Col. Luis P. Enriquez (Ret.)

November 23, 1987 Col. Luis P. Enriquez (Ret.) Room 108, ICTTI Bldg., EDSA cor. Pinatubo Street Mandaluyong, Metro Manila Sir : This has reference to your letter received by this Commission on November 17, 1987, requesting for the opinion of this Commission on the query stated therein. It appears therein that Article IV, Section 5 of the Amended By-Laws of the AFP Savings and Loan Association, Inc. provides as follows: "SECTION 5. Voting . . . . Provided, finally that the Chief of Staff, AFP shall be entitled to cast the total number of votes remaining after deducting the total votes of the members and proxies present from the total registered number of votes of qualified voters." You manifest that the above quoted provision is violative of the mandatory procedural requirement of due process because the owners of the capital contributions are unjustly deprived of their right to select and appoint their own proxies. You likewise maintain that it would render meaningless the purpose of the election of the members of the Board of Directors and the concept of proxy votes because approximately 90% of the total number of votes of the members who could not attend the meeting will be controlled by the Chief of Staff. You likewise believe that no individual can encroach or intervene in the exercise of personal property rights without the proxy authorization in writing by the beneficial owner. Hence, the authority vested in the Chief of Staff, AFP to exercise rights of ownership without any proxy authorization by the aforesaid provision is unjust and confiscatory. Relative thereto, we hereby reiterate our previous ruling, to wit: "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." From the foregoing provision, therefore, it is clear that the articles of incorporation or by-laws of a non-stock corporation may limit, broaden or even deny a member's right to vote. In your case, the right to vote of each member was limited to a maximum of one thousand (1,000) votes irrespective of the amount of his capital contribution. It likewise broadened the right to vote of the Chief of Staff of the AFP by allowing him to vote the remaining balance after deducting the total votes of the members/proxies. ( Ltr. to Mr. Noe Andaya dtd April 23, 1987 ). "As a general rule the courts uphold restrictions on the right to vote contained in a corporation's articles of incorporation or By-laws implementing authority contained in the by-laws." "Where the charter or general law expressly declares who shall be entitled to vote and how they shall be entitled to vote, or imposes other restrictions, its provisions are controlling." (Fletcher's, Vol. 5, p. 131) "A majority of the stockholders or members of a corporation may adopt reasonable by-laws, not inconsistent with the charter or any statute regulating the method of voting at corporate election." (State v. Tudor, 5 Day 329, 5 An Dec. 162, supra, p. 132.) Considering the foregoing, we see no cogent reason to disturb our previous opinion. Please be advised accordingly. LibLex Very truly yours, (SGD.) JULIO A. SULIT, JR. Chairman