Quasha Asperilla Ancheta & Pena and Nolasco

August 8, 1995 Quasha Asperilla Ancheta & Pena and Nolasco Don Pablo Bldg.,114 Amorsolo St. Makati, Metro Manila Attention : Ms . Luisa A . Legaspi-Delfin M a d a m : This refers to your letter of August 3, 1995, requesting opinion on the query posed therein. LibLex As stated, your client's group holds about 1/3 of the outstanding capital stock of Pryce Development Corporation (PDC) which in turn holds 2/3 of the outstanding capital stock of Pryce Properties, Inc. (PPI).This means, therefore, that PDC is entitled to 2/3 of the Board of PPI. Your query is whether you client is entitled as a matter of enforceable right to 1/3 of the 2/3 of the board seats allotted to PDC in PPI. The Commission, on several occasions, had opined that the stockholders of the parent or holding company cannot demand proportionate representation in the Board of Directors of its subsidiaries. ( Ltrs. to Bautista Picazo Buyco Tan and Fider dated 3/13/91; Ltr to Ms. Pura D. Almario dtd. 5/13/91 , etc., citing Fletcher Cyc. Corps & Ballantine on Corporations). It is clear under the Corporation Code that the board of directors of a corporation is entrusted with the corporate management function with best care, skill and judgment solely in the interest of the corporation. Shareholders entrust their investments in the corporate business to the management of the board of directors, thus establishing a fiduciary relationship between them. Accordingly, it is the prerogative and discretion of the board of directors of a parent or holding corporation to choose its nominees in the Board of Directors of its subsidiaries. Your query is therefore answered in the negative. (SGD.) FE ELOISA C. GLORIA Associate Commissioner