Department of Finance ( ) Republic of the Philippines Securities and Exchange Commission OFFICE OF THE GENERAL COUNSEL 08 May 2019 SEC-OGC Opinion No.19-18 Re: Term of Existence of Condominium Corporations MONTEPINO BAGUIO CONDOMINIUM CORPORATION Suite 605 Cattleya Condominium Building 235 Salcedo Street Legaspi Village, Makati City ATTENTION: MR. VENANCIO GUTIERREZ Sir: This refers to your letter dated 21 January 2014 requesting confirmation of the following, to wit: 1, That Montepino Baguio Condominium Corporation (MBC) ceased to exist upon the destruction of the Condominium Project and the successful sale of all its assets; and 2, That Sections 117 to 121 of the Corporation Code, now Sections 133 to 138 of the Revised Corporation Code (the “RCC"), on dissolution is not applicable to MBCC and that it may now proceed to liquidation under Section 122, now Section 139 of the RCC. At the outset, you stated in your letter that the condominium project owned and/or held by MBCC is named *Montepino Baguio Condominium Projects’. However, MBCC’s Articles of Incorporation shows the name of “Montepino Baguio Condominium Apartments” (the “Apartments”) as the subject condominium project. Inyour letter and in the court decision (“Decision”) attached therein, itis represented that MBCC is a non-stock, non-profit corporation registered with the Commission and organized for the sole purpose of owning and/or holding the title to the common areas of the Apartments, under the Condominium Act (the “Condo Act’)?. Itis further stated that on 16 July 1990, the Apartments was heavily destroyed by an earthquake and more than one-half (1/2) of the project was severely damaged, hence thePage 2 of 5 entire edifice became untenantable. The unit owners then convened in a special meeting and in a Resolution dated 15 January 1992, resolved: (1) not to repair the damage anymore, (2) to terminate the condominium project, (3) to sell all the assets of MBCC, and (4) distribute the proceeds of the sale among the various unit owners in accordance with their interests as provided for in the Master Deed and/or other related documents. The Board of Directors was likewise authorized and mandated to execute the necessary Resoluti ‘Subsequently, MBCC filed an action for partition (the “Petition”) with the Regional Trial Court. Having no opposition filed against the Petition, the case was resolved and a decision dated 31 January 1997 was issued granting the Petition which has long become final. You further stated that any remaining damaged structures have been torn down because they caused a danger to the neighboring properties, should they fall; so that, only the lands wherein the Apartments had been constructed and/or which were being used by the owners and owned by MBCC, remained. Further, on 04 September 2013, these lands were sold toa third person, Hence, this query. FIRST QUERY Itis worth noting that MBCC is a condominium corporation duly established pursuant to the provisions of the Condo Act, Section 11 of which provides: “The term of a condominium corporation shall be co-terminus with the duration of the corporation project, the provisions of the Corporation Law to the contrary notwithstanding.” In this connection, MBCC’S Articles of Incorporation provided that: “Fourth. - The Term of the Corporation shall be co-terminus with the duration of the Montepino Condominium Apartments.” To ascertain the intent of the legislature when the Condo Act was crafted, instructive is the deliberations that led to the enactment of the said law. During the second reading of the said Act, then Senate Bill No, 162, held on 13 May 1966, the following are the discussions recorded: “Senator Osias: Mr. President, before we move into the period of amendments, I should like certain clarifications to be made, What is the period described for the duration of the condominium corporations? Senator Manglapus: There is no limit. This is with reference to the holding of real property by private persons even with the medium ofa corporation. There is no limit, otherwise, the stability of the right of the person would be disturbed. Senator Osias: Section 11 on page 8 reads:Page 3 of 5 “Section 11. The term of a condominium corporation shall be coterminous with the duration of the condominium project, the provisions of the Corporation Law to the contrary notwithstanding.” ‘And this connotes certain provisions of the present Corporation Law to be nullified or disregarded. What particular important provision... I don’t know. Senator Manglapus: Well, the duration of time, the time limit for the business of the corporation, a 50-year period. Senator Osias: Fifty-year period? ‘Senator Manglapus: Yes. Senator Osias: Now, I was somewhat responsible for the amendment of the Corporation Law in the Fifth Congress providing for an easier way of lengthening the period or the duration of a given corporation. How could the condominium corporation enjoy the benefits of that amendment which was approved? Senator Manglapus: If this section is untouched if this bill is passed, there would be no need for the condominium corporation to take advantage of any existing law since ‘we would permit the condominium corporation to exist as long as the project exists, and that means under Section 13, a certain thing might come in, like damage or destruction, which will necessitate the dissolution of the joint ownership of the corporation.” From the foregoing, it would appear that the framers of the Condo Act did not put a limit on the term of a condominium corporation to promote stability of property rights. The law permits the condominium corporation to exist as long as the project exists despite the term limit set in the Corporation Law effective during that time. One of the modes provided by the Condo Act to terminate a condominium project, vis- 4-vis, dissolution of a condominium corporation pursuant to Section 11, is Section 8, provides tha “Where several persons own condominiums ina condominium project, an action may be brought by one or more such persons for partition thereof by sale of the entire project, as if the owners of all of the condominiums in such project were co-owners of the entire project in the same proportion as their interests in the common areas: Provided, however, That a partition shall be made only upon a showing: (a) That three years after damage or destruction to the project which renders material part thereof unfit for its use prior thereto, the project has not been rebuilt or repaired substantially to its state prior to its damage or destruction; or