Case Summary (G.R. No. 268962)
RTC Decision
The Regional Trial Court dismissed ADC’s complaint on three grounds: (1) ADC lacked legal personality to sue due to corporate dissolution; (2) the subject property was a reserved open space for homeowners by law; and (3) the Housing and Land Use Regulatory Board had exclusive jurisdiction over the dispute rather than the RTC.
Court of Appeals Ruling
ADC appealed the dismissal. AHVAI sought to prosecute its counterclaim, but the RTC found the counterclaim derivative of the dismissed complaint and denied it. On appeal, the CA affirmed the RTC, holding ADC lacked capacity to sue post-dissolution and beyond the three-year liquidation period, and that an absent plaintiff precludes a valid counterclaim.
Issues for Supreme Court Review
ADC’s petition challenged the CA’s reliance on Columbia Pictures, Inc. v. Court of Appeals for the capacity-to-sue doctrine; disputed the finding that ADC lacked capacity despite its prior existence; and contended that ADC was mandated to cede properties to AHVAI.
Legal Standard on Corporate Capacity
Under Section 122 of the Corporation Code, a dissolved corporation continues as a juridical entity only for three years to settle affairs, prosecute or defend suits, and dispose of assets in trust. Absent conveyance to trustees within this period, the corporation loses capacity to sue or be sued once the three-year window lapses. Trustees, when appointed, may continue pending litigation, but dissolved corporations cannot initiate new suits after expiration.
Application to Present Case
ADC’s certificate of incorporation was revoked on May 26, 2003. It had until May 26, 2006 to initiate or continue suits. ADC filed its complaint on October 19, 2006—over four months after the liquidation period expired—and did so in its corporate name without any trustees. Consequently, ADC no longer possessed juridical personality or capacity to sue at the time of filing.
Analysis of Precedents Cited by Petitioner
The cases of Gelano v. Court of Appeals, Knecht v. United Cigarette Corporation, and Pepsi-Cola Products Philippines, Inc. confirm that trustees may pursue suits filed before corporate dissolution, even i
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Facts and Procedural History
- On October 19, 2006, Alabang Development Corporation (ADC) filed a Complaint for Injunction and Damages before the Regional Trial Court (RTC) of Muntinlupa City, Branch 276.
- ADC alleged that it owned unsold parcels and open‐space lots in Alabang Hills Village and that respondents Alabang Hills Village Association, Inc. (AHVAI) and its president, Rafael Tinio, commenced construction of a multi-purpose hall and swimming pool on ADC’s land without ADC’s consent.
- AHVAI’s Answer denied ADC’s allegations and asserted:
- ADC’s corporate existence had been revoked by the SEC on May 26, 2003, depriving it of capacity to sue.
- ADC held the subject property in trust for AHVAI as beneficial owner.
- The lot formed part of statutorily required open space.
- AHVAI’s compulsory counterclaim sought:
- Divestiture of ADC’s title in favor of AHVAI.
- Moral and exemplary damages and attorney’s fees.
- Rafael Tinio filed a separate Answer with a similar counterclaim.
- On January 4, 2007, the RTC dismissed ADC’s complaint on three grounds:
- ADC lacked personality to sue.
- The subject lot was reserved open space for homeowners.
- The Housing and Land Use Regulatory Board had exclusive jurisdiction.
- ADC filed a Notice of Appeal; AHVAI moved to prosecute