San Miguel Corporation

August 12, 1991 San Miguel Corporation 40 San Miguel Avenue Mandaluyong, Metro Manila Attention : Mr . Renato P . Mabugat (Vice President and Associate General Counsel) Gentlemen : This refers to your letter dated August 5, 1991 inquiring whether San Miguel Corporation has the implied power under the Corporation Code to undertake community development projects and receive grants from donor agencies to assist the Corporation in said projects. LexLib Section 36 of the Corporation Code enumerates the powers expressly conferred on corporations. Said powers include, among others, the power to donate. The Law provides thus: "SECTION 36. Corporation power and capacity . Every corporation incorporated under this Code has the power and capacity: xxx xxx xxx 9. To make reasonable donations ,including those for the public welfare or for hospital, charitable, cultural scientific, civic, or similar purposes: Provided, That no corporation, domestic or foreign, shall give donations in aid of any political party or candidate or for purposes of partisan political activity;" xxx xxx xxx Therefore, whether or not the power to donate is included in the articles of incorporation as to what the corporation could do and perform, it is, nevertheless, deemed to be within the scope of its corporate powers by express provision of the Corporation Code. In the light of the foregoing, subject corporation may undertake community development projects as its donations for the public welfare ,without amending its articles of incorporation to include such power. LibLex However, it has to be emphasized that although stock corporations have the power to make donations, the board of directors should use good judgment in the exercise of the power. Donations should be reasonable in amount in the light of the corporation's financial condition, bear some reasonable relation to the corporation's interest, and not be so "remote and fanciful" as to excite the opposition of shareholders whose property is being used. (6-A Fletcher Sec. 2939) Thus, when doubtful as to the amount involved, the stockholders may review the exercise of such corporate power and may inquire into its reasonableness, and if found excessive, to afford adequate relief therefrom. As to whether the Corporation has the power to receive grants from donor agencies to assist its projects, since the receipt of such grant is to serve the ends of the proposed corporate undertaking or is reasonably tributary to the promotion of those ends, it may be fairly considered as within the implied power of the Corporation, subject to the provisions of Act No. 4075, otherwise known as the Solicitation Permit Law , as amended by P.D. 1564, and Rules and Regulations of the Department of Social Welfare and Development. Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman