TOPIC: SEC JURISDICTION/ Corporate Existence after Dissolution

PNB v. CFI
Facts:
Private respondents entered into a contract of lease w/ the Phil. Blooming Mills, whereby
the latter shall lease 3 parcels of land as factory site. PBM has a corporate term of 25 yrs. The
lease term is for 20 yrs. beginning from the date of contract and is extendable for another 20 yrs.
at the lessee’s option should its term of existence be extended. The contract also provides that the
lessee can construct buildings or improvements as may be necessary. Later, PBM executed a
deed of assignment in favor of PNB transferring all its rights under the contract of lease. Further,
PBM executed a Real Estate Mortgage covering all the improvements constructed by PBM on
the leased premises. The deed of assignment was registered and annotated at the back of the
private respondents’ cert. of title. PBM filed a petition for the registration of improvements in the
titles. However private respondents filed a motion to cancel the annotations on the title
pertaining to the assignment of PBM’s leasehold rights to PNB on the ground that PBM failed to
renew the contract.
Issue:
WON the SEC has jurisdiction over the case?
Ruling:
NO, private respondents’ motion with the respondent court was for the cancellation of the
entries on their titles on the ground that the contract of lease executed between them and PBM had
expired. This action is civil in nature and is within the jurisdiction of the respondent court. The
circumstance that PBM whose corporation term had expired and which fact was made the basis
for the termination of the lease is not sufficient to confer jurisdiction on the SEC. PD # 902-A as
amended enumerates the cases over which SEC has jurisdiction. The case at bar is not covered by
the enumeration.

NOTE: When the period of corporation life expires, the corporation ceases to be a body corporate
for the purpose of continuing the business for which it was organized. But it shall nevertheless be
continued as a body corporate for 3 years after the time it would have been dissolved, for the
purpose of prosecuting and defending suits by or against it and of enabling it gradually to settle
and close its, to dispose of and convey its property and to divide its assets.