Mr. Ruben M. Orteza

November 17, 1994 Mr. Ruben M. Orteza 131 Scout Gandia Kamuning District, Quezon City S i r : This refers to your letter of November 13, 1994 inquiring whether Section 108 of the Corporation Code, quoted hereunder, requiring that the number of Board of Trustees shall be in multiples of five is mandatory. llcd "SECTION 108. Board of Trustees . Trustees of educational institutions organized as non-stock corporations shall not be less than five (5) nor more than fifteen (15):Provided, however, That the number of trustees shall be in multiples of five (5). Unless otherwise provided in the articles of incorporation or the by-laws, the board of trustees of incorporated schools, colleges, or other institutions of learning shall ,as soon as organized, so classify themselves that the term of office of one-fifth (1/5) of their number shall expire every year. Trustees thereafter elected to fill vacancies, occurring before the expiration of a particular term, shall hold office only for the unexpired period. Trustees elected thereafter to fill vacancies caused by expiration of term shall hold office for five (5) years. A majority of the trustees shall constitute a quorum for the transaction of business. The powers and authority of trustees shall be defined in the by-laws. For institutions organized as stock corporations, the number and term of directors shall be governed by the provisions on stock corporations." (Emphasis provided) It is opined that the requirement under the first paragraph is mandatory, otherwise, the legislature would have provided for an exception to the same. This view finds support by the use of the word "shall" which has an ordinary meaning of being imperative. In construing the above provision we follow the cardinal rule of statutory construction stating that laws should be construed in accordance with their common meaning. The staggering system under the second paragraph is also mandatory. The phrase "unless otherwise provided in the by-laws" under said paragraph is not an exception to the required staggered term. It refers to an option to provide for a different percentage of staggered term, not that it can provide for a fixed term for all trustees. In other words, the percentage may be 1/3 for 15 trustees or 1/2 for 10 trustees. To rule otherwise would render nugatory the intention of the first paragraph which requires that the number of trustees shall be in multiples of five. The rationale behind the required staggered term is that if the staggering system will not be applied, there would be a possibility of disruption of the prevailing policies of educational institutions to the detriment of the student body. LexLib On the issue of a possible problem that nobody will break a tie vote in case an educational institution decides to have an "even number" of Board membership. e.g. ten, please be advised that a member of the Board is entitled to only one vote in any corporate transaction. Thus, in the event of a deadlock or tie, no one can vote again to break the tie if he has already exercised his voting right, even if he is the Chairman of the Board. Any matter or transaction must necessarily fail if the votes attained is less than what the law requires. Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner