Question

Under Philippine corporate law, the doctrine of ratification or estoppel plays a significant role in relation to the actions and decisions of directors, trustees, and officers of a corporation. It serves as a safeguard to ensure accountability and adherence to corporate governance principles.

1. Scenario 1:

ABC Corporation, a publicly listed company, held a board meeting to discuss and approve a major investment in a new business venture. However, due to scheduling conflicts, three members of the board (Directors X, Y, and Z) were unable to attend the meeting. Director X expressed strong disagreement with the proposed investment but was unable to voice his concerns during the meeting. Eventually, the board approved the investment decision without the presence or participation of Directors X, Y, and Z.

Director X, upon learning of the approved investment decision, realizes its potential risks and adverse impact on the corporation. He immediately issues a written statement expressing his objection to the investment and demands that the decision be reversed. The board, led by the majority, refuses to reconsider the decision, citing that it has already been ratified.

In this scenario, discuss the concept of ratification or estoppel and its application to the approved investment decision made by the board of ABC Corporation. What legal grounds and arguments can Director X raise to challenge the board's assertion of ratification? Explain the potential implications of the board's decision on the overall governance and accountability of the corporation.

2. Scenario 2:

XYZ Foundation, a charitable institution, appointed Mr. A as its Executive Director. As part of his duties, Mr. A was authorized to sign contracts and enter into agreements on behalf of the foundation. However, an internal audit later revealed that Mr. A had been entering into contracts without the proper authority or approval from the board of trustees.

When the board learned about Mr. A's unauthorized actions, they opted not to dismiss him and instead continued to allow him to perform his duties as Executive Director. The board argued that their continued acquiescence to Mr. A's actions constitutes ratification and estoppel, waiving any claim or right to challenge the validity and legality of the contracts entered into by Mr. A.

Discuss the concept of ratification or estoppel in the context of Mr. A's unauthorized contracts. Can the board's continued acquiescence be considered as ratification? What legal principles can be invoked to challenge or support the board's position? Analyze the potential consequences and implications of the board's decision on the foundation's operations and public perception.