National Power Corp. vs.

Vera
G.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
empowered by the NPCs charter powers.

services

is

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.

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.

Harden, et. al. vs. Benguet

G.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:

Pirovano, et. al. vs. De la Rama

G.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 preemptive 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 that contract or donation is
not ultra vires.
ISSUE:
WON corporation donation of the proceeds of the
insurance policies is an ultra vires act.
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 Southern
22 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.