Col. Jose Bayani A. Salcedo

March 22, 1989 Col. Jose Bayani A. Salcedo Office of the Naval Judge Advocate Headquarters Philippine Navy Roxas Boulevard Manila Sir : This refers to your letter dated March 10, 1989, requesting for the following: 1. Certification as to whether the amendments to the By-Laws of the AFP Savings and Loan Association, Inc. mentioned therein have been approved by the Commission; 2. Legal opinion on the following queries: a) Whether or not Article IV, Sec 4 of the by-laws is in compliance with existing and applicable laws; b) Whether or not Article V, Sec 5 of the by-laws authorizing the Chief of Staff of the AFP to cast the vote of all members not personally present or represented by proxy is in accordance with law. In connection with your No. 1 request, please be advised that the amendments to the by-laws mentioned in your letter were previously approved by the Central Bank on February 26, 1987. On the basis of the certificate issued by C.B.,the Securities and Exchange Commission on February 27, 1987, issued the corresponding certificate of approval. Xerox copies of the certificates issued by C.B. and the SEC and the latest approved amended by-laws of the corporation are herewith attached for ready reference. Anent your query 2(a) Section 52 of the Corporation Code provides that " Unless otherwise provided for in this Code or in the by-laws , a quorum shall consists of the stockholders representing a majority of the outstanding capital stock or majority of the members in case a non-stock corporations". In like manner, Section 47 of the Corporation Code provides that "subject to the provisions of the Constitution, this Code, other special laws, and the articles of incorporation, a private corporation may provide in its by-laws for: ...3. The required quorum in meeting of stockholders and members and the manner of voting them. The provision in the by-laws relative to quorum, however , will not hold true in those instances where the Corporation Code or applicable special law explicitly prescribes the proportion of stockholders or members necessary to resolve or carry out a particular corporate proposal. In such cases therefore, the quorum shall consist of such ratio of stockholders or members as may be declared by statutory provisions. It is a cardinal rule that a by-law providing what shall constitute a quorum is invalid if it is in conflict with the provisions of statute on the subject (5 Fletcher, Cyc. Corp., Sec. 2013). Thus, where the number necessary to constitute a quorum is prescribed by statute, a by-law requiring less than the proportion required by the particular legislation is subordinate to the statute. "By-laws cannot be used to defect the provisions of the statute. (Fletcher, Supra). As regards your query 2(b),attached herewith is a xeroxed copy of our letter dated April 23, 1987, addressed to Mr. Noe S. Andaya which directly answers your query. prcd Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman