Commercial Credit Corporation

August 26, 1982 Commercial Credit Corporation 2nd floor Midland Buendia Building 403 Buendia Avenue Extension Makati, Metro Manila Attention : Mr . Generoso Villanueva, Jr . Sir : This has reference to your letter dated August 3, 1982, informing this Commission of the postponement of your Annual General Stockholders' Meeting and your failure to hold the election of your Board of Directors and Officers for the current year due to the rehabilitation program you are seeking with the aid of the Central Bank. prcd You contend that since your rehabilitation will necessarily result in the reorganization of your directors and officers, the continuance of the present incumbents, in a hold-over capacity, would facilitate such reorganization when the new majority takes over, by the simple election of the new directors and officers. You are now in a quandary whether or not you should wait for the termination of your negotiation with Veterans Bank before you call a stockholders' meeting and elect a new board and corporate officers. The pertinent provision of Sec. 23 of the Corporation Code reads thus: "SECTION 23. The Board of Directors or Trustees . Unless otherwise provided in this Code, the corporate powers of all corporation formed under this Code shall be exercised, all business conducted & all property of such corporations controlled and held by the board of directors or trustees to be elected from among the holders of stocks, . . . who shall hold office for one (1) year and until their successors are elected and qualified .(Emphasis supplied) This Commission, in an earlier 'opinion' ruled that "The tenure of directors of a corporation is generally fixed by charter or general law or the by-laws of a corporation. If the charter or statute fixes their nature, its provisions, of course, are controlling. (Ltr. to Confederation of Government Employer Organization dated July 26, 1971 ,citing Fletcher, Cyc. on Corp. Sec. 334, p. 90) Article 11, Sec. 1 of your Amended By-Laws provides, and we quote: "1. Qualification and Election The general management of the corporation shall be vested in a board of ELEVEN (11) (as per resolution approved by the stockholders at a Special Meeting on June 28, 1965) directors ... who shall be elected annually by the stockholders entitled to vote to serve until the election and qualification of their successors. (Emphasis Supplied) Hence, pursuant to the aforementioned provisions, the election of directors must be held once in a year. Almost without exception, provision is made for the election of directors annually. (Fletcher Cyclopedia Corporation, Sec. 334, p. 90) LibLex Considering therefore, that your annual meeting for the election of directors was not held in accordance with your By-Laws, your Board of Directors may now fix another date within a reasonable time. Please be guided accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Associate Commissioner