Mr. Raul L. Contreras

November 27, 2002 SEC OPINION NO. 13-02 Mr. Raul L. Contreras 130 Taurus Street Cinco Hermanos, Marikina City S i r : In your letter of October 14, 2002 which we received on October 21, 2002 represented that a year ago the Board of Trustees of ME (For Love of Mother Earth) Foundation, Inc. of which you are a founding member amended its Articles of Incorporation to reduce the number of trustees from fifteen (15) to seven (7). There was no mention whether at least 2/3 of your members approved the amendments as required in Section 16 of the Corporation Code which we quote: "Sec. 16. Amendment of articles of incorporation Unless prescribed by this Code or by special law, and for legitimate purposes, any provision or matter stated in the articles of incorporation may be amended by a majority vote of the board of directors or trustees and the vote or written assent of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock, without prejudice to the appraisal right of dissenting stockholders in accordance with the provisions of this Code, or the vote or written assent of two-thirds (2/3) of the members, if it be a non-stock corporation .... The amendments shall take effect upon its approval by the Securities and Exchange Commission or from the date of filing with the said Commission if not acted upon within six (6) months from the date of filing for a cause not attributable to the corporation." (Emphasis Ours) You also stated that your foundation failed to register its Amended Articles of Incorporation with SEC and yet, you elected, based on the reduced number, new members of the board who have been conducting the affairs of the foundation "as if the amendments were already submitted and approved by it." Section 16, last paragraph clearly states that any amendment of the Articles of Incorporation shall take effect upon its approval by the Securities and Exchange Commission or from date of filing with the Commission if not acted upon within six (6) months from date of filing. Without the required SEC approval, the reduction in the number of your trustees cannot legally take effect. Consequently, the election of the new board of trustees on the reduced number of seven (7) is null and void. Thus, the foundation is advised to reconvene its previous board of trustees to pass upon corporate matters requiring board approval observing proper quorum mandated in Section 25 which we quote: "Section 25. Corporate officers, quorum. ...Unless the Articles of Incorporation or the by-laws provides 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 corporate act ,except for the election of officers which shall require the vote of a majority of all the members of the board." Section 25 above fixes the quorum for meetings of the board of trustees which is majority of the number of trustees provided in the Articles of Incorporation. In your case, the required majority is 8 trustees out of 15 based on Article 6 of your Articles. Less than the required quorum cannot meet and bind the corporation by any act or resolution. All that the directors or trustees present can do is to adjourn (Hector De Leon, Corporation C od e Annotated ,citing Ballantine, p. 130). Based on the foregoing, all actions of your reduced board of seven (7) trustees even in lawful exercise of the corporate powers under its Articles, By-Laws, the Corporation Code and other statutes, lack validity and therefore, voidable. As regards your second query, considering that the amendment of your Articles reducing the number of your trustees did not legally take effect because of your failure to file your Amended Articles, your Foundation continues to be governed by your 15 man board of trustees. If the members of the foundation decide to pursue the reduction of the number of its board of trustees, it must strictly comply with Section 16 as afore-quoted and ensure the submission of the Amended Articles to the Securities and Exchange Commission for approval. Please be guided accordingly. Very truly yours, (SGD.) VERNETTE UMALI-PACO General Counsel