A corporation’s new lease of life

But unlike humans, a corporation can be raised back from the dead, and exist in the very same person it was prior to its death. This is one salient feature of a corporation.

In legal parlance, the corporation is a person. A juridical person that is. Thus it has an existence entirely separate and distinct from its owners, the stockholders. Just like a real person, it can enter into transactions with anyone. It purchases and owns assets and properties, inasmuch the same way we humans do. In like manner, it can incur its own debts and liabilities. And these will have to be settled by the corporation itself; not by the stockholders that compose it. Clearly, the corporation lives, breathes and exists on its own.

But just like humans, corporations die too. And based on the (old) Corporation Code (Batas Pambansa 68), a corporation is to live only for fifty years (subject to extension prior to its death). The Revised Corporation Code, Republic Act 11232 (which took effect on 23 February 2019), now has amended this to make corporations exist in perpetuity. The new provision on existence notwithstanding, many corporations, for one reason or the other, have died. And supposedly under the law, when its term of existence has reached its end, the corporation, for all intents and purposes ceases to breathe. And just like a real person, when the corporation dies, its assets and liabilities must be liquidated; akin to the settlement of the estate of a deceased person.

But unlike humans, a corporation can be raised back from the dead, and exist in the very same person it was prior to its death. This is one salient feature of a corporation our Securities and Exchange Commission (SEC) introduced quite recently, 21 November 2019 to be exact. I invite you to read SEC Memorandum Circular 23, Series of 2019. It states that “a corporation whose term has expired… may apply for a revival of its corporate existence, together with all the rights and privileges under its certificate of incorporation and subject to all its duties, debts and liabilities existing prior to its revival.”(3rd Whereas clause, SEC Memo Circular 23). Call it a corporation’s new lease of life. Before the Revised Corporation Code, things would go practically haywire when a corporation continues to exist past its life. There have been instances before when the officers of the corporation failed to extend its fifty-year term, thus creating a vacuum. An absurd situation arises — a corporation existing in fact, but already non-existent in law. If likened to a human, it is like a dead person still actually mingling and transacting with his peers? Impossible, right?

So as to remedy this hiatus, the SEC came up with the circular mentioned above. All that is entailed is for its interested persons to file a petition for revival of the corporation. The SEC hears the petition and grants opportunity for others to oppose it. If it finds the petition meritorious, over the others’ objections, it restores the corporation to its exact state, prior to how it was when it died. Thus, it reacquires its rights and privileges. And at the same time, it is made answerable to its liabilities existent prior to death. So in this manner, a corporation, save for a brief moment of death, can continue to exist and this time in perpetuity. With this, it is as if the corporation never died at all. Business is not disrupted. Transactions continue. Laudable “corporate medical science,” is it not?

If only there is a way of reviving a deceased real person too, like that of a corporation; that would be fantabulous. But that of course my dear readers, only God can do. Amen.