Professional Documents
Culture Documents
VIII. CORPORATE POWERS meeting duly called for the purpose, two-thirds (2/3) of the
outstanding capital stock shall favor the increase or diminution of
1. EXPRESS, IMPLIED, INHERENT the capital stock, or the incurring, creating or increasing of any
bonded indebtedness.
TITLE IV
POWERS OF CORPORATIONS Written notice of the proposed increase or diminution of the capital
stock or of the incurring, creating, or increasing of any bonded
Sec. 36. Corporate powers and capacity. – indebtedness and of the time and place of the stockholder's
meeting at which the proposed increase or diminution of the capital
Every corporation incorporated under this Code has the power and stock or the incurring or increasing of any bonded indebtedness is
capacity: to be considered, must be addressed to each stockholder at his
place of residence as shown on the books of the corporation and
1. To sue and be sued in its corporate name; deposited to the addressee in the post office with postage prepaid,
or served personally.
2. Of succession by its corporate name for the period of time stated
in the articles of incorporation and the certificate of incorporation;
A certificate in duplicate must be signed by a majority of the
3. To adopt and use a corporate seal; directors of the corporation and countersigned by the chairman and
the secretary of the stockholders' meeting, setting forth:
4. To amend its articles of incorporation in accordance with the
provisions of this Code; (1) That the requirements of this section have been complied with;
5. To adopt by-laws, not contrary to law, morals, or public policy, (2) The amount of the increase or diminution of the capital stock;
and to amend or repeal the same in accordance with this Code;
(3) If an increase of the capital stock, the amount of capital stock or
6. In case of stock corporations, to issue or sell stocks to subscribers number of shares of no-par stock thereof actually subscribed, the
and to sell stocks to subscribers and to sell treasury stocks in names, nationalities and residences of the persons subscribing, the
accordance with the provisions of this Code; and to admit members amount of capital stock or number of no-par stock subscribed by
to the corporation if it be a non-stock corporation; each, and the amount paid by each on his subscription in cash or
property, or the amount of capital stock or number of shares of no-
7. To purchase, receive, take or grant, hold, convey, sell, lease, par stock allotted to each stock-holder if such increase is for the
pledge, mortgage and otherwise deal with such real and personal purpose of making effective stock dividend therefor authorized;
property, including securities and bonds of other corporations, as
the transaction of the lawful business of the corporation may (4) Any bonded indebtedness to be incurred, created or increased;
reasonably and necessarily require, subject to the limitations
prescribed by law and the Constitution; (5) The actual indebtedness of the corporation on the day of the
meeting;
8. To enter into merger or consolidation with other corporations as
provided in this Code; (6) The amount of stock represented at the meeting; and
9. To make reasonable donations, including those for the public (7) The vote authorizing the increase or diminution of the capital
welfare or for hospital, charitable, cultural, scientific, civic, or similar stock, or the incurring, creating or increasing of any bonded
purposes: Provided, That no corporation, domestic or foreign, shall indebtedness.
give donations in aid of any political party or candidate or for Any increase or decrease in the capital stock or the incurring,
purposes of partisan political activity; creating or increasing of any bonded indebtedness shall require
prior approval of the Securities and Exchange Commission.
10. To establish pension, retirement, and other plans for the benefit
of its directors, trustees, officers and employees; and
One of the duplicate certificates shall be kept on file in the office of
11. To exercise such other powers as may be essential or necessary the corporation and the other shall be filed with the Securities and
to carry out its purpose or purposes as stated in the articles of Exchange Commission and attached to the original articles of
incorporation. incorporation.
Provided, That in case of extension of corporate term, any Provided, further, That no decrease of the capital stock shall be
dissenting stockholder may exercise his appraisal right under the approved by the Commission if its effect shall prejudice the rights of
conditions provided in this code. (n) corporate creditors.
Sec. 39. Power to deny pre-emptive right. – 2. To collect or compromise an indebtedness to the corporation,
arising out of unpaid subscription, in a delinquency sale, and to
All stockholders of a stock corporation shall enjoy pre-emptive right purchase delinquent shares sold during said sale; and
to subscribe to all issues or disposition of shares of any class, in
proportion to their respective shareholdings, unless such right is 3. To pay dissenting or withdrawing stockholders entitled to
denied by the articles of incorporation or an amendment thereto: payment for their shares under the provisions of this Code. (n)
Provided, That any dissenting stockholder may exercise his The board of directors of a stock corporation may declare dividends
appraisal right under the conditions provided in this Code. out of the unrestricted retained earnings which shall be payable in
cash, in property, or in stock to all stockholders on the basis of
outstanding stock held by them:
A sale or other disposition shall be deemed to cover substantially all
the corporate property and assets if thereby the corporation would Provided, That any cash dividends due on delinquent stock shall
be rendered incapable of continuing the business or accomplishing first be applied to the unpaid balance on the subscription plus costs
the purpose for which it was incorporated. and expenses, while stock dividends shall be withheld from the
delinquent stockholder until his unpaid subscription is fully paid:
After such authorization or approval by the stockholders or
members, the board of directors or trustees may, nevertheless, in Provided, further, That no stock dividend shall be issued without the
its discretion, abandon such sale, lease, exchange, mortgage, approval of stockholders representing not less than two-thirds (2/3)
pledge or other disposition of property and assets, subject to the of the outstanding capital stock at a regular or special meeting duly
rights of third parties under any contract relating thereto, without called for the purpose. (16a)
further action or approval by the stockholders or members.
Sec. 41. Power to acquire own shares. – (3) when it can be clearly shown that such retention is necessary
under special circumstances obtaining in the corporation, such as
A stock corporation shall have the power to purchase or acquire its when there is need for special reserve for probable contingencies.
own shares for a legitimate corporate purpose or purposes, (n)
including but not limited to the following cases:
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Any director who ceases to be the owner of at least one (1) share of
the capital stock of the corporation of which he is a director shall
Sec. 44. Power to enter into management contract. – thereby cease to be a director.
No corporation shall conclude a management contract with another Trustees of non-stock corporations must be members thereof.
corporation
unless such contract shall have been approved by the board of A majority of the directors or trustees of all corporations organized
directors and by stockholders owning at least the majority of the under this Code must be residents of the Philippines.
outstanding capital stock, or by at least a majority of the members
in the case of a non-stock corporation, of both the managing and
the managed corporation, at a meeting duly called for the purpose:
Sec. 27. Disqualification of directors, trustees or officers. –
Provided, That
(1) where a stockholder or stockholders representing the same No person convicted by final judgment of:
interest of both the managing and the managed corporations own or
control more than one-third (1/3) of the total outstanding capital (1) an offense punishable by imprisonment for a period exceeding
stock entitled to vote of the managing corporation; six
Or (6) years,
(2) where a majority of the members of the board of directors of or
the managing corporation also constitute a majority of the members (2) a violation of this Code committed within five (5) years prior to
of the board of directors of the managed corporation, then the the date of his election or appointment,
management contract must be approved by the stockholders of the
managed corporation owning at least two-thirds (2/3) of the total - shall qualify as a director, trustee or officer of any corporation.
outstanding capital stock entitled to vote, or by at least two-thirds
(2/3) of the members in the case of a non-stock corporation.
No management contract shall be entered into for a period longer (b) NON-STOCK Corp.
than five years for any one term.
Chapter II - TRUSTEES AND OFFICERS
The provisions of the next preceding paragraph shall apply to any Sec. 92. Election and term of trustees. –
contract whereby a corporation undertakes to manage or operate all
or substantially all of the business of another corporation, whether Unless otherwise provided in the articles of incorporation or the by-
such contracts are called service contracts, operating agreements laws,
or otherwise:
the board of trustees of non-stock corporations, which may be more
Provided, however, That such service contracts or operating than fifteen (15) in number as may be fixed in their articles of
agreements which relate to the exploration, development, incorporation or by-laws, shall, as soon as organized, so classify
exploitation or utilization of natural resources may be entered into themselves that the term of office of one-third (1/3) of their number
for such periods as may be provided by the pertinent laws or shall expire every year;
regulations. (n)
and subsequent elections of trustees comprising one-third (1/3) of
the board of trustees shall be held annually and trustees so elected
(2) ULTRA VIRES DOCTRINE shall have a term of three (3) years.
Sec. 45. Ultra vires acts of corporations. – Trustees thereafter elected to fill vacancies occurring before the
expiration of a particular term shall hold office only for the
No corporation under this Code shall possess or exercise any unexpired period.
corporate powers except :
1. those conferred by this Code or No person shall be elected as trustee unless he is a member of the
2. by its articles of incorporation and corporation.
3. except such as are necessary or incidental to the exercise
of the powers so conferred. (n)
Unless otherwise provided in the articles of incorporation or the by-
laws, officers of a non-stock corporation may be directly elected by
the members. (n)
Sec. 23. The board of directors or trustees. – 1. For a classification of shares or rights and the qualifications for
owning or holding the same and restrictions on their transfers as
Unless otherwise provided in this Code, may be stated therein, subject to the provisions of the following
section;
the corporate powers of all corporations formed under this Code
shall be exercised, all business conducted and all property of such
corporations controlled and held by the board of directors or * 2. For a classification of directors into one or more classes, each of
trustees to be elected from among the holders of stocks, whom may be voted for and elected solely by a particular class of
or where there is no stock, from among the members of the stock; and
corporation, who shall hold office for one (1) year until their
successors are elected and qualified.
3. For a greater quorum or voting requirements in meetings of
Every director must own at least one (1) share of the capital stock of stockholders or directors than those provided in this Code.
the corporation of which he is a director, which share shall stand in
his name on the books of the corporation.
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*The articles of incorporation of a close corporation may provide
that the business of the corporation shall be managed by the (d) SPECIAL CORP.
stockholders of the corporation rather than by a board of directors.
So long as this provision continues in effect: EDUCATIONAL
1. No meeting of stockholders need be called to elect directors; Sec. 108. Board of trustees. –
In the exercise of such power, the Commission shall have authority RELIGIOUS
to make such order as it deems appropriate, including an order:
Sec. 110. Corporation sole. –
(1) canceling or altering any provision contained in the articles of
incorporation, by-laws, or any stockholder's agreement; For the purpose of administering and managing, as trustee, the
affairs, property and temporalities of any religious denomination,
(2) canceling, altering or enjoining any resolution or act of the sect or church, a corporation sole may be formed by the chief
corporation or its board of directors, stockholders, or officers; archbishop, bishop, priest, minister, rabbi or other presiding elder of
such religious denomination, sect or church. (154a)
(3) directing or prohibiting any act of the corporation or its board of
directors, stockholders, officers, or other persons party to the
action;
Sec. 111. Articles of incorporation. –
(4) requiring the purchase at their fair value of shares of any
stockholder, either by the corporation regardless of the availability In order to become a corporation sole, the chief archbishop, bishop,
of unrestricted retained earnings in its books, or by the other priest, minister, rabbi or presiding elder of any religious
stockholders; denomination, sect or church must file with the Securities and
Exchange Commission articles of incorporation setting forth the
(5) appointing a provisional director; following:
(6) dissolving the corporation; or 1. That he is the chief archbishop, bishop, priest, minister, rabbi or
(7) granting such other relief as the circumstances may warrant. presiding elder of his religious denomination, sect or church and
that he desires to become a corporation sole;
A provisional director shall be an impartial person who is neither 2. That the rules, regulations and discipline of his religious
a stockholder nor a creditor of the corporation or of any subsidiary denomination, sect or church are not inconsistent with his becoming
or affiliate of the corporation, and whose further qualifications, if a corporation sole and do not forbid it;
any, may be determined by the Commission.
A provisional director is not a receiver of the corporation and does 3. That as such chief archbishop, bishop, priest, minister, rabbi or
not have the title and powers of a custodian or receiver. presiding elder, he is charged with the administration of the
temporalities and the management of the affairs, estate and
A provisional director shall have all the rights and powers of a duly properties of his religious denomination, sect or church within his
elected director of the corporation, including the right to notice of territorial jurisdiction, describing such territorial jurisdiction;
and to vote at meetings of directors, until such time as he shall be
removed by order of the Commission or by all the stockholders.
4. The manner in which any vacancy occurring in the office of chief
His compensation shall be determined by agreement between him archbishop, bishop, priest, minister, rabbi of presiding elder is
and the corporation subject to approval of the Commission, which required to be filled, according to the rules, regulations or discipline
may fix his compensation in the absence of agreement or in the of the religious denomination, sect or church to which he belongs;
event of disagreement between the provisional director and the and
corporation.
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5. The place where the principal office of the corporation sole is to or religious order, or diocese, synod, or district organization of the
be established and located, which place must be within the religious denomination, sect or church, setting forth the following:
Philippines.
1. That the religious society or religious order, or diocese, synod, or
district organization is a religious organization of a religious
The articles of incorporation may include any other provision not denomination, sect or church;
contrary to law for the regulation of the affairs of the corporation.
(n)
2. That at least two-thirds (2/3) of its membership have given their
written consent or have voted to incorporate, at a duly convened
meeting of the body;
Sec. 112. Submission of the articles of incorporation. –
The articles of incorporation must be verified, before filing, by 3. That the incorporation of the religious society or religious order,
affidavit or affirmation of the chief archbishop, bishop, priest, or diocese, synod, or district organization desiring to incorporate is
minister, rabbi or presiding elder, as the case may be, and not forbidden by competent authority or by the constitution, rules,
accompanied by a copy of the commission, certificate of election or regulations or discipline of the religious denomination, sect, or
letter of appointment of such chief archbishop, bishop, priest, church of which it forms a part;
minister, rabbi or presiding elder, duly certified to be correct by any
notary public.
4. That the religious society or religious order, or diocese, synod, or
district organization desires to incorporate for the administration of
From and after the filing with the Securities and Exchange its affairs, properties and estate;
Commission of the said articles of incorporation, verified by affidavit
or affirmation, and accompanied by the documents mentioned in
the preceding paragraph, such chief archbishop, bishop, priest, 5. The place where the principal office of the corporation is to be
minister, rabbi or presiding elder shall become a corporation sole established and located, which place must be within the Philippines;
and all temporalities, estate and properties of the religious and
denomination, sect or church theretofore administered or managed
by him as such chief archbishop, bishop, priest, minister, rabbi or
presiding elder shall be held in trust by him as a corporation sole, * 6. The names, nationalities, and residences of the trustees elected
for the use, purpose, behalf and sole benefit of his religious by the religious society or religious order, or the diocese, synod, or
denomination, sect or church, including hospitals, schools, colleges, district organization to serve for the first year or such other period
orphan asylums, parsonages and cemeteries thereof. (n) as may be prescribed by the laws of the religious society or religious
order, or of the diocese, synod, or district organization, the board of
trustees to be not less than five (5) nor more than fifteen (15).
(160a)
Sec. 113. Acquisition and alienation of property. –
Any corporation sole may purchase and hold real estate and
personal property for its church, charitable, benevolent or (e) MEETINGS
educational purposes, and may receive bequests or gifts for such
purposes. TITLE VI
MEETINGS
Such corporation may sell or mortgage real property held by it by
obtaining an order for that purpose from the Court of First Instance
of the province where the property is situated upon proof made to Sec. 49. Kinds of meetings. –
the satisfaction of the court that notice of the application for leave
to sell or mortgage has been given by publication or otherwise in Meetings of directors, trustees, stockholders, or members may be
such manner and for such time as said court may have directed, regular or special. (n)
and that it is to the interest of the corporation that leave to sell or
mortgage should be granted.
Sec. 50. Regular and special meetings of stockholders or
The application for leave to sell or mortgage must be made by members. –
petition, duly verified, by the chief archbishop, bishop, priest,
minister, rabbi or presiding elder acting as corporation sole, and Regular meetings of stockholders or members shall be held annually
may be opposed by any member of the religious denomination, sect on a date fixed in the by-laws, or if not so fixed, on any date in April
or church represented by the corporation sole: of every year as determined by the board of directors or trustees:
Provided, That in cases where the rules, regulations and discipline of Provided, That written notice of regular meetings shall be sent to all
the religious denomination, sect or church, religious society or order stockholders or members of record at least two (2) weeks prior to
concerned represented by such corporation sole regulate the the meeting,
method of acquiring, holding, selling and mortgaging real estate unless a different period is required by the by-laws.
and personal property, such rules, regulations and discipline shall Special meetings of stockholders or members shall be held at any
control, and the intervention of the courts shall not be necessary. time deemed necessary or as provided in the by-laws:
(159a)
Provided, however, That at least one (1) week written notice shall
be sent to all stockholders or members, unless otherwise provided
in the by-laws.
Sec. 116. Religious societies. –
Notice of any meeting may be waived, expressly or impliedly, by
Any religious society or religious order, or any diocese, synod, or any stockholder or member.
district organization of any religious denomination, sect or church,
unless forbidden by the constitution, rules, regulations, or discipline Whenever, for any cause, there is no person authorized to call a
of the religious denomination, sect or church of which it is a part, or meeting, the Secretaries and Exchange Commission, upon petition
by competent authority, may, upon written consent and/or by an of a stockholder or member on a showing of good cause therefor,
affirmative vote at a meeting called for the purpose of at least two- may issue an order to the petitioning stockholder or member
thirds (2/3) of its membership, incorporate for the administration of directing him to call a meeting of the corporation by giving proper
its temporalities or for the management of its affairs, properties and notice required by this Code or by the by-laws.
estate by filing with the Securities and Exchange Commission,
articles of incorporation verified by the affidavit of the presiding
elder, secretary, or clerk or other member of such religious society
6
The petitioning stockholder or member shall preside thereat until at Sec. 101. When board meeting is unnecessary or improperly
least a majority of the stockholders or members present have been held. –
chosen one of their number as presiding officer. (24, 26)
Unless the by-laws provide otherwise,
Sec. 51. Place and time of meetings of stockholders or any action by the directors of a close corporation without a meeting
members. – shall nevertheless be deemed valid if:
Stockholders' or members' meetings, whether regular or special, 1. Before or after such action is taken, written consent thereto is
shall be held in the city or municipality where the principal office of signed by all the directors; or
the corporation is located, and if practicable in the principal office of
the corporation:
2. All the stockholders have actual or implied knowledge of the
Provided, That Metro Manila shall, for purposes of this section, be action and make no prompt objection thereto in writing; or
considered a city or municipality.
3. The directors are accustomed to take informal action with the
Notice of meetings shall be in writing, and the time and place express or implied acquiescence of all the stockholders; or
thereof stated therein.
All proceedings had and any business transacted at any meeting of 4. All the directors have express or implied knowledge of the action
the stockholders or members, if within the powers or authority of in question and none of them makes prompt objection thereto in
the corporation, shall be valid even if the meeting be improperly writing.
held or called, provided all the stockholders or members of the
corporation are present or duly represented at the meeting. (24 and
25) If a director's meeting is held without proper call or notice, an action
taken therein within the corporate powers is deemed ratified by a
director who failed to attend,
unless he promptly files his written objection with the secretary of
Sec. 52. Quorum in meetings. – the corporation after having knowledge thereof.
Special meetings of the board of directors or trustees may be held In stock corporations, every stockholder entitled to vote shall have
at any time upon the call of the president or as provided in the by- the right to vote in person or by proxy the number of shares of stock
laws. standing, at the time fixed in the by-laws, in his own name on the
stock books of the corporation, or where the by-laws are silent, at
the time of the election;
Meetings of directors or trustees of corporations may be held and said stockholder may vote such number of shares for as many
anywhere in or outside of the Philippines, persons as there are directors to be elected or he may cumulate
unless the by-laws provide otherwise. said shares and give one candidate as many votes as the number of
directors to be elected multiplied by the number of his shares shall
Notice of regular or special meetings stating the date, time and equal, or he may distribute them on the same principle among as
place of the meeting must be sent to every director or trustee many candidates as he shall see fit:
at least one (1) day prior to the scheduled meeting,
unless otherwise provided by the by-laws. Provided, That the total number of votes cast by him shall not
exceed the number of shares owned by him as shown in the books
A director or trustee may waive this requirement, either expressly of the corporation multiplied by the whole number of directors to be
or impliedly. (n) elected:
CLOSE CORP. Any meeting of the stockholders or members called for an election
may adjourn from day to day or from time to time but not sine die
Sec. 97. Articles of incorporation. – or indefinitely if, for any reason, no election is held,
or if there not present or represented by proxy, at the meeting, the
The articles of incorporation of a close corporation may provide: owners of a majority of the outstanding capital stock, or if there be
XXX no capital stock, a majority of the member entitled to vote.
3. For a greater quorum or voting requirements in meetings of
stockholders or directors than those provided in this Code.
Sec. 26. Report of election of directors, trustees and
officers. –
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Within thirty (30) days after the election of the directors, trustees
and officers of the corporation, the secretary, or any other officer of A directorship or trusteeship to be filled by reason of an increase in
the corporation, shall submit to the Securities and Exchange the number of directors or trustees shall be filled only by an election
Commission, the names, nationalities and residences of the at a regular or at a special meeting of stockholders or members duly
directors, trustees, and officers elected. called for the purpose, or in the same meeting authorizing the
increase of directors or trustees if so stated in the notice of the
Should a director, trustee or officer die, resign or in any manner meeting.
cease to hold office, his heirs in case of his death, the secretary, or
any other officer of the corporation, or the director, trustee or officer
himself, shall immediately report such fact to the Securities and
Exchange Commission.
A special meeting of the stockholders or members of a corporation 3. attachment does not constitute an absolute conveyance of prop.,
for the purpose of removal of directors or trustees, or any of them, but is primarily used as means ‘to seize the debtor’s prop. in order
must be called by the secretary on order of the president or on the to secure the debt or claim of the creditor in teh event that a
written demand of the stockholders representing or holding at least judgment is rendered.
a majority of the outstanding capital stock, or, if it be a non-stock
corporation, on the written demand of a majority of the members 4. a purchaser of attached prop. acquires it subj. to an attachment
entitled to vote. legally and validly levied upon.
Should the secretary fail or refuse to call the special meeting upon
such demand or fail or refuse to give the notice, or if there is no
secretary, the call for the meeting may be addressed directly to the
stockholders or members by any stockholder or member of the VIII. CORPORATE POWERS
corporation signing the demand.
(1) REPUBLIC vs. ACOJE MINING CO. INC. – 27 Feb. 1963
Notice of the time and place of such meeting, as well as of the
intention to propose such removal, must be given by publication or Facts: ACOJE wrote the Dir. Of Posts requesting the opening of a
by written notice prescribed in this Code. Removal may be with or post, telegraph, and money order offices at its mining camp at Sta.
without cause: Cruz, Zambales to service its ees adn their families that were living
in said camp. The post office branch was opened w/ one Hilario
Provided, That removal without cause may not be used to deprive Sanchez as postmaster – an ee of the co. Sanchez went on 3-day
minority stockholders or members of the right of representation to leave but never returned. Co. Immediately informed the officials of
which they may be entitled under Section 24 of this Code. the manila post office adn prov. Auditor of Sanchez’s disappearance
w/ the results that teh accounts of the postmaster were checked
and a shortage was found. Several demands made upon the co. for
the payment of the shortage.
VACANCY The Co. Denied liability contending that the resolution of the BOD
where it assumed responsibiity for the act of postmaster is UV, and
Sec. 29. Vacancies in the office of director or trustee. – in any event its liability under said resolution is only that of a
guarantor who answers only after the exhaustion of the properties
Any vacancy occurring in the board of directors or trustees other of the principal.
than by removal by the stockholders or members or by expiration of
term, may be filled by the vote of at least a majority of the Issue:
remaining directors or trustees, if still constituting a quorum;
otherwise, said vacancies must be filled by the stockholders in a Ruling:
regular or special meeting called for that purpose.
1. ULTRA VIRES Act – one committed OUTSIDE the object for w/c a
corp. is created as defined by law of its org. and therefore beyond
A director or trustee so elected to fill a vacancy shall be elected only the powers conferred upon it by law.
or the unexpired term of his predecessor in office.
8
However, there are certain powers that may be performed outside in any other manner any person in the affairs and prosperity of
the scope of the powers expressly conferred whom it has a lawful interest,
-> if they are necessary to promote teh interest or welfare of the -> a donation made to the heirs of its late pres. in recognition of the
corp, valuable services rendered by the latter w/c had immensely
contributed to its growth, comes WITHIN this broad grant of power
- such as the establishment, in the instant case, of a local post office and cannot be considered an UV act.
in a mining camp w/c is far removed from the postal facilties or
means of communications accorded to people living in a city or
municipality. 2. UV vs. ILLEGAL ACTS
2. ULTRA VIRES vs. ILLEGAL ACT; enforcement of UV act on the Illegal acts of a corp. – contemplate the doing of an act w/c is
ground of estoppel. contrary to law, morals, or public order, or contravene some rules of
public policy or public duty, and are, like similar transactions b/n
Illegal act – is void and cannot be validated. individuals, VOID!
- they cannot serve as a basis of a court action, nor acquire validity
UV act - is merely voidable and can be enforced by performance, by performance, ratification, or estoppel.
ratification, or estoppel, or on equitable grounds.
UV Acts – those w/c are not illegal and void ab initio, but are merely
In the instant case, the validity of the resolution of the BOD of the within the scope of AOI, are merely VOIDABLE and may become
corp. accepting full responsibility in connection w/ funds to be binding and enforceable when ratified by the SHs.
received by its postmaster – should be upheld on the ground of
ESTOPPEL. 3. Ratification by SHs of UV acts cures infirmity and makes it
perfectly valid and enforceable, specially so if:
3. Assumption of responsibility in the instant case is that of principal a. its not merely executory but executed and consummated and
and not of guarantor. – it is clear from the RESOLUTION that is BOD b. no creditors are prejudiced thereby.
in w/c the corp. assumed ‘full responsiblity for all cash received by
the Postmaster.”
(5) HARDEN vs. BENGUET CONSOLIDATED MINING Co.
– 18 March 1933
(2) NPC vs. VERA – 27 Feb. 1989
Facts: mining corp. prohibition against owning interest in other
Facts: the pier located at Calaca, Bats. w/c is owned by NPC mining corp.
receives the various shipments of coal w/c is used exclusively to fuel
the Bats. Coal-Fired Thermal Power Plant of the NPC for the Ruling:
generation of electric power. 1. corp. law contains ins Sec. 190 provisions fully penalizing the
The stevedoring services w/c involve the unloading of the coal violation of subsec. 5 of sec. 13 act no. 1459 – w/c prohibits the
shipments into the NPC pier for its eventual conveyance to the acquisition by one mining corp. of any interest in another – and
powerplants are incidental and indispensahle to the operation of the inasmuch as these provisions have been enacted in the exercise of
plant. the general police powers of givt., it results that, where one mining
corp. acquires. a prohibited interest in another such corp., - the SHs
Issue: of the latter cannot maintain an action to annul the contract by w/c
such interest was acquired.
Ruling: court holds that NPC is empowered under its Charter to Remedy must be sought in a crim proceeding or quo warranto
undertake such services, it being reasonably necessary to the actio, under sec. 190 (a) instituted by the govt.
operation and maintenance of the powerplant. Until thus assailed in a direct proceeding, the contract by w/c the
interest was acquired will be treated as valid, as between the
1. a corp. is NOT restriced to exercise only those powers expressly parties.
confered upon it by its charter,
- it may also exercise those powers w/c are reasonably necessary or
proper to promite its interest and welfare.
(6) BISSEL vs. MICHIGAN SOUTHERN
(3) GOVT. OF PHIL. vs. EL HOGAR FILIPINO – 13 July 1927 Facts: 2 corps def. Were jointly engaged in the business of carrying
passengers freigh between Chicago and Lake Erie, through a part of
Facts: leasing of excess office space to public the state of Illinois, and through the states of Indiana and Michigan,
by 3 connected railroads w/c they owned or controlled, and the
The circumstance that the bldg. so erected by the assoc. Has office business of w/c was managed under a consolidated agreement w/c
accomodations in excess of its own needs and that such offices are had been in force between the def. For some time previous to the
rented to the public by the assoc. for its benefit and profit does not injury complained of;
make the ownership and holding of such office bldg. – an UV act. That being so engaged, they undertook and assume to carry
plaitinff, as passenger from Chicago eastward over the consolidated
Having acquired the prop. under lawful authority, the corp. is line of road;
entitled to the full beneficial use thereof. That he took his seat in their cars accordingly, and that during the
transit he was injured by an accident, w/c happened through their
carelessness and neglect.
Ruling:
Issue: can then the 2 railroad corp., having connecting lines thus
unite their business, for the purpose of promoting their common
(4) PIROVANO vs. DE LA RAMA STEAMSHIP CO. – 29 Dec. 1954 interest; charter another connecting road in furtherance of the same
policy’ hold themselves out to the public as carriers over the whole
Facts: rout; enter into contracts accordingly; receive the benefits of those
Donation made by the def. Corp. in favor of minor children of the contracts; and when liabiity arises, interpose the VIOLATION OF
late Pirovano of the proceeds of the insurance policies taken on his THEIR OWN CHARTERS to shield them from responsibility?
life.
Ruling:
Ruling:
Where the corp. was given broad and almost unlimited powers to
carry out the purposes for w/c its was organized among them, to aid
9 | AR 3B | BusOrg2
Facts: Issue:
Orientalist co. – corp. enaged in the business of maintaining and
conducting a theater in the city of manila for the exhbition of Ruling:
cinematographic films.
1. there are 3 levels of control in corp. :
Under AOI – teh co. Is authorized to manufacture, buy, or otherwise (1) the Board of Directors
obtain all accessories necessrary for conducting such a business. – w/c is responsible for corporate policies and the general
management of the business affairs of the corp;
JF Ramirez – resident of Paris, Frances, and was enaged in the
business of marketing films for manufacturer/s, there engaged in (2) the Officers
the production or distribution of cinematographic matl. - who in the theory execute the policies laid down by the
board, but in practice often have wide lattitude in
determining the course of business operations; and
Issue:
(3) the Stockholders
Ruling: - who have the residual power over fundamentl corporate
1. the power to make corporate contracts resides primarily in the changes, like amendments of AOI.
company’s BOD; but the board may ratify an unauthorized contract
made by an officer of the corp. However, just as natural person may authorize another to do certain
acts in his behalf, so may the BOD of a corp. validly delegate some
Ratification in this case is held to have occured when the board, w/ of its functions to individual officers or agents appointed by it.
knowledge that the contract had been made, adopted a resolution
recognizing the existence of the contract and directing that steps be 2. an express power in the by-laws may be further delegated.
taken to enable the corp. to utilize its benefits. - SPA constitutes a valid delegation of Freguson’s express power to
represent pet. Bank in the pre-trial conference in the lower court.
(2) EXPERTRAVEL & TOURS, INC. VS. CA and KOREAN AIRLINES 3. sec. 46 of Corp Code that no by-laws is valid w/o SEC approval
– 26 May 2005 applies only to DOMESTIC CORP.
Facts: