Mr. Norberto R. Capistrano

October 28, 1991 Mr. Norberto R. Capistrano Forestry Savings and Loans Asso.,Inc. Visayas Avenue, Diliman Quezon City S i r : This refers to your letter dated September 17, 1991 requesting opinion on the following queries which we answer in the order they were presented. 1. Is a proxy form duly accomplished but undated, valid? llcd Section 47 of the Corporation Code provides that corporations may provide in their by-laws for "the form for proxies of stockholders and members and the manner of voting them". The by-laws of the corporation, therefore, would be controlling insofar as execution of proxies is concerned. As perusal of the by-laws of Forest Savings and Loans Association, Inc. disclosed that the same do not contain a provision requiring proxies to be dated. It requires only that the same be designated by the members " in, writing, which designation shall be registered with the Corporate Secretary and/or his representative, prior to the opening of a meeting ". (Article V (2)) Therefore, proxies of the members of subject corporation should be perceived in relation to its compliance with the above-provision of its by-laws and Section 58 of the Corporation Code quoted hereunder: "SECTION 58. Proxies . Stockholders and members may vote in person or by proxy in all meetings of stockholders or members. Proxies shall be in writing, signed by the stockholder or member and filed before the scheduled meeting with the corporate secretary ...." (Emphasis supplied) Accordingly, for as long as the proxy is executed in accordance with the aforementioned provisions, the corporation is duly bound to honor the same, even if it is undated. Where a corporation receives an undated proxy, the post mark date or actual date of presentation is considered. ( SEC Opinion dated November 13, 1972 addressed to Neil Reyes and Associates ) 2. Can a designated proxy further re-designate another under the same proxy? Section 58 of the Corporation Code requires that "proxies shall be in writing, signed by the stockholder or member ".The appointment of proxy, therefore, is purely personal. Thus, it was held that "the right to vote is inseparable from the right of ownership of stock without the owner's consent ,and therefore a proxy to vote stock, to be valid, must have been given by the person who is the legal owner of the stock and entitled to vote the same at the time it is to be voted".(5 Fletcher Sec. 2053 citing several cases) Accordingly, unless the stockholder or member who executed the proxy consents in writing to the re-designation of proxy, your second query is answered in the negative. 3. When two or more individuals are designated as proxies by one and the same person, which proxy designation should prevail where: (a) they contain different dates; (b) they are sent through mail; (c) they are hand-carried during election of the Board; (d) one is dated and the other undated; (e) both are presented at the same time. The Commission previously opined that where a corporation receives more than one proxy from the same stockholder and they are all undated, the postmark dates become important. If both are mailed on the same date, the one bearing the latest time of day of postmark is counted. If the proxies are not mailed, then the time of their actual presentation is considered. That which is presented latest is the one counted. ( SEC Opinion dated November 13, 1972 addressed to Neil Reyes and Associates ) Consequently, when two or more proxies are submitted the proxy that which is received latest or appears from the evidence to have been last executed will be accepted and counted under the theory that the latter i.e.,more recent proxy, constitutes the revocation of the former. 4. Is the proxy valid if two or more persons are designated in the alternative as proxies in one and same authorization? It must be noted that the power to act as proxy has its source in the principal's consent, as borne out of the terms of the proxy. Hence, such authority will extend to the alternate proxy designated therein. The alternate proxy however, can only act as proxy in the event of non-attendance of the other designated person. 5. How is proxy revoked?,Can there be implied revocation of proxy?,If so under what circumstances? As a general rule, one who has given a proxy the right to vote the stock owned by him may revoke the same at anytime, unless said proxy is coupled with an interest, even though it may in terms be irrevocable. (5 Fletcher Cyc. Corp.,1976 rev. vol.,sec. 2062, at 256) Therefore, proxies constituting an agreement between stockholders to vote their stock in a specified manner or for a specified purpose not supported by any consideration other than a mutual agreement of the stockholders to vote as stated in the proxy would be revocable. Revocation of a proxy need not be made by a formal notice to the corporation unless the statute prescribes otherwise. (Ballantine on Corp.,sec. 179, p. 409) Thus, it may be revoked orally or by conduct. Revocation may also be expressed to the proxy holder by subsequent proxy to another. (Ballantine, Supra.,p. 409) In a number of cases, the Court held that "where the same person gives two or more proxies, the one last given is to be deemed a revocation of all former proxies." (Standard Power & Light Corp.,v. Investment Associates, Inc.,29 De. Ch 593, 51 A2d 572, Affg. 29 Del Ch 225, 48 A2d 501, Pope v. Whitridge, 110. Md. 468, 73A 281, holding that "last proxy given revokes all previous proxies".Bache v. Central Leather Co. 78 NJ Eq. 484, 81A 571 cited in Fletcher, at 257 and 261, respectively). 6. Is a proxy form valid if it contains a particular circular number and date of the issuance thereof which however, are not for the year when the election is to be held and the period when the Trustees will serve is different? The duration of proxy may be fixed by its own terms. (5 Fletcher, sec. 2062 at 243). However, the Corporation Code regulates the time of continuance of proxies. The pertinent provision of the Corporation Code provides, thus: "SECTION 58. Proxies . .... Unless otherwise provided in the proxy ,it shall be valid only for the meeting for which it is intended .No proxy shall be valid and effective for the period longer than five (5) years at any one time." (Emphasis supplied) 7. Can the Board of Trustees prescribe the manner/procedure of election of the members of the Board? The manner or procedure of election of the Board is provided for under Section 24 of the Corporation Code, quoted hereunder: "SECTION 24. Election of directors or trustees . At all elections of directors or trustees, there must be present, either in person or by representative authorized to act by written proxy, the owners of the majority of the outstanding capital stock, or if there be no capital stock, a majority of the members entitled to vote. The election must be by ballot if requested by any voting stockholder or member. In stock corporations, every stockholder entitled to vote shall have the right to vote in person or by proxy the number of shares of stock standing, at the time fixed in the by-laws, in his own name on the stock books of the corporation, or where the by-laws are silent, at the time of the election; and said stockholder may vote such number of shares for as many persons as there are directors to be elected or he may cumulate said shares and give one candidate as many votes as the number of directors to be elected multiplied by the number of his shares shall equal, or he may distribute them on the same principle among as many candidates as he shall see fit: Provided, That the total number of votes cast by him shall not exceed the number of shares owned by him as shown in the books of the corporation multiplied by the whole number of directors to be elected: Provided, however, That no delinquent stock shall be voted. Unless otherwise provided in the articles of incorporation or in the by-laws, members of corporations which have no capital stock may cast as many votes as there are trustees to be elected but may not cast more than one vote for one candidate. Candidates receiving the highest number of votes shall be declared elected. Any meeting of the stockholders or members called for an election may adjourn from day to day or from time to time but not sine die or indefinitely if, for any reason, no election is held, or if there are not present or represented by proxy, at the meeting, the owners of a majority of the outstanding capital stock, or if there be no capital stock, a majority of the members entitled to vote. Further , Section 47 (7) of the same Code provides: LexLib "SECTION 47. Content of by-laws . Subject to the provisions of the Constitution, this Code, other special laws, and the articles of incorporation, a private corporation may provide in its by-laws for: . . . 7. The manner of election or appointment and the term of office of all officers other than directors or trustees :(Emphasis supplied) In view of the foregoing, a corporation cannot adopt any other procedure of electing the members of the Board which is inconsistent with the manner prescribed in the aforecited provisions of the Corporation Code. Please be advised accordingly. prcd Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman