ALHAMBRA CIGAR & CIGARETTE MANUFACTURING COMPANY, INC.

,
vs.SECURITIES & EXCHANGE COMMISSION

G.R. No. L-23606 July 29, 1968

SANCHEZ, J.:

FACTS:
Petitioner Alhambra Cigar and Cigarette Manufacturing Company, Inc. was duly incorporated
under Philippine laws on January 15, 1912. By its corporate articles it was to exist for fifty (50)
years 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 its corporate life for an additional
fifty years, or a total of 100 years from its incorporation.
On October 28, 1963, 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 18, 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
already expired when the said law took effect in short, said law has no retroactive effect."

ISSUE:
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?

RULING:
No. As the Court looks 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.
Plain from the language of the 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.
Republic Act 3531, amending Section 18 of the Corporation Law, is silent, it is true, as to when
such act of extension may be made. But even with a superficial knowledge of corporate
principles, it does not take much effort to reach a correct conclusion. For, implicit in Section 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.
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.
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.
Besides, a new corporation — Alhambra Industries, Inc., with but slight change in stockholdings
--has already been established. Its purpose is to carry on, and it actually does carry on, the
business of the dissolved entity. The beneficial-effects argument is off the mark.
NECTARINA S. RANIEL and MA. VICTORIA R. PAG-ONG vs PAUL JOCHICO,
JOHN STEFFENS and SURYAVIRIYA

G.R. No. 153413 March 1, 2007

AUSTRIA-MARTINEZ, J.:

FACTS:
Petitioners, together with respondents JochicoJohn Steffens and Surya Viriya, were
incorporators and directors of Nephro, with Raniel acting as Corporate Secretary and
Administrator. The conflict started when petitioners questioned respondents' plan to enter into a
joint venture with the Butuan Doctors' Hospital and College, Inc. sometime in December
1997. Because of this, petitioners claim that respondents tried to compel them to waive and
assign their shares with Nephro but they refused. Thereafter, Raniel sought an indefinite leave of
absence due to stress, but this was denied by Jochico, as Nephro President. Raniel, nevertheless,
did not report for work, causing Jochico to demand an explanation from her why she should not
be removed as Administrator and Corporate Secretary. Raniel replied, expressing her sentiments
over the disapproval of her request for leave and respondents' decision with regard to the Butuan
venture.

On January 30, 1998, Jochico issued a Notice of Special Board Meeting on February 2,
1998. Despite receipt of the notice, petitioners did not attend the board meeting. In said meeting,
the Board passed several resolutions ratifying the disapproval of Raniel's request for leave,
dismissing her as Administrator of Nephro, declaring the position of Corporate Secretary vacant,
appointing Otelio Jochico as the new Corporate Secretary and authorizing the call of a Special
Stockholders' Meeting on February 16, 1998 for the purpose of the removal of petitioners as
directors of Nephro.

Otelio Jochico issued the corresponding notices for the Special Stockholders' Meeting to
be held on February 16, 1998 which were received by petitioners on February 2, 1998. Again,
they did not attend the meeting. The stockholders who were present removed the petitioners as
directors of Nephro. Thus, petitioners filed SEC Case No. 02-98-5902.

ISSUE:
Is the removal of petitioner from Nephro was valid?

RULING:

Yes. A corporation exercises its powers through its board of directors and/or its duly
authorized officers and agents, except in instances where the Corporation Code requires
stockholders approval for certain specific acts.

In this case, petitioner Raniel was removed as a corporate officer through the resolution
of Nephro's Board of Directors adopted in a special meeting on February 2, 1998.As correctly
ruled by the SEC, petitioners' removal was a valid exercise of the powers of Nephro's Board of
Directors. The SEC also correctly concluded that petitioner Raniel was removed as an officer of
Nephro in compliance with established procedure.
Petitioners Raniel and Pag-ong's removal as members of Nephro's Board of Directors was
likewise valid.

Only stockholders or members have the power to remove the directors or trustees elected
by them, as laid down in Section 28 of the Corporation Code

Petitioners do not dispute that the stockholders' meeting was held in accordance
with Nephro's By-Laws. The ownership of Nephro's outstanding capital stock is distributed as
follows: Jochico - 200 shares; Steffens - 100 shares; Viriya - 100 shares; Raniel - 75 shares; and
Pag-ong - 25 shares,[17] or a total of 500 shares. A two-thirds vote of Nephro's outstanding capital
stock would be 333.33 shares, and during the Stockholders' Special Meeting held on February
16, 1998, 400 shares voted for petitioners' removal. Said number of votes is more than enough to
oust petitioners from their respective positions as members of the board, with or without cause.