Belo Abierra and Associates

October 16, 1990 Belo Abierra and Associates 6780 Ayala Avenue Makati, Metro Manila Attention : Mr . Enrique M . Belo S i r s : This has reference to your letter dated September 24, 1990 requesting Opinion of the Commission as to whether By-Laws may legally provide that no proxy shall be recognized in any stockholders' meeting. As stated, when the articles of incorporation of the Philippine Daily Inquirer was presented to the Commission for approval, the provision denying proxy voting was cancelled. However, under its by-laws which was approved by the Commission, proxy voting is not recognized. In view of this apparent conflict, you would like to inquire whether or not the provision of the by-laws denying proxy voting is considered valid. Under the Corporation Code, the right of the stockholders to vote by proxy is expressly recognized. The Code provides, thus: "SECTION 58. Stockholders and members may vote in person or by proxy in all meetings of stockholders ...." When the right is given by statute or charter, a shareholder cannot be deprived of it, nor can it be unreasonably restricted by a by-law. (408: Ballantine on Corporation) It is the first requisite of validity that by-laws must be consonant with, and not repugnant to or in contravention of, the law of the land (8 Fletcher Sec. 4185). The by-laws are subordinate to the articles of incorporation as well as the Corporation Code and related statutes, and should therefore not be inconsistent with any of these. Otherwise, they would have no binding effect. (Campos and Lopez Campos, Corporation Code citing Fleisher v. Botica Nolasco, G.R. No. 23241, March 14, 1925, 47 Phil. 584 (1925) Thus, in case of conflict between the Corporation Code and by-laws, the former shall prevail . In view of the foregoing, a by-law provision prohibiting the use of proxy voting, being contrary to law, is void. Please be guided accordingly. (SGD.) RODOLFO L. SAMARISTA Associate Commissioner