Isabelita R. Sevilla vs. Central Market Savings & Loan Association, Inc.

[SEC-SICD * CASE NO. 06-99-6316. February 4, 2000.] D E C I S I O N This is. a petition for the nullification of the elections of board of directors of Central Market Savings and Loan Association, Inc. conducted on March 13, 1999 due to an alleged failure to muster the quorum requirements of its By-Laws. HDaACI Based on the pleadings filed and admissions made, the parties submitted that the hearing panel resolve the Instant case pursuant to Rule 34, Section 1 of the New Rules of Civil Procedure and Section 7, Rule XIV of the New Rules of the Securities and Exchange Commission which provides and we quote: "SECTION 7. Judgment; Hearing, When Ordered . Should the Hearing Officer find upon consideration of the pleadings, the affidavits; and other evidences, and position statements submitted by the parties that a judgment may be rendered thereon without need of a formal hearing, he may proceed to render judgment." xxx xxx xxx Hence, this Judgment on the pleadings. Petitioners alleged that she has been a bona fide member of the defendant association since 1975; that she filed her candidacy for directorship in the questioned elections; that of the two thousand two hundred ten (2210) total membership of the Association, only two hundred thirty five (235) attended and actually cast their votes during the said elections; that the Election Committee created for the purpose of the elections in issue submitted its report on the final results of the questioned elections, proclaiming as winners two (2) new directors in the persons of Roberto Tan and Cesar Isleta. Respondents in their answer averred that all members of the Central Market Savings and Loan Association, Inc.,were notified of the Annual General Assembly Meeting held last March 13, 1999; that the attendance record shows that there were only Two Hundred Thirty Five (235) members (including proxies who were in attendance; that this fact was announced in the assembly before proceeding with the elections; that all the candidates, except one, were present but not one of them stood up to prevent or stop the holding of an elections for any reason particularly for lack of quorum. Based on the pleadings submitted by the parties and the allegations stated therein, the sole issue to be determined by this office is Whether or not the March 13, 1999 elections, of Board of Directors of the Central Market Savings and Loan Association, Inc.,is null and void for lack of quorum. Thus, the ancillary questions that should be resolved are: 1. What is the quorum requirement of the association's By-Laws? 2. Was this-quorum requirement complied with during the March 13, 1999 elections of officers? To answer the first question, it is imperative to cite the pertinent provisions of Article IV of the By-Laws of CMSLAI, to wit: Member's Meeting xxx xxx xxx 9. At all meetings of the Association, every member shall be entitled to one vote for every P1,000.00 or less of his total deposit (capital contribution, savings deposit, and time deposit),except where the law prescribes that particular corporate decisions shall be basis of one vote per member. Provided, that each member shall be entitled to at least one vote. The presence at any meeting of the Association, either in person or by proxy, of the owners of the majority of the total number of votes as computed in this section, shall constitute a quorum and the majority of such quorum shall decide any question that may come before the meeting ,except in those matters where the law required the affirmative vote of a greater proportion. (Emphasis for emphasis). 10. Members may vote at all meetings by proxy duly given in writing and duly presented to the Secretary for inspection and record at or prior to the opening of a meeting. 11. Election of directors shall be held at the annual meeting of the members, which shall be conducted in the manner provided in the Corporation Law. The formalities, procedures, and machinery for election shall be determined by the officer presiding at the meeting; provided, however, that voting must be by secret ballots. Notice of election of directors by newspaper shall be dispensed with. xxx xxx xxx Based on the By-Laws of CMLSAI, the presence at any meeting of the Association, either in person or by proxy, of the owners of the majority of the total number of votes as computed shall constitute a quorum. aHDTAI Hence, on the basis of the available documents and admissions of parties 1 at least one thousand one Hundred Six (1106 or 2210/2 + 1) of the total 2210 members shall be present in person or by proxy to constitute a quorum and to validly proceed with the elections. Resolving the final issue, respondents having admitted that only 235 members (including proxies) are present and actually cast their votes, 2 this fell short of the minimum 1106 members required to constitute a quorum, those present representing only a mere 10.633% of the total membership of the association. The elections conducted absent any quorum is not reflective of the true predeliction and preference of the members. This will undermine the powers of the general assembly and will run counter to the intentions of the law in requiring quorum during meetings. WHEREFORE, for lack of quorum and being violative of the association's By-Laws and the Corporation Code of the Philippines, the March 13, 1999 elections of the Board of Directors of CMSLAI is hereby declared NULL AND VOID. An Order is hereby issued directing the conduct of a special meeting for the purpose of electing a new board of directors of the aforementioned association in accordance with its By-Laws, within thirty (30) days from receipt hereof. SO ORDERED. (SGD.) ROSALINA T. VIDAD-TESORIO (SGD.) JUNAME C. DE LEON MIGUEL Hearing Officer Hearing Officer Footnotes 1. Transcript of Stenographic Notes of October 26, 1999, pp. 18-19 2. Ibid.