Mr. Noe S. Andaya

September 20, 1990 Mr. Noe S. Andaya President & General Manager AFPSLAI Services Corporation AFPSLAI Building Edsa Cor. Col. Serrano Road Camp Aguinaldo, Quezon City S i r : This refers to your letter dated September 10, 1990 requesting opinion relative to filling of vacancies in the board or directors. LexLib You stated therein that Corporation XYZ which is a stock corporation, duly organized and existing under the laws of the Philippines with eleven (11) members of the Board, provides in its by-laws that: "Any vacancy in the Board of Directors shall be filled by a vote of the majority of the outstanding capital stock in a special meeting called for the purpose, and the director or directors who will be chosen shall serve for the unexpired term." On the other hand Section 29 of the Corporation Code of the Philippines provides: "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 vote 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 the purpose. ..." (Emphasis supplied) Your query is: Which would prevail, the by-laws or the Corporation Code? The phrase "may be filled" in the aforecited provision of the Corporation Code purports that the filling of vacancies in the Board by the remaining directors constituting a quorum is merely permissive, hence, not mandatory. Corporations, therefore, may chose on how vacancies in their Board may be filled up which may either be by the remaining directors constituting a quorum or by the stockholders in a regular or special meeting called for the purpose. However, considering that the by-laws of the corporation mentioned in your letter prescribe the specific mode of filling up existing vacancies in its Board of Directors, which is by the stockholders, you have no other choice but to follow said provision. It is well settled that the by-laws are the private laws of the corporation. They are, in effect, written into the charter and, in this sense, they become part of the fundamental law of the corporation; and the corporation, its directors, officers, and members are bound by and must comply with them. (8 Fletcher, Sec. 4197) Accordingly, any procedure different or inconsistent from that specifically provided for in the by-laws of the corporation will run contrary to the basic tenet, that the by-laws of a corporation is a rule for the government of the corporation and its stockholders or members in the conduct and management of its affairs. ( Letter dated March 1, 1976, addressed to Philippine Amateur Radio Association, Inc. ) cdlex Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman