Atty. Felisberto L. Verano, Jr.

August 7, 1997 Atty. Felisberto L. Verano, Jr. Verano Law Office FETA Building, 1623 Jorge Bocobo St. Malate, Manila S i r : This refers to your letter dated August 4, 1997, requesting opinion on the (1) validity of the following amendment to a By-law provision allegedly passed in a resolution and ratified by the members of Manila Yacht Club on August 15, 1996, and (2) whether it covers the incumbent directors who have been-elected consecutively for the past three (3) years. " Eligibility of Director for Nomination .Any member elected to the Board of Directors may only serve for a maximum of three (3) consecutive years as Director. After which, he has to wait for one (1) year before he can run for election in the Board" The above by-law provision is allowable by virtue of Section 47(5) Corporation Code quoted hereunder: "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. 5. The qualifications, duties and compensation of directors or trustees, officers and employees; xxx xxx xxx Relative to the second query, the pertinent provision of the Corporation Code states: "SECTION 48. Amendments to by-laws . ... 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) It is clear from the aforecited provision of the Corporation Code that amendments to the By-laws shall only be effective and enforceable upon approval by the Commission .Thus, the Commission, on several occasions, has opined that By-laws should be made to apply prospectively and not retrospectively. ( SEC Letter to Philippine Institute of Civil Engineers, Inc. dated Oct. 23, 1995 , citing previous SEC opinions) Therefore, even assuming that the above amended By-law provision has been approved in accordance with Section 48 of the Corporation Code, nobody from the incumbent Directors is disqualified to be nominated in the coming election of the corporation as no "three (3) consecutive terms" has yet been served by any director since its effectivity. Very truly yours, (SGD.) SONIA M. BALLO Corporate & Legal Dept . Director