Republic v. Tancinco G.R. No. 139256, December 27, 2002

Republic v. Tancinco G.R. No. 139256, December 27, 2002

Facts:

 The National Sugar Trading Corporation (NASUTRA), a domestic corporation created for the purpose of engaging in the trading of sugar, and a subsidiary of the Philippine Sugar Commission (Philsucom), an entity owned and controlled by the Philippine government, leased the warehouse of Sulpicio Tancinco in Cagayan de Oro City. The contract was for a period of 3 months starting November 23, 1984 renewable for another 3 years. On December 29, 1984, the eastern wall of the warehouse collapsed causing death and injuries to several persons and damage to houses within the area. Tancinco was constrained to incur expenses for the repair and restoration of the warehouse and indemnity for the victims. Due to NASUTRA’s refusal to reimburse Tancinco, the latter filed on March 28, 1985 a complaint for Damages with the Regional Trial Court of Cagayan de Oro City (Branch 23). NASUTRA filed its Answer disclaiming any liability. In the meantime, NASUTRA was converted into a private corporation called the Philippine Sugar Marketing Corporation (Philsuma), the sole marketing agency for the sugar industry to be owned completely by sugar producers. Thereafter, Philsucom was phased out by Executive Order No. 18 in 1986, at same time creating petitioner SRA. NASUTRA substituted petitioner SRA and filed on February 8, 1988, an Answer putting up the defenses that it cannot be liable for NASUTRA’s obligation as it was created after the incident took place and that it is a separate and distinct entity from the former.

Issue: Whether or not Tancinco or his heirs may recover NASUTRA’s adjudged liability from SRA.

 

Ruling:

 

 YES. There is no question that Executive Order No. 18 abolished the Philippine Sugar Commission (Philsucom) and created the Sugar Regulatory Administration (SRA). However, the abolition of NASUTRA and eventually Philsucom did not abate the pendency of the suits filed against them. 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; specially in this case where, pursuant to the transitory provision of E.O. No. 18, Philsucom, under the supervision of SRA, was allowed to continue as a juridical entity for 3 years for the purpose of prosecuting and defending suits by or against it and enabling it to settle and close its affairs, to dispose of and convey its property; and to distribute its assets. If and when a pending action cannot be terminated within said 3-year period, SRA, which has been appointed by law to supervise the closing affairs of Philsucom, is considered a trustee which shall continue to prosecute and defend suits filed by or against it. It being the trustee, SRA must therefore continue the legal personality of the defunct NASUTRA and Philsucom until final judgment and execution stage of the case.