Philippine Aircraft Owners and Pilots Association, Inc.

March 19, 1984 Philippine Aircraft Owners and Pilots Association, Inc. c/o Mrs. Ma. Lourdes Alcalde Manila Madam: This refers to your letter dated March 12, 1984 requesting for opinion/clarification on the following queries: 1. Based on the Securities and Exchange Commission's record, what by-laws of the Aircraft Owners and Pilots Association are to be followed for directors, officers and members? 2. If present officers were elected on the new 1982 by-laws which were never filed with the SEC, and the immediate past officers were elected on the 1977 proposed amended by-laws which was filed but not approved by the SEC, what is the status of the said officers? LibLex 3. Who should be the officers, assuming the newly-elected officers and the immediate past set of officers cannot hold office? Please be informed that the Commission would not render an appropriate opinion based on the allegations in your letter since the matter to be resolved is a justiciable issue which could be clarified and determined in a proper proceeding. Like in other queries of similar nature, the Commission has adopted he policy of not taking any action which will prejudice the outcome of the case if it will be eventually be litigated in the future. However, for purposes of information only, the following may be imparted. Records of the Philippine Owners and Pilots Ass'n. show that this Commission approved its by-laws on February 14, 1957. On January 5, 1977, amended by-laws were filed which were not however issued a certificate of filing for failure of the company to comply with the Commission's letter dated January 24, 1977 requiring the same to amend its articles of incorporation to reflect the change of the corporate name from Philippine Aircraft Owners and Pilots Association to Aircraft Owners and Pilots Association-Philippines, Inc. and comply with the requirements in the increase of the number of the board of directors from eleven to fourteen. In this connection, the Commission has ruled that "by-laws which is not inconsistent with law, public policy and public order; does not discriminate against any particular individual; in consonance with the charter and with the nature, purpose and objects of the corporation; does not impair vested contract rights; does not restrict freedom of trade and business and is not unreasonable, arbitrary or oppressive, when approved by majority of the members and signed by them has the force and effect as laws of the corporation and the officers, directors and members will not be heard to complain thereof. Formal statutory requisites such as filing, certification or posting the same after adoption, with the SEC are not regarded as requisites of its validity." ( SEC letter to Mr. Inocencio Sio dated November 25, 1976 ).Likewise, "a by-law is not necessarily void as a whole because invalid in part. If the portion of it which is unobjectionable is independent of and separable from the portion which is bad, the unobjectionable portion will be sustained ." (Volume 8, Fletcher Cyclopedia Corporations p. 731). In view of the above-quoted rulings and considering that approval of the by-laws by the Commission is not required under the "old" Corporation Law, the pertinent provisions in the amended by-laws filed in 1977 relative to your queries are deemed effective subject, however, to the conditions above-mentioned. LexLib The foregoing ruling, however, is now superseded by the passage of the "new" Corporation Code which took effect on May 1, 1980 requiring that by-laws and any amendments thereto shall be approved by the Commission before the same become effective. The pertinent provisions of the law provide, thus: "SECTION 46. Adoption of by-laws . xxx xxx xxx In all cases, by-laws shall be effective only upon the issuance by the Securities and Exchange Commission of a certification that the by-laws are not inconsistent with the Code . xxx xxx xxx "SECTION 48. Amendments to by-laws . xxx xxx xxx The amended or new by-laws shall only be effective upon the issuance by the Securities and Exchange Commission of a certification that the same are not inconsistent with this Code ." (emphasis supplied) On the basis of the foregoing, the alleged 1982 amended by-laws of the corporation which were never filed with/approved by the Commission is not binding on the members. Please be advised accordingly. Very truly yours, (SGD.) MANUEL G. ABELLO Chairman