Mr. Julio H. Agcaoili

October 10, 1990 Mr. Julio H. Agcaoili Northern Theatrical Enterprises, Inc. c/o Magno and Associates 5th Floor, Prudential Bank Bldg. Ayala, Makati S i r : This refers to your letter dated October 3, 1990 requesting confirmation that the holdover officers of a corporation are authorized under the Corporation Code to wind up the affairs of a corporation after the expiration of the term of its existence. As stated, the term of existence of Northern Theatrical Enterprises, Inc. has expired on April 4, 1988. Pursuant to Section 122 of the Corporation Code, it has up to 1991 to dispose its properties. The only remaining asset of the corporation is a parcel of land. The corporation now would like to sell said parcel of land and distribute the proceeds to the stockholders of record. However, prospective buyers appear to be wary since the corporation's term of existence had already expired. Hence, your present request. The pertinent provision of the Corporation Code provides: "SECTION 122. Corporate liquidation . Every corporation whose charter expires by its own limitation or is annulled by forfeiture or otherwise, or whose corporate existence for other purposes is terminated in any other manner, shall nevertheless be continued as a body corporate for three (3) years after the time when it would have been dissolved, 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 ,but not for the purpose of continuing the business for which it was established. At any time during said three (3) years, said corporation is authorized and empowered to convey all of its property to trustees for the benefit of stockholders, members, creditors, and other persons in interest. From and after any such conveyance by the corporation of its property in trust for the benefit of its stockholders, members, creditors and others in interest, all interest which the corporation had in the property terminates, the legal interest vests in the trustees, and the beneficial interest in the stockholders, members, creditors or other persons in interest." ...(Emphasis supplied) It is clear from the aforecited provision that while an expired corporation cannot continue the business for which it was organized, nevertheless, it shall be continued as a body corporate for three (3) years after the time when it would have been dissolved for the purpose of prosecuting and defending suits by or against it and of enabling it gradually to settle and close its affairs, to dispose of and convey its property and to divide its assets. In other words, it shall continue as a body corporate only for the purpose of winding up and liquidation. The usual procedure of liquidation is by the corporation itself through its board of directors. Thus, our Supreme Court has held that "the normal method of procedure is for the creditors and executive officers to have charge of the winding up operation, though there is the alternative method of assigning the property of the corporation to trustees for the benefit of its creditors and shareholders." (Agbayani, Commercial Laws of the Philippines, citing China Banking Corp. vs. Michelin & Cie, G.R. No. 36930, June 30, 1933) In the light of the foregoing, we hereby confirm your view that the holdover officers of an expired corporation are empowered to wind up the affairs of the corporation within the 3-year liquidation period, which power includes the authority to dispose of or convey its property for the benefit of its creditors and stockholders. (SGD.) RODOLFO L. SAMARISTA Associate Commissioner