Mr. Mario Allas

April 30, 2003 SEC OPINION NO. 15-03 Mr. Mario Allas c/o RSG Condominium 55 Ermin Garcia St., Bgy. Pinagkaisahan 1111 Cubao, Quezon City S i r : This refers to your letter requesting opinion on matters posed therein. First, whether you remain as member of the Board of Directors of RSG Condominium Corporation despite your resignation as Chairman of the Board. Article IV Section 1 of the By-Laws of RSG Condominium Corporation enumerated the executive officers of the corporation namely the President, a Vice-President, Treasurer and a Secretary all of whom shall be elected or appointed by the Board of Directors . The enumeration being exclusive, officers are limited to those mentioned in the By-laws of the corporation ( SEC AO '84 p. 29 ACCRA Law Offices; Feb. 20, '84) It is crystal clear that the position of the Chairman, to which you were merely designated , is not one of the positions provided in the By-laws. Thus, when you "resigned" as Chairman of the Board, you did not vacate the position of the Chairman as there is no such position or office to vacate. Consequently, you continue to be a member of the Board, by reason of your election thereto. Your second query is whether the decision of the officers elected sometime in July 1999 (where the election was conducted without any board resolution) is valid and binding on your members despite a clear provision in your By-laws that the annual meeting of members and election of directors shall be on the "first Thursday of March of each year at 5:30 o'clock p.m., unless otherwise set by the Board of Directors for valid reasons." The Commission, in several instances, consistently rules 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. ( Corporation Code Annotated by Hector De Leon, p. 413 ). The rule, however, admits of exceptions. In your given situation, the election should have been made on the first Thursday of March of 1999. 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 stockholders 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 ( Corporation Code Annotated by Hector de Leon, p. 413 citing SEC Opinion, Feb. 21, 1968 ). Thus, your special election on July 1999 or four months after your mandated annual meeting is valid, provided all the qualifications as provided for in the by-laws are complied with. Likewise, the decisions of the board members elected on matters of management concerning regular and business affairs are presumed valid and binding on the corporation unless tainted with bad faith, fraud or the contrary is proved. The power of the corporate officers to bind the corporation is determined to a large extent by the authority expressly or impliedly entrusted to them and also the application of the general principles governing a principal agent relationship. Just as a natural person may confer to another the performance of certain acts for and in his own behalf, the corporation through its board of directors may similarly delegate some of its functions and duties to its officers, committee or agents. However, contracts or acts of the latter in excess of the authority conferred by the former will not bind the corporation, unless there is estoppel or ratification. ( Rosario N. Lopez, Annotated Corporation Code p. 425 ) cECaHA Relative to your query on whether the decisions of the officers in a hold-over capacity are binding on the members of the corporation, it has been a constant policy of the Commission that in case of failure of a corporation to hold a regular meeting due to valid and justifiable reasons the incumbent members of the Board of Directors may hold-over their office and continue their functions until their successors are duly elected and qualified. ( SEC Advisory Opinion citing Mr. Dominador K. Lopez, Mar 16, 1993 ) As to your question pertaining to the repainting project of common areas of the condominium and whether your corporation has legal recourse before the Commission against your former treasurer who allegedly illegally disbursed funds records. This would entail determination or verification of factual intra-corporate matters which are now under the jurisdiction of the courts of general jurisdiction or the appropriate Regional Trial Court pursuant to Securities Regulation Code (SRC), Chapter II, Section 5, par. 5.2. In view thereof, please be informed that the Commission has adopted the policy to refrain from acting on questions the subject of which is litigious in nature in order not to encroach on the regular court's jurisdiction over intra-corporate disputes or influence the latter in whatever decision it may render in suits that may be brought before it. Very truly yours, (SGD.) VERNETTE G. UMALI-PACO General Counsel