Atty. Jose C. Tolentino

September 4, 1995 Atty. Jose C. Tolentino J.C. Tolentino & Associates Suite 304-305 St. Martin Building 17-A West Point St.,Cubao, Quezon City S i r : This refers to your letter of August 22, 1995, requesting opinion on the following corporate issues relative to Gilmore Townhomes Condominium Corporation: 1.a. Does the Board of Directors of the said corporation, have the absolute authority to fix the time of submission of proxies prior to the meeting? b. Is the Corporate Secretary legally allowed not to accept proxies being submitted after the time fixed for the submission thereof as provided in query no. 1? c. What is the time limit, if any, imposed upon the Board of Directors in fixing the time of the submission of the proxies "before the scheduled meeting"? Does it mean an hour, two (2) hours or even one (1) week prior to the scheduled meeting? 2. Whether or not in the determination of the required quorum delinquent members are included. 3. Whether or not in the approval of amendments to by-laws delinquent shares are entitled to vote. Section 47 of the Corporation Code provides in part: SECTION 47. Contents of by-laws . Subject to the provisions of the Constitution, this Code, other special laws, and the articles of incorporation, a private corporation may provide in its by-laws for: xxx xxx xxx 4. The form for proxies of stockholders and members and the manner of voting therein," (Emphasis supplied) The by-laws of the corporation therefore would be controlling insofar as execution of proxies is concerned. In the absence of a provision in the by-laws fixing a deadline for the submission of proxies, the Board of Directors of the corporation cannot fix a deadline for their submission. Therefore, proxies may be submitted at any time before the meeting. ( SEC Opinion dated November 13, 1972, addressed to Neil Reyes and Associates ). Since the provision of by-laws of the corporation do not provide for a cut-off date for the submission of proxy, the proxies executed by the members should be perceived in relation to its compliance with Section 58 of the Corporation Code and the provision of the By-laws which are quoted hereunder: SECTION 58. Proxies . Stockholders and members may vote in person or by proxy in all meetings of stockholders or members Proxies shall be in writing, signed by the stockholder or member and filed before the scheduled meeting with the corporate secretary. Unless otherwise provided in the proxy, it shall be valid only for the meeting for which it is intended. No proxy shall be valid and effective for a period longer than five (5) years at any one time." (Emphasis supplied);and xxx xxx xxx "Any member or representative as herein defined may be represented by a proxy in all meetings of the corporation. The proxy must be in writing and signed by the member or representative delegating his representation to another and filed before the scheduled meeting with the Corporate Secretary." (Article 11, Sec. 5 of the By-laws). Accordingly, for as long as the proxy is executed in accordance with the aforementioned provisions, the corporation is duty bound to honor the same at any time before the scheduled stockholders' meeting. Relative to the second issue, Section 47 of the Corporation Code provides in part: "SECTION 47. Contents of by-laws . Subject to the provisions of the Constitution, this Code, other special laws and the articles of incorporation, a private corporation may provide in its by-laws for: xxx xxx xxx 3. The required quorum in meetings of stockholders or members and the manner of voting therein;" (Emphasis supplied) cdll A corporation is thus authorized to provide in its by-laws a specific number of members necessary to constitute a quorum for the transaction of corporate business. Accordingly, the following provision in the by-laws of your corporation shall be observed: The presence of members representing a majority of total membership who are not delinquent in their dues and assessments shall constitute a quorum . A majority of the quorum shall be competent to decide on any matter or transact business in any meeting, except in matters or cases in which the Corporation Code or any other law pertaining to the project requires the affirmative vote of a greater proportion" (Art. II, Sec. 6, emphasis supplied). Anent the third issue, the Commission had previously opined that Section 6 of the Corporation Code which provides that non-voting shares shall nevertheless be entitled to vote in matters enumerated therein applies only to stock corporations (SEC Opinion addressed to Dr. Claro M. Cinco dated May 2, 1984). For non-stock corporations, the Corporation Code has a separate provision relative to the right of the members to vote on corporate matters. The Code provides: "SECTION 89. Right to vote . The right of the members of any class or classes to vote may be limited, broadened or denied to the extent specified in the articles of incorporation or the by-laws .Unless so limited, broadened or denied, each member, regardless of class, shall be entitled to one vote." (Emphasis supplied) Thus, the articles of incorporation or by-laws of a non-stock corporation may deny certain members the right to vote. Corollary to the above provision of the Corporation Code, the provision in the By-laws of your corporation states: "....However, members who are delinquent in the payment of dues and assessments fixed by the Board of Directors pursuant to the powers granted them shall not be qualified to cast their votes in any meetings of the corporation." (Art. 2, Sec. 3, emphasis supplied). Accordingly, since under the by-laws of the corporation, delinquent members are not entitled to vote, they should not be included in the determination of the required votes prescribed under the By-laws of your corporation for corporate transactions. prcd Please be advised accordingly. (SGD.) PERFECTO R. YASAY, JR. Acting Chairman