Dissolution of a corporation

THE Dissolution of a corporation signifies the extinguishment or the cancellation of its franchise
and the termination of its corporate existence for business purpose. And consequently the
termination of any obligation to pay taxes as a corporate entity. The fact that the corporation has
ceased to do business does not necessarily constitute dissolution under the law.

A corporation formed or organized under the Corporation Code may be dissolved either
voluntarily or involuntarily (Sec. 117, Corporation Code). There are three (3) types of voluntary
dissolution:
Where no creditors are affected by the dissolution, by an administrative application for
dissolution filed with the SEC (Securities and Exchange Commission) (Sec. 118, Corporation
Code);

Where creditors are affected by dissolution, by a formal petition for dissolution filed with the
SEC, with due notice and hearing (Sec. 119, Corporation Code); and
Shortening of corporate term by the amendment of the articles of incorporation (Sec. 120,
Corporation Code).
On the other hand, a corporation may also be dissolved by the SEC upon filing of a verified
complaint and after proper notice and hearing on grounds provided by existing laws, rules and
regulations (Sec. 121, Corporation Code). Among the grounds for involuntary dissolution
include the situation where the corporation has become inoperative for a period of at least five
(5) years (Sec. 22, Corporation Code), and the failure of the corporation to file the required
reports in appropriate forms as prescribed by the SEC within the prescribed period (Sec. 6(I)(6),
Pres. Decree 902-A).

Upon revocation or cancellation of the certificate of registration, the SEC issues a corresponding
Revocation Order, in which event the corporation is prohibited to continue its operation and shall
be subject to Section 122 of the Corporation Code, that provides that it shall be continued as a
body corporate for three (3) years after the time when it would have been so dissolved, for the
purpose of prosecuting and defending suits by or against it and enabling it to settle 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.