Araneta Alumni Association Incorporated vs. Gregorio Araneta University Foundation

[SEC-SICD * CASE NO. 3505. December 22, 1989.] ARANETA ALUMNI ASSOCIATION INCORPORATED , petitioner , vs . GREGORIO ARANETA UNIVERSITY FOUNDATION, ET AL. , respondents . D E C I S I O N This is a petition filed by Araneta Alumni Association, through its president, Mr. Tommy Yu, to compel Gregorio Araneta University Foundation, Inc. to admit its nominee as member of the Board of Trustees. LexLib The thrust of petitioner's cause of action is premised on two express provisions of the respondents' New By-laws, specifically: "SECTION 1, ARTICLE I. Membership . The corporation shall have ten (10) members, 3 of whom shall be designated by the Archbishop of Manila, 3 by Narciso Ramos and 3 by Salvador Araneta. An additional member shall be selected by the Board of Directors of the Alumni Association" and, "SECTION 2, ARTICLE IV. Composition and Term of Office . The Board of Trustees shall consist of ten (10) members, one of whom shall be the president of the foundation, one shall be a nominee of the Araneta Alumni Association, Inc., and the eight (8) others being members of the Corporation who have been nominated by the Visitators and elected by the members. . . ." In support of its petition, petitioner contends that inspite of repeated demands to accommodate its nominee to sit as member of respondents' Board of Trustees and the clear provisions of the aforequoted sections of respondents' new by-laws, respondent corporation refused to accept the nomination of Mr. Jose Mar Manglicmot, Sr. in flagrant violation of petitioner's right of representation in respondents' Board of Trustees. In its answer, respondent denied specifically the allegations of the petition and alleged, in essence, that the nomination by petitioner of its representative does not IPSO FACTO confer upon the nominee the right to be recognized by the Board of Trustees: It is argued that petitioner's nominee must first be elected by the members. Likewise, respondent maintained that the nomination of petitioner's representatives was rejected as there was no vacancy in the Board of Trustees because the term of office of the incumbent representative of the petitioner, Mr. Romeo T. Acosta, has not yet expired. The issue posed for consideration is the validity of the denial by the respondent to accommodate petitioner's nominee to sit as a member of respondents' Board of Trustees. But first, one point should be clarified whether or not petitioner's nominee should also be elected by members of the respondent corporation. From the context of Section 2, Articles IV of the respondents' by-laws, it could be readily seen that there are two categories of membership in the Board of Trustees. The first relates to the President of the Foundation and to the nominee of the petitioner, and the second, referring to the eight (8) other members who are the nominees of the visitators. This Hearing Officer takes particular note of the fact that an additional requirement of election is sought for insofar as the eight other members are concerned but not so in the case of the president of the foundation and the nominee of the alumni association. The by-laws of the respondent itself state so in clear and unambiguous language. cdll It is to be noted, however, that this particular provision in respondents' by-laws is against a clear provision of the corporation law that makes it illegal, null and void. Section 23 of the Corporation Code, including Sections 92 and 108 thereof, is quite explicit in requiring members of the board of directors or trustees to be elected from among the members of the corporation. Notably thereto, is the indispensable requirement of an election as a mandatory process to qualify members of a non-stock corporation to sit as a member of the board of directors or trustees. It is obvious that the provision in question was incorporated in respondents' by-laws due to its desire to give automatic recognition to the alumni nominee to sit as a member of its board of trustees. This, however, is in conflict with the spirit of the above-quoted provisions of the law, and the same cannot be validated to deprived members of a non-stock corporation the right of choosing the members of the board of directors/trustees. The next point to be resolved is respondents' claim that there was no vacancy in the Board of Trustees as the term of office of the incumbent representative of the petitioner has not yet expired. It appears, in this regard, that Mr. Romeo Acosta represented the petitioner corporation, as the then president of the alumni association, since there was no other nominee. He was allegedly elected by the Board of Trustees on November 27, 1985 and his term of office expired on November 27, 1989. Consequently, however, the question has lost any significance for further elaboration since it has become moot and academic. WHEREFORE, Judgment is hereby rendered ordering the herein respondents to consider the nomination of petitioner's representative, but subject to the election by the members of the Gregorio Araneta University Foundation, Inc. (SGD.) ANTONIO M. ESTEVES Hearing Officer