I share the views expressed in the ponencia written for the Court by our esteemed colleague Mr. Justice Artemio V. Panganiban. There is just a brief clarificatory statement that I thought could be made. Mesm

The Civil Code, being a law of general application, can be suppletory to special laws and certainly not preclusive of those that govern commercial transactions. Indeed, in its generic sense, civil law can rightly be said to encompass commercial law. Jus civile, in ancient Rome, was merely used to distinguish it from jus gentium or the law common to all the nations within the empire and, at some time later, only in contrast to international law. In more recent times, civil law is so referred to as private law in distinction from public law and criminal law. Today, it may not be totally inaccurate to consider commercial law, among some other special laws, as being a branch of civil law.

Section 45 of the Corporation Code provides: Slx

The language of the Code appears to confine the term ultra vires to an act outside or beyond express, implied and incidental corporate powers. Nevertheless, the concept can also include those acts that may ostensibly be within such powers but are, by general or special laws, either proscribed or declared illegal. In general, although perhaps loosely, ultra vires has also been used to designate those acts of the board of directors or of corporate officers when acting beyond their respective spheres of authority. In the context that the law has used the term in article 45 of the Corporation Code, an ultra vires act would be void and not susceptible to ratification.1 [Republic vs. Acoje Mining Co., Inc., 7 SCRA 361. Although in this case the Supreme Court held that the opening of a post office branch by a corporation falls under its implied powers and, therefore, not an ultra vires act, since said facility is needed for the convenience of its personnel and employees.] In determining whether or not a corporation may perform an act, one considers the logical and necessary relation between the act assailed and the corporate purpose expressed by the law or in the charter. For if the act were one which is lawful in itself or not otherwise prohibited and done for the purpose of serving corporate ends or reasonably contributes to the promotion of those ends in a substantial and not merely in a remote and fanciful sense, it may be fairly considered within corporate powers.2 [National Power Corporation vs. Judge Vera, 170 SCRA 721.] Calrky

Section 23 of the Corporation Code states that the corporate powers are to be exercised, all business conducted, and all property of corporations controlled and held, by the Board of Directors. When the act of the board is within corporate powers but it is done without the concurrence of the shareholders as and when such approval is required by law3 [Such as in the sale of all or substantially all of the corporate assets or an investment in another corporation outside corporate purposes.] or when the act is beyond its competence to do,4 [Like the removal of a director.] the act has been described as void5 [Peña vs. Court of Appeals, 193 SCRA 717.] or, as unenforceable,6 [Ricafort vs. Moya, 195 SCRA 247.] or as ineffective and not legally binding.7 [Natino vs. Intermediate Appellate Court, 197 SCRA 323.] These holdings notwithstanding, the act cannot accurately be likened to an ultra vires act of the corporation itself defined in Section 45 of the Code. Where the act is within corporate powers but the board has acted without being competent to independently do so, the action is not necessarily and totally devoid of effects, and it may generally be ratified expressly or impliedly. Thus, an acceptance of benefits derived by the shareholders from an outside investment made by the board wihtout the required concurrence of the stockholders may, nonethelss, be so considered as an effective investment.8 [Gokongwei, Jr. vs. Securities & Exchange Commission, 89 SCRA 336; 97 SCRA 78.] It may be said, however, that when the board resolution is yet executory, the act should aptly be deemed inoperative and specific performance cannot be validly demanded but, if for any reason, the contemplated action is carried out, such principles as ratification or prescription when applicable, normally unknown in void contracts, can serve to negate a claim for the total nullity thereof. Scslx

Corporate officers, in their case, may act on such matters as may be authorized either expressly by the By-laws or Board Resolutions or impliedly such as by general practice or policy or as are impliedl by express powers. When officers are allowed to act in certain particular cases, their acts conformably therewith can bind the company. Hence, a corporate officer entrusted with general management and control of the business has the implied auhtority to act or contract for the corporation which may be necessary or appropriate to conduct the ordinary business.9 [Board of Liquidators vs. Heirs of Kalaw, 20 SCRA 987.] If the act of corporate officers comes within corporate powers but it is done without any express or implied authority therefor from the by-laws, board resolutions or corporate practices, such an act does not bind the corporation. The Board, however, acting within its competence, may ratify the unauthorized act of the corporate officer. So, too, a corporation may be held in estoppel from denying as against innocent third persons the authority of its officers or agents who have been clothed by it with ostensible or apparent authority.10 [In Yao Ka Sin Trading vs. Court of Appeals, the Court said: The rule is, of course, settled that although an officer or agent acts without, or in excess of, his actual authority, however, if he acts within the scope of an apparent authority with which the corporation has clothed him by holding him out or permitting him to appear as ahving such authority, the corporation is bound thereby in favor of a person who deals with him in good faith in reliance on that apparent authority, as where an officer is allowed to exercise a particular authority with respect to the business, or a particular branch of it, continuously and publicly, for a considerable time. Also, "if a private corporation intentionally or negligently clothes its officers or agent with apparent power to perform acts for it, the corporation will be estopped to deny that such apparent authority is real, as to innocent third persons dealing in good faith with such officers or agents." (Fletcher, op, cit. 340) This "apparent authority may result from (1) the general manner by which the corporation holds out an officer or agent as having power to act or, in other words, the apparent authority with which it clothes him to act in general, or (2) the acquiescence in his acts of a particular nature, with actual or constructive knowledge thereof, whether within or without the scope of his ordinary powers."] Slxsc

The Corporation Code itself has not been that explicit with respect to the consequences of ultra vires acts; hence, the varied ascriptions to its effects heretofore expressed. It may well be to consider futile any further attempt to have these situations bear any exact equivalence to the civil law precepts of defective contracts. Nevertheless, general statements could be made. Here reiterated, while an act of the corporation which is either illegal or outside of express, implied or incidental powers as so provided by law or the charter would be void under Article 511 [Art. 5. Acts executed against the provisions of mandatory or prohibitory laws shall be void except when the law itself authorizes their validity.] of the Civil Code, and the act is not susceptible to ratification, an unauthorized act (if within corporate powers) of the board or a corporate officer, however, would only be unenforceable conformably with Article 140312 [Art. 1403. The following contracts are unenforceable, unless they are ratified:

(1)......Those entered into in the name of another person by one who has been given no authority or legal representation, or who has acted beyond his powers; Slxmis

(2)......Those that do not comply with the Statute of Frauds as set forth in this number. In the following cases an agreement hereafter made shall be unenforceable by action, unless the same, or some note or memorandum thereof, be in writing, and subscribed and by the party charged, or by his agent; evidence, therefore, of the agreement cannot be received without the writing, or a secondary evidence of its contents: Missdaa

(a)......An agreeement that by its terms is not to be performed within a year from the making thereof;

(b)......A special promise to answer for the debt, default, or miscarriage of another;

(c)......An agreement made in consideration of marriage, other than a mutual promise to marry;

(d)......An agreement fro the sale of goods, chattels or things in action, at a price not less than five hundred pesos, unless the buyer accept and receive part of such goods and chattels, or the evidences, or some of them such things in action, or pay at the time some part of the purchase money; but when a sale is made by auction and entry is made by the auctioneer in his sales book, at the time of the sale, of the amount and kind of property sold, terms of sale, price, names of the purchasers and person on whose account the sale is made, it is a sufficient memorandum;

(e)......An agreement for the leasing for a longer period than one year, or for the sale of real property or of an interest therein;

(f)......A representation as to the credit of a third person.

(3) ......Those where both parties are incapable of giving consent to a contract.] of the Civil Code but, if the party with whom the agent has contracted is aware of the latter’s limits of powers, the unauthorized act is declared void by Article 189813 [If the agent contracts in the name of the principal, exceeding the scope of his authority, and the principal does not ratify the contract, it shall be void if the party with whom the agent contracted is aware of the limits of the powers granted by the principal. In this case, however, the agent is liable if he undertook to secure the principal’s ratification.] of the same Code, although still susceptible thereunder to ratification by the principal. Any person dealing with corporate boards and officers may be said to be charged with the knowledge that the latter can only act within their respective limits of power, and he is put to notice accordingly. Thus, it would generally behoove such a person to look into the extent of the authority of corporate agents since the onus would ordinarily be with him. Sdaadsc