ALHAMBRA CIGAR & CIGARETTE MANUFACTURING COMPANY, INC vs.

SEC
G.R. No. L-23606

July 29, 1968

FACTS: Alhambra Cigar and Cigarette Manufacturing Company, Inc. was duly
incorporated under Philippine laws on January 15, 1912. By its corporate articles it
was to exist for fifty (50) 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 threeyear statutory period for liquidation, RA 3531 was enacted into law. It amended
Section 18 of the Corporation Law empowering 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
paragraph "Fourth" of its articles of incorporation to extend its corporate life for an
additional fifty years, or a total of 100 years from its incorporation. Alhambra's
articles of incorporation as so amended certified correct by its president and
secretary and a majority of its board of directors, were then filed with SEC. SEC,
however, returned said amended articles of incorporation to Alhambra's counsel
with the ruling that RA 3531 "which took effect only on June 20, 1963, cannot be
availed of by the said corporation, for the reason that its term of existence had
already expired when the said law took effect in short, said law has no retroactive
effect."
ISSUE: Whether or not a corporation can 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.
RULING: Plain from the language of the provision of Section 77 of Corporation Law
is its meaning: continuance of a "dissolved" corporation as a body corporate for
three years has for its purpose the final closure of its affairs, and no other; the
corporation is specifically enjoined from "continuing the business for which it was
established". 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. And it should be clearly evident that no corporation in a
state of liquidation can act in any way, much less amend its articles, "for the
purpose of continuing the business for which it was established".