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176 - National Abaca and Other Fibers Corporation v. Pore

National Abaca and Other Fibers Corporation sued Pore to recover advances allegedly made for the purchase of hemp. The municipal court ruled in favor of National Abaca. Pore appealed to the court of first instance, arguing National Abaca lacked legal capacity to sue as it had been abolished by executive order three years prior. The court of first instance ordered National Abaca to add the Board of Liquidators as a co-plaintiff. National Abaca appealed. The Supreme Court ruled that under the Corporation Law, a corporation does not retain the ability to continue suits in its own name after the three year period for settling its affairs expires, and so the lower court correctly ordered the Board of Liquidators be added.

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139 views2 pages

176 - National Abaca and Other Fibers Corporation v. Pore

National Abaca and Other Fibers Corporation sued Pore to recover advances allegedly made for the purchase of hemp. The municipal court ruled in favor of National Abaca. Pore appealed to the court of first instance, arguing National Abaca lacked legal capacity to sue as it had been abolished by executive order three years prior. The court of first instance ordered National Abaca to add the Board of Liquidators as a co-plaintiff. National Abaca appealed. The Supreme Court ruled that under the Corporation Law, a corporation does not retain the ability to continue suits in its own name after the three year period for settling its affairs expires, and so the lower court correctly ordered the Board of Liquidators be added.

Uploaded by

mimiyuki_
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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176. National Abaca and Other Fibers Corporation v.

Pore
(G.R. No. L-16779, August 16, 1961)

Facts: Plaintiff filed with the Municipal Court of Tacloban, Leyte, a complaint, against defendant for the
recovery of the amount allegedly advanced to her for the purchase of hemp for the account of the
former and for which she had allegedly failed to account. In her answer, defendant alleged that she had
accounted for all cash advances received by her for the aforementioned purpose from the plaintiff. In
due course, said court rendering judgment finding that the defendant had not accounted for cash
advances, she was accordingly, sentenced to pay to the plaintiff with legal interest in addition to the
costs.

Said court having subsequently denied a reconsideration of this decision, as well a new trial prayed for
the plaintiff, the latter appealed to the Court of First Instance of Leyte, in which defendant moved to
dismiss the complaint upon 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. Plaintiff objected
thereto upon the ground that pursuant to said executive order, plaintiff “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
aforementioned. After due hearing, the court of first instance issued an order directing plaintiff to
amend the complaint, within ten (10) days from notice, by including the Board of Liquidators as co-party
plaintiff, with the admonition that otherwise the case would be dismissed. Hence, an appeal by plaintiff
National Abaca and other Fibers Corporation, from two (2) orders of the Court of First Instance of Leyte.

Issue: 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.

Ruling: The rule appears to be well settled that, 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.

The 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. The first question must,
therefore, be answered in the negative.

Wherefore, the orders appealed from are reversed, plaintiff’s amended complaint is hereby admitted,
and the record remanded to the lower court for further proceedings.

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