Mr. James Vinzon

August 25, 1987 Mr. James Vinzon 148 Amorsolo St. Legaspi Village Makati, Metro Manila Sir : This refers to your letter dated August 18, 1987, requesting the opinion of this Commission on the queries posed therein. llcd The pertinent provisions of the amended by-laws of Manila Youth Club, Inc. provides under Article IV thereof as follows: "SECTION 4. Manner of Voting . Members who have the right to vote in accordance with Article 1-A, Section 3 of these by-laws shall be entitled to vote in person or by proxy appointed in writing by the member himself or his duly authorized attorney. The proxy instrument for the Annual General Meeting of members of which the Directors are to be elected shall be used for quorum purposes only and for voting on important matters in the Agenda. The new Board of Directors shall be elected by those members who are present in the Annual General Meeting. Proxy voting, voting by mail or other similar indirect means shall not be allowed." You contend that members of good standing of Manila Youth Club, Inc.,who cannot be present physically at the annual meeting should be allowed to cast his vote for his choice of directors by his duly authorized agent. To rule otherwise would lead to a situation where the members of the board of directors are no longer representations of the majority of the members but rather the majority of the minority who are physically present in the annual meeting. Hence, your query as to the legal interpretation of the above quoted provision of the by-laws of Manila Yatch Club, Inc. Section 89 of the Corporation Code reads thus: " 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. Unless otherwise provided by the articles of incorporation or the by-laws, a member may vote by proxy in accordance with the provisions of this Code. xxx xxx xxx." By the express provision of the law, (Sec. 89, CCP, Supra) a member may be denied of his voting power to the extent specified in the articles of incorporation or by-laws. Therefore, this justifies the by-law provision of the Manila Yatch Club, Inc. of restraining the proxies from participating directly in the election of directors at the annual meeting of members. In most instances, it will be shown that the question as to what constitutes a quorum for the purpose of transacting business at a meeting of stockholders or members is governed by statute. Statutory provisions of this kind are mandatory . As to the election of directors, Section 24 of the Corporation Code reads thus: "At all election of directors or trustees, there must be present, either in person or by representative authorized to act by written proxy, the owners of a majority of the outstanding capital stock, or if there be no capital stock, a majority of the members entitled to vote .....Unless otherwise provided in the articles of incorporation or by-laws, members of corporations which have no capital stock may cast as many votes as there are trustees to be elected but may not cast more than one vote for one candidate. Candidates receiving the highest number of votes shall be declared elected. ...." Section 24 of the Corporation Code (Supra.), fixes the number of quorum required for the election of directors, which is a majority of the members entitled to vote in person or by proxy. Less than the required number cannot hold a valid meeting, although those present may adjourn. The question of determining the basis, necessary for reckoning the candidates receiving the highest number of votes is aptly resolved by the following jurisprudence, by analogy, to wit: "If a quorum is present, the affirmative vote of a majority of the shares represented and voting at a duly held meeting, which shares voting affirmatively also constitute at least a majority of the required quorum, will be the act of the shareholders ,unless the vote of a greater number or voting by class is required by the General Corporation Law or the corporate articles, and except where shareholders have withdrawn after a quorum is constituted." (Ballantine & Sterling, Vol. IA, 1982 ed., sec. 166.01). Thus, in the election of directors, while it is true that only the members physically present during the election may cast their votes in favor of their candidates, nevertheless, the quorum established by law under Section 24 of the Code, which is the majority of the members entitled to vote in person or by proxy, should be strictly observed in reckoning the canvassing as to the candidates receiving the highest number of votes. In other words, the votes of the members physically present must represent a majority of the quorum to declare certain number of directors as elected. To rule otherwise would defeat the purpose of establishing a quorum under Section 24 of the Corporation Code. Please be advised accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Chairman