ALhambra cigar vs. SEC, G.R. No. L23606 July 29, 1968 ~ Mister Criminology

ALHAMBRA CIGAR & CIGARETTE MANUFACTURING COMPANY, INC. vs. SECURITIES & EXCHANGE COMMISSION

G.R. No. L23606 July 29, 1968

FACTS:

Petitioner Alhambra was duly incorporated under Philippine laws on January 15, 1912.
By its corporate articles it was to exist for fifty years from incorporation.
Its term of existence expired on January 15, 1962.
On that date, it ceased transacting business, entered into a state of liquidation.
Thereafter, a new corporation. — Alhambra Industries, Inc. — was formed to carry on the business of Alhambra.
On June 20, 1963 — within Alhambra's three year statutory period for liquidation Republic Act 3531 was enacted into law.
It amended Section 18 of the Corporation Law; It empowered domestic private corporations to extend their corporate life beyond the period fixed by the articles of incorporation for a term not to exceed fifty years in any one instance. Previous to RA 3531, the maximum non extendible term of such corporations was fifty years.
On July 15, 1963, at a special meeting, Alhambra's board of directors resolved to amend its articles of incorporation to extend its corporate life for an additional fifty years, or a total of 100 years from its incorporation.
On August 26, 1963, Alhambra's stockholders, representing more than two thirds of its subscribed capital stock, voted to approve the foregoing resolution.
On October 28, 1963, Alhambra's articles of incorporation as so amended were filed with respondent SEC.
On November 18, 1963, SEC, however, returned said amended articles of incorporation.

ISSUE:

May a corporation extend its life by amendment of its articles of incorporation effected during the three year statutory period for liquidation when its original term of existence had already expired?

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RULING:

The liquidation of the corporation's affairs set forth in Section 77 became necessary precisely because its life had ended. For this reason alone, the corporate existence and juridical personality of that corporation to do business may no longer be extended.

Upon its dissolution, a corporation became legally dead for all purposes. Statutory authorizations had to be provided for its continuance after dissolution "for limited and specified purposes incident to complete liquidation of its affairs". Thus, the moment a corporation's right to exist as an "artificial person" ceases, its corporate powers are terminated "just as the powers of a natural person to take part in mundane affairs cease to exist upon his death". There is nothing left but to conduct, as it were, the settlement of the estate of a deceased juridical person.

Section 77 - the privilege given to prolong corporate life under the amendment must be exercised before the expiry of the term fixed in the articles of incorporation.