[ G.R. No. L-7231. March 28, 1956 ] 98 Phil. 711
[ G.R. No. L-7231. March 28, 1956 ]
BENGUET CONSOLIDATED MINING CO., PETITIONER, VS. PINEDA, IN HIS CAPACITY AS SECURITIES AND EXCHANGE COMMISSIONER, RESPONDENT. CONSOLIDATED MINES, INC., INTERVENOR, D E C I S I O N
REYES, J.B.L., J.:
Appeal under Rule 43 from a decision of the Securities and Exchange Commissioner, denying the right of, a sociedad anonima, to extend its corporate existence by amendment of its original articles of association, or alternatively, to reform and continue existing under the Corporation Law (Act 1459) beyond the original period. The petitioner, the 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 of association expressly provided that it was organized for a term of fifty (50) years. In 1906, the governing Philippine Commission enacted Act 1469, 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. of its enactment, this Court said in its decision in Harden vs. Benguet Consolidated Mining Co., 58 Phil., 141, at pp. 145-146, and 147:
“When the Philippine Islands passed to the sovereignty of the United States, the attention of the Philippine Commission was early .drawn to the fact there is no entity in Spanish law exactly corresponding to the motion of the corporation in English’ and American law; and in the Philippine Bill, approved July 1, 1906, the Congress of the United States inserted certain provisions, under the head of Franchises, which “were intended to control the Lawmaking power in the Philippine Islands in the matter of granting of franchises, privileges and concessions. These provisions are found in sections 74 and 75 of the Act, The provisions of section 74 have been superseded’ by section 28 of the Act of Congress of August 29, 1916, but in section 75 others is a provision referring to mining corporations, which still remains the law, as amended. This provision, in its original form, reads as follows: * * * it shall be unlawful, for any member of a corporation engaged in agriculture or mining; and for any corporation organized for any purpose except irrigation to be in any wise interested in any other corporation engaged in agriculture or in mining. Under the guidance of this and certain other provisions thus enacted by Congress, the Philippine Commission entered upon the enactment of a general law authorizing the creation of corporations ’ in the Philippine Islands. This rather elaborate piece of legislation is embodied in what is called-our Corporation Law (Act No. 1459 of the Philippine Commission). The evident purpose of the commission was to introduce the American corporation into the Philippine Islands as the standard commercial entity and to hasten the day when the sociedad anonima of the Spanish law would be obsolete. That statute is a sort of codification of American corporate law.” “As it was the intention of our lawmakers to stimulate the introduction of the American corporation into the Philippine law in the place . of the sociedad anonima, it was necessary to make certain adjustment resulting from the continued co-existence, for a time, of the two forms of commercial entities. Accordingly, in section 75 of the Corporation Law, a provision is found making the sociedad anonima subject to the provisions of the Corporation Law ‘so far as such provisions may be applicable and giving to the sociedades anonimas previously created in the Islands the option to continue business as such or to reform and organize under the provisions of the Corporation Law. Again, in section 191 of the Corporation Law, the Code of Commerce is repealed in so far as it relates to sociedades anonimas. The purpose of the commission in repealing this part of the Code of Commerce was :to compel commercial entities thereafter organized to incorporate under the Corporation Law, unless they should prefer to adopt some form or other of the partnership. To this provision was added” another to . the effect that existing sociedades anonimas, which elected to continue their business as such, instead of reforming and reorganizing under the Corporation Law, should continue to be governed by the laws that were in force prior to the passage of this Act ‘in relation to their organization and method of transacting business and to the rights of members thereof as between themselves, but their relations to the public and public officials shall be governed by the provisions of this Act.’”
Specifically, the two sections of Act No. 1459 referring to sociedades anonimas then already existing, provide as follows:
“Sec, 75, Any corporation or a sociedad anonima formed, organized, and existing under the laws of the Philippines on the date of the passage of this Act, shall be subject to” the provisions. hereof so far as such ‘provisions may be applicable and shall be entitled at its .option either to continue business as such corporation or to reform and organize under and by virtue of the provisions of this Act, transferring all corporate interests to the new corporation “which, if a stock corporation, is authorized to issue its shares of stock at par to the stockholders or members of the old corporation according to. their interests.” “Sec. 191. The Code of Commerce, in so far as it relates to corporation or sociedades anonimas, and all other Acts or parts of Acts in conflict or inconsistent with this Act, are hereby repealed. with the exception of Act Numbered fifty-two, entitled An Act providing” for examinations of banking institutions, in the Philippines, and for reports by their officers as amended, and Act Numbered ‘Six hundred sixty-seven, entitled An Act prescribing the method of applying to governments of municipalities, except the city of Manila and of provinces for franchises to contract and operate street railway, electric light and power and telephone lines, the conditions upon which the same maybe granted, certain powers of the grantee of said franchises, and of grantees of similar franchises under special Act of the Commission, and for other purposes.’ Provided, however, That nothing in this Act contained shall be deemed to repeal the existing law relating to those classes of associations which are termed sociedades colectivas, and sociedades de cuentas en participation, as to which association the existing law shall be deemed to be still in force; And provided further, That existing corporations or sociedades anonimas, lawfully organized as such, which elect to continue their business as such sociedades anonimas instead of reforming and reorganizing under and by’ virtue of the provisions of this Act, shall continue to be governed by the laws that were in force prior to the passage of this Act in relation to their organization and method of transacting business and to the rights of members thereof as between themselves, but their relations to the public and public officials.’ shall be governed by the provisions of this Act."
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. Upon advice of the Secretary of Justice (Op. No, 45, Ser. 1947) that such, extension was contrary to law, the registration was denied. The matter was dropped, allegedly because the stockholders of Benguet did not approve of the Directors’ action. Some six years later in 1953, the shareholders of Benguet adopted a resolution empowering the Director to “effectuate the. extension of the Company’s business life for not less than 20 and not more than 50 years, and this by either (1) an amendment to the Articles of Association or Charter of this Company or (2) by reforming and reorganizing the Company as a Philippine Corporation, or (3) by both or (4) -by any other means.” Accordingly, the , Board of Directors .on May 27, 1953, adopted a resolution to the following effect—
“Be It
Resolved, that the Company be reformed, reorganized and organized under the provisions of section 75 and other provisions of the Philippine Corporation Law as a Philippine corporation with a corporate life and corporate powers as set forth in the Articles of Incorporation attached hereto as Schedule ‘I’ and made a part hereof by this reference; and
“Be It
‘FURTHER RESOLVED, that any five, or more of the following share-holders of the Company be and they hereby are authorized as instructed to act for and in behalf of the share holders of the Company and of the Company as Incorporators in the reformation, reorganization and organization of the Company under and in accordance with the provisions aforesaid of said Philippine Corporation Law, and in such capacity, they are hereby authorized and instructed to execute the aforesaid . Articles of Incorporation attached to these Minutes as Schedule T. hereof, with such amendments, deletion and additions thereto as any five or more of those so acting shall deem necessary, proper, advisable or convenient to effect prompt registration of said Articles under Philippine Law; and five or more of said Incorporators are hereby further authorized and directed to do all things necessary, proper, advisable or convenient to effect such registration.”
In pursuance of such resolution, Benguet submitted in June, 1953, to the Securities and Exchange Commissioner, for alternative registration, two documents: (1) Certification as to the Modification of (the articles of association of) the Benguet Consolidated Mining Company, extending the term of its existence to another fifty years from June 15, 1953; and (2) articles of incorporation, covering its reformation or reorganization as a corporation in accordance with section 75 of the Philippine Corporation Law. 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); and (2) That Benguet, by its conduct, had chosen to continue as sociedad anomina, under section 75 of Act No. 1459, and could no longer exercise the option to reform into a corporation, specially since it would, indirectly produce the effect of extending its life. This ruling is the subject of the present appeal. Petitioner Benguet contends: (1) That the proviso of section 18 of the Corporation Law to the effect—
“that the life of said corporation shall not be extended by amendment beyond the lime fixed in the original articles.”
does not apply to sociedades anomimas already in existence at the passage of the law, like petitioner herein; (2) That to apply the said Restriction imposed by section 18 of the Corporation Law to sociedades anonimas already functioning when the said law was enacted would be in violation of constitutional inhibitions; (3) That even assuming that said restriction was applicable to it, 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. The first issue arises because the Code of Commerce of 1886 under which Benguet was organized, contains no prohibition (to extend the period of corporate existence), equivalent to that set forth in section 18 of the Corporation Law. Neither does it expressly authorize the extension. But the text of Article 223, reading:
“ART. 223. After the termination of the period for which commercial associations are constituted, it shall not be understood as extended by the implied or presumed will of the members; and if the members desire to continue in association, they shall draw up new articles, subject to all the formalities prescribed for their creation as provided in Article 119.” (Code of Commerce.)
would seem to imply that the period of existence of the sociedad anonimas (or of any other commercial association for that matter) may be extended if the partners or members so agree before the expiration of the original period., While the Code of Commerce, in so far as sociedades anonimas are concerned, was repealed by Act No. 1459, Benguet claims that article 223 is still operative in its favor under the last proviso of section 191 of the Corporation law (ante, p. 4 to the effect that existing sociedades anonimas would continue to be governed by the law in force before Act 1459,
“in relation to their organization and method of transacting business and to the rights of members among themselves, but their relations to the’ public and public officials shall be governed by the provisions of this Act.”
Benguet contends that the period of corporate life relates to its organization and the rights of its members inter se,’ and not to its relations to the, public or public officials. We find this contention untenable. The term of existence of association (partnership or sociedad anomima) is coterminous with their possession of an independent legal personality, distinct from that of their component members. When the period expires, the sociedad anomima loses the power to deal and enter into further legal relations with other persons; it is no longer possible for it to acquire new rights or incur new obligations, have only as may be required by the process of liquidating and winding up its affairs. By the same token, its officers and agents can no longer represent it after the expiration of the life term prescribed, save for settling its business. Necessarily, therefore, third persons or strangers have an interest in knowing the duration of the juridical personality of the sociedad anonima,, .since the latter can not be dealt with after that period; wherefore its prolongation or cessation is a matter directly involving the company’s relations to the public at large. On the importance of the term of existence set in the articles of association of commercial companies under the Spanish Code of Commerce, D. Lorenzo Benito y Endar, professor of mercantile law in the Universidad Central de Madrid, has this to say:
“La duration de la Sociedad.—La necesidad de’ consignar este requisito en el cotitrato social tiene mi valor analogo al qua dijinios tenia el mismo al tratar de las compafiias colectivas, aun cuando respecto de las anonimas no haya de tenerse en cuenta para nada lo que dijimos entonces acerca da” la trascendencia quo ello tiene para Ios socios; porque no existiendo en las mimimas la serie de responsibilidades de caracter personal ;que afectan a Ios socios coleetivos, es claro que la duraci6n de la soeiedad iraporta conocerla a Ios socios y los terceros, porque ella marca el limite natural del desenvolvimiento de la empresa constituida y el comienzo de la Iiquidacion de la sociedad.” (3 Benito, Dereclio Mercantil, 292-293.) “Interesa, pues, la fijacion de la vida de la compañia, desenvol-viendose con normalidad y regularidad, tanto a los asociados eomo a los terceros. A aquellos, porque su libertad economica, en cierto J modo limitada por la existencia del contrato de compafiia, se recobra despues de realisada, mas 6 menos cumplidamente, la finalidad comun perseguida; y a los terceros, porque les advierte el momento en que, extinguida la compania, no cabe y a la creation con ella de nuevas rel’aciones juridicas, de que hazcan reciprocamente derechos y obligaciones, sino solo la liquidacion de los negocios hasta;: entonces convenidos, sin otra eseepci6n que la que luego mas adelante habremos de sefialar”. (3 Benito, Derecho Mercantil, p. 245.)
The State and its officers also have an obvious interest in the term of life of associations, since the conferment of juridical capacity upon them during such period is a privilege that is derived from statute. It is obvious that no agreement between associates can result in giving rise to a new and distinct personality, possessing independent rights and obligations, unless the .law itself shall decree such result. And; the State is naturally interested that this privilege be enjoyed only under the conditions and not beyond the period that it sees fit to grant; and, particularly, that it be not abused in fraud and to the detriment of other parties; and for this reason it has been ruled that “the limitation (of corporate existence) to a definite period is an exercise of control in the interest of the public” (Smith vs. Eastwood Wire Manufacturing Co., 43 Atl. 568). We can not assent to the thesis of Benguet that its period of corporate existence has relation to its “organization”. The latter term is defined in Webster’s International Dictionary as:
“The executive structure of a business; the personnel of management, with its several duties and places in administration; the various persons who conduct a business, considered as a unit.”
The legal definitions of ,the term “organization” are concordant with that given above:
“Organize or ‘organization, as used in Reference to corporations, lias, a well-understood meaning, which is the election of officers, providing for the subscription and payment of the capital stock, the adoption of by-laws, and such other steps as are necessary to endow the legal entity with the capacity to transact the legitimate business for which it was created- Waltson vs. Oliver, SO P. 172, 173, 49 Kan. 107, 33 Am. St. Sep. 355; Topeka Bridge Co. vs. Cummings, 3 Kan. 55, 77; limit vs. Kansas & M. Bridge Co., 11 Kan. 412, 439; Aspen Water & Light Co., to. City of Aspen, 37 P. 728, 730, 5 Colo. App. 12; Nemaha Coal & Mining Co., vs. Settle 38 P. 4S3, 484, 54 Kan. 424. Under a statute providing that, until articles of incorporation should be recorded, the corporation should transact no business except its own organization, it is held that the term “organization” means simply the process of forming and arranging into suitable disposition the parties who are to act together in, and denning the objects of, the compound body, and that this process, even when complete in all its parts, does not confer a franchise either valid or defective, but, on the contrary, it is only the act of the individuals, and something else must be done to secure the corporate franchise. Abbott vs. Omaha Smelting & Refining Co. 4 Neb. 416,. 421.” (30 Words and Phrases, p. 282.)
It is apparent from the foregoing definitions that the term “organization” relates merely to the systematization and orderly arrangement of the internal and managerial affairs and organs of the petitioner Benguet, and has nothing to do with the prorogation of its corporate life. From the double fact that the duration of its corporate life (and juridical personality) has evident connection with the petitioner’s relations to the public, and that it bears none to the petitioner’s organization and method of transacting business, we derive the conclusion that the prohibition contained in section 18 of the Corporation Law (Act No. 1459) against extension of corporate life by amendment of the original articles was designed and intended to apply to “companios anonimas” that, like petitioner Benguet, were already existing at the passage of said law. This conclusion is reinforced by the avowed policy of the law to hasten the day when companias anonimas would, be extinct, and replace them with the American type of corporation (Harden vs. Behguet Consolidated Mining Co., supra), for the indefinite prorogation of the corporation life of sodedades anonimas would maintain the unnecessary duality of organizational types, instead of reducing them to a “single one; and what is more, it would confer upon these sodedades anonimas, whose obsolescence was sought, the advantageous privilege of perpetual existence that the new corporation could not possess. Of course, the retroactive application of the limitations on the terms of corporate existence could not be made in violation of constitutional inhibitions specially those securing equal protection of the laws and prohibiting impairment of the obligation of contracts. It needs no argument to show that if Act No. 1459 allowed existing compañias anonimas to be governed by the old law in respect to their organization, methods.of transacting business and the rights . of the members among themselves, it was precisely in deference to the vested rights already acquired by the entity and its members at the time the Corporation Law was enacted. But we do not agree with petitioner Benguet (and here lies the second issue in this appeal) that the possibility to extend its corporate life under the Code of Commerce constituted a right already vested when Act No. 1459 was adopted. At that time, Benguet’s existence was well within the 50 years period set in its articles of association; and its members had not entered into any agreement that such period should be extended. It is safe to say that none of the members of Benguet anticipated in 1906 any need to reach an agreement to increase the term of its corporate life, barely three years after it had started. The prorogation was purely speculative; a mere possibility that could not be taken for granted. It was as yet conditional, depending upon the ultimate decision of the members and directors. They might agree to extend Benguet’s existence beyond the original 50 years; or again they might not. It must be remembered that in 1906, the success, of Benguet in its mining ventures was by no means so certain as to warrant continuation of its operations beyond the 50 years set in its articles. The records of this Court show that Benguet ran into financial difficulties in the early part of its existence, to the extent that, as late as 1913, ten years after it was found, 301,100 shares of its capital stock (with a par value of $1 per share) were being offered for sale at 25 centavos per share in order to raise the sum of P75,000 that was heeded to rehabilitate the company (Hanlon vs. Hausermann and Beam, 40 Phil., 790). Certainly the prolongation of the corporate existence of Benguet in 1906 was merely a possibility in futuro, a contingency that did not fulfill the requirements of a vested right entitled to constitutional protection, defined by this Court in Balboa vs. Farrales, 51 Phil., 498, 502, as follows:
“Vested right is ‘some right or interest in the property which has become fixed and established, and is no longer open to doubt or controversy,” “A ‘vested’ right is defined to be an immediate fixed right of present or future enjoyment, and rights are ‘vested’ in .contradistinction to being expectant or contingent” (Pearsall vs. Great Northern R. Co., 161 IT. S. 646, 40 L. Ed. 838).
In Corpus Juris Secundum we find:
“Rights are vested when the right to enjoyment, present or prospective, has become the property of some particular person or persons as a present interest. The right must be absolute, .complete, and unconditional, independent of a contingency, and a mere expectancy of future benefit, or a contingent interest in property founded on anticipated continuance of existing laws, does not constitute a vested right. So, inchoate rights which have not been acted on. are not vested.” (16 C. J, S. 214-215.)
Since there was no agreement as yet to extend the period of Benguet’s corporate existence (beyond the original 50 years) when the Corporation Law was adopted in 1906, neither Benguet nor its members had any actual or vested right to such extension at that time. Therefore, when the Corporation Law, by section 18, forbade extensions of corporate life, neither Benguet nor its members were deprived of any actual or fixed right constitutionally protected. To hold, as petitioner Benguet asks, that the legislative power could not deprive Benguet or its members of the imssibilitij to enter at some indefinite future time into an agreement to extend Benguet’s corporate life, solely because such ‘agreements were authorized by the Code of Commerce, would be tantamount to saying that the said Code was irrepealable on that point. 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. (New York C. R. Co. vs. White, 61 L. Ed (U.S.) 667; Mondou vs. New York N: H. & H. E. Co., 56 L. Ed. 327; Rainey vs. V. S., 58 L. Ed. 617; Lilly Co. vs. Saunders, 125 ALR. 1308; Shea vs. Olson, 111 ALR. 998).
“There can be no vested right in the continued existence of a statute or rule of the common law which precludes its change or repeal, nor in any. omission to legislate on a particular matter or subject. Any right conferred by statute may be taken away by statute before it has become vested, but after a right has vested, repeal of the statute or ordinance which created the right does not and cannot affect much right.” (16 0. J. S. 222-228.) It is a general rule of constitutional law that a person has no vested right in statutory privileges and exemptions” (Brearly School vs. Ward, 201 NY. S58, 40 LRA NS. 1215; also, Cooloy, Constitutional Limitations, 7th ed., p. 546).
It is not amiss to recall here that after Act No. 1459 the Legislature found it advisable to impress further restrictions upon the power of corporations to ‘deal in public lands, or to hold real estate beyond a maximum area; and to prohibit any corporation from endeavouring to control or hold more than 15 per cent of the voting stock of an. agricultural or mining corporation (Act No. 3518). These prohibitions are so closely integrated with our public policy that Commonwealth Act No^ 219 sought to extend such restrictions to associations of all kinds. It would be subversive of that policy to enable Benguet to prolong its peculiar status of sociedad ammimas, and enable it to cast doubt and uncertainty on whether it is, or not, subject to those restrictions on corporate power, as it once endeavoured to do in the previous case of Harden vs. Benguet Mining Corp. 58 Phil., 149. Stress has been laid upon the fact that the Compania Maritima (like Benguet, a sociedad anonima established before the enactment of the Corporation Law) has been twice permitted to extend its corporate existence by, amendment of its articles of association, without objection from the officers of the defunct Bureau of Commerce and Industry, then in charge of the enforcement of the Corporation Laws, although the exact question was never raised then. Be that as it may, it is a well established rule in this jurisdiction that the government is never estopped by mistake or error on the part of its agents" (Pineda vs. Court of First Instance of Tayabas, 52 Phil., 803, 807), and that estopped can not give validity to an act that is prohibited by law or is against public policy (Eugenio vs. Perdido, (97 Phil., 41, May 19, 1955; 19 Am. Jur. 802); so that the respondent, Securities and Exchange Commissioner, was not bound by the rulings of his predecessor if they be inconsistent with law. Much less could erroneous decisions of executive officers bind this Court and induce it to sanction an unwarranted interpretation or application of legal principles. We now turn to the third and last issue of this appeal, concerning the exercise of the option granted by section 75 of the Corporation Law to every sociedad anonima. “formed, organized and existing under the laws of the Philippines on the date of the passage of this Act” to either continue business as such sociedad anonima or. to reform and organize under the provisions of the Corporation Law. Petitioner-appellant Benguet contends that as the law does not determine the period within which such option may be exercised, Benguet may exercise it at any time during its corporate existence; and that in fact on June 22, 1953, it chose to reform itself into a corporation for a period of 50 years from that date, filing the corresponding papers The petitioner’s argument proceeds from the unexpressed assumption that Benguet, as sociedad ammima, had not exercised the option given by section 75 of the Corporation Law until 1953. This we find to be incorrect. Under that section, 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 (quoted earlier in this opinion) 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 amdnimas affected are to be understood to have elected the alternative" “to continue business as such corporation” (sociedad amnima) [2]. The election of Benguet to remain a sociedad anonima after the enactment of the Corporation Law is evidence, not only by its failure, from 1906 to 1953, to adopt the alternative to transfer its corporate interests to a new corporation, as required by section 75; it also appears from positive acts. Thus around 1933, Benguet claimed and defended in court its acquisition of shares of the capital stock of the Balatoc Mining Company, on the ground that as a sociedad anonima it (Benguet) was not a corporation. within the purview of the laws prohibiting a mining corporation from becoming interested in another mining corporation (Harden vs. Benguet Mining Corp., 58 Phi)., p. 1.49); Even in the present proceedings, Benguet hag urged its right to amend its original articles of association as " sociedad anonima" and extend its life as such under the provisions of the Spanish Code of Commerce. Such appeals to privileges as " sociedad anonima" under the Code of 1886 necessarily imply that Benguet has rejected the alternative of reforming under the Corporation Law. As respondent Commissioner’s order, now under appeal, has stated—
“A sociedad anonima could not claim the benefit of both, but must have to choose one and discard the other. If it elected to become a corporation it could not continue as a sociedad anonima; and if it choose to remain as a sociedad anonima it could not become a corporation.”
Having thus made its choice, Benguet.may not now go back and seek to change its position and adppt the reformation that it had formerly repudiated. The election of one of several alternatives, is irrevocable once made (as now expressly recognized in article 940 of the new Civil Code of the Philippines) : such rule is inherent in the nature of the choice, its purpose being to clarify and render definite the rights of the one exercising the option, so that other persons may act in consequence. While successive choices may be provided there’ is nothing in section 75 of the Corporation Law to show or hint that a sociedad anonima may make more than one choice thereunder, since only one option is provided for. While no express period of time is fixed by the law within which sociedad.es wnonimas may elect under section 75 of Act No, 1459 either to reform or to retain their status quo, there are powerful reasons to conclude that the legislature, intended such choice to be made within a reasonable time from the effectivity of the Act. To enable a sociedad amonitna to choose reformation when its stipulated period of existence is nearly ended, would be to allow it to enjoy a term of existence far longer than that granted to corporations organized under the Corporation Law; in Ben- guet’s case, 50 years as sociedad ammdma, and another 50 years as an American type of corporation under Act 1459; a result incompatible with .the avowed purpose of the Act to hasten the disappearance of the sociedades anonimas. Moreover, such belated election, if permitted, would enable sociedades anonimas to reap the full advantage of both’ types of organization. Finally, it would permit sociedades awonimas to prolong their corporate existence indirectly by belated reformation into corporations under Act No. 1459, when they could not do so directly by amending their articles of association. Much stress is laid upon allegedly improper motives on the part of the intervenor, Consolidated Mines, Inc., in supporting the orders appealed from, on the ground that intervenor,seeks to terminate Benguet’s operating contract and appropriate the profits that are the result of Benguet’s efforts in developing the mines of the intervenor. Suffice it to say that whatever such motives should be, they are wholly irrelevant to the issues in this appeal, that exclusively concern the legal soundness of the order of the respondent Securities and Exchange Commissioner rejecting the claims of the Benguet Consolidated Mining Company to extend its corporate life. Neither are we impressed by the prophesies of economic chaos that would allegedly ensure with the cessation of Benguet’s activities. If its mining properties are really susceptible of profitable operation, inexorable economic. laws will ensure their exploitation; if, on the other hand, they can no longerj be worked at a profit, then catastrophe becomes inevitable, whether or not petitioner Benguet retains corporate existence. Sustaining the opinions of the respondent Securities and Exchange Commissioner and of the Secretary of Justice, we rule that: (1) The prohibition contained in section 18 of Act No. 1459, against extending the period of corporate existence by amendment of the original articles, was intended to apply, and does apply, to sociedades andnimas already formed, organized and existing at the time of the eff ectivity of the Corporation Law (Act No. 1459) in 1906; (2) The statutory prohibition is valid and impairs no vested rights or constitutional inhibition where no agreement to extend the original period of corporate life was perfected before the enactment of the Corporation Law; (3) A soeiedad (minima, 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 reform into a corporation under section 75 of Act No. 1459. In view of the foregoing, the order appealed from is affirmed. Costs against petitioner-appellant Benguet Consolidated Mining Company. Padilla, Montemayor, Reyes, A. Labrador, Concepcion and Endencia, JJ., concur.