Mr. Joselito S. Fernandez

July 7, 1987 Mr. Joselito S. Fernandez c/o Suite 501 & 504 5th Flr., Alexander House Cond. 132 Amorsolo St., Legaspi Vill. Makati, Metro Manila S i r : This relates to your letter, dated July 3, 1987, enclosing a xerox copy of your letter of April 6, 1987, requesting certain clarification from this Commission affecting Lopez Realty, Inc. as follows: LibLex 1. Is the November 7, 1986 SEC approval extending the term of existence of Lopez Realty, Inc. valid or not? 2. If it is valid, may we use the same as precedent for purposes of other corporations similarly situated, e.g., submit a request for extension of their corporate lives, after these have already lapsed, on the representation that a stockholders' meeting took place prior to the expiration of their term? 3. If the SEC approval is not valid, may Lopez Realty, Inc. continue to exercise full corporate powers, or should it be considered as having been dissolved as of March 14, 1986, the date its original fifty (50) years term expired? Lopez Realty, Incorporated was a pre-war corporation whose corporate records were duly reconstructed with this Commission on April 2, 1948. Subject corporation was incorporated on March 10, 1936 pursuant to Act 1459 with the Bureau of Commerce. Article IV of its original articles of incorporation provides for a term of existence of fifty (50) years from and after the date of incorporation. Accordingly, its term of existence would have expired on March 10, 1986. Subsequently, the company submitted its letter, dated April 11, 1986 informing the Commission that at separate meetings held on February 20, 1986, the board of directors and stockholders thereof had met for the purpose of extending its corporate life for another fifty (50) years. However, before the necessary formal documents could be drawn up and signed, a major change in our political system occurred, causing euphoria to some people, while "civil commotions" to others, forcing the latter to flee the country for fear of reprisal from the new government. When the new government resumed normal operations of the bureaucracy, Lopez Realty, Inc. could not gather enough signatures of its members of the board until Proclamation No. 3 was issued on March 25, 1986, restoring the basic rights of the people. Hence, those who left the country in haste finally returned home. All these and other reasons advanced by subject company were brought to the attention and scrutiny of the Commission in its meeting of May 15, 1986. In said meeting, the Commission so resolved that the company's justifications were meritorious and thus, applied the "doctrine of relation" to the case. The Commission took exception to the strict literal application of Section 16 of the Corporation Code in the case of Lopez Realty, Inc. The Commission considered the contemporaneous historical events that transpired before the expiry date of the corporate existence, which events restricted the corporation from pursuing some of the legitimate steps incident to its extension of term. The occurrence of such fortuitous event (act of God), so to speak, or "force majeure" (act of man), where the previous government was toppled down through "people's power" and the resulting uncertainties or civil commotions to some people were considered meritorious reasons by the Commission to justify the application of the "doctrine of relation". Apropos thereto, Article 1174 of the New Civil Code provides: "Except in cases expressly specified by law, or when it is otherwise declared by stipulation or when the nature of obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen or which, though foreseen, were inevitable ". (emphasis supplied). The test applied by the Commission was whether under the particular circumstances there was such an insuperable interference occurring without the company's intervention as could not have been prevented by prudence, diligence and care. In said case of Lopez Realty, Incorporated, the Commission favorably considered the extension of the corporate life of the company notwithstanding technical delay in the filing of the corresponding document. Hence, the November 7, 1986 SEC approval of the amended articles of incorporation of Lopez Realty, Incorporated "by extending the term of its existence for another fifty (50) years from and after March 10, 1986, the expiry date of its original term" is valid. In connection with your second query, please be informed that the resolution adopted by the Commission in the case of Lopez Realty, Incorporated is not to be given a liberal application and is not an established precedent in future cases of extension of corporate life, since the privilege of extension is purely statutory, hence, all of the statutory conditions precedent must be complied with in order that the extension may be considered. Unless, therefore, the corporation could present and prove the existence of an insuperable interference which is tantamount to a force majeure or fortuitous event, our ruling on the Lopez case should not be liberally applied. The Commission need not answer your third query, as the issue raised therein has already been rendered academic. Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Commissioner