15 December 2018

Mr. Phillip Antonio

TechSolutions Philippines, Inc.
22/F Enterprise Plaza, ADB Avenue
Mandalyuong City

Dear Mr. Antonio:

This legal opinion seeks to answer the following queries as to how TechSolutions
Philippines, Inc. can acquire the parcel of land that was owned by Ascent Corporation particularly
whether Ascent needs to be reinstated for the purposes of the sale since it has already ceased to
operate, and whether the former directors may be allowed to dispose of the said property.

The Facts

Per our discussion preceding this letter, the following are the pertinent facts:

1) Your company, TechSolutions Philippines, Inc., provides financial technology

solutions. Due to the expansion of such, the company seeks to acquire the parcel of
land in question.

a. The 6,306 sqm lot situated in Taguig City was offered by the former directors
of Ascent Corporation.

b. It is registered under their name and is covered by the transfer Certificate Title
(TCT) No. 98651.

2) Ascent Corporation was incorporated in 1980. However, the company underwent

voluntary dissolution through a Resolution adopted on May 15, 2010 by its
stockholders and Board of Directors.

3) On May 9, 2011, the Securities and Exchange Commission (SEC) approved the said
Resolution.

4) On May 20, 2011, the Bureau of Internal Revenue issued a Tax Clearance Certificate.
Ascent has then ceased to continue the business for which it was established.

It was also established that:

1) According to Ascent’s Articles of Incorporation (AOI), it shall have seven directors.

a. As of the 2010 general Information Sheet (GIS), only six of the seven are still
alive.
 2) Currently, eight out of twelve of its stockholders are still alive.

3) A check with the Register of Deeds shows that the property is free from liens and
encumbrances.

4) Ascent no longer has any remaining assets except this parcel of land and that it had
no creditors during its time of dissolution.

The Applicable Laws

The applicable law is Section 122 of the Corporation Code which provides:
Section 122. Corporate liquidation. – Every corporation whose charter expires by
its own limitation or is annulled by forfeiture or otherwise, or whose corporate
existence for other purposes is terminated in any other manner, shall nevertheless
be continued as a body corporate for three (3) years after the time when it would
have been so dissolved, for the purpose of prosecuting and defending suits by or
against it enabling it to settle and close its affairs, to dispose of and convey its
property and to distribute its assets, but not for the purpose of continuing the
business for which it was established.

At any time during said three (3) years, the corporation is authorized and empowered
to convey all of its property to trustees for the benefit of stockholders, members,
creditors, and other persons in interest. From and after any such conveyance by the
corporation of its property in trust for the benefit of its stockholders, members,
creditors, and others in interest, all interest which the corporation had in the property
terminates, the legal interest vests in the trustees, and the beneficial interest in the
stockholders, members, creditors, or other persons in interest.1

To address the first issue, after going through a voluntary dissolution on May 15, 2010
by a Resolution adopted by its board of directors and stockholders, with the Securities and
Exchange Commission (SEC) approving the same, Ascent Corporation has ceased to operate as
a company and therefore falls within the purview of the first paragraph of Section 122.

In the SEC-OGC Opinion No. 15-07 Re: Corporate Liquidation, the commission declared
that although Section 122 of the Corporation Code gave dissolved corporations a leeway of three
(3) years to convey and dispose of its remaining properties for the benefit of its remaining
stockholders, members, and other persons in interest, it is established that the disposition of the
remaining assets shall continue even after the expiration of this period.2 The same opinion citing
SEC En Banc’s decision in the case of Northern Luzon Transportation Inc. Isabela Cultural
Corporation, petitioner, SEACAC No. 347 October 7, 1991 also provided that Section 122 of the
Corporation Code should not be applied and understood in a manner that would prevent dissolved
corporations in completing the process of their final liquidation. The commission, in
promulgating this decision, allowed Northern Luzon Corporation Inc., to dispose of its remaining
assets in order to complete the process of its final liquidation even if the three (3) year leeway

1 Corporation Code of the Philippines [CORPORATION CODE], Batas Pambansa Blg. 68, Title XIV Sec.122 (1980).
2 SEC-OGC Opinion No. 15-07 dated July 21, 2015 addressed to Atty. Nilo L. Geonzon
period has elapsed for to hold the contrary would be unjust, especially to the remaining
stockholders, creditors, and other persons in interest of the company.3

For the second issue, the applicable doctrine would be the decision rendered by the
Supreme Court in the case of Clemente vs. CA which provides the following:

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 (103 SCRA 90) 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 in 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.4

The decision of SEC in SEC-OGC Opinion No. 10-06, there are additional conditions
when it comes to the directors acting as trustees in the disposition of a dissolved company’s
remaining assets:

We opine that in case of the death of one or more directors during or after the three-
year liquidation period, the surviving directors continue as trustee in liquidation, and
may exercise the powers and duties of the deceased director-trustee. However, this
is subject to the right of creditors, stockholders, and other persons interested
in the corporate assets to petition the courts for the appointment of a trustee in
liquidation.

In our jurisdiction, the statutes and jurisprudence are silent regarding the
consequences of the death of a director, acting as trustee in liquidation, during the
liquidation or winding up period. In some American jurisdictions, directors who
become trustees of the corporation on dissolution hold on as joint tenants with right
of survivorship incident to their tenancy. In other words, when one or more directors
die, the surviving trustees take the whole title subject to the trust, and the latter may
exercise the powers and duties of the deceased director-trustee. However, it is also
provided that in case of the death, resignation, inability or refusal to act, of the
directors as trustees, or the survivors, the court may appoint trustees to fill the
vacancy, upon the application of any person interested. 5

Conclusion and Recommendations

Based on the foregoing, it is established that Ascent Corporation does not need to be
reinstated as a company in order to sell the property because under Section 122 of the Corporation
Code, dissolved companies are given a three-year period after its dissolution to convey and
dispose of its remaining properties for the benefit of its remaining stockholders, members, and

3 SEC-OGC Opinion No. 15-07 dated July 21, 2015 addressed to Atty. Nilo L. Geonzon, citing SEACAC No. 347
dated October 7, 1991
4 Clemente v. CA, 242 SCRA 717, 724 (1995).
5 SEC-OGC Opinion No. 10-06 dated January 29, 2010 addressed to Chato & Vinzons-Chato
other persons in interest. In addition to this, the doctrine in Clemente v. CA established that even
after the lapse of the three-year period, the disposition of the final assets of the companies shall
continue in order to allow the completion of its final liquidation.

It has also been decided that in the absence of appointed trustees after the lapse of the
three- year period, the remaining directors of the company shall act as the trustees, provided that
it is subject to the rights of the creditors, stockholders, and other persons in interest to petition to
the court for the appointment of trustees. In cases of the death, inability, resignation, or refusal
of the directors to act as trustees, the court may appoint the same to fill the vacancy, upon
application of any person interested.

To support these, it is recommended that you also submit and present the pieces of
documentary evidence such as Ascent’s Articles of Incorporation and General Information Sheet
in order to attest as to the number of directors still present for the company and in order to
facilitate the sale. Once the remaining directors are appointed or established as trustees, and
absent of any other legal impediments and encroachment as to the rights of its creditors,
stockholders, and other persons in interest, then the sale of the land to TechSolutions can be
commenced.

I appreciate the opportunity to advise you regarding this matter. Please let me know if
you wish to discuss any of these issues further. Thank you.

Truly yours,

Anna Veluz
LEGAL COUNSEL
 Bibliography

I. Primary Authorities
A. Statutes
1. Corporation Code of the Philippines [CORPORATION CODE], Batas
Pambansa Blg. 68, Title XIV Sec.122 (1980).

B. Jurisprudence
1. Clemente v. CA, 242 SCRA 717, 724 (1995).

II. Secondary Authorities

A. SEC Opinions
1. SEC-OGC Opinion No. 15-07 dated July 21, 2015 addressed to Atty. Nilo
L. Geonzon
2. SEC-OGC Opinion No. 15-07 dated July 21, 2015 addressed to Atty. Nilo
L. Geonzon, citing SEACAC No. 347 dated October 7, 1991
3. SEC-OGC Opinion No. 10-06 dated January 29, 2010 addressed to Chato
& Vinzons-Chato