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CORPORATE POWERS
#57: Republic of the Philippines vs. Acoje Mining Co.
G.R. No. L-18062; February 28, 1963
FACTS:
Acoje Mining requested to the Director of Posts for opening of a post, telegraph and money order offices at its mining camp at Sta. Cruz, Zambales,
to service its employees and their families that were living in said camp. The latter signified its willingness but requested that a board resolution be
passed upon regarding assumption of direct responsibility in case of pecuniary loss. The board resolution was approved and thereafter a post office
branch was opened. A postmaster was hired to conduct the operations of post office. The postmaster that was hired went on a leave but never
returned. The company immediately informed the officials of the Manila Post Office and the provincial auditor of Zambales of postmaster’s
disappearance with the result that the accounts of the postmaster were checked and a shortage was found. Several demands were made upon the
company for the payment of the shortage, having failed; the petitioner commenced the present action. The company in its answer denied liability
contending that the resolution of the board of directors wherein it assumed responsibility for the act of the postmaster is ultra vires, and in any event
its liability under said resolution is only that of a guarantor who answers only after the exhaustion of the properties of the principal, aside from the
fact that the loss claimed by the plaintiff is not supported by the office record.
ISSUE:
Is the board resolution for the approval of post office branch ultra vires?
HELD:
NO. The resolution adopted by the company to open a post office branch at the mining camp and to assume sole and direct responsibility for any
dishonest, careless or negligent act of its appointed postmaster is NOT ULTRA VIRES because the act covers a subject which concerns the benefit,
convenience, and welfare of the company’s employees and their families. While as a rule an ultra vires act is 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, there are however
certain corporate acts that may be performed outside of the scope of the powers expressly conferred if they are necessary to promote the interest or
welfare of the corporation. Even assuming arguendo that the resolution in question constitutes an ultra vires act, the same however is not void for it
was approved not in contravention of law, customs, public order or public policy. The term ultra vires should be distinguished from an illegal act for
the former is merely voidable which may be enforced by performance, ratification, or estoppel, while the latter is void and cannot be validated.
2
It
being merely voidable, an ultra vires act can be enforced or validated if there are equitable grounds for taking such action. Here it is fair that the
resolution be upheld at least on the ground of estoppel.
#58: NAPOCOR vs. VERA G.R. No. 83558 February 27, 1989
FACTS:
The instant petition arose from a complaint for prohibition and mandamus with damages filed by private respondent against NPC and Philippine
Ports Authority (PPA), wherein private respondent alleged that NPC had acted in bad faith and with grave abuse of discretion in not renewing its
Contract for Stevedoring Services for Coal-Handling Operations at NPC's plant, and in taking over its stevedoring services.
Soon after the filing of private respondent's complaint, respondent judge issued a restraining order against NPC enjoining the latter from
undertaking stevedoring services at its pier. Consequently, NPC filed an "Urgent Motion" to dissolve the restraining order, asserting, inter alia: (1)
that by virtue of Presidential Decree No. 1818, respondent judge had no jurisdiction to issue the order; and (2) that private respondent, whose contract
with NPC had expired prior to the commencement of the suit, failed to establish a cause of action for a writ of preliminary injunction.
Respondent judge issued the assailed Order denying NPC's motion and issuing a writ of preliminary injunction, after finding that NPC was
not empowered by its Charter, Republic Act No. 6395, as amended, to engage in stevedoring and arrastre services. Hence, the instant petition.
ISSUE:
Whether or not NPC was empowered by its Charter to engage in stevedoring and arrastre services?
Ruling:
Yes. Moreover, respondent judge's finding that NPC is not empowered by its Charter to undertake stevedoring services in its pier is erroneous.
To carry out the national policy of total electrification of the country, specifically the development of hydroelectric generation of power
and the production of electricity from nuclear, geothermal and other sources to meet the needs of industrial development and dispersal and the needs
of rural electrification [Secs. 1 and 2, Rep. Act No. 6395, as amended], the NPC was created and empowered not only to construct, operate and
maintain power plants, reservoirs, transmission lines, and other works, but also:
xxx xxx xxx
... To exercise such powers and do such things as may be reasonably necessary to carry out the business and purposes for which it
was organized, or which, from time to time, may be declared by the Board to be necessary, useful, incidental or auxiliary to

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accomplish said purpose, . . . [Sec. 3 (1) of Rep. Act No. 6395, as amended.]
In determining whether or not an NPC act falls within the purview of the above provision, 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 [Montelibano v.
Bacolod-Murcia Milling Co., Inc., G.R. No. L-15092, May 18, 1962, 5 SCRA 36.]
In the instant case, it is an undisputed fact that the pier located at Calaca, Batangas, which is owned by NPC, receives the various shipments of coal
which is used exclusively to fuel the Batangas Coal-Fired Thermal Power Plant of the NPC for the generation of electric power. The stevedoring
services which involve the unloading of the coal shipments into the NPC pier for its eventual conveyance to the power plant are incidental and
indispensable to the operation of the plant The Court holds that NPC is empowered under its Charter to undertake such services, it being reasonably
necessary to the operation and maintenance of the power plant.
#59: THE GOVERNMENT OF THE PHILIPPINE ISLANDS (on relation of the Attorney-General), plaintiff, vs. EL HOGAR FILIPINO,
defendant.
G.R. No. L-26649 July 13, 1927
STREET, J.:
This is a quo warranto proceeding instituted originally in this court by the Government of the Philippine Islands on the relation of the Attorney-
General against the building and loan association known as El Hogar Filipino, for the purpose of depriving it of its corporate franchise, excluding it
from all corporate rights and privileges, and effecting its final dissolution, due to alleged violations committed by said corporation.
ISSUE: WON the corporation must be dissolved on the grounds enumerated by the Government.
First cause of action: alleged illegal holding by the respondent of the title to real property for a period in excess of five years after the property had
been bought in by the respondent at one of its own foreclosure sales.
In 1920, respondent El Hogar Filipino was the holder of a recorded mortgage upon a tract of land in the San Clemente, Tarlac, as security for a loan
to its shareholders who were the owners of said property. The borrowers having defaulted in their payments, respondent foreclosed the mortgage and
purchased the land at the foreclosure sale on November 18, 1920, and the deed conveying the property to respondent was executed and delivered
December 22, 1920. Respondent sent the deed to the register of deeds of the Province of Tarlac, with the request that the certificate of title then
standing in the name of the former owners be cancelled and that a new certificate of title be issued in its name. The certificate of title to the land was
issued on May 7, 1921.
In 1921, El Hogar Filipino authorized agents to find a buyer of the said land but since they did not succeed in finding one, the land was advertised for
sale. The first offer was made by one Alcantara and the board accepted the offer in 1926. Upon Alcantara’s failure to pay, however, respondent
treated the contract with him rescinded. It was only on July 30, 1926, when the property was finally sold to Felipa Alberto.
HELD: The Attorney-General points out that the respondent acquired title on December 22, 1920, when the deed was executed and delivered, by
which the property was conveyed to it as purchaser at its foreclosure sale, and this title remained in it until July 30, 1926, when the property was
finally sold to Felipa Alberto. The interval between these two conveyances is thus more than five years.
It has been held by this court that a purchaser of land registered under the Torrens system cannot acquire the status of an innocent purchaser for value
unless his vendor is able to place in his hands an owner's duplicate showing the title of such land to be in the vendor. It results that prior to May 7,
1921, El Hogar Filipino was not really in a position to pass an indefeasible title to any purchaser. In this connection it will be noted that section 75 of
the Act of Congress of July 1, 1902, and the similar provision in section 13 of the Corporation Law, allow the corporation "five years after receiving
the title," within which to dispose of the property. A fair interpretation of these provisions would seem to indicate that the date of the receiving of the
title in this case was the date when the respondent received the owner's certificate, or May 7, 1921, for it was only after that date that the respondent
had an unequivocal and unquestionable power to pass a complete title. The failure of the respondent to receive the certificate sooner was not due in
any wise to its fault, but to unexplained delay on the part of the register of deeds. For this delay the respondent cannot be held accountable.
It is urged for the respondent that the period between March 25, 1926, and April 30, 1926, should not be counted as part of the five-year period. This
was the period during which the respondent was under obligation to sell the property to Alcantara, prior to the rescission of the contract by reason of
Alcantara's failure to make the stipulated first payment. Upon this point the contention of the respondent is, in our opinion, well founded. The
acceptance by it of Alcantara's offer obligated the respondent to Alcantara; and if it had not been for the default of Alcantara, the effective sale of the
property would have resulted.
The evident purpose behind the law restricting the rights of corporations with respect to the tenure of land was to prevent the revival of the entail
(mayorazgo) or other similar institution by which land could be fettered and its alienation hampered over long periods of time. In the case before us
the respondent corporation has in good faith disposed of the piece of property which appears to have been in its hands at the expiration of
the period fixed by law, and a fair explanation is given of its failure to dispose of it sooner. Under these circumstances the destruction of the
corporation would bring irreparable loss upon the thousands of innocent shareholders of the corporation without any corresponding benefit to the
public. The discretion permitted to this court in the application of the remedy of quo warranto forbids so radical a use of the remedy.
Second cause of action: the respondent owns and holds a business lot, with the structure thereon, in the financial district of Manila in excess of its
reasonable requirements and in contravention of subsection 5 of section 13 of the corporation Law. (Contention: that the construction of the new

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CORPORATE POWERS #57: Republic of the Philippines vs. Acoje Mining Co. G.R. No. L-18062; February 28, 1963 FACTS: Acoje Mining requested to the Director of Posts for opening of a post, telegraph and money order offices at its mining camp at Sta. Cruz, Zambales, to service its employees and their families that were living in said camp. The latter signified its willingness but requested that a board resolution be passed upon regarding assumption of direct responsibility in case of pecuniary loss. The board resolution was approved and thereafter a post office branch was opened. A postmaster was hired to conduct the operations of post office. The postmaster that was hired went on a leave but never returned. The company immediately informed the officials of the Manila Post Office and the provincial auditor of Zambales of postmaster’s disappearance with the result that the accounts of the postmaster were checked and a shortage was found. Several demands were made upon the company for the payment of the shortage, having failed; the petitioner commenced the present action. The company in its answer denied liability contending that the resolution of the board of directors wherein it assumed responsibility for the act of the postmaster is ultra vires, and in any event its liability under said resolution is only that of a guarantor who answers only after the exhaustion of the properties of the principal, aside from the fact that the loss claimed by the plaintiff is not supported ...
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