ALHAMBRA CIGAR & CIGARETTE MANUFACTURING COMPANY, INC., PETITIONER, VS. SECURITIES & EXCHANGE COMMISSION RESPONDENT.

To the question – 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? – the answer of the Securities and Exchange
Commissioner was in the negative. 
Offshoot is this appeal.

That problem emerged out
of the following controlling facts:

Petitioner Alhambra Cigar
and Cigarette Manufacturing Company, Inc. (hereinafter referred to simply as Alhambra) was duly incorporated under Philippine laws
on January 15, 1912.  By its corporate articles it
was to exist for fifty years (50) 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 May 1,
1962, Alhambra‘s stockholders, by resolution, named Angel
S. Gamboa trustee to take charge of its liquidation.

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 Republic Act 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 is 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 o its subscribed capital, stock, voted to
approve the foregoing resolution.  The
“Fourth” paragraph of Alhambra’s
articles of incorporation was thus altered to read:

“FOURTH.  That the term
for which said cor­poration is to exist is fifty (50) years from and after
the date of incorporation, and for an
additional period of fifty (50) years
thereafter“.

On October 28, 1933, Alhambra’s
articles of incorporation as so amended, certified correct by its president,
and secretary and a majority of its board of directors, were filed with
respondent Securities and Exchange Commission (SEC).

On November 1, 1963, SEC, however, returned said amended articles
of incorporation to Alhambra’s counsel with the ruling that Republic Act 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 al
ready expired when the said law took effect; in short, said law has no retroactive
effect”.

On
December 3, 963, Alhambra’s
counsel sought recon­sideration of SEC’s ruling aforesaid, refiled
the amended articles of incorporation.

On September
8, 1964, SEC, after
a conference-hearing, issued an order denying the
reconsideration sought.

Alhambra now invokes the jurisdiction of this Court to overturn the conclusion below.^[1]

1.  Alhambra
relies on Republic Act 3531, which amended Section 18 of the Corporation
Law.  Well, it is to take note of the old
and the new statutes as they
are framed.  Section 18, prior to and
aster its modification by Republic Act 3531, covers the subject of amendment of
the articles of incorporation of private corporation.  A provision thereof which remains unaltered
is that a corporation may amend its articles of incorporation by a majority
vote of its board of directors o trustees and x x x by the vote or written assent of the stockholders
representing at least two-thirds of the subscribed capital stock x x x“.

But prior to amendment by
Republic Act 3531, an explicit prohibition existed in Section 16, thus:

“x x x Provided,
however, That the life of said corporation shall not be extended by said
amend­ment beyond the time fixed in the
original articles: x x x

This was displaced by Republic Act 3531 which enfranchises all
private corporations to extend their corporate existence.  Thus incorporated into the structure of
Section 18 are the following:

” x x x
Provided however, That should the amendment consist in extending the corporate
life, the extension shall not exceed fifty years in any one instance:  Provided further the original
articles, and amended articles together shall con­tain all provisions required
by law to be set out in the articles of incorporation: x x x“.

As we look in retrospect
at the facts, we find these: From July 15 to October 28, 1963, when Alhambra made its attempt to extend its corporate existence, its
original term of fifty years had already expired (January 15, 1962); it was in
the midst of the three year grace period statutorily fixed in Section 77 of the Corporation Law, thus:

“SEC. 77, Every corporation whose charter expires by its own
limitation or is annulled by forfeiture or otherwise, or whose corporate
existence for other purposes is terminated in any other manner, shall
nevertheless be continued as a body
corporate for three years after the time when it would have been so dissolved, for
the purpose of prosecuting and defending suits
or against it and of enabling it
gradually to settle and close its affairs, to
dispose of and convey its property and
to divide its capital stock, but not
for these of continuing the business for
which it was established“.^[2]

Plain from the language
of this provision 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,

Worth bearing in mind, at
this juncture, is the basic development of corporation law.

The common law rule, at
the beginning, was rigid and inflexible
in that 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”.^[3]  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”.^[4] There is nothing left but to conduct, as it were,
the settlement of the estate of a deceased juridical person.

2.  Republic let 3531,
amending Section 18 of the Corporation Law, is silent, is true, as to when such
act of extension may be
made.  But even with superficial knowledge
of corporate principles, it does not take much
effort to reach a correct conclusion. 
For, implicit in Section 77 heretofore quoted is that 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;

Silence of the law on the
matter is
not hard to understand.  Specificity is not really necessary.  The authority to prolong corporate life was inserted
by Republic Act 3531 into a section of the law that deals with the power
of a corporation to amend its articles of incorporation.  (For, the manner of prolongation is through
an amendment of the articles).  And, it
should be clearly evident that under Section 77 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”.

All
these dilute Alhambra‘s position that it could revivify its
corporate life simply because when it attempted to do so, Alhambra was still in the process of
liquidation.  It is surely impermissible
for us to stretch the law – that merely empowers a corporation to act in
liquidation to inject therein the power to extend its corporate existence,

3.  Not that we are alone in
this view.  Fletcher has written:
“Since the privilege of extension is purely statutory, all of the
statutory conditions precedent must be complied with in order that the
extension maybe effectuated.  And generally
these conditions must be complied with, and the steps necessary to effect the
exten­sion must be taken during the life of the
corporation and before the expiration of
its term of existence as originally fixed
by its charter or the general law, such
as a rule the corporation is ipso factor
dissolved as soon as that time expires.  So where the extension is by amendment of the articles of
incorporation, the amendment must be adopted before
that time.  And, similarly,
the filing and recording of a certificate of extension after that time cannot
relate back to the date of the passage of a resolution by the stockholders in
favor of the extension so as to save the life of the corporation.  The contrary is true, however, and the
doctrine of relation will apply, where the delay is due to the neglect of the
officer with whom the certificate is required to be filed, Or to a wrongful
refusal on his part to receive it.  And
statutes in some states specifically provide that a renewal may be had within a
specified time before or after the time fixed for the termination of the
corporate existence”.^[5]

The logic of this
position is well expressed in a four-square case decided by the court of
Appeals of Kentucky.^[6] There, pronouncement was made as
follows:

“x x x But section 561 (section
2147) provides that, when any corporation expires by the terms of its articles
of incorporation, it may be thereafter continued to act for the purpose of
closing up its business, but for no other purpose.  The corporate life of the Home Building
Association expired on May 3, 1905.  After that date, by the mandate of the
statute, it could continue to act for the purpose of closing up its business,
but for no other purpose.  The proposed
amendment was not made until January
16, 1908, or nearly three years after the corporation expired by
the terms of the articles of incorporation.  When the corporate
life of the corporation was ended,
there was nothing to extend.  Here it
was proposed nearly three years after the corporate life of the association had
expired to revivify the dead body, and to make that relate back some two years
and eight months in other words, the association for two years and eight months
had only existed for the purpose of winding up its business, and, after this
length of time, it was proposed to revivify it and.  Make it a live corporation for the two years
and eight months during which it had not been such.

The law gives a certain length of time for the filing of records in
this court, and provides that the time may be extended by the court, but under
this provision it has uniformly been held that when the time has expired, there
is nothing to extend, and that the appeal must be dismissed; x x x So, when the articles of a corporation have expired, it
is too late to adopt an amendment extending the life of a
corporation; for, the cor­poration having expired, this is in
effect to create a new corporation.  x x x“.^[7]

True it is, that the
Alabama Supreme Court has stated in one case,^[8] that a corporation empowered by statute to
renew its corporate existence may do so even after the
expiration of its corporate life, provided renewal is taken advantage, of
within the extended statutory
period for purposes of liquidation.  That
ruling, however, is inherently week as persuasive authority for the situation
at bar for at least two reasons:  First.  That case was a suit for mandamus to compel a
former corporate officer to turn
over books and records that came into his possession and control by virtue of
his office.  It was there held that such
officer was obliged to surrender his books and records even if
the corporation had already expired.  The
holding on the continued existence of the corporation was a mere dictum.  Second.  Alabama’s
law is different.  Corporations in that
state were authorized not only
to extend but also to renew their corporate existence.  That very case defined
the word “renew as follows: “To make new again; to restore to
freshness; to make new spiritually; to regenerate; to begin again; to
recommence; to resume; to restore to existence; to revive; to re-establish; to recreate; to replace; to grant or
obtain an extension of Webster’s New International Dict;
34 Cyc. 1330; Carter v. Brooklyn Life Ins. Co., 110
N.Y. 15, 21, 22, 17 N.E, 396; 54 C.J. 379, Sec. 1^[9]

On this point, we again
draw from Fletcher: “There is a broad distinction between the extension of
a charter and the grant of a new
one.  To renew a charter is to revive a charter which has expired, or, in other words, to give a new existence to one which has been forfeited, or which has lest its vitality by lapse of
time.  To extend a charter is to
increase the time for the existence of one which would otherwise reach its limit
at an earlier period’”^[10]
Nowhere in our statute Section 18, Corporation Law, as amended by Republic Act
3531 – do we find the word “renew” in reference to the authority
given to corporations to protract their lives. 
Our law limits itself to extension
of corporate existence.  And, as so under­stood,
extension may be made only before the term provided in the corporate
charter expires.

Alhambra draws attention to another case^[11] which
declares that until the end of
the extended period for liquidation, a dissolved corporation “does not
become an extinguished entity”.  But
this statement was obviously lifted out of context.  That case dissected the question whether or
not suits can be commenced by or against a corporation within its liquidation
period.  Which was answered in the
affirmative.  For, the corporation still
exists for the settle­ment of its affairs.

People ex rel.
vs. Greer,^[12]also invoked by Alhambra, is as unavailing.  There, although the corporation amended its
articles to extend its existence at a time when it had no legal authority yet,
it adopted the amended articles later on when it had the power to extend
its life and during its original term when it could amend its articles.

The foregoing
notwithstanding, Alhambra falls back on the contention that its case is arguably within the
purview of the law.  It says that before
cessation of its corporate life, it could not have extended the same, for the
simple reason that Republic Act 3531 had not then become law.  It must be remembered that Republic Act 3531 took
effect on June 20, 1963, while the original term of AlhambraI’s existence expired before that date – on January
15, 1962.  The mischief that flows from this theory is
at once apparent.  It would certainly
open the gates for all defunct corporations – whose charters have expired even
long before Republic Act 3531 came into being – to resuscitate their corporate
existence.

4.  Alhambra
brings into argument Republic
Act 1932, which amends Section 196 of the Insurance Act, now reading as follows

“SEC. 196.  Any
provision of law to the contrary notwithstanding, every domestic life insurance
corporation, formed for a limited period under the provisions of its articles
of incorporation, may extend its corporate existence for a period not exceeding
fifty years in any one instance by amendment to its articles of incorporation
on or before the expiration of the term so fixed in said articles x x x”.

To be observed is that
the foregoing statute – unlike Republic Act 3531 – expressly authorizes domestic insurance corporations to
extend their corporate existence “on or before the expiration of
the term” fixed in their articles
of incorporation.  Republic Act 1932 was
approved on June 22, 1957, long before the passage of Republic Act
35311n 1963.  Congress, Alhambra points out, must have been aware of Republic Act 1932 when it passed
Republic Act 3531.  Since the phrase “on or before” etc., was
omitted in Republic Act 3531, which contains no similar limitation, it follows,
according to Alhambra, that it is not necessary to extend corporate existence
on or before the expiration of its original
term.

That Republic Act 3531
stands mute as to when extension of corporate existence may be made, assumes no
relevance.  We have already said, in the
face of a familiar precept, that a defunct corporation is bereft of any legal
faculty not otherwise expressly sanctioned by law.

Illuminating here is the
explanatory note of H.B 1774, later Republic Act 3531 now in dispute.  Its first paragraph states that
“Republic Act No. 1932 allows the automatic extension of the
cor­porate existence of domestic life insurance corporations upon amendment of
their articles of incorporation on or before the expiration of the terms fixed
by said articles”.  The succeeding
lines are decisive: “This is a good law, a sane and sound one.  There appears to be no valid reason
why it should not be made to apply to other private corporations“.^[13]

The situation here
presented is not one where the law under consideration is ambiguous, where
courts have to put in harness extrinsic aids such as a look at another statute
to disentangle doubts.  It is an
elementary rule in legal hermeneutics that where the terms of the law are
clear, no statutory construction may be permitted.  Upon the basic conceptual scheme under which
corporations operate, and with Section 77 of the Corporation Law particularly
in mind, we find no vagueness in Section 18, as amended by Republic Act
3531.  As we view it, by directing
attention to Republic Act 1932, Alhambra would seek to create obscurity in the law;
and, with that, ask of us a ruling that such obscurity be explained.  This, we dare say, cannot be done.

The pari
materia rule of statutory construction, in
fact, com­mands that statutes must be harmonized with each other.^[14] So harmonizing, the conclusion is clear that
Section 18 of the Corpora­tion Law; as amended by Republic Act 3531 in reference to exten­sions of corporate
existence, is to be read in the same light as Republic Act 1932.  Which means that domestic corporations in
general, as with domestic insurance companies, can extend corporate existence
only on or before the expiration of the term fixed in their charters.

5. Alhambra pleads for
munificence in interpretation, one which brushes technicalities aside.  Bases for this posture are that Republic Act
3531 is a remedial statute, and that extension of corporate life is beneficial
to the economy.

Alhambra‘s stance does not induce assent.  Expansive construction is, possible only
when there is something to expand. 
At the time of the passage of Republic Act 3531, Alhambra‘s corporate life had already expired.  It had overstepped the limits of its limited
existence.  No life there is to
prolong.

Besides, a new
corporation – Alhambra Industries, Inc., with but slight change in stockholdings^[15] has already been established.  Its purpose is to carry on, and it actually
does carry on,^[16] the business of the dissolved entity.  The beneficial-effects argument is off the mark.

The way the whole case
shapes up then, the only possible drawbacks to Alhambra might be that, instead
of the new corporation (Alhambra Industries, Inc.) being written off, the old
one (Alhambra Cigar & Cigarette Manufacturing Company, Inc.) has to be wound up; and that the old corporate name
cannot be retained fully in its exact form.^[17] What is important though is that the word Alhambra the name that counts [it has goodwill],
remains.

For the reasons given, the ruling of the Securities and Exchange Commission of November
18, 1963, and its
order of September 8, 1904, both here under review, are hereby affirmed.

Costs against petitioner
Alhambra Cigar & Cigarette Manufac­turing. 
Company, Inc.

SO ORDERED.

Concepcion, CJ., Reyes, JBL, Dizon, Makalintal, Zaldivar, Ruiz Castro, Angeles, and Fernando, JJ., concur.

^[1]
Rule 43, Rules of Court.

^[2]
Emphasis supplied.

^[3]  19 C.J.S., p.???487.

^[4]
Id., p. 1485 
at footnote 76 citing Sharp vs. Eagle
Lake Lumber Co, 212 P. 933, 60 Cal. App. 386.

^[5]  8 Fletcher, Cyclopedia Corporations, Perm.
ed., 1931, pp. 559- 560, citing cases. Emphasis supplied.

^[6]
Home Bldg. Ass’n.
vs. Bruner, 120 S.W. 306, 307.

^[7]
Citing cases; emphasis supplied.

^[8]
Rayburn vs. Guntersville Realty Company, 93 A.L.R. 1055, 1059-1060, cited by petitioner.

^[9]
At p. 1059.

^[10]
8 Fletcher, p. 535. In 18 Am. Jur. 2d., p. 612, we find at footnote 14 the
following:. “Loeffler v Federal Supply Co. 187 Okla 37 102 P2d 862, wherein the court notes a distinction
between the words ‘extend’ and ‘renew’. The court said that the word ‘extend’ means to prolong or
lengthen in time, whereas the word ‘renew’ means to restore to existence, to
revive, re-establish, or recreate”.

^[11]
Abercrombie vs. United
Light & Power Co., 7 F. Supp. 530, 54:

^[12]
 116 Mich. 505, 74 LW. 714.

^[13]  Emphasis supplied.

^[14]
 82 C.J.S, p. 801.

^[15]
Tr., p. 18.

^[16]
Tr., p. 17.

^[17]
Tr., pp. 17-19.