Facts:

The case involves Tiburcio Sumera, who served as the receiver of the corporation "Devota de Nuestra Senora de la Correa," as the plaintiff and appellant, against Eugenio Valencia, the defendant and appellee. The corporation was established in 1920 in Paombong, Bulacan, Philippines, with the purpose of promoting the fishing industry for a duration of twenty years. An investigation into the corporation's financial condition was initiated in response to petitions from various stockholders, revealing that Eugenio Valencia, the corporation's manager, had withdrawn P600 from its assets. Following this, a petition for voluntary dissolution was filed on September 26, 1927, which was approved by the Court of First Instance of Bulacan on February 14, 1928, leading to the appointment of Damaso P. Nicolas as the assignee for the liquidation of the corporation's properties.

On December 7 and 13, 1928, Nicolas demanded the repayment of the P600 from Valencia, who p...

Facts:

Background of the Corporation

• A corporation named "Devota de Nuestra Senora de la Correa" was organized in 1920 in Paombong, Bulacan, Philippines, for the promotion of the fishing industry. It was established for a period of twenty years.

Financial Irregularities and Dissolution

• An investigation into the corporation's financial condition revealed that Eugenio Valencia, the manager, had withdrawn P600 from the corporation's assets.
• On September 26, 1927, a petition for the voluntary dissolution of the corporation was filed, which was approved by the court on February 14, 1928. Damaso P. Nicolas was appointed as the assignee to oversee the liquidation of the corporation's properties.

Demand for Payment

• On December 7 and 13, 1928, Damaso P. Nicolas demanded payment of the P600 from Eugenio Valencia. Valencia paid P200, leaving a balance of P400.

Substitution of Assignee and Legal Action

• Tiburcio Sumera replaced Damaso P. Nicolas as the assignee. Sumera filed a motion to compel Valencia to pay the remaining P400, but the court denied the motion on March 5, 1936, reserving the right to file a separate action.
• On June 5, 1936, Sumera filed a complaint against Valencia for the recovery of P400, plus interest and indemnity.

Defendant's Defense

• Valencia denied the allegations and claimed that any obligation to the corporation had already been paid. He also denied the authenticity of Exhibit X, a document admitting his withdrawal of P600.
• During the trial, Valencia raised the defense of prescription, arguing that the action was filed beyond the three-year period prescribed by Section 77 of Act No. 1459 (Corporation Law).

Stipulation of Facts

• The parties agreed that Valencia admitted the genuineness of Exhibit X, acknowledged paying P200, and confirmed that the remaining P400 had not been paid. They also agreed to present evidence on whether Valencia invested the P400 in the corporation's fish pond and whether the action had prescribed.

Trial Court's Decision

• The trial court initially ruled in favor of Sumera, ordering Valencia to pay P400 with legal interest. However, upon reconsideration, the court amended its decision, ruling that the action had prescribed under Section 77 of Act No. 1459, and dismissed the case.

Issue:

• (Unlock)

Ruling:

• (Unlock)

Ratio:

• Section 77 of Act No. 1459 provides that a dissolved corporation continues to exist for three years to settle its affairs, prosecute or defend suits, and dispose of its property. However, this provision applies only to the corporation's officers.
• When a receiver or assignee is appointed, the legal interest in the corporation's assets passes to the assignee, and the beneficial interest remains with the members, stockholders, and creditors. The assignee may bring actions for the liquidation of assets even after the three-year period.
• The Supreme Court emphasized that the appointment of an assignee removes the limitation of the three-year period, allowing the assignee to pursue claims on behalf of the corporation indefinitely until the liquidation is complete.