CORPORATION LAW

(32) Harden, et. al. v. Benguet Consolidated Mining Co., 58 Phil. 141
FACTS:
Benguet Consolidated Mining Co. was organized in June, 1903, as a
sociedad anonima in conformity with the provisions of Spanish law. Balatoc
Mining Co. was organized in December 1925, as a corporation, in conformity with
the provisions of the Corporation Law (Act No. 1459). Both were organized for
mining of gold and their respective properties are located only a few miles apart
in Benguet. Balatoc capital stock consists of one million shares of the par value
of one peso (P1) each.

When the Balatoc was first organized, its properties were largely undeveloped. To
improve its operations, it entered into a contract with Benguet Consolidated
Mining providing that Benguet will bring in capital, equipment. and technical
expertise in exchange for capital shares in Balatoc. The venture proved to be
profitable and Balatoc Mining earned and so did its stockholders. Harden, a
stockholder of Balatoc sued Benguet Mining contending that this contract
violated the Corporation Law which restricts the acquisition of interest by a
mining corporation in another mining corporation.
ISSUE: WON the plaintiff can maintain an action based upon the violation of the
law supposedly committed by respondent company.
RULING: 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 AttorneyGeneral or its deputized provincial fiscal and not a private action as the one filed
by Harden.
(57) Financing Corporation of the Phils, v. Teodoro, 93 Phil. 404
FACTS:Asuncion Lopez Vda. de Lizares, Encarnacion Lizares Vda. de Panlilio and
Efigenia Vda. de Paredes, in their own behalf and in behalf of the other minority
stockholders of the Financing Corporation of the Philippines, filed a complaint
against the said corporation and J. Amado Araneta, its president and general
manager, claiming among other things alleged gross mismanagement and
fraudulent conduct of the corporate affairs of the defendant corporation by J.
Amado Araneta, and asking that the corporation be dissolved; etc. Over the
strong objection of the defendants, the trial court presided by respondent Judge
Jose Teodoro, granted the petition for the appointment of a receiver and

designated Mr. Alfredo Yulo as such receiver with a bond of P50,000. Hence,
petitioners filed a petition for certiorari with the main contention in opposing the
appointment of a receiver in this case is that said appointment is merely an
auxiliary remedy; that the principal remedy sought by the respondents in the
action in Negros Occidental was the dissolution of the Financing Corporation of
the Philippines; that according to the law a suit for the dissolution of a
corporation can be brought and maintained only by the State through its legal
counsel, and that respondents, much less the minority stockholders of said
corporation, have no right or personality to maintain the action for dissolution,
and that inasmuch as said action cannot be maintained legally by the
respondents, then the auxiliary remedy for the appointment of a receiver has no
basis.
ISSUE: Was the contention of the petitioners tenable?
RULING: NO. True it is that the general rule is that the minority stockholders of a
corporation cannot sue and demand its dissolution. However, there are cases
that hold that even minority stockholders may ask for dissolution, this, under the
theory that such minority members, if unable to obtain redress and protection of
their rights within the corporation, must not and should not be left without
redress and remedy. As held in Hall, et al. vs. Judge Piccio, even the existence of
a de jure corporation may be terminated in a private suit for its dissolution by
the stockholders without the intervention of the State. Hence, the Court denied
the petition and held that respondent Judge Teodoro had jurisdiction and properly
entertained the original case; that he also had jurisdiction to appoint a
receiver pendente lite, and considering the allegations made in connection with
the petition for the appointment of a receiver, he neither exceeded his
jurisdiction nor abused his discretion in appointing a receiver.