Grace Village Association, Inc.

March 5, 1990 Grace Village Association, Inc. C/o Mr. Ernesto L. Go Grace Village, Quezon City S i r : This refers to your letter dated February 28, 1990 which was received by this Commission on March 2, 1990, requesting confirmation of your opinion that "permanent directors are not allowed under the provisions of the Corporation Code." LibLex It further appears that the aforenamed corporation has been tolerating the automatic inclusion of one member-representative as permanent member of the board. Upon re-examination of said practice, the members agreed to terminate the same and beginning 1990, all directors must be elected by the members. Relative thereto, please be informed that under Section 92 of the Corporation Code, it is specifically provided and we quote: " Election and term of trustees . Unless otherwise provided in the articles of incorporation or the by-laws ,the board of trustees of non-stock corporations, which may be more than fifteen (15) in number may be fixed in their articles of incorporation or by-laws, shall as soon as organized, do classify themselves that the term of office of one-third (1/3) of their 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. (Emphasis supplied) Corollary thereto, the By-laws of Grace Village Association, Inc .expressly mandates that: VI. Annual Meeting "The annual meeting of the members of the Association shall be held on the first Sunday of January in each calendar year at the principal office of the Association at 2:00 P.M. where they shall elect by plurality vote and by secret balloting, the Board of Directors composed of eleven (11) members to serve for one (1) year until their successors are duly elected and have qualified." (Emphasis ours) Based on the foregoing, the current practice of subject association in allowing the automatic inclusion of a member representative as permanent member of the board is contrary to the existing by-laws and the aforequoted provision of the Corporation Code. The Commission hereby confirms your view that provisions allowing directors to serve for a permanent term are not allowable under the law. LexLib Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman