Cagayan de Oro College, Inc.

August 19, 1982 Cagayan de Oro College, Inc. c/o Atty. Ersamo B. Damasing Corporate Secretary Carmen, Cagayan de Oro City Gentlemen: This is with reference to your letter of July 22, 1982, requesting for opinions on the queries posed herein. Section 1, Article III of your amended by-laws approved by this Commission on December 4, 1978, provides in part: "1. The business and property of the corporation shall be managed by the board of ten (10) trustees, who shall be stockholders and who shall be elected annually by the stockholders for the term of one (1) year and shall serve until the election and acceptance of their duly qualified successors. .." It appears that sometime in October, 1979, you filed with this Commission a further amendment of your amended by-laws reclassifying your board of trustees so that the term of office of 1/2 of their number would expire every year; trustees elected thereafter to fill the vacancies caused by expiration of term would hold office for two (2) years. The certificate of filing of amended by-laws has not been issued by the Commission for the reason that the certification of the majority of the trustees, countersigned by the Secretary, attesting to the further amendment of the amended by-laws has not as yet been submitted to this Office. At that time however, the Commission has made a previous opinion to the effect that by-laws or any amendment thereto duly adopted by the members/or stockholders are valid as long as their provisions conform with the essential elements necessary for their validity, namely: 1) they must be consistent with the general law, public policy and with the articles of incorporation; 2) they must be general and uniform and in operation and effect, and not discriminatory, 3) they must not impair or destroy contract obligation or invested rights; and 4) they must be reasonable ( SEC Letter to Mr. Jose Sumagaysay, dated October 26, 1965 ) With the advent, however, of Batas Pambansa Blg. 68, otherwise known as the Corporation Code of the Philippines which took effect on May 1, 1980, a clear cut-off date on the effectivity of amended by-laws has been pronounced. Section 48 of the Corporation Code reads thus: "xxx xxx xxx The amendment 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." With the passage of the above law, the amended by-laws you filed with this Commission on October 1979 became ineffective; consequently, the provisions of the amended by-laws duly approved by this Office on December 4, 1978 are revived. In answer, thus, to your first and second queries, during the annual stockholders' meeting of that corporation, you should elect ten (10) trustees who shall hold office for one (1) year and until their successors are duly elected and qualified pursuant to the provisions of Section 1, Article II of your approved amended by-laws. This is in line with the following provisions of the Corporation Code of the Philippines, to wit: "SECTION 108. Board of Trustees ... For institutions organized as stock corporations, the number and terms of directors shall be governed by the provisions on stock corporations." "SECTION 23. . . . Unless otherwise provided on this Code, the corporate powers of all corporation formed under this Code shall be exercised, all business conducted and all property of such corporations controlled and held by the board of directors or trustees . . . who shall hold office for one (1) year and until their successors are elected and qualified." The provisions of the Corporation Code of the Philippines, pertinent to your third query, reads in part as follows: "SECTION 24. ... In stock corporations, every stockholder entitled to vote shall have the right to vote in person or by proxy the number of shares of stock standing at the time fixed in the by laws, in his own name on the stock books of the corporation, or where the by-laws are silent at the time of election; and said stockholder may vote such number of shares for as many persons as there are directors to be elected or he may cumulate said shares and give one candidate as many votes as the number of directors to be elected multiplied by the number of his shares shall equal, or he may distribute them on the same principle among as many candidates as he shall see fit: Provided, that the total number of votes cast by him shall not exceed the number of shares owned by him as shown in the books of the corporation multiplied by the whole number of directors to be elected. ...Candidates receiving the highest number of votes shall be declared elected. ..." Anent your fourth query, the same is answered in the affirmative in view of the aforecited Section 108 of the Corporation Code of the Philippines. We trust that the foregoing sufficiently answer your queries. Very truly yours, (SGD.) MANUEL G. ABELLO Chairman