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vs Mariano Pineda
FACTS: Benguet Consolidated Mining Company was organized in 1903 under the
Spanish Code of Commerce of 1886 as a sociedad anonima. It was agreed by the
incorporators that Benguet Mining was to exist for 50 years.
In 1906, Act 1459 (Corporation Law) was enacted which superseded the Code of
Commerce of 1886. Act 1459 essentially introduced the American concept of a
corporation. The purpose of the law, among others, is to eradicate the Spanish Code
and make sociedades anonimas obsolete.
In 1953, the board of directors of Benguet Mining submitted to the Securities and
Exchange Commission an application for them to be allowed to extend the life span
of Benguet Mining. Then Commissioner Mariano Pineda denied the application as it
ruled that the extension requested is contrary to Section 18 of the Corporation Law
of 1906 which provides that the life of a corporation shall not be extended by
amendment beyond the time fixed in their original articles.
Benguet Mining contends that they have a vested right under the Code of
Commerce of 1886 because they were organized under said law; that under said
law, Benguet Mining is allowed to extend its life by simply amending its articles of
incorporation; that the prohibition in Section 18 of the Corporation Code of 1906
does not apply to sociedades anonimas already existing prior to the Laws
enactment; that even assuming that the prohibition applies to Benguet Mining, it
should be allowed to be reorganized as a corporation under the said Corporation
Law.
ISSUE: Whether or not Benguet Mining is correct.
HELD: No. Benguet Mining has no vested right to extend its life. It is a well settled
rule that no person has a vested interest in any rule of law entitling him to insist
that it shall remain unchanged for his benefit. Had Benguet Mining agreed to extend
its life prior to the passage of the Corporation Code of 1906 such right would have
vested. But when the law was passed in 1906, Benguet Mining was already deprived
of such right.
To allow Benguet Mining to extend its life will be inimical to the purpose of the law
which sought to render obsolete sociedades anonimas. If this is allowed, Benguet
Mining will unfairly do something which new corporations organized under the new
Corporation Law cant do that is, exist beyond 50 years. Plus, it would have reaped
the benefits of being a sociedad anonima and later on of being a corporation.
Further, under the Corporation Code of 1906, existing sociedades anonimas during
the enactment of the law must choose whether to continue as such or be organized
as a corporation under the new law. Once a sociedad anonima chooses one of these,
it is already proscribed from choosing the other. Evidently, Benguet Mining chose to
exist as a sociedad anonima hence it can no longer elect to become a corporation
when its life is near its end.
therewith. And moreover, the by-laws now in question cannot have any effect on the
appellee. He had no knowledge of such by-law when the shares were assigned to
him. He obtained them in good faith and for a valuable consideration. He was not a
privy to the contract created by said by-law between the shareholder Manuel
Gonzalez and the Botica Nolasco, Inc. Said by-law cannot operate to defeat his
rights as a purchaser.