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Sirs and Mesdames:

Quoted hereunder, for your information, is a resolution of this Court dated JULY 11, 2006

G.R. No. 172556 (Trans Middle East (Phils.) Equities, Inc. (TMEE) v. Sandiganbayan (5^th Division, Presidential Commission on Good Government (PCGG), The Board of Directors of Equitable PCI Bank, Represented by its Chairman, Corazon dela Paz and Sabino Acut, Jr. (In his Capacity as Corporate Secretary of Equitable PCI Bank))

For resolution is a Motion for Full Compliance dated 21 June 2006 filed by Petitioner Trans Middle East (Phils.) Equities, Inc. (TMEE), which prays "that respondent EPCIB Board be directed to make full compliance with the directive of this Honorable Court of 9 June 2006 by restoring to TMEE's representative all the rights and privileges appertaining to his position as duly elected Director including his vice-chairmanship in the HPCIB Board, membership in the major Board Committees and directorship in the various subsidiaries of the Bank." ^[1] cralaw

The motion must be denied.

To recall, the Decision of this Court dated 9 June 2006, granting TMEE's petition, ordained in its dispositive portion: "PENDING FINALITY OF THIS DECISION AND IMMEDIATELY UPON RECEIPT HEREOF, respondents Board of Directors of Equitable-PCI Bank and Corporate Secretary Sabino E. Acut, Jr. arc DIRECTED NOT TO RECOGNIZE said person whose election to the Board of Directors is set aside and nullified herein and TO RECOGNIZE the nominee or representative of TMEE as a duly elected member of the Board of Directors, with all the rights and privileges appertaining to the position."

TMEE relates that its nominee, Atty. Ferdinand Martin G. Romualdez (Romualdez) has since been recognized by the Equitable-PCI Bank Board of Directors as one of its members. However, TMEE alleges that Romualdez, who was formerly a vice-chairperson of the Board, Chairman of the Trust Committee, and a member of other board committees, was not included among the appointed corporate officers or members of the board committees. ^[2] cralaw TMEE thus argues that unless Romualdez retains his previous positions, there is no full compliance with the Court's Decision, which stipulated that the "representative of TMEE as a duly elected member of the Board of Directors, [be recognized] with all the rights and privileges appertaining to the position".

TMEE proceeds from erroneous premises. All the Court mandated was that Romualdez (as TMEE's nominee) be recognized as a member of the Board of Directors. The word "position" as in the phrase "appertaining to the position" simply refers to membership in the Board of Directors, nothing more. To adopt TMEE's theory would lead to the perverse conclusion that one member of a 15-person board of directors ipso facto has the right to sit as an officer of a corporation, to the preclusion of any discretion of the board over that matter.

Under Section 25 of the Corporation Code, it is the directors of the corporation who elect the corporate officers, who, excepting the president, generally need not even be directors themselves. ^[3] cralaw Such election takes place immediately after the election of the new board. While TMEE may have been put in a disadvantage since its representative was not able to participate in the election of Equitable-PCI Bank's officers, it certainly would not follow that such representative had a right to election as an officer since the discretion to elect corporate officers belongs solely to the board of directors. As the directors are charged with the control and management of their corporation, they may appoint officers and agents, and as incident to this power of appointment, may also discharge those whom they appointed. ^[4] cralaw

The fact that Romualdez used to be a vice-chairperson of the Board of Directors does not entitle him to the same position at present. It is clear from Section 25 of the Corporation Code that the term of the officers cannot extend beyond that of the board of directors since they have to be elected after the election of the board. ^[5] cralaw It also follows that contracts for employment for life or indefinite period of officers are generally invalid because they bind the hands of future boards of directors. ^[6] cralaw

Indeed, TMEE does not even cite any provision in the Equitable-PCI Bank by-laws that would somehow entitle Romualdez, as a member of the Board of Directors, to election as a corporate officer. On the other hand, the respondent Board of Directors does cite Section 10(a) of the by-laws, which ineluctably vests in the Board the power to elect those corporate officers "as may be deemed necessary by the Board of Directors". ^[7] cralaw

The same arguments lie against TMEE's claim that Romualdez should be restored as well to his former committee memberships. Unless otherwise provided by law or the by-laws, it is the Board of Directors that has the sole discretion to organize those committees of the corporation that it sees fit to create, and to appoint the members thereof. Again, TMEE does not point to any provision of law or the by-laws that would enable Romualdez to sit on his previous committees, and we can reasonably presume that there is none.

TMEE claims that the Court's earlier Decision was formulated "in recognition of the right of the minority stockholders, represented by Mr. Romualdez, to participation in decision-making and [to] assure the protection and promotion of their interests in the Bank." ^[8] cralaw Yet the decision did not mandate the extent of any participation of TMEE in the corporate affairs of Equitable-PCI Bank, except to the effect that TMEE is entitled to one seat in the 15-member Board of Directors. Otherwise, the Court is bound to respect the prerogative of the collective Board of Directors in the management and control of the Bank.

It appears that ultimately, TMEE wishes to effect the Court's Decision as restoring the status quo ante in Equitable-PCI Bank prior to the controversial election last 23 May 2006. That was hardly the import of our Decision, which took the deliberate conservative measure to respect the election of even date of those directors whose selection did not infringe on TMEE's right to one seat on the Board. Disturbed as the Court was over the circumstances leading to the 23 May 2006 election, the Court still recognized that one seat on the board was all TMEE was legally entitled to, conformably to the specific prayer of TMEE in its own petition. There are no unique accoutrements to that one seat that would warrant any special category of adjunct privileges beyond those that the Board itself would see fit to confer, apart from the rights and privileges which the Corporation Code ^[9] cralaw and the by-laws grant to directors in general.

For lack of merit, the Motion for Full Compliance, dated 21 June 2006, of petitioner Trans Middle East (Phils.) Equities, Inc. is DENIED.

The Court further Resolved to

(a)���� DENY WITH FINALITY the Motion for Reconsideration of the Factual Conclusions against the EPCIB Board in the Decision of June 9, 2006, dated June 19, 2006 filed by counsel for respondent Board of Directors of Equitable PCI Bank, as the basic issues raised therein have been passed upon by this Court and no substantial arguments were presented to warrant the reversal of the questioned decision;

(b)���� NOTE the Opposition to Motion or Full Compliance dated June 25, 2006 filed by counsel for respondent Board of Directors of Equitable PCI Bank;

(c)���� DENY WITH FINALITY the Motion for Reconsideration of the Decision of June 9, 2006, dated June 27, 2006 filed by the Office of the Solicitor General for respondent Presidential Commission on Good Government, as the basic issues raised therein have been passed upon by this Court and no substantial arguments were presented to warrant the reversal of the questioned decision; and

(d)���� NOTE WITHOUT ACTION the Motion for Voluntary Inhibition filed by the OSG, considering that Associate Justice Minita V. Chico-Nazario already inhibited from this case. Carpio, J., on official business. Azcuna & Chico-Nazario, JJ., no part.

Very truly yours,

(Sgd.) MA. LUISA D. VILLARAMA
Clerk of Court