Sec_ogc Opinion No 11-30 & 38

8/22/2019 Sec_ogc Opinion No 11-30 & 38

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Republic of the PhilippinesDepartment of Finance

Securities and Exchange CommissionSEC Building, EOSA, Greenhills, Mandaluyong Cily

Oflice of the General Counsel

ZO September ZOl1

SEC-OGC Opinion No. 11-38

Revoked corporations

MA. LOURDES F. REBUENO

General Manager

National Development Company

NDC Building, 116 Tordesillas st.

Salcedo Village, Makati City

Madam:

This refers to your letter dated 07 J une Z0111

and received by this Office on

16 J uly ZOl1, regarding the status of Crowntex Realty Corporation CCrowntex''),2 a

wholly owned subsidiary of the National Development Company CNDC''). In your

letter, you attached a Certificate of Corporate' Filing and Information secured from

the Corporate Filing and Records Division CCFRD'') of the Company Registration and

Monitoring Department CCRMD"), where it is stated that the certificate of

Registration of Crowntex was revoked on Z9 September 2003 for non-compliance

with reportorial requirements.

Thus, you are seeking legal Opl11l0n on whether or not the Order of

Revocation issued by the Commission on Z9 September Z003 is tantamount to the

dissolution of Crowntex and what appropriate steps the corporation may take, if any.

In the case of Crowntex, its registration was revoked by virtue of SEC Order

of Revocation dated ZO August Z003, pursuant to its authority to "suspend, or

revoke, after proper notice and hearing the franchise or certificate of registration of

corporations, partnerships or associations, upon any of the grounds provided by

law."

3

In SEC Circular No.4, series of Z008 CMC No.4, s. Z008''), the Commission

provided a schedule for corporations revoked via mass revocation within which to file

petitions to lift the orders of revocation issued against them. In the case of

Crowntex, it had until Z9 September Z009 within which to file its petition.

1 The letter dated 07 J une 2011 was endorsed to this Office by the CRMD on 14 J une 201l.

2 SEC Reg. No. 124587.

3 Sec. 6(1), Presidential De(:ree No, 902-A, as amended.

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In SE C Circular No. 15, series of 2009 ("MC No. 15, s. 2009"), the deadline

within which corporations could file a petition to lift order of revocation wasextended to one (1) more year - in the caseof Crowntex, until 29 September 2010.

SEC Resolution No. 598, Series of 2010 ("SEC Res. No. 598, S. 2010,,)4now

allows the revoked corporations to file petitions to lift order of revocation even after

the lapse of the 1-year period provided under MC No. 15, s. 2009.

,

Considering the foregoing, Crowntex may still file its Petition to lift the Order

of Revocation ("Petition") before the Law and Regulation Division of the CRMD

("LRD-CRMD"). Together with the Petition, the corporation has to file a

Directors'fTrustees Certificate signed by a majority of the board of directors, itslatest General Information Sheet and Audited Financial Statements, a photocopy of

Membership/Stock and Transfer Book, proof of operation, and a copy of Certificate

of Registration or iatest Certificate of Amendment if there is a change in corporate

name. For further information, you can consult the LRD-CRMD.

The foregoing opinion rendered is based solely on the facts disclosed in the

query and relevant solely to the particular issues raisedtherein and shall not be usedin the nature of a standing rule binding upon the Commissionwhether of similar or

dissimilar circumstances.s If, upon investigation, it will be disclosed that the facts

relied upon are different, this opinion shall be rendered void.

Pleasebe guided accordingly.

Very truly yours,

~'(--VESPER JU~~B" GARCIA

Offi;/rjn-tharge

4 Adopted by the Commission on December 16, 2010.

5 SEC Memorandum Circular No. 15, series of 2003.



Republic of the Philippines

SECURITIES AND EXCHANGECOMMISSION

SEC Bldg. EDSA, Greenhills, Mandaluyong City

OFFICE OF THE GENERAL COUNSEL

16 J une 2011

SEC-OGC Opinion No. 11-30

Dissolution & Liquidation

Sylvia B. Trinidad

21 Mars Street, Bel-Air 1

Makati City

Madam:

This refers to your 06 April 2011 letter requesting opinion on the procedures

for dissolution of Cebu Memorial Park, Inc (Cempark).

You allege that: (1) you are a stockholder and director of the subject

corporation that is engaged in the selling of lots in a park for interment purposes;

(2) as seller, the corporation agreed that the park is to be operated as a perpetual

care cemetery, and that the deposit by the purchaser shall be placed in trust for the

maintenance of the park; (3) that the net income of the existing trust fund

adequately covers the annual maintenance of the park; and (3) now, it is your

intention to dissolve the corporation and turn over the management of the park to

the lot owners.

Thus, you ask for the Commission's opinion on whether the following is

possible:

1. For the corporation to start distributing liquidating dividends.

2. For the corporation to dissolve and turn over management of the park to

lot owners.3. for the lot owners to elect a board of directors that will manage the park.

You seek the Commission's advice on how you should proceed with these

matters.

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Weadviseasfollows:

1. Liquidating dividends are dividends which are actually distributions of

assets of the corporation upon dissolution1

They are not paid on account

of earnings or profits, but as a return of capital invested.2

Under Section 122 of the Corporation Code,3

"no corporation shall

distribute any of its assets or property except upon lawful dissolution and

after payment of all its debts and liabilities."

In other words, the corporation can only distribute liquidating dividends

after it is dissolved, and all of its creditors have been paid.

2. A corporation may be dissolved voluntarily by majority vote of the board

of directors or trustees, and by a resolution duly adopted by the

affirmative vote of the stockholders owning at least two-thirds (2/3) of the

outstanding capital stock or of at least two-thirds (2/3) of the members of a meeting to be held upon call of the directors or trustees. Pursuant to

Sections 117 to 120 of the Corporation Code, the Commission will issue

the certificate of dissolution upon an application complying with the

following requirements:

a. Directors' Certificate - a notarized document signed by a majority

of the directors/trustees and the corporate secretary, certifying: (1)

the amendment of the Articles of Incorporation shortening the

corporate term or the resolution adopting the dissolution, as the

case may be; (2) the votes of the directors/trustees and

stockholders/members; and (3) the date and place of thestockholders'/members' meeting;

b. Amended Articles of Incorporation (in case where dissolution is by

shortening of corporate term);

c. Audited financial statements as of date of the stockholders' meeting

approving the dissolution or any date thereafter but not earlier than

60 days prior to the date of filing of the application;

d. List of creditors, if any, and the consent of the creditors, or

certification as to non- existence of creditors;

e. Certificate of No Tax Liability issued by the Bureau of Internal

Revenue;

I SEC Opinion No. 70 -03! 16 December 2003/, citing Wise & CO. VS. Meer. G.R. NO.4 823 1,J une 30,

1947.

2 SEC Op'nion No. 70 -03.3 Batas Pambansa Bilang 68 (01 May 1980).



f. Publisher's affidavit of the publication of the notice of dissolution of

the corporation (once a week for three [3J consecutive weeks);

g. Endorsement/clearance from other government agencies, if the

corporation engages in an activity regulated by such agencies;

However, if consent of the creditors was not obtained, then aside from the

foregoing requirements, the application should be in the form of a petition.

The petition shall be filed with the Commission, and judgment shall be

rendered after due notice and hearing in accordance with Section 119 of the

Corporation Code.

After dissolution, the corporation can continue as a body corporate for three

(3) more years for the purpose of winding up its affairs, enabling it to dispose

its property, and distribute its assets.4

From the facts that you have represented, we understand that Cempark, asseller, is obligated to perpetually manage the park for the benefit of the lot

owners. This outstanding obligation means that every lot owner is a creditor

of Cempark. Hence, you need to obtain the consent of each and every

lot owner in order to dissolve Cempark.

Further, y ou m us t al so s ec ur e th e c on sen t o f eac h an d ev er y l ot

owner to your proposal for them to organize a new corporation and

take over the management of the park from Cempark after the latter

is dissolved.

3. Any number of natural persons not less than five (5) but not more than

fifteen (15), all of legal age and a majority of whom are residents of the

Philippines, may form a private corporation for any lawful purpose or

purposes.s

We opine that the management of a memorial park is a lawful purpose.

Thus, if the lot owners agree with you and among themselves, then they

may choose to incorporate a stock corporation and elect a board of

directors to pursue such purpose.

It must be emphasized that the Commission expresses no opinion

o n th e i nter pr etat io n o f c on tr ac ts , o r the c on tr ac tu al r ig hts o f p ar ti es

involved. Any questions, or disputes relating thereto must be submitted to the

courts that have exclusive jurisdiction on the matter.6

4 Corporation Code, Sections J 22.

5 Corporation Code, Sections 10., SEC MemorandumCircularNo. 15. seriesof 2003 (16 December2003).

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This opinion is rendered based solely on the facts and circumstances disclosed

and relevant solely to the particular issues raised therein and shall not be used in the

nature of a standing rule binding upon the Commission in other cases whether of

similar or dissimilar circumstances. If, upon investigation, it will be disclosed that

the facts relied upon are different, this opinion shall be rendered null and void.

Please be guided accordingly.

vesper~:-~arCia

offi~~~Fcharge

P C l g e I I of < 1

Sec_ogc Opinion No 11-30 & 38

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