G.R. No. L-23606 - Alhambra Cigar and Cigarette Manufacturing Co., Inc. vs. Securities and Exchange Commission

Alhambra Cigar and Cigarette Manufacturing Company, Inc. (“Alhambra”) was duly incorporated in the Philippines on January 15, 1912.
The company’s articles of incorporation fixed its corporate existence for a term of fifty (50) years, expiring on January 15, 1962.

Upon expiration of its corporate term on January 15, 1962, Alhambra ceased to transact business and entered a state of liquidation.
A new corporation, Alhambra Industries, Inc., was formed to carry on the business formerly conducted by Alhambra.
On May 1, 1962, Alhambra’s stockholders appointed Angel S. Gamboa as trustee to oversee liquidation.

On June 20, 1963, Republic Act No. 3531 (RA 3531) was enacted, amending Section 18 of the Corporation Law. RA 3531 empowered domestic private corporations to extend their corporate life beyond the original fixed period by amendment of their articles of incorporation, for a term not exceeding fifty (50) years per extension.
Prior law prohibited extension of corporate life beyond original articles fixed term. The amendment authorized such extension, provided the lifetime does not exceed fifty years in any one instance.

On July 15, 1963, Alhambra’s board of directors resolved to amend the articles of incorporation to extend the corporate life by an additional fifty (50) years, totaling 100 years from the date of incorporation.
On August 26, 1963, stockholders representing more than two-thirds of subscribed capital stock approved the amendment. The “Fourth” paragraph of the articles was amended to state that the corporation shall exist for fifty years from incorporation and an additional fifty years thereafter.
On October 28, 1963, the amended articles of incorporation, certified by officers and directors, were filed with the Securities and Exchange Commission (SEC).

On November 1, 1963, SEC returned the amended articles with the ruling that RA 3531 could not be applied retroactively; since Alhambra’s corporate life expired on January 15, 1962 (before RA 3531 took effect on June 20, 1963), it could not avail of the extension.
On December 3, 1963, Alhambra sought reconsideration and refiled the amended articles.
On September 8, 1964, SEC denied the reconsideration after a conference-hearing.

Alhambra appealed SEC’s decision to the Supreme Court, contesting the ruling that it could not extend its corporate existence after expiration of the original term but within the three-year statutory liquidation period.

Whether a corporation may extend its corporate existence by amendment of its articles of incorporation during the three-year statutory liquidation period, when the original term of existence has already expired.

Whether Republic Act No. 3531, which authorizes extension of corporate life, applies retroactively to corporations whose terms expired before the law’s effectivity.

Whether a corporation in liquidation may amend its articles of incorporation to extend its corporate life beyond its original term under RA 3531.

The effect and interpretation of Section 77 of the Corporation Law, which allows continuation of corporate existence for three years after expiration for purposes of liquidation but prohibits the continuation of business.

The relevance and application of Republic Act No. 1932 vis-à-vis RA 3531 regarding timing and conditions for extending corporate existence.