CORPO LAW - NOTES

MARCH 11, 2023

FOCUS ON THE FF CASES:

o STONEHILL VS. DIOKNO
o GAMBOA VS. TEVEZ
o PILIPINAS BROADCASTING VS. CA
o ABS-CBN VS. CA
GRANDFATHER RULE
BOARD OF TRUSTEES/ DIRECTORS
o CORPORATE MANAGEMENT
o BOARD – CENTRAL POWER
THEORIES OF THE SOURCES OF POWER OF CORPORATION
o AGENCY THEORY
o PLATONIC GUARDIAN THEORY
o CONCESSION THEORY
o SUI GENERIS THEORY
BUSINESS MANAGEMENT RULE
CONTRACT INTRA-VIRES
o THE COURT WILL NOT INTERFERE
 DIRECTORS ARE NOT INSURERS
 SEC. 52, RCCP
TERM OF DIRECTOR/TRUSTEE
o 1 YEAR- DIRECTOR
o 3 YEARS- TRUSTEE
o ASSIGNEE
 CAN BE A DIRECTOR
 MUST BE REGISTERED IN THE BOOK OF REGISTRATION/CORPORATION
DIRECTOR/TRUSTEE
o QUALIFICATIONS UNDER THE BY-LAWS
 NATURAL PERSON
 DUAL CITIZEN IS ALLOWED
EFFECTS OF DISQUALIFICATION OF THE DIRECTOR
CORPORATE GOVERNANCE
o INDEPENDENT DIRECTOR
o CORPORATION VESTED WITH PUBLIC INTEREST
o AT LEAST 20% OF SUCH BOARD
CREATION OF EMERGENCY BOARD – SEC. 28, RCCP
VOTE THROUGH REMOTE COMMUNICATION OR IN ABSENTIA
COMPLIANCE OFFICER
INDEPENDENT TRUSTEE OF CORPORATION
REQUIREMENT TO SUBMIT THE LIST OF BOARD IN THE SEC.
SEC. 23, RCCP- ELECTION NOT DESIGNATION OF OFFICERS
o AUTOMATIC MEMBERSHIP OF BOARD IS NOT ALLOWED/PROHIBITED
o THERE MUST BE AN ELECTION
o ANY QUALIFIED DIRECTOR/TRUSTEE MAY BE ELECTED
o MANNER OF VOTING
 VOTE THROUGH REMOTE COMM.
 QUORUM; FOR ELECTION PURPOSES
 STOCKHOLDERS REPRESENTING THE MAJORITY OF SHARES
RECORD DATE
o BY-LAWS
o 2 DAYS BEFORE THE ELECTION- ENTITLED TO VOTE
 PRESENCE OF CANDIDATE IS NOT NECESSARY
 EXCEPTION- UNLESS PROVIDED UNDER THE BY-LAWS
COMMULATIVE VOTING
ELECTION OF INCOMPLETE DIRECTORS
FAILURE TO CALL THE ELECTION BY THE PRESIDENT
o FAILURE OF ELECTION; EFFECT
 MEETING WILL BE AJOURNED INDEFINITELY
 DATE OF ELECTION BE POSTED NOT LATER THAN 60 DAYS FROM THE SCHEDULE
DATE
ELECTION CONTEST
o COMPLAINT
 MUST BE FILED AT THE PROPER COURT – RTC
 INVOLVING TITLE TO ANY ELECTIVE OFFICE
 MANNER OF VALIDITY OF ELECTION
 PROCLAMATION OF WINNERS
CORPORATE OFFICERS
o SEC. 24. RCCP/ SEC. 52, RCCP
 ELECTED BY MAJORITY OF THE DIRECTORS/TRUSTEES
 FIXED IN THE ARTICLES OF INCORPORATION
 PRESIDENT
 SECRETARY
 TREASURER
 COMPLIANCE OFFICER
 V-PRES, ASST. SECRETARY – SEC. 62, RCCP
 OTHER CORPORATE OFFICERS
TERM OF OFFICE OF THE OFFICERS
o IF THE BY-LAWS DOES NOT CREATE SPECIFIC OFFICE, THE BOARD MAY CREATE
APPOINTIVE OFFICERS
SEC REGULATION CODE- SEC. 52, RCCP
DISMISSAL OF CORPORATE OFFICERS
o LABOR ARBITER
 VESTED WITH THE JURISDICTION IF THE OFFICER IS NOT A CORPORATE OFFICER
TO HEAR THE ILLEGAL DISMISSAL CASE.
MINIMUM QUALIFICATION OF THE OFFICERS
COMPENSATION / DUTIES OF THE OFFICERS
o PRESIDENT
 MAY BE A DIRECTOR; STOCKHOLDER.
 ONLY ONE PRESIDENT
 DUTIES
o V-PRES
 NOT MANDATORY
 ASSIGNED UNDER BY-LAWS
o CHAIRMAN
 MAY BE CONCURRENTLY THE PRESIDENT
 OR CHIEF EXECUTIVE
 DUAL POSITION IS ALLOWED; EXCEPTION- PRES AND SEC
o SECRETARY
 ONLY ONE
 ASST SECRETARYIS ALLOWED
 DUTIES:
 MAINTAINS THE STOCKS AND TRANSFERS BOOK- ESSENTIAL DUTY
o TREASURE- SEC.24, RCCP
 AUTHORIZE TO ISSUE RECEIPTS
 KEEP THE MONEY
 ONLY ONE
 EXPRESSLY REQUIRED TO BE A RESIDENT OF THE PHILIPPINES
 FUNCTIONS
IN CASE OF INCREASE OF CAPITAL STOCKS
AUTHORITY OF THE OFFICERS
o GENERALLY, DERIVED FROM LAW
o ARTICLES OF INCORPORATION
o BY-LAWS
o FROM THE BOARD- NEEDS AUTHORIZATION OF THE BOARD
SERVICE OF SUMMONS-SEC.11, RULES ON CIVIL PROCEDURE
o SERVICE ON OFFICERS NOT SPECIFIED IN SEC.11 OF THE RULES ON CIVIL PROCEDURE IS
NOT ALLOWED.
o IF THE ACTION OF THE OFFICERS EXCEEDS WITHIN THEIR AUTHORITY, SAID ACTION IS
NOT BINDING TO THE CORPORATION
DOCTRINE OF APPARENT AUTHORITY
BY-LAWS MAY PROVIDE FOR THE COMPENSATION- SEC. 25, RCCP
VACANCY-SEC.25, RCCP
o WITHIN 7 DAYS FROM THE KNOWLEDGE THEREOF SHALL BE REPORTED TO SEC OF SAID
MATTER- SECRETARY
o WITHIN 30 DAYS – NON-HOLDING OF CORPORATIONS
DISQUALIFICATIO- SEC 26, RCCP
o LIST UNDER SEC.26, RCCP IS NOT EXCLUSIVE GROUND FOR DISQUALIFICATION
REMOVAL UNDER RCCP
o REQUISITES:
 MUST DONE THROUGH VOTE, REPRESENTING 2/3 OF THE MEMBERS
o REMOVAL W/O JUST CAUSE IS ALLOWED BY VOTES OF THE 2/3 OF MEMBERS HOLDING
CAPITAL STOCKS
o REMOVAL OF CORPORATE OFFICERS
 REST WITH THE BOARD
 CORPORATE ACT
VACANCIES IN THE OFFICE OF DIRECTORS
o MAY BE FILLED BY REMAINING DIRECTORS OR MEMBERS OF BOARD BY A UNANIMOUS
VOTES
o REASONS FOR VACANCIES
 STOCKHOLDERS
 REMOVAL
 EXPIRATION
 INCREASE OF MEMBERS OF DIRECTORS
 BOARD
 DEATH
 RESIGNATION
 ABANDONMENT
o FILLING-IN FOR VACANCIES IS NOT MANDATORY
HOLD-OVER DIRECTORS
EMERGENCY BOARD
ELECTION REPLACEMENT
o EXPIRATION; NOT LATER THAT THE DAY OF THE EXPIRATION
o ALL OTHER GROUNDS; NOT LATER THAN 45 DAYS
o REPLACEMENT
 WILL SERVE ONLY THE REMAINING PERIOD OF THE REPLACED OFFICER/BOARD
DOCTRINE OF CORPORATE OPPORTUNITY
DUTIES OF BOARD:
o OBEDIENCE
o LOYALTY- DOCTRINE OF CORPORATET OPPORTUNITY
o DILIGENCE- CONCEPT OF BUSINESS MGT RULE
 UNDER THE BUSINESS MGT RULE, THE BOARD IS NOT LIABLE FOR ANY LOSS
 LIABILITY OF OFFICERS/DIRECTORS
o WHEN ACTED IN BAD FAITH- SOLIDARILY LIABLE
o WATERED STOCKS- SEC. 64, RCCP
 SOLIDARILY LIABLE; IF THE DIRECTORS WILL NOT FILE OBJECTION WITH THE
SECRETARY
SELF-DEALING DIRECTORS-SEC.31, RCCP
o IT IS DISCOURAGED DUE TO FIDUCIARY RELATIONSHIP
o STATUS OF CONTRACT IS VOIDABLE
o GENERALLY, VOIDABLE DESPITE THE ABSENCE OF FRAUD.
INTERLOCKING DIRECTORS- SEC.32, RCCP
o NOT PROHIBITED, THUS ALLOWED
o SHALL NOT BE INVALIDATED EXCEPT IN CASES OF FRAUD
o INTEREST; NOMINAL/ SUBSTANTIAL
o OWNERSHIP- 20%
o VOIDABLE
o EXCEPTION
 VOTE OF SUCH DIRECTOR IS NOT NECESSARY IN THE CONTRACT
 LOYALTY OF THE DIRECTOR-SEC.33, RCCP
EXECOM- 3 DIRECTORS
o IF THE BY-LAWS SO PROVIDES, THE BOARD MAY CREATE COMMITTEES
o SEC.34, RCCP- EXECOM ARE NOT ALLOWED TO HOLD- ENUMERATED UNDER SEC.34
o BOARD ITSELT CANNOT CREATE EXECOM UNLESS PROVIDED IN THE BY-LAWS
o MGT COMMITTEE- IS REQUIRED TO CREATE AUDIT COMMITTEE
o CORPORATION VESTED WITH PUBLIC INTERESTS

COVERAGE OF MIDTERMS:

FROM THE START UNTIL BOARD OF DIRECTORS; UNTIL SEC.34, RCCP

MALAYO PA PERO MALAYO NA! GOD BLESS US…   