VII. BOARD OF DIRECTORS approval for certain specific acts.

[Great Asian
Sales Center Corp v. CA, (2002)]
AND TRUSTEES
The power to purchase real property is
A. DOCTRINE OF CENTRALIZED vested in the BOD or trustees. While a
corporation may appoint agents to negotiate for
MANAGEMENT
the purchase of real property needed by the
corporation, the final say will have to be with the
A.1. BOARD IS SEAT OF CORPORATE
board, whose approval will finalize the
POWERS
transaction. [Spouses Constantine Rime v.
General Rule. Unless otherwise provided in this
Bukal Enterprises and Development Corporation
Code, the corporate powers of all
(2003)]
corporations formed under this Code shall
Indisputably, one of the rights of a
be exercised, all business conducted and all
stockholder is the right to participate in the
property of such corporations controlled and
control or management of the corporation. This
held by the BOD or trustees to be elected from
is exercised through his vote in the election of
among the holders of stocks, or where there is
directors because it is the BOD that controls or
no stock, from among the members of the
manages the corporation. [Gamboa v. Teves,
corporation, who shall hold office for 1 year until
(2011))
their successors are elected and qualified. [Sec.
23]
I. REQUISITES OF A VALID CORPORATE
Exceptions:
ACT BY THE BOD
(1) In case of an Executive Committee duly
(a) The Board must act as a BODY in a
authorized in the by-laws; [Sec. 35]
meeting.
(2) In case of a contracted manager which may
(b) There must be a VALIDLY constituted
be an individual, a partnership, or another
meeting.
corporation
(c) There act must be supported by a
Note: In case the contracted manager is another
MAJORITY OF THE QUORUM duly assembled
corporation, the special rule in Sec. 44 applies.
(Exception: Election of officers requires a vote of
(3) In case of close corporations, the
majority of ALL the members of the board)
stockholders may manage the business of the
(d) The act must be within the powers
corporation rather than by a BOD, If the Articles
conferred to the Board.
of Incorporation so provide (Sec. 97]

The Corporation Code of the Philippines

vests in the BOD the exercise of the corporate
powers of the corporation, save in those
instances where the Code requires stockholders'
II. LIMITATIONS ON POWERS OF the general course of business. [Peoples A
BOD/TRUSTEES Ircorgo v. CA, (1998))

(1) Limitations imposed by the Constitution,

statutes, articles of incorporation or by-laws; B. BUSINESS JUDGMENT RULE
(2) Certain acts of the corporation that require
joint action of the stockholders and BOD: General Rule: Directors cannot be held liable
(a) Removal of director [Sec. 28] for mistakes or errors in the exercise of their
(b) Amendments of Articles of business judgment as long as they acted in
Incorporation [Sec. 16] good faith, with due care and prudence.
(c) Fundamental changes [Sec. 6] Contracts entered into by the BOD are binding
(d) Declaration of stock dividends [Sec. upon the corporation and courts will not
43] interfere.
(e) Entering into management contracts Exceptions:
[Sec. 44] (1) If the contracts are so unconscionable and
(f) Fixing of consideration of non-par oppressive as to amount to a wanton destruction
shares [Sec. 62] of the rights of the minority [Ingersoll v. Mobbon
(g) Fixing of compensation of directors Sugar (1927)];
[Sec. 30] (2) If they violate their duties under Sec. 31
(3) Cannot exercise powers not possessed by (director willfully and knowingly assents to
the corporation. patently unlawful acts of the corporation, or are
guilty of gross negligence or bad faith); and
A.2. PRINCIPLE ON DELEGATION OF (3) If they violate Sec. 34 (disloyalty of a director
BOARD POWER who acquires for himself a business opportunity

Under Sec 23, the power and the responsibility that should have belonged to the corporation,

to decide whether the corporation should enter unless his act is ratified by a 2/3 vote of

into a contract that will bind the corporation is stockholders).

lodged in the board, subject to the articles of

incorporation, by-laws, or relevant provisions of Consequences of the Business
law. However, just as a natural person may Judgment Rule:
authorize another to do certain acts for and on (1) The resolution, contract and transactions of
his behalf, the BOD may validly delegate some the board cannot be overturned or set aside by
of its functions and powers to off kers, the stockholders or members and not even by
committees or agents. The authority of such the courts under the principle that the business
individuals to bind the corporation is generally of the corporation has been left to the hands of
derived from law, corporate by-laws or the board
authorization from the board, either expressly or (2) Directors and duly authorized officers
impliedly by habit, custom or acquiescence in cannot be held personally liable for acts or
contracts done with the exercise of their C. TENURE, QUALIFICATIONS AND
business judgment. DISQUALIFICATIONS OF DIRECTORS
Exceptions: OR TRUSTEES
(1) When the Corporation Code expressly Cl. TENURE
provides otherwise Directors shall hold office for 1 year until their
(2) When the Directors or officers acted with successors are elected and qualified (Sec 23)
fraud, gross negligence or in bad faith (Sec. 31). Term v. Tenure [Voile Verde Country Club v.
(3) When Directors or officers act against the Alma, 2009]
corporation in conflict of interest situation
Term Tenure
(Villanueva).
Time during which the The period within
officer may claim to hold which the director
Remedies In case of Mismanagement
the office as of right, and actually holds
(1) Removal of directors pursuant to Sec. 28
fixes the interval after office, including
(2) Derivative suit or complaint filed with the
which the several the holdover
RTC) (Sec. 5.2, R.A. 8799, Securities
incumbents shall period after the
Regulation Code; A.M. No. 01-2-04 SC interim
succeed one another. end of his term
Rules of Procedure Governing Intra-corporate
Not affected by Includes holdover
Controversies)
holdover.
(3) Receivership
Fixed by statute and it May be shorter or
(4) Injunction if the act has not yet been done
does not change simply longer (In case of
(5) Dissolution if abuse amounts to a ground for
because the office may a holdover) than
quo warranto but Solicitor General refuses to act
have become vacant, the term for
nor because the reasons within or
NOTE:
Incumbent holds over in beyond the power
Dean Villanueva opined that a derivative suit
office beyond the end of of the incumbent
may be an exception to such Rule: this occurs
the term due to the fact
when it is apparent that the Board is not in a
that a successor has not
position to validly exercise its business judgment
been elected and has
for the protection of the corporation, e.g., when
failed to qualify.
the Board itself has committed an act causing
1 Year
damage to the corporation or when the Board is
placed in a conflict of interests scenario whereby
it is unlikely that it would use such business C2. QUALIFICATIONS
discretion to file such suit for the best interest of (1) If STOCK, director must own at least 1 share
the corporation. of the capital stock, which stock shall stand in
his own name [Sec. 23]
Exception: Trustee in a voting trust may be principle that where the director is so employed
elected director/trustee. in the service of a rival company, he cannot
(2) If NON-STOCK, trustee must be a member. serve both, but must betray one or the other.
Such an amendment "advances the benefit of

Qualifications: the corporation and is good." [Gokongwei, Jr. v.

(1) Majority of the directors/trustees must be SEC (1979)]

residents of the Philippines.

(2) Natural person D. ELECTIONS
(3) Of Legal Age
(4) Other qualifications as may be prescribed in D.1. CUMULATIVE VOTING
the by-laws of the corporation. I. CUMULATIVE VOTING FOR ONE
With the omission of the phrase "in his
CANDIDATE
own right" the election of trustees and other
A stockholder is allowed to concentrate his votes
persons who in fact are not beneficial owners of
and give one candidate as many votes as the
the shares registered in their names on the
number of directors to be elected multiplied by
books of the corporation becomes formally
the number of his shares shall equal.
legalized. Hence, this is a clear indication that in
ILLUSTRATION
order to be eligible as a director, what is material
If there are 5 directors to be elected and Pedro,
is the legal title to, not beneficial ownership of,
as shareholder, has 100 shares, Pedro can give
the stock as appearing on the books of the
500 (5 x 100 shares) votes to just one
corporation. [lee v. CA (1992)]
candidate.

C.3. DISQUALIFICATIONS [SEC. 27]

II. CUMULATIVE VOTING BY
(1) Convicted by final judgment of an offense
DISTRIBUTION
punishable by imprisonment for a period
A stockholder may cumulate his shares by
exceeding 6 years; or
multiplying the number of his shares by the
(2) A violation of the Corporation Code,
number of directors to be elected and distribute
committed within 5 years prior to the date of his
the same among as many candidates as he
election. This includes violations of rules and
shall see fit.
regulations issued by the SEC to implement the
ILLUSTRATION
provisions of the Corporation Code.
In the illustration above, Pedro instead may
An amendment to the corporation's by-
choose to give 100 votes to candidate 1, 100
laws which renders a stockholder ineligible to be
votes to candidate 2,100 votes to candidate 3,
a director, if he be also a director in a
150 votes to candidate 4, and 50 votes to
corporation whose business is in competition
candidate 5.
with that of the other corporation, has been
sustained as valid. This is based upon the
III. STRAIGHT VOTING (2) At a regular or special meeting after proper
Every stockholder may vote such number of notice is given
shares for as many persons as there are
directors to be elected.
D.2. QUORUM
There must be present in person or by F. FILLING OF VACANCIES
representative authorized to act by written proxy,
the owners of majority of the Outstanding
F.1. VACANCY (1) BY REMOVAL; OR (2)
Capital Stock or majority of the members entitled
BY EXPIRATION OF TERM; OR (3) WHEN
to vote in the meeting.
THE REMAINING DIRECTORS DO NOT
Election must be by ballot if requested.
CONSTITUTE A QUORUM
A stockholder cannot be deprived in the articles
Vacancy/ies must be filled by the stockholders in
of incorporation or in the by-laws of his statutory
a regular or special meeting called for that
right to use any of the methods of voting in the
purpose.
election of directors.
A director or trustee elected to fill a vacancy
No delinquent stock shall be voted.
shall be elected only for the unexpired term of
The candidates receiving the highest number of
his predecessor in office.
votes shall be declared elected.

E. REMOVAL F.2. VACANCY BY REASON OF

INCREASE IN THE NUMBER OF THE

General Rule: Any Director or Trustee of a DIRECTORS / TRUSTEES

corporation may be removed from office, with or Vacancy/ies must be filled by the stockholders:

without cause. [Sec. 28] (1) in a regular or special meeting called

Exception: Directors who have been elected by for that purpose; or

minority stockholders exercising cumulative (2) in the same meeting authorizing the

voting can only be removed for cause. Removal increase of directors or trustees If so stated in

without cause may not be used to deprive the notice of the meeting.

minority stockholders or members of the right of

representation to which they may be entitled F.3. VACANCY BY OTHER CAUSES
under Sec. 24. Vacancy/ies may be fitted by the vote of at least
Other requisites: a majority of the remaining directors or trustees,
(1) by a vote of the stockholders holding or if still constituting a quorum.
representing 2/3 of the outstanding capital stock,
or if the corporation be a non-stock corporation, G. COMPENSATION [SEC. 30]
by a vote of 2/3 of the members entitled to vote
General Rule: Directors are only entitled to
reasonable per diems. They are not entitled to H. FIDUCIARY DUTIES AND LIABILITY
compensation as directors. RULES

H.1. DUTIES
In this jurisdiction, the members of the BOD
have a three-fold duty: duty of obedience, duty
Exceptions: of diligence, and duty of loyalty.
(1) When Articles of Incorporation, by-laws, or (1) Duty of Obedience - shall direct the affairs
an advance contract provides for compensation. of the corporation only in accordance with the
(2) Compensation other than per diems may purposes for which It was organized;
also be granted to directors by the vote of the (2) Duty of Diligence - shall not willfully and
stockholders representing at least a majority of knowingly vote for or assent to patently unlawful
the Outstanding Capital Stock at a regular or acts of the corporation or act in bad faith or with
special stockholders' meeting. gross negligence in directing the affairs of the
The total yearly compensation of directors shall corporation; and
not exceed 10% of the net Income before (3) Duty of Loyalty - shall not acquire any
income tax of the corporation during the personal or pecuniary interest in conflict with
preceding year. their duty as such directors or trustees.
[Strategic Alliance Development Corp v.
COMPENSATION OF DIRECTORS AS Rodstock Securities Ltd. (2009))

CORPORATE OFFICERS
The position of being chairman and Vice- Duty of Obedience
Chairman, like that of treasurer and secretary, The Directors or Trustees and Officers to be
are not considered directorship positions but elected shall perform the duties enjoined on
officership positions that would entitle the them by law and by the by-laws of the
occupants to compensation. Likewise, the corporation [Sec. 25]
limitation placed under Sec. 30 of the
Corporation Code that directors cannot receive Duty of Diligence
compensation exceeding 10% of the net income Directors or trustees who
of the corporation would not apply to the (i) willfully and knowingly vote for or
compensation given to such positions since it is assent to patently unlawful acts of
being given in their capacity as officers of the the corporation or
corporation and not as board members. (ii) (ii) who are guilty of gross
[Western Institute of Technology v. Solos negligence or bad faith in directing
(1997)] the affairs of the corporation or
 (iii) acquire any personal or pecuniary least 2/3 of the outstanding capital stock [Sec.
interest in conflict with their duty as 34]
such directors or trustees shall be
liable jointly and severally for all Doctrine of Corporate Opportunity
damages resulting therefrom Unless his act is ratified, a director shall refund
suffered by the corporation, its to the corporation all the profits he realizes on a
stockholders or members and other business opportunity which:
persons. [Sec 31] (1) corporation is financially able to undertake
The conditions for the application of Sec. 31 of (2) from its nature, is in line with corporation's
the Corporation Code require factual business and is of practical advantage to it; and
foundations to be first laid out in appropriate (3) one in which the corporation has an
judicial proceedings. Hence, concluding that a interest or a reasonable expectancy.
person breached fiduciary duties as an officer The rule shall be applied notwithstanding the
and member of the BOD of a corporation fact that the director risked his own funds in the
without competent evidence thereon would venture. [Sec. 34]
be unwarranted and unreasonable. [Republic of By embracing the opportunity, the self-interest of
the Philippines v. Sandiganbayan (First Division) the officer or director will be brought into conflict
et al. (2011)] with that of his corporation. Hence, the law does
not permit him to seize the opportunity even if he
Duty of Loyalty will use his own funds in the venture. [Sundiang
Directors and trustees should not and Aquino]
acquire any personal or pecuniary interest in NOTE: Differences between Sec. 31 and
conflict with their duty as such directors or Sec. 34:
trustees, otherwise they shall be held liable (1) First, while both involve the same subject
jointly and severally for all damages resulting matter (business opportunity) they concern
therefrom suffered by the corporation, its different personalities; Sec. 34 is applicable only
stockholders or members and other persons. to directors and not to officers, whereas Sec. 31
[Sec. 31] applies to directors, trustees and officers.
Where a director, by virtue of his (2) Second, Sec. 34 allows a ratification of a
office, acquires for himself a business transaction by a self-dealing director by vote of
opportunity which should belong to the stockholders representing at least 2/3 of the
corporation, thereby obtaining profits to the outstanding capital stock. [Villanueva]
prejudice of such corporation, he must account
to the latter for all such profits by refunding the
H.2. LIABILITIES
same, unless his act has been ratified by a vote
I. SOLIDARY LIABILITY FOR DAMAGES
of the stockholders owning or representing at
 (1) Willfully and knowingly voting for and corporation alone and no personal liability is
assenting to patently unlawful acts of the incurred.
corporation; [Sec. 31) The provisions on seizing corporate opportunity
(2) Gross negligence or bad faith in directing and disloyalty [Secs. 31 and 34) shall also apply
the affairs of the corporation; [Sec. 31] to corporate officers. [Price v. in Innodato Phils.,
(3) Acquiring any personal or pecuniary Inc. (2008)]
Interest in conflict of duty; [Sec. 31) NOTE:
(4) Consenting to the issuance of watered Members of the BOD who are also officers are
stocks, or, having knowledge thereof, failing to held to a more stringent liability because they
file objections with secretary; [Sec. 65] are in-charge of day-to-day activities [Campos]
(5) Agreeing or stipulating in a contract to hold
himself liable with the corporation; Or
(6) By virtue of a specific provision of law
Doctrine of Limited Doctrine of Immunity
II. LIABILITY FOR WATERED STOCKS Liability

Watered Stocks — stocks issued for a Shields the Protects a person

consideration less than its par or issued value or incorporators from acting for and in
for a consideration in any form other than cash, corporate liability behalf of the
valued in excess of its fair value. beyond their agreed corporation from
Any director or officer of a corporation contribution to the being himself
consenting to the issuance of watered stocks or capital or personally liable for
who, having knowledge thereof, does not shareholding in the his authorized actions
forthwith express his objection in writing and file corporation.
the same with the corporate secretary shall be
solidarity liable with the stockholder concerned
to the corporation and Its creditors for the
Liability of Director, Trustee or Officer (Asked in
difference in value [Sec. 65]
'96 and '97) Personal liability of a corporate
director, trustee or officer along (although not
III. PERSONAL LIABILITIES necessarily) with the corporation may so validly
GENERAL RULE attach, as a rule, only when:
Members of the Board, who purport to act in (1) He assents (a) to a patently unlawful act of
good faith for and in behalf of the corporation the corporation, or (b) for bad faith or gross
within the lawful scope of their authority, are not negligence in directing its affairs, or (c) for
liable for the consequences of their acts. When conflict of interest, resulting in damages to the
the acts are of such nature and done under corporation, its stockholders or other persons;
those circumstances, they are attributed to the (2) He consents to the issuance of watered
stocks or who, having knowledge thereof, does
not forthwith file with the corporate secretary his duty to disclose arises and concealment is fraud.
written objection thereto; [Strong v. Repide, 1909]
(3) He agrees to hold himself personally and
solidarity liable with the corporation; or I. RESPONSIBILITY FOR CRIMES
(4) He is made, by a specific provision of law, Since a corporation as a person is a mere legal
to personally answer for his corporate action fiction, it cannot be proceeded against criminally
[Tremor Mercantile, Inc. vs CA, (1994), because it cannot commit a crime in which
reiterated in Atrium Management Corp. v. CA, personal violence or malicious intent is required.
(2001)]
Criminal action is limited to the corporate
IV. SPECIAL FACTS DOCTRINE agents guilty of an act amounting to a crime and
Even though a director may not be under the never against the corporation itself.
obligation of a fiduciary nature to disclose to a
shareholder his knowledge affecting the value of Since the BOD is the repository of corporate
the shares, that duty may exist in special cases. powers and acts as the agent of the corporation,
[Strong v. Repide (1909)] the directors may be held criminally liable. [West
General Rule: Coast Life Ins. Co v. Hurd (1914); Time Inc. v.
Majority view: Directors on owe its duty to the Reyes (1971)]
corporation. They owe no fiduciary duty to The Trust Receipts Law recognizes the
stockholders but they may deal with each other impossibility of imposing the penalty of
at fair and reasonable terms, as if they were imprisonment on a corporation. Hence, if the
unrelated. No duty to disclose facts known to the entrustee is a corporation, the law makes the
director or officer. [Taylor v. Wright, 1945] officers or employees or other persons
NOTE: Minority View (Realistic View) responsible for the offense liable to suffer the
recognizes the directors' obligation to the penalty of imprisonment. The reason is obvious:
stockholders individually as well as collectively, corporations, partnerships, associations and
and refuses to permit him to profit at the tatters other juridical entities cannot be put to jail.
expense by the use of information obtained as a Hence, the criminal liability falls on the human
result of official position and duties. agent responsible for the violation of the Trust
Exception: Receipts Law. [Ong v CA (2003)] (see also Sec.
Special Facts Doctrine: Conceding the 13, P.D. 115)
absence of a fiduciary relationship in the
ordinary case, courts nevertheless hold that J. INSIDE INFORMATION
where special circumstances or facts are
present which make it inequitable for the director The fiduciary position of insiders, directors, and
to withhold information from the stockholder, the officers prohibits them from using confidential
information relating to the business of the
corporation to benefit themselves or any
competitor corporation in which they may have a K.1. BY SELF-DEALING DIRECTORS WITH
mere substantial interest. THE CORPORATION
Since loss and prejudice to the corporation is not General Rule: A contract of the corporation with
a requirement for liability, the corporation has a one or more of its directors or trustees is
cause of action as long as there is unfair use of VOIDABLE, at the option of such corporation.
inside information [Sec. 32]
It is inside information if it is not generally Exceptions:
available to others and is acquired because of Such contract is VALID if all of the following
the close relationship of the director or officer to conditions are present:
the corporation (a) That the presence of such director or
trustee in the board meeting in which the
contract was approved was not necessary to
constitute a quorum for such meeting;
(b) That the vote of such director or trustee was
INSIDER, DEFINED not necessary for the approval of the contract;
"Insider" means: (c) That the contract is fair and reasonable
(a) the issuer; under the circumstances; and
(b) a director or officer (or person performing (d) That in case of an officer, the contract has
similar functions) of, or a person controlling the been previously authorized by the BOD.
issuer;
(c) a person whose relationship or former Ratification
relationship to the issuer gives or gave him In case of absence of the first two conditions
access to material information about the issuer above, contract may be ratified if:
or the security that is not generally available to (a) Stockholders representing at least 2/3 of
the public; the outstanding capital stock or at least 2/3 of
(d) a government employee, or director, or the members in a meeting called for the purpose
officer of an exchange, clearing agency and/or voted to ratify the contract.
self-regulatory organization who has access to (b) Full disclosure of the adverse interest of the
material information about an issuer or a directors or trustees involved is made at such
security that is not generally available to the meeting.
public; or (c) Contract is fair and reasonable under the
(e) a person who learns such information by a circumstances
communication from any of the foregoing
insiders [Sec. 3.8, Securities Regulations Code] K.2. BETWEEN CORPORATIONS WITH
INTERLOCKING DIRECTORS
K. CONTRACTS Interlocking, characterized
If the interests of the interlocking director in the
corporations are both substantial (i.e., K.3. MANAGEMENT CONTRACTS
stockholdings exceed 20% of outstanding capital [SEC 44]
stock). [Sec. 33] See: Corporate Powers (2)(h) above
General Rule: A contract between two or more
corporations having interlocking directors shall L. EXECUTIVE COMMITTEE
not be invalidated on that ground alone. [Sec.
33].
L.1. CREATION
Exception: If contract is fraudulent or not fair
The by-laws of a corporation may create an
and reasonable under the circumstances
executive committee, composed of not less than
three members of the board, to be appointed by
If the interest of the interlocking director in one
the board.
of the corporations is nominal (stockholdings
Said committee may act, by majority vote of all
20% or less) while substantial in the other, the
its members, on such specific matters within the
contract shall be VAUD, if the following
competence of the board, as may be delegated
conditions are met
to it in the by-laws or on a majority vote of the
a) The presence of such director or trustee
board [Sec. 35]
in the board meeting in which the
contract was approved was NOT
L2. LIMITATION ON ITS POWERS
necessary to constitute a quorum for
Executive Committees CANNOT be delegated
such meeting
the following:
b) That the vote of such director or trustee
a. Matters needing stockholder approval
was not necessary for the approval of
[Sec. 35];
the contract
b. Filling up of board vacancies;
c) That the contract is fair and reasonable
c. Amendment, repeal or adoption of by-
under the circumstances.
laws [Sec. 351
Where (a) and (b) are absent, the contract can
d. Amendment or repeal of any resolution
be ratified by the vote of the stockholders
of the Board which by its express terms
representing at least 2/3 of the outstanding
is not amendable or repealable [Sec.
capital stock or at least 2/3 of the members in a
35]
meeting called for the purpose voted to ratify the
e. Cash dividend distribution [Sec. 35);
contract, provided that:
and
a) Full disclosure of the adverse interest of
f. Acts which would render the BOD
the directors/trustees involved is made
powerless and free from all
on such meeting;
responsibilities Imposed on It by law
b) The contract is fair and reasonable
[Campos]
under the circumstances.
Under Sec. 35 of the Corporation Code, the private corporations is a reality, in light of
creation of an executive committee must be Republic Act No. 8792. The Securities and
provided for in the by-laws of the corporation. Exchange Commission Issued SEC
Unfortunately, the by-laws of the corporation in Memorandum Circular No. 15, series of 2001,
this case are silent as to the creation by its BOD on November 30, 2001, providing the guidelines
of an executive committee. to be complied with in relation to such
1) Notwithstanding the silence of the by-laws conferences. [Expertravel and Tours, Inc. v. CA,
on the matter, the SC did not rule that the (May26, 2005)]
BOD's creation of the executive committee
is illegal or unlawful. I. WHEN AND WHERE When? [Sec.53]
2) One reason is the absence of a showing (1) Regular meetings of directors or trustees
as to the true nature and functions of said shall be held monthly, unless the by-laws
executive committee considering that the provide otherwise.
"executive committee," referred to in Sec. (2) Special meetings of the BOD or trustees
35 of the Corporation Code which is as may be held at any time upon the call of the
powerful as the BOD and in effect acting president or as provided in the by-laws.
for the board itself, should be Where? [Sec. 53]
distinguished from other committees which Meetings of directors or trustees of corporations
are within the competency of the board to may be held anywhere in or outside of the
create at anytime and whose actions Philippines, unless the by-laws provide
require ratification and confirmation by the otherwise.
board.
3) Another reason is that the BOD has the II. NOTICE
power to create positions not provided for Notice of regular or special meetings stating the
In the by-laws since the board is the date, time and place of the meeting must be
corporation's governing body. [Filipinos sent to every director or trustee at least 1 day
Port Services Inc. v. Go (2007)] prior to the scheduled meeting, unless
otherwise provided by the by-laws.
M. MEETINGS OF BOD A director or trustee may waive this requirement,
either expressly or impliedly. [Sec. 50]
M.1. REGULAR OR SPECIAL
Who May Attend? M.2. WHO PRESIDES
The members of the Board themselves; The president presides, unless the by-laws
directors or trustees cannot be represented or provide otherwise. [Sec. 54]
voted by proxies at board meetings. [Sec. 25]
In the Philippines, teleconferencing and M.3. QUORUM
videoconferencing of members of BOD of
General Rule: Majority of the number of
directors or trustees as fixed in the articles of M.4. RULE ON ABSTENTION
incorporation. [Sec. 25] A vote of abstention is considered to be a vote in
Exceptions: itself. Abstentions will not be counted towards
(1) Unless the articles of incorporation or the by- the affirmative and such refusal to vote does not
laws provide for a GREATER majority, Or indicate acquiescence in the action of those who
(2) In case of election of officers where a vote of vote.
a majority of all the members of the board is REGULAR BOD SPECIAL BOD
needed. MEETINGS MEETINGS
Whether or not "dead members" are entitled to WHEN
Held monthly, unless at any time upon the
exercise their voting rights (through their
the by-laws provide call of the president
executor or administrator), depends on the
otherwise or as provided in the
articles of incorporation or by-laws. [Tan v. Sycip
by-laws
(2006)] WHERE
The quorum in a members' meeting is to be anywhere in or outside of the Philippines,
reckoned as the actual number of members of unless the by-laws provide otherwise
NOTICE
the corporation. What happens In the event of
Notice of regular or special meetings stating
the death of one of them?
the date, time and place of the meeting must
(1) In stock corporations, shareholders may
be sent to every director or trustee at least 1
generally transfer their shares. Thus, on the
day prior to the scheduled meeting, unless
death of a shareholder, the executor or
otherwise provided by the by-laws.
administrator duly appointed by the Court is
 A director or trustee may waive this
vested with the legal title to the stock and
requirement either expressly or
entitled to vote it. Until a settlement and division
impliedly
of the estate is effected, the stocks of the
decedent are held by the administrator or QUORUM
executor. General Rule: Majority of the number of

(2) On the other hand, membership in and all directors or trustees as fixed in the articles of

rights arising from a non-stock corporation are incorporation. [Sec. 25]

personal and non-transferable, unless the Exceptions:

articles of incorporation or the bylaws of the (1) Unless the articles of incorporation or

corporation provide otherwise. In other words, the by-laws provide for a GREATER

the determination of whether or not "dead majority, or

members" are entitled to exercise their voting (2) In case of election of officers where a

rights (through their executor or administrator), vote of a majority of all the members

depends on the Articles of Incorporation or by- of the board is needed

laws.