Ms. Eileen Rose Tirona-Vizmonte

November 22, 1995 Ms. Eileen Rose Tirona-Vizmonte Japan International Cooperation Agency (JICA) 12th Flr. Pacific Star Building, Sen. Gil Puyat Ave. corner Makati Avenue, Makati City Madam: This refers to your letter dated November 15, 1995 requesting opinion on the following queries: 1. What should be done if the President and Chairman of the Board would not call for an election despite the request of some members of the Board of Trustees to call for it as mandated in the By-laws of the Association. 2. Can the President exercise the plenary powers in the affairs of the Association after willfully not calling for an election ,despite the clamors of the membership? 3. Can the membership initiate proceedings for the expulsion of the President for not following what is written in the By-laws ? 4. If an amendment to the By-laws would prosper, can it be applied to the incumbent Board of Trustees, or to the next Board of Trustees? Relative to the first and second queries, the Commission, on several occasions, has opined that the By-laws signify 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 stockholders or 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 by the board or officers in order to extend their term of office as fixed in the by-laws. In case of failure of the corporation to hold a regular election on the date stated in the By-laws by reason of the refusal of the President and Chairman of the Board to do so, the incumbent members of the board may hold-over their office and continue their functions until their successors are duly elected and qualified. However, it has to be emphasized that " hold-over " is a situation that arises only when no successors are elected due to valid and justifiable reasons . If there is no person authorized to call a meeting or in the event the person authorized in the by-laws to call a meeting fails or refuses to call for a meeting, any interested stockholder or member may, pursuant to the following provisions of the Corporation Code and P.D. 902-A, as amended, petition the SEC to authorize him to call a meeting or compel the officers of the corporation to call a meeting under the supervision of the Commission: Whenever, for any course, there is no person authorized to call a meeting , the Securities and Exchange Commission, upon petition of a stockholder or member , and on the showing of good cause therefor, may issue an order to the petitioning stockholder or member directing him to call a meeting of the corporation by giving proper notice required by this Code or by the by-laws. The petitioning stockholder or member shall preside thereat until at least a majority of the stockholders or members present have chosen one of their number as presiding officer." (SECTION 50, CORPORATION CODE) xxx xxx xxx "In order to effectively exercise such jurisdiction, the Commission shall possess the following powers: xxx xxx xxx (f) To compel the officers of any corporation or association registered by it to call meetings of stockholders or members thereof under its supervision." (SECTION 6 (f), PD 902-A, AS AMENDED) Anent the third query, violation by the corporate officers of the articles of incorporation and by-laws may be ground for their removal from office. Under Section 28 of the Corporation Code, a Director or Trustee of a non-stock corporation may be removed from office, with or without cause, by a vote of two-thirds of the members entitled to vote. Insofar as the corporate officers other than the members of the Board, the power to remove them is vested in the body or officer authorized to elect or appoint them. ( SEC Letter dated January 18, 1989 addressed to Efren L. Cordero , citing previous SEC Opinion dated September 29, 1987) Since under Section 25 of the Corporation Code, the corporate officers are elected by the Board, consequently, the right to remove them is vested in the same body. However, if the officers are directly elected by the members, as allowed under Section 92 of the Corporation Code, the power to remove them is vested directly in the latter. Regarding the last query, the pertinent provision of the Corporation Code provides: SECTION 48. Amendments to by-laws . ... 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 aforecited provision that amended by-laws shall be effective and enforceable only upon approval by the Commission .Thus, the Commission on several occasions, has opined that the by-laws should be made to apply prospectively. ( Ltr. to Mr. Rodrigo A. Alim dated Dec. 6, 1991 ,citing previous opinions) LexLib Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner