CASE Harden v.

Benguet Consolidated Mining AUTHOR: Mendoza

[G.R. No. DATE]37331 March 18,1933 NOTES:
TOPIC: Corporate Powers
PONENTE: J.Street
FACTS:
 Background: Instittued by F.M. Harden, acting in his own behalf and that of all other stockholders of Balatoc Mining
Co. The principal purpose of ghe original action was to (1)Annul a certificate covering 600,000 shares of stock of the
Balatoc Mining which had been issued to Benguet Consolidated; and (2) To secure to the Balatoc Mining the
restoration of a large sum of money alleged to have been unlawfully collected by Benguet Consolidated.
 The complaint was later amended so as to include a prayer for the annulment of their contract with
Benguet Consolidated.
 1. The Benguet Consolidated was organized in 1903 as a Sociedad Anonima in conformity with the provisions of the
spanish law while the Balatoc Mining was organized in 1925 as a corporation in conformity with the provisions of thr
Corporation Law (Act no. 1459).Both were organized for the purpose of engaging in the mining of gold in the
Philippines.
 2. The capital stock of Balatoc Mining consists of one million shares of the par value of one peso each.
 3. When Balatoc was first organized , its properties were largely undeveloped and the original stockholders were
unable to supply the means needed for profitable operation. For this reason, its BOD ordered suspension of all work.
 4. Balatoc made a resolution for the purpose of "interesting" outside capital in the mine. It approached A.W. Beam,
then President of Benguet Consolidated, to secure the capital necessary to the development of Balatoc.
 5. It resulted to a contract which featured that Benguet was to proceed with the development and construct a milling
plant for Balatoc and to erect a powerplant. In return, it was agreed that Benguet should receive from Balatoc shares
of a par value of P600,000, in payment for the first P600,000 to be thus advanced to it by the Benguet Company.
 6, Later, the dividends of Balatoc have been enriching its stockholders, and at the time of the filing of the complaint
its shares had increased to P11 per share.
 7. While Benguet was pouring its million and a half into Balatoc, the arrangements made between the two companies
appear to have been viewed by Harden with complacency, being the owner of thousands of shares of Balatoc. But as
soons as the success of the development had become apparent , he began this litigation in which he has been enjoined
by two out of the eighty shareholders of Balatoc.
ISSUE(S):
1. Whether or not it is unlawful for Benguet to hold any interest in a mining corporation and that the contract in
question be annulled, with the consequent obliteration of the certificate issued to Benguet.
HELD:
SC ruled against Harden. Having shown that Harden have no right of action against Benguet for the infraction of law
supposed to have been committed.
RATIO:
 Under the Philippine Bill, approved in July 1,1902, wherein the US Congress inserted in Section 75 referring to
mining corporations that "It shall be unlawful for any member of a corporation engaged in agriculture or mining
and for any corporation organized for any purpose except irrigation to be any wise interested in any other
corporation engaged in agriculture or in mining." But it was later amended as merely to prohibit any such member
from holding more than 15% of the outstanding capital stock of another such corporation.
 Moreover, the explicit prohibition against the holding of any corporation (except for irrigation) of an interest in
any other corporation engaged in agriculture or in mining was so modified as to limit the restriction to corporations
organized for the purpose of engaging in agriculture or mining.
 As originally drawn, the Corporation Law did not contain any appropriate clause directly penalizing the act of a
corporation, or member of a corporation.
 1. On the issue if Harden can maintain an action based upon the violation of law supposedly committed by
Benguet
 -That the provision referred to( Amended Philippine Bill prohibiting mining companies to be interested in any
other corporation engaged in mining or agriculture) was adopted by the legislature with a sole view to the public
policy that should control in the granting mining rights. And that the penalites imposed can only be enforced only
by a criminal prosecution or by an action of quo warranto,
 -In the case, Benguet has committed no civil wrong against Balatoc, and if a public wrong has been committed, the
directors of Balatoc and Harden were the active inducers of the commission of that wrong. The contract has been
performed by both sides by the building of the plant of Benguet and the delivery of the 600,000 shares of stock by
Balatoc.
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CASE LAW/ DOCTRINE:
Thus, it may be seen that a corporation limited by the law or by its charter has until the State acts every power and capacity
that any other individual capable of acquiring lands, possesses.

The corporation may exercise every act of ownership over such lands; it may sue in ejectment or unlawful detainer and it
may demand specific performance. It has an absolute title against all the world except the State after a proper proceeding is
begun in a court of law.

The Attorney General (Sol.Gen.) is the exclusive offcier in whom is confided the right to initiate proceedings for escheat
or attack the right of a corporation to hold land.

DISSENTING/CONCURRING OPINION(S):