Dra. Josefina T. Ramirez

May 7, 1981 Dra. Josefina T. Ramirez Eusebio S. Garcia and U.P. Medicine '36 Foundation, Inc. Manila Doctors Hospital United Nations Avenue Manila Madam : It appears in your letter of April 20, 1981, that the Articles of Incorporation of Eusebio S. Garcia and U.P. Medicine '36 Foundation, Inc. does not provide for a tenure of office of its Board of Trustees. In this connection, you posed the following queries: LexLib 1. Can the Board of Trustees elected annually serve his term of office for an unlimited period? 2. If there is a limitation of such, what would be the duration a Board Member can serve as required by SEC? Section 92 of the Corporation Code of the Philippines (Batas Pambansa Bilang 68) allows the provision of a term of trustees in the Articles of Incorporation or by-laws of a non-stock corporation. Said section also provides for a staggered term for members of the board of trustees. Thus, as soon as organized, the board of trustees which may be more than fifteen (15) in number as may be fixed in the articles of incorporation or by-laws shall classify themselves so that the term of office of one-third (1/3) of their members shall expire every year and subsequent elections of trustees comprising one-third (1/3) of the board of trustees shall be held annually. The trustees so elected will then have a term of three years. The trustees thereafter elected to fill vacancies occurring before the expiration of a particular term shall hold office only for the unexpired period. This arrangement, however, may be modified by the articles of incorporation or the by-laws. This means that the (1) term or the (2) percentage of trustees comprising a group may vary under the articles of incorporation or by-laws. (Significant changes Affecting the Corporate Directors and Trustees Under the New Corporation Code A Comparative Study, Soledad M. Cagampang de Castro, Journal of the Integrated Bar of the Philippines, Vol. 8 Nos. 2 & 3, 1980, p. 125). A close reading of Section 4.04, Article IV of the by-laws of your corporation, disclosed that the trustees are elected annually by the members of the foundation during their annual meeting which means that they have a term of one year. This term is allowed under Section 92 of the Code as an exception to the rule providing for a staggering of the term of trustees. But the trustees elected under this provision can not be allowed to serve for an unlimited period. cdll In view of the foregoing, it becomes unnecessary to answer your second query. Very truly yours, (SGD.) ROSARIO N. LOPEZ Director Corporate and Legal Department