PRACTICAL EXERCISES NO.

2
Corporation and Basic Securities Law

Submitted by:

Andrada, Junelyn
Arban, Nomer
Bendicio, Cherry Mea
Canto, Hubert
Condes, Gracious
Layson, Marie Ira
Martinez, Juvy Michaila
Navarrete, Mary May
Rendon, Allyza Mhay
Torres, Reynald

Submitted to:

Atty. Zacarias D. Bedona, Jr.

 CENTRAL PHILIPPINE UNIVERSITY
College of Law
Iloilo City
Practical Exercises

I.

a. What is One Person Corporation (OPC)?

A One Person Corporation is a corporation with a single

stockholder. The Revised Corporation Code (RCC) also
provides that only a natural person, trust, or an estate may form
a One Person Corporation.

b. Who can be a stockholder of an OPC?

Section 116 of the Revised Corporation Code provides

that only a natural person, trust or an estate may form a one
person corporation. Thus, a stockholder of an OPC can be a
natural person, trust, or an estate.

c. Who may be appointed officers of an OPC?

Section 122 of the Revised Corporation Code states that

“Within fifteen (15) days from the issuance of its certificate of
incorporation, the One Person Corporation shall appoint a
treasurer, corporate secretary, and other officers as it may
deem necessary, and notify the Commission thereof within five
(5) days from appointment. The single stockholder may not be
appointed as the corporate secretary. A single stockholder who
is likewise the self-appointed treasurer of the corporation shall
give a bond to the Commission in such a sum as may be
required: Provided, That the said stockholder/treasurer shall
undertake in writing to faithfully administer the One Person
Corporation’s funds to be received as treasurer, and to disburse
and invest the same according to the articles of incorporation as
approved by the Commission. The bond shall be renewed every
two (2) years or as often as may be required.”

d. Is the single stockholder qualified to be president and

treasurer or corporate secretary?

No. As mentioned in Section 121 of the Revised

Corporation Code, the single stockholder shall be the sole
director and president of the One Person Corporation. It cannot
assume position simultaneously. He may be allowed to be

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president and a treasurer provided that he will give bond to the
Securities and Exchange Commission (SEC) in such a sum as
may be required.

e. Is an OPC required to file Articles of Incorporation and

By-laws?

The One Person Corporation (OPC) is only required to file

Articles of Incorporation and not the By-laws. Section 118 of the
Revised Corporation Code (RCC) Code provides that: A One
Person Corporation shall file articles of incorporation in
accordance with the requirements under Section 14 of RCC. It
shall likewise substantially contain the following: (a) If the single
stockholder is a trust or an estate, the name, nationality, and
residence of the trustee, administrator, executor, guardian,
conservator, custodian, or other person exercising fiduciary
duties together with the proof of such authority to act on behalf
of the trust or estate; and (b) Name, nationality, residence of the
nominee and alternate nominee, and the extent, coverage and
limitation of the authority. Furthermore, Section 119 of the RCC
provides that the OPC is not required to submit and file
corporate By-laws.

Thus, the OPC is only required to file Articles of

Incorporation and not the By-laws.

II.

Webster is a director of Zebra Corporation, who was

elected for a one-year term on January 15, 2021. On March
5, 2021, Webster resigned due to health issues, and was
replaced by Victor, who assumed as director on March 31,
2021. On May 30, 2021, Victor died. Julius was elected in
his place. Until which time should Julius serve as director?
Explain.

Julius should serve as a director for the remaining period

until January 15, 2022. Under section 125 of the Revised
Corporation Code (RCC), the term of the nominee and alternate
nominee who shall sit as a director and manage the One
Person Corporation, in case of the nominee’s inability,
incapacity, death, or refusal to discharge the functions as
director and manager of the corporation, is only for the same
term and under the same conditions applicable to the nominee.
In the case at bar, Julius can serve only as a director for
the unexpired term of his predecessor Victor in the office until
January 15, 2022. The fact that Victor assumed as director to
replace Webster, still the term of office for such vacancy must
be reckoned from the one-year term as when Webster was

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elected as director of a Travel Corporation. Therefore, Julius as
an alternate director serves only the unexpired portion which is
until January 15, 2022.

III.

Sam is a board director in Silver Corporation. A majority of

the board of directors wanted to remove him and to sell his
shares at public auction for his expressive language and
critical temperament, so he can no longer attend and
participate in stockholders' meetings.
Can the board of directors remove Sam as board director
and stockholder without cause? Explain.

No, Sam cannot be removed as board of director and

stockholder in Silver Corporation. Section 27 of the Revised
Corporation Code (RCC) provides that any director of a
corporation may be removed from office by a vote of the
stockholders holding or representing at least two-thirds (2/3) of
the outstanding capital stock in a meeting called for that
purpose after due notice. The removal may be with or without
cause provided that in the latter’s case, the same may not be
Sused to deprive minority stockholders of the right of
representation.

In the case at bar, the power to remove a director

emanates from the stockholders. Furthermore, Sam as a
stockholder cannot be removed as such from any delinquency
status. His corresponding shares cannot be sold at an auction
without complying with the procedures laid down in Section 16
of the RCC on payment of balance of subscription. Therefore,
Sam cannot be removed as a director.

IV.

Omega Corporation has fifteen members of the Board of

Directors.

a. Give the number of the Board of Directors to constitute a

quorum.

Eight (8) members of the Board of Directors of the Omega

Corporation shall constitute a quorum. Section 51 of the
Revised Corporation Code (RCC) provides that a quorum shall
consist of the stockholders representing a majority of the
outstanding capital stock or a majority of the members in the
case of nonstock corporations. Section 52 of the RCC likewise
provides that: Unless the articles of incorporation or the bylaws

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provides for a greater majority, a majority of the directors or
trustees as stated in the articles of incorporation shall constitute
a quorum to transact corporate business, and every decision
reached by at least a majority of the directors or trustees
constituting a quorum, except for the election of officers which
shall require the vote of a majority of all the members of the
board, shall be valid as a corporate act.

Therefore, to constitute a quorum, 8 members must be

present.

b. Give the vote needed to consider every decision to be a

valid corporate act.

As provided in Section 52 of the Revised Corporation

Code, every decision of at least a majority of the directors or
trustees present at a meeting at which there is a quorum shall
be valid as a corporate act, except for the election of officers
which shall require the vote of a majority of all the members of
the board.

V.

The majority and controlling members of the Board of

Directors of Northern Star Corporation passed a
Resolution granting compensation to the Chairman, Vice
Chairman, Corporate Treasurer and Corporate Secretary.
The majority or controlling members of the Board are also
the officers of the said corporation.

a. Is the grant of salary or compensation to the directors

valid? Explain.

Yes. As provided by Section 29 of the Revised

Corporation Code (RCC), the compensation to the directors can
be granted. In the absence of any provision in the bylaws fixing
their compensation, the directors or trustees shall not receive
any compensation in their capacity as such, except for
reasonable per diems: Provided however, That the stockholders
representing at least a majority of the outstanding capital stock
or majority of the members may grant directors or trustees with
compensation and approve the amount thereof at a regular or
special meeting.

b. Is the grant of salary or compensation to the directors

who are also officers of the corporation valid? Explain.

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 No, it is not valid. The Revised Corporation Code
provides that they shall not participate in the determination of
their compensation. As mentioned, a director cannot participate
in determining his own compensation because there is conflict
of interest in such situation. If compensation is to be determined
for all members of the board, the board may set up a special
committee on compensation and its recommendations shall be
subject to stockholders’ approval (Herbosa and Recalde, ibid.,
p. 144). Any such compensation without proper authorization in
the bylaws or by the vote of the stockholders may be recovered
in a stockholders’ suit. The stockholders cannot ratify a board
action fixing their salaries. Such action, being contrary to law,
cannot be ratified. The stockholders themselves, by the
requisite vote, must fix the compensation (De Leon, The
Corporation Code, pp. 286 and 288).

VI.

On June 15, 2022, ABC Corporation passed a board

resolution removing Paul from his position as Chairman of
the said corporation. The By-Laws of ABC Corporation
provides that the officers are President, Treasurer, and
Corporate Secretary. Paul filed a complaint with SEC, and
he alleged that a General Manager could only be removed
by the affirmative vote of the stockholders representing
two-thirds of the outstanding capital stock. Is the
contention of Paul legally valid?

No, the contention of Paul is not valid. As mentioned in

Section 27 of the Revised Corporation Code (RCC), any
director or trustee of a corporation may be removed from office
by a vote of the stockholders holding or representing at least
two-thirds (2/3) of the outstanding capital stock, or in a nonstock
corporation, by a vote of at least two-thirds (2/3) of the
members entitled to vote: Provided, That such removal shall
take place either at a regular meeting of the corporation or at a
special meeting called for the purpose, and in either case, after
previous notice to stockholders or members of the corporation
of the intention to propose such removal at the meeting. A
special meeting of the stockholders or members for the purpose
of removing any director or trustee must be called by the
secretary on order of the president, or upon written demand of
the stockholders representing or holding at least a majority of
the outstanding capital stock, or a majority of the members
entitled to vote. If there is no secretary, or if the secretary,
despite demand, fails or refuses to call the special meeting or to
give notice thereof, the stockholder or member of the
corporation signing the demand may call for the meeting by
directly addressing the stockholders or members. Notice of the
time and place of such meeting, as well as of the intention to
propose such removal, must be given by publication or by

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written notice prescribed in this Code. Removal may be with or
without cause: Provided, That removal without cause may not
be used to deprive minority stockholders or members of the
right of representation to which they may be entitled under
Section 23 of this Code. The Commission shall, motu proprio or
upon verified complaint, and after due notice and hearing, order
the removal of a director or trustee elected despite the
disqualification, or whose disqualification arose or is discovered
subsequent to an election. The removal of a disqualified
director shall be without prejudice to other sanctions that the
Commission may impose on the board of directors or trustees
who, with knowledge of the disqualification, failed to remove
such director or trustee.

In the case at bar, Paul is simply the Chairman of “ABC”

Corporation. He can be removed by a mere board resolution.
The contention that the affirmative vote of the stockholders
representing 2/3 of the outstanding capital stock is necessary
applies only to the members of the board. Therefore the
contention of Paul is not valid because he is not a corporate
officer as enumerated in Section 24 of the RCC.

VII.

The Board of Directors of Far East Corporation

unanimously passed a Resolution approving the taking of
steps that in reality amounted to willful tax evasion. Upon
discovery of the unlawful acts, the government filed tax
evasion charges against all members of the Board of Far
East Corporation. The directors invoked that they have no
personal liability being mere directors of Far East
Corporation, an artificial being. Are the directors correct?
Explain.

No, since the law makes directors of the corporation

solidarily liable for gross negligence and bad faith in the
discharge of their duties. The Doctrine of Separate and Juridical
Personality emphasizes that a corporation is a personality
separate and distinct from those of the persons composing it.
However, in cases arising from fraud, the protective veil that
shields the directors from liability may be pierced allowing the
officers to be liable in actions entered by them in the name of
the corporation. Personal liability of a corporate director, trustee
or officer, along with the corporation, may validly attach, as a
rule, when he directs to a patently unlawful act of the
corporation, or when he is guilty of bad faith or gross
negligence in directing its affairs, or when there is a conflict of
interest resulting in damages to the corporation, its
stockholders, or other persons.

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 Therefore, the directors invoking that they have no
personal liability being mere directors of Far East Corporation
are incorrect.

VIll.

The Board of Directors of Yankee Corporation created an

Executive Committee pursuant to its By-Laws to manage
the affairs of the Corporation between board meetings. The
Board of Directors appointed the following members of the
Executive committee: The President; and two directors,
Peter and John. The Executive Committee met and decided
on the following:

a. Shorten the corporate term of Yankee Corporation;

b. Purchase a house and lot for its office;

c. Declaration and approval of 13th month pay bonus;

d. Purchase a service vehicle for its travel business;

e. Declaration of PhP200.00 per share cash dividend

Are the actions of the Executive Committee valid? Why?

No, not all the acts of the Executive Committee are valid.
It is mentioned in Section 34 of the Revised Corporation Code
(RCC) a committee may act, by majority vote of all its members,
on such specific matters within the competence of the board, as
may be delegated to it in the by-laws or on a majority vote of
the board, except with respect to; approval of any action for
which shareholders’ approval is also required; the filing of
vacancies in the board; the amendment or repeal of the By-laws
or the adoption of new By-laws; the amendment or repeal of
any resolution of the board which by its express terms is not so
amendable or repealable and a distribution of cash dividends to
the shareholder.

Given the facts of the case, the following acts are

considered invalid: (1) shorten the term of Yankee Corporation
and (2) declaration of cash dividends. The first act of an
executive committee to shorten the term of the Yankee
corporation falls under the exception of the powers of the
executive committee as enumerated in Section 34 of the RCC
which is the amendment or repeal of the by-laws or the

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adoption of the new by-laws. Section 36 of the RCC also states
that a private corporation may extend or shorten its term as
stated in the articles of incorporation when approved by a
majority vote of the board of directors or trustees, and ratified at
a meeting by the stockholders or members representing at least
two-thirds (2/3) of the outstanding capital stock or of its
members. The second act of the said committee to declare
cash dividends, is also invalid because Section 42 of the RCC
clearly specifies that “the board of directors of a stock
corporation may declare dividends out of the unrestricted
retained earnings which shall be payable in cash, property, or in
stock to all stockholders on the basis of outstanding stock held
by them: Provided, That any cash dividends due on delinquent
stock shall first be applied to the unpaid balance on the
subscription plus costs and expenses, while stock dividends
shall be withheld from the delinquent stockholders until their
unpaid subscription is fully paid: Provided, further, That no stock
dividend shall be issued without the approval of stockholders
representing at least two-thirds (2/3) of the outstanding capital
stock at a regular or special meeting duly called for the
purpose. The power to declare cash dividend shall be issued
with the approval of the stockholders representing at least 2/3
of the outstanding capital stock at a regular or special meeting
duly called for the purpose.

The remaining acts of the executive committee to

purchase a house and lot for office, to grant the 13th month pay
and to purchase a service vehicle for its travel business are all
valid as these acts are within the competence of the board.

IX.

a. There is a controversy in the election of the Board of

Directors of Blue Moon Corporation which is questionable.
Is controversy in the election of the Board of Directors an
intra-corporate controversy? Explain.

Yes. under Republic Act No. 8799 and the SEC

Reorganization Act, intra-corporate controversies are the
controversies in the election or appointments of directors,
trustees, officers or managers of such corporation, partnership
or association. Therefore it is an intra-corporate controversy.

b. If a suit were to be initiated as an intra-corporate

controversy, should the matter be submitted to SEC or the
regular courts? Why?

If a suit were to be initiated as an intra-corporate

controversy, it shall be submitted to the regular courts. It should
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be noted that in relation to the exercise of its jurisdiction over
intra-corporate disputes, the Regional Trial Court (RTC) can
issue orders necessary or incidental to carrying out the powers
expressly granted to it. Hence, the RTC may order the holding
of a special meeting of stockholders or members of a
corporation involving an intra-corporate dispute under its
supervision. (Yujuico vs. Quiambao, G.R.168639, Jan. 29,
2007).

X.

Uy is a minority stockholder of Sparrow Corporation. Yap

is a member of the Board of Directors and at the same time
President of Sparrow Corporation.

Uy believes that Yap is mismanaging the Sparrow

Corporation, hence, as a stockholder and on behalf of the
stockholders, he wanted to sue Yap. Is Uy permitted to
institute a derivative suit for himself and on behalf of the
stockholders? Explain.

No, a derivative suit must be instituted on behalf of the

corporation and not directly to Mr. Yap. The Revised
Corporation Code provides that an individual stockholder is
permitted to institute a derivative suit on behalf of the
corporation wherein he holds stock in order to protect or
vindicate corporate rights, whenever the officials of the
corporation refuse to sue, or are the ones to be sued or hold the
control of the corporation. In such actions, the suing stockholder
is regarded as a nominal party, with the corporation as the real
party-in-interest.

In the case at bar, Uy wanted to sue Yap on behalf of the

stockholders. The suit will not prosper since the corporation is
the real party-in-interest in a derivative suit. Furthermore, the
reliefs prayed for must be for the benefit or interest of the
corporation. Otherwise, it is an improper derivative suit.

Xl.

a. Give the number and term of the Trustees of a nonstock

corporation.

A non-stock corporation may or may not have more than

fifteen (15) trustees. Section 91 of the Revised Corporation
Code states that: The number of trustees shall be fixed in the
articles of incorporation or bylaws which may or may not be

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more than fifteen (15). They shall hold office for not more than
three (3) years until their successors are elected and qualified.
Trustees elected to fill vacancies occurring before the expiration
of a particular term shall hold office only for the unexpired
period. Except with respect to independent trustees of nonstock
corporations vested with public interest, only a member of the
corporation shall be elected as trustee. Unless otherwise
provided in the articles of incorporation or the bylaws, the
members may directly elect officers of a nonstock corporation.

b. Give the number and term of the trustees of nonstock

educational corporations.

Trustees of educational institutions organized as nonstock

corporations shall not be less than five (5) nor more than fifteen
(15). Section 106 of the Revised Corporation Code (RCC)
reads: Trustees of educational institutions organized as
nonstock corporations shall not be less than five (5) nor more
than fifteen (15): Provided, That the number of trustees shall be
in multiples of five (5).

Unless otherwise provided in the articles of incorporation

or bylaws, the board of trustees of incorporated schools,
colleges, or other institutions of learning shall, as soon as
organized, so classify themselves that the term of office of
one-fifth (1/5) of their number shall expire every year. Trustees
thereafter elected to fill vacancies, occurring before the
expiration of a particular term, shall hold office only for the
unexpired period.

Trustees elected thereafter to fill vacancies caused by

expiration of term shall hold office for five (5) years. A majority
of the trustees shall constitute a quorum for the transaction of
business. The powers and authority of trustees shall be defined
in the bylaws. For institutions organized as stock corporations,
the number and term of directors shall be governed by the
provisions on stock corporations.

Xll.

Go Tek Corporation shortened its corporate life by

amending its Articles of Incorporation. It has no debts but
owns a prime property located at Iloilo City. How would the
said property be liquidated among the five stockholders of
Go Tek Corporation?

The prime property of Go Tek Corporation can be

liquidated among the five (5) stockholders after the property has
been conveyed by the corporation to the 5 stockholders, by

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dividing or partitioning it among themselves in any of the
following ways: 1) by physical division or partition based on the
proportion of the values of their stockholdings; or 2) selling the
property to a third person and dividing the proceeds among the
five stockholders in proportion to their stockholdings; or 3) after
the determination of the value of the property, by assigning or
transferring the property to one stockholder with the obligation
on the part of the said stockholder to pay the other four (4)
stockholders the amounts in proportion to the value of the
stockholding of each of them.

Xlll.

What are individual suits, class suits and derivative suits?

Derivative suit is an action brought by one or more

stockholders or members in the name and on behalf of the
corporation to redress wrongs committed against it or protest or
vindicate corporate rights, whenever the officials of the
corporation refuse to sue, or are the ones to be sued, or hold
control of the corporation.
Requisites for bringing a derivative suit:
1. There is an existing cause of action belonging to
corporation
2. The Shareholder bringing the suit must have
been such:

a. at the time of the institution of the action;

b. at the time of the subject act; and
c. during the pendency of the action
3. The shareholder must make a demand upon the
Board of Directors (BOD) to file the case and the
BOD refuses or fails to sue unless the demand
would be futile or useless (i.e., there must be
exhaustion of intra-corporate remedies)
4. The action must be brought in the name and for
the benefit of the corporation

Meanwhile, the individual suit is an action brought by a

stockholder against the corporation for direct violation of his
contractual rights.

XIV.

X, Y, Z, A, B, were members of the 2020-2021 Board of

Directors of Paradise Corporation. At the election for

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2021-2022, not one of them was elected. They filed a
derivative suit against the newly elected members of the
Board of Directors. They questioned the validity of the
meeting and election, because there was no quorum, and
they prayed for the nullification of the election. The
2021-2022 Board of Directors moved to dismiss the
complaint, because a derivative suit is not proper. Decide.

The complaint should be dismissed. In cases where

derivative suits can be raised, the real-party-in-interest must be
the corporation itself. An individual stockholder is permitted to
institute a derivative suit on behalf of the corporation wherein he
holds stocks in order to protect or vindicate corporate rights,
whenever the officials of the corporation refuse to sue, or are
the one to be sued, or hold the control of the
corporation.(Legaspi Towers 300, Inc. et. al. vs Muer, et al
(2012).

Therefore, the derivative suit raised by the former

members of the 2020-2021 Board of Directors of Paradise
Corporation is not proper as they are the injured parties to the
case and not the Paradise Corporation itself. Their rights to vote
and to be voted upon were directly affected by the election of
the new set of directors

XV.

What is a Foreign Corporation?

Section 140 of the Revised Corporation Code provides

that: a foreign corporation is one formed, organized or existing
under laws other than those of the Philippines and whose laws
allow Filipino citizens and corporations to do business in its own
country or State. It shall have the right to transact business in
the Philippines after obtaining a license for that purpose in
accordance with this Code and a certificate of authority from the
appropriate government agency.

XVI.

A foreign company has been exporting goods to a

Philippine company for several years now. When the
Philippine company failed to pay the latest exportation, the
foreign company sued to collect in the Philippines. The
Philippine company interposed the defense that the foreign

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company was doing business in the Philippines without a
license hence, could not sue before a Philippine court. Is
this defense tenable? Explain your answer.

No, the defense is not tenable since Section 140 of the

Revised Corporation Code (RCC) provides that a foreign
corporation doing business in the Philippines without license
may be sued in the Philippine courts by a Filipino citizen or a
Philippine entity that had contracted with and benefited from it.

A party is estopped from challenging the personality of a

corporation after having acknowledged the same by entering
into a contract with it. The mere act of exporting from one's own
country, without doing any specific commercial act within the
territory of the importing country, cannot be deemed as doing
business in the importing country. Thus, the foreign company
may be sued in the Philippines despite lack of license to do
business in the Philippines.

XVII.

What is a "Trust Fund" Doctrine?

Trust Fund Doctrine is defined whereby any part of the

capital in the possession of the stockholders cannot be
disposed of because it is merely being held in trust for the
creditors of the corporation. To wit, the creditors of the
corporation can still get such an amount from the stockholders
because it forms part of the capital. However, it is not within the
coffers of the corporation. Thus, the stockholders can be
compelled to deliver such to the creditors.

In a simpler sense, this doctrine implies that the

stockholders are holding the assets of the corporation in trust
for the creditors.

XVIII.

Spartan Corporation and Valiant Corporation have agreed

to be merged into one corporation. To facilitate the merger,
both corporations agreed that the merger be made
effective March 15, 2021. The Securities and Exchange
Commission (SEC) approved the Articles of Merger on May
30, 2021. What is the effective date of merger? Explain.

Section 78 of the Revised Corporation Code (RCC)

clearly expresses that the effective date of the merger is always
the date of the approval of the Articles of Merger by the

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Securities and Exchange Commission (SEC). Thus, the
effective date of the merger is May 30, 2021.

The merger shall only be effective upon the issuance of a

certificate of merger by the Securities and Exchange
Commission, subject to its prior determination that the merger is
not inconsistent with the Corporation Code or existing laws. The
same rule applies to consolidation which becomes effective not
upon mere agreement of the members but only upon issuance
of the certificate of consolidation by the SEC (Mindanao
Savings and Loan Association v. Willkom, G.R. No. 178618,
October 11, 2010).

XIX.

Malas Corporation is a bank. The operation of Malas

Corporation as a bank was not doing well. So, to avert any
bank run, Malas Corporation, with the approval of the
Monetary Board, sold all its assets and liabilities to Swerte
Banking Corporation which includes all deposit accounts.
In effect then, Swerte will service all deposits of all
depositors of Malas Corporation.
Will the sale of all assets and liabilities of Malas
Corporation to Swerte Banking Corporation automatically
dissolve or terminate the corporate existence of Malas
Corporation? Explain.

No, the sale of all the assets and liabilities of Malas

Corporation to Swerte Banking Corporation will not result in the
automatic dissolution or termination of the existence of the
former.

A decision to dissolve Malas Corporation or to terminate

its corporate existence would require compliance of Section 11
of the Revised Corporation Code (RCC) which clearly states
that Corporations with certificates of incorporation issued prior
to the effectivity of this Code, and which continue to exist, shall
have perpetual existence, unless the corporation, upon a vote
of its stockholders representing a majority of its outstanding
capital stock, notifies the Commission that it elects to retain its
specific corporate term pursuant to its articles of incorporation:
Provided, That any change in the corporate term under this
section is without prejudice to the appraisal right of dissenting
stockholders in accordance with the provisions of this Code.
Nevertheless, a separate approval by a majority of the
Board of Directors of Malas Corporation and its stockholders
holding at least two-thirds (2/3) of the total outstanding capital
stock, as well as the separate approval by the Monetary Board
is required.

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XX.

Tibur is a shareholder and member of the Board of Tuburan

Corporation. He cannot personally attend the stockholders'
meeting and the board meeting of Tuburan Corporation
that was scheduled on June 30, 2022, at its principal office,
because of his trip to the US, hence, he decided to send
John as proxy in said meetings. Give comment on the
validity of John's attendance in such meetings.

John can be a proxy if it imposes no limitation as to the

persons who act as proxy. It must be emphasized that attending
or voting through proxy in a members’ meeting is allowed by
Section 49 of the Revised Corporation Code provides, to wit:
the right to vote of stockholders or members may be exercised
in person, through a proxy, or when so authorized in the bylaws,
through remote communication or in absentia. The Commission
shall issue the rules and regulations governing participation and
voting through remote communication or in absentia, taking into
account the company’s scale, number of shareholders or
members, structure, and other factors consistent with the
protection and promotion of shareholders’ or member’s
meetings.”

Furthermore, Sec. 57 of the RCC states, to wit:

stockholders and members may vote in person or by proxy in all
meetings of stockholders or members. When so authorized in
the bylaws or by a majority of the board of directors, the
stockholders or members of corporations may also vote through
remote communication or in absentia.

Therefore, the attendance of John as a proxy in a

stockholder’s meeting and the board meeting of Tuburan
Corporation is valid.

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