Reburiano v. Court of Appeals
REITERATIONFacts
1. The Antecedents: This case originated from a civil suit filed by Pepsi Cola Bottling Company of the Philippines Inc. against James Reburiano and Urbano Reburiano. The Regional Trial Court ruled in favor of the company, ordering the defendants to pay P55,000.00, with a deduction for returned empty cases and bottles valued at P55.00 per case. 2. Procedural History: The Pepsi Cola Bottling Company appealed the trial court's decision to the Court of Appeals, seeking modification of the valuation of the returned empties. The appellate court modified the decision, ordering the defendants to pay P55,000.00 with legal interest from January 1982. After the case was remanded and became final, the trial court issued a writ of execution. The petitioners then moved to quash this writ, alleging the private respondent had ceased to exist as a corporation prior to the trial court's decision. The trial court denied this motion, and the petitioners appealed this denial. The Court of Appeals dismissed the appeal, which was subsequently denied reconsideration. 3. The Petition: The petitioners seek review on certiorari of the Court of Appeals' resolutions affirming the denial of their motion to quash the writ of execution. They argue that the order denying their motion to quash was appealable, and that the Court of Appeals erred in dismissing their appeal. The core of their argument is that the private respondent's dissolution prior to the judgment rendered it incapable of suing or being sued, thus rendering the judgment and subsequent execution void. They contend that the counsel's continued appearance and the enforcement of the judgment are invalid due to the corporation's loss of juridical personality. The petitioners pray for the setting aside of the Court of Appeals' resolutions and for the appellate court to give due course to their appeal.
Issue(s)
Whether the order of the trial court denying petitioners' Motion to Quash Writ of Execution is appealable. Whether the dissolution of the private respondent prior to the rendition of the judgment affects its capacity to sue and be sued, and consequently, the validity of the judgment and its execution. Whether the appearance of counsel for a dissolved corporation is tenable and if the corporation's counsel can be considered a trustee for purposes of continuing litigation.
Ruling
The Supreme Court affirmed the resolutions of the Court of Appeals, holding that the order denying the motion to quash the writ of execution was not appealable, and that the dissolution of the corporation prior to the judgment did not divest the courts of jurisdiction or render the judgment void, especially since the issue was not raised during the trial or the initial appeal. The Court also reiterated that a dissolved corporation can continue prosecuting suits through its counsel, who may be considered a trustee.
Ratio Decidendi
On the appealability of the order denying the motion to quash: The Court reiterated the general rule that no appeal lies from an order denying a motion to quash a writ of execution to prevent interminable litigation. While exceptions exist, such as a change in the situation of the parties making execution inequitable, this exception applies only to changes occurring subsequent to the judgment. In this case, the dissolution of the private respondent occurred in 1983, prior to the rendition of the trial court's judgment in 1987. Therefore, it did not fall under the exception. The Court found it incredible that the petitioners were unaware of the dissolution, especially considering the time elapsed and Urbano Reburiano's former employment with the company. The Court concluded that the CA correctly denied due course to the appeal. On the effect of corporate dissolution on capacity to sue and the validity of the judgment: The Court agreed with the CA that the issue of the private respondent's dissolved status and lack of capacity to sue was not raised before the trial court nor in the appeal from the RTC decision. Rules of fair play dictate that such issues, which were already obtaining at the time of the trial and initial appeal, cannot be raised for the first time on appeal from an order denying a motion to quash a writ of execution. The CA's decision modifying the RTC's judgment had already become final and executory, and the issue of capacity to sue should have been raised then. On the representation of a dissolved corporation and the role of counsel: The Court invoked Section 122 of the Corporation Code, which allows a dissolved corporation to continue as a body corporate for three years for the purpose of prosecuting and defending suits. It cited jurisprudence, particularly Gelano v. Court of Appeals, which held that even beyond the three-year liquidation period, the counsel prosecuting the case can be considered a trustee of the corporation for the purpose of continuing the litigation. The Court noted that this ruling was further supported by Clemente v. Court of Appeals, where the board of directors could continue as trustees, and Sumera v. Valencia, which clarified that while the corporation's own officers have a limited time, trustees have no time limit to complete liquidation. Moreover, Section 145 of the Corporation Code protects rights and remedies from being impaired by subsequent dissolution. Therefore, the suit filed by the private respondent was validly allowed to proceed to execution.
Main Doctrine
A motion to quash a writ of execution based on a change in the situation of the parties, specifically the dissolution of a corporation, is generally not appealable if the change occurred prior to the rendition of the judgment. Furthermore, issues that could have been raised during the trial or in the appeal from the judgment cannot be raised for the first time in an appeal from an order denying a motion to quash a writ of execution. A dissolved corporation continues to have juridical personality for three years for the purpose of prosecuting and defending suits, and its counsel may be considered a trustee for purposes of continuing litigation.