:jgc:chanrobles.com.ph

"The ‘Sociedad Popular Calambeña’ an organization conceived by the parties as a ‘Sociedad Anonima,’ was organized on or about the advent of the early American occupation of the Philippines. Plaintiff says it was at ‘the beginning of the 20th Century,’ but the defendant claim it was in 1907. The ‘sociedad’ actually did business and held itself out as a corporation from November, 1909 up to September 24, 1932. Its principal business was cockfighting or the operation and management of a cockpit.

"On June 8, 1911, or during its existence, the ‘Sociedad’ acquired by installments the parcel of land above described from the Friar Lands Estate of Calamba, Laguna at the total cost of P2,676.00 (Exhs.’A’). Installments for the sale started on June 3, 1911 to June 16, 1931. Patent No. 38994 was issued in the name of the ‘Sociedad Popular Calambeña’ on August 5, 1936 (ibid). The Real Property Tax Register of the Office of the Calamba, Laguna showed:jgc:chanrobles.com.ph

"‘That Lot No. 148-New-A, situated at Burgos Street, Calamba, Laguna, is declared and assessed for taxation purpose in the name of SOCIEDAD POPULAR CALAMBEÑA (Exh.’C’).’

"Plaintiff’s evidence also shows that Mariano Elepaño and Pablo Clemente, now both deceased, were original stockholders of the aforesaid ‘sociedad.’ Mariano Elepaño subscribed and paid on November, 1909 for FORTY (40) shares of stocks worth TWO HUNDRED (P200.00) PESOS (Exh.’F’). While Pablo Clemente subscribed and paid FOUR HUNDRED EIGHTEEN (418) shares of stocks worth TWO THOUSAND (P2,000.00) PESOS. Pablo Clemente’s shares of stocks were however later distributed and apportioned to his heirs, in accordance with a Project of Partition (Exh.’K’) and the Inventory of Property (Exh.’J’), in Civil Case No. 6127, Court of First Instance, Laguna, entitled Intestate of the late Pablo Clemente namely: to Luis Clemente, shares worth P510; to Ricardo Clemente, shares worth P510; to Leonor Clemente de Elepaño, shares also worth P510, and to Placida Clemente de Belarmino shares worth P510.chanrobles.com:cralaw:red

"On September 24, 1932, in accordance with the aforesaid project of partition, the ‘sociedad’ issued stock certificates to the aforesaid heirs of Pablo Clemente. Thus, Luis Clemente, No. 39 (Exh. "H") and Leonor Clemente. Thus, Luis Clemente was issued Stock Certificate No. 38 (Exh.’G’); Ricardo Clemente No. 39 (Exh.’H’) and Leonor Clemente de Elepaño No. 44 (Exh.’I’).

"On the basis of their respective stocks certificates, present plaintiffs Luis, Ricardo, Leonor and Placida, all surnamed Clemente, heirs of Pablo Clemente, and, the heirs of Mariano Elepaño, namely Concepcion, Mariano, Artemio, Vicente, Angelita, Roberto, Hernando and Lourdes all surnamed Elepaño, jointly claim ownership over the above described property, asserting that their fathers being the only known stockholders of the ‘Sociedad Popular Calambeña,’ they, to the exclusion of all others, are entitled to be declared owners of Lot No. 148-New." 3

The trial court dismissed the complaint not merely on what it apparently perceived to be an insuficiency of the evidence that firmly could establish plaintiffs’ claim of ownership over the property in dispute but also on its thesis that, absent a corporate liquidation, it is the corporation, not the stockholders, which can assert, if at all, any title to the corporate assets. The court, even then, expressed some reservations on the corporation’s being able to still validly pursue such a claim. It said:jgc:chanrobles.com.ph

"The evidence presented so far, indicates that Lot No. 148-New although purchased on installment on June 8, 1911, was finally acquired by the ‘sociedad’ on August 5, 1936 (Exh. "A"). If was declared for tax purposes in the name of the ‘sociedad’ (Exh.’C’). Strangely however, no proof was offered showing that taxes were paid on its (sic) by the ‘sociedad,’ and neither were there efforts exerted by the latter to consolidate title over the property. In fact, no explanation was offered as to how and when the property came to the possession of the defendants. This simply means that the ‘sociedad’ never asserted ownership over Lot No. 148-New.

"Basic is the rule that one asserting a right has the burden of proving it and the fact is, no proof was introduced demonstrating that the ‘sociedad’ ever asserted its right of ownership over the property during the period of its existence. The presumption is, ‘that a person takes ordinary care of his concern.’ (Rule 131, Sec. 5(a), Rules of Court)." 4

In sustaining the dismissal of the complaint, as well as the counterclaim, the Court of Appeals, in part, said:jgc:chanrobles.com.ph

"With the above views that We take, Sociedad is the legal owner of the land in dispute, in light of Exhibit ‘A’ (pp. 97-98, RTC Rollo, Vol. 1). While a copy of Patent No. 38994, issued on August 5, 1936, has not been presented during the trial, there is also no evidence of its cancellation or muniment of title presented by plaintiffs-appellants supportive of their claim of ownership of the property. Even assuming that their parents were the only stockholders of Sociedad, and assuming that their parents were the only stockholders of Sociedad, and assuming further that Sociedad has ceased to exist, these do not ipso facto vest ownership over the property in the hands of plaintiffs-appellants. Again, assuming that sociedad is a duly-organized entity under the laws of the Philippines, its corporate existence is separate and distinct from its stockholders and from other corporations to which it may be connected (Yutive Sons Hardware Co. v. Court of Tax Appeals, 1 SCRA 161, 165), If it was not organized and registered under Philippine laws as a private corporation, it is a de facto corporation, as found by the court below, with the right to exercise corporate powers, and thus it is imperative that any of the modes of transferring ownership from said entity must be shown.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph

"In a reinvindicatory action, the plaintiff has the burden of establishing his case by more than more (sic) preponderance of evidence (Vegas v. Vegas, 56 Phil. 229; Villaruz v. Delfin, CA-G.R. No. 15918-R, Jan. 18, 1961; Perante v. Malinao, CA-G.R. No. 29314-R, Feb. 16, 1962). This the plaintiff has not satisfactorily done in this case. 5

Petitioners have assigned several "errors," the focal issue, nevertheless, is still whether or not petitioners can be held, given their submissions, to have succeeded in establishing for themselves a firm title to the property in question. Like the courts below, we find petitioners’ evidence to be directly wanting; all that appear to be certain are that the "Sociedad Popular Calambeña," believed to be a "sociedad anonima" and for a while engaged in the operation and management of a cockpit, has existed some time in the past; that it has acquired the parcel of land here involved; and that plaintiffs’ predecessors, Mariano Elepaño and Pablo Clemente, had been original stockholders of the sociedad. Except in showing that they are successors-in-interest of Elepaño and Clemente, petitioners have been unable to come up with any evidence to substantiate their claim of ownership of the corporate asset.

If, indeed, the sociedad has long become defunct, it should behoove petitioners, or anyone else who may have any interest in the corporation, to take appropriate measures before a proper forum for a peremptory settlement of its affairs. We might invite attention to the various modes provided by the Corporation Code (see Secs. 117-122) for dissolving, liquidating or winding up, and terminating the life of the corporation. Among the causes for such dissolution are when the corporate term has expired or when, upon a verified complaint and after notice and hearing, the Securities and Exchange Commission orders the dissolution of a corporation for its continuous inactivity for at least five (5) years. The corporation continues inactivity for at least five (5) years. The corporation continues to be a body corporate for three (3) years after its dissolution for purposes of prosecuting and defending suits by and against it and for enabling it to settle and close its affairs, culminating in the disposition and distribution of its remaining assets. It may, during the three-year term, appoint a trustee or a receiver who may act beyond that period. The termination of the life of a juridical entity does not by itself cause the extinction or diminution of the rights and liabilities of such entity (see Gonzales v. Sugar Regulatory Administration, 174 SCRA 377) nor those of its owners and creditors. If the three-year extended life has expired without a trustee or receiver having been expressly designated by the corporation within that period, the board of directors (or trustees) itself, following the rationale of the Supreme Court decision in Gelano v. Court of Appeals (103 SCRA 90) may be permitted to so continue as "trustees" by legal implication to complete the corporate liquidation. Still in the absence of a board of directors or trustees, those having any pecuniary interest in the assets, including not only the shareholders but likewise the creditors of the corporation, acting for and in its behalf, might make proper representation with the Securities and Exchange Commission, which has primary and sufficiently broad jurisdiction in matters of this nature, for working out a final settlement of the corporate concerns.chanrobles lawlibrary : rednad

WHEREFORE, the decision appealed from is AFFIRMED. No. Costs.

Feliciano, Romero, Melo and Francisco, JJ., concur.

Endnotes:



1. Rollo, p. 61.

2. Rollo, pp. 164-165.

3. Rollo, pp. 62-63.

4. Rollo, p. 67.

5. Rollo, p. 165.




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  • G.R. No. 116418 March 7, 1995 - SALVADOR C. FERNANDEZ v. HON. PATRICIA A. STO. TOMAS, ET AL.

  • G.R. Nos. 118577 & 118627 March 7, 1995 - JUANITO MARIANO, JR., ET AL. v. COMMISSION ON ELECTIONS, ET AL.

  • Adm. Matter No. 93-774 March 8, 1995 - GERARDO B. PADILLA v. PAISAL M. ARABIA

  • G.R. No. 106664 March 8, 1995 - PHILIPPINE AIR LINES v. FLORANTE A. MIANO

  • G.R. No. 109140 March 8, 1995 - PEOPLE OF THE PHIL. v. ROLAND TACIPIT

  • G.R. No. 105204 March 9, 1995 - PEOPLE OF THE PHIL. v. THELMA REYES, ET AL.

  • G.R. Nos. 111624-25 March 9, 1995 - ALFONSO C. BINCE, JR. v. COMMISSION ON ELECTIONS, ET AL.

  • G.R. Nos. 104151 & 105563 March 10, 1995 - COMMISSIONER OF INTERNAL REVENUE v. COURT OF APPEALS, ET AL.

  • Adm. Matter No. P-94-1061 March 13, 1995 - MARCOS V. PRIETO v. GODOFREDO R. CARIAGA

  • Adm. Case No. 1955 March 14, 1995 - NAPOLEON R. GONZAGA, ET AL. v. CRISANTO P. REALUBIN

  • Adm. Matter Nos. MTJ-93-853 & P-94-1013 March 14, 1995 - DOMINGO BALANTES v. JULIAN OCAMPO III

  • Adm. Matter No. MTJ-93-874 March 14, 1995 - AUGUSTUS L. MOMONGAN v. RAFAEL B. OMIPON

  • G.R. No. 112660 March 14, 1995 - SPS. ANTONIO AND VIRGINIA CHUA, ET AL. v. COURT OF APPEALS, ET AL.

  • Adm. Matter No. 94-7-225-RTC March 15, 1995 - IN RE: REPORT OF NESTOR C. FLAUTA

  • G.R. No. 104109 March 15, 1995 - CONRADO MARCELO v. COURT OF APPEALS, ET AL.

  • G.R. No. 112721 March 15, 1995 - PEOPLE OF THE PHIL. v. EFREN RIVERO

  • G.R. No. 115640 March 15, 1995 - REYNALDO ESPIRITU, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 105606 March 16, 1995 - EUGENIA CREDO MERCER v. NATIONAL LABOR RELATIONS COMMISSION, ET AL.

  • G.R. No. 112658 March 16, 1995 - WILMA CRUZ TAPALLA v. NATIONAL LABOR RELATIONS COMMISSION, ET AL.

  • G.R. No. 112916 March 16, 1995 - SCOTT CONSULTANTS & RESOURCE DEVT. CORP., INC. v. COURT OF APPEALS, ET AL.

  • G.R. No. 113054 March 16, 1995 - LEOUEL SANTOS, SR. v. COURT OF APPEALS, ET AL.

  • G.R. No. 118702 March 16, 1995 - CIRILO ROY G. MONTEJO v. COMMISSION ON ELECTIONS

  • Adm. Matter No. 94-3-20-MCTC March 17, 1995 - IN RE: REPORT ON TERESITA S. SABIDO

  • Adm. Matter No. MTJ-94-1012 March 20, 1995 - JOHAN L.H. WINGARTS, ET AL. v. SERVILLANO M. MEJIA

  • G.R. No. 96288 March 20, 1995 - PEOPLE OF THE PHIL. v. RICARDO D. NEMERIA

  • G.R. No. 101338 March 20, 1995 - PEOPLE OF THE PHIL. v. CRISALITO A. TABARNO, ET AL.

  • G.R. No. 104399 March 20, 1995 - PEOPLE OF THE PHIL. v. ANTONIO G. ALVARADO

  • G.R. No. 106718 March 20, 1995 - GREGORIO MA. ARANETA III v. SANDIGANBAYAN, ET AL.

  • G.R. No. 109373 March 20, 1995 - PACIFIC BANKING CORPORATION EMPLOYEES ORGANIZATION, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 112381 March 20, 1995 - ISABELO APA, ET AL. v. RUMOLDO R. FERNANDEZ, ET AL.

  • G.R. No. 116049 March 20, 1995 - PEOPLE OF THE PHIL. v. EUSTAQUIO Z. GACOTT, JR., ET AL.

  • Adm. Matter No. P-94-1045 March 21, 1995 - BRAULIO D. YARANON v. JONATHAN RULLODA

  • G.R. Nos. 105536-37 March 21, 1995 - PEOPLE OF THE PHIL. v. WILFREDO T. ABENDAÑO

  • Adm. Matter No. MTJ-94-1000 March 22, 1995 - ARCHIMEDES P. CARDINES, ET AL. v. GREGORIO L. ROSETE

  • G.R. No. 112983 March 22, 1995 - PEOPLE OF THE PHIL. v. HECTOR MAQUEDA, ET AL.

  • Adm. Matter Nos. RTJ-941140 & RTJ-94-1218 March 23, 1995 - NOE CANGCO ZARATE v. ROBERTO B. ROMANILLOS

  • G.R. No. 95031 March 23, 1995 - PEOPLE OF THE PHIL. v. MARIO GUERRERO

  • G.R. No. 111581 March 23, 1995 - PEOPLE OF THE PHIL. v. SILVESTRE MIRANDAY, ET AL.

  • G.R. Nos. 111956 & 111958-61 March 23, 1995 - PEOPLE OF THE PHIL. v. ARMANDO V. PADILLA

  • G.R. No. 116623 March 23, 1995 - PEOPLE OF THE PHIL., ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 116820 March 23, 1995 - COMMISSIONER OF INTERNAL REVENUE v. COURT OF APPEALS, ET AL.

  • G.R. No. 93436 March 24, 1995 - PEOPLE OF THE PHIL. v. MELCHOR B. REAL

  • Adm. Matter No. MTJ-92-713 March 27, 1995 - GLENITA S. LEGASPI v. FRANCISCO A. GARRETE

  • Adm. Matter No. P-92-766 March 27, 1995 - LOURDES SUMALJAG EVANGELISTA v. LUISA PENSERGA

  • Adm. Matter No. MTJ-94-902 March 27, 1995 - EMETERIO L. ASINAS, JR. v. ERNESTO T. TRINIDAD

  • G.R. No. 82407 March 27, 1995 - LUIS C. CLEMENTE, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 87235 March 27, 1995 - PEOPLE OF THE PHIL. v. DANILO PLAZA

  • G.R. Nos. 103803-04 March 27, 1995 - PEOPLE OF THE PHIL. v. SOCRATES ROUS, ET AL.

  • G.R. No. 106573 March 27, 1995 - ANTONIO CHUA v. COURT OF APPEALS, ET AL.

  • G.R. No. 116272 March 27, 1995 - PEOPLE OF THE PHIL. v. NOEL PAGUNTALAN, ET AL.

  • Adm. Case No. 3701 March 28, 1995 - PHILIPPINE NATIONAL BANK v. TELESFORO S. CEDO

  • G.R. No. 113795 March 28, 1995 - PEOPLE OF THE PHIL. v. JESUS ESPINOSA, JR., ET AL.

  • Adm. Matter No. 94-1-061-SC March 29, 1995 - JOAQUIN YUSECO, ET AL. v. JUANITO A. BERNAD

  • Adm. Matter No. MTJ-92-706 March 29, 1995 - LUPO ALMODIEL ATIENZA v. FRANCISCO F. BRILLANTES, JR.,

  • G.R. No. 87163 March 29, 1995 - PEOPLE OF THE PHIL. v. ROLANDO CASINGAL, ET AL.

  • G.R. No. 100514 March 29, 1995 - ZAMBOANGA CITY ELECTRIC COOP. v. MUSIB M. BUAT, ET AL.

  • G.R. No. 110812 March 29, 1995 - PEOPLE OF THE PHIL. v. ARTEMIO GAPASAN

  • G.R. Nos. 115908-09 March 29, 1995 - PEOPLE OF THE PHIL. v. DANNY GODOY

  • Adm. Case No. 2936 March 31, 1995 - CESAR V. ROCES v. JOSE G. APORTADERA

  • G.R. No. 80225 March 31, 1995 - PEOPLE OF THE PHIL. v. JOSE SOLDAO, ET AL.

  • G.R. Nos. 106541-42 March 31, 1995 - PEOPLE OF THE PHIL. v. MENANDRO TRIMOR

  • G.R. No. 107356 March 31, 1995 - SINGAPORE AIRLINES LIMITED v. COURT OF APPEALS , ET AL.

  • G.R. No. 107916 March 31, 1995 - PERCIVAL MODAY, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 109444 March 31, 1995 - DELANO T. PADILLA v. PATRICIA STO. TOMAS

  • G.R. Nos. 109638-39 March 31, 1995 - FLORENCIO D. FIANZA v. PEOPLE’S LAW ENFORCEMENT BOARD, ET AL.

  • G.R. No. 112130 March 31, 1995 - CHUA TIONG TAY v. COURT OF APPEALS, ET AL.

  • G.R. No. 113658 March 31, 1995 - PABLO A. COYOCA v. NATIONAL LABOR RELATIONS COMMISSION

  • G.R. No. 115863 March 31, 1995 - AIDA D. EUGENIO v. CIVIL SERVICE COMMISSION, ET AL.

  • G.R. No. 116041 March 31, 1995 - NESCITO C. HILARIO v. CIVIL SERVICE COMMISSION, ET AL.