BENGUET CONSOLIDATED MINING CO. vs. MARIANO PINEDA G.R. No. L-7231. March 28, 1956

 BENGUET CONSOLIDATED MINING CO. vs. MARIANO PINEDA G.R. No. L-7231. March 28, 1956

Art. 148. In cases of cohabitation not falling under the preceding Article, only the properties acquired by both of the parties through their actual joint contribution of money, property, or industry shall be owned by them in common in proportion to their respective contributions. In the absence of proof to the contrary, their contributions and corresponding shares are presumed to be equal. The same rule and presumption shall apply to joint deposits of money and evidences of credit. 
If one of the parties is validly married to another, his or her share in the co-ownership shall accrue to the absolute community or conjugal partnership existing in such valid marriage. If the party who acted in bad faith is not validly married to another, his or her shall be forfeited in the manner provided in the last paragraph of the preceding Article. 
The foregoing rules on forfeiture shall likewise apply even if both parties are in bad faith. (144a) 

FACTS:

Benguet Consolidated Mining Co. (hereafter termed "Benguet" for short), was organized on June 24,1903, as a sociedad anonima regulated by Articles 151 et seq., of the Spanish Code of commerce of 1886, then in force in the Philippines. The articles ot association expressly provided that it was organized for a term of fifty (50) years. in 1906, the governing Philippine commission enacted Act 1459, commonly known as the Corporation Law, establishing in the islands the American type of juridical entities known as corporation, to take effect on April 1, 1906.

As the expiration of its original 50 year term of existence approached, the Board of Directors of Benguet adopted in 1946 a resolution to extend its life for another 50 years from July 3, 1946 and submitted it for registration to the Respondent securities and Exchange commissioner.

Relying mainly upon the adverse opinion of the Secretary of Justice (Op. No. 180, s. 1953), the Securities and Exchange Commissioner denied the registration and ruled:

(1) That the Benguet, as sociedad anonima, had no right to extend the original term of corporate existence stated in its Articles of Association, by subsequent amendment thereof adopted after enactment of the Corporation Law (Act No. 1459);

(2) That Benguet, by its conduct, had chosen to continue as sociedad anonima, under section 75 of Act No. 1459, and could no longer exercise the option to reform into a corporation, especially since it would indirectly produce the effect of extending its life.

ISSUES:

Whether or not Benguet could still exercise the option of reforming and reorganizing under section 75 of the Corporation Law, thereby prolonging its corporate existence, since the law is silent as to the time when such option may be exercised or availed of.

RULING:

Under Section 75 of the Corporation law 1953, by continuing to do business as sociedad anonima, Benguet in fact rejected the alternative to reform as a corporation under Act No. 1459. It will be noted from the text of section 75 that no special act or manifestation is required by the law from the existing sociedades anonimas that prefer to remain and continue as such. It is when they choose to reform and organize under the Corporation Law that they must. in the words of the section. transfer all corporate interests to the new corporation". Hence if they do not so transfer, the sociedades anonimas affected are to be understood to have elected the alternative "to continue business as such corporation."

Furthermore, the court held that a sociedad anonima, existing before the Corporation Law, that continues to do business as such for a reasonable time after its enactments, is deemed to have made its election and may not subsequently claim to retorm into a corporation under section 75 of Act No. 1459.