Significance of a Board Resolution

in Corporations
This article defines a Board Resolution. Corporate powers are exercised by the Board of
Directors. A Board Resolution is a formal document which serves as evidence of the actions
and matters taken by the directors of the corporation in the meeting duly held.

A Board Resolution is a formal document which serves as evidence of the actions and
matters taken by the directors of the corporation in the meeting duly held.

Republic Act No. 11232, otherwise known as the Revised Corporation Code of the
Philippines, defines a corporation as an artificial being created by operation of law, having
the right of succession and the powers, attributes, and properties expressly authorized by
law or incidental to its existence. Since a corporation’s existence is only by fiction of law, it
can only exercise its rights and powers through its directors, officers, or agents, who are all
natural persons (Lanuza, Jr. v. BF Corporation, G.R.

The Board of Directors (or Trustees)

must act as a body in order to
exercise corporate powers.
It bears stressing that in order to exercise corporate powers, the board of directors (or board
of trustees) must act as a body and not individually. As enunciated by the Supreme Court in
the case of University of Mindanao, Inc. vs. Bangko Sentral ng Pilipinas, G.R. No.
194964, 11 January 2016), individual trustees (or directors) are not clothed with corporate
powers just by being a trustee (or director). Hence, the individual director cannot bind the
corporation by himself or herself.

The discussion and decision of the

Board of Directors are formalized in
a document called the Board
Resolution.
Since the corporation exercises corporate powers through its Board of Directors, meetings
are generally held by the Board to discuss the going concerns of the corporation as well as
approve or disapprove corporate measures. This discussion is documented in the minutes
of the meeting. Thereafter, the said minutes are formalized in a document called a Board
Resolution. Consequently, a Board Resolution is a formal document which serves as
evidence of the actions and matters taken by the directors of the corporation in the meeting
duly held.

Contents of a Board Resolution.

The Board Resolution starts with the “Whereas clauses” which recite the preliminary facts
such as the date of the meeting, intent of the directors, etc. Thereafter, it shall enumerate
the measures taken by the board. It usually begins with the statement “NOW,
THEREFORE, for and in consideration of the foregoing premises and pursuant thereto, a
majority of the Board of Directors of the Corporation hereby approves the following
resolutions:”. This is followed by the resolutions of the board. Finally, it ends with the date
and place when these resolutions were approved and adopted.

The Board Resolution is duly signed by the directors present in the meeting. There is no
requirement that a Board Resolution be notarized. However, when Board Resolutions are
used as evidence in court trials, notarization gives more credence to the document.

==

COLUMNISTS

FOR LAW'S SAKE

Is a board resolution or
secretary’s certificate always
required?
By: John Philip Siao - @inquirerdotnet
INQUIRER.net / 10:07 AM August 08, 2023

In the corporate world, decisions are made and actions are taken through
formal processes to ensure transparency and legality. A corporation
operates through its board of directors or trustees, which exercises
corporate powers and controls all its business and properties.

When dealing with corporations, parties often request corporate

representatives to present either a board resolution or a secretary’s
certificate to demonstrate their authorization to act on behalf of the
company. However, there has been a debate about whether these
documents are always necessary and whether a corporation can be held
accountable for actions taken without them.
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A board resolution is an official written document, signed by the

members of the board of directors, that details decisions or actions taken
by the board of a corporation during their meeting.

On the other hand, a secretary’s certificate is a document issued and

signed by the corporate secretary of a corporation, who is the person
responsible under the law for maintaining the company’s records, that
serves as an official attestation of the accuracy and authenticity of
corporate records, resolutions (including board resolutions) and other
documents.
Notably, when a Secretary’s Certificate appears to show no irregularity,
third parties may rely on the facts and contents stated in the document
without having to further investigate.

The rule is, it is always good practice to require the presentation of board
resolutions and secretary’s certificates when transacting with
representatives of corporations, to ensure that the representative is
properly authorized.

Notwithstanding the same, there are instances when the board resolution
or secretary’s certificate, for various reasons, are not provided. This
article explores various scenarios where such documents may not be
strictly required and delves into recognized exceptions and practices.

1. Specific corporate officers have been recognized to be authorized

In filing certain complaints and petitions with the Courts, the rules
require the submission of a Verification and/or Certification against
forum shopping executed by a duly authorized representative when the
party is a corporation.

The Supreme Court has recognized the authority of some corporate

officers to sign this verification and certification for the corporation even
in the absence of the submission of a board resolution or secretary’s
certificate evidencing the authority of the signatory.

The following have been found to have the authority to sign for the
corporation without need of a board resolution:

(a) the chairperson of the board of directors

(b) the president of a corporation
(c) the general manager or acting general manager,
(d) personnel officer
(5) an employment specialist in a labor case
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The Supreme Court clarified that the determination of the sufficiency of
the authority of the concerned officers was done on a case to case basis.
The rationale in justifying the authority of corporate officers or
representatives of the corporation to sign the verification or certificate
against forum shopping is that they are in the best position to verify the
truthfulness and correctness of the allegations in the petition. (Swedish
Match Philippines, Inc. v. The Treasurer of the City of Manila, G.R. No.
181277, July 3, 2013)

However, with the amendments to the 1997 Rules of Civil Procedure

which now provides that for pleadings filed with the courts that are
required to be verified or under oath, the authorization of the signatory
to act on behalf of a party, whether in the form of a secretary’s certificate
or a special power of attorney, should already be attached to the
pleading. Failure to comply with the foregoing requirements shall not be
curable by mere amendment of the complaint or other initiatory
pleading but shall be cause for the dismissal of the case. (Rule 7, Sections
4 and 5, Rules of Court)

This requirement that the Secretary’s Certificate or proof of authority was

not previously expressly stated to be required under the previous Rules
of Court.

2. Ratification by the corporation

Acts of an officer that are not authorized by the board of
directors/trustees do not bind the corporation unless the corporation
ratifies the acts or holds the officer out as a person with authority to
transact on its behalf. (University of Mindanao, Inc. v. Bangko Sentral ng
Pilipinas, et al., G.R. No. 194964 – 65, Jan 11, 2016)

There are two kinds of unauthorized acts, the first are those that are void
and, the second are those that are merely ultra vires.
Corporate acts or contracts which are void from the beginning and may
not be ratified are those illegal acts which are contrary to law, morals, or
public order, or contravene some rules of public policy or public duty.

Ultra vires acts are those acts that are merely beyond the powers of the
corporation or done without the proper authorization. Since these acts
are not illegal and void they are merely voidable and may become
binding and enforceable when ratified by the corporation. Notably, when
ratified by the corporation, the approval relates back to the time of the
act or contract ratified, and is equivalent to original authority.

3. Apparent Authority
The Supreme Court has also recognized presumed or apparent authority
which have been considered to bind corporate representatives in
instances when the corporation, through its silence or other acts of
recognition, allowed others to believe that persons, through their usual
exercise of corporate powers, were conferred with authority to deal on
the corporation’s behalf.

The doctrine of apparent authority does not go into the question of the
corporation’s competence or power to do a particular act. It involves the
question of whether the officer has the power or is clothed with the
appearance of having the power to act for the corporation. A finding that
there is apparent authority is not the same as a finding that the corporate
act in question is within the corporation’s limited powers.

The rule on apparent authority is based on the principle of estoppel. (Art.

1431 and 1869, Civil Code)

Accordingly, a corporation is estopped by its silence and acts of

recognition.

4. The corporation’s bylaws already grants the authority

In a case decided by the Supreme Court, it was declared that a
Corporation can be held responsible for a loan contracted by its President
who acted without a board resolution. In that case, the By-Laws of the
corporation provided that the company’s President shall have the
following powers:

a. Borrow money for the company by any legal means whatsoever,

including the arrangement of letters of credit and overdrafts with any
and all banking institutions

b. Execute on behalf of the company all contracts and agreements which

the said company may enter into

c. Sign, indorse, and deliver all checks, drafts, bill of exchange,

promissory notes and orders of payment of sum of money in the name
and on behalf of the corporation

Since the by-laws had expressly given the president the power to borrow
money, execute contracts, and sign and indorse checks and promissory
notes, in the name and on behalf of the Corporation, the president need
not anymore secure a resolution from the company’s board of directors.
(Cebu Mactan Members Center Inc. v. Masahiro Tsukahara, G.R. No.
159624, July 17, 2009)

(The author, Atty. John Philip C. Siao, is a practicing lawyer and founding partner of
Tiongco Siao Bello & Associates Law Offices, an Arbitrator of the Construction
Industry Arbitration Commission of the Philippines, and teaches law at the De La Salle
University Tañada-Diokno School of Law. He may be contacted at
jcs@tiongcosiaobellolaw.com. The views expressed in this article belong to the author
alone.)

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