Engr. Florencio M. Inandan

February 3, 1994 Engr. Florencio M. Inandan Acting Director Regional Officer for Luzon Presidential Commission for the Urban Poor Malacaang S i r : This refers to your letter of January 31, 1994 inquiring on the legality of the alleged hold over term of the corporate officers of Aguardiente Christ Faith Association, Inc. for more than two years in violation of the provisions of the corporate by-laws; and the intention of another community association based in the same locality to merge with the aforecited organization provided that a general election for officers of the combined groups be conducted as soon as possible. cdll The pertinent provision of the Corporation Code relative to the term of office of Directors/Officers of non-stock corporations provides: "SECTION 92. Election and term of trustees . Unless otherwise provided in the articles of incorporation or the by-laws ,the board of trustees of non-stock corporations, which may be more than fifteen (15) in number as may be fixed in their articles of incorporation or by-laws, shall, as soon as organized, so classify themselves that the term of office of one-third (1/3) of the number shall expire every year; and subsequent elections of trustees comprising one-third (1/3) of the board of trustees shall be held annually and trustees so elected shall have a term of three (3) years. Trustees thereafter elected to fill vacancies occurring before the expiration of a particular term shall hold office only for the unexpired period. ..." (Emphasis supplied) From the above phrase "unless otherwise provided in the articles of incorporation or by-laws",it is clear that non-stock corporations may provide a desired term of office of the Board and/or Officers in the articles of incorporation or by-laws. The by-laws signifies the rules and regulations or private laws enacted by the corporation to regulate, govern and control its own actions, affairs and concerns, and its stockholders and members and directors and officers with relation thereto and among themselves in their relation to it. 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. 4166, 4197) Therefore, there must be an election of directors on the date fixed for the purpose in the by-laws. However, in case of failure of the corporation to hold a regular election, the incumbent members of the board may hold-over their office and continue their functions until their successors are duly elected and qualified. It has to be emphasized however that hold-over is a situation that arises only when no successors are elected due to valid and justifiable reasons. The regular election of directors as stated in the By-laws cannot be dispensed with by the board or officers in order to extend their term of office as fixed in the by-laws. Under Section 50 of the Corporation Code whenever, for any cause, there is no person authorized to call a meeting, the Securities and Exchange Commission, upon petition of a member, and on the showing of good cause therefor, may issue an order to the petitioning member directing him to call a meeting of the corporation by giving proper notice required by the by-laws. The petitioning member shall preside thereat until at least a majority of the members present have chosen one of their number as presiding officer. Relative to the proposal to merge the corporation with another association, the same is legally feasible if the association referred to in your letter is also registered, subject to the requirements for mergers under Sections 76-80 of the Corporation Code. prcd Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman