Commissioner Gregoria Cruz Arnaldo

September 6, 1983 Commissioner Gregoria Cruz Arnaldo Office of the Insurance Commission 1071 United Nations Avenue Manila Madam: This has reference to your letter dated August 8, 1983 requesting for advice on the query posed therein. It appears that a number of insurance companies duly incorporated under the old Corporation Law (Act No. 1459) are not in operation for more than five (5) years due to the suspension of their certificates of authority to do business for causes under the pertinent provisions of the Insurance Act (Act No. 2427, as amended). Insofar as pertinent, Section 22 of the New Corporation Code (Batas Pambansa Blg. 68) provides that continuous inoperation of a corporation for a period of at least 5 years is a ground for revocation of its corporate franchise or certificate of incorporation. In view of said provision, you now ask for advice if the corporate franchises of such companies are deemed to have already expired, so much so, that any proposal of interested companies to rehabilitate/reactivate and have their certificates of authority to do business restored or revived upon compliance with the pertinent requirements, may no longer be entertained and given due course. The Corporation Code provides in part, to wit: "SECTION 22. Effects on non-use of corporate charter and continuous inoperation of a corporation . ...However, if a corporation has commenced the transaction of its business but subsequently inoperative for a period of at least five (5) years, the same shall be a ground for suspension or revocation of its corporate franchise or certificate of incorporation." ...(emphasis supplied) It is very clear from the aforecited provision that continuous inoperation of a corporation for a period of 5 years is merely a "ground" for suspension or revocation of its franchise or certificate of incorporation. This pre-supposes that there must be some steps to be taken before its corporate franchise or certificate of registration can legally be declared as revoked. Section 6 (i) of Presidential Decree No. 902-A, as amended provides, thus: "SECTION 6. In order to effectively exercise such jurisdiction the Commission shall possess the following powers: xxx xxx xxx (i) To suspend, or revoke after proper notice and hearing ,the franchise or certificate of registration of corporations, partnerships or association, upon any of the grounds provided by law, including the following: xxx xxx xxx 4. Continuous inoperation for a period of five (5) years;" ...(emphasis supplied). From the foregoing provision, it is very clear that revocation of a franchise or certificate of registration of a corporation can only be effected by the Securities and Exchange Commission after proper notice and hearing after which, the Commission in a proper case, shall issue an "order of revocation". Thus, unless a corporation is issued an order of revocation by the Commission, the same is still considered as "existing". cdll Please be advised accordingly. Very truly yours, (SGD.) MANUEL G. ABELLO Chairman