Atty. Nita G. Untalan

May 14, 1996 Atty. Nita G. Untalan Paseguruhan Ng Mga Naglilingkod sa Pamahalaan Financial Center, Pasay City, Metro Manila M a d a m : This refers to your letter dated May 9, 1996, requesting reconsideration of the SEC letter dated May 2, 1996 ,which states, among others, that in the case of Vernida Development Corporation ,which was dissolved by way of amendment of the Articles of Incorporation shortening its corporate existence, the 3-year liquidation period under Section 122 of the Corporation Code shall be reckoned from the date of approval by the SEC of said Amended Articles of Incorporation . As stated, you have undertaken the above request because in the Order of the Land Registration Authority (LRA),dated October 17, 1994, from which you had drawn the factual backdrop of your previous letter to our office on April 15, 1996, the date of approval by the Securities and Exchange Commission of the Amended Articles of Incorporation, shortening Vernida's existence to October 31, 1982, was May 12, 1993. However, from the records, the date of approval was actually May 12, 1983 .Since the 3-year liquidation period, as stated in the previous SEC reply letter, shall be reckoned from the date of approval by the SEC of the Amended Articles of Incorporation dissolving the corporation, it would appear that the liquidation period had already lapsed. You believe that the three-year liquidation period could still be extended even after the lapse of 13 years for purposes of distribution of the remaining assets of the dissolved corporation, which view however was not included in the above-mentioned previous SEC opinion, as under the previous facts presented, the liquidation period had not yet lapsed. Hence, you are requesting for an SEC opinion on the issue of whether or not the 3-year liquidation period required under the Corporation Code could still be extended . While Section 122 of the Corporation Code gives a dissolved corporation three (3) years to continue as a body corporate for purposes of liquidation, the disposition of the remaining undistributed assets must necessarily continue even after such period following the SEC Commission En Banc decision in the case of Northern Luzon Transportation Inc. Isabela Cultural Corporation ,petitioner, SEC AC No. 347 October 7, 1991, quoted in part hereunder: "SECTION 122. Simply means that after the expiration of the three-year winding-up period pending actions by or against the dissolved corporation are abated. Section 122 should not, however, be construed to prevent a corporation from pursuing, activities which would complete the final liquidation of a dissolved corporation. In this case, Northern Luzon Corporation Inc. which term has long expired, was unable to dispose of its remaining assets even during the three-year period granted it by Section 122. Accordingly, it should be allowed to continue liquidating its remaining assets in order to complete the process of dissolving the corporation .Likewise, it should be allowed to distribute the proceeds from said disposition to its stockholders or creditors if any. A contrary interpretation would have unjust and absurd results ." (Emphasis supplied) The above SEC Ruling is supported by a recent Supreme Court decision in the case of Clemente vs. Court of Appeals G.R. 82407 dated March 27, 1995 which states: "If the three-year extended life has expired without a trustee or receiver having been expressly designated by the corporation within that period, the board of directors (or trustees) itself, following the rationale of the Supreme Court's decision in Gelano vs. Court of Appeals, G.R. No. L-39050, February 24, 1981 may be permitted to so continue as "trustees" by legal implication to complete the corporate liquidation .Still in the absence of a board of directors or trustees, those having any pecuniary interest in the assets including not only the shareholders but likewise the creditors of the corporation, acting for and its behalf, might make proper representations with the Securities and Exchange Commission which has primary and sufficiently broad jurisdiction in matters of this nature, for working out a final settlement of the corporate concerns. (Emphasis supplied) Accordingly, we confirm your view that the 3-year liquidation period under Section 122 of the Corporation Code may be extended for purposes of disposition or distribution of the remaining assets of a dissolved corporation. Consequently, the GSIS, as the only remaining stockholder, may transfer the remaining assets of the dissolved Vernida Development Corporation in its favor and have them registered in accordance with law under its name by the LRA. llcd Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner