VALLE VERDE COUNTRY CLUB, INC., ERNESTO VILLALUNA, RAY GAMBOA, AMADO M.SANTIAGO, JR.

, FORTUNATO DEE, AUGUSTO SUNICO, VICTOR SALTA, FRANCISCO ORTIGAS III, ERIC ROXAS, in their ca acitie! a! "e"#er! $% the B$ar& $% Direct$r! $% Va''e Ver&e C$(ntr) C'(#, Inc., an& JOSE RAMIRE*, Petitioners, - versus VICTOR AFRICA, Respondent.

G.R. N$. +,+-.Present: QUISUMBING, J., Chairperson, CARPIO-MORALES, BRION, EL CAS!ILLO, "nd ABA , JJ.

Pro#u$%"ted:

Septe#&er ', ())* + ---------------------------------------------------------------------------------------------- +

DECISION BRION, J./ In t,is petition -or revie. on certiorari,/01 t,e p"rties r"ise " $e%"$ 2uestion on 3orpor"te %overn"n3e: C"n t,e #e#&ers o- " 3orpor"tion4s &o"rd o- dire3tors e$e3t "not,er dire3tor to -i$$ in " v"3"n35 3"used &5 t,e resi%n"tion o- " ,o$d-over dire3tor6 T0E FACTUAL ANTECEDENTS On 7e&ru"r5 (8, 0**9, durin% t,e Annu"$ Sto3:,o$ders4 Meetin% o- petitioner ;"$$e ;erde Countr5 C$u&, In3. <VVCC=, t,e -o$$o.in% .ere e$e3ted "s #e#&ers o- t,e ;;CC Bo"rd o- ire3tors: Ernesto ;i$$"$un", >"i#e C. in%$"s"n <Dinglasan=, Edu"rdo M":"$int"$ <Makalintal=, 7r"n3is3o Orti%"s III, ;i3tor S"$t", A#"do M. S"nti"%o, >r., 7ortun"to ee, Au%usto Suni3o, "nd R"5 G"#&o". /(1 In t,e 5e"rs 0**8, 0**?, 0***, ())), "nd ())0, ,o.ever, t,e re2uisite 2uoru# -or t,e ,o$din% o- t,e sto3:,o$ders4 #eetin% 3ou$d not &e o&t"ined. Conse2uent$5, t,e "&ove-n"#ed dire3tors 3ontinued to serve in t,e ;;CC Bo"rd in " ,o$d-over 3"p"3it5. On Septe#&er 0, 0**?, in%$"s"n resi%ned -ro# ,is position "s #e#&er o- t,e ;;CC Bo"rd. In " #eetin% ,e$d on O3to&er 9, 0**?, t,e re#"inin% dire3tors, sti$$ 3onstitutin% " 2uoru# o- ;;CC4s nine-#e#&er &o"rd, e$e3ted Eri3 Ro+"s <Roxas= to -i$$ in t,e v"3"n35 3re"ted &5 t,e resi%n"tion o- in%$"s"n. A 5e"r $"ter, or on Nove#&er 0), 0**?, M":"$int"$ "$so resi%ned "s #e#&er o- t,e ;;CC Bo"rd. @e ."s rep$"3ed &5 >ose R"#ireA <Ramirez=, .,o ."s e$e3ted &5 t,e re#"inin% #e#&ers o- t,e ;;CC Bo"rd on M"r3, 9, ())0. Respondent A-ri3" <Africa=, " #e#&er o- ;;CC, 2uestioned t,e e$e3tion o- Ro+"s "nd R"#ireA "s #e#&ers ot,e ;;CC Bo"rd .it, t,e Se3urities "nd E+3,"n%e Co##ission < SEC= "nd t,e Re%ion"$ !ri"$ Court < RTC=, respe3tive$5. !,e SEC 3"se 2uestionin% t,e v"$idit5 o- Ro+"s4 "ppoint#ent ."s do3:eted "s SEC C"se No. )0-**9088. !,e R!C 3"se 2uestionin% t,e v"$idit5 o- R"#ireA4 "ppoint#ent ."s do3:eted "s Civi$ C"se No. 9?8(9. In ,is nu$$i-i3"tion 3o#p$"int/B1 &e-ore t,e R!C, A-ri3" "$$e%ed t,"t t,e e$e3tion o- Ro+"s ."s 3ontr"r5 to Se3tion (*, in re$"tion to Se3tion (B, o- t,e Corpor"tion Code o- t,e P,i$ippines <Corporation Co e=. !,ese provisions re"d: Sec. 12. The board of directors or trustees. - Un$ess ot,er.ise provided in t,is Code, t,e 3orpor"te po.ers o- "$$ 3orpor"tions -or#ed under t,is Code s,"$$ &e e+er3ised, "$$ &usiness 3ondu3ted "nd "$$ propert5 o- su3, 3orpor"tions 3ontro$$ed "nd ,e$d &5 t,e #$ar& $% &irect$r! or trustees to &e e$e3ted -ro# "#on% t,e ,o$ders o- sto3:s, or .,ere t,ere is no sto3:, -ro# "#on% t,e #e#&ers o- t,e 3orpor"tion, .,o !ha'' h$'& $%%ice %$r $ne 3+4 )ear (nti' their !(cce!!$r! are e'ecte& an& 5(a'i%ie&. ++++ Sec. 1-. Vacancies in the office of director or trustee. - An) 6acanc) $cc(rrin7 in the #$ar& $% &irect$r! $r tr(!tee! other than by removal by the stockholders or members or by expiration of term, "a) #e %i''e& #) the 6$te $% at 'ea!t a "a8$rit) $% the re"ainin7 &irect$r! $r tr(!tee!, i% !ti'' c$n!tit(tin7 a 5($r("9 otherwise, said vacancies must be filled by the stockholders in a regular or special meeting called for that purpose. A dire3tor or trustee so e$e3ted to -i$$ " v"3"n35 s,"$$ &e e$e3ted on$5 -or t,e une+pired ter# o- ,is prede3essor in o--i3e. +++. /E#p,"sis supp$ied.1 A-ri3" 3$"i#ed t,"t " 5e"r "-ter M":"$int"$4s e$e3tion "s #e#&er o- t,e ;;CC Bo"rd in 0**9, ,is /M":"$int"$4s1 ter# C "s .e$$ "s t,ose o- t,e ot,er #e#&ers o- t,e ;;CC Bo"rd C s,ou$d &e 3onsidered to ,"ve "$re"d5 e+pired. !,us, "33ordin%

to A-ri3", t,e resu$tin% v"3"n35 s,ou$d ,"ve &een -i$$ed &5 t,e sto3:,o$ders in " re%u$"r or spe3i"$ #eetin% 3"$$ed -or t,"t purpose, "nd not &5 t,e re#"inin% #e#&ers o- t,e ;;CC Bo"rd, "s ."s done in t,is 3"se. A-ri3" "ddition"$$5 3ontends t,"t -or t,e #e#&ers to e+er3ise t,e "ut,orit5 to -i$$ in v"3"n3ies in t,e &o"rd odire3tors, Se3tion (* re2uires, "#on% ot,ers, t,"t t,ere s,ou$d &e "n !nexpire term durin% .,i3, t,e su33essor-#e#&er s,"$$ serve. Sin3e M":"$int"$4s ter# ,"d "$re"d5 e+pired .it, t,e $"pse o- t,e one-5e"r ter# provided in Se3tion (B, t,ere is no #ore Dune+pired ter#E durin% .,i3, R"#ireA 3ou$d serve. !,rou%, " p"rti"$ de3ision/'1 pro#u$%"ted on >"nu"r5 (B, ())(, t,e R!C ru$ed in -"vor o- A-ri3" "nd de3$"red t,e e$e3tion o- R"#ireA, "s M":"$int"$4s rep$"3e#ent, to t,e ;;CC Bo"rd "s nu$$ "nd void. In3ident"$$5, t,e SEC issued " si#i$"r ru$in% on >une B, ())B, nu$$i-5in% t,e e$e3tion o- Ro+"s "s #e#&er o- t,e ;;CC Bo"rd,"ice ,o$d-over dire3tor in%$"s"n. F,i$e ;;CC #"ni-ested its intent to "ppe"$ -ro# t,e SEC4s ru$in%, no petition ."s "3tu"$$5 -i$ed .it, t,e Court o- Appe"$sG t,us, t,e "ppe$$"te 3ourt 3onsidered t,e 3"se 3$osed "nd ter#in"ted "nd t,e SEC4s ru$in% -in"$ "nd e+e3utor5. /H1 T0E :ETITION ;;CC no. "ppe"$s to t,e Court to "ss"i$ t,e R!C4s >"nu"r5 (B, ())( p"rti"$ de3ision -or &ein% 3ontr"r5 to $". "nd Iurispruden3e. ;;CC #"de " dire3t resort to t,e Court "ia " petition -or revie. on certiorari, 3$"i#in% t,"t t,e so$e issue in t,e present 3"se invo$ves " pure$5 $e%"$ 2uestion. As -r"#ed &5 ;;CC, t,e issue -or reso$ution is whether the remaining directors of the corporations Board, still constituting a uorum, can elect another director to fill in a vacancy caused by the resignation of a hold!over director. Citin% $". "nd Iurispruden3e, ;;CC posits t,"t t,e po.er to -i$$ in " v"3"n35 3re"ted &5 t,e resi%n"tion o- " ,o$dover dire3tor is e+press$5 %r"nted to t,e re#"inin% #e#&ers o- t,e 3orpor"tion4s &o"rd o- dire3tors. Under t,e "&ove-2uoted Se3tion (* o- t,e Corpor"tion Code, " v"3"n35 o33urrin% in t,e &o"rd o- dire3tors 3"used &5 t,e e+pir"tion o- " #e#&er4s ter# s,"$$ &e -i$$ed &5 t,e 3orpor"tion4s sto3:,o$ders. Corre$"tin% Se3tion (* .it, Se3tion (B o- t,e s"#e $"., ;;CC "$$e%es t,"t a "e"#er;! ter" !ha'' #e %$r $ne )ear and (nti' hi! !(cce!!$r i! e'ecte& an& 5(a'i%ie&9 ot,er.ise st"ted, " #e#&er4s ter# e+pires on$5 .,en ,is su33essor to t,e Bo"rd is e$e3ted "nd 2u"$i-ied. !,us, Dunti$ su3, ti#e "s /" su33essor is1 e$e3ted or 2u"$i-ied in "n "nnu"$ e$e3tion .,ere " 2uoru# is present,E ;;CC 3ontends t,"t Dt,e ter# o- /" #e#&er1 o- t,e &o"rd o- dire3tors ,"s 5et not e+pired.E As t,e v"3"n35 in t,is 3"se ."s 3"used &5 M":"$int"$4s resi%n"tion, not &5 t,e e+pir"tion o- ,is ter#, ;;CC insists t,"t t,e &o"rd ri%,t-u$$5 "ppointed R"#ireA to -i$$ in t,e v"3"n35. In support o- its "r%u#ents, ;;CC 3ites t,e Court4s ru$in% in t,e 0*(8 El #ogar/91 3"se .,i3, st"tes: O<in7 t$ the %ai'(re $% a 5($r(" at "$!t $% the 7enera' "eetin7! !ince the re! $n&ent ha! #een in e=i!tence, it ha! #een the ractice $% the &irect$r! t$ %i'' in 6acancie! in the &irect$rate #) ch$$!in7 !(ita#'e er!$n! %r$" a"$n7 the !t$c>h$'&er!. !,is 3usto# -inds its s"n3tion in Arti3$e 80 o- t,e B5-L".s, .,i3, re"ds "s -o$$o.s: Art. 80. !,e dire3tors s,"$$ e$e3t -ro# "#on% t,e s,"re,o$ders #e#&ers to -i$$ t,e v"3"n3ies t,"t #"5 o33ur in t,e &o"rd o- dire3tors unti$ t,e e$e3tion "t t,e %ener"$ #eetin%. ++++ Upon -"i$ure o- " 2uoru# "t "n5 "nnu"$ #eetin% t,e dire3tor"te n"tur"$$5 ,o$ds over "nd 3ontinues to -un3tion unti$ "not,er dire3tor"te is 3,osen "nd 2u"$i-ied. Un$ess t,e $". or t,e 3,"rter o- " 3orpor"tion e+press$5 provides t,"t "n o--i3e s,"$$ &e3o#e v"3"nt "t t,e e+pir"tion o- t,e ter# o- o--i3e -or .,i3, t,e o--i3er ."s e$e3ted, t,e %ener"$ ru$e is to "$$o. t,e o--i3er to ,o$d over unti$ ,is su33essor is du$5 2u"$i-ied. Mere -"i$ure o- " 3orpor"tion to e$e3t o--i3ers does not ter#in"te t,e ter#s o- e+istin% o--i3ers nor disso$ve t,e 3orpor"tion. !,e do3trine "&ove st"ted -inds e+pression in "rti3$e 99 o- t,e &5-$".s o- t,e respondent .,i3, de3$"res in so #"n5 .ords t,"t dire3tors s,"$$ ,o$d o--i3e J-or t,e ter# o- one 5e"r or unti$ t,eir su33essors s,"$$ ,"ve &een e$e3ted "nd t":en possession o- t,eir o--i3es.J +++. It resu$ts t,"t the ractice $% the &irect$rate $% %i''in7 6acancie! #) the acti$n $% the &irect$r! the"!e'6e! i! 6a'i&. Nor 3"n "n5 e+3eption &e t":en to t,e person"$it5 o- t,e individu"$s 3,osen &5 t,e dire3tors to -i$$ v"3"n3ies in t,e &od5. /E#p,"sis supp$ied.1 A-ri3", in opposin% ;;CC4s 3ontentions, r"ises t,e s"#e "r%u#ents t,"t ,e did &e-ore t,e tri"$ 3ourt. T0E COURT;S RULING ?e are n$t er!(a&e& #) VVCC;! ar7("ent! an&, th(!, %in& it! etiti$n (n"erit$ri$(!. !o repe"t, t,e issue -or t,e Court to reso$ve is whether the remaining directors of a corporations Board, still constituting a uorum, can elect another director to fill in a vacancy caused by the resignation of a hold!over

director. !,e reso$ution o- t,is $e%"$ issue is si%ni-i3"nt$5 ,in%ed on t,e deter#in"tion o- .,"t 3onstitutes " dire3tor4s ter# o- o--i3e. The holdover period is not part of the term of office of a member of the board of directors !,e .ord Dter#E ,"s "32uired " de-inite #e"nin% in Iurispruden3e. In sever"$ 3"ses, .e ,"ve de-ined "term# "s the ti"e &(rin7 <hich the $%%icer "a) c'ai" t$ h$'& the $%%ice as of right, "nd -i+es t,e interv"$ "-ter .,i3, t,e sever"$ in3u#&ents s,"$$ su33eed one "not,er. /81 The ter" $% $%%ice i! n$t a%%ecte& #) the h$'&$6er. /?1 !,e ter# is -i+ed &5 st"tute "nd it does not 3,"n%e si#p$5 &e3"use t,e o--i3e #"5 ,"ve &e3o#e v"3"nt, nor &e3"use t,e in3u#&ent ,o$ds over in o--i3e &e5ond t,e end o- t,e ter# due to t,e -"3t t,"t " su33essor ,"s not &een e$e3ted "nd ,"s -"i$ed to 2u"$i-5. !er# is distin%uis,ed -ro# tenure in t,"t "n o--i3er4s "tenure# re re!ent! the ter" &(rin7 <hich the inc("#ent actually holds office. !,e tenure #"5 &e s,orter <or, in 3"se o- ,o$dover, $on%er= t,"n t,e ter# -or re"sons .it,in or &e5ond t,e po.er o- t,e in3u#&ent. B"sed on t,e "&ove dis3ussion, .,en Se3tion (B /*1 o- t,e Corpor"tion Code de3$"res t,"t Dt,e &o"rd odire3torsKs,"$$ ,o$d o--i3e -or one <0= 5e"r unti$ t,eir su33essors "re e$e3ted "nd 2u"$i-ied,E .e 3onstrue t,e provision to #e"n t,"t t,e ter" $% the "e"#er! $% the #$ar& $% &irect$r! !ha'' #e $n') %$r one year$ t,eir ter# e+pires one 5e"r "-ter e$e3tion to t,e o--i3e. !,e ,o$dover period C t,"t ti#e -ro# t,e $"pse o- one 5e"r -ro# " #e#&er4s e$e3tion to t,e Bo"rd "nd unti$ ,is su33essor4s e$e3tion "nd 2u"$i-i3"tion C is not p"rt o- t,e dire3tor4s ori%in"$ term o- o--i3e, nor is it " ne. ter#G t,e ,o$dover period, ,o.ever, 3onstitutes p"rt o- ,is ten!re. Coro$$"r5, .,en "n in3u#&ent #e#&er o- t,e &o"rd o- dire3tors 3ontinues to serve in " ,o$dover 3"p"3it5, it i#p$ies t,"t the $%%ice ha! a %i=e& ter", which has expired, "nd t,e in3u#&ent is ,o$din% t,e su33eedin% ter#. /0)1 A-ter t,e $"pse o- one 5e"r -ro# ,is e$e3tion "s #e#&er o- t,e ;;CC Bo"rd in 0**9, M":"$int"$4s ter# o- o--i3e is dee#ed to ,"ve "$re"d5 e+pired. !,"t ,e 3ontinued to serve in t,e ;;CC Bo"rd in " ,o$dover 3"p"3it5 3"nnot &e 3onsidered "s e+tendin% ,is ter#. !o &e pre3ise, M":"$int"$4s ter# o- o--i3e &e%"n in 0**9 "nd e+pired in 0**8, &ut, &5 virtue o- t,e ,o$dover do3trine in Se3tion (B o- t,e Corpor"tion Code, ,e 3ontinued to ,o$d o--i3e unti$ ,is resi%n"tion on Nove#&er 0), 0**?. !,is ,o$dover period, ,o.ever, is not to &e 3onsidered "s p"rt o- ,is ter#, .,i3,, "s de3$"red, ,"d "$re"d5 e+pired. Fit, t,e e+pir"tion o- M":"$int"$4s ter# o- o--i3e, " v"3"n35 resu$ted .,i3,, &5 t,e ter#s o- Se3tion (* /001 oCorpor"tion Code, #ust &e -i$$ed &5 t,e sto3:,o$ders o- ;;CC in " re%u$"r or spe3i"$ #eetin% 3"$$ed -or t,e purpose. "ssu#e C "s ;;CC does C t,"t t,e v"3"n35 is 3"used &5 M":"$int"$4s resi%n"tion in 0**?, not &5 t,e e+pir"tion oter# in 0**8, is &ot, i$$o%i3"$ "nd unre"son"&$e. @is resi%n"tion "s " ,o$dover dire3tor did not 3,"n%e t,e n"ture ov"3"n35G t,e v"3"n35 due to t,e e+pir"tion o- M":"$int"$4s ter# ,"d &een 3re"ted $on% &e-ore ,is resi%n"tion. The powers of the corporations board of directors emanate from its stockholders ;;CC4s 3onstru3tion o- Se3tion (* o- t,e Corpor"tion Code on t,e "ut,orit5 to -i$$ up v"3"n3ies in t,e &o"rd odire3tors, in re$"tion to Se3tion (B t,ereo-, e--e3tive$5 .e":ens t,e sto3:,o$ders4 po.er to p"rti3ip"te in t,e 3orpor"te %overn"n3e &5 e$e3tin% t,eir represent"tives to t,e &o"rd o- dire3tors. !,e &o"rd o- dire3tors is t,e dire3tin% "nd 3ontro$$in% &od5 o- t,e 3orpor"tion. It is " 3re"tion o- t,e sto3:,o$ders "nd derives its po.er to 3ontro$ "nd dire3t t,e "--"irs o- t,e 3orpor"tion -ro# t,e#. !,e &o"rd o- dire3tors, in dr".in% to t,e#se$ves t,e po.ers o- t,e 3orpor"tion, o33upies " position o- trustees,ip in re$"tion to t,e sto3:,o$ders, in t,e sense t,"t t,e &o"rd s,ou$d e+er3ise not on$5 3"re "nd di$i%en3e, &ut ut#ost %ood -"it, in t,e #"n"%e#ent o- 3orpor"te "--"irs. /0(1 !,e under$5in% po$i35 o- t,e Corpor"tion Code is t,"t t,e &usiness "nd "--"irs o- " 3orpor"tion #ust &e %overned &5 " &o"rd o- dire3tors .,ose #e#&ers ,"ve stood -or e$e3tion, "nd .,o ,"ve "3tu"$$5 &een e$e3ted &5 t,e sto3:,o$ders, on "n "nnu"$ &"sis. On$5 in t,"t ."5 3"n t,e dire3torsL 3ontinued "33ount"&i$it5 to s,"re,o$ders, "nd t,e $e%iti#"35 o- t,eir de3isions t,"t &ind t,e 3orpor"tionLs sto3:,o$ders, &e "ssured. !,e s,"re,o$der vote is 3riti3"$ to t,e t,eor5 t,"t $e%iti#iAes t,e e+er3ise o- po.er &5 t,e dire3tors or o--i3ers over properties t,"t t,e5 do not o.n. /0B1 !,is t,eor5 o- de$e%"ted po.er o- t,e &o"rd o- dire3tors si#i$"r$5 e+p$"ins .,5, under Se3tion (* o- t,e Corpor"tion Code, in 3"ses .,ere t,e v"3"n35 in t,e 3orpor"tion4s &o"rd o- dire3tors is 3"used not &5 t,e e+pir"tion o- " #e#&er4s ter#, t,e su33essor Dso e$e3ted to -i$$ in " v"3"n35 s,"$$ &e e$e3ted only for the unexpired term o- t,e ,is prede3essor in o--i3e.E !,e $". ,"s "ut,oriAed t,e re#"inin% #e#&ers o- t,e &o"rd to -i$$ in " v"3"n35 on$5 in spe3i-ied inst"n3es, so "s not to ret"rd or i#p"ir t,e 3orpor"tion4s oper"tionsG 5et, in re3o%nition o- t,e sto3:,o$ders4 ri%,t to e$e3t t,e #e#&ers ot,e &o"rd, it $i#ited t,e period durin% .,i3, t,e su33essor s,"$$ serve on$5 to t,e D !nexpire term o- ,is prede3essor in o--i3e.E F,i$e t,e Court in El #ogar "pproved o- t,e pr"3ti3e o- t,e dire3tors to -i$$ v"3"n3ies in t,e dire3tor"te, .e point out t,"t t,is ru$in% ."s #"de &e-ore t,e present Corpor"tion Code ."s en"3ted /0'1 "nd &e-ore its Se3tion (* $i#ited t,e inst"n3es .,en t,e re#"inin% dire3tors 3"n -i$$ in v"3"n3ies in t,e &o"rd, i.e., .,en t,e re#"inin% dire3tors sti$$ 3onstitute " 2uoru# "nd .,en t,e v"3"n35 is 3"used -or re"sons ot,er t,"n &5 re#ov"$ &5 t,e sto3:,o$ders or &5 e+pir"tion o- t,e ter#. It "$so &e"rs notin% t,"t t,e v"3"n35 re-erred to in Se3tion (* 3onte#p$"tes " 6acanc) $cc(rrin7 within the directors term of office. F,en " v"3"n35 is 3re"ted &5 t,e e+pir"tion o- " ter#, $o%i3"$$5, t,ere is no #ore une+pired ter# to spe": o-. @en3e, Se3tion (* de3$"res t,"t it s,"$$ &e t,e 3orpor"tion4s sto3:,o$ders .,o s,"$$ possess t,e "ut,orit5 to -i$$ in " v"3"n35 3"used &5 t,e e+pir"tion o- " #e#&er4s ter#. t,e !o ,is t,e

As 3orre3t$5 pointed out &5 t,e R!C, .,en re#"inin% #e#&ers o- t,e ;;CC Bo"rd e$e3ted R"#ireA to rep$"3e M":"$int"$, t,ere ."s no #ore une+pired ter# to spe": o-, "s M":"$int"$4s one-5e"r ter# ,"d "$re"d5 e+pired. Pursu"nt to $"., t,e "ut,orit5 to -i$$ in t,e v"3"n35 3"used &5 M":"$int"$4s $e"vin% $ies .it, t,e ;;CC4s sto3:,o$ders, not t,e re#"inin% #e#&ers o- its &o"rd o- dire3tors. ?0EREFORE, .e DENY t,e petitioners4 petition -or revie. on certiorari, "nd AFFIRM t,e p"rti"$ de3ision o- t,e Re%ion"$ !ri"$ Court, Br"n3, 0H(, M"ni$", pro#u$%"ted on >"nu"r5 (B, ())(, in Civi$ C"se No. 9?8(9. Costs "%"inst t,e petitioners. SO ORDERED. 7AC!S: 7e&ru"r5 (8, 0**9: Ernesto ;i$$"$un", >"i#e C. in%$"s"n < in%$"s"n=, Edu"rdo M":"$int"$ <M":"$int"$=, 7r"n3is3o Orti%"s III, ;i3tor S"$t", A#"do M. S"nti"%o, >r., 7ortun"to ee, Au%usto Suni3o, "nd R"5 G"#&o" .ere e$e3ted "s BO durin% t,e Annu"$ Sto3:,o$ders4 Meetin% o- petitioner ;"$$e ;erde Countr5 C$u&, In3. <;;CC= 0**8 - ())0: Re2uisite 2uoru# 3ou$d not &e o&t"ined so t,e5 3ontinued in " ,o$d-over 3"p"3it5 Septe#&er 0, 0**?: in%$"s"n resi%ned, BO sti$$ 3onstitutin% " 2uoro# e$e3ted Eri3 Ro+"s <Ro+"s= Nove#&er 0), 0**?: M":"$int"$ resi%ned on M"r3, 9, ())0: >ose R"#ireA <R"#ireA= ."s e$e3ted &5 t,e re#"inin% BO Respondent A-ri3" <A-ri3"=, " #e#&er o- ;;CC, 2uestioned t,e e$e3tion o- Ro+"s "nd R"#ireA "s #e#&ers ot,e ;;CC Bo"rd .it, t,e Se3urities "nd E+3,"n%e Co##ission <SEC= "nd t,e Re%ion"$ !ri"$ Court <R!C= "s 3ontr"r5 to: Se3. (B. !,e &o"rd o- dire3tors or trustees. - Un$ess ot,er.ise provided in t,is Code, t,e 3orpor"te po.ers o- "$$ 3orpor"tions -or#ed under t,is Code s,"$$ &e e+er3ised, "$$ &usiness 3ondu3ted "nd "$$ propert5 o- su3, 3orpor"tions 3ontro$$ed "nd ,e$d &5 t,e &o"rd o- dire3tors or trustees to &e e$e3ted -ro# "#on% t,e ,o$ders o- sto3:s, or .,ere t,ere is no sto3:, -ro# "#on% t,e #e#&ers o- t,e 3orpor"tion, .,o s,"$$ ,o$d o--i3e -or 0 5e"r unti$ t,eir su33essors "re e$e3ted "nd 2u"$i-ied. Se3. (*. ;"3"n3ies in t,e o--i3e o- dire3tor or trustee. - An5 v"3"n35 o33urrin% in t,e &o"rd o- dire3tors or trustees ot,er t,"n &5 re#ov"$ &5 t,e sto3:,o$ders or #e#&ers or &5 e+pir"tion o- ter#, #"5 &e -i$$ed &5 t,e vote o- "t $e"st " #"Iorit5 o- t,e re#"inin% dire3tors or trustees, i- sti$$ 3onstitutin% " 2uoru#G ot,er.ise, s"id v"3"n3ies #ust &e -i$$ed &5 t,e sto3:,o$ders in " re%u$"r or spe3i"$ #eetin% 3"$$ed -or t,"t purpose. A dire3tor or trustee so e$e3ted to -i$$ " v"3"n35 s,"$$ &e e$e3ted on$5 -or t,e une+pired ter# o- ,is prede3essor in o--i3e. +++. M":"$int"$Ls ter# s,ou$d ,"ve e+pired "-ter 0**9 t,ere &ein% no une+pired ter#. !,e v"3"n35 s,ou$d ,"ve &een -i$$ed &5 t,e sto3:,o$ders in " re%u$"r or spe3i"$ #eetin% 3"$$ed -or t,"t purpose R!C: 7"vored A-ri3" - R"#ireA "s M":"$int"$Ls rep$"3e#ent M nu$$ "nd void SEC: Ro+"s "s ;i3e ,o$d-pver dire3tor o- in%$"s"n M nu$$ "nd void ;;CC "ppe"$ed in SC -or 3ertior"ri &ein% p"rti"$$5 3ontr"r5 to $". "nd Iurispruden3e ISSUES: 0. FNN t,ere is "n une+pired ter# - NO (. FNN t,e re#"inin% dire3tors o- " 3orpor"tion4s Bo"rd, sti$$ 3onstitutin% " 2uoru#, 3"n e$e3t "not,er dire3tor to -i$$ in " v"3"n35 3"used &5 t,e resi%n"tion o- " ,o$d-over dire3tor. - NO @EL : Petition 0. enied. R!C A--ir#ed.

NO Dter#E ti#e durin% .,i3, t,e o--i3er #"5 3$"i# to ,o$d t,e o--i3e "s o- ri%,t not "--e3ted &5 t,e ,o$dover -i+ed &5 st"tute "nd it does not 3,"n%e si#p$5 &e3"use t,e o--i3e #"5 ,"ve &e3o#e v"3"nt, nor &e3"use t,e in3u#&ent ,o$ds over in o--i3e &e5ond t,e end o- t,e ter# due to t,e -"3t t,"t " su33essor ,"s not &een e$e3ted "nd ,"s -"i$ed to 2u"$i-5. DtenureE ter# durin% .,i3, t,e in3u#&ent "3tu"$$5 ,o$ds o--i3e. Se3tion (B o- t,e Corpor"tion Code: ter# o- BO on$5 0 5e"r - -i+ed "nd ,"s e+pired <0 5r "-ter 0**9= (. NO under$5in% po$i35 o- t,e Corpor"tion Code is t,"t t,e &usiness "nd "--"irs o- " 3orpor"tion #ust &e %overned &5 " &o"rd o- dire3tors .,ose #e#&ers ,"ve stood -or e$e3tion, "nd .,o ,"ve "3tu"$$5 &een e$e3ted &5 t,e sto3:,o$ders, on "n "nnu"$ &"sis. On$5 in t,"t ."5 3"n t,e dire3torsL 3ontinued "33ount"&i$it5 to s,"re,o$ders, "nd t,e $e%iti#"35 ot,eir de3isions t,"t &ind t,e 3orpor"tionLs sto3:,o$ders, &e "ssured. !,e s,"re,o$der vote is 3riti3"$ to t,e t,eor5 t,"t $e%iti#iAes t,e e+er3ise o- po.er &5 t,e dire3tors or o--i3ers over properties t,"t t,e5 do not o.n. t,eor5 o- de$e%"ted po.er o- t,e &o"rd o- dire3tors Se3tion (* 3onte#p$"tes " v"3"n35 o33urrin% .it,in t,e dire3tor4s ter# o- o--i3e <une+pired= v"3"n35 3"used &5 M":"$int"$4s $e"vin% $ies .it, t,e ;;CC4s sto3:,o$ders, not t,e re#"inin% #e#&ers o- its &o"rd o- dire3tors