ANG PUE & COMPANY, ET AL., PLAINTIFFS AND APPELLANTS VS. SECRETARY OF COMMERCE AND INDUSTRY, DEFENDANT AND APPELLEE.

Action for declaratory relief filed in the Court of First Instance
of Iloilo by Ang Pue & Company, Ang Pue and Tan Siong against the
Secretary of Commerce and Industry to secure judgment “declaring that
plaintiffs could extend for five years the term of the partnership
pursuant to the provisions of plaintiffs’ Amendment to the Articles of
Copartnership.”

The answer filed by the defendant alleged, in substance, that the
extension for another five years of the term of the plaintiffs’
partnership would be in violation of the provisions of Republic Act No.
1180.

It appears that on May 1, 1953, Ang Pue and Tan Siong, both Chinese
citizens, organized the partnership Ang Pue & Company for a term of
five years from May 1, 1953, extendible by their mutual consent. The
purpose of the partnership was “to maintain the business, of general
merchandising, buying and selling at whole-sale and retail,
particularly of lumber, hardware and other construction materials for
commerce, either native or foreign.” The corresponding articles of
partnership (Exhibit B) were registered in the Office of the Securities
& Exchange Commission on June 16, 1953.

On June 19, 1954 Republic Act No. 1180 was enacted to regulate the
retail business. It provided, among other things, that, after its
enactment, a partnership not wholly formed by Filipinos could continue
to engage in the retail business until the expiration of its term.

On April 15, 1958—prior to the expiration of the five-year term of
the partnership Ang Pue & Company, but after the enactment of
Republic Act 1180—the partners already mentioned amended the original
articles of partnership Exhibit B so as to extend the term of life of
the partnership to another five years. When the amended articles were
presented for registration in the Office of the Securities &
Exchange Commission on April 16, 1958, registration was refused upon
the ground that the extension was in violation of the aforesaid Act.

From the decision of the lower court dismissing the action, with costs, the plaintiffs interposed this appeal.

The question before us is too clear to require an extended
discussion. To organize a corporation or a partnership that could claim
a juridical personality of its own and transact business as such, is
not a matter of absolute right but a privilege which may be enjoyed
only under such terms as the State may deem necessary to impose. That
the State, through Congress, and in the manner provided by law, had the
right to enact Republic Act No. 1180 and to provide therein that only
Filipinos and concerns wholly owned by Filipinos may engage in the
retail business can not be seriously disputed. That this provision was
clearly intended to apply to partnerships already existing at the time
of the enactment of the law is clearly shown by its provision giving
them the right to continue engaging in their retail business until the
expiration of their term of life. To argue that because the original
articles of partnership provided that the partners could extend the
term of the partnership, the provisions of Republic Act 1180 cannot
adversely affect appellants herein, is to erroneously assume that the
aforesaid provision constitute a property right of which the partners
can not be deprived without due process or without their consent. The
agreement contained therein must be deemed subject to the law existing
at the time when the partners come to agree regarding the extension. In
the present case, as already stated, when the partners amended the
articles of partnership, the provisions of Republic Act 1180 were
already in force, and there can be not the slightest doubt that the
right claimed by appellants to extend the original term of their
partnership to another five years would be in violation of the clear
intent and purpose of the law aforesaid.

Wherefore, the judgment appealed from is affirmed, with costs.

Bengzon, C. J., Padilla, Labrador, Concepcion, Barrera, Paredes, Regala, and Makalintal, JJ., concur.