Atty. Ma. Cecile C. Tresvalles

June 17, 1996 Atty. Ma. Cecile C. Tresvalles P.E. Cases, Jr. & Associates 6th Flr.,PDCP Bank Building, 371 Sen. Gil Puyat Ave. Extension, 1200 Makati, Metro Manila Madam: This refers to your letter dated June 14, 1996 requesting opinion on the proper construction of the following provisions of the By-laws "Yangco Traders Corporation": cdll "SECTION 5.5, Art. V. Voting Power . The right to vote in any meeting of the Corporation shall belong to every stall holder who had acquired a title to his/her/its stall or stalls. Each member shall be entitled to such number of votes as shall correspond to his appurtenant proprietory interest or percentage of participation as provided in the Incorporation Agreement ,..." (Emphasis supplied) "SECTION 5.7, Art. V. In the election of Directors, no cumulative voting shall be permitted." (Emphasis supplied) Your query is: What voting right will apply to the members to approve a particular corporate act or to elect Directors/Trustees the voting right based on the proprietary interest or the cumulative voting?" The pertinent provision of the Corporation Code relative to the voting rights of members in non-stock corporations provides: "SECTION 89. Right to vote . The right of the members of any class or classes to vote may be limited, broadened or denied to the extent specified in the articles of incorporation or the by-laws . Unless so limited, broadened or denied, each member, regardless of class, shall be entitled to one vote . ..." (Emphasis provided) It is clear from the above provision that the Articles of Incorporation or By-laws of a non-stock corporation may provide for the desired voting rights of the members of a non-stock corporation. To illustrate: if for example under the criteria set forth in the Articles of Incorporation or By-laws, a member is entitled to a total of three (3) votes, he may cast the entire 3 votes in favor of or against a corporate proposal. Thus, we find Sec. 5.5 of the By-laws of the corporation in conformity with the Corporation Code. However, take note that in the absence of a clear criteria of determining the number of votes a member is entitled, one cannot cast more than one (1) vote for a corporate proposal. In the case of election of the Board of Directors , Sec. 24 of the Corporation Code states: "SECTION 24. Election of directors or trustees . At all elections 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. The election must be by ballot if requested by any voting stockholder or member. ... 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 .Candidates receiving the highest number of votes shall be declared elected. Any meeting of the stockholders or members called for an election may adjourn from day to day or from time to time but not sine die or indefinitely if, for any reason, no election is held, or if there are not present or represented by proxy, at the meeting, the owners of a majority of the outstanding capital stock, or if there be no capital stock, a majority of the members entitled to vote." (Emphasis supplied) Thus, as a general rule ,"cumulative" voting is not allowed in the election of the Board of Directors of non-stock corporation, unless the same is expressly provided in the articles of incorporation or by-laws. Accordingly, since under Sec. 5.7 of the By-laws of subject corporation "cumulative voting" is prohibited, the corporation cannot adopt said manner of voting in the election of the Board of Directors. llcd Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner