Leopoldo Lejano vs. Antonio Afable, et al.

[SEC-SICD * CASE NO. 2707. September 8, 1985.] LEOPOLDO LEJANO, ET AL. , petitioner , vs .ANTONIO AFABLE, ET AL. , respondents . D E C I S I O N This is an action instituted by the petitioners in their capacity either as incumbent directors or persons claiming to have been duly elected as members of the board of directors of Samahang Mag-aasukal ng Kanluran Batangas, Inc. (SAMAKABA for short). dctai SAMAKABA is a non-stock corporation incorporated in 1962. It is an association of sugar planters in Cavite and Batangas provinces milling their canes at Central Azucarera Don Pedro, at Nasugbu, Batangas. Since its incorporation, it has acted as the sole representative body of the sugar planters of Western Batangas with the aforesaid mill. Said corporation is controlled by seven members of the board of directors who are elected annually by the general membership. On September 8, 1984, the general annual meeting of the members took place, at which seven members of the board of directors of SAMAKABA for the term 1984-1985 were elected. The respondents were among the first seven candidates who garnered the highest number of votes while the petitioners namely: Leopoldo C. Lejano, Modesto V. Rubio and Rafael Lejano occupied the 8th, 9th, 10th slots, respectively. Although the respondents were among those who received the highest number of votes in the said election to seat in the board for the term 1984-85, the petitioners filed this instant case claiming that the respondents are not qualified and eligible to the position as SAMAKABA directors, much less, capacitated to act and perform the duties and functions of the office on the following grounds: FIRST respondents Afable and Lainez, though members, do not possess the vital qualifications to become directors of the association as required by the by-laws; SECOND respondent Oliva, on the other hand was and still is, up to the present, not a member of SAMAKABA, as he did not mill with the Central even for a single time. The contentions of the petitioners are anchored, among others, on the provision of Section 3, By -Law IV SAMAKABA, we quote: "SECTION 3. Qualifications . unless otherwise disqualified, only members who are such for at least three (3) consecutive crop years at the time of election ,may be voted upon and elected as directors of the association. The provision of the immediately proceeding paragraph, notwithstanding, the following are disqualified from being voted upon and elected as directors of the association : a. officials and employees of the Central Azucarera Don Pedro ; b. Incumbent elective public official ; c. Those who have been finally convicted in any court of competent jurisdiction of any offense involving moral turpitude ; d. Uncontracted sugarcane planters w/o Philsucom-issued quota (as amended August 14 & 18, 1982 respectively) The petitioners maintain that respondents' broken and discontinued membership in said association for the last three (3) consecutive crop years before the election of September 8, 1984 disqualified them from being eligible for the position of directors. In answer thereto, the respondents took the position that their predecessors-in-interest are registered and contracted planters of the Central and they have been milling their canes under the name of the estate of which they claim to be heirs and are, therefore, qualified to be elected directors of SAMAKABA. In the course of the hearing, the parties presented testimonial as well as various documentary evidence. They also entered into a stipulation of fact to abbreviate the proceeding. Except for some minor details, the protagonists are in agreement as to factual issues involved in this case. prLL The issues are: 1) Whether respondents Afable and Lainez possessed the sole qualification attached to the position of, at the time they were elected as, directors on September 8, 1984 annual meeting of the Association? 2) Whether respondent Oliva was a member of the said association at the time he was elected director during the aforesaid annual meeting? Stated differently, whether respondents Afable and Lainez milled "for at least three (3) consecutive crop years at the time of election" with the Central Azucarera Don Pedro; and, whether respondent Oliva milled with the same milling company at least once immediately prior to the said annual meeting? It is worthwhile to cite once more some pertinent provisions of the By-Laws of SAMAKABA which are crucial in the proper disposition of the issues at bar. Thus "SECTION 1. Membership . Membership in the SAMAKABA shall automatically vest on all sugar cane planters milling their sugar cane at the Central Azucarera Don Pedro at Nasugbu, Batangas, and no written application shall be required for the same." (Article II, SAMAKABA By-Laws) xxx xxx xxx "SECTION 3. Duration of Membership . Membership shall reckon on an annual basis. Consequently, any member who does not mill at the Central Azucarera Don Pedro at any crop year shall not be deemed a member for the crop year." (Article II, Supra.) xxx xxx xxx "SECTION 3. Qualification . Unless otherwise disqualified, only members who are such for at least three (3) consecutive crop years at the time of election, may be voted upon and elected as directors of the association." (Article IV, Supra.) The primordial requisite to acquire membership in, or the qualification to become a director of the Association is simply the common denominator found in the three by-law provisions just quoted, i.e. the sugar planter, or one who purports to be, must mill his sugar cane with the Central Azucarera Don Pedro. Though sugar planter he may be, one cannot acquire membership or retain such membership without the planter milling his sugar cane with the Central. In the same vein, a sugar planter cannot qualify as a director of the Association without him milling his sugar cane with the same Central for an uninterrupted period of three (3) crop years preceding the election. Thus, the concurrence of the positive acts of the two principal parties the sugar planter and the Central the former, to mill his sugar cane, and the latter, to have such sugar cane milled, is vital to vest membership in the Association or to acquire the required qualification. The absence or omission of one makes the process incomplete. To the first and second issues, therefore, the Commission need not be labor itself in announcing its negative response therein. It is persuaded to believe that insofar as respondents Afable and Lainez are concerned, they did not possess the qualification required to become directors of the Association at the time of their election on September 8, 1984 annual meeting, for not having milled with the Central for three (3) consecutive crop years prior to such election. As regards respondent Oliva, he was not a member at the time of such election for not having milled with the same Central immediately before the September 8, 1984 annual meeting. It need no stressing that non-members are disqualified from becoming a director in a non-stock corporation (Section 92, Corporation Code of the Philippines). The by-laws of the Association not only makes ineligible non-members from becoming directors, it even attached a qualification vis-a-vis three (3) consecutive milling with Central Azucarera Don Pedro preceding the election, which said respondent does not even possess for obvious reason. The unassailable fact is that respondents Afable and Lainez milled, in their own right, with the Central during crop year 1983-84 only; while respondent Oliva milled, also in his own right, in crop year 1981-82 only, (Exhibit "C" to "L",inclusive of sub-markings).Thus, respondents Afable and Lainez are still short of two crop years immediately preceding the crop year 1983-84 to complete the required three (3) consecutive crop years. On the other hand, respondent Oliva became a member of the Association, and only for this period, in crop year 1981-82. Subsequent to this, he ceased to become a member pursuant to Section 3, Article II of the SAMAKABA By-Laws. The Commission is not oblivious of the fact that respondents are successors-in-interest of their respective deceased parent. It is conceding that upon such death and while the properties subject of inheritance which are devoted to sugar cane remain in state of indivision, respondents became members of the Association or even acquired the said qualification, provided they complied with the by-law requirement on the matter, since by operation of law they became co-owners together with their co-heirs of the respective property of the parents. "ARTICLE 1078. Where there are two or more heirs, the whole estate of the decedent is, before its partition, owned in common by such heirs, subject to the payment of debts of the deceased." (Civil Code of the Philippines) This is not, however, always true because the estate of their parents have long been partitioned, therefore, there is no more co-ownership to speak of. Upon the division of the estate more than ten years ago, except that of respondent Lainez where the partition took place in the late 1970, retention of such membership or qualification is already dependent upon respondents' actual and personal, not mere constructive, compliance of the pertinent by-law provisions, to which they have failed in this score as pointed out earlier. It is elementary in civil law that co-ownership subsists only so long as the property subject thereof remains undivided. "ARTICLE 484. There is co-ownership whenever the ownership of an undivided thing or right belongs to different persons." (Civil Code) It cannot be gainsaid that the estate of the deceased parents of the respondents had long been partitioned (Proposed Stipulation). The Commission cannot subscribe completely to the arguments of respondents that being forced heirs they stand to inherit whatever rights their deceased parents may have in the Association. The property of the deceased and their rights to mill with the Central in accordance with the milling contracts or their extensions are admittedly transferable, as in fact they were already transferred to them. Other than this, the Commission already beg to disagree. Firstly, membership in a non-stock corporation and all the rights therefrom are non-transferable as a general rule (Section 90, Corporation Code). Secondly, qualification to become a director is not a property right transmissible by successor. It is a sheer absurdity to argue otherwise. And, thirdly, it would be equally preposterous to halve or divide among the co-heirs and the respondents the membership and qualification of their predecessors. All the years after the death of their parents and the division of the latter's estate, respondents could have milled under their own right but they choose to ignore this. In their belated attempt to correct their deficiency, they are now asserting that due to "sentimental reason" they maintained the sugar quota registered in the name of their deceased parents, which in the mind of the Commission is a clincher to their own downfall in the present proceeding rather than working to their advantage. It goes to show that respondents opted not to set things in the proper perspective insofar as their relationship with the Association, much more their membership or qualification. Instead of milling with the Central under their own right, which they could have done so had they wanted to and which is the right thing to do, as in fact they did in some occasions, they allowed the Estate of their parents to mill as it was thus, unwittingly they created a partnership, albeit impliedly, and permitted the retention of the membership of the Estate in the Association. If it was the convenient thing to do to continue milling under the name of the Estate perforce let the intention takes its course but no inference deviating from such intention shall be allowed. cdll "(a) Whenever a party has, by his own declaration, act, or omission, intentionally and deliberately led another to believe a particular thing true, and to act upon such belief, he cannot, in any litigation arising out of such declaration, act, or omission, be permitted to falsify it;" (Section 3, Rule 131, Rules of Court) Lastly, the reliefs demanded by the petitioners, i.e. to oust respondents from the board of directors of the Association and to install them as the duly elected directors of the same organization have become moot and academic mainly due to expiration of the term of office last August 31, 1985 upon which said petitioners claim to have been elected. The complexity of the facts and issues in this case coupled by the absence of parallel cases in our jurisdiction, the Commission had no alternative but pore over time and again on the records and the evidence deciphering which arguments of the protagonists are legally tenable. WHEREFORE, in the light of the foregoing, judgment is hereby rendered, first ,declaring all the respondents disqualified as directors of the Association for the term 1984-85; and second ,declaring petitioners as the duly elected directors of the same organization for the said term 1984-85. Without cost against the respondents. llcd SO ORDERED. (SGD.) ANTONIO M. ESTEVES Hearing Officer