Opinion No. 06-16 RE : Proxy rules governing condominium corporation

...... : . ,..f"t~rl.lbljc'.~f.t.he'~.~.ili~PineS • Departmef1tof~inance SHCVRIHESANDEXC1BfNGE. COMA/ISSION ¥. SEC 8uilding;EDSA,.Greenhills 1 Mandaluyong City Metro Manila Philippines I 06 March 2006 I SEC Opinion No. 06-16 Proxy mles governing condominium corporation ATTY. l\NTHONY B. PERALTA h li Floor, 139 Corporate Center 139 Va~ero Street, Salcedo Village .1227 rvlakati City Dear Atty. Peralta: This refers to your letter dated 03 January 2006 requesting opinion whether five-year proxies are still valid. Section 58 the Corporation Code prescribes the minimum requirement of proxies, thus: "SECTION 58. Proxies. - Stockholders and members may vote in person or by proxy in al1 meetings of stockholders or members. Proxies shal1 be in writing, signed by the stockholder or member and filed before the scheduled. meeting with the corporate secretary. Unless otherwise provided in the proxy, it shal1 be valid only for the meeting for which it is intended. No proxy shall be valid and effective for a period longer than five (5) years at anyone time. (n)" The afore-quoted provision applies to non-stock corporations as we)] pursuant to Section 87 of the Corporation Code which in part ptovides as follows: {'.'

xxx xxx The provisions governing stock corporation, when . pertinent, shall be applicable to non-stock corporations, except as may be covered by specific provisions of this TitIe.(nX,' On 23 May 2001, the Commission issued Memorandum Circular No. 05-01 series of 2001 adopting the mles laid down in Memorandum Circular No. 5 dated 06 August 1991, which applies only to publicly listed companies, regarding the conduct of annual stockholders or membership meetings and the acceptance and validation of proxies for stock corporations whose stocks are not registered under the Securities Regulation Code and non-stock corporations .. Memorandum Circular No. 05-01 series of 2001, however, applies only in the absence of rules, . guidelines or provisions in the by-laws of the corporation regarding the conduct of annual stockholders or membership' meetings and the acceptance and validation of proxies. Thus, if the by-laws have specific provision on proxies then said by-laws are controlling. With regard to the validity of a proxy, the proxy may fix the period during which it may be used, but it cannot exceed five (5) years, renewable for not more than five (5) years for each renewal. If the proxy does not fix the period, then it expires after the meeting for which it was given. It cannot be used again for a subsequent meeting unless it is renewed. I The reason is that though the duration of the proxymay be fixed by its own temls, the Corporation Code regulates the time of continuance ofproxies.2 . In an opinion, this Commission had the occasion to state that a proxy may be specific or continuing depending on the extent of a,uthority given in the instmment. If it is specific, then the authority granted the proxy holder is merely for a particular meeting on a specific date. 3 Stated differently, if the proxy does not expressly state the duration of its validity, it is understood that it is only valid for a particular meeting after which it is deemed to have expired. Corollary thereto, if the proxy instrument states its validity period then the instrument shall be valid for the stated period; provided, however, that the validity period of the proxy does not exceed five (5) years from the date of the instrument. .1 Campos, Jr. Jose and Campos, Maria Clara L. THE CORPORATION CODE: Comments, Notes and Selected Cases. Vol. 1 (1990), pp. 516-517. ,/ 2 SEC Opinion dated 28 October 199 I addressed to Mr. Norberta Capistrano. 3 Dated 19 August 2005 addressed to Mr. F. B. Reyes. 2

:' ," ,--':"-:<;~¥tt~"-",,~;7::;:::,',:' ,,;<":':'--, .. ':~:-:-:' _,'." _,' -, _,,' , " f,~~;~:"'!.,'f;:~'~~c.~i,Qn,\~:>Manne[ of Voting., At aU meetings of .m.~mbcis, only a non-deli~Cluent member,may vote either in "US1;!~,:H~'rson or by..proxy .executed. in writing by. the member or his . 'authorized attorney-in-fact. Unless otherwise provided in the ", proxy, it shall be valid only for the meeting atwhi<;h it has been presented to the Secretary. All proxies must be in the .)1' hands of the Secretary not later than ten (10) days before the , ' time set for the meeting. Such proxies filed with the Secretary may be revoked by the members either in an instrument duly presented and recorded with the Secretary at least three (3) days prior toa scheduled meeting. The decision of the Secretary on the validity of proxies shall be final and binding until set aside by a court of competent jurisdiction or the proper government agency:" As earlier stated, Memorandum Circular No. 05-01 series of 2001 only applies to cases where there are no rules, guidelines or provisions in the by-laws of a corporation that specifically address the acceptance and validation of proxies. In the case ofTACC, its by-laws clearly provide that a proxy shall be valid only for a particular meeting, unless another validity period is stated, which should not exceed five (5) years from the date of the instrument. ,', '.'1 very~ours, VERNETTE G. UMALI-PACO General Counsel '.I , .1 ',' , ' " •• J , D:IMSBlopinion.proxy validityl,doc 3