Mr. Pacifico Maghari, Jr.

September 23, 1992 Mr. Pacifico Maghari, Jr. 590 Ylac Avenue Villamonte, Bacolod City S i r : This refers to your letter of September 12, 1992 inquiring on the legality of the alleged election of three (3) directors of First Farmers Holding Corporation who are disqualified under the provision of the by-laws of said Corporation which provides that no person shall be eligible for office of director if he has unexcused absences for three (3) consecutive Board or Committee meetings. Please be advised that the Commission does not, as a matter of settled policy, render Opinion on queries based on allegations involving justiciable issues which may eventually be litigated in the future or which could only be clarified and determined in a proper proceeding, such as those presented in your letter. The opinion which may be rendered thereon would not be binding upon private parties who would in all probability, if the opinion happens to be adverse to their interest, take issue therewith and contest it before the Court. For this reason, the Commission refrains from giving categorical answer to your query so that it will not be estopped to decide on the issue raised therein if brought before it in a proper proceeding. However, for purposes of information only, please be advised that a provision in the by-laws prescribing a qualification as a devise to protect the interest of the corporation, like disqualification of a director who has unjustified absences in Board or Committee meetings, may be considered a valid by-law provision. The Code provides thus: "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: xxx xxx xxx (5) The qualification , duties and compensation of directors or trustees, officer and employees; . . ." (Emphasis supplied) Thus, instead of rendering a categorical answer to your query, and in order to afford the parties due process of law, should you feel you have a cause of action against the corporation, its officers or directors, you may file a verified complaint with the Securities Investigation and Clearing Department of this Commission pursuant to P.D. 902-A, as amended which provides: "SECTION 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations, registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving: xxx xxx xxx (c) Controversies in the election or appointments or directors, trustees, officers or managers of such corporation, partnerships or association . . . ." (Emphasis supplied) Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman