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Philippines
Friday, March 29, 2024

Proxies on government boards?

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That stockholders can vote by proxy, and that in fact most of the time they do, is known by anyone with the slightest introduction to corporation law in the Philippines.  But it is as clear from the Corporation Code that directors and trustees do not attend meetings, much less vote by proxies.  Jurisprudence has explained why: Directors and trustees are elected because of the trust reposed on them—owing to expertise, authority exercised or office occupied.

Instrumentalities of the national government, as defined by the Administrative Code of 1987, are strictly not corporations.  The Supreme Court has distinguished them from GOCCs, but has also underscored the fact that they have corporate features and enjoy corporate powers.  This is patently true in the case of state universities and colleges governed by the Higher Education Modernization Act.  The law expressly grants their governing boards all the corporate powers granted ordinary corporations in Section 36 of the Corporation Code.  The same law identifies the members of the governing board.  Two seats are occupied by the committee chairs for education of both chambers of the Legislature.

In the case of the chair—who is, ex officio, the Chair of the Commission on Higher Education, there is no debate.  The Chair can designate a member of the Commission to be the “working chair” of the governing board.  After all, the Chair’s presence is to assure the State—and the public —that policies of the Commission on Higher Education governing higher education are not transgressed by state universities and colleges, and any member of the Commission can very well see to that.

The matter is quite different, however, with other members of the governing board—often called the Board of Regents.  Reynato Puno, for example, sits as regent of the University of the Philippines, and the reason is clear: the wisdom, prudence and insights of such a renowned jurist are precious to UP, and it would be absurd even to suggest that a proxy could sit in his place and vote in his behalf.  His attributes are personal to him, and so must his participation in the policy-making that is the chief function of the board.

Habitually, the chairs of the committees on education of both chambers of Congress have assigned proxies to sit for them—and to vote for them at meetings of governing boards of SUCs.  And if all parties were candid, it would easily come to light that none of the proxies sits as “instructed,” that is, the proxy votes as he or she thinks fit, without any instruction or antecedent referral to the principal!  Obviously, when the law made the chairs of the committees on education members of the governing boards of state universities and colleges, it did so in the expectation that the concerns of SUCs would be appropriately addressed by the legislature—on which they are dependent not only for appropriations but also for oversight.

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It does happen that the “proxies” are qualified people, but that is really be side the point, because the matter of fulfilling the purpose of the law cannot be left to happenstance!  If a SUC is an instrumentality upon which the law bestows corporate features, should its policy-making and operations not be “corporatized” as well?  In fact, they are, in the measure that officers of the instrumentality—the university president and subordinate university officials—are ultimately accountable to the board of regents.  Why then should such instrumentalities carve out for themselves exceptions to the general corporate principle on the trust reposed on members of the governing boards in their persons?

With the avowed policy of state to make higher education more accessible—principally through ordaining a free tuition-fee system—state universities are obviously at the forefront.  Private higher education institutions cannot be expected to make this service available.  All the more urgent then the need to address this dangling legal issue that has to do with the deliberations that go into the formulation of policy!

rannie_aquino@csu.edu.ph
rannie_aquino@sanbeda.edu.ph
rannie_aquino@outlook.com

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