Is this grammatically correct road liable to flooding?

Not really.

The road may be prone to flooding, or subject to flooding.

Although you may say "this road is liable to flood" colloquially.

In using "liable to _____" one would use the verb infinitive. As you could say "it is liable to rain" (not raining) or "the dog is liable to bark" (not barking), so you could correctly say "That area is liable to flood in the next big storm." but not "liable to flooding." This construction might still be seen used, although it is ungrammatical.