Q What are the consequences if the liquidation is not terminated within the 3

Q what are the consequences if the liquidation is not

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Q: What are the consequences if the liquidation is not terminated within the 3 year period? A: 1. Pending suits for or against the corporation which were initiated prior to the expiration of the 3 year period shall continue. (Gelano v. CA, G.R. No. L 39050, Feb. 24, 1981) 2. New actions may still be filed against the trustee of the corporation even after the expiration of the 3 year period but before the affairs of said corporation have been finally liquidated or settled by the trustee . (Republic v. Marsman, G.R. No. L 18956 Apr. 27, 1972) 3. A corporation which has a pending action which cannot be finished within the 3 year period is authorized to convey all its property, including pending choses of action, of a trustee to enable it to prosecute and defend suits by or against the corporation beyond the 3 year period. Where no trustee is appointed, its counsel who prosecuted and represented the interest of the corporation may be considered as trustee of said corporation, at least with respect to the matter in litigation ( Gelano v. CA, G.R. No. L 39050, Feb. 24, 1981). The directors may also be permitted to continue as trustees to complete the liquidation. (Clemente v. CA, G.R. No. 82407, Mar. 27, 1995) 4. The creditors of the corporation who were not paid may follow the property of the corporation that may have passed to its stockholders unless barred by prescription or laches or disposition of said property in favor of a purchaser in good faith. Q: What is the rationale behind the 3 year period? A: The continuance of a corporation s legal existence for three years for the purpose of enabling it to close up its business is necessary to enable the corporation to collect the demands due it as well as to allow its creditors to assert the demands against it. Q: May the corporation, through its president condone penalties and charges after it had been placed under receivership? A: No. The appointment of a receiver operates to suspend the authority of a corporation and of its directors and officers over its property and effects, such authority being reposed in the receiver (Yam v. CA, G.R. No. 104726 Feb 11, 1999). Q: When may the Commission appoint a receiver to undertake the winding up and liquidation of a corporation? A: Where the application for dissolution of a corporation is upon application, affecting rights of creditors, or involuntarily initiated by verified complaint, the Commission may appoint a receiver to undertake the winding up rather than entrust the responsibility to directors and corporate officers. Q: What is the effect if the corporation appoints a trustee and convey all its property to him for the benefit of stockholders, members, creditors and other persons in interest? A: After such conveyance to the trustee, all interest which the corporation had in the property terminates and the legal interests vests in the trustee, subject to the beneficial interest of stockholders, members, creditors or other persons in interest.
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