Atty. Renato L. Liboro

June 2, 1986 Atty. Renato L. Liboro 314-315 Rufino Building Ayala Avenue, Makati Metro Manila Sir : This has reference to your letter dated May 9, 1986, requesting for the opinion of this Commission on the queries posed therein. It appears that the Avalon Condominium Corporation is a non-stock and non-profit corporation. The Condominium is purely residential. It is composed of individual as well as corporate unit owners who are members of the corporation. prcd The following are your queries: 1. May the representative so designated by corporate unit-owner and member of the corporation be a candidate for and be eligible to be elected as a member of the Board of Directors of a condominium corporation? 2. Must a member be first declared a "delinquent" by the Board of Directors to disqualify him/her from being a candidate for Board membership or does this status automatically apply upon non-payment of dues, etc. Anent your first query, the pertinent provisions of the Corporation Code are the following: "SECTION 23. . . . 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 and until their successors are elected and qualified. .... Trustees of non-stock corporations must be members thereof ...." (Emphasis supplied). SECTION 92. ...No person shall be elected as trustee unless he is a member of the corporation. ..." From the foregoing it is clear that only a member of the corporation can be elected to sit in the board. As to who are the members of a condominium corporation, Section 2A of R.A. 4726 * , otherwise known as the Condominium Act provides thus: "A condominium is an interest in real property consisting of a 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 the 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 specifically 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 . cdll xxx xxx xxx (Emphasis supplied) Likewise, Section 10 of R.A. 4726 provides in part thus: "...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. ...". Hence; in line with R.A. 4726, your amended by-laws pertinently provides: cdlex "Article II. Section 2.1. Members . All unit owners in the project shall automatically become members of the corporation." Considering the foregoing, and applying a previous opinion of this Commission, a corporate unit owner and member of the corporation cannot designate a representative to the board of directors. ( Letter to Atty. Antonio Pastoleros * ,dated July 16, 1985 ). Furthermore, it is advised that a corporation, being a juridical person, is not qualified to occupy the position of a director. Although the Corporation Code does not contain an express provision to the effect that only natural persons can be elected as directors, yet, jurisprudence in corporation law acknowledges the discrimination. A corporation cannot act by itself but only through its officers and agents, being a juridical person. Such being the case, a corporation cannot attend personally board meetings of the corporation wherein it was elected a director, but only through a representative. Under these circumstances, therefore, whoever represents a corporation as a director is doing so in his capacity as "proxy" of the director. This is not allowed in this jurisdiction, considering the well-established principle in corporation law that a "director may not be represented by a proxy at a meeting of the board." ( Letter to Mr. Dante Sarrage, dated June 26, 1969 ,citing C.J.S.,Vol. 19 p. 96, Dowdle v. Central Bank Co.,189 N.E. 145). Your first query is, therefore, answered in the negative. Regarding your second query, the following precedents are appropriate: "The charter or by-laws may, however, provide for an ipso facto forfeiture of membership or suspension of a member, and when such is the case, notice to him is not necessary unless specially provided for." (emphasis supplied) "Thus, the by-laws of fraternal benefit association, providing for the payment of assessments made during the month on a certain day and for suspension, without notice ,of the members in default, are self-executing and a reasonable and necessary penalty for the enforcement of the payment of assessments to a fraternal insurance fund." (emphasis supplied) Fletcher Cyclopedia Corporations, Vol. 12 A, pp. 578-579) Your amended by-laws provide, and we quote: "Article IV. Section 4.1. ...The directors shall be elected annually in the manner provided in these by-laws from among the non-delinquent members of the corporation ..." (emphasis supplied) "Article III. Section 3.7.,2nd par. Any member who is delinquent in the payment of any assessment or the interest due in case of delinquency or the costs of collection and penalties from delinquency ...shall not be qualified to vote in any meeting of the-members of the corporation until such assessment, interest, cost or penalty is paid in full ..." "Article V. Section 5.3. ...Provided that, an officer who becomes delinquent on any of the grounds enumerated in the second paragraph of Sec. 3.7. shall be automatically removed from office ..." Applying the foregoing provisions, it is clear that the status of delinquency of a member automatically applies upon non-payment of dues. It is not necessary that a member should first be declared delinquent by the Board of Directors. Please be advised accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Acting Chairman * Copied verbatim from documents obtained directly from the Securities and Exchange Commission .