AFP Savings and Loan Association Inc.

March 28, 1985 AFP Savings and Loan Association Inc. c/o Mr. Reynaldo Gopilan Col. Bonny S. Serrano Rd. cor. EDSA Quezon City, MM Gentlemen: This refers to your letter dated February 1, 1985, requesting for an opinion on the query posed therein. It appears that in the General Assembly meeting of the association, one of the members recommended that the provision of its by-laws (Article V, Sec. 1) relative to the composition of the Board of Directors should be amended in such a manner that six (6) of the members of the Board shall be appointed by the Chief of Staff of the Armed Forces of the Philippines (AFP) from the bonafide members of the association, while the other five (5) members shall be elected by the members of the General Assembly in the election called for that purpose. Your query is whether the aforementioned procedure is legally feasible under the Corporation Code. The pertinent provisions of the Corporation Code provide, to wit: "SECTION 23. The Board of Directors or Trustees . Unless otherwise provided in this Code, the corporate powers of all corporations formed under this Code shall be exercised, all business conducted and held by the board of directors or trustees to be elected from among the holders of stocks or where there is no stock, from among the members of the corporation who shall hold office for one (1) year and until their successors are elected and qualified." ...(emphasis supplied) "SECTION 24. Election of directors or trustees . At all election of directors or trustees, there must be present either in person or by representative authorized to act by written proxy, the owners of the majority of the outstanding capital stock or if there be no capital stock, a majority of the members entitled to vote .....Unless otherwise provided in the articles of incorporation or in the by-laws, members of corporations which have no capital stock, may cast as many votes as there are trustees to be elected but may not cast more than one vote for one candidate." ...(emphasis supplied) It is quite clear from the aforecited provisions that the manner of choosing the members of the board is by election and such authority to elect is lodged in the members of the association. Since the law expressly confers to the members the authority to elect the members of the Board, mere designation without election is not legally feasible. In view of the foregoing, your query is answered in the negative. Very truly yours, (SGD.) MANUEL G. ABELLO Chairman