Emilio C. Igna, et al. vs. Rosendo C. Carticiano, et al.

[SEC-SICD * CASE NO. 5368. April 7, 1998.] EMILIO C. IGNA, ET AL. , petitioners , vs .ROSENDO C. CARTICIANO, ET AL. , respondents . D E C I S I O N This is a petition filed on June 3, 1996 seeking resolution of the issues raised surrounding the April 20, 1996 election of the Board of Directors of URCI-Las Pias Condominium Corporation herein after referred to as URCI. Petitioners herein are members of URCI while the respondents are the incumbent members of the Board of Directors and members of the Committee of Election. At the preliminary hearing on the above-entitled-case held on September 5, 1996, the parties by their respective counsels agreed to submit the case for decision on the basis of the pleadings and position papers, of the following two issues: 1. What constitute a quorum for purposes of election of URCI Board of Directors and 2. When is a member considered delinquent and therefore not qualified to vote. Petitioners alleged, among others, that URCI has 286 members of which 95 members are entitled to vote for purposes of the regular election of URCI Board of Directors scheduled on April 20, 1996; that came election day, a majority of the 95 members entitled to vote were present in person and/or by proxy to cast their votes but were prevented to do so by the respondent- Committee; that it turned out that respondent-directors issued election guidelines fixing the majority of those entitled to vote at 144 when such should be nearly 48 as there were only 95 members entitled to vote; that following the election guidelines issued by the respondent-directors with regards to the presence or absence of majority of members entitled to vote, respondent-committee declared a failure of election. Petitioners further alleged that members with less than 30-day arrears in monthly dues and who were customarily allowed to vote as in the past elections of the URCI Board of Directors including the elections where the respondent-directors were elected, were likewise disenfranchised. Respondents in their answer denied categorically the material allegations in the petition and in their Special and Affirmative defenses respondents alleged that petitioners have no cause of action against the respondents on the ground that there was no quorum present on the day of the, questioned election of directors since majority of the members of the corporation was not present during the meeting called for the purpose. On the first issue, both parties invoked Section 24 of the Corporation Code in support of their respective contentions as to quorum requirement for purposes of election of directors of URCI. "SECTION 24. At all election of directors or trustees, there must be present, either in person or by representative authorized to act by written proxy, the owners of the majority of the outstanding capital stock or if there is no capital stock, a majority of the members entitled to vote." In order to determine the quorum provided for in Section 24 of the Corporation Code, it is imperative to look at the By-laws of the corporation on who are entitled to vote in the election of the Board of Directors. And the pertinent provisions of the By-laws are hereunder cited to wit: "ARTICLE II SECTION 4. Voting Powers . Each member shall be entitled to one vote for every unit owned by him. Any member who is delinquent in the payment of an assessment or interest due in case of delinquency, ...,shall not be qualified to vote in any meeting of the members of the corporation until such assessment, interest cost or penalty is paid in full ...." "ARTICLE III SECTION 1. Composition, Election and Term of Office . the Corporation shall be governed and its affairs managed and controlled by a Board of Directors composed of five (5) members elected by and from among the non-delinquent members of the corporation. ..." Under the above-quoted provisions of the By-laws of the Corporation, it is clear that members of the Board of Directors shall be elected by the non-delinquent members of the corporation. Therefore, a delinquent members are disqualified to vote in the election. Considering that delinquent members cannot exercise their right to vote, then they should not be included in determining the quorum for purposes of election of directors. This Commission has once declared that "delinquent members should not be included in determining the existence of a quorum where the by-laws provide that the right to vote may be exercised only by members of good standing."(SEC Opinion, February 23, 1993, SEC Quarterly Bulletin, June 1993 pp. 44-45) This Hearing Officer cannot subscribe to the argument of the respondent that the by-laws of the URCI Corporation specifically Section 4 paragraph 1 (of Article II) provides that every member of the corporation is entitled to vote, and no further qualification was made. The paragraph referred to does not provide literally that "every member is entitled to vote" but rather "each member shall be entitled to vote for every unit owned" The said paragraph is concerned more in the numerical allocation of votes for the condominium units. With regard to the second issue on delinquency in relation to the exercise of the right to vote, we again look closely at the pertinent provision of URCI By-laws, to wit: "ARTICLE II, SECTION 4. Voting Power . ...Any member who is delinquent in the payment of any assessment or the interest due in case of delinquency, ...,shall not be qualified to vote in any meeting of the members of the corporation until such assessment, interest cost or penalty is paid in full." The term "delinquent" is attached to one who fail to pay some amount when it is due. As the URCI by-laws made no qualification as to who is a delinquent member vis-a-vis payment of monthly dues, we take the provision to mean that a member is delinquent so long as he has outstanding/unpaid monthly dues. And for non-payment of any assessment or interest due thereon, a member shall be disqualified to vote until said assessment, interest cost or penalty is paid in full. Petitioners while agreeing that delinquent members should be disqualified to vote wanted to qualify the word "delinquent" so as not to include those with ,arrears not exceeding thirty days contemplates a situation where members had been prompt in the payment of their dues for most of the year but were unable to pay their dues for the month immediately preceding the elections probably due to inevitable reasons, including economic constraints. We are not unmindful of such a situation, but, the monthly dues for members of a condominium corporation serve as the life-blood of the corporation that non-payment thereof will not only be inimical to the interest of the corporation but will threaten its existence altogether. Besides, said dues are ordinarily of minimal amounts that By-laws provision ensuring prompt payment thereof even to the extent of depriving delinquent members of their right to vote cannot be taken to be unreasonable. WHEREFORE, a decision is hereby rendered declaring that: a) the required quorum for purposes of the election of URCI Board of Directors shall be the majority or 50% + 1 of the non-delinquent members of the corporation qualified to vote; b) the delinquent member disqualified to vote in the election of the URCI Board of Directors is any member who had an account, with the corporation that has remained outstanding and due unless fully paid prior to Accordingly, respondents are hereby directed to immediately call and hold a membership meeting to elect new members of the Board of directors of URCI Corporation. SO ORDERED. (SGD.) JAMES K ABUGAN Hearing Officer