Atty. Nita G. Untalan

May 2, 1996 Atty. Nita G. Untalan Paseguruhan ng mga Naglilingkod sa Pamahalaan Financial Center, Pasay City Metro Manila Madam: This refers to your letter dated April 15, 1996 requesting confirmation of your opinion that with the acquisition by the GSIS of the entire shares of stock of the dissolved Vernida Development Corporation prior to its dissolution by virtue of a " Deed of Sale " on September 18, 1980, the former has become the owner of all the assets of the latter, such that the former could consider itself as having absolute dominant rights over the properties of the latter. Consequently, the GSIS can convene its own Board of Directors to appoint a liquidator for the purpose of distributing the assets of the dissolved corporation consisting of two lots covered by TCT Nos. 60597 and 60598 in favor of GSIS. cdlex Section 63 of the Corporation Code, quoted hereunder, expressly provides that the ownership of shares of stock may be transferred by delivery of the certificate(s) indorsed by the owner or his attorney-in-fact or other persons authorized to make the transfer. "SECTION 63. Certificate of stock and transfer of shares . The capital stock of stock corporations shall be divided into shares for which certificates signed by the president or vice president, countersigned by the secretary or assistant secretary, and sealed with the seal of the corporation shall be issued in accordance with the by-laws. Shares of stock so issued are personal property and may be transferred by delivery of the certificate or certificates indorsed by the owner or his attorney-in-fact or other person legally authorized to make the transfer. No transfer, however, shall be valid, except between the parties, until the transfer is recorded in the books of the corporation so as to show the names of the parties to the transaction, the date of the transfer, the number of the certificate or certificates and the number of shares transferred. No shares of stock against which the corporation holds any unpaid claim shall be transferable in the books of the corporation." (Emphasis supplied) Thus, ordinarily, transfer of stock ownership may be made by merely indorsing the certificate evidencing such ownership. However, indorsement of the stock certificate is not the only means by which a transfer of stock ownership may be made as it may be done by assignment and power of attorney to a particular person. (12 Fletcher sec. 5480, citing several decided cases) Thus, the Commission previously opined that indorsement of the stock certificate is not necessary to pass title to the stocks where a formal " deed of assignment " has been duly executed in favor of the transferee. ( Ltr. to Oriental Photographix and Equipment Corporation, dated May 3, 1983 , citing several authorities) Accordingly, in the absence of a stock certificate, the " Deed of Sale " mentioned in your letter may be admissible as evidence to establish ownership of the dissolved corporation. The GSIS, which is allegedly the transferee by virtue of a deed of sale of the entire shares of the dissolved corporation, may thus have the right to claim the remaining assets of the dissolved corporations. On the matter of liquidation of corporate assets brought about by the dissolution of a corporation, 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 so 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 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) As to when the 3-year liquidation period commences under the situation presented in your letter, the same should, pursuant to Section 16 of the Corporation Code quoted hereunder, be reckoned from the date of approval by the SEC of the Amended Articles of Incorporation dissolving the corporation. "SECTION 16. Amendment of articles of incorporation . . . . xxx xxx xxx The amendment shall take effect upon its approval by the Securities and Exchange Commission or from the date of filing with the said Commission if not acted upon within six (6) months from the date of filing for a cause not attributable to the corporation." (Emphasis supplied) In the light of the foregoing, the GSIS, as the only remaining stockholder, has the power to have the assets of the dissolved corporation liquidated in accordance with law. It has to be emphasized however that no corporate property should be distributed until the existing obligations of the dissolved corporation have been paid and satisfied. It is well-settled under the " trust fund doctrine " that the debts and liabilities of the dissolved corporation to its creditors must be paid prior to the distribution of the remaining corporate assets to the stockholders. llcd Very truly yours, (SGD.) PERFECTO R. YASAY, JR. Acting Chairman