212501029-Aurbach-v-Sanitary-Wares.doc

Aurbach v Sanitary Wares December 15, 1989 G.R. No. 75875: WOLFGANG AURBACH, JOHN GRIFFIN, DAVID . . WHI!!INGHA" #$% CHARL&' CHA"'A( )*. 'ANI!AR( WAR&' "ANUFAC!URING CORORA!OIN, &RN&'!O V. LAGDA"&O, &RN&'!O R. LAGDA"&O, JR., &NRI+U& R. LAGDA"&O, G&ORG& F. L&&, RAUL A. BONCAN, BALDWIN (OUNG #$% AV&LINO V. CRU G.R. No. 75951: 'ANI!AR( WAR&' "ANUFAC!URING CORORA!ION, &RN&'!O R. LAGDA"&O, &NRI+U& B. LAGDA"&O, G&ORG& FL .&& RAUL A. BONCAN, BALDWIN (OUNG #$% AV&LINO V. CRU- )*. !H& COUR! OF A&AL', WOLFGANG AURBACH, JOHN GRIFFIN, DAVID . WHI!!INGHA", CHARL&' CHA"'A( #$% LUCIANO 'ALAAR G.R. No*. 759757/: LUCIANO LUCIANO &. 'ALAAR 'ALAAR )*. 'ANI!AR( WAR&' "ANUFAC!URING CORORA!ION, &RN&'!O V. LAGDA"&O, &RN&'!O R. LAGDA"&O, JR., &NRI+U& R. LAGDA"&O, G&ORG& F. L&&, RAUL A. BONCAN, BALDWIN (OUNG, AV&LINO V. CRU #$% 0e COUR! OF A&AL' GUTIERREZ, JR., J.: SUMMARY: SUMMARY: '#$23#re* 3#* # %ome*02c cor4or#02o$ 32c e$0ere% 2$0o #$ #reeme$0 36 0e A'I ore2$ ro4 2$ or%er 0o e4#$% 0e2r b*2$e** 2$0er$#02o$#;. I$ 0e eec02o$ o 0e2r bo#r% member*, 0e; #ree% 0#0 < o 0e 9 %2rec0or* *# be %e*2$#0e% b; A'I 32e 0e o0er / *# be %e*2$#0e% b; 0e F2242$o *0oc=o%er*. D2*40e e$*e% 3e$ A'I 2$)o=e% 0e2r r20 0o cm#02)e )o02$ #$% $om2$#0e% #$o0er c#$%2%#0e. I$ or%er 0o %e0erm2$e 3o 0e %2rec0or* #re, 0e cor0 %2*c**e% 3e0er 0e b*2$e** 3#* # >o2$0 )e$0re or # cor4or#02o$. HELD: !e HELD: !e 2m4or0#$0 4ro)2*2o$* o 0e 4#r02e*? #reeme$0, #reeme$0, #* 3e #* 0e*02mo$2# e)2%e$ce, *o3e% 0#0 0e 4#r02e* #ree% 0o e*0#b2* # >o2$0 )e$0re #$% $o0 #$ or%2$#r; cor4or#02o$, 2m4;2$ 0#0 r22% 4r2$c24e* o cor4or#02o$ #3 $ee% $o0 be #442e%. NOTE: I 02$= 0e %2*c**2o$ o$ >o2$0 )e$0re 3#* %o$e 2$ or%er 0o *o3 0#0 02* 2* # cor4or#0e >o2$0 )e$0re, $o0 #$ or%2$#r; cor4or#02o$ #$% #* *c r22% 4r2$c24e* o 0e Cor4or#02o$ #3 #re $o0 co$0ro2$@ e$ce, $o $ee% 0o *02c= 0o cm#02)e )o02$ bec#*e 0e; m#;, b; #reeme$0, #ree o$ # %2ere$0 me0o%. !ere #re *4ec2# co$0r#c0# #reeme$0* 32c #re 2)e$ eec0 #$% 02* 2$c%e* 0e #c0 0#0 A'I, 0e ore2$ ro4, 2* o$; # m2$or20; ro4 #* #ree% #$% %e*420e 0e  o 0e2r *#re*, 20 3#* #ree% #*o 0#0 0e; c#$ o$; $om2$#0e 4 0o < c#$%2%#0e*, $o more $o e**. I0?* $o0 $#2r  bec#*e 0ere #re o0er 4ro)2*2o$* 36c 4ro0ec0 A'I #$;3#;. DOCTRINE: !e re 2* 0#0 3e0er 0e 4#r02e* 0o # 4#r02c#r co$0r#c0 #)e 0ereb; e*0#b2*e% #mo$ 0em*e)e* # >o2$0 )e$0re or *ome o0er  re#02o$ %e4e$%* 4o$ 0e2r #c0# 2$0e$02o$ 32c 2* %e0erm2$e% 2$ #ccor%#$ce 320 0e re* o)er$2$ 0e 2$0er4re0#02o$ #$% co$*0rc02o$ o co$0r#c0*.  A >o2$0 )e$0re )e$0re 2* # orm o 4#r0$er*24 4#r0$er*24 #$% *o% 0* be o)er$e% o)er$e% b; 0e #3 o 4#r0$er*24*. 4#r0$er*24*. 'C #* o3e)er o3e)er reco$2e% # %2*02$c02o$ %2*02$c02o$ be03ee$ 0e*e 03o b*2$e** orm*, #$% #* e% 0#0 #0o # cor4or#02o$ c#$$o0 e$0er 2$0o # 4#r0$er*24 co$0r#c0, 20 m#; o3e)er e$#e 2$ # >o2$0 )e$0re 320 o0er*. 'ee 3oe 4#r. 2$ E ACTS: C#*e 2$)o)e* # %2*40e be0.  ro4* A'Iore2$  (o$%ome*02cE (o$%ome*02cE #* 0o 3o '#$23#re*? %; eec0e% bo#r% o %2rec0or* #re. 19/1: '#$20#r; W#re* "0. Cor4. '#$23#reE 2* # %ome*02c cor4. 2$cor4or#0e% or 0e 4r2m#r; 4r4o*e o m#$#c0r2$ #$% m#r=e02$ *#$20#r; 3#re* hindi hindi ngaE. ngaE. (o$, (o$, o$e o 0e 2$cor4or#0or*, 3e$0 #bro#% 0o oo= or ore2$ 4#r0$er* or 2 0* e4#$*2o$.  A. 15, 19/: Amer2c#$ '0#$%#r% '0#$%#r% I$c. A'IE, A'IE, # ore2$ cor4., cor4., e$0ere% 2$0o 2$0o #$ A!ree"ent 320 '#$23#re*  *ome F2242$o 2$)e*0or* o !o 4#r02c24#0e 2$ 0e #$nershi% #& an enter%rise 36c enter%rise 36c 3o% e$#e 4r2m#r2; 2$ 0e b*2$e** o m#$#c0r2$ 2$ R #$% *e2$ ere #$% #bro#% )20reo* c2$# #$% *#$20#r; 3#re*. B*2$e** o4er#02o$* 2$ R *# be 0r #$ inc#r%#rate' enter%rise 36 enter%rise 36 2$202# $#me o "Sanitary Wares Mftg. Corp." o  Areeme$0 co$0#2$e% co$0#2$e% 4ro)2*2o$* ree)#$0 ree)#$0 0o 0e $om2$#02o$ $om2$#02o$ #$% eec02o$ eec02o$ o 0e %2rec0or* o 0e cor4. 2$c%2$: 2$c%2$: o Se. !. a# $ %rti&es of Inorporation: a# The %rti&es of Inorporation of the Corporation sha&& 'e s('stantia&&y in the for) anne*ed hereto as E*hi'it % and, insofar as per)itted (nder +hi&ippine &a, sha&& speifia&&y pro-ide for:  (1) Cumulative voting for directors Se. . a# $ Manage)en Manage)ent: t: a# The )anage)ent )anage)ent of the Corporati Corporation on sha&& 'e -ested -ested in a /oard of 0iretors 0iretors,, hih sha&& onsist of 1 o indi-id(a&s. %s &ong as %)erian$Standard %)erian$Standard sha&& on at &east !23 of the o(tstanding sto4 of the Corporation, 3 of the 9 directors shall  be designated by American-Standard, and the other 6 shall be designated by the other stocholders of the Cor!oration" !e #reeme$0 #*o co$0#2$e% 4ro)2*2o$* %e*2$e% 0o 4ro0ec0 A'I #* # m2$or20; ro4 *c #*@ o r#$0 o )e0o 4o3er* o)er # $mber o cor4or#0e #c0* o r20 0o %e*2$#0e %e*2$#0e cer0#2$ cer0#2$ o2cer* o2cer*,, *c #* # member member o 0e &ec. Comm200ee Comm200ee 3o*e 3o*e )o0e 3#* re2re% re2re% or 2m4or0#$0 2m4or0#$0 cor4or#0e cor4or#0e 0r#$*#c02o$*, r20 0o %e*2$#0e 0e 4re*2%e$0 #$% 4#$0 m#$#er  o 0e )o0e o 7 o0 o 9 %2rec0or* 6c 2* re2re% 2$ cer0#2$ e$mer#0e% cor4or#0e #c0* o re2reme$0 o # 75 *4erm#>or20; )o0e or 0e #me$%me$0 o 0e #r02ce* #$% b;#3* o '#$23#re* o *#e* 4o2c; o '#$23#re* *# be 0#0 32c 2* $orm#; oo3e% b; A'I #$% 0#0 '#$23#re* *o% $o0 e4or0 '0#$%#r% 4ro%c0* o0er32*e 0#$ 0ro A'I* &4or0 "#r=e02$ 'er)2ce*  A'I #ree% 0o 4ro)2%e 4ro)2%e 0ec$oo; #$% #$% =$o3o3 0o '#$23#re* #$% 0e 0e #00er 4#2% ro;#02e* ro;#02e* or 0e *#me *#me o L#0er, 0e ec0e% #* 20 #% o0er *b*2%2#r2e* o >o2$0 )e$0re ro4* 2$ co$0r2e* 3ere 22442$e e4or0* 3ere co$0em4#0e%. ELECTION O MEM(ERS O THE (OARD O DIRECTORS ON MAR) *+ ,-*. !e #$$# *0oc=o%er* mee02$ 3#* e% #$% 0e *0oc=o%er* 4rocee%e% 0o eec0 0e member* o 0e bo#r% o %2rec0or*.  A'I ro4 $om2$#0e% $om2$#0e% < 4er*o$*: Wo#$ Arb#c, Jo$ Gr22$ Gr22$ #$% D#)2% D#)2% . . W2002$#m. 22442$e 2$)e*0or* $om2$#0e% /: &r$e*0o L#%#meo, 'r., 'r., R# Bo$c#$, &r$e*0o L#%#meo, Jr., Geore Lee, #$% B#%32$ (o$. (o$. &%#r%o Ce$2# 0e$ $om2$#0e% Lc2#$o '###r, 3o 2$ 0r$ $om2$#0e% C#re* C#m*#;. C#m*#;.  Y#un!+ the chair"an+ ru/e' the /ast 0 n#"inati#ns #ut #& #r'er #n the basis #& Sec) 1 2a3 #& the A!ree"ent+ an' %ractice #& the %arties t# n#"inate #n/y - %ers#ns as n#"inees &#r the -4"e"ber b#ar' #& 'irect#rs)  A'I re4re*e$0#02)e re4re*e$0#02)e #44e#e% 0o 0e 0e bo%; o *0oc=o%er* *0oc=o%er* 0o )o0e )o0e o$ C#2rm#$?* r2$ b0 02* 3#* o)erre% b; (o$. (o$ 0e$ 2$*0rc0e% 0e Cor4or#0e 'ec. 0o c#*0 # 0e )o0e* 4re*e$0 #$% re4re*e$0e% b; 4ro; e#; or 0e / $om2$ee* o 0e 2. I$)e*0or* #$% 0e < $ om2$ee* o A'I, 0* e5c/u'in! the 0 a''iti#na/ %ers#ns n#"inate'+ Sa/a6ar 7 Cha"say) Cha"say) ASI re%resentative %r#teste' the 'ecisi#n #& the Chair"an an' ann#unce' that a// v#tes accruin! t# ASI shares $ere bein! cu"u/ative/y v#te' &#r the . ASI n#"inees 7 Char/es Cha"say  Cha"say  'a&e 'a&e 5 na so ontrary sa agree)ent E+ an' instructe' the Secretary t# s# v#te) C()(&ati-e -oting -oting e*a)p&e: 5 -aant positions, positions, -oter has 22 shares so she has 6222 -otes 22*5#: 22*5#: for reg(&ar -oting $7 -oter an hoose to gi-e a&&  andidates 22 -otes eah '(t on&y (p to 22 /UT for ()(&ati-e -oting $7 -oter an hoose to gi-e a&& 6222 -otes to 8 andidate or di-ide it 'et  diff andidates9 in the %gree)ent in this ase, strit&y ! no)inations fro) %SI %SI and  fro) &oa& gro(p, they annot add )ore to the peop&e they an no)inate e-en if they sti&& ha-e -otes &eft# '###r #$% o0er 4ro; o%er* #$$o$ce% 0#0 # 0e )o0e* o3$e% b; 0em 3ere be2$ )o0e% cm#02)e; 2$ #)or o '###r. C#2rm#$ (o$ (o$ *02 o)erre% 0em *o 0e 'ecre0#r; cer022e% or eec02o$ o$; 0o*e %e*2$#0e% b; 22442$e 2$)e*0or*  A'I.  A'I re4re*e$0#02)e re4re*e$0#02)e mo)e% 0o rece** 0e mee02$ mee02$ 32c 3#* *eco$%e%. Ho3e)er, Ho3e)er, 0ere 3#* 3#* #*o # mo02o$ 0o #%>or$, *o mee02$ mee02$ 3#* #%>or$e% b; (o$.  

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H#)2$ bee$ 2$ore%, A'I re4re*e$0#02)e %ec#re% 0#0 *c 3#* mere; # rece** #$% #*=e% or # mee02$ 0o be reco$)e$e% 2$ 0e $e0 room. A'I Gro4, '###r #$% o0er *0oc=o%er*, #ee%; re4re*e$02$ 5< or 5 o '#$23#re*? *#re* %ec2%e% 0o co$02$e 0e mee02$ #0 0e ee)#0or  obb; o 0e Amer2c#$ '0#$%#r% B2%2$. O$ 0e b#*2* o 0e cm#02)e )o0e* c#*0 e#r2er 2$ 0e mee02$, A'I Gro4 $om2$#0e% 20*  $om2$ee*. '###r )o0e% or 2m*e. !* 0e *#2% 5 %2rec0or* 3ere cer022e% #* eec0e% %2rec0or* b; 0e Ac02$ 'ecre0#r; 320 0e e4#$#02o$ 0#0 0ere 3#* # 02e #mo$ 0e o0er / $om2$ee* or 0e  rem#2$2$ 4o*202o$* o %2rec0or* #$% 0#0 0e bo%; %ec2%e% $o0 0o bre#= 0e 02e. COM8LAINTS+ 8ETITIONS !e*e 2$c2%e$0* 0r2ere% o 0e 22$ o *e4#r#0e %etiti#ns by the %arties $ith the SEC) F2r*0 4e0202o$. For 4re2m2$#r; 2$>$c02o$ b; '#$23#re*  L#%#meo ro4 ##2$*0 '###r #$% C#m*#;. 'eco$% 4e0202o$. For o 3#rr#$0o #$% #442c#02o$ or rece2)er*24 b; A'I ro4 36 '###r  C#m*#; ##2$*0 0e ro4 o (o$ #$% L#%#meo #$% A)e2$o Cr. Bo0 *e0* o 4#r02e* ece40 or Cr c#2me% 0o be 0e e202m#0e %2rec0or* o 0e cor4or#02o$. !e 03o 4e 0202o$* 3ere co$*o2%#0e% #$% 0r2e% >o2$0;. SEC HEARIN9 OICER: U4o%2$ L#%#meo Gro4?* eec02o$ #$% %2*m2**2$ '###r  C#m*#;?* o 3#rr#$0o 4e0202o$  A'I Gro4 #$% '###r #44e#e% 0e %ec2*2o$ 0o 0e '&C e$ b#$c SEC: A2rme% 0e e#r2$ o2cer* %ec2*2o$.   *e4#r#0e #44e#* 3ere 2e% 320 IAC b; A'I ro4 #$% b; '###r. IAC:  Co$*o2%#0e% 0e 4e0202o$*. Or%ere% 0e rem#$% o 0e c#*e 0o '&C 320 0e %2rec02)e 0#0 # $e3 *0oc=o%er* mee02$ o '#$23#re* be or%ere% co$)o=e% #* *oo$ #* 4o**2be, $%er 0e *4er)2*2o$ o 0e '&C L#%#meo ro4 2e% "R CA: 'e0 #*2%e e#r2er %ec2*2o$ 0e 0e$ IAC. I$ # *b*ee$0 eec02o$* or %2rec0or* o '#$23#re*, A'I c#$$o0 $om2$#0e more 0#$ < %2rec0or*. o F2242$o *0oc=o%er* *# $o0 2$0erere 2$ A'I* co2ce o 20* < $om2$ee* o F2242$o *0oc=o%er* c#$ $om2$#0e o$; / c#$%2%#0e*. I$ 0e e)e$0 0e; c#$$o0 #ree o$ 0e / $om2$ee*, 0e; *# )o0e o$; #mo$ 0em*e)e* 0o %e0erm2$e 3o 0e / $om2$ee* 32 be, 320 cm#02)e )o02$ 0o be #o3e% b0 320o0 2$0erere$ce rom A'I. G.R. No. 75875: A'I ro4 2e% 4e0202o$ or re)2e3 #**#22$ 0e %ec2*2o$ or 4o%2$ eec02o$ o L#%#meo ro4 3e$ 0ere 3#* $o eec02o$ #0 #@ or 4ro2b202$ 0e *0oc=o%er* rom eerc2*2$ 0e2r  )o02$ r20* re4re*e$0e% b; 0e $mber o *#re* 2$ '#$23#re*, 0* %e4r2)2$ 0em #$% A'I o 0e2r 4ro4er0; r20* 320o0 %e 4roce**. G.R. No*. 759757/: '###r #**#2* 0e #me$%e% %ec2*2o$ o$ 0e . ro$%*: o D2*re#r% o b2$%2$ co$0r#c0# #reeme$0* e$0ere% 2$0o b; *0oc=o%er* #$% 0e re4#ceme$0 o 0e co$%202o$* o *c #reeme$0* 320 0erm* $e)er co$0em4#0e% b; 0e *0oc=o%er* b0 mere; %2c0#0e% b; 0e CA . De4r2)#02o$ o 0e 4ro4er0; r20* o *0oc=o%er* 320o0 %e 4roce** o #3 2$ or%er 0#0 # #)ore% ro4 o *0oc=o%er* m#; be 2e#; o be$e20e% #$% #r#$0ee% # co$02$2$ mo$o4o; o 0e co$0ro o # cor4or#02o$ G.R. No. 75951: L#%#meo ro4 #**#2* CA #me$%e% %ec2*2o$. W2e reco$22$ 0#0 0e *0oc=o%er* o '#$23#re* #re %2)2%e% 2$0o  boc=*, 20 #2* ; 0o e$orce 0e b#*2c 2$0e$0 o 0e Areeme$0 #$% 0e #3. CA #*o %2% $o0 c#0eor2c#; re 0#0 L#%#meo Gro4 3ere 0e %; eec0e% %2rec0or* %r2$ 0e #$$# *0oc=o%er*? mee02$ MAIN ISSUE: Wo 3ere 0e %; eec0e% %2rec0or* o '#$23#re* or 0e ;e#r 198< %r2$ 20* #$$# *0oc=o%er* mee02$ e% o$ "#rc 8, 198o2$0 )e$0re or *ome o0er re#02o$ 'e%en's u%#n their actua/ intenti#n 32c 2* %e0erm2$e% 2$ #ccor%#$ce 320 0e re* o)er$2$ 0e 2$0er4re0#02o$ #$% co$*0rc02o$ o co$0r#c0*. !erm2$# '#re*, I$c. ). C2c#oE ASI 9r#u% 7 Sa/a6ar: Ac0# 2$0e$02o$ o 0e 4#r02e* *o% be )2e3e% *0r2c0; o$ 0e "%gree)ent"  3ere2$ 20 2* ce#r; *0#0e% 0#0 0e %arties< intenti#n $as t# &#r" a c#r%#rati#n an' n#t a =#int venture) 

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No. 1/ $%er Mise&&aneo(s +ro-isions o Areeme$0: # nothing herein ontained sha&& 'e onstr(ed to onstit(te any of the parties hereto partners or >oint -ent(rers in respet of any transation here(nder.

!e; ob>ec0 0o 0e #%m2**2o$ o o0er e)2%e$ce 32c 0e$%* 0o *o3 0#0 0e 4#r02e* #reeme$0 3#* 0o e*0#b2* # >o2$0 )e$0re 4re*e$0e% b; 0e L#%#meo  (o$ Gro4 o$ 0e ro$% 0#0 20 co$0r#)e$e* 0e 4#ro e)2%e$ce re. L#%#meo #$% (o$ Gro4 $e)er 4e#%e% 2$ 0e2r 4e#%2$ 0#0 0e Areeme$0 #2e% 0o e4re** 0e 0re 2$0e$0 o 0e 4#r02e*. La!'a"e# 7 Y#un! 9r#u% in their Re%/y $> SEC: Areeme$0 #2e% 0o e4re** 0e 0re 2$0e$0 o 0e 4#r02e*. o

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W2e cer0#2$ 4ro)2*2o$* o 0e Areeme$0 3o% m#=e 20 #44e#r 0#0 0e 4#r02e* %2*c#2m be2$ 4#r0$er* or >o2$0 )e$0rer*, *c %2*c#2mer 2* %2rec0e% #0 02r% 4#r02e* #$% %oe* $o0 4rec%e 0e e2*0e$ce o  %2*02$c0 ro4* o *0oc=o%er* 2$ '#$23#re* o$e o 32c 0e 22442$e I$)e*0or*E *# co$*0200e 0e m#>or20;, #$% 0e o0er A'I *# co$*0200e 0e m2$or20; *0oc=o%er.

Evi'ent intenti#n o 0e 22442$e I$)e*0or* #$% A'I 2$ e$0er2$ 2$0o 0e Areeme$0 2* 0o enter int# a =#int venture enter%rise, #$% 2  *ome 3or%* 2$ 0e Areeme$0 #44e#r 0o be co$0r#r; 0o 0e e)2%e$0 2$0e$02o$ o 0e 4#r02e*, 0e #00er *# 4re)#2 o)er 0e ormer NCC 1o2$e% 0e2r eor0* 2$ r0er#$ce o #$ e$0er4r2*e or  0e2r >o2$0 4ro20, 0e e*02o$ 3e0er 0e; 2$0e$%e% b; 0e2r #reeme$0 0o cre#0e # >o2$0 #%)e$0re, or 0o #**me *ome o0er re#02o$ 2* # ?uesti#n #& &act &#r the =ury) 8r#visi#ns #& the A!ree"ent as $e// as the testi"#nia/ evi'ence %resente' by La!'a"e# 7 Y#un! 9r#u% sh#$s that the %arties a!ree' t# estab/ish a =#int venture an' NOT a c#r%#rati#n) !e 2*0or; o 0e or#$2#02o$ o '#$23#re* #$% 0e $*# #rr#$eme$0* 32c o)er$ 20* 4o2c; m#=2$ bo%; #re # co$*2*0e$0 320 # >o2$0 )e$0re #$% NO! 320 #$ or%2$#r; cor4or#02o$. SEC 'C #ree*E: U$%er 0e Areeme$0 0ere #re  ro4* o *0oc=o%er* 3o e*0#b2*e% # c#r%#rati#n $ith %r#visi#ns &#r a s%ecia/ c#ntractua/ re/ati#nshi% be0. 0e 4#r02e*, 2.e., A'I #$% 0e o0er *0oc=o%er*.  /asta hindi ordinary orp. ito E o  A'I #ree% 0o #cce40 0e roe o m2$or20; )2*#)2* 0e 22442$e N#02o$# ro4 o 2$)e*0or*, o$ 0e co$%202o$ 0#0 0e Areeme$0 *o% co$0#2$ 4ro)2*2o$* 0o 4ro0ec0 A'I #* 0e m2$or20;. o

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!2* 2$c%e% A'I?* r20 o # 7 o0 o 9 )o0e* o 0e bo#r% o %2rec0or* or cer0#2$ #c02o$*, 36c 2$ eec0 #)e A'I 32c %e*2$#0e* < %2rec0or* $%er 0e Areeme$0E #$ eec02)e )e0o 4o3er.

Gr#$0 o *c r20* 0o A'I *ee #c0*E e*4. 0e r20 o A'I 0o %e*2$#0e < o0 o 0e 9 %2rec0or* 32e 0e o0er *0oc=o%er* *# %e*2$#0e 0e o0er /, ce#r; 2$%2c#0e 0#0 0ere #re: 1E 0 'istinct !r#u%s in Sani$ares, $#me; ASI, 32c ons 523 of the apita&  sto4   #$% 0e 8hi/i%%ine Nati#na/ st#c@h#/'ers  3o on the 'a&ane of 23, #$% 0#0 E A'I 2* 2)e$ cer0#2$ 4ro0ec02o$* #* 0e m2$or20; *0oc=o%er. 'ec. 5 #E o 0e #reeme$0 uses the $#r' #designated# #$% $o0 "no)inated"  or "e&eted"  2$ 0e *eec02o$ o 0e 9 %2rec0or* o$ # / 0o < r#02o. &#c ro4 2* assure' #& a &i5e' nu"ber  o %2rec0or* 2$ 0e bo#r%.  A'I 2$ 20* comm$2c#02o$* reerre% 0o 0e e$0er4r2*e #* >o2$0 )e$0re. 'ec. 1/cE o 0e Areeme$0 0#0  SC: R22% 4r2$c24e* o Cor4or#02o$ #3 #re $o0 #442e% 2$ #reeme$0* be03ee$ cor4or#0e >o2$0 )e$0re*. &)e$ #**m2$ 0#0 *ec. 5#E o 0e Areeme$0 re#02$ 0o 0e %e*2$#02o$ or $om2$#02o$ o %2rec0or* re*0r2c0* 0e r20 o 0e Areeme$0* *2$#0or2e* 0o )o0e or  %2rec0or*, such c#ntractua/ %r#visi#n+ is va/i' an' bin'in! u%#n the si!nat#ries 0ere0o, 32c 2$c%e A'I ro4. F2r*0. 95 *0oc=o%er* #re $o0 *e4#r#0e rom e#c o0er b0 #re %2)2*2be 2$0o ro4* re4re*e$02$ # *2$e 2%e$022#be 2$0ere*0. A'I #cco$0* or 1< o 0e 95, (o$ #m2;: 1SC: Cor0 $o0 4re4#re% 0o o% 0#0 #$; #reeme$0 32c cr0#2* 2$ #$; 3#; cm#02)e )o02$ *o% be *0rc= %o3$. Ho3e)er, cm#02)e )o02$ r20* m#; be )o$0#r2; 3#2)e% b; *0oc=o%er* 3o e$0er 2$0o s!ecial relationshi!s $ith each other to !ursue and im!lement s!ecific   !ur!oses, as in %oint venture relationshi!s bet$een foreign and local stocholders, *o o$ #* *c #reeme$0* %o $o0 #%)er*e; #ec0 02r% 4#r02e*.

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W2e, 0e ce#r; e*0#b2*e% m2$or20; 4o*202o$ o A'I #$% 0e co$0r#c0# #oc#02o$ o bo#r% *e#0* c#$$o0 be %2*re#r%e%, 0e r20* o 0e *0oc=o%er* 0o cm#02)e )o02$ *o% #*o be 4ro0ec0e%. !*, 3e reco$2e 0e %2)2*2o$ o 0e com4#$; 2$0o  ro4* #$% #*o #o3 0e eerc2*e o 0e r20* 0o cm#02)e )o02$.

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!2* me#$* 0#0 2 0e F2242$o *0oc=o%er* c#$$o0 #ree 3o 0e2r / $om2$ee* 32 be, # )o0e 3o% #)e 0o be 0#=e$ #mo$ 0e F2242$o *0oc=o%er* o$;. Dr2$ 02* )o02$, e#c F2242$o *0oc=o%er c#$ cm#0e 2* )o0e*.

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 A'I, o3e)er, *o% $o0 be #o3e% 0o 2$0erere 2$ 0e )o02$ 3202$ 0e F2242$o ro4. O0er32*e, A'I 3o% be #be 0o %e*2$#0e more 0#$ 0e < %2rec0or* 20 2* #o3e% 0o %e*2$#0e, #$% m#; e)e$ be #be 0o e0 # m#>or20; o 0e bo#r% *e#0*, # re*0 32c 2* ce#r; co$0r#r; 0o 0e co$0r#c0# 2$0e$0 o 0e 4#r02e*.

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ASI 9r#u% 7 Sa/a6ar: A'I Gro4 #* 0e r20 0o )o0e 0e2r #%%202o$# e20; 4r*#$0 0o 'ec.  o 0e Cor4. Co%e 32c 2)e* 0e *0oc=o%er* o  # cor4or#02o$ 0e r20 0o cm#0e 0e2r )o0e* 2$ eec02$ %2rec0or*. !2* r20, 2 r#$0e%, 3o% $o0 $ece**#r2; me#$ # )2o#02o$ o 0e A$02Dmm;  Ac0 *2$ce *c Ac0 #o3* 0e eec02o$ o #2e$* #* member* o 0e Bo#r% 2$ 4#r02#; $#02o$#2e% #c02)202e* in proportion to their a&&oa'&e share in the apita& of the entity.

SC: A'I Gro4* #rme$0 2* correc0 3202$ 0e co$0e0 o 'ec.  o 0e Cor4or#02o$ Co%e. !e 4o2$0 o er;, o3e)er, 2* 3e0er or $o0 0#0 4ro)2*2o$ 2* #442c#be 0o # =#int venture $ith c/ear/y 'e&ine' a!ree"ents.  %pparent&y ec0* 0o # cm#02)e )o02$ %r2$ 0e eec02o$ o 0e bo#r% o %2rec0or*  ito y(ng sa Ai&ipino gro(p na &ang E. / %2rec0or* #o00e% 0o 0e F2242$o *0oc=o%er* *o% be *eec0e% b; co$*e$** 4r*#$0 0o 'ec. 5 #E o 0e Areeme$0 32c *e* 0e 3or% %e*2$#0e me#$2$ no)inate, de&egate or appoint . 

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 A*o, A'I Gro4 m20 0#=e co$0ro o 0e e$0er4r2*e 2 0e F2242$o *0oc=o%er* #re #o3e% 0o *eec0 0e2r $om2$ee* *e4#r#0e; #$% $o0 #* # commo$ *o0 %e0erm2$e% b; 0e m#>or20; o 0e2r ro4. SC: 'ec. 5 #E o 0e Areeme$0 *o% be co$*0re% 2$ re#02o$ 0o 'ec. < #E 1E 36c re#0e* 0o 0e )anner of -oting or 0e*e $om2$ee* 32c 2* ()(&ati-e -oting  32e 0e ormer re#0e* 0o 0e m#$$er o no)inating the )e)'ers o 0e bo#r% o % 2rec0or*. HOWE;ER: !#0 0e A'I Gro4 m#; be #be 0o co$0ro 0e e$0er4r2*e $%er 0e cm#02)e )o02$ 4roce%re c#$$o0 be 2$ore%. !e )#2%20; o 0e cm#02)e )o02$ 4roce%re 2* %e4e$%e$0 o$ 0e %2rec0or* 0* eec0e% be2$ e$2$e member* o 0e F2242$o ro4, $o0 )o0er* 3o*e 2$0ere*0 2* 0o 2$cre#*e 0e A'I *#re 2$ 0e m#$#eme$0 o '#$23#re*. !e >o2$0 )e$0re c#r#c0er o 0e e$0er4r2*e m*0 #3#;* be 0#=e$ 2$0o #cco$0, *o o$ #* 0e com4#$; e2*0* $%er 20* or22$# #reeme$0. Cm#02)e )o02$ m#; $o0 be *e% #* # %e)2ce 0o e$#be A'I 0o #c2e)e *0e#02; or 2$%2rec0; 3#0 0e; c#$$o0 #ccom42* o4e$;. !ere #re *b*0#$02# *#e#r%* 2$ 0e Areeme$0 32c #re 2$0e$%e% 0o 4re*er)e 0e m#>or20; *0#0* o 0e F2242$o 2$)e*0or* #* 3e #* 0o m#2$0#2$ 0e m2$or20; *0#0* o 0e ore2$ 2$)e*0or* ro4 #* e#r2er %2*c**e%. !e; *o% be m#2$0#2$e%. DIS8OSITI;E:  G.R. No*. 759757/ '###rE  G.R. No. 75875 Arb#cE DI'"I''&D. G.R. No. 75951 '#$23#re*E 4#r0; GRAN!&D. CA "ODIFI&D 2$ 0#0 L#%#meo Gro4  Wo#$ Arb#c Jo$ Gr22$  D#)2% W2002$#m #re %ec#re% #* 0e %; eec0e% %2rec0or* o '#$23#re* #0 0e "#r. 8,198< #$$# *0oc=o%er* mee02$. I$ # o0er re*4ec0*, CA %ec2*2o$ AFFIR"&D. o

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