Mr. Antonio V. Navarro

September 23, 1991 Mr. Antonio V. Navarro 71 E. Jacinto Street, Quezon City S i r : This refers to your letter of August 27, 1991, requesting opinion on the following query: "Are actuations, proceedings and/or resolutions approved during the period when two of a five-men newly constituted Board of Directors are not registered stockholders, valid and enforceable?" Section 23 of the Corporation Code requires stock ownership in order to be eligible as director. However, 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 provision in the charter or by-laws to the contrary, and it will be presumed that a majority vote of directors means a majority of a quorum. (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 directors 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 a 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. LibLex Please be advised accordingly. Very truly yours, (SGD.) ARMANDO Z. GONZALES Associate Commissioner