CORPORATION LAW CASE
SERGE CENIΖA
** QUORUM **
CASE 44
PAUL LEE TAN,- versus -PAUL SYCIP and MERRITTOLIM,
FACTS: PETITIONER Grace Christian High School (GCHS)
is a nonstock, non-profit educational corporation with
fifteen (15) regular members, who also constitute the
board of trustees. During the annual members meeting
held on April 6, 1998, there were only eleven
(11) living member-trustees, as four (4) had already
died. Out of the eleven, seven (7). attended the meeting
through their respective proxies. The meeting was
convened and chaired by Atty. Sabino Padilla Jr. over the
objection of Atty. Antonio C. Pacis, who argued that
there was no quorum. In the meeting, Petitioners
Ernesto Tanchi, Edwin Ngo, Virginia Khoo, and Judith Tan
were voted to replace the four deceased member-
trustees.
When the controversy reached the Securities and
Exchange Commission (SEC), petitioners maintained
that the deceased member-trustees should not be
counted in the computation of the quorum because,
upon their death, members automatically lost all their
rights (including the right to vote) and interests in the
corporation.
SEC Hearing Officer Malthie G. Militar declared
the April 6, 1998 meeting null and void for lack of
quorum. She held that the basis for determining the
quorum in a meeting of members should be their
number as specified in the articles of incorporation , not
simply the number of living members. The SEC en banc
denied the appeal of petitioners and affirmed the
Decision of the hearing officer in toto.
CA dismissed the appeal of petitioners, because the
Verification and Certification of Non-Forum Shopping
had been signed only by Atty. Sabino Padilla Jr.No
Special Power of Attorney had been attached to show
his authority to sign for the rest of the petitioners.
ISSUE: Whether dead members should still be counted
in the determination of the quorum, for purposes of
conducting the annual members meeting.
RULING: Basis for Quorum, In nonstock corporations,
the voting rights attach to membership.[39] Members
vote as persons, in accordance with the law and the
bylaws of the corporation. Each member shall be
COMMERCIAL LAW REVIEW ATTY.
entitled to one vote unless so limited, broadened, or
denied in the articles of incorporation or bylaws. [40] We
hold that when the principle for determining the
quorum for stock corporations is applied by analogy to
nonstock corporations, only those who
are actual members with voting rights should be
counted.
Under Section 52 of the Corporation Code, the majority
of the members representing the actual number of
voting rights, not
the number or numerical constant that may originally
be specified in the articles of incorporation, constitutes
the quorum.[41]
Effect of the Death
of a Member or Shareholder
On the other hand, membership in and all rights arising
from a nonstock corporation are personal and non-
transferable, unless the articles of incorporation or the
bylaws of the corporation provide otherwise.[45] In other
words, the determination of whether or not dead
members are entitled to exercise their voting rights
(through their executor or administrator), depends on
those articles of incorporation or bylaws.
Applying Section 91 to the present case, we hold that
dead members who are dropped from the membership
roster in the manner and for the cause provided for in
the By-Laws of GCHS are not to be counted in
determining the requisite vote in corporate matters or
the requisite quorum for the annual members
meeting. With 11 remaining members, the quorum in
the present case should be 6. Therefore, there being a
quorum, the annual members meeting, conducted with
six[47] members present, was valid.