G.R. No. L-7231 – 98 Phil. 711 – Mercantile Law – Corporation Law – Sociedad Anonima – Corporate Existence
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In 1906, Act 1459 (Corporation Law) was enacted which superseded the Code of Commerce of 1886.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 Law’s 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 can’t 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.
