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Corpo Digest 8
Corpo Digest 8
Esteban dela Rama = owned and controlled the stocks of the corporation
= distributed his shareholdings among his five
daughters
Dela rama steamship = has a bonded indebtedness for the debt to the
National Development Corp
The bonded indebtedness was = converted to non-voting preferred shares of
the company
*** therefore had the right to be represented by four out of nine
members in the Board of Directors
BOD = adopted the a resolution as Special Payment to Minor Heirs of the
late Enrico Pirovano
= the Company had insured the life of Mr. Pirovano for a 1M
= set aside P400,000 to the Pirovano children with the sum convertible
into shares of stock.
= Leonor de la Rama and Lourdes de la Rama motioned and approved
the resolution
Submitted to the stockholders at a meeting properly convened was duly
approved
Lourdes de la Rama = learned that the voting strength of the De la Rama
daughters would be adversely affected
= ask for the cancellation and waiver of her preemptive rights
Don Esteban = advised the corporate secretary that the resolution be
nullified
BOD = adopted a new resolution changed the donation to merely a
renunciation of all the company's "right, title, and interest as
beneficiary in and to the proceeds of the abovementioned life insurance
policies"
Estefania (as guardian of the children) = accepted the donation in their
behalf
Husband of Lourdes de la Rama = questioned the donation w/ the SEC
SEC = said the donation was void = Grounds:
The corporation could not dispose of its assets by gifts
acted beyond the scope of its powers
Therefore Stockholders revoked the donation on this ground
Estefania their mother NOW seeks to enforce these resolutions
The company contends that:
the resolution and the contract executed pursuant thereto are ultra
vires
if valid, the obligation to pay the amount given is not yet due and
demandable
Issue:
WON the said Board of Directors resolution was an ultra vires act?
Held: NO
corporation was given broad and unlimited powers to carry out the
purpose for which it was organized
Including the power to = (1) invest and deal with corporate money not
immediately required
(2) aid in any other manner to any
person, association or corporation of
which any obligation is held by this
corporation
The donation undoubtedly comes within the scope of this
broad power
An ultra vires act in this case is merely voidable and may become
binding and enforceable when ratified by stockholders
within the scope of the Articles of Incorporation and not illegal nor
prejudicial to the creditors of the corporation
infirmity MAY BE cured by ratification and subsequent acts of the
corporation
The donation has already been perfected such that the corporation
could no longer rescind it.
embodied in a Board Resolution
Stockholders and even its creditors as the NDC have given their
concurrence.
Estefania accepted the donation = RECORDED in corporation
Board of Directors approved Estefanias purchase of the house in New
York
While the case was pending RFC also instituted foreclosure proceedings
Sold at public auction in favor of Amador D.
Santos
Sale was approved by SEC but still Subject to
the mortgage lien in favor of petitioner
CFI ruled that = chattel mortgage should be sold at public auction
= AGAIN sold at public auction in favor of Luneta Motor
= Applied for the approval of the sale from SEC
In the meantime = Amador D. Santos sold and transferred to A.D. Santos Inc
A.D Santos = OPPOSED the application = grounds:
** Luneta Motors AOI = was not authorized to purchase and/or engage
in the taxicab business or operate as a common
carrier
SEC upheld the opposition made by AD Santos. Hence Appeal
Issue:WON Luneta Motor may acquire by purchase a certificate of public
convenience and operate as a common carrier by land?
Held: NO
Purpose of AOI does not allow them to do so
PURPOSE = may operate and otherwise deal in automobiles and
automobile accessories
= engage in the transportation of persons by water
does not mean that it may engage in the business of land
transportation = entirely different line of business
THEREFORE = Not allowed to purchase that CPC
because such acquisition would be without purpose and would
have no necessary connection with petitioner's legitimate
business
Several demands made upon the company for the payment of the shortage
Failed to pay hence filed a case
Company in its answer denied liability = Grounds:
resolution of the board of directors is ultra vires
Assuming they are liable = limited to being mere guarantor
Court = ordered Acoje to pay. Hence appeal
Issue:
WON the acts of BOD is ultra vires?
Held: NO
The contention has no factual or legal basis
opening of a post office branch at the mining camp = because of a
request submitted by it to promote the convenience and benefit of its
employees
company had signified its willingness to comply with the
requirement imposed by the Director of Post by ADOPTING A
BOARD RESOLUTION
The least that can be said is that it cannot now go back on its
plighted word on the ground of estoppel.
*** 'full responsibility for all cash received by the Postmaster.' =
Included in the RESOLUTION
Not Ultra Vires
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.
a corporation may become a surety where the particular
transaction is reasonably necessary or proper to the conduct
of its business
a corporation may become a surety where the particular transaction is
reasonably necessary or proper to the conduct of its business
The check was conditioned that upon approval by the GSIS of the
compromise agreement = check will be encashed accordingly
No approval was made = MADE ANOTHER CHECK
Check was dishonored for insufficiency of funds = Filed a criminal complaint
for violation of Batas Pambansa Blg. 22
against Atty. Oscar
Z. Benares and plaintiff Ricardo S. Santos, Jr
Trial court dismissed Crisologos complaint = Grounds: consignation is NOT
APPLICABLE to this case
CA reversed and set aside said judgment of dismissal. Hence appeal =
Grounds:
*** Mover Enterprises, Inc. is the accommodation party in this case not Atty
Benares and Ricardo Santos
Issue:
WON Corporation may be held liable on the accommodation instrument?
Held: NO
The rule on accommodation party in negotiable instruments law DOES
NOT APPLY TO CORPORATION as accommodation parties
Reason = issue or indorsement of negotiable paper by a
corporation without consideration and for the accommodation
of another is ultra vires
GR: Pres and VP = NO POWER to execute for mere
accommodation for their individual debts or transactions
arising from or in relation to matters in which the corporation
has no legitimate concern.
Exception = only if specifically authorized to do so
since it is not involved in any aspect of the corporate business or
operations THEREFORE cannot thus be enforced against the
corporation
the inescapable conclusion in law and in logic is that the signatories
thereof shall be personally liable therefor
NOTE:
Though the arrangement of the mining companies is prohibited by law,
the shareholders cannot maintain an action to annul the contract by
which such prohibited interest was acquired
Even where corporate contracts are illegal per se, when only public or
government policy is at stake and no private wrong is committed, the
courts will leave the parties as they are in accordance with their
original contractual expectations.
The only contracts that the courts will touch are contracts
which are void for being illegal per se.
SHIELD
Held: NO
share of stock is not an indebtedness to the owner nor evidence of
indebtedness = therefore, it is not a credit
Stockholders = not creditors of the corporation
Doctrine = the capital stock of a corporation is a trust fund to be used
more particularly for the security of creditors of the corporation
Lim Chu Sing not being a creditor of the Mercantile Bank of
China (although the latter is a creditor of the former ) there is
no sufficient ground to justify a compensation