University of the Philippines College of Law | Corporation Law | D2021

Topic Methods of Liquidation

Case Name LUIS C. CLEMENTE, LEONOR CLEMENTE DE ELEPAÑO, HEIRS OF ARCADIO C. OCHOA, represented
by FE O. OCHOA-BAYBAY, CONCEPCION, MARIANO, ARTEMIO, VICENTE, ANGELITA, ROBERTO,
HERNANDO AND LOURDES, all surnamed ELEPAÑO, vs. CA, ELVIRA PANDINCO-CASTRO AND
VICTOR CASTRO
Case No. & Date
Ponente
Petitioners Please input all petitioners/respondents here. Para immediately apparent kung ano yung role ng
parties kahit summary lang babasahin.
Respondents

Summary (recit- In 1911, the "Sociedad Popular Calambeña", a Sociedad Anonima which held itself out as a
friendly) corporation, acquired Lot No. 148-New-A. Mariano Elepaño and Pablo Clemente, now both
deceased, were original stockholders of the "sociedad." Their shares were later distributed to their
heirs who were issued stock certificates. On the basis of their respective stock certificates, Plaintiffs
(Heirs of Clemente and Elepaño) filed an action for In Declaration of Ownership with Receivership
before RTC to be declared the owners of Lot No. 148-New asserting that their fathers were the only
known stockholders of the "sociedad".

The issue to be decided was W/N Ps can be held to have succeeded in establishing for themselves a
firm title to Lot 148-New. The Supreme Court answered in the negative and held that except in
showing that they are the successors-in-interest of Elepaño and Clemente, Ps have been unable to
substantiate their claim of ownership of the corporate asset. If, indeed, the sociedad has long
become defunct, it should behoove anyone who may have any interest in the corporation to take
appropriate measures before a proper forum for a peremptory settlement of its affairs.

The Corporation Code (Secs. 117-122) provides various modes for dissolving, liquidating or winding
up, and terminating the life of the corporation. Among the causes for such dissolution are

1) when the corporate term has expired or

2) when, upon a verified complaint and after notice and hearing, the SEC orders the
dissolution of a corporation for its continuous inactivity for at least 5 years.

The corporation continues to be a body corporate for 3 years after its dissolution for purposes of
prosecuting and defending suits by and against it and for enabling it to settle and close its affairs,
culminating in the disposition and distribution of its remaining assets. It may, during the 3-year
term, appoint a trustee or a receiver who may act beyond that period. The termination of the life
of a juridical entity does not by itself cause the extinction or diminution of the rights and liabilities
of such entity nor those of its owners and creditors.

If the 3-year extended life has expired without a trustee or receiver having been expressly
designated, the BOD/BOT itself may be permitted to so continue as "trustees" by legal implication
to complete the corporate liquidation.

Still in the absence of a BOD/BOT, those having any pecuniary interest in the assets, including not
only the shareholders but likewise the creditors of the corporation, acting for and in its behalf,
might make proper representations with SEC for working out a final settlement of the corporate
concerns.

Doctrine/s
 University of the Philippines College of Law | Corporation Law | D2021
RELEVANT FACTS

ISSUE AND RATIO DECIDENDI

Issue Ratio
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RULING

WHEREFORE, …

NOTES