Rolando B. Liongson, et al. vs. Eduardo M. Anama, et al.

[SEC-SICD * CASE NO. 03-94-4717. November 7, 1994.] ROLANDO B. LIONGSON, ET AL. , complainants , vs .EDUARDO M. ANAMA, ET AL. , respondents . D E C I S I O N This is a complaint for the creation and appointment of a management committee, prevention of respondents Edgar A. Malay and Eduardo Anama from representing themselves to be the Chairman of the Board and President, respectively, of the corporation and to declare respondents disqualified from holding any position as an officer of the corporation. ESDHCa The parties, considering that there is no disputed fact in this case forego the formal presentation of their evidence and instead opted to present their respective position papers. The facts of this case are the following: Parties herein are stockholders of Magnetic Services Corporation owning 1,000 shares of stock each. On December 24, 1993, complainant Rolando Liongson, the then incumbent President of the aforesaid corporation, called up the annual meeting of stockholders for the purpose of electing the directors in accordance with the company's by-laws. Since the by-laws of the corporation provides for ten (10) members of the board of directors, the parties herein composing the ten (10) members and are the only stockholders of the corporation were elected as members of the board of directors. Immediately thereafter, the election of corporate officers followed and the result of which is as follows: Position Nominees Votes Obtained Chairman Edgar Malay 5 Rolando Liongson 4 Federico Jose 1 President Eduardo Anama 5 Rolando Liongson 4 Eduardo Jose 1 Secretary Teofilo Macaranas 6 Treasurer Ceferino Maglalay 7 Later on December 29, 1993, complainant Rolando Liongson sent a formal letter-notice to all the members of the board claiming that there was a failure of election since the elected Chairman and President did not garner the required number of votes to be declared as the winners of the said election. In the same letter-notice, complainant Liongson called for the holding of a special meeting of stockholders and members of the board of directors to decide on the issue of when to hold new elections for the officers of the corporation. On January 3, 1994, the respondents met and held a meeting among themselves and passed several resolutions among which is the cancellation of the meeting called by complainant Liongson which was scheduled for January 23, 1994. They countermanded the meeting called by complainant Liongson and set another meeting which was held on January 7, 1994. During their said meeting, respondents passed several resolutions and one of them is a declaration that there was indeed a failure of the election of officers held on December 24, 1993 and deemed all the results thereof as null and void. In the meeting set for January 23, 1994 called by complainant Liongson, not one of the respondents appeared, thus, the said meeting was adjourned with no agenda having been taken up since there was no quorum. On January 27, 1994, through the intervention of the representatives of the Manila Electric Company, a meeting was held between the complainants and the respondents wherein the matter taken up was the designation of an officer in charge to handle the day to day operations and management of the corporation. In the same meeting, the parties agreed to the designation of Manuel S. Mendoza as Officer-in-Charge and that neither the complainants nor the respondents shall participate in the management of the corporation. Up to this date, the corporation remains to be under the management of the designated Officer-in-Charge. After a perusal of the herein parties respective pleadings, this Hearing Officer finds that the sole issue to be resolved in this case is whether or not there was a valid election of the Chairman of the Board and President of the Corporation Magnetic Services Corporation during the meeting of its board of directors held on December 24, 1993 for the election of the company's corporate officers. Section 25 of the Corporation Code provides: SECTION 25. Corporate Officers, quorum : Immediately after their election, the directors of a corporation must formally organize by the election of a president, who shall be a director, a treasurer who may or may not be a director, a secretary who shall be a resident and citizen of the Philippines, and such other officers as may be provided for in the by-laws. Any two or more positions may be held concurrently by the same person, except that no one shall act as president and secretary or as president and treasurer at the same time. The director or treasurer and officers to be elected shall perform the duties enjoined on them by law and the by-laws of the corporation. Unless the articles of incorporation or the by-laws provide for a greater majority, a majority of the members of directors or trustees as fixed in the articles of incorporation shall constitute a quorum for the transaction of corporate business, and every decision of at least a majority of the directors or trustees present at a meeting at which there is a quorum shall be valid as a corporate act, except for the election of officers which shall require the vote of a majority of all the members of the board . Directors or trustees cannot attend or vote by proxy at board meetings." (Emphasis supplied for emphasis) The phrase "except for the election of officers which shall require the vote of a majority of all the members of the board" in the second paragraph of the aforequoted provision is quite clear that is: for the election of officers, the vote of a majority of all the members of the board is required. The aforesaid provision being clear, in accordance with the established doctrine, what it needs is application and not interpretation. Considering that, as admitted by the herein parties, the candidates who got the highest number of votes for the Chairman of the Board and President of the corporation got only five (5) votes each out of the total ten (10) votes during the election of officers of the corporation held on December 24, 1993, and is therefore not in accordance with the aforequoted provision of law, it is very clear that indeed there was then a failure of election insofar as the positions of the Chairman of the Board and President of the corporation are concerned. WHEREFORE, premises considered, judgment is hereby rendered declaring that there was a failure of election for the positions of the Chairman of the Board and President of the corporation Magnetic Services Corporation during the election of corporate officers of the said corporation held on December 24, 1993. Accordingly, the herein parties are hereby directed to hold a Board of Directors' meeting of Magnetic Services Corporation, immediately upon the receipt hereof, and elect from among themselves the Chairman of the Board and President of the corporation who shall hold office as such until the next annual stockholders' meeting of the corporation and submit within fifteen (15) days thereafter to this Office the result of the said election. prcd SO ORDERED. NO COSTS. (SGD.) ROGELIO C. SESCON Hearing Officer