First Consolidated Rural Bank

August 24, 1987 First Consolidated Rural Bank (BOHOL), Inc. J.S. Torralba Street Tagbilaran City Attention : Mr . Rufino Pondoc Sir : This has reference to your letter dated July 8, 1987, requesting for the opinion of this Commission on the queries posed therein. It appears therein that the Board of Directors of the above corporation directed you to inquire on two questions, based on the following facts: 1. Article Sixth in the articles of incorporation of the bank states among others that "The number of Directors of said corporation shall be fifteen (15) and, 2. Nowhere in the articles of incorporation, by-laws and/or articles of consolidation of said bank can be found a provision fixing the number of directors to attend the meeting in order to obtain the requisite quorum. llcd You, therefore, pose the following questions: 1. Will the presence of eight (8) directors composing of fifteen (15) members can constitute a quorum in a Board meeting to transact business? 2. Will the affirmative votes of seven (7) out of thirteen (13) Directors attending the meeting can pass a resolution to be valid as a corporate act? Relative to your first query, article IV, Sec. 5 of your approved By-laws on file with this Commission, provides, and we quote: "SECTION 5. Quorum . A majority of the directors shall constitute a quorum for the transaction of business at any meeting of the board of directors, but less than a quorum may adjourn from time to time until a quorum is acquired. Fletcher is emphatic: "In the absence of provision to the contrary in the charter or by-laws, a majority of the directors is necessary, and is sufficient to constitute a quorum and to transact business, including, of course, the authorization or ratification of executive compensation. (Model Bus Corp. Act Sec. 20; Model Non-profit Corp. Act Sec. 20 cited in Fletchers, Vol. 2, Chap. 11, p. 267). From the foregoing, it is clear that eight (8) directors in Board of Fifteen (15) can constitute a quorum to transact business. Regarding your second query, please be informed that "less than a majority cannot meet and bind the corporation by any act or resolution, unless expressly authorized. (Tennessee & C. K. Co. vs. East Alabama Ry. Co. 73 Ala 436) "Half of the directors is not a quorum : (Broughton v. Jones 120 Mich 462, 79 NW 691). Applying the foregoing ruling to your case, there is therefore, no doubt that seven out of thirteen directors cannot pass a resolution to be valid as a corporate act. Our answer to your second query is, therefore, in the negative. Please be advised accordingly. llcd Very truly yours, (SGD.) JULIO S. SULIT, JR. Chairman