Ms. Rosalina B. Villena

July 22, 1992 Ms. Rosalina B. Villena Uni-Asia International Placement & Services Ground Floor, St. Gothard Bldg., 2127 A. Mabini St.,Malate Metro Manila M a d a m : This refers to your letter of July 16, 1992 requesting opinion whether or not the board of directors can designate or appoint the daughter of a deceased stockholder as director and stockholder in lieu of said decedent even if she is not yet declared as the legal heir, and in case she refuses to accept said appointment, will said refusal negate the existence of the corporation. LexLib The Commission on several occasions has ruled that on the death of a shareholder, his executor or administrator becomes vested with the legal title to the stock and entitled to vote the same at all meetings, and that until a settlement and division of the estate is effected, the stock of the decedent belongs to said administrator or executor as his personal representative. (SEC Opinion dated October 3, 1988) The pertinent provision of the Corporation Code provides, thus: "SECTION 55. Right to vote of pledgors, mortgagors and administrators . ... Executors; administrators ,receivers, and other legal representatives duly appointed by the court may attend and vote in behalf of the stockholders or members without need of any written proxy." (Emphasis supplied) The administrator of a decedent must be duly appointed by the Court and once appointed, may attend or represent and vote in behalf of the deceased stockholder. In the absence of any appointment of an administrator by the Court or any designation of an executor in the will of the deceased stockholder, no one can represent or vote the shares. (SEC Opinion dated July, 1988) Relative to your second query, the Corporation Code provides as follows: "SECTION 2. Corporation defined . A corporation is an artificial being created by operation of law ,having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence." (Emphasis supplied) Likewise, the Civil Code of the Philippines provides: "ARTICLE 44. The following are juridical persons : xxx xxx xxx (3) Corporations ,partnerships and associations for private interest or purpose to which the law grants a juridical personality, separate and distinct from that of each shareholder, partner or member ." Based upon the above provisions, a corporation registered under the Corporation Code is considered a juridical person with a personality separate and distinct from that of each shareholder. This attribute gives rise to a fundamental principle in corporation law that under normal conditions, the stockholders of a corporation are not the same as the corporation itself hence, stockholders are not personally liable for corporate obligations and cannot be held liable to third persons who have claims against the corporation beyond their agreed contribution to the corporate capital. Another attribute under the above definition is that a corporation has the right of succession which means that a corporation has a continuity of existence during its term of existence stated in the articles of incorporation, independent from that of its members or shareholders. Its continued existence cannot be affected by any change in the stockholders, whether the change be the consequence of death of a stockholder or transfer of shares by a stockholder to third persons. Accordingly, death of a stockholder neither dissolve a corporation nor render the same inoperative. LibLex Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman