Benguet Consolidated Mining Company vs Pineda

Benguet Consolidated Mining Company was organized in 1903 under the Spanish Code of Commerce
of 1886 as a sociedad anonima. It was agreed by the incorporators that Benguet Mining was to exist
for 50 years.

In 1906, Act 1459 (Corporation Law) was enacted which superseded the Code of Commerce of 1886.
Act 1459 essentially introduced the American concept of a corporation. The purpose of the law, among
others, is to eradicate the Spanish Code and make sociedades anonimas obsolete.

In 1953, the board of directors of Benguet Mining submitted to the Securities and Exchange
Commission an application for them to be allowed to extend the life span of Benguet Mining. Then
Commissioner Mariano Pineda denied the application as it ruled that the extension requested is contrary
to Section 18 of the Corporation Law of 1906 which provides that the life of a corporation shall not be
extended by amendment beyond the time fixed in their original articles.

Benguet Mining contends that they have a vested right under the Code of Commerce of 1886 because
they were organized under said law; that under said law, Benguet Mining is allowed to extend its life
by simply amending its articles of incorporation; that the prohibition in Section 18 of the Corporation
Code of 1906 does not apply to sociedades anonimas already existing prior to the Law’s enactment;
that even assuming that the prohibition applies to Benguet Mining, it should be allowed to be
reorganized as a corporation under the said Corporation Law.

ISSUE: Whether or not Benguet Mining is correct.

HELD: No. Benguet Mining has no vested right to extend its life. It is a well settled rule that no person
has a vested interest in any rule of law entitling him to insist that it shall remain unchanged for his
benefit. Had Benguet Mining agreed to extend its life prior to the passage of the Corporation Code of
1906 such right would have vested. But when the law was passed in 1906, Benguet Mining was already
deprived of such right.

To allow Benguet Mining to extend its life will be inimical to the purpose of the law which sought to
render obsolete sociedades anonimas. If this is allowed, Benguet Mining will unfairly do something
which new corporations organized under the new Corporation Law can’t do – that is, exist beyond 50
years. Plus, it would have reaped the benefits of being a sociedad anonima and later on of being a
corporation. Further, under the Corporation Code of 1906, existing sociedades anonimas during the
enactment of the law must choose whether to continue as such or be organized as a corporation under
the new law. Once a sociedad anonima chooses one of these, it is already proscribed from choosing the
other. Evidently, Benguet Mining chose to exist as a sociedad anonima hence it can no longer elect to
become a corporation when its life is near its end.

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TAYAG VS BENGUET CONSOLIDATED INC
In March 1960, Idonah Perkins died in New York. She left behind properties here and abroad. One
property she left behind were two stock certificates covering 33,002 shares of stocks of the Benguet
Consolidated, Inc (BCI). Said stock certificates were in the possession of the Country Trust Company
of New York (CTC-NY). CTC-NY was the domiciliary administrator of the estate of Perkins (obviously
in the USA). Meanwhile, in 1963, Renato Tayag was appointed as the ancillary administrator (of the
properties of Perkins she left behind in the Philippines).

A dispute arose between CTC-NY and Tayag as to who between them is entitled to possess the stock
certificates. A case ensued and eventually, the trial court ordered CTC-NY to turn over the stock
certificates to Tayag. CTC-NY refused. Tayag then filed with the court a petition to have said stock
certificates be declared lost and to compel BCI to issue new stock certificates in replacement thereof.
The trial court granted Tayag’s petition.

BCI assailed said order as it averred that it cannot possibly issue new stock certificates because the two
stock certificates declared lost are not actually lost; that the trial court as well Tayag acknowledged that
the stock certificates exists and that they are with CTC-NY; that according to BCI’s by laws, it can only
issue new stock certificates, in lieu of lost, stolen, or destroyed certificates of stocks, only after court of
law has issued a final and executory order as to who really owns a certificate of stock.

ISSUE: Whether or not the arguments of Benguet Consolidated, Inc. are correct.

HELD: No. Benguet Consolidated is a corporation who owes its existence to Philippine laws. It has
been given rights and privileges under the law. Corollary, it also has obligations under the law and one
of those is to follow valid legal court orders. It is not immune from judicial control because it is
domiciled here in the Philippines. BCI is a Philippine corporation owing full allegiance and subject to
the unrestricted jurisdiction of local courts. Its shares of stock cannot therefore be considered in any
wise as immune from lawful court orders. Further, to allow BCI’s opposition is to render the court order
against CTC-NY a mere scrap of paper. It will leave Tayag without any remedy simply because CTC-
NY, a foreign entity refuses to comply with a valid court order. The final recourse then is for our local
courts to create a legal fiction such that the stock certificates in issue be declared lost even though in
reality they exist in the hands of CTC-NY. This is valid. As held time and again, fictions which the law
may rely upon in the pursuit of legitimate ends have played an important part in its development.

Further still, the argument invoked by BCI that it can only issue new stock certificates in accordance
with its bylaws is misplaced. It is worth noting that CTC-NY did not appeal the order of the court – it
simply refused to turn over the stock certificates hence ownership can be said to have been settled in
favor of estate of Perkins here. Also, assuming that there really is a conflict between BCI’s bylaws and
the court order, what should prevail is the lawful court order. It would be highly irregular if court orders
would yield to the bylaws of a corporation. Again, a corporation is not immune from judicial orders.

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PHILIPPINE STOCK EXCHANGE VS CA

Puerto Azul Land, Inc. (PALI) is a corporation engaged in the real estate business. PALI was granted
permission by the Securities and Exchange Commission (SEC) to sell its shares to the public in order
for PALI to develop its properties.

PALI then asked the Philippine Stock Exchange (PSE) to list PALI’s stocks/shares to facilitate
exchange. The PSE Board of Governors denied PALI’s application on the ground that there were
multiple claims on the assets of PALI. Apparently, the Marcoses, Rebecco Panlilio (trustee of the
Marcoses), and some other corporations were claiming assets if not ownership over PALI.

PALI then wrote a letter to the SEC asking the latter to review PSE’s decision. The SEC reversed PSE’s
decisions and ordered the latter to cause the listing of PALI shares in the Exchange.

ISSUE: Whether or not it is within the power of the SEC to reverse actions done by the PSE.

HELD: Yes. The SEC has both jurisdiction and authority to look into the decision of PSE pursuant to
the Revised Securities Act and for the purpose of ensuring fair administration of the exchange. PSE, as
a corporation itself and as a stock exchange is subject to SEC’s jurisdiction, regulation, and control. In
order to insure fair dealing of securities and a fair administration of exchanges in the PSE, the SEC has
the authority to look into the rulings issued by the PSE. The SEC is the entity with the primary say as
to whether or not securities, including shares of stock of a corporation, may be traded or not in the stock
exchange.

HOWEVER, in the case at bar, the Supreme Court emphasized that the SEC may only reverse decisions
issued by the PSE if such are tainted with bad faith. In this case, there was no showing that PSE acted
with bad faith when it denied the application of PALI. Based on the multiple adverse claims against the
assets of PALI, PSE deemed that granting PALI’s application will only be contrary to the best interest
of the general public. It was reasonable for the PSE to exercise its judgment in the manner it deems
appropriate for its business identity, as long as no rights are trampled upon, and public welfare is
safeguarded.

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