Adaptación del inyector y el reservorio

1. Resolution of the BOD;

2. Approval by the stockholders representing a majority of the outstanding capital stock or majority of the members of both the managing and the managed corporation;

3. The approval of the stockholders or members must be made at the meeting called for that purpose; and

4. The contract shall not be for a period longer than 5 years for any one term, except those which relate to exploration, development or utilization of natural resources which may be entered into for such periods as may be provided by pertinent laws and regulations;

5. 2/3 of the stockholders or members would be required, where:

a. The stockholders representing the same interest of both the managing and the managed corporation own or control more than 1/3 of the total outstanding capital stock of the managing corporation;

b. A majority f the members of the BOD of the managing corporation also constitute a majority of the directors of the managed corporation;

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THE CORPORATION CODE OF THE PHILIPPINES (Batas Pambansa Bilang 68, as amended) based on the book of Atty Ruben C. Ladia c. The contract would constitute the management or operation of all

or substantially all of the business of another corporation, whether such contracts are called service contracts. If it will not constitute the management of all or substantially all of the business of another corporation, the first paragraph of Sec. 44 will apply and not that of the second, that is, only the vote of the majority is required.

R. ULTRA VIRES ACTS

Sec. 45. Ultra vires acts of corporations. - No corporation under this Code shall possess or exercise any corporate powers except those conferred by this Code or by its articles of incorporation and except such as are necessary or incidental to the exercise of the powers so conferred.

ULTRA VIRES ACTS are those which cannot be executed or performed by a corporation because they are not within its express, inherent, or implied powers as defined by its charter or AOI. Accordingly, it may be subject to a collateral attack questioning the authority of the corporation to engage in such particular endeavor.

CONSEQUENCES:

1. On the Corporation itself: The proper forum may suspend or revoke, after proper notice and hearing, the franchise or certificate of registration of the corporation for serious misrepresentation as to what the corporation can do or is doing to the great damage or prejudice of the general public.

2. On the rights of the Stockholders: A stockholder may bring either an individual or derivative suit to enjoin a threatened ultra-vires act or contract. If already performed, a derivative suit against the directors may be filed, but their liability will depend on whether they acted in good faith and with reasonable diligence in entering into the contract.

3. On the immediate parties:

a. If the contract is fully executed in both sides, the contract is effective and the courts will not interfere to deprive either party of what has been acquired under it;

b. If the contract is executory on both sides,, as a rule, neither party can maintain an action for its non-performance; and

c. Where the contract is executory on one side only, and has been fully performed on the other, the courts differ as to whether an action will lie on the contract against the party who has received benefits of performance under it. Majority of the courts, however, hold that the party who has received benefits from the performance is ―estopped‖ to set up that the contract is ultra vires to defeat an action on the contract.

READ AGAIN: Government vs. EL Hogar and Republic vs. Acoje Mining (both in this chapter)

PRIVANO, ET AL. VS. DE LA RAMA STEAMSHIP CO. (96 Phil. 335; Dec.

29, 1954) - The Board of directors of defendant company adopted a resolution wherein the proceeds of the insurance taken on the life of its previous President and General Manager Enrico Privano be set aside and used to purchase 4,000 shares to be given to Privano’s heirs, which was approved by the stockholders in a meeting duly called for the purpose.

The donation of the shares was later on modified to transfer all the proceeds directly to the heirs which would become a loan of the company with 5%

interest per annum and payable after the settlement of its bonded indebtedness, and still later, modified to be payable ―whenever the company is in a position to meet said obligation‖.

On an opinion by the SEC, sought by the President of the corporation, Sergio Osmena, Jr., it was opined by the SEC that the donation was void for being ultra vires. The Board planned to adopt a different resolution to effect the donation but failed to act on it. The heirs, through Mrs. Estefania R. Privano, acting as guardian, demanded the settlement of the obligation.

ISSUE: WON the donation was an ultra vires act?

HELD: No. After a careful perusal of the AOI, we find that the corporation was given broad and almost unlimited powers to carry out the purposes for

which it was organized among them, (1) ―to invest and deal with the money of the company not immediately required, in such manner as fro time to time may be determined‖ and (2) ―to aid in any manner any person association, or corporation or in the affairs of the property of which this corporation has lawful interest‖. The donation in question undoubtedly comes within the scope of this broad power for it is a fact appearing in the evidence that the insurance proceeds were not immediately required when they were given away.

We don‘t see much distinction between the acts of generosity of the benevolence extended to some employees of the corporation, and even to some in whom the corporation was merely interested because of certain moral or political consideration, and the donations which the corporation has seen fit to give the children of the late Enrico Privano from the point of view of the power of the corporation as expressed in the AOI. And if the former had been sanctioned and had been valid and intra-vires, we see no plausible reaons why the latter should now be deemed ultra-vires. It may perhaps be argued that the donation given to the children of the late Enrico Privano is so large and disproportionate that it can hardly be considered a pension or gratuity that can be placed ona par with the instances above-mentioned, but this argument overlooks one consideration: the gratuity here given was not merely motivated by pure liberality or act of generosity, but by a deep sense of recognition of the valuable services rendered by the late Enrico Privano which had immensely contributed to the growth of the corporation to the extent that from its humble capitalization it blossomed into a multi-million corporation that it is today.

Granting that it was ultra-vires, it may be said that the same cannot be invalidated, or declared legally ineffective for that reason alone, it appearing that the donation represents not only the act of the BOD but of the stockholders themselves as shown by the fact the same has been expressly ratified in a resolution duly approved by the latter. By this ratification, the infirmity of the corporate act, if any has been obliterated thereby making the act perfectly valid and enforceable. This is specially so if the donation is not merely executory but executed and consummated and no creditors are prejudiced, or if there are creditors affected, the latter has expressly given their conformity.

ISSUE2: What is the difference between an illegal act and that which is ultra-vires?

HELD: The former contemplates the doing of an act which is contrary to law, morals, or public order or contravene some rules of public policy or public duty, and are, like similar transactions between the individuals, void. They cannot serve as basis of a court action, nor acquire validity by performance, ratification or estoppel. Mere ultra-vires acts, on the other hand, or those which are not illegal and void ab initio, but are merely beyond the scope of the AOI, are merely voidable and may become binding and enforceable when ratified by the stockholders.

Since it is not contended that the donation under consideration is illegal, or contrary to any of the express provisions of the AOI, nor prejudicial to the creditors of the defendant corporation, we cannot but logically conclude that said donation, even if ultra vires in the supposition we have adverted to, is not void, and if voidable its infirmity has been cured by ratification and subsequent acts of the defendant corporation.

The corporation is now prevented or estopped from contesting the validity of the donation.

IRINEO CARLOS, plaintiff-appellant VS. MINDORO SUGAR CO., ET AL., defendant-appellees (57 Phil. 343; Oct. 26, 1932) - Mindoro Sugar Company (MSC) transferred all of its property to Philippine Trust Company (PTC) in consideration of the bonds it had issued to the value of P3,000,000, each bond being $1,000, which par value, with interest at 8% per annum, PTC guaranteed to the holders.

PTC paid Ramon Diaz upon presentation of the coupons, the stipulated interest from the date of maturity until July 1, 1928, when its stopped payments, alleging that it did not deem itself bound to pay such interest or to redeem the obligation because the guarantee given for the bonds was illegal and void.

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THE CORPORATION CODE OF THE PHILIPPINES (Batas Pambansa Bilang 68, as amended) based on the book of Atty Ruben C. Ladia The CFI of Manila absolved the defendants from the complaint except MSC

which was sentenced to pay the value of the bond.

ISSUE: WON PTC’s act was ultra-vires?

HELD: No. Firstly, PTC although secondarily engaged in banking, was primarily organized as a trust corporation with full power to acquire personal property such as the bonds in question according to both sec. 13 (par. 5) of the Corporation Law and its duly registered by-laws and AOI; Secondly, that being thus authoriezd 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.

―It is not, however, ultra vires for a corporation to enter into contracts of guaranty where it does so in the legitimate furtherance of its purposes and business. And it is well settled that where a corporation acquires commercial papers or bonds in the legitimate transaction of its business it may sell them, and in furtherance of such a sale, it may in order to make them more readily marketable, indorse or guarantee their payment.‖

Even if PTC did not acquire the bonds in question, but only guaranteed them, it would at any rate, be valid and the said corporation is bound to pay the appellant their value with the accrued interest in view of the fact that they become due on account of the lapse of 60 days, without the accrued interest due having been paid; and the reason is that it is estopped from denying the validity of its guarantee.

The doctrine of ultra vires as a defense, is by some courts regarded as an ungracious and odious one, to be sustained only where the most persuasive consideration of public policy are involved, and there are numerous decisions and dicta to the effect that the plea should not as a general rule prevail whether interposed for or against the corporation, where it will not advance justice but on the contrary will accomplish a legal wrong.

When a contract is not on its face necessarily beyond the scope of the power of the corporation by which it was made, it will, in the absence of proof to the contrary, be presumed to be valid. Corporations are presumed to contract within their powers. The doctrine of untra vires, when invoked for or against a corporation, should not be allowed to prevail where it would defeat the ends of justice or work a legal wrong.

JAPANESE WAR NOTES CLAIMANTS ASSOC., INC. VS. SEC (101 Phil 540; May 23, 1957) - The SEC issued an order requiring petitioner herein and its President Alfredo Abcede to show cause why it should not be proceeded against for making misrepresentations to the public about the need of registering and depositing war notes, with a view of probable redemption as contemplated in Senate Bill No. 163 and in Senate Concurrent Resolution No.

14, for otherwise they would be valueless.

Petitioner contended that the statement was made in good faith as President Magsaysay would soon make representations to the US to have the war notes redeemed.

Respondent SEC found that according to its AOI, the petitioner has the privilege to work for the redemption of the war notes of its members alone, but that it cannot offer its services to the public for a valuable consideration, because there is nothing definite and tangible about the redemption of the war notes and its success is speculative that any authority given to offer services can easily degenerate into a racket; that under its AOI the petitioner is a civic and non-stock corporation and upon should not engage in business for profit; that it has received war notes for deposit, upon payment of fees, without authority in its articles to do so; that it had previously been rendered to desist from collecting from those registering the war notes, but notwithstanding this prohibition it has done so in the guise of service fees.

Hence the Commission ordered to stop receiving war notes, receiving same for deposit and chargin fees therefore.

ISSUE: WON the SEC erred in issuing the questioned order?

HELD: No. The articles authorize collection of fees from members; but they do not authorize the corporation to engage in the business of registering and accepting war notes for deposit and collecting fees from such services. This was the ruling of the Commission and this we find to be correct.

Neither do we find any merit in the third contention that the association has authority to accept and collect fees for reparation claims for civilian casualties and other injuries. This is beyond any of the powers of the association as embodied in its articles and have absolutely no relation to the avowed purpose of the association to work for the redemption of war notes.

ERNESTINA CRISOLOGO-JOSE VS. CA (GR No. 80599; Sept. 15, 1989) - The Vice-president of Mover Enterprises, Inc. issued a check drawn against Traders Royal Bank, payable to petitioner Ernestina Crisologo-Jose, for the accommodation of his client. Petitioner-payee was charged with the knowledge that the check was issued at the instance and for the personal account of the President who merely prevailed upon respondent vice-president to act as co-signatory in accordance with the arrangement of the corporation with its depository bank. While it was the corporation's check which was issued to petitioner for the amount involved, petitioner actually had no transaction directly with said corporation.

ISSUE: WON private respondent, one of the signatories of the check issued under the account of Mover Enterprises, Inc., is an accommodation party under NIL and a debtor of petitioner to the extent of the amount of said check?

HELD: Yes. The liability of an accommodation party to a holder for value, although such holder does not include nor apply to corporations which are accommodation parties. This is because the issue or indorsement of negotiable paper by a corporation without consideration and for the accommodation of another is ultra vires. One who has taken the instrument with knowledge of the accommodation nature thereof cannot recover against a corporation where it is only an accommodation party. By way of exception, an officer or agent of a corporation shall have the power to execute or indorse a negotiable paper in the name of the corporation for the accommodation of a third person only if specifically authorized to do so.

Corollarily, corporate officers, such as the president and vice-president, have no power to execute for mere accommodation a negotiable instrument of the corporation for their individual debts or transactions arising from or in relation to matters in which the corporation has no legitimate concern. Since such accommodation paper cannot thus be enforced against the corporation, especially since it is not involved in any aspect of the corporate business or operations, the signatories thereof (president and vice-president) shall be personally liable therefor, as well as the consequences arising from their acts in connection therewith.

CHAPTER 8: BY-LAWS

BY-LAWS are rules and ordinances made by a corporation for its own government; to regulate the conduct and define the duties of the stockholders or members towards the corporation and among themselves.

They are the rules and regulations or private laws enacted by the corporation to regulate, govern and control its own actions, affairs and concerns and tis stockholder or members and directors and officers with relation thereto and among themselves in their relation to it.

Sec. 46. Adoption of by-laws. - Every corporation formed under this Code must, within one (1) month after receipt of official notice of the issuance of its certificate of incorporation by the Securities and Exchange Commission, adopt a code of by-laws for its government not inconsistent with this Code. For the adoption of by-laws by the corporation the affirmative vote of the stockholders representing at least a majority of the outstanding capital stock, or of at least a majority of the members in case of non-stock corporations, shall be necessary. The by-laws shall be signed by the stockholders or members voting for them and shall be kept in the principal office of the corporation, subject to the inspection of the stockholders or members during office hours. A copy thereof, duly certified to by a majority of the directors or trustees countersigned by the secretary of the corporation, shall be filed with the Securities and Exchange Commission which shall be attached to the original articles of incorporation.

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THE CORPORATION CODE OF THE PHILIPPINES (Batas Pambansa Bilang 68, as amended) based on the book of Atty Ruben C. Ladia Notwithstanding the provisions of the preceding paragraph, by-laws may be

adopted and filed prior to incorporation; in such case, such by-laws shall be approved and signed by all the incorporators and submitted to the Securities and Exchange Commission, together with the articles of incorporation.

In all cases, by-laws shall be effective only upon the issuance by the Securities and Exchange Commission of a certification that the by-laws are not inconsistent with this Code.

The Securities and Exchange Commission shall not accept for filing the

The Securities and Exchange Commission shall not accept for filing the