SECTION 122.

Corporate Liquidation
(a) Who may undertake the liquidation of a corporation?
1. By the corporation itself through the BOD- usual method or procedure of liquidating a
corporation and although there is no law authorizing it, neither is there anything that prohibits
the BOD from undertaking the same. If this method is resorted to, the board will only have a
period of 3 years to finish its task of liquidation. Actions pending for or against the
corporation when the 3 year period expires, are abated since after the period, the
corporation ceases for all intents and purposes and is no longer capable of suing or being
sued.
2. By a trustee appointed by the corporation- the corporation may opt to convey all corporate
assets to a trustees who will take charge of liquidation. If this method is used, the three year
period limitation imposed by section 122 will not apply provided the designation of the
trustee is made within that period
3. By appointment of a receiver- a receiver may be appointed by the proper forum on petition
or motu proprio upon the dissolution of the corporation. If a receiver is appointed, the 3 year
period fixed by law within which to complete the task of liquidation will not likewise apply
because the dissolved corporation is substituted by the receiver who may sue or be sued
even after that period
(b) For how long may the liquidation of a corporation may be undertaken? - Every corporation
whose corporate existence has been terminated in any manner shall nevertheless be
continued as a body corporate for 3 years after its dissolution. (UP Class Notes at 49)
(c) What could and should be done during the period of liquidation? - Prosecuting and
defending suits by or against it and enabling it to settled and close its affairs, to dispose of
and convey its property and to distribute its assets, but not for the purpose of continuing the
business for which it was established; anytime during the 3 year period, the corporation is
authorized and empowered to convey all of its property to trustees for the benefit of SHs and
other persons in interest.
(d) What happens if an asset cannot be distributed? - Any asset distributable to any creditor or
stockholder or member who is unknown or cannot be found shall be escheated to the city or
municipality where such asset is located.
(e) Who are liable after dissolution and winding up? - Although a corporate officer is not liable
for corporate obligations, such as claims for wages, however, when such corporate officer
[ceases] corporate property to apply to his own claims against the corporation, he shall be
liable to the extent thereof to corporate liabilities, since knowing fully well that certain
creditors had similarly valid claims, he took advantage of his position as general manager
and applied the
(f) May a corporation that is already dissolved, transfer and assign its assets and properties to
a new corporation which will continue the business of the dissolved one? -Yes, provided all
the stockholders gave their consent.