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[G.R. No. L-7231. March 28, 1956.

]
ISSUE:
BENGUET CONSOLIDATED MINING CO., petitioner, vs. MARIANO (1) That the proviso of section 18 of the Corporation Law to the effect
PINEDA, in his capacity as Securities and Exchange
"that the life of said corporation shall not be extended by amendment beyond
the time fixed in the original articles."
SYLLABUS
does not apply to sociedades anonimas already in existence at the passage of
1.
CORPORATION LAW; PROHIBITION AGAINST EXTENSION the law, like petitioner herein;
OF CORPORATE EXISTENCE BY AMENDMENT OF THE ORIGINAL
(2) That to apply the said restriction imposed by section 18 of the Corporation
ARTICLES, APPLICABLE TO "SOCIEDADES ANONIMAS." The
Law to sociedades anonimas already functioning when the said law was
prohibition contained in section 18 of Act No. 1459, against extending the
enacted would be in violation of constitutional inhibitions;
period of corporate existence by amendment of the original articles, was
(3) That even assuming that said restriction was applicable to it, Benguet could
intended to apply, and does apply, to sociedades anonimas, already formed,
still exercise the option of reforming and reorganizing under section 75 of the
organized and existing at the time of the effectivity of the Corporation Law
Corporation Law, thereby prolonging its corporate existence, since the law is
(Act 1459) in 1906.
silent as to the time when such option may be exercised or availed of.
2.
ID.; ID.; PROHIBITION VALID AND IMPAIRS NO VESTED
RIGHTS. The aforesaid statutory prohibition is valid and impairs no
vested rights or constitutional inhibition where no agreement to extend the
HELD:
original period of corporate life was perfected before the enactment of the
Corporation Law.
1st issue:
3.
WHEN "SOCIEDAD ANONIMAS", MAY NOT CLAIM TO
REFORM INTO A CORPORATION UNDER SECTION 75 OF THE ACT.
1. term of existence of association (partnership or sociedad anonima) is
A sociedad anonima, existing before the Corporation Law, that continues
coterminous with their possession of an independent legal
to do business as such for a reasonable time after its enactment, is deemed to
personality, distinct from that of their component members.
have made its election and may not subsequently claim to reform into a
2. When the period expires, the sociedad anonima loses the power to
corporation under section 75 of Act No. 1459. Particularly should this be the
deal and enter into further legal relations with other persons; no
case where it has asserted its privileges as such sociedad anonima before
longer possible for it to acquire new rights or incur new obligations;
invoking its alleged right to reform into a corporation.
third persons or strangers have an interest in knowing the duration
of the juridical personality of the sociedad anonima, since the latter
FACTS:
can not be dealt with after that period; wherefore its prolongation or
cessation is a matter directly involving the company's relations to
1. Appeal from a decision of the Securities and Exchange
the public at large.
Commissioner, denying the right of a sociedad anonima to extend
3. The State and its officers also have an obvious interest in the term
its corporate existence by amendment of its original articles of
of life of associations, since the conferment of juridical capacity
association, or alternatively, to reform and continue existing under
upon them during such period is a privilege that is derived from
the Corporation Law (Act 1459) beyond the original period.
statute. It is obvious that no agreement between associates can result
2. Benguet Consolidated Mining Co. was organized on June 24,1903,
in giving rise to a new and distinct personality, possessing
as a sociedad anonima regulated by Spanish Code of Commerce of
independent rights and obligations, unless the law itself shall decree
1886.
such result.
3. The articles of association expressly provided that it was organized
for a term of fifty (50) years.
2nd Issue
4. In 1906, Philippine Commission enacted Act 1459, the Corporation
Law, establishing in the islands the American type of juridical
1. Of course, the retroactive application of the limitations on the terms
entities known as corporation, to take effect on April 1, 1906.
of corporate existence could not be made in violation of
5. That statute is a sort of codification of American corporate law.
constitutional inhibitions specially those securing equal protection
6. Section 75 and 191 of the Corporation Law, makes the sociedad
of the laws and prohibiting impairment of the obligation of
anonima subject to the provisions of the Corporation Law 'so far as
contracts. However, there's no life vested to Benguet Act No. 1459
such provisions may be applicable' and giving to the sociedades
was adopted since its members had not entered into any agreement
anonimas previously created in the Islands the option to continue
that such period should be extended.
business as such or to reform and organize under the provisions of
2. Certainly the prolongation of the corporate existence of Benguet in
the Corporation Law.
1906 was merely a possibility in futuro, a contingency that did not
7. To this provision was added another to the effect that existing
fulfill the requirements of a vested right entitled to constitutional
sociedades anonimas, which elected to continue their business as
protection
such, instead of reforming and reorganizing under the Corporation
3. Therefore, when the Corporation Law, by section 18, forbade
Law, should continue to be governed by the laws that were in force
extensions of corporate life, neither Benguet nor its members were
prior to the passage of this Act 'in relation to their organization and
deprived of any actual or fixed right constitutionally protected.
method of transacting business and to the rights of members
thereof as between themselves, but their relations to the public and 3rd issue
public officials shall be governed by the provisions of this Act.
8. Meanwhile, As the expiration of its original 50 year term of
1. The petitioner's argument proceeds from the unexpressed
existence approached, Board of Directors of Benguet adopted in
assumption that Benguet, as sociedad anonima, had not exercised
1946 a resolution to extend its life for another 50 years, and
the option given by section 75 of the Corporation Law until 1953.
submitted it for registration to the respondent Securities and
(NOT CORRECT)
Exchange Commissioner.-DENIED (contrary to law)
2. Under that section, by continuing to do business as sociedad
9. six years later in 1953, the shareholders of Benguet adopted a
anonima, Benguet in fact rejected the alternative to reform as a
resolution empowering the Director to "effectuate the extension of
corporation under Act No. 1459.
the Company's business life for not less than 20 and not more than
3. The election of Benguet to remain a sociedad anonima after the
50 years, and this by either (1) an amendment to the Articles of
enactment of the Corporation Law is evidence, not only by its
Association or Charter of this Company or (2) by reforming and
failure, from 1906 to 1953, to adopt the alternative to transfer its
reorganizing the Company as a Philippine Corporation, or (3) by
corporate interests to a new corporation, as required by section 75; it
both or (4) by any other means."
also appears from positive acts. Thus around 1933, Benguet claimed
10. Benguet submitted in June, 1953, to the Securities and Exchange
and defended in court its acquisition of shares of the capital stock of
Commissioner, for alternative registration, two documents: (1)
the Balatoc Mining Company, on the ground that as a sociedad
Certification as to the Modification of (the articles of association
anonima it (Benguet) was not a corporation within the purview of
of) the Benguet Consolidated Mining Company, extending the term
the laws prohibiting a mining corporation from becoming interested
of its existence to another fifty years from June 15, 1953; and (2)
in another mining corporation
articles of incorporation, covering its reformation or reorganization
4. "A sociedad anonima could not claim the benefit of both, but
as a corporation in accordance with section 75 of the Philippine
must have to choose one and discard the other. If it elected to
Corporation Law.
become a corporation it could not continue as a sociedad
11. SEC DENIED and ruled that:
anonima; and if it choose to remain as a sociedad anonima, it
a. That the Benguet, as sociedad anonima, had no right to extend
could not become a corporation."
the original term of corporate existence stated in its Articles of
5. While no express period of time is fixed by the law within which
Association, by subsequent amendment thereof adopted after
sociedades anonimas may elect under section 75 of Act No.
enactment of the Corporation Law
1459 either to reform or to retain their status quo, there are
b. Benguet, by its conduct, had chosen to continue as sociedad
powerful reasons to conclude that the legislature intended such
anonima and could no longer exercise the option to reform into a
choice to be made within a reasonable time from the effectivity
corporation,
of the Act (since purpose is to hasten disappearance of
12. Hence this present appeal.

sociedades anonimas)