Eladio S. Pasamba vs. Roberto M. Oca, Jr., et al.

[SEC-SICD * CASE NO. 3757. January 4, 1991.] ELADIO S. PASAMBA , petitioner , vs .ROBERTO M. OCA, JR.,ET AL. , respondents . D E C I S I O N Submitted for resolution of this Hearing Officer is a petition filed by Eladio S. Pasamba praying for the annulment of the March 31, 1990 election of respondents as members of the Board of Directors of the United Nations (Avenue) Walkers Club, Inc. on the ground that the said election was conducted in the absence of a quorum and that the meeting for the said purpose was held in disregard of the pertinent provisions of its Constitution and By-Laws. In their answer, respondents claim that their contested election had been validly held and conducted in accordance with law and their By-Laws, and that, on the contrary, it was the purported election of petitioner which was held in a manner contrary to the provisions of their by-laws as well as the pertinent laws on the matter and that as such said election is void ab initio and consequently, their (respondents') election of March 31, 1990 should be held and declared as the valid one. To simplify, the parties agreed that the only issue to be resolved in this case is whether or not the election of March 31, 1990 is valid, and conversely, whether or not the March 17, 1990 election is valid. For reasons herein below discussed, petitioners' case must lean heavily on the validity or invalidity of the association's March 17, 1990 election. We rule in favor of petitioner. As culled from the parties' stipulations of facts as well as the evidence on record, it appears that the general membership meeting originally scheduled and actually held on March 3, 1990 did not proceed due to the tense atmosphere then pervading. Consequently, the said meeting was postponed upon motion made and concurred in by a majority of the members then present, but without fixing any date for the election. Invoking the provision of Article IX, Section 2 of their Constitution and By-Laws, petitioner and nineteen (19) other members on March 14, 1990 requested the holding of and subsequently held a special meeting of the members of the club on March 17, 1990 for the purpose of receiving the annual report of the President and the Treasurer and electing the incoming members of its Board of Directors. This election has remained uncontested until after the filing of the instant petition. Copies of the minutes of the contested election of March 17, 1990 have been duly filed with this Commission as early as March 21, 1990. The evidence presented by respondents' counsel and the written and oral arguments ably delivered by respondent Roque A. Tamayo, while persuasive as they may be, cannot, however, overcome the presumption that the meeting of March 17, 1990 has been regularly called in view of the fact that the results of the said election have already become uncontestable as early as April 1, 1990 as any action for the purpose must be filed within the reglementary period of fifteen (15) days from the date it was conducted. Further, their claim that the March 17 election was defectively held and, therefore, void ab initio does not entitle them to call and to hold a subsequent election without the first election having been previously declared as such in an appropriate proceedings before this Commission. Respondents cannot, by themselves alone, declare an election as null and void. "Where each of two rival faction assumes to organize the meeting, and rival chairmen are elected, the first regular and formal proceeding for organization will be recognized by the courts as valid." (Fletcher, Cyclopedia of the Law of Private Corporations, 1987 Rev. Vol.,Vol. 5 p. 137).'The redress of any person aggrieved by such organization is to be sought through the courts, and not by disorder in attempting to carry on two elections at once, and those who participate in such a course, refusing to participate in the regular election, cannot have it set-aside on the ground that it was made by a minority." (id.) The resolution invoked by respondents postponing indefinitely the meeting for the purpose of holding the election is not only in disregard of the law (Sec. 24, The Corporation Code) but is likewise unconscionable and oppressive as to amount to a wanton destruction of rights of the individual members. "Board may not perpetuate themselves in office by postponing the shareholders' meeting." [Ibid.,p. 13, citing Silverman v. Gilbert, 185 So 2d. 373 (La App.)] Since, as already stated, the election of March 17, 1990 having been contested beyond the time prescribed by the Rules, said defense cannot prosper as the defect becomes jurisdictional, "If a statutory remedy provides as condition precedent that the action to enforce it must be commenced within a prescribed time, such requirement is jurisdictional and failure to comply therewith may be raised in a motion to dismiss." (Callahan vs. Cheasepeake and Ohio R. Co.,40 F. Supply 323, cited in Francisco, the Revised Rules of Court in the Philippines, Vol. I, 2d. Ed. p. 936) (Emphasis supplied) Consequently, even assuming in gratia argumendi, that the March 17, 1990 election suffers certain defects consisting of non-compliance with certain provisions of the law and the association's Constitution and By-laws, such irregularities or defects have been cured and considered waived by respondents' failure to take action thereon within the period prescribed. "Irregularities in calling a meeting or a failure to comply with the provisions of the charter or by-laws on the subject may be waived by the stockholders." (William Firth Co. v. South Carolina Loan & Trust Co.,122 Fed. 569, aff'g. 1188 Fed. 892; Hill v. Atlantic & N.C.R. Co.,143 N.C. 539, 55 S. E. 854, 9 L.R.A. (N.S.) 606, cited in Fletcher Cyclopedia Corporations, Perm. Ed. Vol. 5, p. 15) "Unreasonable delay in objecting will be equivalent to ratification, and ground for the court's refusal to interfere and set aside the action taken in the meeting." (Weinburgh v. Union St. Ry. Advertising Co.,N.J. Eq. 640, 37 Atl. 1026; Hill v. Atlantic & N.C.R. Co.,143 N.C. Southern Countries Deposit Bank v. Rider, 73 L.T. (N.S.) 374 cited in Fletcher, ibid. p. 16). In view of all the foregoing, the validity of the election of March 17, 1990 must, therefore, be upheld. prLL WHEREFORE, premises considered, judgment is hereby rendered declaring the election of the members of the Board of Directors of the United Nations (Avenue) Walkers Club, Inc. during the special meeting called on March 31, 1990 as null and void. SO ORDERED. (SGD.) DEOGENES N. AGELLON Hearing Officer