Hon. Benjamin V. Bautista Sr.

September 24, 1996 Hon. Benjamin V. Bautista Sr. House of Representatives Quezon City, Metro Manila S i r : This refers to your letter dated requesting comments on the House Resolution Nos. 379 and 476 which aims to investigate and conduct an inquiry in aid of legislation on the joint Palm Oil venture of the JANOUB PHILIPPINES DEVELOPMENT CORPORATION (JPDCI) and consortium of Malaysian corporations. Our comments herein are merely confined on the extent of power of JPDCI as a corporation registered under the Corporation Code. The Commission is not in a position to comment on the authority of the Department of Agrarian Reform (DAR) and/or Northern Philippines Development Authority (SPDA) to allow or commit itself to support the proposed joint Palm Oil Venture. It is well-settled in corporate jurisprudence that a corporation only has the powers as are expressly granted in its charter or in the statutes under which it is created or such powers as are necessary for the purpose of carrying out its express powers .Only such powers as, are reasonably necessary to enable corporations to carry out the express powers granted and the purposes of their creation are to be implied as are to be deemed incidental. Powers merely convenient or useful are not implied if they are not essential having in view the nature and object of incorporation. Thus, in the determination of what businesses may be carried on by a corporation, reference must be made to its articles of incorporation, and unless the power to carry a particular business is either expressly or impliedly conferred thereby, it cannot be undertaken by a corporation. In the case of the above-named corporation, nowhere in the purpose clause of its Articles of Incorporation do we find a provision expressly authorizing the corporation to engage in the palm oil business. Should the corporation intend to engage in said line of business, it is necessary to amend its Articles of Incorporation in accordance with Section 16 of the Corporation Code to include said line of business among its secondary purposes. In the event the joint venture agreement would result to a formation of a separate corporation, the registration requirements under the Corporation Code should be complied with, or if it would result into a partnership, the requirements for the registration of a partnership. Further, the proposed joint venture is subject to the following provision of Article XII, Section 2 of the Philippine Constitution: "SECTION 2. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens or corporations or associations at least sixty per centum of whose capital is owned by such citizens .Such agreements may be for a period not exceeding twenty-five years, reasonable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant. prcd ..." (Emphasis supplied) Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner