Angara Abello Concepcion Regala & Cruz

October 30, 1995 Angara Abello Concepcion Regala & Cruz ACCRA Building, 122 Gamboa Street Legaspi Village, 0770 Makati City Metro Manila Attention : Atty . Senen Y . Glinoga S i r : This refers to your letter dated October 11, 1995 requesting an opinion on the legality of the procedure of election of the Filipino-Chinese Chambers of Commerce and Industry, Inc. stated therein. prcd Please be advised that the Commission does not, as matter of settled policy, render opinions on queries or issues which may eventually be litigated in the future, such as those presented in your letter. The opinion which may be rendered thereon would not be binding upon private parties who would in all probability, if the opinion happens to be adverse to their interest, take issue therewith, and contest it before the proper forum. It appearing that the issue raised in your letter appears to be a potential case, the Commission has to refrain from rendering opinion thereon so that it will not be estopped to decide the same if brought before it in a proper proceeding. The Commission also adheres to the hands-off policy in the interpretation and application of the provisions of the by-laws of the above-named corporation on the issue raised as they are internal matters that should first be resolved by the members of the corporation. However, for purposes of information, the following are imparted. By-laws are the private laws of the corporation. Hence, the provisions thereof must be construed in accordance with the intent of its own makers. Such self-imposed private laws, when valid, have substantially the same force and effect as laws of the corporation as have the provisions of its charter insofar as the corporation and persons within it are concerned. "They are in effect written into the charter and in this sense, they become part of the fundamental law of the corporation. Accordingly, the corporation, its directors, officers and members are bound by and must comply with the same." ( SEC Letter to Atty. Victor Africa dated November 24, 1992 , citing 8 Fletcher Cyc. Corp. Sec. 4197) It has to be emphasized, however, that the first requisite of validity of by-law provisions is that they must be in consonance with and not repugnant to or in contravention with the laws of the land. (Ibid, citing 8 Fletcher Sec. 4185). Thus, while a corporation is allowed to provide in its by-laws matters which may be necessary or convenient in its operation or corporate affairs, the same must not be inconsistent with the provisions of the Corporation Code. Otherwise, they would have no binding effect. In addition to the by-laws, a corporation may adopt other rules and regulations to govern its operations. However, a corporation cannot adopt rules and regulations or procedure different from or inconsistent with what is specifically provided for in the by-laws or Corporation Code. On the right to vote of members, a non-stock corporation may provide for the desired voting rights of the members in the articles of incorporation or by-laws. The pertinent provision of the Corporation Code provides, thus: "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) On the matter of election of the Board of Directors or Trustees, the Corporation Code provides: "SECTION 24. Election of directors or trustees . At all elections of directors or trustees, there must be present either in person or by representative authorized to act by written proxy, the owners of the majority of the outstanding capital stock, or if there be no capital stock, a majority of the members entitled to vote . The election must be by ballot if requested by any voting stockholder or member. . . . Unless otherwise provided in the articles of incorporation or in the 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. Any meeting of the stockholders or members called for an election may adjourn from day to day or from time to time but not sine die or indefinitely if, for any reason, no election is held, or if there are not present or represented by proxy, at the meeting, 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." (Emphasis supplied) Please be guided accordingly. Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner