G.R. No. 187456 , June 2, 2014
ALABANG DEVELOPMENT CORPORATION, Petitioner, vs. ALABANG HILLS VILLAGE ASSOCIATION and RAFAEL TINIO, Respondents.

FACTS

Petitioner Alabang Development Corporation (ADC) filed a Complaint for Injunction and Damages against respondents Alabang Hills Village Association, Inc. (AHVAI) and its President, Rafael Tinio, with the Regional Trial Court (RTC) of Muntinlupa City on October 19, 2006. ADC alleged it was the developer of Alabang Hills Village and still owned certain parcels of land therein, including open spaces not yet donated. ADC claimed that in September 2006, AHVAI began constructing a multi-purpose hall and swimming pool on one of these parcels without ADC’s consent and continued despite demand. ADC prayed for an injunction to stop the construction. In their Answers, respondents contended that ADC had no legal capacity to sue because its corporate existence was revoked by the Securities and Exchange Commission (SEC) on May 26, 2003, and that the subject lot was part of the legally required open space, with ADC holding it in trust for AHVAI. The RTC dismissed ADC’s complaint on January 4, 2007, citing ADC’s lack of personality to sue, the property’s status as a reserved area for homeowners, and the exclusive jurisdiction of the Housing and Land Use Regulatory Board (HLURB). ADC appealed. The Court of Appeals (CA), in its Decision dated March 27, 2009, affirmed the RTC’s dismissal, ruling that ADC lacked capacity to sue as it was already defunct when it filed the complaint, having been dissolved and the three-year grace period under the Corporation Code having lapsed. The CA also dismissed AHVAI’s counterclaim. ADC filed the instant petition.

ISSUE

Whether the Court of Appeals erred in ruling that petitioner Alabang Development Corporation lacked the capacity to sue when it filed the complaint on October 19, 2006, after the revocation of its corporate registration and the lapse of the three-year liquidation period provided under Section 122 of the Corporation Code.

RULING

The Supreme Court DENIED the petition and AFFIRMED the assailed Decision of the Court of Appeals. The Court held that petitioner ADC lacked the capacity to sue as a corporation at the time it filed the complaint. ADC’s corporate registration was revoked on May 26, 2003. Under Section 122 of the Corporation Code, a dissolved corporation is continued as a body corporate for three years for the purpose of prosecuting and defending suits, settling its affairs, and conveying its property, but not for continuing its business. The three-year period ended on May 26, 2006. ADC filed its complaint on October 19, 2006, which was beyond this statutory period. The Court distinguished the cases cited by ADC (Gelano v. Court of Appeals, Knecht v. United Cigarette Corporation, and Pepsi-Cola Products Philippines, Inc. v. Court of Appeals), noting that in those cases, the corporations had initiated their suits while still in existence; the actions were already pending when their corporate existence terminated. Here, ADC initiated the suit after its dissolution and after the three-year liquidation period had lapsed. To allow such a suit would circumvent Section 122 of the Corporation Code. Since the basic issue of ADC’s lack of capacity to sue was settled, the Court found no need to resolve the other issues raised by petitioner.