Ingasco, Incorporated v. Cataran

March 25, 2011 SEC EN BANC CASE NO. 01-11-226 INGASCO, INCORPORATED , appellant , vs . BENITO A. CATARAN, in his capacity as Director of the Company Registration and Monitoring Department , appellee . CALOOCAN GAS CORPORATION , appellee-intervenor . FOR : Review of Denial of Application for Amendment of Articles of Incorporation and By-Laws DECISION For decision of the Commission En Banc is the Appeal dated 27 January 2011 filed by INGASCO INCORPORATED, ( "Appellant" or "INGASCO" , for brevity) from the 11 January 201[1] Decision of Director Benito A. Cataran ( "Appellee" , for brevity) of the COMPANY REGISTRATION AND MONITORING DEPARTMENT ("CRMD", for brevity) of the Commission (may also be referred to as "SEC") impleaded herein in his official capacity, who denied Appellant's application for the amendment of its Articles of Incorporation and By-Laws. The facts of the case as culled from the records are as follows: Appellant INGASCO is a stock corporation duly organized and existing under Philippine laws, with SEC Certificate of Registration No. 5930 dated 29 March 1951. It was incorporated on 19 March 1951 as a domestic corporation with members of the Gutierrez family as its incorporators. The stockholders consisted of members of the Gutierrez, Ibarra and Romero families. In 1994, INGASCO entertained foreign investments. To this effect, the By-Laws of the corporation were amended to reflect this change. In the By-Laws of INGASCO adopted on 15 April 1994, 1 the supermajority vote requirement was introduced, as follows: "ARTICLE VII. AMENDMENTS The stockholders by the affirmative vote of the shareholders holding in the aggregate not less than ninety (90) percent of the total outstanding shares in the company may, at any regular or special meeting, alter or amend these by-laws. The power to amend to repeal these by-laws may by the same affirmative vote be delegated to the Board of Directors in the manner provided by law." INGASCO's Amended Articles of Incorporation adopted on 26 October 1998 2 also required a supermajority vote, viz. : "EIGHTH That unless mandatory applicable laws shall provide a higher vote, the following corporate acts of the corporation shall require, for their validity and effectivity the affirmative vote of the shareholders holding in the aggregate not less than ninety (90) percent of the total outstanding shares of the company: CAaDSI xxx xxx xxx p) Any amendments or changes to the Articles of Incorporation or the Code of By-Laws of the company; . . ." In 2002, the group of INGASCO shareholders was composed of Nippon Sanso Corporation ("NSC") with 35.6% ownership of shares, the Gutierrez Family Group ("Gutierrez") with 34.2% and Appellee-Intervenor Caloocan Gas Corporation ("CGC") with 30.2%. The parties entered into a Joint Venture Agreement dated 17 June 2002, which, among others, provides: "Article 15. IMPORTANT ISSUES. 15.1 Subject to the provisions of the Corporate Code of the Philippines that may be applicable and which may require a different procedure and number of votes or unless provided in the Articles of Incorporation and/or By-Laws as amended pursuant to this Agreement requiring the procedure and the number of votes, no action specified below shall be taken without (i) the affirmative vote of not less than seven-tenths (7/10) of the total number of attending directors, constituting a quorum (for meeting of the Board) including the vote of one (1) director representing each GUTIERREZ and CGC or (ii) the affirmative vote of the shareholders holding in the aggregate not less than ninety percent (90%) of the total number of shares in the Company at general meeting of shareholders of the Company: . . ." 3 (Emphasis supplied.) In 2004, NSC merged with Taiyo Toyo Sanso of Japan, becoming Taiyo Nippon Sanso Corporation ("TNSC") in the process. In 2006, TNSC purchased all of the shares belonging to Gutierrez. Afterwards, on 1 July 2006, a Shareholders' Agreement was executed between the two remaining shareholders: TNSC and CGC. Notably, INGASCO also adopted amendments to its Articles of Incorporation on 1 July 2006. Based on the latest General Information Sheet of INGASCO dated 16 December 2010, 69.81% of Appellant's shares belong to TNSC, while 30.19% is owned by CGC. On 8 December 2010, notices of the regular meeting of INGASCO's Board of Directors were sent to all six (6) members of the board. Said meeting was held on 15 December 2010. This meeting was presided by INGASCO President Masahiko Kitabatake, and attended by all the other members namely, Raymond M. Chu, Mon Fui Chu, Kunishi Hazama, Akihiro Marutani, and Masahiro Shindo. During this meeting, Mr. Kitabatake raised the issue of having to waive the By-Laws of INGASCO because the bulk of these By-Laws were directly lifted from the 2002 JVA entered into by NSC, Gutierrez and CGC. Appellant claims that these By-Laws have been superseded by subsequent events, i.e. , the merger of NSC with Taiyo Toyo Sanso Corporation and buy out of the Gutierrez shares, thus appellant INGASCO claims that the relevant provisions of the By-Laws are considered as no longer operative as the governing rules of the Joint Venture Parties. Appellant INGASCO claims that instead, it is the Shareholders' Agreement of 2006 that should govern the parties. SECATH In spite of the changes in equities and parties to the JVA and the execution of a Shareholders' Agreement, "the By-Laws of Appellant was [ sic ] for some reason not amended to conform to these changes." 4 This resulted in what Appellant INGASCO deems an impossible situation where there is a quorum of 7 in every board meeting, based on a 10-man board; however, the INGASCO Board only has 6 members at present. Mr. Kitabatake thus proposed a waiver of the By-Laws and that the relevant provisions of the Corporation Code be applied instead, conformably with Clause 11 of the 2006 Shareholders' Agreement that states: "11. Any and all matters not covered by this Agreement shall be subject to Philippine law and corporate procedures." 5 Two of the members of the board, namely, Raymond Chu and Mon Fui Chu, voted against the waiver, but as there was a majority vote in favor of the waiver of the By-Laws, the motion was carried. Appellant's Corporate Secretary announced the presence of a quorum in accordance with the provisions of the Corporation Code, citing the complete attendance of all the members of the Board. In spite of their earlier objection to the waiver of By-Laws, Raymond Chu and Mon Fui Chu did not object to the presence of the quorum and participated in the meeting. Mr. Kitabatake then proceeded with a motion to amend INGASCO's Articles of Incorporation. Raymond Chu and Mon Fui Chu voted against this, but the rest voted for the approval of the proposed Articles of Incorporation. Using the rule of majority prescribed in the Corporation Code, the motion to amend was carried with a vote of four (4) in favor, and two (2) against. Next, the adoption of new By-Laws was proposed, and ended with a vote of four (4) in favor, and two (2) against. Later on the same day, a stockholders' meeting was held where a motion to waive the By-Laws was proposed and approved. The proposed amendments to the Articles of Incorporation and the adoption of new By-Laws were approved by the stockholders representing at least two-thirds (2/3) of the outstanding capital stock pursuant to Section 16 of the Corporation Code. Specifically, 69.81% approved the amendment, while 30.19% voted against it. On 20 December 2010, INGASCO filed with the CRMD its Amended Articles of Incorporation and By-Laws, together with the Directors' Certificate. On 11 January 2011, Appellee CRMD wrote a letter denying Appellant INGASCO's application for amendment of the Appellant's articles of incorporation and by-laws, stating that: "A perusal of the directors' certificate you submitted in support of your application will reveal that the amendments were approved by the stockholders of your corporation who owns at least 2/3 of the outstanding capital stock. On the other hand, records of your corporation on file with this Commission, specifically, Article VIII of its articles of incorporation and Article II Section 4 of its by-laws explicitly provide that stockholders approval on any amendments or changes to the articles of incorporation and by-laws requires the vote of not less than 90% of the total outstanding shares of the corporation. DAaEIc In view thereof, we regret that we cannot approve your application for amendments considering that the required number of votes of stockholders for its approval was not obtained." On 12 January 2011, Appellant received the letter from CRMD. The instant appeal was timely filed on 27 January 2011, pursuant to Sec. 11-2 of the 2006 Rules of Procedure of the Commission ("2006 Rules"). On 14 February 2011, CGC filed with this Commission a Motion for Intervention and to Admit Attached Reply Memorandum. In an Order dated 15 February 2011, the Commission granted this Motion. On 28 February 2011, Appellant INGASCO filed its Comment/Opposition to the Reply-Memorandum dated 14 February 2011. The instant appeal is deemed ripe for resolution of the Commission En Banc. First, we dispose of the procedural matters. Appellant INGASCO in its Comment/Opposition dated 28 February 2011 argues that CGC should not have been admitted as Appellee-Intervenor as CGC is no ordinary legally interested third person because it is a shareholder of Appellant Corporation. INGASCO alleges that since CGC is not an "innocent third-party intervenor" 7 that is immediately entitled to intervene and/or be heard in the proceedings. This contention is without merit. Sections 2-3 of the 2006 Rules provides that: "Secs. 2-3. Intervention. A natural or juridical person may, at any stage of the proceedings, be permitted by the Hearing Panel or Officer to intervene in an action or complaint if he has a legal interest therein or when he is so situated as to be adversely affected by the decision of the Commission. The said party may file a motion to intervene or oppose the subject action before the Hearing Panel or Officer stating therein the reason for his intervention or opposition. . . ." (Emphasis supplied.) Clearly, the 2006 Rules allow intervention, without a requirement that the intervening party be an "innocent third-party" as Appellant puts it. It is sufficient that the party seeking to intervene has a legal interest in the case or that the party would be adversely affected by the decision of the Commission, and CGC has met these conditions. INGASCO also raises the issue of jurisdiction of the Commission over the controversy at hand. In its Comment/Opposition, INGASCO claims that this Commission cannot rule upon the arguments against the validity of the 27 January 2011 Urgent Special Meeting of the Board of Directors of INGASCO, and the issues concerning the validity of the amendment of Appellant's Articles of Incorporation and By-Laws in so far as CGC's arguments depart from the grounds stated for the denial in the assailed Decision of the CRMD; and any alleged violations of Appellant's Articles of Incorporation and By-Laws. INGASCO claims that these issues fall under the jurisdiction of regular courts for being matters of an intra-corporate dispute. 8 ACIEaH We agree with INGASCO only insofar as to the issue of the validity of the Board of Directors' Special Meeting being an intra-corporate matter. CGC assails the validity of the 27 January 2011 special board meeting that resulted in a board resolution authorizing the President of INGASCO to file the instant appeal, with the allegation that the 30-day prior notice requirement for the special meeting as provided by the By-Laws of the corporation was not complied with. This issue is properly an intra-corporate matter as clarified in A.M. No. 01-2-04-SC, 9 Section 1, and thus subject to the jurisdiction of the regular courts. Pertaining to the issues concerning the validity of the amendment of Appellant's Articles of Incorporation and By-Laws, and any alleged violations of Appellant's Articles of Incorporation and By-Laws, we disagree with Appellant INGASCO. It is precisely the issue of the validity of the amendment that is the question of this appeal, the answer to which is discussed below. Appellant INGASCO claims that "the Appellee gravely erred in denying Appellant's right to amend its articles of incorporation and by-laws which are already outdated, and inapplicable due to several changes in the corporate structure and not reflective of the intentions of the shareholders as indicated by the 2006 shareholders' agreement." 11 The CRMD correctly denied INGASCO's application for amendment of its Articles of Incorporation and By-Laws. Appellant INGASCO's present Articles of Incorporation, 12 adopted on 1 July 2006 and approved and registered by the Commission on 18 April 2007, provides that: "EIGHTH That unless mandatory applicable laws shall provide a higher vote, the following corporate acts of the corporation shall require, for their validity and effectivity the affirmative vote of the shareholders holding in the aggregate not less than ninety (90%) percent of the total outstanding shares of the company: xxx xxx xxx p) Any amendments or changes to the Articles of Incorporation or the Code of By-Laws of the company; . . ." 13 As correctly held by the CRMD in the appealed decision, and we quote: "It should be stressed that compliance with the afore-cited provision of your articles of incorporation and by-laws are mandatory. The articles of incorporation and by-laws constitute the rules and regulations or private laws enacted by the corporation to regulate, govern, and control its own actions, affairs and concerns, its stockholders, directors, and officers with relation thereto, and among themselves in relation to it. In the same vein, the articles of incorporation and by-laws are the corporation's own private laws which substantially have the same effect as the laws of the corporation. In that sense, they become part of the fundamental law of the corporation with which the corporation and its directors and officers must comply." IECAaD The Supreme Court, in its decision in Lanuza vs. Court of Appeals , has stated that: "The articles of incorporation has been described as one that defines the charter of the corporation and the contractual relationships between the State and the corporation , the stockholders and the State, and between the corporation and its stockholders." 14 (Emphasis provided.) The Commission, the arm of the State with the power to regulate and supervise corporations, INGASCO included, is bound by law to enforce the provisions of the Articles of Incorporation that INGASCO has registered with the Commission. Therefore, since INGASCO was not able to muster enough votes, considering that only 69.81% of the shares were voted to approve the amendment, as opposed to the 90% requirement of the Articles of Incorporation, Director Cataran thus did not commit a mistake in denying Appellant's application for the amendment of its Articles of Incorporation and By-Laws. It does not matter that the Articles of Incorporation were merely copied verbatim from the 2002 Joint Venture Agreement. Once it was incorporated into the 2006 Amended Articles on Incorporation, which the parties voted on, adopted and duly registered with the SEC, the Commission is thus bound to enforce the corporation's compliance to this Articles of Incorporation. Even if the Articles of Incorporation were copied from the 2002 JVA, it also cannot be deemed to have been superseded by the subsequent Shareholders' Agreement (2006), because the Shareholders' Agreement and the present Articles were simultaneously adopted on the same day, on 1 July 2006. On this date, only Articles III, VI and VII were amended. Had it been the intention of the parties to change the 90% requirement, to reflect the changes brought about by the modification of the composition of its stockholders, they should have also amended the provisions in the Articles relevant to this, but this was not done. On this matter, we agree with the position of CGC, as stated in its Reply Memorandum, that as provided in clause 2 of the Shareholders' Agreement, the parties only agreed to the reduction from ten (10) to seven (7) members in the Board of Directors, and the specifics concerning the Board of Directors, and not the all-encompassing amendment that INGASCO desires. Appellant INGASCO argues that the amendment of its Articles of Incorporation is necessary because it contains pieces of information that are no longer accurate, and one may be considered illegal, i.e. , the secondary purpose of INGASCO provides that it can acquire or purchase lands. Since 69.81% of INGASCO is now owned by TNSC, a Japanese corporation, Appellant INGASCO claims that the provision may be deemed illegal and thus the Articles must necessarily be changed. We disagree. The provision in the Articles of Incorporation referred to by INGASCO provides among its secondary purposes: DCaEAS "6. To purchase or otherwise acquire lands or real estate, to construct or purchase or otherwise buildings and sell or otherwise dispose of said lands, real estate or buildings, to act as guarantor or as surety for a consideration for the obligation of other persons, natural or otherwise, in which it has a lawful interest without necessarily engaging in the business of suretyship and/or for this purpose, to mortgage or otherwise encumber its property, real or personal, or any of its interest therein, as may be permitted by law. " 15 (Emphasis supplied.) Since the law does not permit ownership by foreign entities of Philippine land, INGASCO's secondary purpose is not valid only insofar as it concerns purchasing or acquiring land, but this does not necessitate the amendment of the entire articles of incorporation solely for this provision, as the quoted provision concedes that this secondary purpose is limited by what the law may permit, thus the phrase "as may be permitted by law." Other information that are now inaccurate according to INGASCO are: the principal office address of Appellant, the ninety percent (90%) stockholders vote requirement based on a 10-person Board of Directors, and the inclusion of the Gutierrezes in the provisions of the Articles. All these may be changed by INGASCO by following the process to amend its Articles and By-Laws as provided in its Articles and By-Laws. Article VII of INGASCO's By-Laws provide: "ARTICLE VII. AMENDMENTS The stockholders by the affirmative vote of the shareholders holding in the aggregate not less than ninety (90%) percent of the total outstanding shares in the company may, at any regular or special meeting, alter or amend these by-laws. The power to amend to repeal these by-laws may by the same affirmative vote be delegated to the Board of Directors in the manner provided by law. . . ." Appellant INGASCO's assertion that the execution of the Shareholders' Agreement of 2006 superseded the By-Laws is unavailing. The By-Laws should have been amended or repealed in the manner provided by the Articles of Incorporation and the quoted Article VII of the By-Laws, and the By-Laws do not state that such By-Laws may be amended or repealed by the execution of a Shareholders' Agreement. Unless the Shareholders' Agreement was ratified by the affirmative vote of the shareholders holding in the aggregate not less than 90% of the total outstanding shares in the company, the Shareholders' Agreement cannot be deemed to have superseded Appellant's By-Laws. The Supreme Court has stated in Rosita Pea vs. Court of Appeals 16 that "the by-laws of a corporation are its own private laws which substantially have the same effect as the laws of the corporation. They are in effect, written, into the charter. In this sense they become part of the fundamental law of the corporation with which the corporation and its directors must comply." TSEAaD It must also be noted that the Shareholders' Agreement was entered into on the same day that the present Articles of Incorporation was adopted, specifically 1 July 2006. If Appellant INGASCO, indeed, intended to supersede the 90% voting requirement, it could have incorporated this change into its amendment of the Articles of Incorporation. Appellant INGASCO also raises the problem of the composition of the Board of Directors. Under the By-Laws, the Board shall be composed of five (5) directors nominated by NSC, three (3) by the Gutierrez group, and two (2) by CGC. The By-Laws also state that quorum in board meetings shall be seven (7) out of the ten (10) directors, with four (4) directors representing NSC, two (2) for Gutierrez, and one (1) for CGC. Decisions made by a majority of the quorum duly assembled shall be valid, with certain exceptions enumerated, which required the affirmative vote of at least seven-tenths (7/10) of all the attending directors constituting a quorum including the vote of at least one (1) director each representing Gutierrez and CGC. However, because of the sale of the Gutierrez shares to TNSC, the Board was left with only seven (7) directors, and unable to act on certain corporate transactions that require the vote and participation of a Gutierrez representative. Thus, Appellant INGASCO claims that the present By-Laws have become "unjust, unfair and unreasonable" and must be changed. The Supreme Court, quoting the ruling of the Commission En Banc , has stated that: "By-laws signifies the rules and regulations or private laws enacted by the corporation to regulate, govern and control its own actions, affairs and concerns and its stockholder or members and directors and officers with relation thereto and among themselves in their relation to it. In other words, by-laws are the relatively permanent and continuing rules of action adopted by the corporation for its own government and that of the individuals composing it and having the direction, management and control of its affairs, in whole or in part, in the management and control of its affairs and activities. (9 Fletcher 4166. 1982 Ed. )" 17 INGASCO is bound by law to observe its own By-Laws. Thus, the proper manner for INGASCO to resolve the situation regarding its Board of Directors is to first amend its By-Laws, in the manner provided by the By-Laws , meaning, the 90% vote requirement must be complied with. It is worth noting that in 2002, when NSC owned only 35.6% of INGASCO and the Filipinos (Gutierrezes and CGC) owned 64.4%, it did not object to the 90% voting requirement, but now that it is the majority owner and CGC is the minority with 30.2%, it is now questioning the same. This is not acceptable. The Supreme Court, in a case involving a Joint Venture Agreement between Sanitary Wares Manufacturing Corporation, a domestic corporation, and American Standard, Inc., a foreign corporation, has stated that: TcEaAS "Quite often, Filipino entrepreneurs in their desire to develop the industrial and manufacturing capacities of a local firm are constrained to seek the technology and marketing assistance of huge multinational corporations of the developed world. Arrangements are formalized where a foreign group becomes a minority owner of a firm in exchange for its manufacturing expertise, use of its brand names, and other such assistance. However, there is always a danger from such arrangements. The foreign group may, from the start, intend to establish its own sole or monopolistic operations and merely uses the joint venture arrangement to gain a foothold or test the Philippine waters, so to speak. Or the covetousness may come later. As the Philippine firm enlarges its operations and becomes profitable, the foreign group undermines the local majority ownership and actively tries to completely or predominantly take over the entire company. This undermining of joint ventures is not consistent with fair dealing to say the least. To the extent that such subversive actions can be lawfully prevented, the courts should extend protection especially in industries where constitutional and legal requirements reserve controlling ownership to Filipino citizens." 18 Appellant INGASCO also asserts that as long as a majority vote of the Board of Directors and a majority vote of stockholders are met, the By-Laws may be amended. Appellant quotes Section 48 of the Corporation Code, to wit: "Sec. 48. Amendments to by-laws. The board of directors or trustees, by a majority vote thereof, and the owners of at least a majority of the outstanding capital stock, or at least a majority of the members of a non-stock corporation, at a regular or special meeting duly called for the purpose, may amend or repeal any by-laws or adopt new by-laws. The owners of two-thirds (2/3) of the outstanding capital stock or two-thirds (2/3) of the members in a non-stock corporation may delegate to the board of directors or trustees the power to amend or repeal any by-laws or adopt new by-laws: Provided, That any power delegated to the board of directors or trustees to amend or repeal any by-laws or adopt new by-laws shall be considered as revoked whenever stockholders owning or representing a majority of the outstanding capital stock or a majority of the members in non-stock corporations, shall so vote at a regular or special meeting. . . . ." Appellant INGASCO's interpretation of this provision is incorrect. The provision requires the vote of "the board of directors or trustees, by a majority vote thereof, and the owners of at least a majority of the outstanding capital stock . . ." There is nothing in the law that prohibits a corporation from setting higher voting requirements. The law only sets a minimum requirement. In fact, the Supreme Court has elucidated in Rosita Pea vs. Court of Appeals that "under Section 25 of the Corporation Code of the Philippines, 19 the articles of incorporation or by-laws of the corporation may fix a greater number than the majority of the number of board members to constitute the quorum necessary for the valid transaction of business. Any number less than the number provided in the articles or by-laws therein cannot constitute a quorum and any act therein would not bind the corporation; all that the attending directors could do is to adjourn." 20 To claim that Appellee's basis for denying the application does not fall under any of the grounds provided by law, appellant INGASCO invokes Section 17 of the Corporation Code that provides: "Sec. 17. Grounds when articles of incorporation or amendment may be rejected or disapproved. The Securities and Exchange Commission may reject the articles of incorporation or disapprove any amendment thereto if the same is not in compliance with the requirements of this Code: Provided, That the Commission shall give the incorporators a reasonable time within which to correct or modify the objectionable portions of the articles or amendment. The following are grounds for such rejection or disapproval: cAECST 1. That the articles of incorporation or any amendment thereto is not substantially in accordance with the form prescribed herein; 2. That the purpose or purposes of the corporation are patently unconstitutional, illegal, immoral, or contrary to government rules and regulations; 3. That the Treasurer's Affidavit concerning the amount of capital stock subscribed and/or paid if false; 4. That the percentage of ownership of the capital stock to be owned by citizens of the Philippines has not been complied with as required by existing laws or the Constitution. . . ." However, this provision does not provide an exhaustive enumeration of the grounds when articles of incorporation or amendment may be rejected or disapproved. The Commission is also empowered by the Securities Regulation Code 21 to "approve, reject, suspend, revoke or require amendments to registration statements and registration and licensing applications." 22 WHEREFORE, based on the foregoing, the Decision dated 11 January 2011 of Appellee Benito A. Cataran is hereby AFFIRMED, and the instant Appeal is hereby DENIED. SO ORDERED. City of Mandaluyong, March 25, 2011. (SGD.) FE B. BARIN Chairperson (SGD.) MA. JUANITA E. CUETO Commissioner (SGD.) RAUL J. PALABRICA Commissioner (SGD.) MANUEL HUBERTO B. GAITE Commissioner (SGD.) ELADIO M. JALA Commissioner Footnotes 1. Annex "L" of the Reply Memorandum. 2. Annex "K" of the Reply Memorandum. 3. Annex "F" of the Memorandum on Appeal, p. 22. 4. Memorandum on Appeal, pp. 4-5. 5. Annex "G" of the Memorandum on Appeal. 6. Note from the Publisher: Missing footnote text and reference number. 7. Comment/Opposition dated 28 February 2011, p. 5. 8. Id. , pp. 6-7. 9. Interim Rules of Procedure for Intra-Corporate Controversies (2001). 10. Note from the Publisher: Missing footnote text and reference number. 11. Memorandum on Appeal, p. 7. 12. Ibid. , Annex "H". 13. Annex "H" of the Memorandum on Appeal, p. 4. 14. G.R. No. 131394, March 28, 2005. 15. Annex "H" of the Memorandum on Appeal. 16. G.R. No. 91478, February 7, 1991. 17. China Banking Corporation vs. Court of Appeals and Valley Golf and Country Club, Inc. , G.R. No. 117604, March 26, 1997. 18. Wolfgang Aurbach, et al. vs. Sanitary Wares Manufacturing Corporation, et al. , G.R. No. 75875, December 15, 1989. 19. Sec. 25. Corporate officers, quorum. Immediately after their election, the directors of a corporation must formally organize by the election of a president, who shall be a director, a treasurer who may or may not be a director, a secretary who shall be a resident and citizen of the Philippines, and such other officers as may be provided for in the by-laws. Any two (2) or more positions may be held concurrently by the same person, except that no one shall act as president and secretary or as president and treasurer at the same time. The directors or trustees and officers to be elected shall perform the duties enjoined on them by law and the by-laws of the corporation. Unless the articles of incorporation or the by-laws provide for a greater majority, a majority of the number of directors or trustees as fixed in the articles of incorporation shall constitute a quorum for the transaction of corporate business, and 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. Directors or trustees cannot attend or vote by proxy at board meetings. (Emphasis supplied). 20. G.R. No. 91478, February 7, 1991. 21. Republic Act No. 8799 (2000). 22. Id. at Sec. 5.