Mr. Rodolfo J. Gonzales

December 21, 1988 Mr. Rodolfo J. Gonzales Mansalay Mining Corporation 2336 G. del Pilar St. Singalong, Manila Sir : This refers to your letter dated December 12, 1988, requesting for opinion on the following queries: LexLib 1. May an individual director without the approval of majority of the Board of Directors file a mining claim in the name of Mansalay Mining Corporation? Will this act of his be valid as a Corporate act? 2. May the general manager file a mining claim in the name of Mansalay Mining Corporation without the approval of a majority of the Board of Directors and consider this within the scope of his authority and therefore, binding to the corporation? It is well settled that the board of directors is the governing of the corporation with whom the management of the corporate affairs is vested. The pertinent provisions of the Corporation Code provide, thus: "SECTION 23. The Board of directors or trustees . Unless otherwise provided in this Code, the corporate powers of all corporations formed under this Code shall be exercised all business conducted and held by the board of directors or trustees to be elected from and among the holders of stocks, ..." (emphasis supplied) "SECTION 25. Corporate officers quorum . ...Unless the articles of incorporation or the by-laws provide for a greater majority, a majority of the members of directors or trustees as fixed in the articles of incorporation shall constitute a quorum for the transaction of corporate business ,and every decision of at least a majority of the directors or trustees present at a meeting at which there is a quorum shall be valid as a corporate act, ...(emphasis supplied) Corollary thereto, Article II of the by-laws of Mansalay Mining Corporation, provides: "1. ...The general management of the Corporation shall vested in the Board of seven (7) directors . 2. Quorum . The Directors shall act only as a board and the individual directors shall have no power as such .A majority of the directors shall be necessary at all meetings to constitute a quorum ,for the transaction of any business, and every decision of a majority of the quorum duly assembled as Board shall be valid as a corporate act." (emphasis supplied) From the foregoing, it is clear that the power and authority to manage and conduct the affairs of the corporation is vested upon the Board of Directors acting as a body .Hence, any act involving the affairs of the corporation not duly authorized the Board of Directors is not binding on the corporation. Article II of the By-laws of the corporation further provides: "4. Powers . The Board of Directors shall have management of the business of the company ... Without prejudice to the general powers herein-above conferred, the Board of Directors, shall have the following expressed powers . xxx xxx xxx b. To purchase or otherwise acquire for the company, rights or privilege which the company is authorized to acquire at such price and on such terms and conditions & for such consideration as it shall from time to time, fix. The general rule is that the power to bind a corporation by contract rests in its board of directors or trustees. (Agbayani, Commercial Laws of the Philippines, Vol. 3, 1988 ed. p. 226)."All other agents normally receive their authority by delegation expressed or implied, from these agents." (Ibid) In view of the foregoing, an individual director or manager has no authority to file a mining claim in the name of the corporation without prior authority from the Board. In such case where the corporate agent exceeds the authority granted to him by the corporation, his act would be beyond his powers as such agent, but his act may not be ultra-vires, as it may be within the powers of the corporation. Its defect is only that it is performed by the corporate officer in excess of his authority. (Agbayani, Supra., p. 319-320). However, the board may ratify an unauthorized contract made by a director or officer of the corporation. Ratification is said to have occurred when the board, with the knowledge that the contract had been made, adopted a resolution recognizing the existence of the contract or directing steps to be taken to enable the corporation to utilize the benefits. (Agbayani, p. 228, citing Ramirez v. Orientalist, GR No. 11897, September 24, 1918, Syll., 38, Phil. 634, Zamboanga Transportation v. Bachrach Motor Co., G.R. No. 27694, October 24, 1928, 52 Phil. 244, Montague v. Artesian Water Co., GR No. 11137, Dec. 7, 1915, 32 Phil. 468, 2 Fletcher 767). cdll Please be advised accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Chairman