Mr. Robert G. Young

October 17, 1990 Mr. Robert G. Young Baguio Skyworld Condominium Skyworld Bldg.,Session Road Baguio City S i r : This refers to your letter dated August 28, 1990 requesting opinion on the following queries relative to Baguio Skyworld Condominium which was totally destroyed during the July 16, 1990 earthquake: cdlex 1. Does the destruction of the high rise building result in the dissolution of the project/corporation? 2. How will the remaining assets of the corporation, the parcel of land, be distributed? 3. What are the steps to be undertaken by the stockholders and owners for the dissolution of the project/corporation? 4. If a new building will be constructed, how will the previous owners proceed? 5. If the condominium corporation has been dissolved by the PED, is the dissolution final and executory? Relative to your first query, the destruction of a condominium project does not automatically dissolve the condominium corporation. In the event of damage to a condominium project, two general options are available for unit owners to pursue: First, restore or reconstruct the project and continue with the condominium and this requires a vote from the owners holding in aggregate not less than 70% in interest in the corporation (implied from Sec. 13(d) RA 4726).Second, terminate the condominium project and voluntarily dissolve the corporation under any of the conditions provided under Section 13 of RA 4726, otherwise known as the Condominium law. The corporation may also be dissolved pursuant to Section 14 of the same Law. Anent your second query, upon voluntarily dissolution of a condominium corporation, it shall be deemed to hold a power of attorney from all the members to sell their separate interest in the project and liquidation of the corporation shall be affected by the sale of the entire project as if the corporation owned the whole thereof, subject to the rights of the corporate and individual condominium creditors (Section 15 RA 4726). Relative to your third query, if the condominium corporation is dissolved under any of the conditions enumerated under Section 13 of RA 4726, it shall be dissolved through an action under Section 104 of the Rules of Court. Should it be dissolved pursuant to Section 14 of RA 4726, the requirements for dissolution under the Corporation Code shall be complied with. Regarding your fourth query, should the building be reconstructed, the expenses for the restoration of the project shall be taken from the proceeds of the insurance coverage. Should the insurance proceeds be insufficient, the difference shall be shared by the condominium owners in proportion to their interest in the total areas. As regard your fifth query, please be advised that a verification from our Prosecution and Enforcement Department (PED) disclosed that subject corporation has not been dissolved. What was dissolved under PED Case Nos. 88-0418 and 89-512-A was the "Skyworld Condominium Owners Association, Inc." whose certificate of registration was revoked and cancelled after finding that it has violated the terms of its incorporation through fraud and misrepresentation in the procurement of its certificate of registration. The legally registered condominium corporation (Baguio Skyworld Condominium), which was organized pursuant to RA 4726 to hold title to the common areas of the Baguio Skyworld Condominium project, is still existing. (SGD.) RODOLFO L. SAMARISTA Associate Commissioner