Mr. Demetrio Garcia

February 11, 1982 Mr. Demetrio Garcia Fisheries Savings and Loan Association, Inc. 860 Quezon Avenue Quezon City Dear Mr. Garcia; This refers to your letter dated January 23, 1981, requesting opinion of the Commission on the queries posed therein relative to the Fisheries Savings and Loan Association, Inc.,a non-stock savings and loan association, and enclosing thereto a xerox copy of the comments of the Central Bank of the Philippines (CB),Department of Rural Banks and Savings and Loan Association, with the information that the letter-query be directed to this Commission as the same involved an intra-corporate matter. After a thorough study of the matters presented in your letter, the following are our answers to your queries; Re: Query No. 1 Was Ms. Caugma's liquidation of her outstanding loans and subsequent withdrawal of all her capital contribution from the BFSLA on December 23, 1980 which virtually rendered her accounts, deposit and loans at zero balance tantamount to a severance or resignation of her membership in the BFSLA and therefore impliedly abandoned or forfeited her seat as one of the elected Board of Directors of the BFSLA for the year 1981? Re: Query No. 2 Was Ms. Caugma's subsequent filing of an application for membership on December 24, 1980 and approved on December 29, 1980 had any significance to her status as a member of the BFSLA and the effect upon her election to the Board of Directors even before the official oath-taking of the seven (7) in-coming members of the said Board? SECTION 5. Upon admission to the Association, each regular member shall make a monthly contribution of not less than (2%) percent of his monthly salary which shall be treated as capital contribution. SECTION 16. Any member in good standing shall be eligible for election as a director. Members in good standing are those who are up-to-date in their required monthly regular contributions and installments on loans previously granted. It could be gleaned from all the aforecited provisions that a member who withdrew his capital contribution ceased to be a member in good standing and accordingly, she is not qualified to be voted for a director of said corporation. This Office hereby concurs with the opinion/comments of the Central Bank of the Philippines that when Ms. Caugma withdrew her contribution on December 23, 1980, she ceased to be a member in good standing of the corporation and as such, automatically ceased to be a director thereof and a vacancy was thereby created. Please note, however, that the provision of the by-laws relating to the filling of vacancies (Sec. 15) in the Board which reads: cdll SECTION 15. ...Any vacancy or vacancies shall be automatically filled by the candidate(s) who obtained the next higher vote(s) during the election of the incumbent Board and the said director(s) shall serve the unexpired term(s). cannot prevail over and above the express provision of the Corporation Code of the Philippines which provides that: SECTION 29. Vacancies in the office of director or trustee . Any vacancy occurring in the board of directors or trustees other than by removal by the stockholders or members or by expiration of term, may be filled by the voted of at least a majority of the remaining directors or trustees, if still constituting a quorum, otherwise, said vacancies must be filled by the stockholders in a regular or special meeting called for that purpose. Relative to your second query, it is clear that Ms. Caugma became a member again of the association on the date of approval of her re-application on December 29, 1980. But this would not restore her to the directorship of the corporation considering that a vacancy was already created by operation of law, irrespective of the fact that the incoming members of the Board had not yet taken their oath of office which is but a mere formality. Please be advised accordingly. LexLib Very truly yours, (SGD.) ROSARIO N. LOPEZ Associate Commissioner