Mr. Danny B. Galuna

June 17, 1994 Mr. Danny B. Galuna Galuna, Galuna, Galuna Law Offices 22nd Flr.,RLY Bldg. D. Jakosalem St.,Cebu City S i r : This refers to your letter of May 10, 1994 requesting opinion on the queries posed therein. cdlex As stated, you have a client corporation which incorporated several years back. After its organizational meeting or before it could commence business, it decided to stop operation. One of the grounds for dissolution is failure to convene business within two years from the date of issuance of the certificate of incorporation, hence, you posed the following queries. 1. Is the dissolution automatic? 2. If this year the corporation wants to commence business, is it allowed? 3. How will they go about it? The Commission had previously opined that the dissolution contemplated in Section 22 of the Corporation Code can only be effected by the Commission after due notice and hearing. This interpretation is supported by the second paragraph thereof which states as follows: "This provision shall not apply if the failure to organize, commence the transaction of its business or the construction of its works, or to continuously operate is due to causes beyond the control of the corporation as may be determined by the Securities and Exchange Commission ." (Emphasis supplied) Likewise, P.D. 902-A, as amended, provides: "SECTION 6. In order to effectively exercise such jurisdiction, the Commission shall possess the following powers: LibLex xxx xxx xxx 1) To suspend, or revoke, after proper notice and hearing the franchise or certificate of registration of corporations, partnerships or associations, upon any of the grounds provided by law, including the following: xxx xxx xxx 4) Continuous in operation for a period of at least five (5) years; 5) Failure to file by-laws within the required period. ....(Emphasis supplied) From the foregoing, it can be deduced that automatic dissolution was not envisioned under Section 22 of the Code. Accordingly, a corporation continues to exist as such notwithstanding its non-operational status until its certificate of registration is officially revoked by the Commission. Should the corporation desire to resume business operation, it must comply with the reports required by the Supervision and Monitoring Department of this Commission. The filing of the reportorial requirements with that Department will serve as sufficient notice the Commission of the resumption of business by the company. Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman