Opinion No. 06-06 RE : Sale of shares of stock of a revoked corporation

SECURITIES AND EXCHANGE COMMISSION SEC Building, EDSA, Greenhills Republic of the Philippines Mandaluyong City

January 31, 2006

corporation SEC Opinion No. 06-06 Sale of shares of stock of a revoked

F. Ortigas Ave., Ortigas Complex Pasig City Unit 2601, 26 th Floor Prestige Tower Office Condominium ATTY. MARILYN O. NGO

Madame:

Commission as forming part of the asset of the buying company. actually acquires those shares, will the shares be recognized by the by the Commission can still validly and legally sell, assign or transfer its shares of stock to a third party who is not a creditor and, (2) if a third party the following queries: (1) whether a company whose license has been revoked This refers to your letter dated January .04, 2006 requesting opinion on

circumstances from which the Commission may dran premises and conclusions, and the resolution of the legal issues preseuited lringes on factual in character and those pertaining to undisclosed entities. In addition, as guideline, uthe requesting party must present the complete factual matters which are readily discernible from the query. policy, the Commission refrains from rendering opinion on questions which are too gerieral in scope or hypothetical, abstract, speculative and anticipatory Under SEC Memorandum Circular No. 15; series of 2003, as a matter of

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Commission can formulate a suitable conclusion. grounds for the revocation of the corporation's registration -- from which the Your letter failed to specify pertinent details --among others, the

information only: In view of the above, the following is imparted for purposes of

Section 122 of the Corporation Code provides:

charter expires by its ovon limitation or is annulled by forfeiture or body corporate for three (3) years after the time wohien it would have been 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, bit uot for the purpose of continuing. the business forvolich it was established. x x x' (underscoring ours) otherwise, or whose corporate existence for other purposes is terminated in any othier manner, sliall nevertheless be continued as a "Section 122. Corporate liquidation. - Every corporation wohiose

continues as a body corporate for three (3) years for purposes of winding up which it was established. Accordingly, it can no longer issue shares of stock and sell the same as that would he tantamount to continuing its business as a or liquidation only, but not for the purpose of continuing the business for going concern. Upon revocation, and consequently dissolution, the corporation

not make the purchaser or assignee a stockholder, though it may pass rights assignment of the net interest ofthe assignor in the corporate property, which a court of equity will recognize. It may be treated as an equitable transferring the right of the seller to any balance of assets which may be found to be due him after payment.1 destroyed by dissolution, and an attempted transfer or assignment of shares of stock after the corporation has been dissolved passes no legal title and does More importantly, the transferable character of corporate stock is

of the reportorial requirements of the Commission, the revoked corporation If the revocation was issued due fo non-compliance by the corporation

i 16A Fletcher Cyc Corp S 8131

CL

dissolution [or revocation] as if the dissolutionJor.revocation] had".never reinstatement..of...the..corporation is that it .relates...back.to..the...date..of based on the three-year winding up period for dissolved corporations under Section 122 :of the Corporation Code.2 Generally, the.effect 'of the has three (3) years within which to file a petition to lift the order of revocation with the Commission. However, the filing of the petition should not be beyond three years from the date of revocation. This three-year period is occurred.3

For your information and guidance.

Very truly ours

VERNETTE G. UMALI-PACO General Counsel

General Information Sheet, 1st page phofocopy of Membership/Stock and Transfer Book, and a copy 2 Together with the Petition to lift Order of Revocation, the corporation has to file a Board Resolution signed by the majority of the board of directors, as well as the latest financial statements, latest of Certificate of Registration or latest Certificate of Amendment if there is a change in corporate name. supra note 1 S 8112.3