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    1 - SEC Opinion No. 09-27 (Proxy Election)

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    Ajean Tuazon-Cruz
    The SEC opinion states that proxies or representatives of members of a condominium corporation are not eligible for election to the board of directors/trustees based on two previous SEC opinions. The opinions found that only actual members of the corporation meet the basic qualification of being a candidate for the board since the right to be a director cannot be delegated to a non-member proxy or representative. Previous SEC rules also indicate that corporate stockholders or members cannot designate representatives to the board since the representative would not be a stockholder or member themselves.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    1 - SEC Opinion No. 09-27 (Proxy Election)

    Uploaded by

    Ajean Tuazon-Cruz
    47 views3 pages
    The SEC opinion states that proxies or representatives of members of a condominium corporation are not eligible for election to the board of directors/trustees based on two previous SEC opinions. The opinions found that only actual members of the corporation meet the basic qualification of being a candidate for the board since the right to be a director cannot be delegated to a non-member proxy or representative. Previous SEC rules also indicate that corporate stockholders or members cannot designate representatives to the board since the representative would not be a stockholder or member themselves.

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    The SEC opinion states that proxies or representatives of members of a condominium corporation are not eligible for election to the board of directors/trustees based on two previous SEC opinions. The opinions found that only actual members of the corporation meet the basic qualification of being a candidate for the board since the right to be a director cannot be delegated to a non-member proxy or representative. Previous SEC rules also indicate that corporate stockholders or members cannot designate representatives to the board since the representative would not be a stockholder or member themselves.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    47 views3 pages

    1 - SEC Opinion No. 09-27 (Proxy Election)

    Uploaded by

    Ajean Tuazon-Cruz
    The SEC opinion states that proxies or representatives of members of a condominium corporation are not eligible for election to the board of directors/trustees based on two previous SEC opinions. The opinions found that only actual members of the corporation meet the basic qualification of being a candidate for the board since the right to be a director cannot be delegated to a non-member proxy or representative. Previous SEC rules also indicate that corporate stockholders or members cannot designate representatives to the board since the representative would not be a stockholder or member themselves.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    Republic of the Philippines

    SECURITIES AND EXCHANGE COMMISSION


    EDSA, Greenhills, Mandaluyong City

    OFFICE OF THE GENERAL COUNSEL

    9 September 2009
    SEC Opinion No. 09-27
    Proxy: Non-eligibility for
    Election to the Board

    ATTY. ALEXES M. ENRIQUEZ


    Sanidad Abaya Te Viterbo
    Enriquez & Tan
    2nd Flr. Eastside Bldg.,
    77 Malakas St., Brgy. Pinyahan
    Diliman, Quezon City

    Sir:

    This refers to your letter requesting an opinion on whether it is permissible for a


    representative or proxy (designated by a natural person who is a member of a
    condominium corporation) to be elected to the Board of Directors/Trustees of the
    condominium corporation.

    We reply in the negative. The Commission has previously issued an opinion on


    this matter in its Opinion to Atty. Richard V. Funk,1 hereunder quoted in full:

    "February 17, 1986


    Atty. Richard V. Funk
    Suite 217, Comfoods Bldg.
    Buendia Avenue corner Pasong Tamo St.
    Makati, Metro Manila

    Sir:

    This has reference to your letter dated November 18, 1985 requesting
    opinion of this Commission on the query posed therein.

    It appears that Mid-Land Mansions Condominium Corporation is a non-


    stock, non-profit corporation formed pursuant to the provisions of the
    Condominium Act for the purpose of holding title to, and managing the
    common areas of said condominium. In your letter you claim that proxies
    representing members of said association can be elected as director
    therein.

    Your query is: Can a proxy, who was elected as director, continue to act as
    such if and when, before the expiration of his term, the unit owner whom
    he represents, decides to withdraw his right to represent him?

    Section 47 of the Corporation Code of the Philippines (BP Blg. 68)


    empowers the members of an association to provide in its by-laws the

    1
    17 February 1986.

    1 of 3
    qualifications of its directors. Thus, Article II of your by-laws provides as
    follows:

    "SECTION 1. Composition, Election and Term of Office. - The


    corporation shall be governed and its affairs managed and
    controlled by Board of Directors composed of five (5) members
    elected by and from any of the non-delinquent members of the
    corporation."

    On the other hand, Article I of the same by-laws provides:

    "SECTION 1. Members. - Membership in the corporation shall be


    limited exclusively to owners of condominium units in the Mid
    Land Condominium Project, who, under the provisions of the
    Master Deed and Declaration of Registration bf said project,
    automatically become members of the corporation. However, if a
    unit owner owns more than one unit in the said condominium
    project, he may designate other persons to represent him as
    member of the corporation with respect to such other units,
    provided, that such designation shall be in writing and filed with
    the Secretary of the Corporation, and shall continue in effect, for
    all intents and purposes, until receipt by the Secretary of a written
    revocation. Membership in the condominium corporation cannot
    be transferred or encumbered separately from the condominium
    unit of which it is an appurtenance. When a member ceases to own
    a unit in the project in which the condominium corporation owns
    or holds the common areas, he shall automatically cease to be a
    member of the condominium corporation." (Emphasis supplied)

    It is clear from the aforecited provisions of Article III of the by-laws of


    Mid-Land Mansions Corporation that the basic qualification of a candidate
    for director is his membership in the corporation and his being non-
    delinquent. While Article I of your by-laws allows unit-members to be
    represented, the right to be a candidate is not a right that can be delegated.
    The right to be a director is peculiar only to members of the corporation.
    The proxy not being a member, it follows that he is not qualified to be a
    candidate as director.

    Anent thereto, the pertinent provisions of the Code states and we quote:

    "SECTION 23. The board of directors or trustees. – Unless


    otherwise provided in this Code, the corporate powers of all
    corporations formed under this Code shall be exercised, all
    business conducted and all such property of such corporations
    controlled and held by the board of directors or trustees to be
    elected from among the holders of stock, or where there is non
    stock, from among the members of the corporation ... "
    (Emphasis supplied)

    In view of the foregoing, the answer to your query is in the negative.

    Please be advised accordingly.

    Very truly yours,

    (SGD.) JULIO A. SULIT, JR


    . Associate Commissioner"

    2 of 3
    The rule admits of no exceptions, even in the case of corporations, which by their
    nature cannot act by themselves. Villanueva offers an insightful summary2 of SEC
    Opinions on the matter:

    "a. Rule on Corporate Stockholders

    In cases of corporate stockholders or corporate members of a corporation,


    such entities cannot be qualified to be elected as such to the board of the
    corporation. A corporation cannot act by itself but only through its officers
    and agents, and as such a corporation cannot attend personally board
    meetings of the corporation wherein it is elected as a director, but only
    through representative or a proxy, which would contravene the established
    rule that a director may not be represented by a proxy at a meeting of the
    board. In addition such corporate stockholders or members of the
    corporation cannot also designate an individual representative to be voted
    into the board of the corporation since the representative would not be a
    stockholder of record nor a member himself, which is a minimum
    requirement to be qualified to be voted into the board of the corporation.

    Therefore, in the case of corporate stockholders or corporate members,


    their representation can be achieved by making their individual
    representatives trustees of the shares or memberships, which would make
    them stockholders or members of record and thereby qualified to be
    elected to the board ...”

    For your information and guidance.

    Very truly yours,

    VERNETTE G. UMALI-PACO (Sgd.)


    General Counsel

    2
    Villanueva, Cesar L. Philippine Corporate Law, at p. 294, citing SEC Opinion, 2 June 1998, XX SEC
    Quarterly Bulletin (Nos. 1 & 2, March & June, 1986); SEC Opinion, 16 July 1985, SEC Annual
    Opinions 1985, at p. 125; SEC Opinion, 26 June 1969, SEC Folio 1960-1976, at p. 381.

    3 of 3

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