Title XIV

Question 1

Define dissolution

Answer 1

Dissolution is the extinguishment of the franchise of a corporation and the termination of its corporate existence.

Question 2

What are the modes of dissolution?

Answer 2

Dissolution may be done through:

• Voluntary Dissolution
• Involuntary Dissolution
• Shortening of Term
• Expiration of Term
  -Revocation of the Certificate of Incorporation by the SEC

Question 3

What is a de jure dissolution?

Answer 3

It is defined as one that is adjudged and determined by judicial sentence, or brought about by and act of or with the consent of a sovereign power, or which results from the expiration of the charter period of corporate life.

Question 4

What is a de facto dissolution?

Answer 4

It is one which takes place in substance and in fact when the corporation by reason of insolvency, cessation of business, or otherwise, suspends all operations and, it may be, goes into liquidation but still retaining its primary franchise to be a corporation.

Question 5

Discuss the procedure in involuntary dissolution where no creditors are affected

Answer 5

• A meeting must be held on the call of the directors and trustees.
• Notice of the meeting should be given to the stockholders/members of record, whether or not entitled to vote at the meeting, by personal delivery or by registered mail or by other means authorized under the Bylaws at least 20 days prior to the meeting.
• The notice of meeting should also be published once in a newspaper published in a place where the corporation’s principal office is located or if there is no such newspaper, in a newspaper of general circulation in the Philippines.
• The resolution to dissolve must be approved by the majority of the directors/trustees and approved by the stockholders representing at least a majority of the outstanding capital stock or majority of members.
• A verified request for dissolution shall be filed with the SEC and the latter shall approve the request and issue the certificate of dissolution within 15 days from receipt of the verified request.

Question 6

Discuss the procedure voluntary dissolution where creditors are affected

Question 7

What are the modes of involuntary dissolution

Answer 7

• Filing a verified complaint under Section 138
• Revocation of the Articles of Incorporation by the SEC
• Quo warranto proceedings

Question 8

Enumerate the grounds Section 138 of the RCCP provide for involuntary dissolution

Answer 8

• nonuse of corporate charter as provided under Section 21 of the RCCP
• Continuous inoperation of a corporation as provided under Section 21 of the RCCP
• Upon receipt of a lawful court order dissolving the corporation
• Upon finding by final judgement that the corporation procured itis incorporation through fraud.

-Upon

Question 9

Effects of the dissolution of a corporation

Answer 9

Upon dissolution, the corporation ceases as a body corporate to continue the business for which it was established.

The assets of the corporation will then be liquidated and legal title to remaining corporate properties is transferred to the stockholders who become co-owners thereof.

the corporation continues as a body corporate for three years for purposes of winding up or liquidations; upon the expiration of the three-year winding-up period the corporation ceases to exist for all purposes.