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Corporate owners of condominium units can appoint representatives to sit in condo boards – SC
Corporate owners of condominium units can appoint representatives to sit in condo boards – SC
The Supreme Court (SC) has ruled that corporations, which own units in a condominium building or complex, can nominate their representatives who can be elected to the condominium’s board of directors even if they are not unit owners.
In a decision written by Associate Justice Maria Filomena D. Singh, the SC upheld the election in 2018 of Gregorio Pastorfide, Ramona Matibag, Cecil L. Monteblanco, and Roland Agustin Angeles to the board of the Medical Plaza Makati Condominium Corporation (MPMCC).
They were elected, not as private persons, but as official representatives of corporations that own units in the MPMCC.
The SC said:
“It is obvious that only natural persons may be elected to the Board, since the duties and obligations of board members can only be performed by natural persons.
“Thus, if the corporation is a member of MPMCC, and it wants to be elected to the Board, then it necessarily has to appoint a natural person to act on its behalf as its representative.
“However, it must be emphasized that the member-corporation may appoint only one natural person to act as its representative for purposes of election to the Board. Otherwise, the member-corporation will be occupying more than one seat in the Board, and possibly, more than one position as an officer of the Board.
“Such situation may result in a biased and unfair power dynamics in the Board, which can be detrimental to the interests of the corporation.”
The issue stemmed from the Oct. 16, 2018 MPMCC’s 20th annual general membership meeting and election of the members of its board of directors.
Pastorfide presided over the meeting as chairman and announced the officials list of seven candidates including himself, Monteblanco, Matibay, and Angeles.
The by-laws require membership in the MPMCC to be a director and that only registered owners of condominium units may be considered members of the corporation.
Questions arose as to the qualifications of Pastorfide, Monteblanco, Matibay and Angeles who are not unit owners in the MPMCC but merely representatives of corporations which are the unit owners.
Since there were no other candidates to the board of directors, the election committee declared there was no need to hold an election and declared the seven candidates as members of the board of directors.
Peter Rico F. Rodriguez, a member of MPMCC and a unit owner, filed a case before the regional trial court (RTC) on Oct. 30, 2018.
Rodriguez told the trial court that Pastorfide and his group cannot be elected as members of MPMCC's board because they are not unit owners in their own right.
The RTC declared the election null and void. However, the Court of Appeals (CA) reversed the RTC as it dismissed the case filed before the trial court. Rodriguez elevated the case to the SC.
The SC affirmed the CA’s decision. It said it is the corporation, not the individual, that is the actual member sitting on the board.
It pointed out that since corporations can act only through people, their authorized representatives carry out corporate duties, including being nominated and elected to the board.
Thus, it said, the respondents (Pastorfide and his group) have the right to vote and to sit as members of MPMCC’s board on behalf of their respective corporations.
The SC also said:
“To adopt the interpretation espoused by Rodriguez would result in an absurd situation where member-corporations are deprived of their essential ownership right to participate in the management of the corporation by being nominated and elected in MPMCC's Board.
“Surely, the By-Laws of the MPMCC does not intend to strip a member of one of the most important rights of membership by the mere fact that the member is a juridical person and not a natural person. This would result in baseless discrimination.
“Thus, the Court finds that the CA did not err in ultimately dismissing Rodriguez's Complaint.
“Accordingly, the Petition for Review on Certiorari is denied. The Decision, dated Nov. 16, 2020, and the Resolution, dated May 31, 2021, of the Court of Appeals in CA-G.R. SP Nos. 161687 and 163119, are affirmed. So ordered.”