Ms. Erlinda C. San Mateo

January 11, 1980 Ms. Erlinda C. San Mateo Vice President, Saint Anthony Homeowners' Association Cainta, Rizal Dear Ms. San Mateo: This refers to your letter of the 11th instant requesting opinion on the queries posed therein. It appears that the Board of Directors of the St. Anthony Homeowners' Association, Inc. created an Election Committee which promulgated rules and regulations to conduct the election of the board of directors for 1980. Said rules provided for the qualifications of the candidates for the board of directors, to wit: "I. Candidates should be a bonafide member of the association. A bonafide member is one who has been registered as such and has regularly paid his dues and assessments up to December 31, 1979"; Your question, is, whether a new member who started paying dues in 1980 cannot be considered a bonafide member. The by-laws of the corporation provide that: "All real estate owners or long term lessees in Saint Anthony Subdivision shall, upon proper application, be entitled to join as members of the association." "A lessee shall be considered a long term lessee if his lease is in writing and for a period of one year or more." "Each member of the association is entitled to one vote. However, those who are delinquent in their dues and charges fixed by the Board of Directors in accordance with these by-laws shall not be qualified to cast their votes." The by-laws of your corporation entitles all real estate owners or long term lessees to be members of the association upon proper application and each member is entitled to vote provided he is not delinquent in his dues and charges. A new member who became such before the election is a bonafide member and is entitled to vote on the assumption that he is not delinquent in his dues and charges. prcd The provision of your by-laws regarding disqualifications of members from voting does not provide for a specific period of delinquency in the payment of dues, while the rule of the Election Committee provides for a specific period. In the face of this contrariety, it is advised that the by-laws should be made to prevail over the rules of the Election Committee. "By-laws have been defined as the rules of action adopted by the corporation for its own government and for the government of its members and those having the direction, management and control of its affairs. (Agbayani, Commercial Laws of the Philippines p. 1470) Their function is "To regulate the conduct and define the duties of the members towards the corporation and among themselves" (8 Fletcher, 634).A code of by-laws establishes rules for the internal government of the corporation (Agbayani, Commercial Laws of the Philippines p. 1470, citing Diedrick v. Helm 13 NW (2d) 913, 8 Fletcher, Sec. 4170). Your second query asks, whether a proxy must necessarily be a member of the St. Anthony Homeowners' Association and can such proxy be limited to represent only one member or hold only one proxy instrument? Your by-laws is silent on the manner of voting by proxy. Section 21 of the Corporation Law partly states that "corporations may provide in their by-laws for the mode of securing proxies of members or stockholders and voting them". It is clear, therefore, that restrictions on proxy voting must be made in the by-laws and rules concerning proxies must be consistent with said by-laws. "Where the law confers the right to vote by proxy without limitation regarding the persons who may be appointed, the stockholder may appoint any person whom he sees fit to represent him, and a by-law provision limiting his right in this respect is void (Fletcher, Cyclopedia of Corporations, Sec. 2060),A by-law providing that no proxy shall be voted by anyone who is not a stockholder of record of the corporation is invalid under a statute providing generally that stockholders may be represented by proxies. A statute authorizing a corporation to provide in its by-laws for the "mode of voting by proxy" refers to the preliminary requirements to be followed and does not authorize the curtailment of the right to vote by proxy, but only the regulation of the exercise of the right by requiring the authority to be in writing, properly witnessed, acknowledged, and filed with their records, etc. (13 AM Jr. Sec. 496, p. 534). Consequently, the rule of your election committee limiting proxies is null and void. Very truly yours, (SGD.) ROSARIO N. LOPEZ Director Corporate and Legal Department