Harden v. Benguet Consolidated Mining Co., 58 Phils.

141 (1933)

CORPORATIONS; MlNING CORPORATION; PROHIBITION AGAINST OWNING INTEREST

IN OTHER MINING CORPORATION; RIGHT OF ACTION.—Inasmuch as the Corporation
Phil Products Co v. PrimateraFacts: Primateria Zurich, through Alexander B. Baylin,
entered into an agreement with plaintiff Philippine Products Company, whereby the
latter undertook to buy copra in the Philippines for the account of Primateria Zurich.
Plaintiff caused the shipment of copra to foreign countries, pursuant to instructions from
defendant Primateria Zurich, thru Primateria (Phil.) Inc. acting by Baylin and Jose M.
Crame, officers of said corporation. As a result, defendant obtained an obligation of
P31,009.71. For failure to file an answer within the reglementary period, defendant
Primateria Zurich was declared in default.After trial, judgment was rendered by the
lower court holding defendant Primateria Zurich liable to the plaintiff for the sums of
P31,009.71, with legal interest from the date of the filing of the complaint, and
P2,000.00 as and for attorney's fees; and absolving defendants Primateria (Phil.), Inc.,
Alexander G. Baylin, and Jose M. Crame from any and all liability.Plaintiff appealed from
that portion of the judgment dismissing its complaint as regards the three defendants. It
is plaintiff's theory that Primateria Zurich is a foreign corporation within the meaning of
Sections 68 and 69 of the Corporation Law, and since it has transacted business in the
Philippines without the necessary license, as required by said provisions, its agents here
are personally liable for contracts made in its behalf.Issue: 1. Whether defendant
Primateria Zurich may be considered a foreign corporation within the meaning of
Sections 68 and 69 of the Corporation Law.2. Can plaintiff recover from the other three
defendants?Ruling:1. No. Section 68 of the Corporation Law states: "No foreign
corporation or corporation formed, organized, or existing under any laws other than
those of the Philippines shall be permitted to transact business in the Philippines, until
after it shall have obtained a license for that purpose from the Securities and Exchange
Commission .. ." And under Section 69, "any officer or agent of the corporation or any
person transacting business for any foreign corporation not having the license
prescribed shall be punished by imprisonment for etc. ... ."Primateria Zurich was not
duly proven to be a foreign corporation; nor that a societe anonyme ("sociedad
anomima") is a corporation; and that failing such proof, the societe cannot be deemedto
fall within the prescription of Section 68 of the Corporation Law. In fact, our corporation
law recognized the difference between sociedades anonimas and corporations.2. No. At
any rate, we do not see how the plaintiff could recover from both the principal
(Primateria Zurich) and its agents. It has been given judgment against the principal for
the whole amount. It asked for such judgment, and did not appeal from it. It clearly
statedthat its appeal concerned the other three defendantLaw contains, in section 190
(A), provisions fully penalizing the violation of subsection 5 of sec tion 13 of Act No.
1459,—which prohibits the acquisition by one mining corporation of any interest in
another,—and inasmuch as these provisions have been enacted in the exercise of the
general police powers of the Government, it results that, where one mining corporation
acquires a prohibited interest in another such corporation, the shareholders of the latter

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cannot maintain an action to annul the contract by which such interest was acquired.
The remedy must be sought in a criminal proceeding or quo warranto action, under
section 190 (A), instituted by the Government. Until thus assailed in a direct proceeding
the contract by which the interest was acquired will be treated as valid, as between the
parties.

Benguet Consolidated Mining Co. vs. Pineda, 98 Phil. 711, March 28, 1956

1.CORPORATION LAW; PROHIBITION AGAINST EXTENSION OF CORPORATE

EXISTENCE BY AMENDMENT OF THE ORIGINAL ARTICLES, APPLICABLE TO
“SOCIEDADES ANONIMAS."—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 anonimas, already
formed, organized and existing at the time of the effectivity of the Corporation Law (Act
1459) in 1906.

2. ID.; ID.; PROHIBITION VALID AND IMPAIRS NO VESTED RIGHTS.—The aforesaid

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.WHEN “SOCIEDAD ANONIMAS", MAY NOT CLAIM TO REFORM INTO A CORPORATION

UNDER SECTION 75 OF THE ACT.—A sociedad anónima, existing before the Corporation
Law, that continues to do business as such for a reasonable time after its enactment, is
deemed to have made its election and may not subsequently claim to reform into a
corporation under section 75 of Act No. 1459. Particularly should this be the case where
it has asserted its privileges as such sociedad anónima before invoking its alleged right
to ref orm into a corporaLIM TONG LIM vs. PHILIPPINE FISHING GEAR
INDUSTRIES, INC.
317 SCRA 728, G.R. No. 136448, Nov. 3, 1999, Panganiban, J.:p

FACTS: Antonio Chua and Peter Yap bought nets of various sizes and floats
from Philippine Fishing Gear (PFG) for Ocean Quest Fishing Corporation (OQF),
saying that petitioner was also involved with OQF despite not being a signatory
to the agreement. They failed to pay the purchase price, hence PFG filed a
collection case against OQF. PFG also alleged that OQF is a non-existent
corporation by virtue of a certification by the SEC. RTC issued the writ of

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attachment on the nets, and was sold at a public auction with the proceeds
deposited to the court. RTC ruled there was partnership between the three
(Chua, Yao, Lim) anchoring on the Compromise Agreement they executed in the
civil case filed by Chua and Yao against Lim for the declaration of ownership of
the fishing boats, among other things. CA affirmed.
ISSUE: Whether or not by their acts, Lim, Chua, and Yao are deemed to have
entered into a partnership.
HELD: Yes. A partnership is a contract where two or more persons bind
themselves to contribute money, property, or industry to a common fund, with the
intention of dividing the profits among themselves. The three engaged in a
commercial venture for commercial fishing and contracted loans to buy two
fishing boats, and the nets and floats needed to operate the fishing business. In
their Compromise Agreement, they subsequently revealed their intention to pay
the loan with the proceeds of the sale of the boats, and to divide equally among
them the excess or loss. These boats, the purchase and the repair of which were
financed with borrowed money, fell under the term "common fund" under Article
1767. The contribution to such fund need not be cash or fixed assets; it could be
an intangible like credit or industry. That the parties agreed that any loss or profit
from the sale and operation of the boats would be divided equally among them
also shows that they had indeed formed a partnership. It extended to the fishing
nets and the floats, both essential to fishing, which were obviously acquired in
furtherance of their business.
Petitioner’s defense that he was a mere lessor does not hold water. In effect, he
would like this Court to believe that he consented to the sale of his own boats to
pay a debt of Chua and Yao, with the excess of the proceeds to be divided
among the three of them. No lessor would do what petitioner did. Indeed, his
consent to the sale proved that there was a preexisting partnership among all
three.
Corporation by estoppels: Although the partnership/corporation was never legally
formed for unknown reasons, this fact alone does not preclude the liabilities of
the three as contracting parties in representation of it. Clearly, under the law on
estoppel, those acting on behalf of a corporation and those benefited by it,
knowing it to be without valid existence, are held liable as general partners.
tion.FRANK S. BOURNS, plaintiff-appellee,

vs.

D. M. CARMAN, ET AL., defendants-appellants.

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