Fred Harden sued Benguet Consolidated Mining Company, claiming they violated corporation law by investing in and owning shares of another mining corporation, Balatoc Mining Company. However, the court ruled in favor of Benguet Consolidated for two reasons. First, the law was amended in 1929 to allow corporations to hold up to 15% of another's shares. Second, violations of corporation law by another corporation must be addressed through a quo warranto action initiated by the Attorney General, not a private lawsuit. Therefore, Harden's private suit against Benguet Consolidated was not the proper action.
Original Description:
HARDEN VS. BENGUET CONSOLIDATED 58 PHIL 141 (1963)
corporation case digest
intro
Fred Harden sued Benguet Consolidated Mining Company, claiming they violated corporation law by investing in and owning shares of another mining corporation, Balatoc Mining Company. However, the court ruled in favor of Benguet Consolidated for two reasons. First, the law was amended in 1929 to allow corporations to hold up to 15% of another's shares. Second, violations of corporation law by another corporation must be addressed through a quo warranto action initiated by the Attorney General, not a private lawsuit. Therefore, Harden's private suit against Benguet Consolidated was not the proper action.
Fred Harden sued Benguet Consolidated Mining Company, claiming they violated corporation law by investing in and owning shares of another mining corporation, Balatoc Mining Company. However, the court ruled in favor of Benguet Consolidated for two reasons. First, the law was amended in 1929 to allow corporations to hold up to 15% of another's shares. Second, violations of corporation law by another corporation must be addressed through a quo warranto action initiated by the Attorney General, not a private lawsuit. Therefore, Harden's private suit against Benguet Consolidated was not the proper action.
58 Phil 141 Business Organization Corporation Law Proper Action to File in Case Violator is a Corporation In 1927, Benguet Consolidated Mining Company, registered as a sociedad anonima under the Spanish Law, agreed to invest and build capital equipments in favor of Balatoc Mining Company, a corporation registered under the then relatively new Corporation Law of 1925. In exchange, Balatoc Mining agreed to give Benguet Mining 600,000 shares. The venture proved to be profitable and Balatoc Mining earned and so did its stockholders, and of course, Benguet Mining was earning big too because it now owns 600k shares. This prompted, Fred Harden a stockholder of Balatoc Mining who also owns thousands of shares to sue Benguet Mining on the ground that under the Corporation Law a corporation like Benguet Mining which is engaged in the mining industry is prohibited from being interested in other corporations which are also engaged in the mining industry like Balatoc Mining. ISSUE: Whether or not Hardens suit should prosper. HELD: No. The Corporation Law of 1925 subjects sociedades anonimas to its provisions so far as such provisions may be applicable. In 1929, the Corporation Law was amended and the prohibition cited by Harden was so modified as merely to prohibit any such corporation from holding more than fifteen per centum of the outstanding capital stock of another such corporation. Further and more importantly, the Corporation Law of 1925 provides that if the person who allegedly violated the provisions of said law is a corporation, the proper action is a quo warranto which should be initiated by the Attorney-General or its deputized provincial fiscal and not a private action as the one filed by Harden