SECOND DIVISION
G.R. No. 206038, January 25, 2017
MARY E. LIM, REPRESENTED BY HER ATTORNEY-IN-FACT, REYNALDO V. LIM, Petitioner, v. MOLDEX LAND, INC., 1322 ROXAS BOULEVARD CONDOMINIUM CORPORATION, AND JEFFREY JAMINOLA, EDGARDO MACALINTAL, JOJI MILANES, AND CLOTHILDA ANNE ROMAN, IN THEIR CAPACITY AS PURPORTED MEMBERS OF THE BOARD OF DIRECTORS OF 1322 GOLDEN EMPIRE CORPORATION, Respondents.
D E C I S I O N
MENDOZA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the March 4, 2013 Decision1 of the Regional Trial Court of Manila, Branch 24, (RTC) in Civil Case No. 12-128478, which dismissed the complaint against the respondents for 1] annulment of the July 21, 2012 general membership meeting of 1322 Roxas Boulevard Condominium Corporation (Condocor); 2] annulment of election of Jeffrey Jaminola (Jaminola), Edgardo Macalintal (Macalintal), Joji Milanes (Milanes), and Clothilda Anne Roman (Roman) (collectively referred to as "individual respondents") as members of the Board of Directors; and 3] accounting.
The primordial issue presented before the RTC, acting as a special commercial court, was the validity, legality and effectivity of the July 21, 2012 Annual General Membership Meeting and Organizational Meeting of Condocor's Board of Directors.2
Initially, the Court, in its Resolution3 dated April 1, 2013, denied the petition for having availed of the wrong mode of appeal because Lim raised mixed questions of fact and law, which should have been filed before the Court of Appeals (CA).4 Upon motion for reconsideration, however, the Court granted it. Thereafter, the respondents filed their Comment5 and Lim filed a Reply6 thereto.
The Antecedents
Lim is a registered unit owner of 1322 Golden Empire Tower (Golden Empire Tower), a condominium project of Moldex Land, Inc. (Moldex), a real estate company engaged in the construction and development of high end condominium projects and in the marketing and sale of the units thereof to the general public. Condocor, a non-stock, non-profit corporation, is the registered condominium corporation for the Golden Empire Tower. Lim, as a unit owner of Golden Empire Tower, is a member of Condocor.
Lim claimed that the individual respondents are non-unit buyers, but all are members of the Board of Directors of Condocor, having been elected during its organizational meeting in 2008. They were again elected during the July 21, 2012 general membership meeting.7
Moldex became a member of Condocor on the basis of its ownership of the 220 unsold units in the Golden Empire Tower. The individual respondents acted: as its representatives.
On July 21, 2012, Condocor held its annual general membership meeting. Its COrPorate secretary certified, and Jaminola, as Chairman, declared the existence of a quorum even though only 29 of the 1088 unit buyers were present. The declaration of quorum 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 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 annual general membership meeting and elected the new members of the Board of Directors for 2012-2013. All four (4) individual respondents were voted as members of the board, together with three (3) others whose election was conditioned on their subsequent confirmation.9 Thereafter, the newly elected members of the board conducted an organizational meeting and proceeded with the election of its officers. The individual respondents were elected as follows:
Consequently, Lim filed an election protest before the RTC. Said court, however, dismissed the complaint holding that there was a quorum during the July 21, 2012 annual membership meeting; that Moldex is a member of Condocor, being the registered owner of the unsold/unused condominium units, parking lots and storage areas; and that the individual respondents, as Moldex's representatives, were entitled to exercise all membership rights, including the right to vote and to be voted.11 In so ruling, the trial court explained that the presence or absence of a quorum in the subject meeting was determined on the basis of the voting rights of all the units owned by the members in good standing.12 The total voting rights of unit owners in good standing was 73,376 and, as certified by the corporate secretary, 83.33% of the voting rights in good standing were present in the said meeting, inclusive of the 58,504 voting rights of Moldex.13
1. Atty. Jeffrey Jaminola -Chairman of the
Board and President 2. Ms. Joji Milanes -Vice-President 3. Ms. Clothilda Ann Roman -Treasurer 4. Mr. Edgardo Macalintal -Corporate Secretary 5. Atty. Ma. Rosario Bernardo -Asst. Corporate
Secretary 6. Atty. Mary Rose Pascual -Asst. Corporate
Secretary 7. Atty. Jasmin Cuizon -Asst. Corporate
Secretary10
In sum, the primordial issues to be resolved are: 1) whether the July 21, 2012 membership meeting was valid; 2) whether Moldex can be deemed a member of Condocor; and 3) whether a non-unit owner can be elected as a member of the Board of Directors of Condocor.ISSUES
- THE LOWER COURT GRAVELY ERRED IN RULING THAT IN DETERMINING THE PRESENCE OR ABSENCE OF QUORUM AT GENERAL OR ANNUAL MEMBERSHIP MEETINGS OF RESPONDENT CONDOCOR, EVEN NON UNIT BUYERS SHOULD BE INCLUDED DESPITE THE EXPRESS PROVISION OF ITS BY-LAWS, THE LAW AND SETTLED JURISPRUDENCE;
- THE LOWER COURT ERRED IN RULING THAT RESPONDENT MOLDEX IS A MEMBER OF RESPONDENT CONDOCOR AND THAT IT MAY APPOINT INDIVIDUAL RESPONDENTS TO REPRESENT IT THEREIN;
- EVEN ASSUMING THAT RESPONDENT MOLDEX MAY BE A MEMBER OF RESPONDENT CONDOCOR, THERE IS STILL NO BASIS FOR IT TO BE ELECTED TO THE BOARD OF DIRECTORS OF RESPONDENT CONDOCOR BECAUSE IT IS A JURIDICAL PERSON;
- ASSUMING FURTHER THAT DESPITE BEING A JURIDICAL PERSON, IT MAY BE ELECTED TO THE BOARD OF DIRECTORS OF RESPONDENT CONDOCOR, THERE IS NO LEGAL BASIS FOR THE LOWER COURT TO HOLD THAT RESPONDENT MOLDEX HAS AUTOMATICALLY RESERVED FOUR SEATS THEREIN; AND
- THE LOWER COURT GRAVELY ERRED IN RULING TO RECOGNIZE RESPONDENT MOLDEX AS OWNER DEVELOPER HAVING FOUR RESERVED SEATS IN RESPONDENT CONDOCOR BOARD, AS SUCH RULING EFFECTIVELY ALLOWED THE VERY EVIL THAT PD 957 SOUGHT TO PREVENT FROM DOMINATING THE CONTROL AND MANAGEMENT OF RESPONDENT CONDOCOR TO THE GRAVE AND IRREPARABLE DAMAGE AND INJURY OF PETITIONER AND THE OTHER UNIT BUYERS, WHO ARE THE BONA FIDE MEMBERS OF RESPONDENT CONDOCOR.
A petition for review on certiorari under Rule 45 is an appeal from a ruling of a lower tribunal on pure questions of law. It is only in exceptional circumstances that we admit and review questions of fact.Respondents argued that the initial denial of the petition was correct because Lim availed of the wrong mode of appeal. As the assailed judgment involved an intra-corporate dispute cognizable by the RTC, the appeal should have been filed before the CA, and not before this Court.
A question of law arises when there is doubt as to what the law is on a certain state of facts, while there is a question of fact when the doubt arises as to the truth or falsity of the alleged facts. For a question to be one of law, the question must not involve an examination of the probative value of the evidence presented by the litigants or any of them. The resolution of the issue must rest solely on what the law provides on the given set of circumstances. Once it is clear that the issue invites a review of the evidence presented, the question posed is one of fact.
Thus, the test of whether a question is one of law or of fact is not the appellation given to such question by the party raising the same; rather, it is whether the appellate court can determine the issue raised without reviewing or evaluating the evidence, in which case, it is a question of law; otherwise it is a question of fact.16 [Emphasis supplied]
Pursuant to A.M. No. 04-9-07-SC, all decisions and final orders in cases falling under the Interim Rules of Corporate Rehabilitation and the Interim Rules of Procedure Governing Intra-Corporate Controversies shall be appealable to the CA through a petition for review under Rule 43 of the Rules of Court. Such petition shall be taken within fifteen (15) days from notice of the decision or final order of the RTC. 18
a) Devices or schemes employed by or any acts, of the board of directors, business associates, its officers or partnership, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the stockholder, partners, members of associations or organizations registered with the Commission; b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members, or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and between such corporation, partnership or association and the state insofar as it concerns their individual franchise or right to exist as such entity; and c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations. [Emphasis supplied]
Membership in the CORPORATION is a mere appurtenance of the ownership of any unit in the CONDOMINIUM and may not therefore be sold, transferred or otherwise encumbered separately from the said unit. Any member who sells or transfer his/her/its unit/s in the CONDOMINIUM shall automatically cease to be a member of the CORPORATION, the membership being automatically assumed by the buyer or transferee upon registration of the sale or transfer and ownership of the latter over the unit with the Register of Deeds for the City of Manila.20 [Emphasis supplied.]Likewise, the Master Deed of Condocor provides:
Section 11 : MORTGAGES, LIENS, LEASES, TRANSFERS OF RIGHTS AND SALE OF UNITS : All transactions involving the transfer of the ownership or occupancy of any UNIT, such as sale, transfer of rights or leases, as well as encumbrances involving said UNIT, such as mortgages, liens and the like, shall be reported to the CORPORATION within five (5) days after the effectivity of said transactions.21Nothing in the records showed that the alleged transfer made by Lim was registered with the Register of Deeds of the City of Manila or was reported to the corporation. Logically, until and unless the registration is effected, Lim remains to be the registered owner of the condominium unit and thus, continues to be a member of Condocor.
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.
- The meeting must be held on the date fixed in the By Laws or in accordance with law;26
- Prior written notice of such meeting must be sent to all stockholders/members of record;27
- It must be called by the proper party;28
- It must be held at the proper place;29 and
- Quorum and voting requirements must be met.30
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.31
Membership in a condominium corporation, regardless of whether it is a stock or non-stock corporation, shall not be transferable separately from the condominium unit of which it is an appurtenance. When a member or stockholder ceases to own a unit in the project in which the condominium corporation owns or holds the common areas, he shall automatically cease to be a member or stockholder of the condominium corporation.35 [Emphasis supplied]Although the Condominium Act provides for the minimum requirement for membership in a condominium corporation, a corporation's articles of incorporation or by-laws may provide for other terms of membership, so long as they are not inconsistent with the provisions of the law, the enabling or master deed, or the declaration of restrictions of the condominium project.
Section 30. Organization of Homeowners Association. The owner or developer of a subdivision project or condominium project shall initiate the organization of a homeowners association among the buyers and residents of the projects for the purpose of promoting and protecting their mutual interest and assist in their community development. [Emphasis in the original.]Furthermore, in distinguishing between a unit buyer and an owner developer of a project, Lim cited Section 25 of P.D. No. 957, which provides:
Section 25. Issuance of Title. The owner or developer shall deliver the title of the lot or unit to the buyer upon full payment of the lot or unit. xxxLikewise, Lim relied on Sunset View Condominium Corp. v. Hon. Campos, Jr.,38 where the Court wrote:
The share of stock appurtenant to the unit will be transferred accordingly to the purchaser of the unit only upon full payment of the purchase price at which time he will also become the owner of the unit. Consequently, even under the contract, it is only the owner of a unit who is a shareholder of the Condominium Corporation. Inasmuch as owners is conveyed only upon full payment of the purchase price, it necessarily follows that a purchaser of a unit who has not paid the full purchase price thereof is not the owner of the unit and consequently is not a shareholder of the Condominium Corporation. [Emphasis in the original]On these grounds, Lim asserted that only unit buyers are entitled to become members of Condocor.39
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. [Emphasis supplied]In Sunset View,43 the Court elucidated on what constitutes "separate interest," in relation to membership, as mentioned in the Condominium Act, to wit:
By necessary implication, the "separate interest" in a condominium, which entitles the holder to become automatically a shareholder in the condominium corporation, as provided in Section 2 of the Condominium Act, can be no other than ownership of a unit. This is so because nobody can be a shareholder unless he is the owner of a unit and when he ceases to be the owner, he also ceases automatically to be a shareholder.44 [Emphasis supplied.]Thus, law and jurisprudence dictate that ownership of a unit entitles one to become a member of a condominium corporation. The Condominium Act does not provide a specific mode of acquiring ownership. Thus, whether one becomes an owner of a condominium unit by virtue of sale or donation is of no moment.
Section 58. Proxies. - Stockholders and members may vote in person or by proxy in all meetings of stockholders or members. Proxies shall in writing, signed by the stockholder or member and filed before the scheduled meeting with the corporate secretary. Unless otherwise provided in the proxy, it shall be valid only for the meeting for which it is intended. No proxy shall be valid and effective for a period longer than five (5) years at any one time. [Emphasis supplied]Relative to the above provision is Section 1, Article II of Condocor's By-Laws,46 which grants registered owners the right to designate any person or entity to represent them in Condocor, subject to the submission of a written notification to the Secretary of such designation. Further, the owner's representative is entitled to enjoy and avail himself of all the rights and privileges, and perform all the duties and responsibilities of a member of the corporation. The law and Condocor's By-Laws evidently allow proxies in members' meeting.
Section 23. The Board of Directors or Trustees. - Unless otherwise provided in this Code, the corporate powers of all corporations formed under this Code shall be exercised, all business conducted and all property of such corporations controlled and held by the board of directors or trustees to be elected from among the holders of stocks, or where there is no stock, from among the members of the corporation, who shall hold office for one (1) year until their successors are elected and qualified.This rule was reiterated in Section 92 of the Corporation Code, which
Every director must own at least one (1) share of the capital stock of the corporation of which he is a director, which share shall stand in his name on the books of the corporation. Any director who ceases to be the owner of at least one (1) share of the capital stock of the corporation of which he is a director shall thereby cease to be a director. Trustees of non-stock corporations must be members thereof. A majority of the directors or trustees of all corporations organized under this Code must be residents of the Philippines. [Emphasis supplied]
Section 92. Election and term of trustees.- x x x No person shall be elected as trustee unless he is a member of the corporation. x x xWhile 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 proxy.
Costs against respondents.
a) The July 21, 2012 Annual General Membership Meeting of Condocor is null and void; b) The election of members of the Board of Directors in the annual general membership meeting is likewise null and void; and c) The succeeding Organizational Meeting of Condocor's Board of Directors as well as the election of its corporate officers are of no force and effect.
Endnotes:
• Per Special Order No. 2416-B dated January 4, 2017.
1 Penned by Judge Lyliha L. Abella-Aquino, rollo, pp. 32-35.
2 Id. at 32.
3 Id. at 84.
4 Id.
5 Id. at 112-156.
6 Id. at 283-299.
7 Id. at 7.
8 Id. at 55-58.
9 Id. at 119.
10Id.
11 Id. at 35.
12 Id. at 33.
13 Id. at 34.
14 Id. at 84.
15 711 Phil. 576 (2013).
16 Id. at 585-586.
17 The Securities Regulation Code.
18 A.M. No. 04-9-07-SC, Mode of Appeal in Cases Formerly Cognizable by the Securities and Exchange Commission, September 14, 2004.
19 Rollo, p. 274.
20 Id. at 225.
21 Id. at 176.
22 Id. at 43.
23 350 Phil. 237 (1998).
24 Id. at 244.
25 Ladia, Ruben C., The Corporation Code of the Philippines (Annotated), Revised Edition (2007), p. 316.
26 Section 50, Corporation Code.
27 Sections 50 and 51, Corporation Code.
28 Sections 50 and 54, Corporation Code.
29 Section 51, Corporation Code.
30 Section 52, Corporation Code.
31Tan v. Sycip, 530 Phil. 609, 623 (2006).
32 Section 89, Corporation Code of the Philippines.
33 Section 7: Voting Rights Every member shall be entitled to one (1) vote for every square meter and any fraction thereof in excess of one-half (V2) square meter of the unit that he/she/it owns; provided, however that only members in good standing shall be entitled to exercise their right to vote. A member in good standing is one who does not have any outstanding obligation to the CORPORATION and who is not currently subject to sanctions or penalties by the CORPORATION.
34 Sec. 2, RA 4726; Medical Plaza Makati Condominium Corporation v. Cullen, 720 Phil. 732, 749 (2013).
35 Sec. I 0, The Condominium Act (RA 4726).
36Rollo, p. 292.
37 Id. at 293.
38 191 Phil. 606,614 (1981).
39Rollo, p. 292.
40Rollo, p. 137.
41 Id. at 134.
42 Id. at 140.
43 191 Phil. 606,615 (1981).
44 Id. at 615.
45Spouses Lim v. Court of Appeals, 702 Phil. 634, 641 (2013).
46Rollo, pp. 224-232.
47 Secretary's Certificate, id. at 253-254.
48 Id. at 235-237.
49 696 Phil. 276, 316 (2012).