Title III corporation refuse to sue or are the ones to
BOARD OF DIRECTORS/TRUSTEES AND
OFFICERS
1. Correlation among the BOD/BOT, officers
and stockholders
Stockholders periodically elect the
BOD/BOT, who are charged with the
management of the corporation. The board,
in turn, periodically elects officers to carry out
management functions on a day-to-day
basis.
Stockholders have residual powers over
fundamental and major corporate changes.
2. Acts of management vs ownership
Acts of management pertain to BOD/BOT,
and those of ownership, to the stockholders
or members.
BOD/BOT cannot act alone, but must seek
approval of the stockholders/members.
3. What is business judgment rule?
Contracts intra vires entered into by the BOD
are binding upon the corporation and courts
will not interfere unless such contracts are so
unconscionable and oppressive as to
amount to wanton destruction to the rights of
the minority.
 Intra vires – within the powers
4. Where do corporate powers reside?
Once the BOD/BOT are elected, the
stockholders or members relinquish
corporate powers to the board.
5. Who has power to manage the
corporation?
The BOD/BOT shall exercise the corporate
powers, conduct all business, and control all
properties of the corporation.
6. What is meant by apparent or ostensible
authority?
It is the power of an agent to act on behalf of
a principal, even though not expressly or
impliedly granted. This power arises only if a
third party reasonably infers, from the
principal’s conduct, that the principal granted
such power to the agent.
7. Derivative suit
The right of a stockholder to sue on behalf of
the corporation to protect or vindicate
corporate rights, whenever officials of the
be sued.
8. Authority of the BOD/BOT
BOD/BOT has the sole authority to
determine policies, enter into contracts, and
conduct the ordinary business of the
corporation within the scope of its charter.
The authority of BOD/BOT is restricted to the
management of the regular business affairs
of the corporation, unless more extensive
power is expressly conferred.
9. What are the 3 levels of control?
(1) BOD – responsible for corporate policies
and general management of the
corporation’s business affairs; may
delegate some of its functions to officers
or agents
(2) Officers – execute policies laid down by
the board
(3) Stockholders – have the residual power
over fundamental corporate changes
10. Who has the power to decide whether a
corporation can enter into a binding
contract?
The power and responsibility to decide
whether a corporation can enter into a
binding contract is lodged with the BOD.
General rule: In the absence of authority
from the BOD, no person, not even its
officers, can validly bind a corporation.
11. May the corporate powers be directly
conferred upon corporate officers?
Yes. The corporate powers may be directly
conferred upon corporate officers or agents
by statute, AOI, by-laws or by resolution or
other act of the BOD.
12. Qualifications of BOD/BOT
(1) For a stock corporation, ownership of at
least 1 share of the capital stock of the
corporation in his own name.
For a non-stock corporation, only
members of the corporation can be
elected.
(2) Must be capacitated
(3) Must be of legal age
(4) Other qualifications prescribed in the by-
laws of the corporation.
13. Who is an independent director?
A person who is independent of
management and free from any business or
other relationship which could be perceived
 to materially interfere with the exercise of May or may not Must be a Must be a
independent judgment in carrying out the Secretary be a director Filipino resident of the
Citizen Philippines
responsibilities as a director.
May or may not Need not be Must be a
Treasurer be a director a Filipino resident of the
14. What are the requirements for the Citizen Philippines
election of directors/trustees? Compliance
If the corporation is vested with public interest.
(1) The owners of the majority of the Officer
Other
outstanding capital stock, or if there be officers
Qualification may be provided for in the by-laws.
no capital stock, a majority of the
members entitled to vote must be Note: Any 2 or more positions may be held by the
present, either in person or by same person concurrently except that no one shall
representative authorized to act by act as president and secretary or president and
written proxy. treasurer at the same time.
(2) When authorized in the by-laws or by a
majority of the BOD, the stockholders or 18. Who is a corporate employee?
members may also vote through remote A person who is employed by the action of
communication or in absentia. the managing officer of the corporation.
(3) The election must be by ballot, if
requested by any voting 19. Quorum at the meeting of BOD/BOT
stockholder/member. General rule: A majority of the BOD/BOT, as
(4) In stock corporations, the total number of fixed in the AOI, shall constitute a quorum for
votes cast shall not exceed the number the transaction of corporate business, and
of shares owned by the stockholders every decision of at least a majority of
multiplied by the whole number of BOD/BOT present at the meeting shall be
directors to be elected. Provided, no valid as a corporate act.
delinquent stock shall be voted. Exception: If the AOI or by-laws provide for a
(5) In nonstock corporations, the members greater majority.
may cast as many votes as there are
trustees to be elected but may not cast  Majority means 50% + 1
more than 1 vote for 1 candidate.
(6) Nominees for BOD/BOT receiving the 20. Requirement regarding report of election
highest number of votes shall be and its objectives
declared elected. Requirement
Within 30 days after the election of
15. Define corporate officer BOD/BOT, the secretary, or any other officer
A person who shall manage the corporation shall submit to the Commission, the names,
and perform such duties as may be provided nationalities, shareholdings, and residence
in the by-laws and/or as resolved by the addresses of the BOD/BOT and officers
BOD. elected.

16. Are the acts of corporate officers binding Objective

the corporation? To give the public information under sanction
General rule: The acts of corporate officers of oath of responsible officers, of the nature
within the scope of their authority are binding of business, financial condition and
on the corporation. operational status of the company together
Exception: When officers exceed their with information on its key officers or
authority, their actions cannot bind the managers.
corporation, unless it has ratified such acts or
is estopped from disclaiming them. 21. Grounds for disqualification of directors,
trustees or officers
17. Who are the corporate officers? (1) If within 5 years prior to the election or
appointment, the BOD/BOT or officers
Officer Requirement Citizenship Residency
were convicted by final judgment of an
i. Must be a Need not be Need not be a
director a Filipino resident of the offense punishable by imprisonment for a
ii. Must be a Citizen Philippines period exceeding 6 years:
President stockholder a. For violating the Revised Corporation
on record
Code; and
of at least 1
share
b. For violating R.A. 8799 The
Securities Regulation Code
 (2) If within 5 years prior to the election or
appointment, the BOD/BOT or officers
were found administratively liable for any
offense involving fraudulent acts.
(3) If within 5 years prior to the election or
appointment, the BOD/BOT or officers
were found by a foreign court or
equivalent foreign regulatory authority for
acts, violations or misconduct similar to
(1) and (2).
22. Can a director be remove with or without
cause?
General rule: Removal of directors or
trustees may be with or without cause.
Exception: Removal without cause may not
be used to deprive minority stockholders or
members of the right of representation to
which they may be entitled.
23. How are the directors (trustees)
removed?
Any director or trustee of a corporation may
be removed from office by a vote of the
stockholders holding 2/3 of the outstanding
capital stock, or if a non-stock corporation, by
a vote of 2/3 of the members entitled to vote:
Provided, that such removal shall take place
either at a regular meeting of the corporation
or at a special meeting called for the
purpose, and in either case, after previous
notice to stockholders or members of the
corporation of the intention to propose such
removal at the meeting.
24. Who has the power to remove directors or
trustees?
The power to remove directors or trustees
belongs to the stockholders or members
exclusively.
a majority of the outstanding capital stock
or a majority of the members entitled to
vote.
26. In case of a special meeting for the
removal of director or trustee, who shall
call the meeting?
It must be called by the secretary on order of
the president.
27. If the president does not order the special
meeting to be called, who may call such
meeting?
It must be called by the secretary upon
written demand of the stockholders
representing at least a majority of the
outstanding capital stock or a majority of the
members entitled to vote.
28. Who may call the meeting if the secretary
fails or refuses to call the special meeting
or fails or refuses to give notice?
The stockholder or member signing the
demand may call for the meeting by directly
addressing the stockholders or members.
29. In what manner shall notice of the time
and place of such meeting as well as the
intention to propose such removal be
made?
It must be given by publication or by written
notice prescribed in the Code.
30. What vote is required for the removal of a
director or trustee?
The vote of the stockholders representing at
least 2/3 of the outstanding capital stock or
2/3 of the members entitled to vote in case of
non-stock corporation.

25. Requisites for the removal of directors or

trustees
(1) The removal should take place at a
regular or special meeting duly called for
the purpose;
(2) The BOD/BOT can only be removed by a
vote of the stockholders representing at
least 2/3 of the outstanding capital stock
or 2/3 of the members entitled to vote in
case of non-stock corporation;
(3) There must be a previous notice to
stockholders or members of the
corporation of the intention to propose
such removal at the meeting; and
(4) The special meeting of the stockholders
or members for the propose of removal
must be called by the secretary on order
of the president or on the written demand
of the stockholders representing at least