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Power of Corporations - in General

The court ruled that the donation by the defendant corporation of insurance proceeds to the minor children of a deceased employee was not an ultra vires act. The corporation's articles of incorporation granted it broad powers to invest funds not immediately required and aid any person or entity in which the corporation had a lawful interest. The donation fell within these broad powers as the insurance proceeds were not immediately required, as evidenced by the corporation declaring cash dividends. The donation did not reflect against the solvency of the corporation.

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MIKHAEL MEDRANO
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133 views2 pages

Power of Corporations - in General

The court ruled that the donation by the defendant corporation of insurance proceeds to the minor children of a deceased employee was not an ultra vires act. The corporation's articles of incorporation granted it broad powers to invest funds not immediately required and aid any person or entity in which the corporation had a lawful interest. The donation fell within these broad powers as the insurance proceeds were not immediately required, as evidenced by the corporation declaring cash dividends. The donation did not reflect against the solvency of the corporation.

Uploaded by

MIKHAEL MEDRANO
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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THE DIRECTOR OF LANDS vs.

THE HONORABLE COURT OF APPEALS and


IGLESIA NI CRISTO,
G.R. No. L-56613 March 14, 1988.

FACTS:

On November 28, 1973, private respondent Iglesia ni Cristo filed an application for
registration in its name of a parcel of land. Private respondent alleged that it acquired title thereto
by virtue of a Deed of Absolute Sale executed by Aquelina dela Cruz in its favor. The Republic
of the Philippines opposed the application on the following grounds: 1] the applicant and its
predecessors-in-interest did not possess sufficient title to aquire ownership in fee simple of the
parcel of land applied for; 2] neither the applicant nor its predecessors-in-interest have been in
open, continuous, exclusive and notorious possession and occupation of the land in question;
and, 3] the subject parcel of land is a portion of the public domain belonging to the Republic of
the Philippines not subject to private appropriation.

ISSUE:

Ist the disqualification of juridical person under 1973 Constitution to acquire land is still
applicable?

RULING:

As observed at the outset, had this case been resolved immediately after it was submitted
for decision, the result may have been quite adverse to private Respondent. For the rule then
prevailing under the case of Manila Electric Company v. Castro-Bartolome, Et Al., 114 SCRA
799, reiterated in Republic v. Villanueva, 114 SCRA 875 as well as the other subsequent cases
involving private respondent adverted to above, is that a juridical person, private respondent in
particular, is disqualified under the 1973 Constitution from applying for registration in its name
alienable public land, as such land ceases to be public land "only upon the issuance of title to any
Filipino citizen claiming it under section 48[b]" of Commonwealth Act No. 141, as amended.
Since then, however, this Court had occasion to re-examine the rulings is these cases vis-a-vis
the earlier cases of Cariño v. Insular Government, 41 Phil. 935, Susi v. Razon, 48 Phil. 424 and
Herico v. Dar, 95 SCRA 437, among others. Thus, in the recent case of Director of Lands v.
Intermediate Appellate Court, 146 SCRA 509, We categorically stated that the majority ruling in
Meralco is "no longer deemed to be binding precedent", and that" [T]he correct rule, . . . is that
alienable public land held by a possessor, personally or through his predecessors-in-interest,
openly, continuously and exclusively for the prescribed statutory period [30 years under the
Public Land Act, as amended] is converted to private property by mere lapse or completion of
said period, ipso jure." We further reiterated therein the time-honored principle of non-
impairment of vested rights.
MARIA CLARA PIROVANA ET AL.,  vs. THE DE LA RAMA STEAMSHIP CO.,

G.R. No. L-5377        December 29, 1954

FACTS:

Plaintiffs herein are the minor children of the late Enrico Pirovano represented by their
mother and judicial guardian Estefania R. 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.

ISSUE:

Can defendant corporation give by way of donation the proceeds of said insurance
policies to the minor children of the late Enrico Pirovano under the law or its articles of
corporation, or is that donation an ultra vires act?

RULING:

After a careful perusal of the provisions of the Articles of Incorporation of respondent


corporation 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
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 or prosperity of
which this corporation has a lawful interest." The world deal is broad enough to include any
manner of disposition, and refers to moneys not immediately required by the corporation, and
such disposition may be made in such manner as from time to time may be determined by the
corporations. 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. In fact, the evidence shows that the corporation declared a
100 per cent cash dividend, or P2,000,000, and later on another 30 per cent cash dividend. This is
clear proof of the solvency of the corporation. It may be that, as insinuated, Don Esteban wanted
to make use of the insurance money to rehabilitate the central owned by a sister corporation,
known as Hijos de I. de la Rama and Co., Inc., situated in Bago, Negros Occidental, but this, far
from reflecting against the solvency of the De la Rama company, only shows that the funds were
not needed by the corporation.

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