National Power Corp. vs. VeraG.R. No. 83558; February 27, 1989

FACTS:Sea Lion International Port Services, private respondent, filed a complaint for prohibition and mandamus against petitioner NPC alleging that it had acted in bad faith in not renewing its contract for stevedoring services for its plant and in taking over its stevedoring services. 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 that respondent judge had no jurisdiction to issue the order and 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. The respondent judge denied the NPCs motion and issued a TRO after finding that NPC was not empowered by its Charter to engage in stevedoring and arrastre services.

ISSUE:WON the undertaking of stevedoring services is empowered by the NPCs charter powers.

HELD:YES. To carry out the national policy of total electrification of the country, the NPC was created and empowered not only to construct, operate and maintain power plants, reservoirs, transmission lines, and other works, but also 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 accomplish said purpose.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.

Pirovano, et. al. vs. De la RamaG.R. No. L-5377; December 29, 1954

FACTS:Enrico Pirovano, president of the defendant company, managed the company until it became a multi-million corporation by the time Pirovano was executed by the Japanese during the occupation.BOD Resolution:Out of the proceeds, the sum of P400,000 be set aside for equal division among the 4 minor children, convertible into shares of stock of the De la Rama Steamship Company, at par and, for that purpose, that the present registered stockholders of the corporation be requested to waive their pre-emptive right to 4,000 shares of the unissued stock of the company in order to enable each of the 4 minor heirs to obtain 1,000 shares at par.Plaintiffs herein are the minor children of the late Enrico Pirovano represented by their mother and judicial guardian Estefania Pirovano. They seek to enforce certain resolutions adopted by the Board of Directors and stockholders of the defendant company giving to said minor children of the proceeds of the insurance policies taken on the life of their deceased father Enrico Pirovano with the company as beneficiary. Defendant's main defense is: that said resolutions and the contract executed pursuant thereto are ultra vires, and, if valid, the obligation to pay the amount given is not yet due and demandable.RTC ruled thatcontract or donation is notultra vires.

ISSUE:WON corporation donation of the proceeds of the insurance policies is an ultra vires act.

HELD:NO. The AOI of the corporation provided two relevant items: (1) to invest and deal with moneys of the company not immediately required, in such manner as from time to time may be determined; and (2) to aid in any other manner any person, association or corporation of which any obligation or in which any interest is held by this corporation or in the affairs of prosperity of which this corporation has a lawful interest.From this, it is obvious that the corporation properly exercised within its chartered powers the act of availing of insurance proceeds to the heirs of the insured and deceased officer.

NOTE: Ultra vires act vs. Illegal Acts A distinction should be made between corporate acts or contracts which are illegal and those which are merely ultra vires. The former contemplates the doing of an act which is contrary to law, morals, or public policy or public duty, and are, like similar transactions between the individuals void. They cannot serve as basis of a court action, nor require validity ultra vires acts on the other hand, or those which are not illegal and void ab initio, but are merely within are not illegal and void ab initio, but are not merely within the scope of the articles of incorporation, are merely voidable and may become binding and enforceable when ratified by the stockholders.

Harden, et. al. vs. BenguetG.R. No. L-37331; March 18, 1933

FACTS:A contract between Benguet Consolidated Mining and Balatoc Mining Co. provided that Benguet will bring in capital, equipment. and technical expertise in exchange for capital shares in Balatoc. Harden was a stockholder of Balatoc and he contends that this contract violated the Corporation Law which restricts the acquisition of interest by a mining corporation in another mining corporation.

ISSUE:WON the plaintiff can maintain an action based upon the violation of the law supposedly committed by respondent company.

HELD:NO. The provision was adopted by the lawmakers with a sole view to the public policy that should control in the granting of mining rights. Furthermore, the penalties imposed in what is now section 190 (A) of the Corporation Law for the violation of the prohibition in question are of such nature that they can be enforced only by a criminal prosecution or by an action of quo warranto. but these proceedings can be maintained only by the Attorney-General in representation of the Government.

Bissell vs. Michigan Southern22 NY 258; 1860

FACTS:Two railroad corporations contend that they transcended their own powers and violated their own organic laws. Hence, they should not be held liable for the injury of the plaintiff who was a passenger in one of their trains.

ISSUE:WON the contract made between the two railroad corporations is valid and as such can be use a defense to evade the liability against the passenger.

HELD:NO. The contract between the two corporations was an ultra vires act. However, it is not one tainted with illegality, therefore, the accompanying rights and obligations based on the contract of carriage between them and the plaintiff cannot be avoided by raising such a defense.