CORP.

LAW OUTLINE 6 (RCCP))

Prof. M.I.P. Romero

Xl. CORPORATE POWERS

1) Express, Implied, Inherent - Sections 35 to 44

Y-1 Leisure v. Yu GR 207161; Sept. 8, 2015

2) Ultra Vires Doctrine --- Sec. 44; Legal Consequences

a) illegal vs. ultra vires
b) legal consequences of ultra vires acts
- if fully executed by both parties
- if executory on both ends
- if partially executed
c) intra vires but not authorized/ lacking in formalities

Pirovano, et al v. De la Rama 96 Phil. 335 (1954)

Rep. v. Acoje Mining 7 SCRA 631 (1963)
Gokongwei Jr. v. SEC, et al. 89 SCRA 336 (April 11,1979)
(re investment of corp. funds in another corporation)

XlI. CONTROL & MANAGEMENT

OBJECTIVE: to know how EACH group controls the

corporation.

1) Board of Directors/Trustees

a) Stock corp – Directors

- Independent directors/trustees
- Sections 22, 26 (powers, term of office)

Boyer-Roxas v. CA 211 SCRA 470

b) Non-stock corp. – Trustees

- Sec. 91

c) Close corp. - Secs. 96, Sec.103

 - provisional directors

d) Special corporations – Educational --- Sec. 106

Religious – Sec. 108-111, Sec. 114 (f)

e) One Person Corp. – Sec. 121, 125

f) Meetings of BOD/T – Sec. 48, 52, 53

-- Close corp. – Sec. 96 (c), 100

- NOT allowed --- by proxy

- ALLOWED --- by remote communication

Expert Travel & Tours v. CA 459 SCRA 147

g) Election of DIR/TEES - Sec. 23, 25, 26

- Sec. 96 (b)
- Sec. 121

SH or Members may elect D/T thru the ff modes:

g.1) default mode
- in person
- written proxy
g.2) if authorized in B/L or majority of voting
OKS/Members
- remote communication
- in absentia
g.3) if corp vested w/ public interest
- in person, by written proxy, remote
communication, in absentia
g.4) by ballot if requested

Types of Voting – Sec. 23 (5)

- straight voting
- cumulative voting

Disqualifications – Sec. 26
Removal – Sec. 27
Vacancy – Secs. 28; Emergency board
 Sec. 109 (d); 112 – corp. sole
Sec. 125 - OPC

Rev. Ao-as v. CA June 20, 2006

Tan v. Sycip G.R. 153468 (Aug.17, 2006)
Valle Verde v. Africa Sept. 4, 2009

2) Officers – Sec. 24, 26

91 (par. 3) – non-stock
96 (last par.) – close corp.
121; 122 – OPC
Revised Code of Civil Procedure – on service of summons
on corporations

Marc ll v. Joson Dec. 12, 2011

Yu Chuck v. Kong Li Po 46 Phil 608 (1924)
Woodchild Holdings v. Roxas Electric 436 SCRA 235
People’s Air Cargo v. CA Oct. 7, 1998
** E.B. Villarosa v. Benito Aug. 6, 1999
(** See how this was amended by the Revised Code of Civil
Procedure)
Cagayan Valley Drug v. CIR Feb. 13, 2008

3) Executive, Mgt./ Special Committees - Sec. 34

Filipinas Port Services, Inc. v. Go Mar. 16, 2007

4) Stockholders –
a) Sec. 23 and OTHER provisions requiring SHs’ action
b) Meetings – Sec. 48 - 50; sec. 53
Quorum – sec. 51; 96 (c)

Tan v. Sycip Aug.17, 2006

c) Close corps - allows mgt. by SH instead of by BOD

- Sec. 96, last 2 paragraphs

5) Members – Sec. 88 - 90
 Lim v. Moldex Land, Inc. Jan. 25, 2017

XIlI. DUTIES OF DIRECTORS, OFFICERS

& CONTROLLING STOCKHOLDERS

Three - fold duty of directors --- Diligence, Loyalty, Obedience

Sec. 21 of New Civil Code

1) Compensation of directors – Sec. 29

Western Institute of Technology v. Salas 278 SCRA 216

2) Business Judgment Rule – Sec. 22 (par. 1)

Exception - Sec. 30

Board of Liquidators v. Kalaw 20 SCRA 987

Benguet Electric Coop. v. NLRC 209 SCRA 55

3) Self-dealing directors- Sec. 31 (NOTE error in revision)

Prime White Cement v. IAC 220 SCRA 103

4) Interlocking directors – Sec. 32

5) Doctrine of Corporate Opportunity – Sec. 33

Gokongwei v. SEC et al. April 11, 1979
(re being director in competing corporations)

6) Duty to stockholders - Special Facts Doctrine

Strong v. Repide 41 Phil. 947

7) Duty to creditors – Steinberg v. Velasco 52 Phil. 953

8) Watered Stocks - Sec. 64

9) Duty of shareholders in close corps. – Sec. 96 (par. 2);

- Sec. 99 (d and e)