Ms. Catalina Agudelo

December 17, 1992 Ms. Catalina Agudelo Batac, Ilocos Norte M a d a m: This refers to your letter of September 27, 1992 inquiring whether the Board of Directors of Aglipayans' Association of Batac, Ilocos Norte, Inc. can legally transact business involving corporate funds and properties where two of the members thereof were allegedly not being duly elected. The disqualification of ineligible directors would not render the Board incapable of transacting business for as long as the remaining directors still constitute a quorum . Such a situation would merely give rise to vacancy in the Board which may be filled up in accordance with the provisions of the Corporation Code and By-laws of the corporation. It is well-settled that the power of a board of directors is not suspended by vacancies in the board unless the number be reduced below a quorum, and that, under a by-law which provides that a majority of the directors shall be necessary and sufficient to constitute a quorum, the number necessary is a majority of the entire board, notwithstanding there may be vacancies in the board at the time, and this rule also applies where there are fewer directors than are legally qualified to act as such (2 Fletcher Sec. 421, citing several cases). When there is a quorum of directors at a meeting of which proper notice has been given, a majority of a quorum has the power to decide any question coming before the meeting unless there is some express provisions in the charter or by-laws to the contrary. (Fletcher, supra, sec. 425) As to what constitutes a quorum, the pertinent provision of the Corporation Code provides in part: "SECTION 25. Corporate officers, quorum . ... Unless the articles of incorporation or the by-laws provide for a greater majority, a majority of the number of director 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 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. ...(Emphasis supplied) Accordingly, any act or resolution of the members of the Board constituting a quorum, even in the presence of vacancy caused by disqualifications may be considered valid and enforceable. ( SEC letter dated September 23, 1991 addressed to Mr. Antonio V. Navarro ) Should you feel you have a cause of action against the directors referred to in your letter, you may file a verified complaint with the Securities Investigation and Clearing Department of the Commission pursuant to P.D. 902-A, as amended. As to your request for the latest elected trustees and officers of Aglipayans' Association of Batac, Ilocos Norte, Inc.,please find enclosed herewith xerox copies of the letter and certification of Viralus S. Reguindin of said Association as to its officers who were elected during its election held in July 15, 1992 which was submitted to the Commission on July 23, 1992. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman