Mr. Roberto R. Palmares

August 21, 1985 Mr. Roberto R. Palmares Palmares Law Office Gorones Building, Mezzanine 1 Juan Luna St.,Cebu City Sir : This refers to your letter dated June 24, 1985 wherein you manifested your opposition to the merger of German B. Araez, Inc.,and Asean Timber and Development Corporation. You alleged that your client, Cebu Liberty Lumber Co.,is a creditor of German B. Araez for a substantial amount. According to the merger agreement between the said two entities, the absorbing company would absorb and assume all the liabilities of the absorbed company. Up to the present however, your client has not been paid, hence, you are requesting this Commission to take remedial steps to compel the merged companies to pay their obligation to your client. A verification of our records disclosed that the merger of the above-named corporations was approved by this Office on June 30, 1984. Regarding the legal effects of merger, the Corporation Code provides: "SECTION 80. Effects of merger or consolidation . ... 5. The surviving or consolidated corporation shall be responsible and liable for all the liabilities and obligations of each of the constituent corporations in the same manner as if such surviving or consolidated corporation had itself incurred such liabilities or obligations; and any pending claim, action or proceeding brought by or against any of such constituent corporations may be prosecuted by or against the surviving or consolidated corporation. The rights of creditors or liens upon the property of any of such constituent corporations shall not be impaired by such merger or consolidation." Thus, Asean Timber and Development Corporation, the surviving company in the instant case, is under obligation to assume the liabilities of German B. Araez, Inc.,the absorbed company. However, it appearing that your complaint does not involve any controversy arising out of intra-corporate relations, the Commission regrets to inform you that it cannot take cognizance of your complaint/request. It is, therefore, advised that since the liability arose out of contractual obligation, you settle the matter with Asean Timber and Development Corporation itself, and should you believe that your client's claim cannot be settled amicably, you may file a proper action with the regular courts. Please be advised accordingly. Very truly yours, (SGD.) JULIO L. SULIT, JR. Associate Commissioner