138. SEC Opinion No. 26-03 May 22, 2003 ISSUE: This opinion was addressed to Ms.

Jaycel E. Sato as Corporate Secretary of Ken Transportation Inc. in Cebu regarding her inquiry as to WON a trustee of a non-stock corporation can vote through the internet. She claimed that "voting by internet would fast-tract the activity of the non-stock corporation rather than by mail as provided for by law" RATIO: While the law may allow voting by mail by members of non-stock corporations, the law does not provide for voting by mail by trustees. Under paragraph 2 of Section 89 of the Corporation Code, it is provided that: "Voting by mail or other similar means by members of non-stock-corporations may be authorized by the by-laws of non-stock corporations with the approval of, and under such conditions which may be prescribed by, the Securities and Exchange Commission." A SEC Opinion issued to ACCRA Law Offices states: "the Commission En Banc has ruled that it must respond to the exigencies of the times and the technological developments of the 21st Century thereby modifying its previous opinion requiring `actual presence' of directors or trustees during board meetings. In view of the foregoing and in accordance with Section 16 of the Electronic Commerce Act (RA 8792), which provides in part that, no contract shall be denied validity or enforceability on the sole ground that it is in the form of an electronic data message or electronic document or that any or all of the elements required under existing laws for the formation of contracts is expressed, demonstrated or proved by means of electronic documents', the Commission, likewise is of the opinion that the intended benefits of the above-referenced law may be made to apply to Section 25 of the Corporation Code, which conversely requires the presence of the directors in board meetings. However, we would like to emphasize that participation of directors in meetings through teleconferencing and video conferencing may be deemed acceptable only when adequate safeguards have been accordingly set in place. Meetings of this nature should be properly recorded and the appropriate tapes and discs properly stored for safekeeping." On the basis of this opinion, a trustee may now be allowed to vote through the internet, provided that the internet medium to be used is akin to or similar (i.e. Video streaming with voice packet or video over the internet) to the one being used in video-conferencing or tele-conferencing, where a participant can see or hear the actual proceedings of a board meeting and actively participate in the deliberation of the board. As it is, voting by e-mail alone is not adequate because a user-participant's role in such cases is passive considering that his access to the entire proceedings is limited to the information in print transmitted through the internet. It should always be emphasized however that voting through the internet using the medium just described may be allowed only after adequate safeguards have been set in place. -Mike