Chapter 6 - Corporate Powers Flashcards
Ultra vires act
One committed outside the object for which a corporation is created as defined by the law of its organization and therefore beyond the powers conferred upon it by law
EXC: Those necessary to promote the interest or welfare of the corporation.
Ultra vires vs. illegal
Ultra vires – Merely voidable which may be enforced by performance, ratification, or estoppel
Illegal – Void and cannot be validated
Is there an implied power to guarantee for corporations?
Theres an SCE opinion that says unless the power to guarantee is expressly stated in the articles, you cannot guarantee
Carlos v. Mindoro Sugar Co. (1932)
Being thus authorized to acquire the bonds, it was given implied power to guarantee them in order to place them upon the market under better, more advantageous conditions, and thereby secure the profit derived from their sale.
Government v. El Hogar
Corporations possess only such express powers as are actually conferred and such implied powers as are reasonably necessary to the exercise of the express powers. In this case, the corporation extended itself beyond the legitimate range of its powers when it engaged in the management and administration of the propertkies of its shareholders which was not expressly authorized by law. However, dissolution of the corporation is not in order. It was merely enjoined from the exercise of such activities.
NAPOCOR v. Vera
The Court must decide whether or not a logical and necessary relation exists between the act questioned and the corporate purpose expressed in the NPC charter.For if that act is one which is lawful in itself and not otherwise prohibited, and is done for the purpose of serving corporate ends, and reasonably contributes to the promotion of those ends in a substantial and not in a remote and fanciful sense, it may be fairly considered within the corporation’s charter powers
Madrigal & Co. v. Zamora
Profits of a corporation in the form of dividends are not beyond the reach of the corporation’s creditors, since the corporation had received them as compensation for its management services in favor of the companies it managed as a shareholder thereof.
Pirovano v. De la Rama
Shows that the corporation was given broad and almost unlimited powers to carry out the purposes for which it was organized, and the donation comes within the scope of such broad powers. Since the donation under consideration is not illegal, or contrary to any of the express provisions of the articles of incorporation, nor prejudicial to the creditors of the company, the said donation, even if ultra vires, is not void, and if voidable its infirmity has been cured by ratification and subsequent acts of the defendant corporation.
University of Mindanao v. BSP
In this case, the petitioner does not have the power to mortgage its properties in order to secure loans of other persons. As an educational institution, it is limited to developing human capital through formal instruction. It is not a corporation engaged in the business of securing loans of others.
Harden v. Benguet Consolidated Mining
The Attorney General is the exclusive officer in whom is confided the right to initiate proceedings for escheat or attack the right of a corporation to hold land.”
Stonehill v. Diokno
Consequently, petitioners herein may not validly object to the use in evidence against them of the documents, papers and things seized from the offices and premises of the corporations adverted to above, since the right to object to the admission of said papers in evidence belongs exclusively to the corporations, to whom the seized effects belong, and may not be invoked by the corporate officers in proceedings against them in their individual capacity.
Bache v. Ruiz
In organizing itself as a collective body it waives no constitutional immunities appropriate to such body. Its property cannot be taken without compensation. It can only be proceeded against by due process of law, and is protected, under the 14th Amendment, against unlawful discrimination .
Mambulao v. PNB
An artificial person cannot experience physical sufferings; mental anguish, fright, serious anxiety, wounded feelings, moral shock or social humiliation which are the basis of moral damage. A corporation may have a good reputation which, if besmirched, may also be a ground for the award of moral damages.
LBC Express v. CA
SC held that Rural Bank, as an artificial person, is not entitled to moral damages as it is incapable of feeling emotions.
ABS CBN v. CA
The power to enter into contracts, are exercised by the Board of Directors. However, the Board may delegate such powers to either an executive committee or officials or contracted managers. The delegation, except for the executive committee, must be for specific purposes. Delegation to officers makes the latter agents of the corporation. Accordingly, the general rules of agency as to the binding effects of their acts would apply. For such officers to be deemed fully clothed by the corporation to exercise a power of the Board, the latter must specially authorize them to do so.
