Sec 23- the powers (Management, conduct, and maintenance of the properties) of the

corporation is exercised by the board of directors (in case of stock corp) and board of
trustees (in case of non-stock); every director must own at least 1 share of the
corporation of which he is a director
- board can delegate such functions to the officers (except of course the funda
change in the charter)

Do the boards of director can make fundamental changes, solely in the charter of the
corporation?
- NO. Sec 23 does not extend to making fundamental changes in the charter of
the corp- there has to be a concurrence of all the stockholders in a special
meeting called for the purpose

A corporation is bound by the corporate acts of the corporate officers if they acted
within the scope of the 5 classifications of powers of corporate agents:
1. Those expressly conferred/ granted by arts of incorporation;
2. Those that are incidental/ ordinarily done;
3. Without notice of any restrictions there of bnb
4.
5.

Can a corporation thru its board of directors setup as a defense that the board did not
authorize a certain officer to transact such business?
- YES. Bec the rule is that there must be an authority coming from the board.
But this defense must be raised in the pleading, otherwise, such authority
will be waived.

Qualification of Directors
1. Must own at least 1 share capital stock of the corporation in his own name; must
be a member- if non-stocks;
2. Majority of the directors/ trustees must be residents of the PH;

- The officers must come from the member of the board of directors

In the Arts of Inc/ by-laws, can we restrict the ownership of the director to qualify him?
YES, as long as it is provided for in the by-laws.

SEC24- ELECTION OF OFFICERS

- Commulative voting- pwede ilagay sa isa-isang candidate, pwedeng ibuhos
sa isa…
- this is the procedure to be followed- it cannot be change even in the by-laws
- majority votes is not necessary for the election of each director; what's
needed is plurality
- in a meeting called for the purpose
- there must ba a quorum: 50+1; invalid pag walang quorum and a petition for
quo warranto may be filed
- There can be an election in absentia but if the by-laws says otherwise, the
absent candidate cannot be elected.
Sec27
Disqualifications
1. Person convicted by final judgment of an offense punishable by imprisonment
for a period exceeding six (6) years;
2. Violation of this Code committed within 5 years prior to the date of his election
or appointment.

Removal is with or without cause.

What is the minority’s exercise of cumulative voting rights?

Sec 28:
On removal of directors/trustees:
1. Removal must take place in either a regular/ special meeting duly called for the
purpose;
2. Removal must be by a vote of the stockholders representing at least 2/3 of the
Outstanding Capital Stocks; or 2/3 of members;
3. Prior notice of the proposed removal must be made stating the time and place of
meeting, either by publication or by written notice (for the observance of due
process);
4. The meeting must be called by the secretary on the order of the president, OR
upon the written demand of stockholders representing majority of the ACS or
majority of members, otherwise, the meeting is void.
5. GO DIRECTLY TO COURT WHEN THERE IS AN INTRA-CORPORATE
CONTROVERSY TO QUESTION THE APPOINTMENT OF THE DIRECTOR OR HIS
MISMANAGMENT;
a. Based on PD 902-1, the courts now have powers to remove a director, motu
proprio, and appoint a management committee, WHEN there is an intra-
corporate controversy- such as when the qualification of the director is
being questioned or there is mismanagement.

GR: Removal is with or without cause.

One of the board of directors who accumulated votes as a representative of the minority
stock holders can be assured that he will not be removed without just cause. (bec he is
thereby a representative of the minority stockholders- he can only be removed with just
cause.)
- Hindi kasi pu-pwede na walang representative ang minority stockholders
doon sa board of directors.
-
Say dun sa bylaws nila, entitled ang minority s.h. sa dalawang reps, pero isang director
lang ang nai-elect nila, edi assured na panalo lagi ng majority bec they can always
muster the 2/3 votes.

Sec29
In case of vacancy:
1. By stockholders/members- if vacancy results from
a. Removal
b. Expiration of term
c. Grounds other than removal/ expiration (death, resignation,
abandonment) where the remaining directors does not constitute a
quorum;
d. Increase in the number of directors
2. By the board if the remaining directors constitute a quorum

The director/ trustee so elected to fill a vacancy shall be elected only for the unexpired
term of his predecessor in office.

Kahit kulang sila, they can still continue exercising their function

No successors? HOLD-OVER

There is no such thing as automatic appointment of board of directors

Sec30 Compensation
- No compensation, except otherwise provided in the by-laws (shmpre lagging
meron.)
- By-laws may provide for a fixed compensation
- Any such compensation other than per diems may be granted to directors by
the vote of the stockholders representing at least a majority of the
outstanding capital stocks (OCS) at a regular or special stockholder’s
meeting.
- In no case shall the total yearly compensation of directors, as such directors,
exceed 10% of the net income before income tax of the corporation during
the preceding year
SEC31
Primordial duties of a director:
1. Obedience- requires compliance with the law and rules of the Art of I ; intra vires
2. Diligence- exercise due care in the performace of their function
3. Loyaly- and allegiance to the corporation, otherwise he shall be liable for
damages.
a. If he acquired properties by reason of disloyalty to the damage of the
corporation, he shall be liable as a trustee- therefore the property he
acquired will be considered held in trust in favor of the corporation
SEC32-intances that the contract entered into by the director to be valid:

SEC33- contracts between

Interlocking corps- there are 2 corpos, directors of which are also directors of such
corporations
- In the absence of fraud, the transaction is valid
- Kung nominal lang, oks lang ( must not exceed 20%)
Sec34 disloyalty of a director
- Duty of loyalty mandates that directors must not priorities his own interest
over that of the corporation by reason of their fiduciary relationship.
Sec35- executive committee

- What is the effect if the decision of the executive committee is questionable?

o If you don't agree, the remedy is to bring the matter before the entire
board of directors as they can reverse the decision of the executive
committee.

Powers of the president: sec23

- Actions of the president must be authorized (AUTHORITY) thru a board
resolution
Powers of the (chairman) board of directors:
- There must still be an AUTHORITY from the board of directors

IN THE ABSENCE OF AUTHORITY COMING FROM THE BOARD OF DIRECTORS, NO

PERSON, NOT EVEN THE PRESIDENT NOR THE CHAIRMAN OF BOARD OF DIRECTORS
CAN BIND THE CORPORATION.

NEXT MEETING: POWERS OF THE CORP AND BY-LAWS