Atty. Augusto B. Sunico

April 16, 1991 Atty. Augusto B. Sunico 125 Pioneer St. Mandaluyong, Metro Manila Dear Atty. Sunico : This refers to your query of March 25, 1991 regarding membership of the Board of Directors of a condominium corporation. As stated, "A" Corporation is a duly registered office condominium organized for the purpose of holding title to and managing the common areas, all units of which are separately owned by different corporations .Your queries are: Considering that all owners are corporate entities, are their respective representatives legally qualified to become members of the Board? In the event that they are not, who shall be deemed qualified to become members of the Board? The Commission, on several occasions, previously opined that a corporate unit owner/member of a condominium corporation cannot designate a representative or nominee to the board of directors on the basis of the following authorities. The pertinent provisions of the Corporation Code provide: "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 stock, 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. .... 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 ....." (Emphasis supplied) From the foregoing, it is required that whoever occupies the position of director or trustee in a non-stock corporation must be a member thereof. As to who are the members of a condominium corporation, Section 2 of RA 4726, otherwise known as the Condominium Act provides: "A condominium is an interest in real property consisting of a separate interest in a residential, industrial or commercial building and 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 interest 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) Section 10 of RA 4726 further provides: "... 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. ...." Thus, while we allow nominees or transferees of qualifying shares to be elected as members of the Board in ordinary corporations ,the Commission in the case of condominium corporations , previously ruled that corporate unit owners cannot designate a representative or nominee to the Board of Directors since under the aforecited provision of the Condominium Law, membership in a condominium corporation is not transferable separately from the condominium unit . (SEC opinions dated December 12, 1988, June 2, 1986 and July 16, 1985). However, we noted that if we apply the foregoing ruling in cases where all the condominium unit owners are corporations or juridical persons ,it would be impossible to elect members of the Board since nobody would be qualified to be elected. In this connection, it is worth mentioning that beneficial ownership is not necessary for one to become a director, and that a person who holds the legal title to a stock on the books of the corporation is qualified, although the beneficial ownership thereof may be in another. (2 Fletcher, Cyc. of Corps. 1982 rev. vol. sec 300 at 93, citing Transamerica Corp. v. Parrington, 115 Cal. App. 2d 346, 252 P 2d 385, 12 USC 72) Hence, a trustee may be eligible as director notwithstanding absence of beneficial right, title, or interest in the stock. It is therefore logical and practical to apply the foregoing principle in the case of condominium corporations. While a corporation cannot act by itself being a juridical person, it can act through its officers and authorized agent. Accordingly, an officer or duly authorized agent or trustee who has been designated in the Board Resolution of the corporate unit owner or member as its representative for the express purpose of qualifying him as director and whose appointment as such has been recorded in the corporate books, may be eligible to be elected as director. To rule otherwise would create a situation where there would be no Board of Directors of the Corporation. This ruling supersedes the above-mentioned previous opinion of the Commission on the matter. cdll Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman