BAGUIO CITY, Philippines — The Supreme Court (SC) Third Division has ruled that the appointment of a receiver is a “convenient and feasible” means of liquidating a dissolved corporation, even when the three-year winding-up period provided by law has already expired.

In a Decision promulgated on April 7, 2025, and penned by Associate Justice Maria Filomena D. Singh, the Court reinstated Jaime T. Dee as the receiver for Mabasa and Company, Inc. (MCI), reversing a Court of Appeals (CA) ruling that had previously revoked his appointment. The SC held that the dissolution of a corporation does not result in the extinction of its rights and that stockholders may act as trustees to settle corporate affairs.

Winding Up After Dissolution

MCI was a corporation whose existence ended on October 25, 2011, after its corporate term was shortened through an amendment of its articles of incorporation. Under the Corporation Code (now the Revised Corporation Code), a dissolved company has three years to wind up its affairs, settle debts, and distribute assets.

In December 2014—roughly two months after the three-year period had lapsed—Jaime T. Dee, a majority shareholder, petitioned the Regional Trial Court (RTC) for the appointment of a receiver to manage MCI’s remaining assets and revive several judgments against Union Bank of the Philippines. The RTC granted the petition and appointed Dee. However, Union Bank challenged the move, arguing that MCI had no juridical personality to sue and that a “Petition for Liquidation,” not “Receivership,” was the proper legal path. The CA eventually sided with the bank, revoking Dee’s appointment.

Trustees by Legal Implication

The Supreme Court rejected the CA’s rigid interpretation of the three-year winding-up rule. The Court clarified that while a defunct corporation cannot initiate new business or suits in its own name after three years, its property rights and liabilities do not simply vanish.

The SC emphasized that if a corporation fails to appoint a formal trustee or receiver within the three-year window, the board of directors or the shareholders—by legal implication—become “trustees” of the corporate assets. These trustees have the authority to complete the liquidation process, including the prosecution of suits to collect debts or revive judgments, regardless of the lapse of time.

“The termination of the life of a juridical entity does not by itself cause the extinction or diminution of the rights and liabilities of such entity,” the Court held. It added that receivership under Rule 59 of the Rules of Court is an appropriate and valid tool for preserving and administering property during this final phase.

Rejection of Union Bank’s Intervention

The SC also rebuffed Union Bank’s attempt to intervene in the receivership proceedings. Union Bank had argued it had a “legal interest” because Dee, as receiver, intended to file collection suits against it.

The Court ruled that Union Bank’s interest was merely “contingent or expectant” rather than direct. A party’s desire to avoid being sued by a receiver does not constitute the substantial legal interest required by the Rules of Court to intervene in a receivership petition. The RTC was correct to deny the bank’s motion, the SC noted, as Union Bank can adequately protect its interests in the separate collection or revival of judgment cases.

Ultimately, the SC found that Dee, as a majority shareholder with a direct pecuniary interest in MCI’s assets, was a qualified person to oversee the liquidation. The ruling ensures that debtors cannot escape their financial obligations simply because a creditor-corporation has ceased its formal existence.