LIM v. MOLDEX

Mary E. Lim Vs. Moldex Land, Inc., et al.

G.R. No. 206038

January 25, 2017

FACTS:

On July 21, 2012 Condocor (Condominium Corporation) a non-stock, non-profit corporation, which is the registered condominium corporation for the Golden Empire Tower held its annual general membership meeting. Moldex became a member of Condocor on the basis of its ownership of the 220 unsold units in the Golden Empire Tower.

During the meeting, an existence of a quorum was declared even though only 29 of the 108 unit buyers were present. The declaration was based on the presence of the majority of the voting rights, including those pertaining to the 220 unsold units held by Moldex through its representatives. Lim, through her attorney-in-fact, objected to the validity of the meeting. The objection was denied. Thus, Lim and all the other unit owners present, except for one, walked out and left the meeting.

Despite the walkout, the individual respondents and the other unit owner proceeded with the meeting and elected the new members of the Board of Directors for 2012-2013. All four (4) individual respondents (JAMINOLA, MACALINTAL, MILANES, and ROMAN) were voted as members of the board, together with other 3 members.

Consequently, Lim filed an election protest before the RTC. Lim claimed that herein respondents are not entitled to be members of the Board of Directors because they are non-unit buyers. However, said court ruled in favor for the respondents. Not in conformity, Lim filed the present petition.

ISSUES:

1) Whether or not the July 21, 2012 membership meeting was valid.

2) Whether or not Moldex can be deemed a member of Condocor.

3) Whether or not representatives of Moldex who are non-members can be elected as a member of the Board of Directors of Condocor.

HELD:

I

No. The July 21, 2012 membership meeting was not valid.

A stockholders' or members' meeting must comply with the following requisites to be

valid:

1. The meeting must be held on the date fixed in the ByLaws or in accordance with law;

2. Prior written notice of such meeting must be sent to all stockholders/members of record;

3. It must be called by the proper party;

4. It must be held at the proper place; and

5. Quorum and voting requirements must be met.

Of these five ( 5) requirements, the existence of a quorum is crucial. Any act or transaction made during a meeting without quorum is rendered of no force and effect, thus,

not binding on the corporation or parties concerned. In relation thereto, Section 52 of the

Corporation Code of the Philippines (Corporation Code) provides:

Section 52. Quorum in meetings. - Unless otherwise provided for in this Code or in the by-laws, a quorum shall consist of the stockholders representing a majority of the outstanding capital stock or a majority of the members in the case of non-stock corporations.

Thus, for stock corporations, the quorum is based on the number of outstanding voting stocks while for non-stock corporations, only those who are actual, living members with voting rights shall be counted in determining the existence of a quorum.

The By-Laws of Condocor has no rule different from that provided in the Corporation Code with respect the determination of the existence of a quorum. The quorum during the July 21, 2012 meeting should have been majority of Condocor's members in good standing. Accordingly, there was no quorum during the July 21, 2012 meeting considering that only 29 of the 108 unit buyers were present. As there was no quorum, any resolution passed during the July 21,2012 annual membership meeting was null and void and, therefore, notbinding upon the corporation or its members. The meeting being null andvoid, the resolution and disposition of other legal issues emanating from the null and void July 21, 2012 membership meeting has been rendered unnecessary.

II

Yes. Moldex can be deemed a member of Condocor.

Lim asserted that only unit buyers are entitled to become members of Condocor. Respondents, for their part, countered that a registered owner of a unit in a condominium project or the holders of duly issued condominium certificate of title (CCT), automatically becomes a member of the condominium corporation, relying on Sections 2 and 10 of the Condominium Act, the Master Deed and Declaration of Restrictions, as well as the By-Laws of Condocor. For said reason, respondents averred that as Moldex is the owner of 220 unsold units and the parking slots and storage areas attached thereto, it automatically became a member of Condocor upon the latter's creation.

On this point, respondents are correct. Section 2 of the Condominium Act states:

Sec. 2. A condominium is an interest in real property consisting of separate interest in a unit in a residential, industrial or commercial building and an undivided interest in common, directly or indirectly, in the land on which it is located and in other common areas of the building. A condominium may include, in addition, a separate interest in other portions of such real property. Title to the common areas, including the land, or the appurtenant interests in such areas, may be held by a corporation specially formed for the purpose (hereinafter known as the "condominium corporation") in which the holders of separate interest shall automatically be members or shareholders, to the exclusion of others, in proportion to the appurtenant interest of their respective units in the common areas

It is erroneous to argue that the ownership must result from a sale transaction between the owner-developer and the purchaser. Such interpretation would mean that persons who inherited a unit, or have been donated one, and properly transferred title in their names cannot become members of a condominium corporation.

III

No. Representatives of Moldex who are non-members cannot be elected as a member of the Board of Directors of Condocor.

A corporation can act only through natural persons duly authorized for the purpose or by a specific act of its board of directors.45 Thus, in order for

Moldex to exercise its membership rights and privileges, it necessarily has to appoint its representatives. However, individual respondents who are non-members cannot be elected as directors and officers of the Condocor.

While Moldex may rightfully designate proxies or representatives, the latter, however, cannot be elected as directors or trustees of Condocor. First, the Corporation Code clearly provides that a director or trustee must be a member of record of the corporation. Further, the power of the proxy is merely to vote. If said proxy is not a member in his own right, he cannot be elected as a director or proxyndominium corporation.