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Corporation Law Digests
Corporation Law Digests
RESIDENCE OF A CORPORATION YES. Although the Rules of Court do not provide that
when the plaintiff is a corporation, the complaint should be filed
17. in the location of its principal office as indicated in its articles of
HYATT ELEVATORS INC. vs. GOLDSTAR ELEVATORS PHILS. incorporation, jurisprudence has, however, settled that the place
G.R. No. 161026 October 24, 2005 J. PANGANIBAN where the principal office of a corporation is located, as stated in
the articles, indeed establishes its residence. This ruling is
Jurisprudence has settled that the place where the principal office important in determining the venue of an action by or against a
of a corporation is located, as stated in the articles, indeed corporation.
establishes its residence.
FACTS:
ISSUE:
HELD:
MERCANTILE LAW REVIEW || Corporation Law 2
Cases 17-37 (Except: 19, 22, 24, 29)
CLAIM FOR MORAL DAMAGES RBS asserts that it was entitled to the cost of
advertisement for the canceled showing of the film “Maging Sino
18. Ka Man” and moral damages for harassing and prejudicing its
ABS-CBN BROADCASTING CORPORATION vs. HONORABLE business as they operate nationwide and viewers expected
COURT OF APPEALS, REPUBLIC BROADCASTING CORP, VIVA whatever they announce or advertise.
PRODUCTION, INC., and VICENTE DEL ROSARIO
G.R. No. 128690 January 21, 1999 CJ Davide ISSUE:
Moral damages are in the category of an award designed to Whether or not a corporation, like RBS, is entitled to an
compensate the claimant for actual injury suffered and not to award of moral damages upon grounds of debased reputation.
impose a penalty on the wrongdoer. The award is not meant to
enrich the complainant at the expense of the defendant, but to RULING:
enable the injured party to obtain means, diversion, or
amusements that will serve to obviate then moral suffering he has NO. The award of moral damages cannot be granted in
undergone. It is aimed at the restoration, within the limits of the favor of a corporation because, being an artificial person and
possible, of the spiritual status quo ante, and should be having existence only in legal contemplation, it has no feelings,
proportionate to the suffering inflicted. Trial courts must then no emotions, no senses, It cannot, therefore, experience physical
guard against the award of exorbitant damages; they should suffering and mental anguish, which call be experienced only by
exercise balanced restrained and measured objectivity to avoid one having a nervous system. No moral damages can be awarded
suspicion that it was due to passion, prejudice, or corruption on to a juridical person. The statement in the case of People vs
the part of the trial court. Manero and Mambulao Lumber vs PNB is a mere obiter dictum
hence it is not binding as a jurisprudence.
FACTS:
When ABS-CBN and Viva through Mr. Vic del Rosario did
not come into an agreement with regard to the 104 films that will
be aired in ABS-CBN, Viva entered a contract with RBS instead
and allowed them to play the said films. When this information
came to ABS-CBN’s attention, it immediately filed an injunction
with the RTC to stop the airing of certain films, “Maging Sino Ka
Man” is one of those.
19. 20.
ADVANCE PAPER CORP., ET AL. vs. ARMA TRADERS CORP., DONNINA C. HALLEY vs. PRINTWELL, INC.
ET AL. G.R. No. 157549 May 30, 2011 J. BERSAMIN
G.R. No. 176897 December 11, 2013 J. BERSAMIN
The trust fund doctrine is not limited to reaching the stockholder’s
unpaid subscriptions. The scope of the doctrine when the
corporation is insolvent encompasses not only the capital stock,
but also other property and assets generally regarded in equity as
a trust fund for the payment of corporate debts. All assets and
property belonging to the corporation held in trust for the benefit
of creditors that were distributed or in the possession of the
stockholders, regardless of full payment of their subscriptions, may
be reached by the creditor in satisfaction of its claim.
FACTS:
subscriptions, the defendant stockholders submitted in evidence establish that the stockholders have not in good faith paid the
BMPI official receipt (OR) no. 217, OR no. 218, OR no. 220, OR no. par value of the stocks of the corporation.
221, OR no. 222, OR no. 223, and OR no. 227.
ISSUE:
RULING:
xxx rule that the property of a corporation is a trust fund for the
payment of creditors, but such property can be called a trust
fund ‘only by way of analogy or metaphor.’ As between the
corporation itself and its creditors it is a simple debtor, and as
between its creditors and stockholders its assets are in equity a
fund for the payment of its debts.
Section 11, Article XII of the Constitution refers only to shares of BOARD OF DIRECTORS/POWER OF THE BOD
stock that can vote in the election of directors.
22.
VALLE VERDE COUNTRY CLUB, INC. vs. VICTOR AFRICA
G.R. No. 151969 September 4, 2009
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Cases 17-37 (Except: 19, 22, 24, 29)
Whether or not the creation of an executive committee to choose the directors who shall control and supervise the
and other offices in the corporation with corresponding conduct of corporate business.
remunerations are within the powers of the Board of Directors.
In the present case, the board’s creation of the positions
HELD: of Assistant Vice Presidents for Corporate Planning, Operations,
Finance and Administration, and those of the Special Assistants
YES. The acts are within the powers of the Board of to the President and the Board Chairman, was in accordance with
Directors. the regular business operations of Filport as it is authorized to
do so by the corporation’s by-laws, pursuant to the Corporation
The governing body of a corporation is its board of Code.
directors. Section 23 of the Corporation Code explicitly provides
that unless otherwise provided therein, the corporate powers of The election of officers of a corporation is provided for
all corporations formed under the Code shall be exercised, all under Section 25 of the Code which reads:
business conducted and all property of the corporation shall be
controlled and held by a board of directors. Thus, with the Sec. 25. Corporate officers, quorum. – Immediately after
exception only of some powers expressly granted by law to their election, the directors of a corporation must
stockholders (or members, in case of non-stock corporations), formally organize by the election of a president, who
the board of directors (or trustees, in case of non-stock shall be a director, a treasurer who may or may not be a
corporations) has the sole authority to determine policies, enter director, a secretary who shall be a resident and citizen
into contracts, and conduct the ordinary business of the of the Philippines, and such other officers as may be
corporation within the scope of its charter, i.e., its articles of provided for in the by-laws.
incorporation, by-laws and relevant provisions of law. Verily, the
authority of the board of directors is restricted to the In turn, the amended Bylaws of Filport provides the
management of the regular business affairs of the corporation, following: Officers of the corporation, as provided for by the by-
unless more extensive power is expressly conferred. laws, shall be elected by the board of directors at their first
meeting after the election of Directors.
The raison d’etre behind the conferment of corporate
powers on the board of directors is not lost on the Court. Indeed, The officers of the corporation shall be a Chairman of the
the concentration in the board of the powers of control of Board, President, a Vice-President, a Secretary, a Treasurer, a
corporate business and of appointment of corporate officers and General Manager and such other officers as the Board of
managers is necessary for efficiency in any large organization. Directors may from time to time provide, and these officers shall
Stockholders are too numerous, scattered and unfamiliar with be elected to hold office until their successors are elected and
the business of a corporation to conduct its business directly. qualified.
And so the plan of corporate organization is for the stockholders
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Cases 17-37 (Except: 19, 22, 24, 29)
Likewise, the fixing of the corresponding remuneration for the virtually precluded from suing to declare such acts of the board
positions in question is provided for in the same by-laws of the as invalid or illegal. And it makes no difference that he sues in
corporation, viz: xxx The Board of Directors shall fix the behalf of himself and of the other stockholders. Indeed, as his
compensation of the officers and agents of the corporation. voice was not heard in protest when he was still Filport’s
president, raising a hue and cry only now leads to the inevitable
Unfortunately, the bylaws of the corporation are silent as conclusion that he did so out of spite and resentment for his non-
to the creation by its board of directors of an executive re-election as president of the corporation.
committee. Under Section 35 of the Corporation Code, the
creation of an executive committee must be provided for in the
bylaws of the corporation.
ISSUE:
HELD:
26.
However, the Board may create APPOINTIVE POSITIONS LESLIE OKOL vs. SLIMMERS WORLD INTERNATIONAL,
other than the positions of corporate officers, but such person os BEHAVIOR MODIFICATIONS, INC., and RONALD JOSEPH MOY
not considered a corporate officer under Section 25 of the G.R. No. 160146 December 12, 2011 J. CARPIO
Corporation Code.
Said appointive positions are not allowed to exercise functions of A corporate officer’s dismissal is always a corporate act, or a intra-
corporate officers EXCEPT those functions delegated to them. corporate controversy which arises between a stockholder and a
corporation.
According to Article 27 of the Labor Code, it is the Labor
Arbiter who has original and exclusive jurisdiction over cases FACTS:
involving termination or dismissal of employees. In case the
person terminated is a corporate officer, jurisdiction falls within Leslie Okol from being a management trainee in
the RTC. Slimmers World she rose up the ranks and became the vice
In the case at bar, Alfredo Joson was not a corporate officer president up to the time of her unfortunate dismissal due to the
because his position as General Manager was not mentioned in alleged undervaluation of certain imported gym equipments
the by-laws of Marc II Marketing, Inc. Thus, Joson can only be which happened to be named under Leslie Okol’s name together
regarded as an emplpoyee of the said corpotation. Therefore, with two (2) custom brokers that resulted to the seizure of said
jurisdiction lies before the Labor Arbiter. equipments by the Bureau of Customs.
Petitioner Gomez for her part conceded taht as corporate LIABILITY OF CORPORATE OFFICER
secretary, she served only as a corporate officer. But, when they
named her administrator, she became a regular managerial 28.
employee. Consequently, the respondent PDMC’s board did not RODOLFO LABORTE and PHILIPPINE TOURISM AUTHORITY
have to approve either her appointment as such or the extension vs.
of her term in 1998. PAGSANJAN TOURISM CONSUMERS COOPERATIVE and
LELIZA S. FABRICIO, ET AL.
ISSUE: G.R. No. 183860 January 15, 2014 J. REYES
Whether or not Gomez is an ordinary employee and her The officer cannot be held personally liable with the
complaint is within the jurisdiction of the NLRC. corporation, whether civilly or otherwise, for the consequences of
his acts, if acted for and in behalf of the corporation, within the
HELD: scope of his authority and in good faith.
CALABARZON area with direct supervision over the PTA comprehensive program and project to rehabilitate and upgrade
Complex and other entities at the Southern Luzon. the facilities of the PTA Complex as shown in Annexes "H-2" to
"H-4" of the petition. The Court finds that there was indeed a
On October 22, 1993, Laborte served a written notice renovation of the Pagsanjan Administration Complex which was
upon the respondents to cease the operations of the latter’s sanctioned by the PTA main office; and such renovation was
restaurant business and boat ride services in view of the done in good faith in performance of its mandated duties as
rehabilitation, facelifting and upgrading project of the PTA tourism administrator. In the exercise of its management
Complex. Consequently, on November 9, 1993, the PTCC filed prerogative to determine what is best for the said agency, the
with the RTC, Branch 28, Santa Cruz, Laguna a Complaint for PTA had the right to terminate at any moment the PTCC’s
Prohibition, Injunction and Damages with Temporary operations of the restaurant and the boat ride services since the
Restraining Order (TRO) and Preliminary Injunction against PTCC has no contract, concession or franchise from the PTA to
Laborte. operate the above-mentioned businesses. As shown by the
records, the operation of the restaurant and the boat ride
In an Order dated November 11, 1993, the trial court services was merely tolerated, in order to extend financial
issued the TRO prayed for, prohibiting Laborte from (a) causing assistance to its PTA employee-members who are members of
the PTCC to cease operations; (b) doing the threatened act of the then fledging PTCC.
closing the operation of the PTCC’s restaurant and other
activities; (c) evicting the PTCC’s restaurant from the main The respondents failed to show any contract, concession
building of the PTA Complex; and (d) demolishing the said agreement or franchise to operate the restaurant and boat ride
building. services. While the PTCC has been operating the restaurant and
boat ride services for almost ten (10) years until its closure, the
ISSUE: same was by mere tolerance of the PTA. In the consolidated case
of Phil. Ports Authority v. Pier 8 Arrastre & Stevedoring Services,
Whether or not petitioner Laborte can be held personally Inc., the Court upheld the authority of government agencies to
liable with the corporation while acting in his official and terminate at any time hold-over permits. Thus, considering that
personal capacity as corporate officer. the PTCC’s operation of the restaurant and the boat ride services
was by mere tolerance, the PTA can, at any time, terminate such
HELD: operation.
NO. Laborte cannot be held personally liable as he was With respect to Laborte's liability in his official and
simply implementing the lawful order of the PTA management. personal capacity, the Court finds that Laborte was simply
implementing the lawful order of the PTA Management. As a
The PTA is a government owned and controlled general rule the officer cannot be held personally liable with the
corporation which was mandated to administer tourism zones. corporation, whether civilly or otherwise, for the consequences
Based on this mandate, it was the PTA’s obligation to adopt a
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Cases 17-37 (Except: 19, 22, 24, 29)
of his acts, if acted for and in behalf of the corporation, within the 29.
scope of his authority and in good faith. MAM REALTY DEVELOPMENT CORPORATION vs. NLRC
314 Phil. 838 (1995)
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Cases 17-37 (Except: 19, 22, 24, 29)
ISSE:
HELD:
31.
SPI TECHNOLOGIES, INC. and LEA VILLANUEVA vs. VICTORIA On November 16, 2006, Mapua obtained a summary of
K. MAPUA her attendance for the last six months to prove the allegations of
G.R. No. 191154 April 7, 2014 J. REYES Nolan against her were unfounded. However, she was bypassed.
Moreover, Nolan and Raina started giving out majority of her
Personal liability of corporate directors, trustees or officers research work and other duties under Healthcare and Legal
attaches only when: (a) they assent to a patently unlawful act of Division to the rank-and-file staff. Mapua lost about 95% of her
the corporation, or when they are guilty of bad faith or gross work projects and job responsibilities.
negligence in directing its affairs, or when there is a conflict of
interest resulting in damages to the corporation, its stockholders Mapua consulted with Lea Villanueva (Villanueva), SPI’s
or other persons; (b) they consent to the issuance of watered down Human Resource Director, and requested to be transferred to
stocks or when, having knowledge of such issuance, do not another department within SPI. Villanueva scheduled her for an
forthwith file with the corporate secretary their written objection; exploratory interview but did not materialize due to
(c) they agree to hold themselves personally and solidarily liable postponements not made by Mapua.
with the corporation; or (d) they are made by specific provision of
law personally answerable for their corporate action. On February 28, 2007, Mapua allegedly saw the table of
organization of the Corporate Development Division which
FACTS: would be renamed as the Marketing Division. The new structure
showed that Mapua’s level will be again downgraded because a
In 2003, Victoria K. Mapua (Mapua) was hired by SPI new manager will be hired and positioned between her rank and
Technologies, Inc. (SPI) as its Corporate Development’s Raina’s.
Research/Business Intelligence Unit Head and Manager. In
August 2006, then Peter Maquera (Maquera), Vice President and On March 21, 2007, Raina informed Mapua over the
Corporate Development Head, hired Elizabeth Nolan (Nolan) as phone that her position was considered redundant and that she
Mapua’s supervisor. is terminated form employment effective immediately.
Villanueva notified Mapua that she should cease reporting for
On November 13, 2006, upon retrieving lost data from work the next day. Her laptop and company mobile phone were
the hard disk of Mapua’s laptop, Nolan informed her that she was taken right away and her office phone ceased to function.
realigning Mapua’s position to become subordinate of co-
manager Sameer Raina (Raina) due to her missing a work Mapua filed a complaint for illegal dismissal before the
deadline. Nolan also disclosed that Mapua’s colleagues were Labor Arbiter (LA) claiming reinstatement and/or separation
“demotivated” [sic] because she was “taking things easy while pay. After meeting with SPI, she was given a second termination
they were working very hard,” and that she was “frequently letter which is similar to the first one. A third Notice of
absent, under timing, and coming in late every time [Maquera] Termination dated March 21, 2007 was given to her on April 25,
goes on leave or on vacation.” 2007. The date of effectivity was changed from March 21 to April
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Cases 17-37 (Except: 19, 22, 24, 29)
25, 2007 wherein it stated that her separation pay will be Decision. It held that it is management prerogative to decide the
released on May 20, 2007 and a notation, “refused to sign and necessity of the position of Corporate Development Manager.
acknowledge” with unintelligible signatures of witnesses was Before the CA, it reinstated the LA Decision. Hence, this petition.
included.
ISSUE:
On May 13, 2007, a recruitment advertisement of SPI was
published in the Philippine Daily Inquirer including the position Whether or not petitioner Villanueva can be held solidary
for Marketing Communications Manager under Corporate liable with SPI for Mapua’s illegal dismissal.
Support – the same group where Mapua previously belonged.
HELD:
Moreover, on July 16, 2007, Prime Manpower Resources
Development (Prime Manpower) posted a job vacancy for NO. Mapua’s averments against Villanueva, Nolan,
Corporate Development Manager in an unnamed Business Maquera and Raina, although detailed and exhaustive, are mostly
Processing Outsourcing (BPO) company located in Parañ aque suppositions on her part. It is hornbook principle that the
City on the website of Jobstreet Philippines. Mapua applied personal liability of corporate directors, trustees or officers
under the pseudonym of “Jeanne Tesoro.” She was interviewed attached only when:
by Portia Dimatulac (Dimatulac), Prime Manpower’s consultant,
who revealed that SPI contracted Prime Manpower to search for (a) they assent to a patently unlawful act of the
applicants for the Corporate Development Manager position. corporation, or when they are guilty of bad faith or
gross negligence in directing its affairs, or when there
To SPI’s defense, it alleges that it underwent is a conflict of interest resulting in damages to the
reorganization of its structure to streamline its operations as corporation, its stockholders or other persons;
embodied in its Inter-Office Memorandum dated August 28, (b) they consent to the issuance of watered down stocks
2008 issued by SPI’s Chief Executive Officer (CEO). Further, or when, having knowledge of such issuance, do not
based on SPI’s assessment and evaluation, the duties of a forthwith file with the corporate secretary their
Corporate Development Manager could be performed by other written objection;
officers/managers/departments of the company as proved by (c) they agree to hold themselves personally and
Villanueva’s affidavit. Further, SPI denied contracting the solidarily liable with the corporation; or
services of Prime Manpower for the hiring of a Corporate (d) they are made by specific provision of law personally
Development Manager. answerable for their corporate action.
The LA ruled that Mapua was illegally dismissed and In addition, the determination of the continuing necessity
awarded her with backwages, separation pay in lieu of of a particular officer or position in a business corporation is a
reinstatement, moral and exemplary damages and attorney’s management prerogative, and the courts will not interfere unless
fees. Upon appeal to the NLRC, it reversed and set aside the LA arbitrary or malicious action on the part of management is
MERCANTILE LAW REVIEW || Corporation Law 19
Cases 17-37 (Except: 19, 22, 24, 29)
ISSUE:
HELD:
FACTS:
amended and thus, affirming the decision of RTC in denying that requirements with the SEC. This maybe
petitioners’ claim to be recognized as stockholders and directors against the law but practice, no matter how
of PFCS. Petitioners filed a MR which was denied. Hence, the long continued, cannot give rise to any
present petition before the SC. vested right.
ISSUE: If a transferee of shares of stock who failed
to register such transfer in the Stock and
WON mere inclusion as shareholder in the General Transfer Book of the Corporation could not
Information Sheet of a corporation sufficient proof that one is a exercise the rights granted unto him by law
shareholder in such corporation. as stockholder, with more reason that
such rights be denied to a person who is not
HELD: a stockholder of a corporation. Petitioners-
appellants never secured such a standing as
NO. Petitioners bank heavily on the General Information stockholders of PFSC and consequently,
Sheet submitted by PFSC to the SEC in which they were named as their petition should be denied.
shareholders of PFSC. They claim that respondent is now
estopped from contesting the General Information Sheet. It should be stressed that the burden of proof is on
petitioners to show that they are shareholders of PFSC. This is so
While it may be true that petitioners were named as because they do not have any certificates of shares in their
shareholders in the General Information Sheet submitted to name. Moreover, they do not appear in the corporate books as
the SEC, that document alone does not conclusively prove that registered shareholders. If they had certificates of shares, the
they are shareholders of PFSC. The information in the document burden would have been with PFSC to prove that they are not
will still have to be correlated with the corporate books of shareholders of the corporation.
PFSC. As between the General Information Sheet and the
corporate books, it is the latter that is controlling. As correctly As discussed, petitioners failed to hurdle their
ruled by the CA: burden. There is no written document evidencing their claimed
purchase of shares. Records disclose that petitioners have no
We agree with the trial court that mere certificates of shares in their name. A certificate of stock is the
inclusion in the General Information Sheets evidence of a holders interest and status in a corporation. It is a
as stockholders and officers does not make written instrument signed by the proper officer of a corporation
one a stockholder of a corporation, for this stating or acknowledging that the person named in the document
may have come to pass by mistake, is the owner of a designated number of shares of its stock. It
expediency or negligence. As professed by is prima facie evidence that the holder is a shareholder of a
respondent-appellee, this was done merely corporation.
to comply with the reportorial
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Cases 17-37 (Except: 19, 22, 24, 29)
any report on the association's activities. These paved the way Section 46 of the Corporation Code, expressly declared that
for the formation of the North and South Associations. "every corporation formed under this Act, must within one
month after the filing of the articles of incorporation with the
LGVHAI then lodged a complaint with HIGC Hearing Securities and Exchange Commission, adopt a code of by-laws."
Officer Danilo Javier, and questioned the revocation of its Whether this provision should be given mandatory or only
registration. Hearing Officer Javier ruled in favor of LGVHAI, directory effect remained a controversial question until it
revoking the registration of the North and South Associations. became academic with the adoption of PD 902-A. Under this
decree, it is now clear that the failure to file by-laws within the
Petitioner South Association appealed the ruling, required period is only a ground for suspension or revocation of
contending that LGVHAI's failure to file its by-laws within the the certificate of registration of corporations.
period prescribed by Section 46 of the Corporation Code
effectively automatically dissolved the corporation. The Appeals Non-filing of the by-laws will not result in automatic
Board of the HIGC and the Court of Appeals both rejected the dissolution of the corporation. Under Section 6(I) of PD 902-A,
contention of the Petitioner affirmed the decision of Hearing the SEC is empowered to "suspend or revoke, after proper notice
Officer Javier. and hearing, the franchise or certificate of registration of a
corporation" on the ground inter alia of "failure to file by-laws
ISSUE: within the required period." It is clear from this provision that
there must first of all be a hearing to determine the existence of
May the failure of a corporation to file its by-laws within the ground, and secondly, assuming such finding, the penalty is
one month from the date of its incorporation, as mandated by not necessarily revocation but may be only suspension of the
Section 46 of the Corporation Code, result in its automatic charter. In fact, under the rules and regulations of the SEC, failure
dissolution? to file the by-laws on time may be penalized merely with the
imposition of an administrative fine without affecting the
HELD: corporate existence of the erring firm.
NO. Failure to file the by-laws does not automatically It should be stressed in this connection that substantial
operate to dissolve a corporation but is now considered only a compliance with conditions subsequent will suffice to perfect
ground for such dissolution. corporate personality. Organization and commencement of
transaction of corporate business are but conditions subsequent
Section 19 of the Corporation Law, part of which is now and not prerequisites for acquisition of corporate personality.
Section 22 of the Corporation Code, provided that the powers of The adoption and filing of by-laws is also a condition subsequent.
the corporation would cease if it did not formally organize and Under Section 19 of the Corporation Code, a Corporation
commence the transaction of its business or the continuation of commences its corporate existence and juridical personality and
its works within two years from date of its incorporation. Section is deemed incorporated from the date the Securities and
20, which has been reproduced with some modifications in Exchange Commission issues certificate of incorporation under
MERCANTILE LAW REVIEW || Corporation Law 26
Cases 17-37 (Except: 19, 22, 24, 29)
its official seal. This may be done even before the filing of the by- 36.
laws, which under Section 46 of the Corporation Code, must be PETRONILO J. BARAYUGA vs. ADVENTIST UNIVERSITY OF
adopted "within one month after receipt of official notice of the THE PHILIPPINES
issuance of its certificate of incorporation G.R. No. 168008 August 17, 2011 J. BERSAMIN
FACTS:
ISSUE:
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Cases 17-37 (Except: 19, 22, 24, 29)
Section 108 of the Corporation Code determines the In light of foregoing, the members of the Board of
membership and number of trustees in an educational Trustees were to serve a term of office of only two years; and the
corporation which the second paragraph of the provision officers, who included the President, were to be elected from
contains a proviso expressly subjecting the duration to what among the members of the Board of Trustees during their
is otherwise provided in the articles of incorporation or by-laws organizational meeting, which was held during the election of the
of the educational corporation. That contrary provision controls Board of Trustees every two years. Naturally, the officers,
the term of office. including the President, were to exercise the powers vested by
Section 2 of the amended By-Laws for a term of only two years,
In AUP’s case, its amended By-Laws provided the term of not five years.
the members of the Board of Trustees, and the period within
which to elect the officers, thusly: Ineluctably, the petitioner, having assumed as President
of AUP on January 23, 2001, could serve for only two years, or
Board of Trustees until January 22, 2003. By the time of his removal for cause as
President on January 27, 2003, he was already occupying the
Section 1. At the first meeting of the members of the office in a hold-over capacity, and could be removed at any time,
corporation, and thereafter every two years, a Board of without cause, upon the election or appointment of his successor.
Trustees shall be elected. It shall be composed of fifteen His insistence on holding on to the office was untenable,
members in good and regular standing in the Seventh- therefore, and with more reason when one considers that his
day Adventist denomination, each of whom shall hold removal was due to the loss of confidence on the part of the
his office for a term of two years, or until his Board of Trustees.
successor has been elected and qualified. If a trustee
ceases at any time to be a member in good and regular
standing in the Seventh-day Adventist denomination, he
shall thereby cease to be a trustee.
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Cases 17-37 (Except: 19, 22, 24, 29)
RULING: