Mr. David R. Sinangote, Jr.

September 9, 1991 Mr. David R. Sinangote, Jr. Mindanao Automotive Industries, Inc. Km. 7, Lanang, Davao City S i r : This refers to your letter of June 11, 1991 requesting opinion on the following queries based on the facts presented therein: 1. Is it necessary to specify the agenda in the notice of special meeting? What is the effect of the meeting without the agenda in the notice? cdll 2. What is the required vote in order to legally effect the sale of a corporation? 3. Is it legal to reassign one of the two written proxies to another officer or director of the corporation even if said two proxies were given to only one Member/Director by the owner represented by such proxies, for the reason that a proxy-holder cannot hold two proxies at the same time. Anent your first query, the general rule is that where the law expressly requires notice of meeting of a particular transaction, no meeting can be validly held, unless the notice of such meeting specifies the corporate transaction to be resolved, except if all the stockholders/members are present or are duly represented during the meeting and do not object. The validity of the proceedings or business transacted at any meeting improperly held or called may be questioned by any of the stockholders or members of the corporation. Relative to your second query, the pertinent provision of the Corporation Code provides: "SECTION 40. Sale or other disposition of assets . Subject to the provisions of existing laws on illegal combinations and monopolies, a corporation may, by a majority vote of its board of directors or trustees, sell, lease, exchange, mortgage, pledge or otherwise dispose of all or substantially all of its property and assets, including its goodwill, upon such terms and conditions and for such consideration, which may be money, stocks, bonds or other instruments for the payment of money or other property or consideration, as its board of directors or trustees may deem expedient, when authorized by the vote of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock; or in case of non-stock corporation, by the vote of at least two-thirds (2/3) of the members, in a stockholders' or members' meeting duly called for the purpose. Written notice of the proposed action and of the time and place of the meeting shall be addressed to each stockholder or member at his place of residence as shown on the books of the corporation and deposited to the addressee in the post office with postage prepaid, or served personally: Provided, That any dissenting stockholder may exercise his appraisal right under the conditions provided in this Code. A sale or other disposition shall be deemed to cover substantially all the corporate property and assets if thereby the corporation would be rendered incapable of continuing the business or accomplishing the purpose for which it was incorporated. After such authorization or approval by the stockholders or members, the board of directors or trustees may, nevertheless, in its discretion, abandon such sale, lease, exchange, mortgage, pledge or other disposition of property and assets, subject to the rights of third parties under any contract relating thereto, without further action or approval by the stockholders or members. Nothing in this section is intended to restrict the power of any corporation, without the authorization by the stockholders or members, to sell, lease, exchange, mortgage, pledge, or otherwise dispose of any of its property and assets if the same is necessary in the usual and regular course of business of said corporation or if the proceeds of the sale or other disposition of such property and assets by appropriated for the conduct of its remaining business. In non-stock corporation, where there are no members with voting rights, the vote of at least a majority of the trustees in office will be sufficient authorization for the corporation to enter into any transaction authorized by this section." However, it has to be emphasized that "a transfer of all the property and franchise of a corporation does not necessarily dissolve the corporation or terminate the corporate existence." (6A Fletcher Cyc. Corps.,1968 Rev. Vol.,Sec. 2953).If one corporation sells all of its assets to another corporation and there is no intent to combine, the considerations for the sale could be in cash or other property, and the selling corporation may continue in a state of suspended animation." (Campos, Campos, 1981 ed.,p. 959, citing Ballantine on Corps.,666) The corporation, however, may opt to dissolve the corporation by means of amendment of the articles of incorporation shortening the term of its existence. Regarding your third query, the pertinent provision of the Corporation Code provides: "SECTION 58. Proxies . ....Proxies shall be in writing, signed by the stockholder or member and filed before the scheduled meeting with the corporate secretary. ...(Emphasis supplied) The appointment of proxy, therefore, is purely personal .Thus, it was held that "the right to vote is inseparable from the right of ownership of stock without the owner's consent, and therefore a proxy to vote stock, to be valid, must have been given by the person who is the legal owner of the stock and entitled to vote the same at the time it is to be voted. (5 Fletcher Sec. 2053 citing several cases).Accordingly, unless the stockholder/member who executed the proxy consents to the assignment, your query is answered in the negative. Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman