Understanding the Business Judgment Rule | 18 March 2024

Under the “business judgment rule”, the courts are barred from intruding into the business judgments of the corporation, when the same are made in good faith. (Angeles Balinghasay vs. Cecilia Castillo, G.R. No. 185664, April 8, 2015)

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Alburo Law
March 18, 2024

Understanding the Business Judgment Rule

Under the “business judgment rule”, the courts are barred from intruding into the business judgments of the corporation, when the same are made in good faith. (Angeles Balinghasay vs. Cecilia Castillo, G.R. No. 185664, April 8, 2015)

The Business Judgment Rule is like a shield that protects corporate decision-makers from being second-guessed by the courts, as long as they act honestly and reasonably.  As long as you’re playing fair and not making reckless moves, the courts won’t step in and tell you how to play.

This rule recognizes that those running a company usually have the best understanding of its needs and challenges, so it’s up to them to call the shots.

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Alburo Alburo & Associates Law Offices:

• Have labor law and business law as our main fields of practice. For almost a decade now, we have been helping businesses improve their productivity and profitability by helping them comply with relevant laws, rules, and regulations.

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