G.R. No. L-17295; July 30, 1962
Ang Pue & Company, et al., plaintiffs-appellants, vs. Secretary of Commerce and Industry, defendant-appellee.

FACTS

On May 1, 1953, Chinese citizens Ang Pue and Tan Siong organized the partnership Ang Pue & Company for a five-year term, extendible by mutual consent, to engage in the retail business of general merchandising. Its articles were duly registered. Subsequently, Republic Act No. 1180, enacted on June 19, 1954, regulated the retail trade by providing that only Filipino citizens or enterprises wholly owned by Filipinos could engage therein. The law allowed existing non-Filipino partnerships to continue only until the expiration of their original term.
Prior to the expiration of their initial five-year term, the partners amended their articles on April 15, 1958, to extend the partnership’s life for another five years. The Securities and Exchange Commission refused to register this amendment, citing a violation of R.A. 1180. The plaintiffs then filed an action for declaratory relief, which the lower court dismissed, prompting this appeal.

ISSUE

Whether the partners, being non-Filipinos, could validly extend the term of their retail partnership after the enactment of R.A. 1180, which restricted retail trade to Filipino citizens and wholly Filipino-owned entities.

RULING

The Supreme Court affirmed the lower court’s dismissal. The right to form a corporation or partnership is a privilege granted by the state, not an absolute right, and is subject to terms and conditions imposed by law. R.A. 1180 is a valid exercise of police power to nationalize the retail trade. Its provision allowing existing non-Filipino partnerships to continue only until the expiration of their original term clearly indicates the legislative intent to prohibit any extension beyond that point.
The contractual provision in the original articles allowing extension by mutual consent did not create a vested property right immune from subsequent legislation. Agreements are deemed subject to the law in force at the time of their execution or amendment. Since R.A. 1180 was already in effect when the partners attempted to amend and extend the partnership in 1958, such an extension would directly contravene the law’s explicit purpose and duration limit for non-Filipino retail entities. Therefore, the extension was invalid, and the SEC correctly refused its registration.