TITLE III – BOARD OF DIRECTORS/TRUSTEES/OFFICERS 7.

Derivative suit
It is a lawsuit brought by a shareholder on behalf of a corporation
1. Correlation among the BOD/BOT, officers and stockholders
against a third party.
Stockholders/members periodically elect the board of directors or
8. Authority of the BOD or BOT
trustees, who are charged with the management of the corporation.
The board of directors or trustees has the sole authority to determine
The board, in turn, periodically elects officers to carry out
policies, enter into contracts, and conduct the ordinary business of the
management functions on a day-to-day basis.
corporation within the scope of its charter, i.e., its articles of
Stockholders/members – owners who have residual powers over
incorporation, bylaws, and relevant provisions of law.
fundamental and major corporate changes.
9. What are the 3 levels of control?
2. Acts of management vs. ownership
 The board of directors – they are responsible for corporate
Acts of management pertain to the board while Acts of ownership
policies and the general management of the business affairs of
pertain to stockholders or members.
the corporation.
3. What is business judgment rule?
 The officers – they execute the policies laid down by the
Contracts intra vires (beyond the powers) entered into by the board of
board, but in practice often have wide latitude in determining
directors are binding upon the corporation and courts will not interfere
the course of business operations.
unless such contracts are unconscionable and oppressive as to
 The stockholders – they have the residual power over
amount to wanton destruction to the rights of the minority, as when
plaintiffs aver that the defendants (members of the board), have fundamental corporate changes, like amendments of the
articles of incorporation.
concluded a transaction among themselves as will result in serious
injury to the plaintiffs stockholders. 10. Who has the power to decide whether a corporation can enter
into a binding contract?
o Unconscionable – not right or reasonable
The board of directors. In the absence of the authority of board of
o Wanton – deliberate and unprovoked
directors, no person, not even its officers, can validly bind a
o Plaintiff – the one who sues
corporation.
o Defendant – the one being sued 11. May the corporate powers be directly conferred upon corporate
4. Where do corporate powers reside? officers?
The stockholders/members relinquish corporate powers to the board Yes, by statute, the articles of incorporation, the bylaws or by
in accordance with law. resolution or other act of the board of directors.
5. Who has power to manage the corporation? 12. Qualifications of BOD/BOT
The board of directors or trustees  For a stock corporation, ownership of at least 1 share of the
6. What is the meant by apparent or ostensible authority? capital stock of the corporation in his own name. For a non-
It is the power of an agent to legally bind its principal with a third party, stock corporation, only members of the corporation can be
and. arises from conduct of a principal, by permitting the agent to elected.
make contracts of a particular kind on its behalf.
 The director or trustee must be capacitated.
  The director or trustee must be of legal age. If such acts exceed their authority, it cannot bind the corporation,
 Other qualifications as may be prescribed in the by-laws of the unless it has ratified such acts or is estopped from disclaiming them.
corporation. 17. Who are the corporate officers? (requirement, citizenship,
13. Who is an independent director? residency)
Is a person who, apart from shareholdings and fees received from the
Officer Requirement Citizenship Residency
corporation, is independent of management and free from any
President > Must be a Need not be a Need not be a
business or other relationship which could or could reasonably be director Filipino citizen resident of the
perceived to materially interfere with the exercise of independent > Must be a Philippines
judgment in carrying out the responsibilities as a director. stockholder on
14. What are the requirements for the elections of directors or record of at
trustees? least one share
 The owners of majority of the outstanding capital stock or a
majority of members entitled to vote, of the corporation must Secretary May or may not Must be a Must be a
be present, either in person or through a representative be a director Filipino citizen resident of the
authorized to act by written proxy. Philippines
 When so authorized in the bylaws or by a majority of the board Treasurer May or may not Need not be a Must be a
be a director Filipino citizen resident of the
of directors, the stockholders or members may also vote
Philippines
through remote communication or in absentia. (absentia – “in
Compliance If the corporation is vested with public interest.
the absence”)
Officer
 The election must be by ballot, if requested by any voting Other Officers Qualification may be provided for in the by-laws.
stockholder or member
 In stock corporations, the total number of votes cast shall not 18. Who is a corporate employee?
exceed the number of shares owned by the stockholder as A corporate employee is employed by the action of the managing
shown in the books of the corporation multiplied by the whole officer of the corporation.
number of directors to be elected. Provided that no delinquent 19. Quorum at the meeting of the BOD/BOT
stock shall be voted. A majority of the directors or trustees, as fixed I the articles of
15. Define corporate officer incorporation, shall constitute a quorum for the transaction of
Is one who shall manage the corporation and perform such duties as corporate business (unless the articles of incorporation or the bylaws
may be provided in the bylaws or as resolved by the board of provide a greater majority)
directors. The position must be expressly mentioned in the by-laws in o Majority – at least 51%
order to be considered as a corporate office. 20. Requirement regarding report of election and its objectives
16. Are the acts of corporate officers binding on the corporation?  The secretary or any other officer of the corporation shall
Yes if it is within the scope of their authority. submit to the commission the names, nationalities,
 shareholdings, and residence addresses of the directors, at least 2/3 of the members entitled to vote. Removal shall take place
trustees and officers elected. either at a regular meeting or at a special meeting called for the
(Done within 30 days after the election) purpose.
 The non-holding of elections and the reasons therefor shall be 24. Who has the powers to removed directors or trustees?
reported to the commission within 30 days from the date of The stockholders or members exclusively. However, the securities
scheduled election. The report shall specify a new date for the and exchange commission shall, motu proprio or upon verified
election which shall not be later than 60 days from the complaint, and after due notice and hearing, order the removal of a
scheduled date. director or trustee elected.
 If there is no new date or if the rescheduled election 25. Requisites for the removal of directors or trustees
was not held, the commission may summarily order 1. The removal should take place at a regular or special meeting
that an election be held duly called for the purpose
 Should a director, trustee or officer die, resign or in any 2. The director or trustee can only be removed by a vote of the
manner cease to hold office, the secretary, or the director, stockholders representing at least 2/3 of the outstanding capital
trustee or officer of the corporation shall report in writing such stock or 2/3 of the members entitled to vote in case of non-stock
fact to the commission within 7 days from knowledge thereof. corporations.
21. Grounds for disqualification of directors, trustees or officers 3. There must be a previous notice to stockholder or members of the
A person shall be disqualified if within 5 years prior to the election, the corporation of the intention to propose such removal at the
person was: meeting
a) Convicted by final judgment: 4. The special meeting of the stockholders or members of a
1. Of an offense punishable by imprisonment for a period corporation for the purpose of removal must be called by the
exceeding 6 years secretary on order of the president or on the written demand of the
2. For violating this code stockholders representing or holding at least a majority of the
3. For violating RA no. 8799, otherwise known as “the securities outstanding capital stock or the majority of the members entitled to
regulation code” vote.
b) Found administratively liable for any offense involving fraudulent 26. In case of a special meeting for the removal of director or
acts; and trustee, who shall call the meeting?
c) By a foreign court or equivalent foreign regulatory authority for  Secretary
acts, violations or misconduct similar to the ones mentioned 27. If the president does not order the special meeting to be called,
earlier who shall call the meeting?
22. Can a director be removed with or without cause? The stockholders representing or holding at least a majority of the
Yes outstanding capital stock, or the majority of the members entitled to
23. How are directors (trustees) removed? vote.
By a vote of the stockholders holding or representing at least 2/3 of 28. Who may call the meeting if the secretary fails or refuses to give
the outstanding capital stock or in a nonstick corporation, by a vote of notice?
 The stockholder or member of the corporation signing the demand o Increase in the number of directors or trustees due to
may call for the meeting by directly addressing the stockholders or amendment of the articles of incorporation
members.
29. In what manner shall the notice of the time and place of such o Other than removal or expiration of term, like death,
meeting as well as the intention to propose such removal be resignation, abandonment, or disqualification, if the remaining
made? directors or trustees do not constitute a quorum for the
By publication or by written notice purpose of filling the vacancy.
30. What vote is required for the removal of a director or trustee?
A vote of stockholders representing at least 2/3 of the outstanding Vacancy shall be filled by the members of the board of directors or
capital stock or of the members entitled to vote for a non-stock trustees if:
corporation. o Still constituting a quorum, at least a majority of them are
31. How are vacancies in the office of the director/trustee be filled? empowered to fill any vacancy occurring in the board other than
By the vote of at least a majority of the remaining directors of the by removal by stockholders/members or expiration of term
remaining directors or trustees, if still constituting a quorum; 33. How shall vacancy resulting from removal be filled?
otherwise, such vacancies must be filled by the stockholders or By electing a stockholder or member
members in a regular or special meeting called for that purpose. 34. When may vacancies in the board be filled up by the remaining
32. Rules in filling of vacancies members of the board?
 Vacancy due to term expiration, the election shall be held no If still constituting a quorum, at least a majority of them are
later than the day of such expiration at a meeting called for empowered to fill any vacancy occurring in the board other than by
such purpose. removal by stockholders/members or expiration of term.
 Vacancy as a result of removal by the stockholders/members, 35. In case of amendment of the articles of incorporation increasing
the election may be held on the same day of the meeting the number of directors or trustees, how shall such directorship
authorizing the removal and this fact must be so stated in the or trusteeship be filled?
agenda and notice of the said meeting. By electing a stockholder or member
 In all other cases, the election must be held no later than 45 36. Give instances where vacancies in the board are filled by
days from the time the vacancy arose. stockholders
 A director or trustee elected to fill a vacancy shall be referred o Removal by the stockholders or members
to as replacement director and shall serve only for the o Expiration of term
unexpired term of the predecessor in office. o Increase in the number of directors or trustees due to
amendment of the articles of incorporation
Vacancy shall be filled by the stockholders or members if it is due to: o Other than removal or expiration of term, like death,
o Removal by the stockholders or members
resignation, abandonment, or disqualification, if the remaining
o Expiration of term
 directors or trustees do not constitute a quorum for the for themselves any business opportunity that could benefit the
purpose of filling the vacancy. corporation.

37. Do directors receive compensation as such directors? 43. When is a director accountable for secret profits obtained by
Directors shall not receive any compensation, as such directors, him?
except for reasonable per diems. When such profits acquired are adverse to the corporation in respect
38. May directors be granted compensation other than per diem? of any matter reposed in them in confidence, and upon which, equity
Yes when it is fixed by the corporation’s by-laws or when the imposes a disability upon themselves to deal in their own behalf
stockholders, representing at least the majority of the capital stock, or 44. May a director enter into a contract with the corporation of which
majority of the members, vote to grant the same. he is a director?
39. Is there a limit to the compensation granted to the directors? No, unless
Yes, the total yearly compensation must not exceed 10% of the net o the presence of a such director or trustee in the board meeting
income before income tax of the corporation during the preceding in which the contract was approved was not necessary to
year. constitute a quorum for such meeting
40. How directors are therefore compensated o the vote of such director/trustee was not necessary for the
Through reasonable per diems approval of the contract
41. When are directors, trustees or officers jointly and severally o the contract is fair and reasonable under circumstances
liable to the corporation? 45. May a corporate officer enter into a contract with corporation of
Directors/trustees who willfully and knowingly vote for or assent to which he is an officer?
patently unlawful acts of the corporation or who are guilty of gross No, unless the contract has been previously authorized by the board
negligence or bad faith in directing the affairs of the corporation or of directors.
acquire any personal or pecuniary interest in conflict with their duty as 46. What is the status of contracts entered into by the director or
such directors/trustees shall be liable jointly and severally for all trustee with the corporation if the above conditions are not met?
damages resulting therefrom suffered by the corporation, its Contract is voidable
stockholders or members and other persons. 47. Can such contract be ratified?
Assent – expression of approval or agreement Yes by the vote of the stockholders representing at least 2/3 of the
Pecuniary – relating to or consisting of money outstanding capital stock or at least 2/3 of the members in a meeting
Jointly and severally – both together and separately called for the purpose.
42. What is the doctrine of corporate opportunity? Requisites:
The doctrine of corporate is the legal principle providing that directors, o Any of the first 3 conditions set forth is absent
officers, and controlling shareholders of a corporation must not take o Full disclosure of the adverse interest of the directors or
trustees involved is made at such meeting
 o The contract is fair and reasonable under the circumstances o Amendment or repeal of any resolution of the board which by
48. Who are considered interlocking directors? its express terms is not amendable or repealable.
These are members of the board of directors in a certain corporation o Distribution of cash dividend to shareholders
who are also directors in another corporation. 56. How much vote of the members of the executive committee is
49. What percentage of stock ownership is considered substantial required
for purposes of interlocking directors? Majority vote of all its members
More than 20%
50. What is the status of contracts entered into between
corporations with interlocking directors? TITLE IV – POWERS OF CORPORATION
It shall not be invalidated on that ground alone.
51. On what ground may such contracts be invalidated? 1. How are corporate powers classified?
If the interest of the interlocking director in one corporation is o Expressly conferred by the corporation code
substantial and his interest in the other corporation is merely nominal. o Implied/incidental to its existence
52. What conditions should be met in the event of interlocking 2. Give examples of implied powers of a corporation?
director’s interest is nominal? o Acts in the usual course of the business
- borrowing money; making ordinary contracts; executing
53. If the interest of the interlocking directors is substantial promissory notes, checks or bills of exchange;
(stockholding) exceeds 20% of the outstanding stock, what 2 o Acts to protect debts owing to a corporation
basic conditions are required so that the contract be valid? - A corporation may purchase property, act as guarantor or
1. The contract is not fraudulent sometimes even run a business temporarily to collect a debt.
2. The contract is fair and reasonable under the circumstances o Embarking in different business
54. Who may appoint an executive committee and what are its - A corporation may temporarily conduct an outside business
functions? to collect a debt out of its profits
The board may create an executive committee if provided by the by- o Acts in part or wholly to protect or aid employees
laws. The said committee may act, by majority vote of all its members, - While the cases are divided, the better view favors such acts
on such specific matters within the competence of the board, as may as building homes, places of amusement, hospitals, etc., for
be delegated to it in the bylaws or by majority vote of the board. employees as within corporate powers
55. What are the matters that cannot be delegated to the executive o Acts to increase business
committees? - A corporation may conduct contests or sponsor radio or
o Approval of any action for which shareholders’ approval is also television programs, or promote fairs and other gatherings to
required advertise and increase its business
o Filing of vacancies in the board 3. Which are the express powers of the corporation?
o Amendment or repeal (revoke) of bylaws or the adoption of o Power
new bylaws
 o Power to extend or shorten corporate term 9. What vote is necessary to increase or decrease capital stock and
o Power to increase or decrease capital stock to incur or create bonded indebtedness?
o Power to deny preemptive right Majority vote of the board of directors and 2/3 of the outstanding
o Power to sell, lease, etc. all or substantially all corporate capital stock at a stockholders’ meeting duly called for the purpose.
assets 10. What requirements must be met for the increase or decrease of
o Power to acquire own shares capital stock?
o Power to invest corporate funds in another corporation or o Written notice of the proposed increase or diminution of the
business or for any other purpose capital stock and of the time and place of the stockholders’
o Power to declare dividends meeting at which the proposed increase or diminution of the
capital stock is to be considered, must be addressed to each
o Power to enter into management contract
stockholder at his place of residence as shown on the books of
4. May the corporate term be extended or shortened?
the corporation and deposited to the addressee by mail, or
Yes, as stated in the articles of incorporation when approved by a
served personally, or through electronic means recognized in
majority vote of the board of directors/trustees and ratified at a
the corporation’s bylaws and/or the commission’s rules as a
meeting by the stockholders or members representing at least 2/3 of
valid mode for service of notices
the outstanding capital stock or of its members.
o No decrease of the capital stock shall be approved if its effect
5. May the reduction or extension of the corporate term be
shall prejudice the rights of corporate creditors
approved by merely assent of 2/3 outstanding capital stock or
o Approval by a majority vote of the board of directors
2/3 members in case of non-stock?
No, mere assent would not be sufficient. o Ratification by the stockholders holding at least 2/3 of the
6. If the corporate term is reduced will that bring about a voluntary outstanding capital stock
dissolution? o A certificate must be signed by a majority of the directors of
Yes, a voluntary dissolution of a corporation may be effected by the corporation and countersigned by the chairperson and
amending the articles of incorporation to shorten the corporate term. secretary of the stockholders’ meeting
7. Appraisal right defined o Approval thereof by the Securities and Exchange Commission
A stockholder who dissented and voted against the proposed o Treasurer’s affidavit showing that at least 25% of such
corporate action, may choose to get out of the corporation by increased capital stock has been subscribed and that at least
demanding payment of the fair market value of his shares. 25% of the amount subscribed has been paid.
8. Instances of distribution of corporate capital 11. May non-stock corporations incur, create or increase bonded
o Amendment of the articles of incorporation to reduce the indebtedness?
authorized capital stock Non-stock corporations may incur, create or increase bonded
o Purchase of redeemable shares by the corporation, regardless indebtedness when approved by the majority of the board of trustees
of the existence of unrestricted retained earnings and of at least 2/3 of the members in a meeting duly called for the
o Dissolution and eventual liquidation of the corporation purpose.
12. Define bonded indebtedness Money, stocks, bonds or other instruments
It is a long-term indebtedness secured usually by real property.
13. How much real property or real estate may a corporation hold?
As the transaction of the lawful business of the corporation may 21. In case where there are no members with voting rights in a non-
reasonably and necessarily require. stock corporation who may approve the same disposition as
14. What is the meaning of stockholder’s pre-emptive right? mentioned?
It is the preferential right of all stockholders of a stock corporation to The vote of at least majority of the trustees in office will be sufficient
subscribe to all issues or disposition of shares of any class, in authorization.
proportion to their respective shareholdings. 22. May such disposition after having been approved by the
15. What are the purposes of pre-emptive right of stockholders? required vote of stockholders or members be abandoned?
To enable the shareholder to retain his proportionate control in the Yes, subject to the rights of third parties under any contract relating
corporation. thereto, without further action or approval by the stockholder or
16. To what case may stockholder exercise his pre-emptive right? members.
Pre-emptive right must be exercised within the period of stated in the 23. In cases of disposition or corporate assets in the course of the
articles of incorporation or the by-laws. business done by the board of directors (or trustees), do they
17. To what cases is the pre-emptive right not applicable? require the approval of stockholders or members?
o Shares to be issued in compliance with laws requiring stock No
offerings or minimum stock ownership by the public. 24. Suppose all or substantially all the corporate property or assets
o Shares to be issued in good faith with the approval of the shall be disposed of, is the corporation dissolved?
stockholders representing 2/3 of the outstanding capital stock, Yes because then the corporation would be rendered incapable of
in exchange for property needed for corporate purposes or in continuing the business or accomplishing the purpose for which it was
payment of a previously contracted debt. incorporated.
18. What are the limitations on power of the corporation to sell or 25. Do stockholders of the close corporations enjoy the same pre-
dispose all or substantially all it corporate assets including emptive right?
goodwill? No
It must be authorized by the vote of the stockholders representing at 26. To what cases shall such pre-emptive right in close corporations
least 2/3 of the outstanding capital stock or at least 2/3 of the extend?
members, in a meeting duly called for the purpose. It extends to all stock to be issued, including reissuance of treasury
19. What is the test to apply in order to determine whether the shares, whether for money or for property or personal services, or in
disposition is for all or substantially all assets of the payment of corporate debts, unless the articles of incorporation
corporation? provides otherwise.
It must be computed based on its net asset value as shown in the 27. May the pre-emptive right of stockholders in close corporations
latest financial statements. be limited?
20. What may be the consideration for such sale or disposition?
28. What are fractional shares? Yes, when approved by a majority of the board of directors/trustees
Shares which are less than one share. and ratified by the stockholders representing at least 2/3 of the
outstanding capital stock or the members of a non-stock corporation
29. When may a corporation be allowed to acquire its own shares? at a meeting duly called for the purpose.
In the presence of unrestricted retained earnings. 34. May such investment be made even without the approval of
30. What basic conditions must be met before a corporation can stockholders or members?
acquire its own shares? Yes
The corporation has unrestricted retained earnings in its books to 35. Define dividend
cover shares to be purchased or acquired for legitimate purposes Corporate profits set aside, declared, and ordered to be paid by the
such as: directors for distribution among stockholders at a fixed time.
 To eliminate fractional shares arising out of stock dividends 36. Who has the power to declare dividends in a corporation?
 To collect or compromise an indebtedness to the corporation, The board of directors
arising out of unpaid subscription, in a delinquency sale, and 37. From what source shall the dividend be declared?
to purchase delinquent shares sold during the said sale Unrestricted retained earnings
 To pay dissenting or withdrawing stockholders entitled to 38. In what forms shall the dividends be declared?
payment for their shares under the provisions of this code Cash, property or in stock
31. Basis of unrestricted retained earnings 39. Which stockholders are entitled to dividends?
Trust fund doctrine – which means that the capital stock, property and To all stockholders on the basis of outstanding stock held by them
other assets of a corporation are regarded as equity in trust for the 40. May delinquent stocks earn dividends?
payment of corporate creditors. The reason is that creditors of a Yes, however, cash dividends due on delinquent shares shall first be
corporation are preferred over stockholders in the distribution of applied to the unpaid balance on the subscription plus costs and
corporate assets. There can be no distribution among stockholders expense while stock dividends shall be withheld from delinquent
without first paying corporate creditors. Hence, any disposition of stockholders until their unpaid subscription is fully paid.
corporate funds to the prejudice of creditors is null and void. 41. Can the board alone declare stock dividends?
32. Instances of distribution of corporate capital No, because for stock dividends, there are additional requirements:
 Amendment of the articles of incorporation to reduce the o A vote representing not less than 2/3 of outstanding capital
authorized capital stock o A corporation must also have a sufficient number of authorized
 Purchase of redeemable shares by the corporation regardless unissued shares for distribution to stockholders.
of the existence of unrestricted retained earnings 42. May stock corporations retain surplus profits without declaring
 Dissolution and eventual liquidation of the corporation them into dividends?
33. May a corporation invest its corporate funds in another No, stock corporations are prohibited from retaining surplus profits in
corporation for a purpose other than its main purpose? excess of 100% of their paid-in capital stock.
43. When may SEC compel corporations to declare dividends?
44. What are the valid reasons acceptable to the SEC for retaining 53. What two basic regulatory conditions are required before a
surplus profits in excess of 100% of paid-in without having to corporation concludes a management contract with another
declare said excess into dividends corporation?
o When justified by definite corporate expansion projects or o The contract must be approved by the board of directors
programs approved by the board of directors owning at least the majority of outstanding capital stock, or by
o When the corporation is prohibited under any loan agreement at least a majority of the members in the case of a nonstick
with any financial institution or creditor, whether local or corporation, of both the managing and managed corporation at
foreign, from declaring dividends without its/his consent, and a meeting duly called for the purpose
such consent has not yet been secured o No management contract shall be entered into for a period
o When it can be clearly shown that such retention is necessary longer than 5 years for any one term
under special circumstances obtaining in the corporation, such  Except for service contracts or operating agreements
as when there is need for special reserve for probable which relate to exploration, development, exploitation
contingencies or utilization of natural resources may be entered into
45. Is stock dividend taxable income to stockholders? for such periods as may be provided by the pertinent
No laws or regulations
46. Can stock dividends be issued to a person who is not a 54. When shall a bigger vote of stockholders or members be
stockholder in payment for services rendered? required to approve such management contract?
Yes o Interlocking stockholder
47. Can dividends be declared out of capital? - where a stockholder or stockholders representing the
Yes, in a wasting asset corporation same interest of both the managing and the managed
48. What is a wasting assets corporation? corporations own or control more than 1/3 of the total
It is a corporation engaged in mining or cutting timber or some such outstanding capital stock entitled to vote of the
business, so that dividends are in fact paid out of capital, the assets managing corporation
being consumed in the regular course of operations. o Interlocking directors
49. Can dividends be declared out of re-appraisal surplus? - Where a majority of the members of the board of
directors of the managing corporation also constitute a
50. May cash dividends be declared out of paid-in or premium majority of the members of the board of directors of the
surplus? managed corporation
No 55. What is the vote required in the above two cases?
51. May dividend declaration be revoked? Approval by the stockholders of the managed corporation owning at
No least 2/3 of the total outstanding capital stock entitled to vote, or by at
52. May a corporation be managed by a corporation? least 2/3 of the members in the case of a non-stock corporation.
Yes
56. What is an ultra-vires act?
 It refers to an act outside or beyond corporate powers including those
that may ostensibly be within such powers but are by general or
special laws, prohibited or declared illegal.
57. Is an ultra-vires act necessarily illegal?
No. On the contrary, it may be lawful, moral or even praiseworthy.
58. What is an intra-vires act?
Acts within the legitimate powers of a corporation.
59. What is the effect if an ultra-vires act is executory on both sides?
When an ultra vires contract has been fully performed on both sides,
neither party thereto can lawfully set aside the same or to recover
what has been given. No public interest is involved here since both
parties have already received to their advantage the benefits of the
contract voluntarily entered into
60. Can an ultra vires act be ratified?
o When the contract is illegal per se, it is wholly void or
inexistent. It cannot be ratified or validated.
o Where the contract is not illegal per se but merely beyond the
power of a corporation, the same is merely voidable and may
be enforced by performance, ratification, or estoppel or on
equitable ground.