Ms. Magdalena C. Divino

October 27, 1998 Ms. Magdalena C. Divino Real Estate Brokers Association of the Philippines, Inc. REBAP Center 2nd floor, CREBA Bldg. South "A" Rd. cor. Alejandro Roces Ave. Quezon City M a d a m : This refers to your letter dated October 8, 1998 requesting opinion/information on the queries posed therein relative to the following: purpose of the By-laws; amendments to By-laws and the effects thereof; and committee meeting in connection therewith . By-laws are defined as private laws of the corporation and such self-imposed private laws have, when valid, substantially the same force and effect as laws of the corporation as have the provisions of its charter insofar as the corporation and the persons within it are concerned. They are in effect written into the charter and in this sense, they become a part of the fundamental law of the corporation. Hence, the corporation, its directors, officers and stockholders/members are bound by and must comply with the provisions thereof. Amendment of the by-laws may either be in terms of a single existing by-law or several of them, or, the whole body of the existing by-laws by the addition of one or more new ones either with or without the accompanying repeal or alteration of the existing ones, or perhaps, the repeal of the entire body of existing by-laws and the enactment of an entirely new body of by-laws in place of the old ones. Section 48 of the Corporation Code, quoted hereunder, describes the mode and procedure for the amendment of by-laws. "SECTION 48. Amendments to by-laws . The board of directors or trustees, by a majority vote thereof; and the owners of at least a majority of the outstanding capital stock, or at least a majority of the members of a non-stock corporation, at a regular or special meeting duly called for the purpose, may amend or repeal and by-laws or adopt new by-laws .The owners of two-thirds (2/3) of the outstanding capital stock or two-thirds (2/3) of the members in a non-stock corporation may delegate to the board of directors or trustees to amend or repeal any by-laws or adopt new by-laws: Provided, That any power delegated to the board of directors or trustees to amend or repeal any by-laws or adopt new by-laws shall be considered as revoked whenever stockholders owning or representing a majority of the members in non-stock corporation, shall so vote at a regular or special meeting. Whenever any amendment or new by-laws are adopted, such amendment or new by-laws shall be attached to the original by-laws in the office of the corporation, and a copy thereof, duly certified under oath by the corporate secretary and a majority of the directors or trustees, shall be filed with the Securities and Exchange Commission, the same to be attached to the original articles of incorporation and original by-laws. The amended or new by-laws shall only be effective upon the issuance by the Securities and Exchange Commission of a certification that the same are not inconsistent with this Code." It is clear from the above position that approval by the SEC is necessary before any amendment to the by-laws can legally take effect. Therefore, no corporation can immediately implement any amendment in the by-laws approved by the corporation without the approval by the SEC. It is only upon the issuance by the SEC of a certification that the amendments are not inconsistent with the Corporation Code should the provisions of the amended by-laws be followed and observed. In the connection with your queries relative to the calling of Committee meeting for purposes of amending the by-laws, please be advised that Commission always adheres to the hands-off policy in the interpretation and application of the provisions of the corporate by-laws as they are internal matters that should first be resolved by the members of the corporation. By-laws are the private laws of the corporation, hence, the provisions thereof must be construed and applied in accordance with the intent of its own makers. Thus, unless there is formal complaint filed with the SEC questioning the interpretation made on the by-laws by the corporation itself, the Commission will not interfere on the matter. Very truly yours, (SGD.) SONIA M. BALLO Director Corporate and Legal Department