Atty. Sabino Padilla, Jr.

September 25, 1990 Atty. Sabino Padilla, Jr. Padilla Law Office 7th Floor, Padilla De Los Reyes Bldg. 232 Juan Luna Street 1006 Manila S i r : This refers to your letter dated August 30, 1990 requesting clarification relative to the term of existence of non-stock, non-profit educational corporations incorporated before World War II. LibLex As stated many pre-war schools were incorporated without any provision in their articles of incorporation as to their term of existence since this was not required under the old Corporation Law. When these corporations found it necessary or convenient to amend their articles of incorporation to comply with the fifty (50) years maximum term of corporate existence required under the new Corporation Code, doubts were raised as to the reckoning date for the counting of the required period. Hence, your request. The pertinent provision of the Corporation Code provides: "SECTION 148. Applicability to existing corporation . All corporations lawfully existing and doing business in the Philippines on the date of the effectivity of this Code and heretofore authorized, licensed or registered by the Securities and Exchange Commission, shall be deemed to have been authorized, licensed or registered under the terms and conditions of its license, and shall be governed by the provisions hereof: Provided, That where any such corporation is affected by the new requirements of this Code, said corporation shall unless otherwise herein provided, be given a period not more than two (2) years from the effectivity of this Code within which to comply with the same ." (Emphasis supplied) Under the aforecited provision, affected corporations were given two (2) years from the effectivity of the Corporation Code within which to comply with provisions thereof. However, the Commission, in several occasions has ruled that, failure on their part to amend their articles of incorporation to comply with the applicable provisions of the Code on or before May 1, 1982 the expiry date of the two (2)-year period, the Commission will consider the provisions therein as written into the articles of incorporation as of May 1, 1980, the date of effectivity of the Corporation Code. (SEC opinions dated April 26 and June 29, 1982) Thus, applying this ruling in the instant case, the 50-year period should be counted from May 1, 1980 . The 50-year period should not be counted from the date of registration as this would adversely affect the operations of pre-war schools which were established more than fifty (50) years from the date of effectivity of the Corporation Code since it would result in the dissolution of said corporations as the 50-year period had already lapsed. This situation, therefore, would be detrimental to students who might be affected by the dissolution of their schools. Likewise, it is worth mentioning that it is an established principle that retroactive laws are not favored if the same would take away or impair vested rights acquired prior to the enactment of the law. Indeed the Legislature would not have intended to deprive existing pre-war educational institutions of their right to exist granted them under the old Corporation Law. Thus, to avoid unjust results and in order to be consistent with the abovementioned previous ruling of the Commission on the application of Section 148 of the Corporation Code, it would be appropriate to reckon the 50-year period from the date of effectivity of the Corporation Code. This interpretation will not prejudice public interest, rather it would enable pre-war corporations to continue serving the needs of the locality where the schools are located. For the Commission to rule otherwise would lead to manifest injustice which is not within the intent and purpose of the Legislature in enacting the Corporation Code. However, in order to avoid possible confusion from the public who might be misled in believing that the corporation existed only after May 1, 1980, you may provide for the term of existence on the amended articles of incorporation in the following tenor: "That the term of existence of the corporation shall begin on ______________, the date of its registration, and shall continue to exist for fifty (50) years from and after May 1, 1980, the date of effectivity of the Corporation Code. (As amended on ________ )." (SGD.) RODOLFO L. SAMARISTA Associate Commissioner