MEMO TO THE GOCC BOARDS
TO : ALL MEMBERS OF THE BOARD OF TRUSTEES/DIRECTORS OF GOCCs
FROM : AGNES VST DEVANADERA
Government Corporate Counsel
SUBJECT : DUTY TO ATTEND BOARD MEETINGS AND TO VOTE
Pursuant to NPC DRIVERS AND MECHANICS ASSOCIATION (NPC DAMA), represented by its President ROGER S. SAN JUAN, SR., NPC EMPLOYEES & WORKERS UNION (NEWU) NORTHERN LUZON REGIONAL CENTER, represented by its Regional President JIMMY D. SALMAN, in their own individual capacities and in behalf of the members of the associations and all affected officers and employees of National Power Corporation (NPC), ZOL D. MEDINA, NARCISO M. MAGANTE, VICENTE B. CIRIO, JR., NECITAS B. CAMAMA, in their individual capacities as employees of National Power Corporation as Petitioners versus THE NATIONAL POWER CORPORATION (NPC), NATIONAL POWER BOARD OF DIRECTORS (NPB), JOSE ISIDRO N. CAMACHO as Chairman of the National Power Board of Directors (NPB), ROLANDO S. QUILALA, as President-Officer-in-Charge/CEO of National Power Corporation and Member of National Power Board, and VINCENT S. PEREZ, JR., EMILIA T. BONCODIN, MARIUS P. CORPUS, RUBEN S. REINOSO, JR., GREGORY L. DOMINGO and NIEVES L. OSORIO, as Respondents.
DATE : October 27, 2006
------------------------------------------------------------------------------------------------
The Supreme Court has once again stressed the legal maxim that there is no better rule to follow than to strictly adhere to the tenets of the law. This was the clear admonition of the Court to all directors of corporations in its decision in the case of the NPC Drivers and Mechanics Association, NPC Employees Union and all affected employees of NPC, as petitioners, and the NPC Board of Directors (Board), as respondents (G.R. No. 1526208).
In the aforesaid case, the petitioners instituted a special civil action for injunction to enjoin respondents from implementing Board Resolutions No. 2002-124 and No. 2002-125 both dated 18 November 2002 of the National Power Corporation (NPC). Petitioners claimed that the resolutions were not approved by a majority of the members of the board; that only three of the nine members of the Board, as provided under Section 48 of the EPIRA Law, were present; and that the four (4) other officials who signed the resolutions in question were merely representatives of the department secretaries concerned.
Respondents, on the other hand, insisted that the assailed resolutions were valid because the four other members of the Board were duly represented during the enactment of the resolutions; that the practice of appointing a representative to take the place of a member of the board for purposes of attendance at meetings has long been accepted as valid; and, that Section 48 of the EPIRA Law does not in any way prohibit any member of the NPB from authorizing his representative to sign resolutions adopted by the Board.
However, Supreme Court found the respondents' arguments to be without merit because according to the Court, Section 48 of the EPIRA Law clearly identified the officials who should be sitting and exercising the powers of the members of the Board. Under the said law, only those officials mentioned have been vested by the legislature with the power to exercise their judgment and to vote on matters which have relation to the running of the affairs of the Board.
The Court emphasized that since the members of the Board were exercising powers which were only delegated by the Corporation Code and other statutes, such delegated power cannot be further delegated. "Thus, the department secretaries cannot delegate their duties as members of the Board, much less their power to vote and approve board resolutions because it is their personal judgment that must be exercised in the fulfillment of such responsibility. There is no question that the enactment of the assailed resolutions involves the exercise of discretion and not merely a ministerial act that could be validly performed by a delegate."
The Court further held that the practice of delegating authority to persons appointed is permissible "only when the judgment and discretion are finally exercised by the officers authorized by law." An administrative officer may utilize the aid of subordinates in the process of exercising his own judgment and discretion but the final decision must be made by him/her alone. This legal principle and duty was violated when in this case, the representatives made the final decision by affixing their signatures to the assailed resolutions.
In summary, the members of the board of directors of corporations, including GOCCs are called upon to personally attend meetings of the Board and to vote. If they cannot be personally present, they may designate a representative to attend the meeting on their behalf, but said representative cannot vote. This is particularly true with respect to Section 48 of the EPIRA Law.
For the full text of the decision, please visit www.ogcc.gov.ph
