NOTES - Dissolution of Corporation

A corporation formed or organized under the provisions of this Code may be
dissolved voluntarily or involuntarily.1
Voluntary Dissolution:
 Voluntarily with no creditors affected (Section 134)
o Voting by Board & Stockholders/Members
o Submit to SEC a verified request for Dissolution
 Voluntarily with creditors affected (Section 135)
 By Shortening Term (Section 136)
Involuntary Dissolution
Section 134. Voluntary Dissolution Where No Creditors are Affected.— If

dissolution of a corporation does not prejudice the rights of any creditor having a
claim against it, the dissolution may be effected:
1. By majority vote of the board of directors or trustees, and
2. By a resolution adopted by the affirmative vote of the stockholders owning
at least majority of the outstanding capital stock or majority of the members
The meeting to be held upon the call of the directors or trustees.
THE NOTICE:
Notice shall be given to each shareholder or member of record (whether or not

entitled to vote at the meeting) at least twenty (20) days prior to the meeting thru
1. Personal service,
2. by registered mail, or
3. by any means authorized under its bylaws,
, in the manner provided in Section 50 of this Code and
The Notice shall state that the purpose of the meeting is to vote on the dissolution
of the corporation.
Notice of the time, place, and object of the meeting shall be published once prior to
the date of the meeting.
1
Section 133
Where: in a newspaper published in the place where the principal office of
said corporation is located,
If no newspaper is published in such place, in a newspaper of general
circulation in the Philippines.
A verified request for dissolution shall be filed with the Commission stating:
(a) the reason for the dissolution;
(b) the form, manner, and time when the notices were given;
(c) names of the stockholders and directors or members and trustees who
approved the dissolution;
(d) the date, place, and time of the meeting in which the vote was made; and
(e) details of publication.
The corporation shall submit the following to the Commission:

(1) a copy of the resolution authorizing the dissolution, certified by a
majority of the board of directors or trustees and countersigned by the
secretary of the corporation;
(2) proof of publication; and
(3) favorable recommendation from the appropriate regulatory agency, when
necessary.2
Within fifteen (15) days from receipt of the verified request for dissolution, and in
the absence of any withdrawal within said period, the Commission shall approve
the request and issue the certificate of dissolution.
The dissolution shall take effect only upon the issuance by the Commission of a
certificate of dissolution.
Section 135. Voluntary Dissolution Where Creditors are Affected; Procedure and
Contents of Petition.— Where the dissolution of a corporation may prejudice the
rights of any creditor:
A verified petition for dissolution shall be filed with the Commission.

i. Signed by a majority of the corporation’s board of directors or trustees,
2
No application for dissolution of banks, banking and quasi-banking institutions, preneed, insurance and trust
companies, NSSLAs, pawnshops, and other financial intermediaries shall be approved by the Commission unless
accompanied by a favorable recommendation of the appropriate government agency.
ii. verified by its president or secretary or one of its directors or trustees,
iii. and shall:
 set forth all claims and demands against it;
 that its dissolution was resolved upon by the affirmative vote of the
stockholders representing at least two-thirds (2⁄3) of the outstanding
capital stock or at least two-thirds (2⁄3) of the members at a meeting
of its stockholders or members called for that purpose.
iv. The petition shall likewise state:

(a) the reason for the dissolution;
(b) the form, manner, and time when the notices were given; and
(c) the date, place, and time of the meeting in which the vote was
made.
The corporation shall submit to the Commission the following:

(1) a copy of the resolution authorizing the dissolution,
i. certified by a majority of the board of directors or trustees and
countersigned by the secretary of the corporation; and
(2) a list of all its creditors.
If the petition is sufficient in form and substance, the Commission shall, by an

order reciting the purpose of the petition, fix a deadline for filing objections to the
petition which date shall not be less than thirty (30) days nor more than sixty (60)
days after the entry of the order.
Before such date,

 a copy of the order shall be published at least once a week for three (3)
consecutive weeks in a newspaper of general circulation published in the
municipality or city where the principal office of the corporation is situated
o or if there be no such newspaper, then in a newspaper of general
circulation in the Philippines, and
 a similar copy shall be posted for three (3) consecutive weeks in three (3)
public places in such municipality or city.
Upon five (5) days’ notice, given after the date on which the right to file objections
as fixed in the order has expired, the Commission shall proceed to hear the petition
and try any issue raised in the objections filed; and
if no such objection is sufficient, and the material allegations of the petition are
true, it shall
 render judgment dissolving the corporation and
 directing such disposition of its assets as justice requires, and
 may appoint a receiver to collect such assets and pay the debts of the
corporation.
The dissolution shall take effect only upon the issuance by the Commission of a
certificate of dissolution.
Section 136. Dissolution by Shortening Corporate Term.— A voluntary

dissolution may be effected:
By amending the articles of incorporation to shorten the corporate term

pursuant to the provisions of this Code.
- a copy of the amended articles of incorporation shall be submitted
to the Commission.
Upon the expiration of the shortened term, as stated in the approved amended
articles of incorporation, the corporation shall be deemed dissolved without any
further proceedings, subject to the provisions of this Code on liquidation.
Dissolution shall automatically take effect on the day following the last day of
the corporate term stated in the articles of incorporation, without the need for
the issuance by the Commission of a certificate of dissolution.
Section 137. Withdrawal of Request and Petition for Dissolution.— A withdrawal

of the request for dissolution shall:
Be made in writing,
- duly verified by any incorporator, director, trustee, shareholder, or
member and
- signed by the same number of incorporators, directors, trustees,
shareholders, or members necessary to request for dissolution as
set forth in the foregoing sections.
The withdrawal shall be submitted no later than fifteen (15) days from receipt
by the Commission of the request for dissolution.
Upon receipt of a withdrawal of request for dissolution, the Commission shall
- withhold action on the request for dissolution and
- shall, after investigation:
(a) make a pronouncement that the request for dissolution is
deemed withdrawn;
(b) direct a joint meeting of the board of directors or trustees
and the stockholders or members for the purpose of
ascertaining whether to proceed with dissolution; or
(c) issue such other orders as it may deem appropriate.
A withdrawal of the petition for dissolution

- shall be in the form of a motion and
- similar in substance to a withdrawal of request for dissolution
o but shall be verified and
o filed prior to publication of the order setting the deadline for
filing objections to the petition.
Section 138. Involuntary Dissolution.— A corporation may be dissolved by the

Commission
- motu proprio or
- upon filing of a verified complaint by any interested party.
The following may be grounds for dissolution of the corporation:
(a) Non-use of corporate charter as provided under Section 21 of this Code;
(b) Continuous inoperation of a corporation as provided under Section 21 of

this Code;
(c) Upon receipt of a lawful court order dissolving the corporation;
(d) Upon finding by final judgment that the corporation procured its
incorporation through fraud;
(e) Upon finding by final judgment that the corporation:
(1) Was created for the purpose of committing, concealing or aidihg

the commission of securities violations, smuggling, tax evasion,
money laundering, or graft and corrupt practices;
(2) Committed or aided in the commission of securities violations,
smuggling, tax evasion, money laundering, or graft and corrupt
practices, and its stockholders knew of the same; and
(3) Repeatedly and knowingly tolerated the commission of graft and

corrupt practices or other fraudulent or illegal acts by its directors,
trustees, officers, or employees.
If the corporation is ordered dissolved by final judgment pursuant to the grounds

set forth in subparagraph (e) hereof, its assets, after payment of its liabilities, shall,
upon petition of the Commission with the appropriate court, be forfeited in favor of
the national government.
Such forfeiture shall be without prejudice to the rights of innocent stockholders

and employees for services rendered, and to the application of other penalty or
sanction under this Code or other laws.
The Commission shall give reasonable notice to, and coordinate with, the
appropriate regulatory agency prior to the involuntary dissolution of companies
under their special regulatory jurisdiction.
Section 139. Corporate Liquidation.— Except for banks, which shall be covered
by the applicable provisions of Republic Act No. 7653, otherwise known as “The
New Central Bank Act”, as amended, and Republic Act No. 3591, otherwise
known as the Philippine Deposit Insurance Corporation Charter, as amended,
every corporation
- whose charter expires pursuant to its articles of incorporation,
- is annulled by forfeiture, or
- whose corporate existence is terminated in any other manner,
shall nevertheless remain as a body corporate for three (3) years after the effective
date of dissolution, for the purpose of:
- prosecuting and defending suits by or against it and
- enabling it to:
o settle and close its affairs, dispose of and convey its
property, and
o 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.
After any such conveyance:

- all interest which the corporation had in the property terminates,
o the legal interest vests in the trustees,
o and the beneficial interest in the stockholders, members,
creditors or other persons-in-interest.
Except as otherwise provided for in Sections 93 and 94 of this Code, upon the
winding up of corporate affairs, any asset distributable to any creditor or
stockholder or member who is unknown or cannot be found shall be escheated
in favor of the national government.
Except by decrease of capital stock and as otherwise allowed by this Code, no

corporation shall distribute any of its assets or property except upon lawful
dissolution and after payment of all its debts and liabilities.

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NOTES - Dissolution of Corporation

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A corporation formed or organized under the provisions of this Code may be

dissolved voluntarily or involuntarily.1

Section 134. Voluntary Dissolution Where No Creditors are Affected.— If

The meeting to be held upon the call of the directors or trustees.

Notice shall be given to each shareholder or member of record (whether or not

The corporation shall submit the following to the Commission:

A verified petition for dissolution shall be filed with the Commission.

iv. The petition shall likewise state:

The corporation shall submit to the Commission the following:

If the petition is sufficient in form and substance, the Commission shall, by an

Before such date,

Section 136. Dissolution by Shortening Corporate Term.— A voluntary

By amending the articles of incorporation to shorten the corporate term

Section 137. Withdrawal of Request and Petition for Dissolution.— A withdrawal

A withdrawal of the petition for dissolution

Section 138. Involuntary Dissolution.— A corporation may be dissolved by the

The following may be grounds for dissolution of the corporation:

(a) Non-use of corporate charter as provided under Section 21 of this Code;

(b) Continuous inoperation of a corporation as provided under Section 21 of

(c) Upon receipt of a lawful court order dissolving the corporation;

(e) Upon finding by final judgment that the corporation:

(1) Was created for the purpose of committing, concealing or aidihg

(3) Repeatedly and knowingly tolerated the commission of graft and

If the corporation is ordered dissolved by final judgment pursuant to the grounds

Such forfeiture shall be without prejudice to the rights of innocent stockholders

After any such conveyance:

Except by decrease of capital stock and as otherwise allowed by this Code, no

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