Reburiano v.

CA | Emerson
January 21, 1999
JAMES REBURIANO and URBANO REBURIANO, petitioners, vs.
HONORABLE COURT OF APPEALS, and PEPSI COLA BOTTLING COMPANY OF THE PHILIPPINES, INC.,
respondents.
Mendoza, J.:
SUMMARY: In 1982, Pepsi filed a civil case against the Reburianos. While the case was pending, SEC approved the
shortening of Pepsis corporate term, which expired in 1983 as provided in the amended AOI. The civil case was
decided in favor of Pepsi in 1987 and became final in 1990 when the Reburianos lost on appeal. When Pepsi moved
for execution in 1991, the Reburianos opposed on the ground that Pepsi had become defunct in 1983 and no longer
had juridical capacity when the case was decided. RTC overruled the objection but allowed the Reburianos to appeal
to the CA, which overruled them as well. On recourse by the Reburianos, SC held that the denial of a motion to
quash a writ of execution is unappealable except in 6 circumstances, which all do not obtain in the case at bar. As for
the dissolution of Pepsi during the pendency of the case, SC said that Urbano Reburiano should have known about it
since he used to work for Pepsi and the case had been pending for too long for them not to know; so they should
have raised it during trial and not on appeal from a denial of a MTQ against a writ of execution. Finally, SC held that a
corporation whose term had expired or was dissolved is allowed 3 years after such termination date to wind up.
Within this period, it may appoint trustees to whom the interests of the corporation will be assigned, to be held in trust
for persons interested in the corporate properties. These trustees are also allowed to prosecute or defend the
corporations pending suits. The lawyer of the corporation in a case which continues after the expiration of the 3-year
period can even be deemed to be such a trustee for the purposes of the case he is handling on behalf of the
corporation.
DOCTRINE: A corporation that has a pending action which cannot be terminated within the 3-year period after its
dissolution is authorized under CCP1 122 to convey all its property to trustees to enable it to prosecute and defend
suits by or against the corporation beyond the 3-year period. Such trustees to whom the corporate assets have been
conveyed pursuant to the authority of CCP 122 may sue and be sued as such in all matters connected with the
liquidation.
The counsel who prosecuted and defended the interest of the corporation and who in fact appeared in behalf of the
corporation may be considered a trustee of the corporation at least with respect to the matter in litigation only.
There is no time limit within which the trustees must complete a liquidation placed in their hands. The law only
provides that the conveyance to the trustees must be made within the 3-year period.
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.
NATURE: Petition for review on certiorari. Proceedings arising from a motion for writ of execution in a civil case.
FACTS

1982 - PEPSI Cola Bottling Co. of the Philippines, Inc., brought a civil suit against THE REBURIANOS
(Urbano and James). [The decision did not state the nature or other circumstances of the suit. Digester
thinks it is a collection suit in relation to the return of glass softdrink bottles.] Urbano was a former sales
manager of Pepsi.

Pepsi amended its Articles of Incorporation to shorten its term of existence to July 8, 1983.

Mar. 2, 1984 The SEC approved the amended AOI.

June 1, 1987 RTC DECISION

o Reburianos are solidarily liable to Pepsi for P55,000, less whatever empty cases and bottles may
be returned by them at the rate of P55 per case with empty bottles.
o The RTC had not been notified of the shortening of Pepsis corporate term.

June 26, 1990 On appeal by Pepsi, the CA modified the RTC decision with respect to the valuation of the
empty bottles. The Reburianos remained liable for P55,000. The case was remanded to the RTC for
execution.

Feb. 5, 1991 The RTC issued a writ of execution of the CA decision.

Feb. 13, 1991 The Reburianos filed a motion to quash the writ of execution.
o They claimed that Pepsi had ceased to exist as a juridical person pending the decision of the RTC.
When the CA rendered its decision, Pepsi was no longer existing and no longer had the capacity to
sue and be sued; thus the decisions of the RTC and the CA were null and void.

Corporation Code of the Philippines

The Reburianos argue that such change in the situation of the parties rendered the execution of the
decision inequitable or impossible.
Pepsi opposed the motion, arguing that the jurisdiction of the court and the capacity of the parties to sue
continued to be established throughout the prosecution of the suit despite Pepsis dissolution.
o Pepsi also argued that it was still existing when the case was filed in 1982 and its capacity to sue
had become established at that moment.
o The dissolution of Pepsi was effected only for convenient transfer of its assets to a new firm of
almost the same name.
Feb. 28, 1991 RTC denied the Reburianos motion to quash.
The Reburianos filed a notice of appeal.
Pepsi moved to dismiss the appeal on the ground that a denial of a motion to quash a writ of execution is not
appealable.
RTC denied Pepsis motion and allowed the Reburianos to pursue their appeal.
Sep. 3, 1991 CA dismissed the Reburianos appeal. Their MR having been denied, they filed the present
petition.
PEPSIS ARGUMENTS
o The Reburianos knew that Pepsi had ceased to exist during the trial of the case in the RTC but did
not act on it until they were being threatened with a pending execution. The Motion to Quash and
its concomitant proceedings are thus mere dilatory tactics.
o The counsel of a dissolved corporation is deemed its trustee for the purposes of continuing any
action pending at the time of dissolution (Gelano v. CA).
o

ISSUES (HELD)
1) W/N an order denying a motion to quash a writ of execution is appealable (GENERALLY NOT)
2) W/N Pepsi may continue the pending suit and move for its execution even after its dissolution (YES)
RATIO
1) NON-APPEALABILITY OF ORDERS DENYING A MOTION TO QUASH WRIT OF EXECUTION; EXCEPTIONS

GENERAL RULE No appeal lies from an order denying a motion to quash a writ of execution, pursuant to
the policy that all litigation should be terminated.
EXCEPTIONS (Limpin, Jr. v. IAC; based on considerations of justice and equity, through appeal or special
civil action)
1) the writ of execution varies the judgment
2) there has been a change in the situation of the parties making execution inequitable or unjust
3) execution is sought to be enforced against property exempt from execution
4) it appears that the controversy has never been submitted to the judgment of the court
5) the terms of the judgment are not clear enough and there remains room for interpretation thereof
6) it appears that the writ of execution has been improvidently issued, or that it is defective in substance,
or is issued against the wrong party, or that the judgment debt has been paid or otherwise satisfied, or the
writ was issued without authority
Change in Situation exception not applicable

CAB: The Reburianos claim that Pepsis dissolution amounted to a change in the situation of the parties.

SC: The exception being invoked applies only when the change in situation occurred after the judgment of
the court. Here the change happened before the judgment.

While it is true that Pepsi did not notify the RTC of the approval of the abbreviation of its corporate term, it
must also be noted that Urbano Reburiano was a former sales manager of Pepsi. It could thus be
reasonably presumed that the Reburianos knew of the dissolution. It is incredible that the Reburianos did not
know about the dissolution, considering the time it took the RTC to decide the case and the fact that Urbano
was a former Pepsi employee.

The exception being invoked is thus inapplicable and the CA correctly denied the Reburianos appeal.
Issue of Dissolution should have been raised on Trial

A writ of execution will not be recalled by reason of any defense which could have been made at the time of
the trial of the case (Francisco on the Rules of Court).

Fair play and justice dictate that parties cannot raise for the first time on appeal from a denial of a Motion to
Quash Writ of Execution issues which should have been raised on trial or even on appeal.
2) LAW ALLOWS CORPORATIONS TO CONTINUE SUITS AFTER DISSOLUTION THROUGH TRUSTEES

Reburianos Arguments
o 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.

Athough CCP 122 allows the corporation to designate a trustee, Pepsi did not designate one. The
Corporation Code does not authorize corporations to continue actions it began within the 3-year
period, after such period has lapsed. As held in National Abaca and Other Fibers Corp. v. Pore,
such actions are abated upon the lapse of the 3-year period
SC: Reburianos are in error.
CCP 122 provides that a corporation whose charter expires or whose corporate existence is terminated shall
continue as a body corporate for 3 years after the time of its dissolution, for the purpose of conducting its
suits and winding up of its affairs.
o During such period, the corporation may convey all its property to trustees for the benefit of
stockholders/members, creditors or other persons in interest. The legal interest is vested in the
trustee and the beneficial interest passes to the stockholders/members, creditors or other persons
in interest.
The ruling in National Abaca, laid down in 1961, has since been modified by later cases.
Board of Liquidators v. Kalaw (1967): The legal interest became vested in the trustee the Board of
Liquidators. The beneficial interest remained with the sole stockholder the government. At no time had
the government withdrawn the property, or the authority to continue the present suit, from the Board of
Liquidators. If for this reason alone, we cannot stay the hand of the Board of Liquidators from prosecuting
this case to its final conclusion. The provision of [CCP 122] the third method of winding up corporate
affairs finds application.
Gelano v. CA (1981), where the SC ruled on facts substantially similar to the case at bar: However, a
corporation that has a pending action which cannot be terminated within the [3-year] period after its
dissolution is authorized under [CCP 122] to convey all its property to trustees to enable it to prosecute and
defend suits by or against the corporation beyond the [3-year] period. Although private respondent did not
appoint any trustee, yet the counsel who prosecuted and defended the interest of the corporation in
the instant case and who in fact appeared in behalf of the corporation may be considered a trustee
of the corporation at least with respect to the matter in litigation only. Said counsel had been handling
the case when the same was pending before the trial court until it was appealed before the [CA] and finally
to this Court. We therefore hold that there was substantial compliance with [CCP 122] and x x x Insular
Sawmill, Inc. could still continue prosecuting the present case even beyond the period of 3 years from the
time of dissolution. ...[T]he trustee may commence a suit which can proceed to final judgment even
beyond the [3-year] period. No reason can be conceived why a suit already commenced by the
corporation itself during its existence, not by a mere trustee who, by fiction, merely continues the
legal personality of the dissolved corporation should not be accorded similar treatment allowed to
proceed to final judgment and execution thereof.
Clemente v. CA (1995): The board of directors may be allowed to complete the liquidation by continuing as
trustees by legal implication.
Sumera v. Valencia (1939): It is to be noted that the time during which the corporation, through its own
officers, may conduct the liquidation of its assets and sue and be sued as a corporation is limited to three
years from the time the period of dissolution commences; but there is no time limit within which the
trustees must complete a liquidation placed in their hands. It is provided only [in CCP 122] that the
conveyance to the trustees must be made within the [3-year] period. It may be found impossible to complete
the work of liquidation within the [3-year] period or to reduce disputed claims to judgment. The authorities
are to the effect that suits by or against a corporation abate when it ceased to be an entity capable of suing
or being sued x x x; but trustees to whom the corporate assets have been conveyed pursuant to the
authority of [CCP 122] may sue and be sued as such in all matters connected with the
liquidation. . . .
Furthermore CCP 145 provides that the subsequent dissolution of the corporation shall not remove or impair
any right, remedy, or liability in favor of or against the corporation, its stockholders/members,
directors/trustees, or officers. This provision safeguards the corporations rights during its dissolution.
Under the law and jurisprudence, there is no reason to prevent the execution of Pepsis judgment. The
Reburianos concede that the CA decision on favor of Pepsi has become final and executory.
The only reason offered by the Reburianos is the non-existence of the corporation; and this has been proven
to be 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.
o

DISPOSITION: Petition denied. CA decision affirmed.