When a corporation has been dissolved, it ceases to possess a juridical personality except for purposes of liquidating its affairs. Dissolution refers to the process which ends the capacity of the body corporate to act as such and extinguishes all the legal relations existing in respect of the corporate enterprise.
The causes of dissolution are various. It may either be voluntary or not.
Once the corporate franchise has been revoked and the corporation dissolved, the corporation must undergo corporate liquidation. It is mandatory for a dissolved corporation to commence liquidation of its affairs, settle its liabilities, and distribute and dispose of its corporate assets within three years after its corporate term had elapsed.
The law provides that every corporation whose charter expires pursuant to its articles of incorporation, is annulled by forfeiture, or whose corporate existence is terminated in any other manner, shall remain for a period of three (3) years to dispose of and convey its property and distribute its assets. During the said three years, the corporation is authorized and empowered to convey all of its property to trustees for the benefit of stockholders, members, creditors and other persons in interest. While the law gives a dissolved a corporation three years to continue as a body corporate for purposes of liquidation, the distribution of the remaining undistributed assets necessarily continues even after said period.
During the liquidation, the remaining properties of the expired corporation are considered to be held in trust by either the court-appointed receiver or, in the event that there is none, the directors and trustees of the corporation at the time of the expiration of the corporate term. Clemente v. CA provides that if the three-year extended life has expired without a trustee or receiver having been expressly designated by the corporation within said period, the board of directors or trustees itself may be permitted to continue as “trustees” by legal implication to complete the corporate liquidation. When one or more directors die, the surviving trustees take the whole title subject to the trust, and the latter may exercise the powers and duties of the deceased director-trustee. However, in case of the death, resignation, inability, or refusal to act of the directors as trustees, or the survivors, the court may appoint trustees to fill the vacancy, upon the application of any person interested.
Once all the claims of creditors are settled, the remaining assets of the corporation should be divided between and among the stockholders of the defunct corporation depending on their interest in the corporation and other contractual agreements they may have entered into. The distribution of the corporate assets may be through sale or other modes of assignment, and all the proceeds from the assignment or sale of the properties shall be divided accordingly among all those with remaining interest in the said corporation.
The approval of the Securities and Exchange Commission, insofar as the distribution or liquidation of assets is concerned, is not required.
Juris Supellectilem 