December 2011 Philippine Supreme Court Decisions on Commercial Law

Here are selected December 2011 rulings of the Supreme Court of the Philippines on commercial law:

Corporation; contracts before incorporation. With respect to petitioners’ contention that the Management Contract executed between respondent and petitioner Lucila has no binding effect on petitioner corporation for having been executed way before its incorporation, this Court finds the same meritorious.

Logically, there is no corporation to speak of prior to an entity’s incorporation.  And no contract entered into before incorporation can bind the corporation.  March II Marketing, Inc. and Lucila V. Joson vs. Alfredo M. Joson, G.R. No. 171993, December 12, 2011.

Corporation; corporate officers. In the context of Presidential Decree No. 902-A, corporate officers are those officers of a corporation who are given that character either by the Corporation Code or by the corporation’s by-laws.  Section 25 of the Corporation Code specifically enumerated who are these corporate officers, to wit: (1) president; (2) secretary; (3) treasurer; and (4) such other officers as may be provided for in the by-laws.

With the given circumstances and in conformity with Matling Industrial and Commercial Corporation v. Coros, this Court rules that respondent was not a corporate officer of petitioner corporation because his position as General Manager was not specifically mentioned in the roster of corporate officers in its corporate by-laws.  The enabling clause in petitioner corporation’s by-laws empowering its Board of Directors to create additional officers, i.e., General Manager, and the alleged subsequent passage of a board resolution to that effect cannot make such position a corporate office.  Matling clearly enunciated that the board of directors has no power to create other corporate offices without first amending the corporate by-laws so as to include therein the newly created corporate office.  Though the board of directors may create appointive positions other than the positions of corporate officers, the persons occupying such positions cannot be viewed as corporate officers under Section 25 of the Corporation Code.  In view thereof, this Court holds that unless and until petitioner corporation’s by-laws is amended for the inclusion of General Manager in the list of its corporate officers, such position cannot be considered as a corporate office within the realm of Section 25 of the Corporation Code.  March II Marketing, Inc. and Lucila V. Joson vs. Alfredo M. Joson, G.R. No. 171993, December 12, 2011.

(Hector thanks Mary Caroline A. Tan for her assistance to Lexoterica.)