Alabang Corp. v. Alabang Hills Village
REITERATIONFacts
The Antecedents: Alabang Development Corporation (ADC), the developer of Alabang Hills Village, filed a Complaint for Injunction and Damages against Alabang Hills Village Association (AHVAI) and its President, Rafael Tinio. ADC alleged that AHVAI commenced construction of a multi-purpose hall and swimming pool on parcels of land still owned by ADC without its consent and despite demands to desist. ADC sought an injunction to stop the construction. Procedural History: AHVAI denied ADC's claims, asserting ADC lacked legal capacity to sue due to its corporate registration revocation by the SEC on May 26, 2003. AHVAI also claimed ADC held the property in trust for AHVAI as the beneficial owner and that the lot was a legally mandated open space. The Regional Trial Court (RTC) dismissed ADC's complaint, ruling ADC lacked personality to sue, the property was a reserved area for homeowners' benefit, and the Housing and Land Use Regulatory Board (HLURB) had exclusive jurisdiction. The RTC also dismissed AHVAI's counterclaim, deeming it dependent on ADC's complaint. Both parties appealed to the Court of Appeals (CA). The Petition: The CA dismissed both appeals, affirming the RTC's decision. The CA found ADC lacked capacity to sue because it was defunct and had no standing. It also held AHVAI's counterclaim was improper as there was no claim against AHVAI, given ADC's lack of capacity. ADC filed a petition for review on certiorari with the Supreme Court.
Issue(s)
Whether the Court of Appeals gravely erred in relying on the case of "Columbia Pictures, Inc. v. Court of Appeals" in resolving petitioner's lack of capacity to sue. Whether the Court of Appeals gravely erred in finding a lack of capacity of the petitioner in filing the case contrary to earlier rulings of the Supreme Court. Whether the Court of Appeals gravely erred when it failed to resolve the issue that petitioner is mandated to cede properties to respondent AHVAI.
Ruling
The Supreme Court denied the petition and affirmed the Decision of the Court of Appeals, which sustained the Regional Trial Court's dismissal of the complaint. The Court held that Alabang Development Corporation (ADC) lacked the legal capacity to file the complaint because its corporate registration was revoked on May 26, 2003, and the complaint was filed on October 19, 2006, which is beyond the three-year liquidation period provided under Section 122 of the Corporation Code.
Ratio Decidendi
On the issue of capacity to sue and reliance on Columbia Pictures, Inc. v. Court of Appeals: The Court held that the CA did not err in relying on Columbia Pictures, Inc. v. Court of Appeals. The CA used the case to distinguish between "lack of capacity to sue" and "lack of personality to sue." The definition of "lack of capacity to sue" as a general disability, such as lack of juridical personality, was correctly applied. In this case, ADC lacked capacity because it no longer possessed juridical personality due to its dissolution and the expiration of the three-year grace period under Section 122 of the Corporation Code. On the issue of lack of capacity to sue contrary to earlier rulings: The Court reiterated that Section 122 of the Corporation Code provides a three-year period for a dissolved corporation to prosecute or defend suits. This period expired on May 26, 2006, for ADC. The complaint was filed on October 19, 2006, by the corporation itself, not by its trustees. The cases cited by ADC, such as Gelano v. Court of Appeals, Knecht v. United Cigarette Corporation, and Pepsi-Cola Products Philippines, Inc. v. Court of Appeals, involved corporations that filed their complaints while still in existence or had pending actions at the time of dissolution. These cases do not permit a defunct corporation to initiate a suit after the three-year liquidation period has passed. Therefore, ADC clearly lacked the capacity to sue at the time of filing. On the issue of failure to resolve the mandate to cede properties: The Court found no cogent reason to depart from the CA's ruling. The basic and pivotal issue was ADC's capacity to sue, which had already been settled. Since ADC lacked the capacity to initiate the suit, the Court deemed it unnecessary to delve into the other issues raised by the petitioner, including the alleged mandate to cede properties.
Main Doctrine
A corporation whose registration has been revoked and has failed to file suit within the three-year liquidation period provided under Section 122 of the Corporation Code lacks the legal capacity to sue. The initiation of a suit after the lapse of this period, even for the purpose of asset liquidation, is not permitted.