Padilla, Reyes, Belarmino & de la Torre Law Office

June 10, 1986 Padilla, Reyes, Belarmino & de la Torre Law Office Suite 209, Comfood Building Sen. J. Puyat Avenue Makati, Metro Manila Gentlemen: This relates to your letter dated June 3, 1986, requesting the opinion of this Commission on the queries posed therein. It appears that on June 21, 1976, former President Marcos ordered the reorganization of private bus operators in Metropolitan Manila into four consortium with the Metropolitan Manila Transit Corporation as the fifth consortium. L.O.I. No. 532, issued on April 20, 1977, directed the "Secretary of Public Works, Transportation and Communications, Chairman, Committee on Bus Reorganization, Secretary of Finance, Chairman, Board of Transportation, Chairman, Development Bank of the Philippines and President, Philippine National Bank," to take the following steps, among others, to wit: "1. Relax the required number of bus consortium in Metropolitan Manila from four, but in no case should it exceed ten in number, inclusive of the government-owned Metropolitan Manila Transit Corporation (MMTC),and in no case should a single consortium or merger account for less than 200 operating units. 2. Impose a deadline for the formal organization of the consortia which should not be later than one year from this date. All bus operators affected should, however, be registered before 21 June 1977 as belonging to any of the acceptable consortium under incorporation and their units bearing identifying marks/colors by this date. Non-membership to an acceptable and registered consortium shall be a cause for withdrawal or cancellation of any or all certificates of public convenience, franchises, permits to operate, or provisional authority by the Board of Transportation." Likewise, on July 20, 1983, former President Marcos issued L.O.I. No. 1343, directing each consortium to be registered with the Securities and Exchange Commission as a stock corporation and gave all the consortium up to July 31, 1984 to combine and integrate their operations in terms of one ownership and one management of the old and new units. In compliance with L.O.I. 532 and 1343, the stockholders of Transmasters Bus Company, Inc. and Antipolo Highway Lines, Inc combined their existing units and resources and formed a new corporation now known as the Eastern Metropolitan Bus Corporation, which corporation was registered with the Securities and Exchange Commission on January 14, 1980. As a consequence thereof, you} queries restated as follows are: whether Antipolo Highway Lines, Inc. was ipso facto dissolved in view of L.O.I. Nos. 532 and 1343, and the resulting birth of Eastern Metropolitan Bus Corporation. If not, is there a need for Antipolo Highway Lines, Inc. to dissolve in accordance with Title XIV (Dissolution) of the Corporation Code. A perusal of the records of Antipolo Highway Lines, Inc. and Transmasters Bus Co., Inc. failed to show a corporate reorganization effected through merger or consolidation under Title IX of the Corporation Code. Instead, it appears that the stockholders of .the two companies merely entered into a consortium or joint venture agreement pursuant to L.O.I. Nos. 532 and 1343, resulting in the formation of another corporation, named Eastern Metropolitan Bus Corporation. Considering the foregoing, the effect of "merger" or "consolidation" ipso facto terminating the corporate existence of the constituent corporations except that of the surviving or consolidated corporation finds no application. Dissolution of a corporation involves two legal steps namely: the termination of the corporate existence, at least as far as the right to go on doing ordinary business is concerned; and the winding up of its affairs, the payment of its debts and the distribution of its assets among the shareholders. (Agbayani, Commercial Laws of the Philippines, Vol. 3, 1984 ed. 603) Possession of property is not essential to the existence of a corporation (13 Am. Jur. sec. 1313.) A transfer of all the property and franchise of a corporation does not necessarily dissolve the corporation or terminate the corporate existence. (Am. Jur.,Supra.,6A Fletcher, Cyc. Corps.,1968 Rev. Vol.,sec. 2953, pp. 678-679). Hence, the corporate existence of both Antipolo Highway Lines; Inc. and Transmasters Bus Co., Inc. is not dissolved merely by virtue of L.O.I. Nos. 532 and 1343. Your client, Antipolo Highway Lines, Inc. may opt to continue to exist in a state of suspended animation, subject to the limitation found in Section 22 of the Corporation Code; or it may apply for a voluntary dissolution under Sections 118, 119 or 120 of the Corporation Code as the attending circumstance may warrant submitting therewith all the requisite requirements of the applicable law. Please be advised accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Chairman