HARDEN VS.

BENGUET CONSOLIDATED 58 PHIL 141 (1963)

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