RE : Mindanao Business Council, Inc.

December 11, 2003 SEC OPINION NO. 68-03 Atty. Bede S. Tabalingcos Ms. Elena Haw Corporate Secretary Tabalingcos and Associates Law Offices Unit 1609 Cityland Pasong Tamo Tower 2210 C. Roces Ave. Pio Del Pilar Makati City RE : Mindanao Business Council, Inc. Sir/Madam : This refers to your letter dated 01 December 2003 inquiring whether the act of six (6) of the members of the Board of your association that voted to call for a special election is valid notwithstanding the provision in Sec. 3, Article 10 of your by-laws providing for a quorum of eight (8) and whether such act shall be interpreted as removal of the Board of Directors whereby the concurrence of two thirds (2/3) of the members of good standing is needed. Sec. 3, Art. VI of Mindanao Business Council, Inc.'s by-laws provides: "Thereafter, the Board of Trustees will consist of individuals then holding the positions stated it Section 2 hereof for a term of one (1) year." Also, please take note of the provisions of Article X of your by-laws as quoted hereunder: "Sec. 1.1 Annual General Membership Meeting: This is to be held on any day in the month of July for the purpose of electing the Trustees and officers of the Council, presentation of reports, and other business which the Board or the general membership may take up. 1.2 General Membership Meetings: This is to be called at least twice at a place and time for each meeting to be fixed by the Board for the purpose of taking current and interim reports, and such matters that the Board, Management Committee or the general membership may take up (As amended on 28 January 2000) 1.3 Special Membership Meetings: This may be called at any time during the year when the Chairman so [sic] or directors or up [sic] written petition by at least five (5) members of the Board or at least ten percent (10%) of the members in good standing to take up urgent matters needing immediate resolution or action by the general membership." (emphasis ours) Moreover, please be hereby reminded that where the date of the annual meeting is fixed in the by-laws of the corporation, the board of directors or trustees cannot change the date as to lengthen their term of office. 1 The rule, however, admits of exceptions as where the annual meeting cannot be held on the date fixed in the by-laws for some valid reason, such as, an erroneous date for holding the meeting stated in the notice sent out to the members. In such case, the annual meeting may be postponed to a date later than that fixed in the by-laws, provided proper notice of the change of date is given to the members. 2 It is the duty of the board of directors or trustees to call the annual meeting without unnecessary delay or within a reasonable time, particularly when a demand therefor is made on them by the stockholder's or members, because they can continue to hold over only as long as their successors have not been elected; hence, it is not within their power to delay such election as to prolong their stay in office. 3 In addition, Section 24 of the Corporation Code provides in part, "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," SHDAEC Ergo, the act of six (6) of the members of your Board of Directors or Trustees is valid and in pursuance to the mandate of Art. X, Sec. 1.3 of your by-laws which requires a written petition of only five (5) board members. The same should not be construed as removal because the term of office of the Board of Directors expired after their one year term of office and they are merely in their hold over capacity. As such, the concurrence of two thirds (2/3) vote of your members, as stated in your by-laws is no longer necessary. Very truly yours, (SGD.) VERNETTE G. UMALI-PACO General Counsel Footnotes 1. Corporation C od e Annotated by Hector De Leon, p. 413. 2. Confederation of Government Employees Corporation, Inc.,SEC Opinion, June 13, 1967. 3. Philippine Public School Teachers' Association, Inc.,SEC Opinion, Feb. 21, 1968.