Atty. W. Rancap Lagumbay

September 9, 1981 Atty. W. Rancap Lagumbay Lagumbay & Associates 4th Flr. Valderama Bldg. 107 Esteban St., Legaspi Village Makati, Metro-Manila Sir : This has reference to your letter dated September 3, 1981, requesting the opinion of this Commission on whether it is prohibited to deposit the funds of the corporation into the personal account of any of the officers, whether or not approved by its Board of Directors. A corporation is an artificial being created by operation of law, a person distinct and separate from its individual stockholders or members. As a legal entity, a corporation has to maintain funds under its corporate name to undertake the business objectives specified in its articles of incorporation. The Board of Directors, in managing the corporation, should always safeguard that its funds are not misappropriated nor disposed for the sole benefit of the directors and officers. It is noteworthy that "the board of directors, or a majority thereof, in drawing to themselves the powers of the corporation, occupies a position of trusteeship in relation to the stockholders in the sense that the board should exercise not only care and diligence, but utmost good faith in the management of corporate affairs. (Legarda v. La Previsora, G.R. No. 44451, December 16, 1938, 66 Phil. 723) In view thereof, this Commission holds the view that, to deposit the funds of the corporation into the personal account of any of the corporate officers, is not a sound corporate practice and should therefore not be allowed. cdll Very truly yours, (SGD.) ROSARIO N. LOPEZ Associate Commissioner