Mr. Reynaldo Lorena

July 19, 1994 Mr. Reynaldo Lorena Sitio Fatima Parenthood Asso., Inc. Marcelo Green Village, P'que., Metro Manila S i r : This refers to your letter of July 8, 1994 requesting opinion on the queries posed therein pertaining to the following provision in the by-laws of Sitio Fatima Parenthood Assn., Inc. "Article IV Section 2. Term of officers of the ASSOCIATION shall hold office for one year and until their successors are duly elected and qualified." Queries: 1. Under the above provision, if the one year term of office of the officers expires and there is no election yet, does it mean that the present officers can still continue to act as such? 2. Prior to the expiration of the term of office of the officers, a Board Resolution was passed extending their term of office up to three (3) years. Is the amendment based on said Board Resolution if approved by the Commission considered valid? The By-laws signifies the rules and regulations or private laws enacted by the corporation to regulate, govern and control its own actions, affairs and concerns, and its stockholders and members and directors and officers with relation thereto and among themselves in their relation to it. They are in effect written into the charter and in this sense, they become part of the fundamental law of the corporation, and the corporation, its directors, officers and members are bound by and must comply with them. (8 Fletcher, Sec. 4166, 4197) Therefore, the date fixed in the By-laws for the election of the directors must be observed. The regular election of directors as stated in the by-laws cannot be dispensed with the board or officers in order to extend their term of office as fixed in the by-laws. However, in case of failure of the corporation to hold a regular election on the date stated in the By-laws, the incumbent members of the board may hold-over their office and continue their functions until their successors are duly elected and qualified. It has to be emphasized however that hold-over is a situation that arises only when no successors are elected due to valid and justifiable reasons. Relative to your second query. the pertinent provision of the Corporation Code provides: "SECTION 29. Election and term of trustees . Unless otherwise provided in the articles of incorporation or by-laws , the board of trustees of non-stock corporations, which may be more than fifteen (15) in number as may be fixed in their articles of incorporation or by-laws, shall, as soon as organized, so classify themselves that the term of office of one-third (1/3) of the number shall expire every year; and subsequent elections of trustees comprising one-third (1/3) of the board of trustees shall be held annually and trustees so elected shall have a term of three (3) years. Trustees thereafter elected to fill vacancies occurring before the expiration of a particular term shall hold office only for the unexpired period. xxx xxx xxx (Emphasis supplied) From the above underlined words, it is clear that non-stock corporations may provide in their articles of incorporation or by-laws the desired term of office of the Board of Directors and/or Officers. However, any change of the term of office is subject to the following provision of the Corporation Code: "SECTION 48. Amendments to by-laws . The board of directors or trustees, by a majority vote thereof; and the owners of at least a majority of the outstanding capital stock, or at least a majority of the members of a non-stock corporation , at a regular or special meeting duly called for the purpose, may amend or repeal any by-laws or adopt new by-laws. The owners of two-thirds (2/3) of the outstanding capital stock or two-thirds (2/3) of the members in a non-stock corporation may delegate to the board of directors or trustees the power to amend or repeal any by-laws or adopt new by-laws; Provided That any power delegated to the board of directors or trustees to amend or repeal any by-laws or adopt new by-laws shall be considered as revoked whenever stockholders owning or representing a majority of the outstanding capital stock or a majority of the members in non-stock corporations, shall so vote at a regular or special meeting. Whenever any amendment or new by-laws are adopted, such amendment or new by-laws shall attached to the original by-laws in the office of the corporation, and a copy thereof, duly certified under oath by the corporate secretary and a majority of the directors of trustees, shall be filed with the Securities and Exchange Commission, the same to be attached to the original articles of incorporation and original by-laws. cdll 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) It is clear from the above provision that any amendment to the by-laws of a non-stock corporation shall be approved by at least majority of the Board and majority of all the members in case of non-stock corporations, and any amendment thereto shall be effective only upon approval by the Commission. Please be advised accordingly. Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner