Mr. Carlos G. Vicente, Jr.

June 3, 1981 Mr. Carlos G. Vicente, Jr. PRC Compound, Alex Prieto Stable A. P. Avenue, Makati, Metro-Manila Sir : This has reference to your letter dated 15 May 1981 requesting the opinion of this Commission on whether after a duly held election of directors, the results of said election may subsequently be altered by mere agreement of the directors. cdll It appears from your letter that on 20 April 1981, the Professional Horse Trainers Association, Inc.,pursuant to its by-laws, held its annual election of the eleven (11) members of its board of directors. After the counting of votes, one faction of the Association won eight (8) seats. Another faction, invoking an alleged tradition, insists that the results of the election should be honored and that by agreement the board should be made up of six (6) from one faction and the other five (5). Corporate powers conferred upon a board of directors usually refer to the ordinary business transactions of the corporation, and the authority of the board does not extend beyond the management of ordinary corporate affairs nor beyond the limits of their authority. There are some powers which are reserved to the shareholders and which cannot be exercised by the directors until they are conferred by the stockholders. No board can usurp the power of control of the corporation vested by law in the shareholders. (19 Am. Jur. 2d p. 577). The authority to elect or remove the members of the board of directors is lodged in the stockholders or members of the corporation (Section 24 and 28, Corporation Code of the Philippines). Since the law expressly confers this authority to the stockholders or members, the directors cannot indirectly usurp or disregard the same, conducted by the stockholders pursuant to their by-laws. Relative hereto, Fletcher has this to say: "An agreement by which selection of corporate directors is reposed in any body except majority of stockholders is in violation of "public policy" and "unenforceable".(Fletcher 294 citing case re Estate of Johnson, 339 III App 110, 88 NE2d 886). cdll In view of the foregoing, we answer your query in the negative. Very truly yours, (SGD.) ROSARIO N. LOPEZ Director Corporate and Legal Department