CORPORATION LAW TRANSCRIPTION
(MARCH 3, 2020)
*Legend:
BOX 
Laws, Jurisprudence and Definition of Doctrines are inside this
 - Advertising corporations should have 70%
FILIPINAS BROADCASTING vs AGO MEDICAL
ISSUE: WON AMEC is entitled to moral damages.
RULING: GR: A juridical person is generally not entitled to
moral damages because, unlike a natural person, it cannot
experience physical suffering or such sentiments as wounded
feelings, serious anxiety, mental anguish or moral shock
(People v. Manero, Jr., G.R. Nos. 86883-85, 29 January 1993,
218 SCRA 85).
XPN:
(1) Article 2219(7) of NCC. This provision expressly
authorizes the recovery of moral damages in cases of
libel, slander or any other form of defamation. Article
2219(7) does not qualify whether the plaintiff is a
natural or juridical person. Therefore, a juridical
person such as a corporation can validly complain for
libel or any other form of defamation and claim for
moral damages.
(2) where the broadcast is libelous per se, the law
implies damages.
APPLICATION: In this case, Alegre simply relied on the words
of the students because they were many and not because there
is proof that what they are saying is true. The act of
broadcasting that the AMEC’s administrators are greedy for
money, that AMEC is a dumping ground and that the students
would become liabilities rather than assets in the society, is
libelous per se. This plainly shows Rima and Alegres reckless
disregard of whether their report was true or not.
CONCLUSION: AMEC is entitled to Moral Damages since the
broadcasts are libelous. This falls under the exception given by
the law.
Applying the Filipinas case, we established the
following:
1. GR: Corporations cannot recover Moral
Damages
XPT: NCC: A juridical person may claim moral
damages in cases of libel, slander or any other
defamation.
- Civil Liabilities; officers; corporation
 Officers cannot be held liable for
the civil liability of the corporation
- Torts
 Only natural persons can commit
torts and not juridical persons
(corporation)
- Due Diligence
 When corporations have employees
or BoD/Officers who failed to
exercise due diligence while
employed with the corporation in
the fulfillment of their function,
both natural (ees and bod/officers)
and juridical (corporation) persons
are liable
Reason:
o Corporations should
exercise due diligence in
the selection and
supervision of its
employees
2. The broadcasters were very careless since they
disregarded whether the reports given by the
students were true
Representatives of the school did not even
have a chance to rebut the statements of the
students since they broadcasted it without
confirming first.
3. BONILLA: The corporations should say a
disclaimer first and that the statements given
would not necessarily represent the views and
opinions of the broadcasting station nor the
broadcasters.
CONSTITUTIONAL PROVISIONS’ IMPOSITION TO
THE RIGHT TO OWNERSHIP
1. MEDIA
- Any media corporation should have 100%
Shares of Stocks
- RATIONALE: media greatly impacts public
opinions; it shapes people’s ideas and/or
mindsets
2. ADVERTISING
Filipino owned Common Shares
3. LANDS OF PUBLIC DOMAIN
- Only Filipino Corporation can lease public
lands
4. SCHOOLS OWNED BY RELIGIOUS ORDERS
SCHOOLS ESTABLISHED BY FOREIGNERS
FOR CHILDREN OF DIPLOMATS
- exempt
5. MINING
- Mining Corporations follow the 60-40 rule
- Foreign investments in mining industry are
accepted but only up to 40%
6. NATURAL RESOURCES INDUSTRY
- Natural Resources Industry follows the 60-
40 rule
7. FILIPINIZED CORPORATIONS
- 60-40 rule
NARRA NICKEL vs REDMONT
ISSUE: WON the petitioner’s nationality is Filipino or
Foreign. FOREIGN
WON Grandfather Test or Control test shall be
used. GRANDFATHER
RULING: In determining WON a corporation is a Filipino
Corp within the ambit of Sec. 2 Art. XII of the 1987 Const.
GR: Control test is the prevailing mode of determining
whether or not a corporation is Filipino or foreign
XPN: Grandfather rule is used when there is doubt based
on the facts and circumstances of the case. (BONILLA
QUESTION: WON grandfather rule is used. NO, because
there is no ‘doubt’
APPLICATION: The grandfather rule is used. The doubt
exists as to the extent of control and beneficial ownership
of MBMI over petitioners and their investing corporate
shareholders. The indicators that there is, indeed, doubt
are:
1. 3 mining corporations are 100% owned by
Canadian foreign investor
2. Similar corporate structure and shareholder
composition
3. Major Filipino shareholder did not pay any amount
with respect to its subscription
4. The act of MBMI in conveying its interests in the
mining corporation
MBMI resorted to corporate layering.
CONCLUSION: Petitioners are considered as foreign
corporation since 60% or more of their capital
stocks/equity are owned by MBMBI who resorted to said
corporate layering which was used to circumvent the
constitution.
Applying the Narra case, we established the
following:
1. Corporations who operate Natural Resources
industry must comply with 60-40 ownership
requirement.
2. Corporate layering is used as a scheme which
lawyers exercise because they want to get
around with the limitation of ownership.
(*corporate layering was discussed in the 3rd
meeting)
PHILIPPINE DEPOSITORY RECEIPTS
Article XVI, 1987 Constitution
Section 11. The ownership and management of mass
media shall be limited to citizens of the Philippines, or to
corporations, cooperatives or associations, wholly owned
and managed by such citizens.
PDR is a security which grants the holder the right to the
delivery of sale of the underlying share. PDRs are not
evidences or statements nor certificates of ownership of a
corporation.
1. Lawyers thought of a way to “avoid” the 60-40
requirement. What they did was to apply the
PDRs. This is used as a scheme of lawyers to
get around the constitutional limit (60-40 req)
2. The reason why they create more incentives
(receipts) is to revive foreign investors
 3. Whereby foreigners can purchase this PDR for
exchange, thus, would not “owning”
corporation but simply acting as depositors,
and the corporation, would be able to raise
additional funds when foreigners buy this PDR.
4. These PDRs are not characterized as shares of
stocks but simply investments securities. In
effect, Filipino corporations can raise a lot of
capital from abroad.
5. What usually happens is that since local
companies are interested in raising capitals,
they introduce PDRs which are attractive to the
foreigners because they get premium interest
from investing it, in turn, such actions are
beneficial to the both parties.
6. Before Shareholders be given dividends,
corporation must first meet financial stability in
these PDRs.
7. SEC was not yet very adamant in what the
scheme is all about so their laid down
requisites were not geared toward setting
Applying the GSIS case, we established the
certain parameters, and because of that,
following:
corporations do tailor PDR to suit to the
requirements of the buying market (investors).
GIVEN EXAMPLES:
a. In the case of Rappler, it issued a lot of
PDRs, for the reason that since its media, it
must be 100% Filipino-owned. The
investors of PDRs of Rappler which were
media companies in USA, want to make
sure that they have control over Rappler.
The foreign investors of PDRs alleged that
PDRs issued (which has specific flaw) says
that the owners of PDRs can change their
“investment” to voting shares to dictate
who are the Board of Directors of Rappler.
This action allowing for investors to own
Rappler by changing it to voting shares is a
direct violation of our constitution.
b. In case of ABS-CBN, they issued PDRs as
well to be able to penetrate the Philippine
Market including those Filipino Markets
abroad. There is a huge amount of
production cost needed to operate TV
stations in the Philippines and abroad, and
that is the reason why ABS-CBN issued
PDRs to foreign investors since it raises
Applying the Halley case, we established the
their capital.
following:
SUMMARY OF PDR: PDR is a form of raising capital.
In conjunction with the effort to raise capital, there is a
question on ‘how control be kept’ in a corporation
which has a lot of foreign investors investing PDRs.
NEGATIVE EFFECT OF PDRs: Investors that do not
like how a corporation operate can simply “dump” the
PDRs they first invested in, which in turn, would
greatly reduce the capital of a corporation and would
probably result in the bankruptcy of it, that is the
reason why corporations do tend allow foreign
investors to “control” it. In effect thereof, this is an act
of circumventing our laws.
Example:
If PDRs issued are 40% equivalent of your
capital stock, there is a huge possibility that
the operation and maintenance of the
corporation would be controlled by the foreign
investors which are not the true owner of it.
(*please refer to our definition of pdr)
We have the mindset that there should be
Filipino control over the corporations, which in
turn, limits our development.
Annual Dividends Policy
- SC should check how much PDRs were issued
since there is the possibility of “control” which
is violative of the laws.
GSIS vs BPI
ISSUE: WON the petitioner is entitled to the change and
use of its corporate name “GSIS Family Bank, a Thrift
Bank”
RULING: The Corporate Code provides the rule on
corporate name and that there are requisites that should
be followed in order to be allowed to change the name.
These are:
1. Compliant Corporation acquired prior right; and
2. The proposed name is identical, deceptive or
confusingly similar, or patently deceptive,
confusing or contrary to existing law.
APPLICATION: The requisites of exclusive use of
corporate name are present in this case in favor of
respondent bank. BPI has successfully established prior
right over the name, “Family Bank” upon its incorporation
in 1969. Whereas petitioner was incorporated as GSIS FB
17 years after the incorporation of BPI. The words “Family
Bank” are identical to each other and the fact that they are
both engaged in banking business might misled people.
CONCLUSION: The court, applying the priority rule, ruled
that respondent bank has the prior right over the use of
corporate name, “Family Bank”.
1. SEC has the authority over the name of
corporations. SEC can dictate whether or
not corporate name is distinguishable to
other corporate names. There is a
probability that an ordinary layman might
get confused over the similarity of the
names. The requisites should be followed.
The corporation should have the prior right
over name.
HALLEY vs. PRINTWELL
ISSUE: WON Trust Fund Doctrine is applicable
RULING: The Trust Fund Doctrine enunciates a rule that
the property of a corporation is a trust fund for the
payment of creditors. The creditor of corporation, in
insolvency, is allowed to maintain an action upon any
unpaid subscriptions and thereby steps into the shoes of
the corporation for satisfaction of its debt. The
stockholders of a corporation are liable for the debts of the
corporation up to the extent of their unpaid subscriptions.
APPLICATION: In this case, Halley, as debtor of BMPI,
failed to discharge her burden of proving the full payment
of her subscriptions, such as presenting the certificate of
stocks issued.
CONCLUSION: Thus, Halley is liable for the debts of the
corporation up to the extent of her unpaid subscription
worth P262,500.
1. Trust Fund Doctrine (*this was discussed
in the 2nd and 4th meetings)
Corporation is the trustee while the
corporate creditors are the beneficial
owners.
2. As far as corporate assets and liabilities are
concerned, these belong to the corporation
and not the stockholders.
3. TFD is in presence in order to enable
corporate creditors not to be unjustly
enriched. As a result, corporation may
demand its corporate officers to pay their
unpaid subscriptions. Once corporate
assets are insufficient, corporation can run
over the stockholders to pay.
4. This is the advantage of no par value (wala
na siyang babayarang unpaid subscription)
and whatever he paid is already deemed as
full payment.
 TITLE II
INCORPORATION AND ORGANIZATION OF
PRIVATE CORPORATIONS
Section 21. Effects of Non-Use of Corporate Charter and
Continous Inoperation. - If a corporation does not formally
organize and commence its business within five (5) year from
the date of its incorporation, its certificate of incorporation shall
be deemed revoked as of the day following the end of the five
(5)-year period.
However, if a corporation has commence its business but
subsequently becomes inoperative for a period of at least five
(5) consecutive years, the Commission may, after due notice
and hearing, place the corporation under delinquent status.
A delinquent corporation shall have a period of two (2) years to
resume operations and comply with all requirements that the
Commission shall prescribed. Upon the compliance by the
corporation, the Commission shall issue an order lifting the
delinquent status. Failure to comply with the requirements and
resume operations within the period given by the Commission
shall cause the revocation of the corporation's certificate of
incorporation.
The Commission shall give reasonable notice to, and coordinate
with the appropriate regulatory agency prior to the suspension
or revocation of the certificate of incorporation of companies
under their special regulatory jurisdiction.
Two periods are involved in this, which are:
1. 5-year period – if corporation does not
formally organize and commence within 5
years, its certificate of incorporation shall
be deemed revoked. In order to apply this,
dapat wala talagang ginawa.
2. 2-year period – delinquent corporation
shall have 2 years to resume operations
and comply with all the requisites the
commission prescribed. If the corporation
does not operate:
a. It shall submit to BIR a notice that it
does not operate anymore;
b. File to SEC indicating any change in
directors; and
c. File financial statements showing
income
FAILURE TO COMPLY WOULD RESULT TO
REVOCATION OF CERTIFICATE OF
INCORPORATION
o SEC will give a period of 2 years within
which the corporation can decide to
reverse direction, otherwise, it would
be forced to close shop.
o When you close shop, and SEC is
aware of it, SEC would allow you to
inquire in BIR, which the latter will
audit you for the last 3 years of the
corporation’s operation.
o BONILLA: if you want to close shop,
then close shop and move somewhere
else (not an advice; usually good for
small corps)
o If it is a foreign corporation- they have
no choice but to close shop
Filipino corporation- SEC will acquire
you first to get clearance from both
BIR and SEC.
o BONILLA: advise to settle their
employees first so that they won’t be
sued, then settle with creditors so that
when they go to SEC, they can show
that they have no more debts, ang
matagal lang naman ay yung sa bir
o Remedy if closed: they have 3 year-
period to file for liquidation
 Any acts can be considered as a
commencement of the business
Examples:
o Opening up offices for people
o Start to advertise the corporation
o Hire a lawyer to handle legal issues
o Lease bldgs.
TITLE III
BOARD OF DIRECTORS/TRUSTEES/OFFICERS
Section 22. The Board of Directors or Trustees of a
Corporation; Qualification and Term. - Unless otherwise
provided in this Code, the board of directors or trustees shall
exercise the corporate powers, condict all business, and control
all properties of the corporation.
Directors shall be elected for a term of one (10 Year from
among the holders of stocks registered in the corporation's
book while trustees shall be elected for a term not exceeding
three (3) years from among the members of the corporation.
Each director and trustee shall hold office until the successor is
elected and qualified. A director who ceases to own at least
one (1) share of stock or a trustee who ceases to be a member
of the corporation shall cease to be such.
The board of the following corporations vested with public
interest shall have independent directors constituting at least
twenty percent (20%) of such board:
(a) Corporations covered by Section 17.2 of Republic
Act No. 8799, otherwise known as "The Securities
Regulation Code", namely those whose securities are
registered with the Commission, corporations listed
with an exchange or with assets of at least Fifty
million pesos (50,000,000.00) and having two
hundred (200) or more holders of shares, each
holding at least one hundred (100) shares of a class
of its equity shares;
(b) Banks and quasi-banks, NSSLAs, pawnshops,
corporations engaged in money service business,
preneed, trust and insurance companies and other
financial intermediaries; and
(c) Other corporations engaged in businesses vested
with public interest similar to the above, as may be
determined by the Commission, after taking into
account relevant factors which are germane to the
objective and purpose of requiring the election of an
independent director, such as the extent of minority
ownership, type of financial products or securities
issued or offered to investors, public interest involved
in the nature of business operations, and other
analogous factors.
An independent director is a person who apart from
shareholdings and fees received from any business or other
relationship which could, or could reasonable be received to
materially interfere with the exercise of independent judgment
in carrying out the responsibilities as a director.
Independent directors must be elected by the shareholders
present or entitled to vote in absentia during the election of
directors. Independent directors shall be subject to rules and
regulations governing their qualifications, disqualifications,
voting requirements, duration of term and term limit,
maximum number of board membership and other
requirements that the Commission will prescribed to
strengthen their independence and align with international best
practices.
CENTRALIZED MANAGEMENT DOCTRINE
The Board of Directors cannot decide as an ‘individual’
on their own, it must be a ‘group’ decision.
GR: Board of Directors, Trustees, or
Corporate Officers shall exercise all power
and control over properties of the
corporation, unless otherwise provided by
the code.
XPN: Section 6: Corporate Action requires
Board of Directors’ approval
o For the most part it is the board who
decides
Business Judgement Rule
o The courts cannot entertain suits filed
by anybody questioning the wisdom of
the decisions made by the BOD. The
board cannot substitute its judgement
for the ‘business judgement’.
o Only the board is allowed sole juris
over corporate matters.
Doctrine Of Limited Powers
The Board’s acts limited only to what:
1. AOI/ by-laws provides
2. Corporate Code provides
3. Other Laws provide
4. Jurisprudence
5. Constitution provides
- This also limits the extent which the board can
manage on the corporation. The said
limitations provide for what the qualifications
of the board members and who can sit on the
board.
1-YEAR TERM OF OFFICE FOR THE BOD
Section 22 provides only 1 year as a term of office for
BOD
 Tenure – how long he sits on the board
o If it goes beyond 1 year, that would be
his tenure, which not to be confused
from the 1-year term
o 1-year term can be extended by the
AOI
o After 1 year, they ought to have an
election
MUST OWN ATLEAST 1 SHARE OF STOCK
A Director must own at least 1 share of stock
o If he loses such, he automatically loses
his right to be a member of the BOD.
o The more shares you own the more
chance for you to sit on the board.
o Owning share with voting powers is so
important because once you are in the
board, you have the power over the
corporation.
INDEPENDENT DIRECTOR
 Corporations vested with public interest:
1. Those listed in the stock exchange
2. Asset of at least 50 million
3. At least 200 Shareholders
4. Each Shareholder owns at least 100
share of the class of its equity shares
5. Banks and other financial companies
 He must be independent of management and
free from any relationship which must easily be
perceived as one.
 Elected as all other directors by the
shareholders.
 In the past, there are proxy for the voters who
are absent. But now, law diluted that because
the shareholders may vote via skype or other
technological method, or in absentia vote (such
as email). With that, it is not proxyfied
anymore
Section 23. Election of Directors or Trustees. - Except when
the exclusive right is reserved for holders of founders' shares
under Section 7 of this Code, each stockholder or member shall
have the right to nominate any director or trustee who
posseses all of the qualifications and none of the
disqualifications and none of the disqualifications set forth in
this Code.
At all elections of directors or trustees, there must be present,
either in person or through a representative authorized to act
by written proxy, the owners of majority of the outstanding
capital stock, or if there be no capital stock, a majority of the
members entitled to vote. When so authorized in the bylaws or
by a majority of the board of directors, the stockholders or
members may also vote through remote communication or in
absentia: Provided, That the right to vote through such modes
may be exercised in corporations vested with public interest,
notwithstanding the absence of a provision in the bylaws of
such corporations.
A stockholder or member who participates through remote
communication or in absentia, shall be deemed present for
purposes of quorum.
The election must be by ballot if requested by any voting
stockholder or member.
In stock corporations, stockholders entitled to vote shall have
the right to vote the number of shares of stock standing in
their own names in the stock books of the corporation at the
time fixed in the bylaws or where the bylaws are silent at the
time of the election. The said stockholder may: (a) vote such
number of shares for as many persons as there are directors to
be elected; (b) cumulate said shares and give one (1)
candidate as many votes as the number of directors to be
elected multiplied by the number of shares owned; or (c)
distribute them on the same principle among as many
candidates as may be seen fit: Provided, That the total number
of votes cast shall not exceed the number of shares owned by
the stockholders as shown in the books of the corporation
multiplied by the whole number of directors to be
elected: Provided, however, That no delinquent stock shall be
voted. Unless otherwise provided in the articles of
incorporation or in the bylaws, members of nonstock
corporations may cast as many votes as there are trustees to
be elected by may not cast more than one (1) vote for one (1)
candidate. Nominees for directors or trustees receiving the
highest number of votes shall be declared elected.
If no election is held, or the owners of majority of the
outstanding capital stock or majority of the members entitled
to vote are not present in person, by proxy, or through remote
communication or not voting in absentia at the meeting, such
meeting may be adjourned and the corporation shall proceed in
accordance with Section 25 of this Code.
The directors or trustees elected shall perform their duties as
prescribed by law, rules of good corporate governance, and
bylaws of the corporation.
ANNUAL SHAREHOLDERS MEETING
 By-laws usually states when ASM is scheduled.
o Usually it is held after calendar/fiscal
year of corporation and that financial
statements have already been audited,
where the shareholder would already
know whether or not the corporation
had good profits for that year.
Most important agenda to be decided every ASM:
1. Ratification
2. Election of board
a. What shareholders are
concerned: whether or not
there would be dividends
b. Annual dividend policy
c. If SH would learn that there
are dividends to be declared,
tataas na ang price
d. Window dressing: shareholders
want to make sure that at the
end of the year ang
mapapakita nila ay maganda
ang profits nila at
magkakaroon ng dividends
Publicly Listed Corporations
o Usually they hire lawyers from law firm
where the partners get the associate to
act as a shareholder in the corporation
so that they can follow the 60-40
requirement.
o In short, scripted mga besh
1st paragraph of Section 23
o Owners of founder’s shares are the
only ones allowed to have the 5-year
term office.
o For the election of the BOD, quorum
must be followed. Plurality of votes is
enough, no need to have majority of
votes.
How does the shareholders vote?
o Through Cumulative Voting – total
number of shares times total number
of directors seated on the board equals
your total votes
No. of Shares x No. of Directors
= your total votes

Ex.:
20 shares x 5 directors = 100 votes
that you can use
o In common votes, pwedeng gamitin
lahat ng vote or pwede ring spread it
out
Delinquent shareholders - they cannot vote; means
they are delinquent in paying their unpaid
subscriptions even when the directors told them to
pay.
Non Stock Corporations
o For NSC, only 1 vote per trustee is
allowed, unless, by-laws allow
cumulative voting.
How do you get elected to the board?
o Mere plurality is sufficient
If cannot hold the ASM
o Need to notice SEC 30 days before why
you would not have the meeting as
scheduled and give a good reason why
because the law allows in absentia
meeting.
BONILLA: it is better not put very specific date
(such as March 1) cos it may fall in weekends; it is
better if not specific (such as 1st Monday of March)
No failure of election in the election of BOD could
happen because in absentia voting is now allowed.
Section 24. Corporate Officers. - Immediately after their
election, the directors of a corporation must formally organize
an elect: (a) a president, who must be a director; (b) a
treasurer, who must be a resident of the Philippines; and (d)
such other officers as may be provided in the bylaws. If the
corporation is vested with public interest, the board shall also
elect compliance officer. The same person may hold two (2) or
more positions concurrently, except that no one shall act as
president and secretary or as president and treasurer at the
same time, unless otherwise allowed in this Code.
The officers shall manage the corporation and perform such
duties as may be provided in the bylaws and/or as resolved by
the board of directors.
Who Are The Corporate Officers
1. President
2. Treasurer
3. Secretary
 There are other corporate officers, but must be
put in the by-laws because consequences can
happen.
Consequences: If employee, under labor law,
you have security of tenure (must have legal
or just cause for termination or if you have
terminated, your remedy is under labor law or
jurisdiction under NLRC), if corporate officer,
you may be removed with or without cause.
Why? Because corporate officers are elected
every year.
AGENDAS:
 1st agenda is election of officer
o Corporate officers are subject to the
preference of the board.
o President does not need to be a
resident of PH, for regular
corporations. President is the only one
who cannot be a director. For other
corporations not subject to
constitution, president need not be
citizen nor resident of the PH
o Treasure must be a resident of PH but
need not be a citizen. Can treasure be
a director? Not necessarily
o Secretary need to be both resident and
citizen of PH
o Incorporators need not have a majority
of Filipino incorporators because you
can now have incorporators who are
corporation itself.
o Officers and agents of board are
subject to doctrine of limited powers.
They can only act and perform acts
that are provided in the by-laws or
designated by board and what
law/constitution provides.
Section 25. Report of Election of Directors, Trustees and
Officers, Non-holding of Election and Cessation from Office. -
Within thirty (30) days after the election of the directors,
trustees and officers of the corporation, the secretary, or any
other officer of the corporation, the secretary, or any other
officer of the corporation, shall submit to the Commission, the
names, nationalities, shareholdings, and residence addresses
of the directors, trustees and officers elected.
The non-holding of elections and the reasons therefor
shall be reported to the Commission within thirty (30)
days from the date of the scheduled election. The report
shall specify a new date for the election, which shall not
be later than sixty (60) days from the scheduled date.
If no new date has been designated, or if the rescheduled
election is likewise not held, the Commission may, upon the
application of a stockholder, member, director or trustee, and
after verification of the unjustifiable non-holding of the
election, summarily order that an election be held. The
Commission shall have the power to issue such orders as may
be appropriate, including other directing the issuance of a
notice stating the time and place of the election, designated
presiding officer, and the record date or dates for the
determination of stockholders or members entitled to vote.
Notwithstanding any provision of the articles of incorporation
or by laws to the contrary, the shares of stock or membership
represented at such meeting and entitled to vote shall
constitute a quorum for purposes of conducting an election
under this section.
Should a director, trustee or officer die, resign or in any
manner case to hold office, the secretary or the director,
trustee or officer of the corporation, shall, within seven (7)
days form knowledge thereof, report in writing such fact to the
Commission.
DOCTRINE OF APPARENT AUTHORITY
- 3rd persons may rely on such apparent
authority in dealing with the corporation itself.
Ex. President is always the head of the
corporation, when he executes a contract and
3rd person deals with that president,
presumably it is the president who binds the
corporation in the contract.
Requisites:
1. Acting in pursuit to the primary
business of the corporation
2. Corporation must have been acting in
conformity with the normal business of
corporation, unless there is a resolution
by board allowing him such.
3. Corporation itself accepted impliedly or
expressly the consented contracts with
3rd person, such as accepting the
benefits of the contract.
Ex. Buying all new model of laptops
4. 3rd party must not be stupid
(BONILLA), acted in good faith
 Any change in the composition of the members
of the board must be reported in writing to the
commission.
Section 26. Disqualification of Directors, Trustees or
Officers. - A person shall be disqualified from being a director,
trustee or officer of any corporation if, within five (5) years
prior to the election or appointment as such, the person was:
(a) Convicted by final judgment:
(1) Of an offense punishable by imprisonment for a period
exceeding six (6) years;
 (2) For violating this Code; and

(3) For violating Republic Act No. 8799, otherwise known

as "The Securities Regulation Code";

(b) Found administratively liable for any offense involving

fraudulent acts; and

(c) By a foreign court or equivalent foreign regulatory authority

for acts, violations or misconduct similar to those enumerated
in paragraphs (a) and (b) above.

The foregoing is without prejudice to qualifications or other

disqualifications, which the Commission, the primary
regulatory agency, or Philippine Competition Commission may
impose in its promotion of good corporate governance or as a
sanction in its administrative proceedings.

DISQUALIFICATION

 Disqualification is in period of 5 years

o If you are convicted for any final
Judgement
o There can be additional disqualification
aside from the5 year period.
 If 6 years na, pwede na lol haha

Additional Cases for Recitation:

1. Cebu Country Club, Inc. vs. Elizagaque
o 542 SCRA 65 , January 18, 2008
2. Marc II Marketing, Inc. vs. Joson
o 662 SCRA 35 , December 12, 2011
3. Locsin vs Nisan
o GR No 185567, October 20, 2010
4. Valle Verde Country Club, Inc. vs. Africa

o 598 SCRA 195 , September 04, 2009