Miss Leonor Noceda

March 1, 1988 Miss Leonor Noceda 193-A 15th Avenue Cubao, Quezon City Madam : This has reference to your letter dated January 11, 1988, requesting the opinion of this Commission on the queries stated therein. It appears that Section 1 of Article II of the By-laws of the Philippine Veterans Legion Auxiliary, Inc. provides and we quote: "SECTION 1. No one shall be elected National President for more than two (2) consecutive terms, each term comprising one legion Year. A National President at the time of her election must have served the Philippine Veterans' Legion Auxiliary for two active years as a Chapter President and she must be a veteran in her own right, wife or widow, daughter, mother, or sister of a veteran." Your query is: 1. Are hold-over tenures of national officers by consensus during national conventions equivalent to elections or to disqualify the national president for a third term as provided in the above by-law. An examination of your approved by-laws on file shows that the same is silent insofar as hold-overs are concerned. Relative thereto, Sections 23 and 25 of the Corporation Code provides, and we quote: "SECTION 23. The Board of Directors or Trustees . Unless otherwise provided in this Code, the corporate powers of all corporations . . . shall be exercised, all business conducted and all property of such corporations controlled and held by Board of Directors or Trustees . . . who shall hold office for one (1) year and until their successors are elected and qualified." "SECTION 25. Corporate officers, quorum . Immediately after their election, the directors of a corporation must formally organize by the election of a president who shall be a director, a treasurer who may or may not be a director, a secretary who shall be a resident and citizen of the Philippines, and such other officers as may be provided for in the by-laws. ..." From the above quoted provision, it is clear that officers shall hold office for one year and until their successors are elected and qualified. "The tenure of office generally is until the election of successor is elected and qualified ..." (Fletcher's, Vol. 2, ch. 11; p. 207 citing Model Bus Corp. Act) It must be noted that "hold-over" is a situation that arises when no successor is elected in which case the incumbent holds over and continue to function until another officer is chosen and qualified (Government vs. El Hogar, 50 Phil. 399, p. 394, Philippine Legal Encyclopedia) To holdover when applied to an office implies that the office has a fixed term which has expired, and the incumbent is holding into the succeeding term. (Words & Phrases, Vol. 19, p. 576) The term "election" as ordinarily used and understood, means the choice or election of one man amongst more to fill a certain office .../State v. Cahill 105 N.W. 691, 692, 131. Iowa 153 cited in p. 238. Words & Phrases, Vol. 14) It means to pick out or choose from among a number, to select for office or employment, by a majority of votes. (State v. Dass, 134, S.E. 749, 750, 102 W. Va. 162, Words & Phrases, p. 234) Considering the aforecited distinctions between election and hold-over, there is no doubt that hold-over tenures of national officers by consensus during national conventions are not equivalent to elections. The national officers were merely allowed to continue functioning as such. Neither were they chosen over other contenders for the said positions. LexLib However, it must be pointed out that pursuant to your approved By-laws, the National President can only have two (2) consecutive terms. Likewise, you require the opinion of this Commission on the following queries: 2. Does "any member in good standing" means among other things that they should have paid their fees at the time they were elected as national officers or at any time thereafter? 3. Should majority of the National Board of Directors be disqualified through non-payment of membership fees on time, what remedies, can be resorted to, to be able to do business, short of a national convention? 4. Where the by-laws is silent in the matter of proxy, except in National Conventions, and due to disqualification of majority of the National Board of Directors, can we appoint proxies who are Life members of our corporation to take the place of disqualified members, to do business? Anent your second query, an examination of your approved By-laws shows that it is silent on the definition of a "member in good standing." Consequently, we shall have to define the same based on previous rulings of this Commission. As regards "member in good standing",it has been ruled that "members in good standing" are those who are up-to-date in their required monthly regular contribution and installments on loans previously granted ( Ltr. to Demetrio Garcia dated Feb. 11, 1982 ) Every member is obliged to pay all national and local annual dues to be considered in good standing. ( Ltr. to Phil. Medical Ass'n., Inc. dtd Oct. 1, 1984 ) Relative to your third query, please be informed that Sec. 2 of Art. VIII refers to a delinquent member and outlines the procedure for his suspension. The Commission had occasion to rule in a previous opinion that members who have not been automatically dropped from the membership roster may so vote at the meetings of members. ( Ltr. to Phil. Institute of Certified Public Accountant, dtd. Sept. 28, 1984 and further cited in Ltr. to Mr. Salvador dtd. March 10, 1987 ) By-laws providing for disenfranchisement of members are penal in character and must be strictly construed. Furthermore the removal of directors or trustees must be in accordance with Sec. 28 of the Corporation Code. Relative to your query No. 4, Sec. 58 of the Corporation Code provides thus: "SECTION 58. Proxies . ...members may vote by proxy in all meetings of ...members. Proxies shall be in writing signed by the ...member and filed before the scheduled meeting with the corporate secretary. Unless otherwise provided in the proxy, it shall be valid only for the meeting for which it is intended. No proxy shall be valid and effective for a period longer than five (5) years at any one time." Squarely in point are the following rulings: "A proxy to vote at the annual or a regular meeting is authority to vote on any matter which can properly come before it. ...But such a proxy to vote in the ordinary concerns of the corporation ...is no authority to vote for the reorganization of the corporation ..." (Farish v. Cienequita Copper G. 12 Ariz 235, 100 p 781 cited in Fletcher, vol. 5, p. 251) "A general proxy contemplates action by the person to whom it is given only with reference to matters which could be submitted to the stockholders under the existing statutes articles and by-laws .It has been said, however, that "a stockholder is ordinarily bound by the action of a meeting in which he is represented by proxy, whether it be extraordinary or not, provided that it is not forbidden by the charter or some general law ." (Emphasis supplied, Crook v. Int'l Trust Co. of Maryland, 32 App. DC 490, ibid). Pertinent thereto, we reiterate Sec. 23 of the Corporation Code which provides: "SECTION 23. The board of directors or trustees . Unless otherwise provided in this Code, the corporate powers of all corporations termed under this Code shall be exercised, all business conducted and all property of such corporations controlled and hold by the board of directors or trustees to be elected ...from among the members of the corporation ..." (Emphasis supplied) From the above, it is clear that the business of a corporation shall be conducted by the board of directors or trustees It is likewise clear that proxies can be appointed by members provided that the action is not forbidden by the provisions of the Corporation Code. Hence, you cannot appoint proxies to take the place of disqualified members to do business. LLjur Considering the above, the members have no other alternative but to call for a national convention for the election of the members of the board. Please be advised accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Chairman