Corporation Law: The Revised Corporation Code of the Philippines - Secs 53, 54, 55 & 56

 THE REVISED CORPORATION CODE  OF THE PHILIPPINES

Republic Act No. 11232 

TITLE VI - MEETINGS

Section 53. Who Shall Preside at Meetings.

The chairman or, in his absence, the president shall preside at all meetings of the directors or trustees as well as of the stockholders or members, unless the bylaws provide otherwise.

1. Presiding Officer.

• The office of the Chairman of the Board is not expressly provided for in Section 24 of the RCCP.  
• However, Section 53 of the RCCP mentions the Chairman as the presiding officer at all meetings. 
• Moreover, the By-Laws may create the office of the Chairman who may be designated as the presiding officer of stockholders' and Board meetings.

2. Presiding Officer Can Vote. 

• The presiding officer is also a member of the Board.
• Hence, it cannot be provided in the By-Laws or in a Board resolution that he can vote only in case of a tie in a Board meeting.
• The resolution is not deemed approved in case of a tie because the required number of votes is not met.

Section 54. Right to Vote of Secures Creditors and Administrators.

In case a stockholder grants security interest in his or her shares in stock corporations, the stockholder-grantor shall have the right to attend and vote at meetings of stockholders, unless the secured creditor is expressly given by the stockholder-grantor such right in writing which is recorded in the appropriate corporate books.

Executors, administrators, receivers, and other legal representatives duly appointed by the court may attend and vote on behalf of the stockholders or members without need of any written proxy.

1. When Shares are Pledged or Mortgaged.

• The stockholders whose stock certificates are used as collaterals for a loan have the right to vote unless said stockholders authorizes the bank in writing to vote the pledged or mortgaged shares.
• A stockholder whose shares are the subject of security interest under Personal Property Act (R.A. No. 11057) shall be entitled to vote such shares until the shares have been transferred in the name of the transferee in a sale to enforce the security interest. 
• In the meantime, the stockholder retains the right to vote because he retains ownership of the property. 
• However, the security agreement may provide that that the security holder may attend and vote at meetings. 

2. Administrators and Executors. 

• The second paragraph of Section 54 allows executors, administrators, receivers, and other legal representatives to attend and vote in behalf of the stockholders members even without a proxy.
• The reason for this is that such representatives become vested with legal title over the shares upon their appointment by the court.
• However, it is indispensable that the representative is appointed by the court, otherwise, a proxy is necessary. 

3. Escrow Shares. 

• Where a stock certificate is deposited in escrow as security for a promissory note with instructions to the holder to deliver the certificate to the payee of the note and the stock is so delivered and transferred to the payee in the books of the corporation, the payee-transferee has the right to vote the same. 
• The rule is that stocks deposited in trust or in escrow can vote as other trust stocks, whenever a title and ownership vest in the designated persons.

Section 55. Voting in Case of Joint Ownership of Stock.

The consent of all the co-owners shall be necessary in voting shares of stock owned jointly by two (2) or more persons, unless there is a written proxy, signed by all the co-owners, authorizing one (1) or some of them or any other person to vote such share or shares: Provided, That when the shares are owned in an "and/or" capacity by the holders thereof, any one of the joint owners can vote said shares or appoint a proxy therefor.

1. Unanimity. 

• In civil law, acts of ownership require unanimity among the co-owners. 
• The general rule under Section 55 of the RCCP follows this rule by requiring the consent of all the co-owners in order to vote a share that is owned jointly by two or more persons. 
• For example, a share in the name of "Mr. A and Mr. B" requires the consent of both of them in order to vote. 

2. When Unanimity is not Required.

• Even if the shares are co-owned, unanimity is not required in the following instances:
1. If there is a written proxy signed by all the co-owners authorizing any or some to vote; and 
2. If the shares are owned in an "and/or" capacity.

Section 56. Voting Right for Treasury Shares. 

Treasury shares shall have no voting right as long as such shares remain in the Treasury.

1. Rationale.

• Treasury shares are not part of the outstanding capital. 
• Hence, they shall have no voting rights. 
• Shares that are not part of the outstanding capital are not entitled to any right or privilege of a stockholder. 
• When a corporation re-acquires its own shares, it does not become a subscriber thereof and the only right that a corporation has over the treasury shares is to reissue the same for valuable consideration.

2. Disqualified Shares. 

• It was also observed that whenever the general corporation law disqualifies shares from voting on any matter, they are not considered outstanding for the determination of the quorum at any meeting to act upon any matter. 
• They are not required in the determination of the number of votes that are necessary to approve any action upon any matter under any other provision of law or Articles of Incorporation or By-Laws.