Benigno Vigilla, et.

al
v.
Philippine College of Criminology
G.R. No. 200094
June 10, 2013
Facts:

Petitioners were deployed to work as maintenance personnel in the Philippine College of

Criminology (PCC), but were employees of MBMSI, a corporation declared to be a labor-only
contractor which registration as a corporation was revoked in 2003. When PCC discovered
MBMSI’s revocation, it terminated its relationship with the latter, which resulted to the
termination of the petitioner’s employment as well. Thus, the petitioners filed a complaint for
illegal dismissal alleging that PCC was their direct employer, and not MBMSI since the former
undertook their hiring and control. As defense however, PCC presented signed quitclaims and
waivers allegedly signed by the petitioners releasing MBMSI from any liability, more than three
(3) years after its revocation as a corporation. The Labor Arbiter ruled in favor of the petitioners,
and such decision was affirmed by NLRC, but exempted PCC from liability contending that since
the obligation was solidary, PCC was released from such when the petitioners signed the release,
waiver and quitclaim.

Issue: Whether or not MBMSI, a dissolved corporation can enter into an agreement such as
releases, waivers, and quitclaims beyond the 3-year winding up period under Sec.122 of the
Corporation Code.

Ruling: Yes.

The executed releases, waivers and quitclaims are valid and binding notwithstanding the
revocation of MBMSI’s Certificate of Incorporation because the revocation does not result in the
termination of its liabilities. Section 122 of the Corporation Code provides for a three-year
winding up period for a corporation whose charter is annulled by forfeiture or otherwise to
continue as a body corporate for the purpose, among others, of settling and closing its affairs.

In the case of Premiere Development Bank v. Flores, the Court held that a corporation is
allowed to settle and close its affairs even after the winding up period of three (3) years. As early
as 1939, this Court held that, although the time during which the corporation, through its own
officers, may conduct the liquidation of its assets and sue and be sued as a corporation is limited
to three years from the time the period of dissolution commences, there is no time limit within
which the trustees must complete a liquidation placed in their hands.

What is provided in Section 122 of the Corporation Code is that the conveyance to the
trustees must be made within the three-year period. But it may be found impossible to complete
the work of liquidation within the three-year period or to reduce disputed claims to judgment.
The trustees to whom the corporate assets have been conveyed pursuant to the authority of
Section 122 may sue and be sued as such in all matters connected with the liquidation.