Manila International Airport

June 18, 1986 Manila International Airport Supervisors Association, Inc. MIA, Metro Manila Attention : Mr . Vicente Umali, Jr . President Gentlemen: This relates to your letter, dated June 3, 1986, requesting information from this Commission on the legality of your entering into a contract with the Manila International Airport Authority as one of its concessionaires. prcd Article II of your Articles of Incorporation provides in part thus: "SECOND. That the objectives and purposes for which this Association is formed are: xxx xxx xxx 4. To undertake any lawful, related activity for the members' social and economic welfare. For the purpose of attaining or furthering any or all of the objectives and purposes herein stated, to do any other act and to exercise any other power which a juridical (natural) person could do and exercise and which now or hereafter be authorized by law." The exercise of implied powers by a corporation is expressly recognized by the law, particularly, under paragraphs 7 and 11 of the Corporation Code. Based on these statutory provisions, implied powers may be defined as those that "may be essential or necessary to carry out its purpose or purposes as stated in its articles of incorporation." (Agbayani, Commercial Laws of the Philippines, Vol. 3, 1984 ed., p. 305). The rule may thus be stated that the management of a corporation, in the absence of express restrictions, has discretionary authority to enter into contracts or transactions which may be deemed reasonably incidental to its business purposes .(Agbayani, Supra.,citing Ballantine 224). No uniform rule has been or can be laid down as to what is or is not incidental nor any test to determine whether a particular act is "reasonably necessary" to the exercise of the corporation's express powers. Each case must depend upon its particular facts and circumstances and upon the nature of the powers granted. (Agbayani, Supra.,citing 6 Fletcher, 195).The Court held thus: "It is a question, therefore, in each case of the logical relation of the act to the corporate purpose expressed in the charter. If that act is one which is lawful in itself and not otherwise prohibited, is done for the purpose of serving corporate ends and is reasonably tributary to the promotion of those ends in a substantial and not in a remote and fanciful sense, it may fairly be considered within charter powers. The test to be applied is whether the act in question is in direct and immediate furtherance of the corporation's business, fairly incident to the express powers and reasonably necessary to their exercise. If so, the corporation has the power to do it. Otherwise, not." (Montelibano v. Bacolod-Murcia Milling Co.,Inc.,G.R. No. L-15092, May 18, 1962, citing 6 Fletcher, 1950 Rev. Ed.,pp. 266-268, as quoted in Agbayani, pp. 305-306). However, the tendency of the more recent decisions is to hold an act within corporate powers, if possible, where it is clearly beneficial to the company. (Agbayani, p. 307). In the light of the foregoing, it is opined that if your contract with the Manila International Airport Authority is in furtherance of the social and economic welfare of your members, the pursuance of said act is within your implied powers. Considering, however, that you were organized as a non-stock corporation, please be reminded that no part of your income which you may derive from such activity, should be distributed as dividends to your members, trustees or officers. Please be advised accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Acting Chairman