Case Digest (G.R. No. 129760) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Fredenick M. Harden, J.D. Highsmith, and John C. Hart v. Benguet Consolidated Mining Company et al. (58 Phil. 141, decided March 18, 1933), plaintiffs-appellants Harden, Highsmith and Hart, acting for themselves and all other shareholders of the Balatoc Mining Company, filed suit in the Court of First Instance of Manila against the Benguet Consolidated Mining Company, the Balatoc Mining Company, H.E. Renz (trustee of the disputed shares), John W. Haussermann and A.W. Beam, seeking to annul a certificate for 600,000 shares of Balatoc stock issued to Benguet and to recover moneys allegedly unlawfully collected under a March 9, 1927 development contract. The Balatoc Company, organized under Act No. 1459 in December 1925 with one million P1-par shares, had suspended operations in July 1926 for lack of funds. A stockholder committee solicited outside capital and negotiated with Beam, then president of Benguet (a 1903 sociedad anonima under Spanish law). Under their contract, Bengu Case Digest (G.R. No. 129760) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Procedural History
- Plaintiffs/Appellants: Fred M. Harden, J. D. Highsmith, and John C. Hart, suitors on behalf of themselves and all other contributing stockholders of the Balatoc Mining Company, Inc.
- Defendants/Appellees:
- Benguet Consolidated Mining Company (a sociedad anonima under Spanish law)
- Balatoc Mining Company (a corporation under Act No. 1459)
- H. E. Renz (trustee of 600,000 shares)
- John W. Haussermann and A. W. Beam (officers of Benguet Company)
- Trial Court Disposition: Complaint dismissed; preliminary injunction dissolved; costs awarded against plaintiffs.
- Underlying Transactions and Contract
- Corporate Origins:
- Benguet Company organized June 1903 under Spanish sociedad anonima form for gold mining in Benguet.
- Balatoc Company organized December 1925 under Corporation Law (Act No. 1459) to develop adjacent gold property; capital stock 1,000,000 shares at ₱1 par value.
- Financial Difficulties and Negotiations:
- July 31, 1926: Balatoc operations suspended for lack of funds.
- November 1926: Stockholders’ committee, including Harden, sought outside capital; approached A. W. Beam of Benguet Company.
- March 9, 1927 Contract:
- Benguet Company to develop Balatoc mine, build 100-ton daily mill (85% gold recovery), power plant, tramlines, surface buildings.
- Balatoc Company to issue 600,000 shares (₱600,000 par) as payment for first ₱600,000 advanced; further expenses reimbursed in cash.
- By May 31, 1929: Benguet spent ₱1,417,952.15; received 600,000-share certificate; excess ₱817,952.15 refunded.
- Market Development and Litigation Trigger
- Balatoc dividends and rising market value (>₱11/share) after plant success.
- Harden and two other stockholders initiated suit to annul share certificate and March 9, 1927 contract, and to recover alleged unlawful collections with interest.
- Preliminary Injunction: Restraining sale, assignment, transfer, or removal of the 600,000 shares; later dissolved on trial court decision.
Issues:
- Plaintiffs’ Standing and Available Remedy
- Whether private stockholders may maintain a civil action to enforce statutes penalizing cross-interest of mining corporations.
- Definition and Applicability of Statutory Prohibition
- Whether Benguet Company, as a Spanish-law sociedad anonima, qualifies as a “corporation” under:
- Section 75 of the Philippine Bill (Act July 1, 1902)
- Paragraph (5), Section 13, and Section 190(A) of the Corporation Law (Act No. 1459, as amended by Act No. 3518).
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)