GR L 23606; (July, 1968) (Digest)
G.R. No. L-23606 July 29, 1968
ALHAMBRA CIGAR & CIGARETTE MANUFACTURING COMPANY, INC., petitioner, vs. SECURITIES & EXCHANGE COMMISSION, respondent.
FACTS
Petitioner Alhambra Cigar and Cigarette Manufacturing Company, Inc. was incorporated on January 15, 1912, with a term of existence of fifty (50) years, expiring on January 15, 1962. Upon expiration, it ceased business and entered into liquidation. On June 20, 1963, Republic Act 3531 was enacted, amending Section 18 of the Corporation Law to empower domestic private corporations to extend their corporate life beyond the original term for up to fifty years. On July 15, 1963, Alhambra’s board resolved to amend its articles to extend its corporate life for an additional fifty years. This was approved by the stockholders on August 26, 1963. The amended articles were filed with the SEC on October 28, 1963. The SEC rejected the amendment, ruling that Republic Act 3531, which took effect on June 20, 1963, could not be availed of by Alhambra because its term had already expired when the law took effect, and the law had no retroactive effect. Alhambra sought reconsideration, which was denied.
ISSUE
May a corporation extend its life by amending its articles of incorporation during the three-year statutory period for liquidation after its original term of existence has expired?
RULING
No. The Supreme Court affirmed the SEC’s ruling. The Court held that under Section 77 of the Corporation Law, a corporation whose term has expired is continued as a body corporate for three years only for the purpose of prosecuting and defending suits, settling and closing its affairs, disposing of property, and dividing capital stock, but not for continuing its business. The corporate existence and juridical personality to do business cease upon expiration. The privilege to extend corporate life under Republic Act 3531 must be exercised before the expiry of the term fixed in the articles. Since Alhambra’s corporate life had already expired, there was “nothing to extend.” The amendment attempting to extend its life was adopted during the liquidation period, which is solely for winding up affairs, not for reviving the corporation. The Court cited Fletcher’s Cyclopedia of Corporations and analogous jurisprudence stating that an amendment to extend corporate life must be adopted before the original term expires, as after expiration, the corporation is dissolved and there is nothing to extend.