G.R. No. 139256 December 27, 2002
Republic of the Philippines, represented by Sugar Regulatory Administration, petitioner, vs. Sulpicio Tancinco, respondent.

FACTS

The National Sugar Trading Corporation (NASUTRA), a subsidiary of the government-owned Philippine Sugar Commission (Philsucom), leased a warehouse from Sulpicio Tancinco. On December 29, 1984, the warehouse’s eastern wall collapsed, causing death, injuries, and property damage. Tancinco incurred expenses for repairs and victim indemnity. After NASUTRA refused reimbursement, Tancinco filed a complaint for damages. During the pendency of the case, NASUTRA was converted into the private Philippine Sugar Marketing Corporation (Philsuma). Subsequently, Philsucom was abolished by Executive Order No. 18 in 1986, which created the Sugar Regulatory Administration (SRA). The SRA was substituted as defendant. The Regional Trial Court (RTC) rendered a decision in favor of Tancinco, holding SRA jointly and severally liable with NASUTRA for the damages, based on its role as liquidator under E.O. No. 18. The Court of Appeals affirmed the RTC decision. SRA filed a petition for review, arguing that the appellate court misapplied the ruling in Gonzales v. Sugar Regulatory Administration and that it is not jointly and solidarily liable.

ISSUE

Whether Tancinco (or his heirs) may recover NASUTRA’s adjudged liability from the Sugar Regulatory Administration (SRA).

RULING

Yes, Tancinco’s heirs may recover from SRA, but SRA’s liability is not joint and solidary. The Supreme Court held that the abolition of NASUTRA and Philsucom did not extinguish pending suits against them. Pursuant to the transitory provision of E.O. No. 18, SRA, as the entity appointed to supervise the closing affairs of Philsucom, acts as a trustee. As such, SRA must continue the legal personality of the defunct entities to prosecute and defend suits until final judgment and execution. The Court clarified that the ruling in Gonzales v. SRA does not require a claimant to first prove that SRA holds Philsucom’s assets before liability can attach. Instead, SRA can be held liable for proven claims against NASUTRA/Philsucom to the extent of the assets it actually took over from them. However, SRA’s liability is merely co-extensive with the value of those assets and is not joint and solidary with NASUTRA. The petition was partially granted. The RTC decision was modified to order SRA to pay the awarded sums only up to the extent of the Philsucom assets it holds as trustee, with the trial court to determine the extent of those assets.