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TO: Atty.

Christopher Cruz, Chief Legal Counsel, De La Salle University Manila


FROM: Cedric Labasan, Student
SUBJECT: Declaration of Nullity of the Qualifications of the Board of Directors of
ABE Corporation; Dela Pena vs. ABE Corp.
DATE: November 9, 2015

ISSUES

1. Whether or not setting the qualifications of the board of directors of the ABE
Corporation over and above the qualifications set by the board policy of the
Philippine Corporation Code is illegal

2. Whether or not setting these qualifications would be detrimental to the


companys future

CONCLUSION

Yes, Batas Pambansa Blg. 68 Sec. 144 states that Violations of any of the
provisions of this Code or its amendments not otherwise specifically
penalized therein shall be punished by a fine of not less than one thousand
(P1,000.00) pesos but not more than ten thousand (P10,000.00) pesos or by
imprisonment for not less than thirty (30) days but not more than five (5)
years, or both, in the discretion of the court. If the violation is committed by
a corporation, the same may, after notice and hearing, be dissolved in
appropriate proceedings before the Securities and Exchange Commission:

Provided, That such dissolution shall not preclude the institution of


appropriate action against the director, trustee or officer of the corporation
responsible for said violation: Provided, further, That nothing in this section
shall be construed to repeal the other causes for dissolution of a corporation
provided in this Code. (190 1/2 a). ABE Corp. rules and guidelines which
sets
the qualifications of its board of directors is considered illegal according to
Sec. 144 of the Philippine Corporation Code. I recommend filing a case
against the said corporation.

FACTS

Mr. Edilberto Dela Pena is a resident of 854 Brgy. Ugong, Pasig City and a
capital stockholder of ABE Corporation which manufactures and sells car
tires and is located at 9804, Maharlika Highway, Valenzuela City. Last
October 12, 2015 , the company had its elections for its board of directors.
Mr. Dela Pena is one of the capital stockholders and passes all the
requirements under B.P. 68 as one of the
Company.

board of directors of ABE

But according to the qualification in becoming a board of director of the


company, Mr. Dela Pena is not qualified because the minimum age of a
board
of director is 50 years old but the Plaintiff is just 45 years old and that he is
only qualified as an independent director and not as an executive director
according to the SEC Memo Circular No. 6 which is the Revised Code of
Corporate Governance.

The plaintiff argued to the company that there is no age limit required in
being
a board of director of the corporation and as such the titles of the
independent
and executive director in the Philippine Corporation Code. He argued that
only the prescribed qualifications written in B.P. 68 must be followed in the
election of the new sets of board of directors of ABE Corporation. But, the
respondents argued that the qualifications are written in the Articles of
Incorporation and in the SEC Memo Circular and thus making the
qualifications legal and binding. After two weeks of negotiating, both the
plaintiff and the respondent did not come to an agreement and thus
prompting
the plaintiff to file a case against ABE Corporation on October 31, 2015.

DISCUSSION

Batas Pambansa Blg. 68 is the sole law that must be followed by every corporation
whether domestic or foreign corporation in the Philippines. The SEC, by issuing a
memorandum circular violated the said law (Article 3 of B.P. 68) and with that,
they
must cancel the said circular or must revise the circular in order to stop confusion
in
the rules of the corporation. ABE Corp. the respondent, must also remove the age
requirement for it also violates the Philippine Corporation Code. The provisions

explained violates the freedom of the plaintiff to lead the corporation or anyone
who
is willing and able to lead and govern any corporation because he is not of age or
did not pass the age requirement. Therefore I conclude that the plaintiffs case has
merit and must be pursued in court.

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