St. Gabriel Realty and Development Corp.

August 9, 1984 St. Gabriel Realty and Development Corp. Room 503, Martinez Building Dasmarias, Manila Attention : Mr . Osmundo Victoriano Vice-President Gentlemen: This has reference to your letter dated June 7, 1984, requesting for the opinion of this Commission on the queries posed therein. It appears therein that your corporation, after several years of corporate existence, has no more income, no more expected receivables except a money market placement with the State Investment House, Inc. (SIHI) in the amount of P235,000.00 which earns interest at 12% per annum and which matured on June 18, 1984. Your corporation has no known debts or creditors. Considering the aforementioned circumstance, you would like to dissolve your corporation but your problem is that, since SIHI is under receivership, it refuses to allow you to withdraw your money market placement, or any substantial portion thereof, except trickles of a few thousand pesos and/or interest at certain periods when it has the financial capacity to do so. Should you dissolve the corporation, you are in a quandary as to what will happen to said placement, who will take care of it on behalf of the corporation, and what should be done to effect its withdrawal to protect your corporate interest. You now want the opinions of this Commission on the following queries: 1) Considering our interest in the money market placement with the State Investment House, Inc.,is it legally possible for the corporation to dissolve itself, totally and/or partially? If no, why not? 2) Contrary to the allegation of the State Investment House, Inc.,is there a law prohibiting the corporation from transferring its money market placement with the State Investment House, Inc. in favor of any third person, entity or corporation? If not, what can we do to effect its withdrawal from the State Investment House, Inc.? Anent your first query, Sec. 122 of the Corporation Code provides, and we quote: "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 to distribute its assets, but not for the purpose of continuing the business for which it was established." (Emphasis supplied) 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) xxx xxx xxx The afore-quoted provision therefore, authorizes any dissolved corporation to act as a body corporate and to convey all of its property to trustees for the benefit of its stockholders and creditors for three (3) years from the date of the dissolution. In a previous opinion, this Commission has ruled that: "...the stockholders of a corporation are therefore entitled to have the assets sold or converted into cash which will in turn be distributed (Mason v. Pewavis Min. Co. 133 US 50) for the dissolution of the corporation results in the vesting of legal title to the corporate property in the stockholders, who become co-owners thereof. ..." From the foregoing, your query is therefore answered in the affirmative inasmuch as even if your corporation has already been dissolved, the same can act as body corporate for three (3) years which can dispose of and convert its property into cash and distribute the same to its stockholders only since your corporation has no creditors. As regards your second query, we know of no law which prohibits the corporation from transferring its money market placement with the State Investment House, Inc. in favor of any third person, entity or corporation unless the tenor of the instrument prohibits its further negotiation. Please be advised accordingly. cdlex Very truly yours, (SGD.) MANUEL G. ABELLO Chairman