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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
If a corporation does not formally organize and commence its business within five (5) years from the date of its incorporation, its certificate of incorporation shall be deemed revoked as of the day following the end of the five (5)-year period. (Section 21, Revised Corporation Code)
The law says –
What is the effect of Non-Use of Corporation Charter?
If a corporation does not formally organize and commence its business within five (5) years from the date of its incorporation, its certificate of incorporation shall be deemed revoked as of the day following the end of the five (5)-year period.
What is the effect of continuous inoperation of the corporation?
If a corporation has commenced its business but subsequently becomes inoperative for a period of at least five (5) consecutive years, the Commission may, after due notice and hearing, place the corporation under delinquent status.
How can a corporation remove its delinquent status?
A delinquent corporation shall have a period of two (2) years to resume operations and comply with all requirements that the Commission shall prescribe. Upon compliance by the corporation, the Commission shall issue an order lifting the delinquent status. Failure to comply with the requirements and resume operations within the period given by the Commission shall cause the revocation of the corporation’s certificate of incorporation.
What is the role of the Securities and Exchange Commission in case of suspension or revocation of the company’s certificate of incorporation?
The Commission shall give reasonable notice to, and coordinate with the appropriate regulatory agency prior to the suspension or revocation of the certificate of incorporation of companies under their special regulatory jurisdiction
Source: Section 21, Revised Corporation Code
Jurisprudence says –
As to dissolved corporations:
Plain from the language of the provision is its meaning: continuance of a “dissolved” corporation as a body corporate for three years has for its purpose the final closure of its affairs, and no other; the corporation is specifically enjoined from “continuing the business for which it was established”. The liquidation of the corporation’s affairs set forth in Section 77 became necessary precisely because its life had ended. For this reason alone, the corporate existence and juridical personality of that corporation to do business may no longer be extended.
The common law rule, at the beginning, was rigid and inflexible in that upon its dissolution, a corporation became legally dead for all purposes. Statutory authorizations had to be provided for its continuance after dissolution “for limited and specified purposes incident to complete liquidation of its affairs”. Thus, the moment a corporation’s right to exist as an “artificial person” ceases, its corporate powers are terminated “just as the powers of a natural person to take part in mundane affairs cease to exist upon his death”. There is nothing left but to conduct, as it were, the settlement of the estate of a deceased juridical person.
Source: ALHAMBRA CIGAR & CIGARETTE MANUFACTURING COMPANY, INC., vs. SECURITIES & EXCHANGE COMMISSION, G.R. No. L-23606, July 29, 1968
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