Attys. Alex Ferdinand S. Fider and Vicente D. Gerochi

January 5, 1995 Attys. Alex Ferdinand S. Fider and Vicente D. Gerochi Angara Abello Concepcion Regala & Cruz ACCRA Bldg.,122 Gamboa St.,Legaspi Village 0770 Makati, Metro Manila, Philippine Gentlemen: This refers to your letter of December 20, 1994 requesting opinion on the queries posed therein relative to the proposed amendments of articles of incorporation and by-laws of Philippine College of Surgeons, Inc. which were drafted during the Constitutional Convention called by its Board of Regents. Please be advised that the Commission does not, as a matter of settled policy, render opinion on queries based on allegations or issues which may eventually be litigated in the future or which could only be clarified and determined in a proper proceeding, such as those presented in your letter. The opinion which may be rendered thereon would not be binding upon private parties who would in all probability, if the opinion happens to be adverse to their interest, take issue therewith, and contest it before the proper forum. For this reason, the Commission has to refrain from rendering categorical answers to your queries so that it will not be estopped to decide the same if brought before it in a proper proceeding. However, for purposes of information only, the following are imparted. The pertinent provisions of the Corporation Code on the matter of amendment of articles of incorporation and by-laws provide: "SECTION 16. Amendment of articles of incorporation . Unless otherwise prescribed by this Code or by special law, and for legitimate purposes, any provision or matter stated in the articles of incorporation may be amended by a majority vote of the board of directors or trustees and the vote or written assent of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock , without prejudice to the appraisal right of dissenting stockholders in accordance with the provisions of this Code, or the vote or written assent of two-thirds (2/3) of the members if it be a non-stock corporation. xxx xxx xxx. The amendments shall take effect upon its approval by the Securities and Exchange Commission or from the date of filing with the said Commission if not acted upon within six (6) months from the date of filing for a cause not attributable to the Corporation." (Emphasis supplied) "SECTION 48. Amendments to the by-laws . The board of directors or trustees by a majority vote thereof, and the owners of at least 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 any 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 the power 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 outstanding capital stock or a majority of the members in non-stock corporations, shall so vote at a regular or special meeting. xxx xxx xxx 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." (Emphasis supplied) Inasmuch as the manner of amending the articles of incorporation and by-laws is explicitly provided for in the Corporation Code, a corporation cannot provide for a different procedure by means of a by-law provision or Board Resolution or thru a committee created for the purpose. It is well-settled that the By-laws are subordinate to the Corporation Code and while the Board may adopt other rules and regulations to govern the affairs of the corporation, the same should be in consonance with and not repugnant to or in contravention of the Corporation Code. Thus, in order to have a binding effect, any provision of the By-laws or procedure adopted by the Board/stockholders or members on the matter should conform with the above provisions of the Corporation Code. The power of any committee tasked to draft or introduce amendments to articles of incorporation and by-laws is merely recommendatory in nature. cdlex Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman