Manila Metal Container vs.

PNB, 518 SCRA 453 (2007)

G.R. No. 166862, December 20, 2006

FACTS:

Petitioner is the owner of a parcel of land. To secure a loan he obtained from PNB he executed a REM
over said land. For failure to pay the loan, PNB sought the foreclosure of the REM. After the public auction, the
petitioner requested PNB to grant him an extension to redeem the property. He failed to redeem the property.
Later on, the PNB agreed to let the petitioner purchase the property for a certain amount, and a downpayment
was then given. Subsequently, however, the bank informed the petitioner that it was increasing the purchase price.
Hence, a case was filed by petitioner.

According to respondent, the Statement of Account prepared by SAMD as of June 25, 1984 cannot be classified
as a counter-offer; it is simply a recital of its total monetary claims against petitioner. Moreover, the amount stated
therein could not likewise be considered as the counter-offer since as admitted by petitioner, it was only
recommendation which was subject to approval of the PNB Board of Directors.

According to respondent, petitioner knew that the SAMD has no capacity to bind respondent and that its authority
is limited to administering, managing and preserving the properties and other special assets of PNB. The SAMD
does not have the power to sell, encumber, dispose of, or otherwise alienate the assets, since the power to do so
must emanate from its Board of Directors. The SAMD was not authorized by respondent's Board to enter into
contracts of sale with third persons involving corporate assets. There is absolutely nothing on record that
respondent authorized the SAMD, or made it appear to petitioner that it represented itself as having such
authority.

ISSUE:

Whether or not the letter by the respondent accepting the petitioner’s offer was valid.

RULING:

NO.
The statement of account prepared by the SAMD stating that the net claim of respondent as of June 25, 1984 was
P1,574,560.47 cannot be considered an unqualified acceptance to petitioner's offer to purchase the property. The
statement is but a computation of the amount which petitioner was obliged to pay in case respondent would later
agree to sell the property, including interests, advances on insurance premium, advances on realty taxes,
publication cost, registration expenses and miscellaneous expenses.

There is no evidence that the SAMD Special Asset Management Department was authorized by
respondent's Board of Directors to accept petitioner's offer and sell the property. Any acceptance by the SAMD
of petitioner's offer would not bind respondent. A corporation can only execute its powers and transact its
business through its Board of Directors and through its officers and agents when authorized by a board resolution
or its by-laws. Absent such valid delegation/authorization, the rule is that the declarations of an individual director
relating to the affairs of the corporation, but not in the course of, or connected with the performance of authorized
duties of such director, is held not binding on the corporation.

Section 23 of the Corporation Code expressly provides that the corporate powers of all corporations shall be
exercised by the board of directors. Just as a natural person may authorize another to do certain acts in his behalf,
so may the board of directors of a corporation validly delegate some of its functions to individual officers or

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agents appointed by it. Thus, contracts or acts of a corporation must be made either by the board of directors or
by a corporate agent duly authorized by the board. Absent such valid delegation/authorization, the rule is that the
declarations of an individual director relating to the affairs of the corporation, but not in the course of, or
connected with the performance of authorized duties of such director, are held not binding on the corporation.

Thus, a corporation can only execute its powers and transact its business through its Board of Directors and
through its officers and agents when authorized by a board resolution or its by-laws.61

Lopez Realty v. Fontecha, 247 SCRA 183 (1995)

FACTS:

Lopez Realty, Inc., is a corporation engaged in real estate business, while petitioner Asuncion Lopez
Gonzales is one of its majority shareholders. Sometime in 1978, Arturo Lopez submitted a proposal relative to
the distribution of certain assets of Petitioner Corporation among its three (3) main shareholders. The proposal
had three (3) aspects, viz: (1) the sale of assets of the company to pay for its obligations; (2) the transfer of certain
assets of the company to its three (3) main shareholders, while some other assets shall remain with the company;
and (3) the reduction of employees with provision for their gratuity pay. The proposal was deliberated upon and
approved in a special meeting of the board of directors held on April 17, 1978.
It appears that petitioner corporation approved two (2) resolutions providing for the gratuity pay of its
employees, viz: (a) Resolution No. 6, Series of 1980 resolving to set aside, twice a year, a certain sum of money
for the gratuity pay of its retiring employees and to create a Gratuity Fund for the said contingency; and (b)
Resolution No. 10, Series of 1980, setting aside the amount of P157,750.00 as Gratuity Fund covering the period
from 1950 up to 1980.
On August 17, 1981, the remaining members of the Board of Directors, namely: Rosendo de Leon,
Benjamin Bernardino, and Leo Rivera, convened a special meeting and passed a resolution which provides that:
(a) Those who will be laid off be given the full amount of gratuity; (b) Those who will be retained will receive
25% of their gratuity (pay) due on September 1, 1981, and another 25% on January 1, 1982, and 50% to be
retained by the office in the meantime.
Private respondents were the retained employees of petitioner corporation. In a letter, dated August 31,
1981, private respondents requested for the full payment of their gratuity pay. Their request was granted in a
special meeting held on September 1, 1981.
Petitioner contention: Petitioners contend that the board resolutions passed on August 17, 1981 and September
1, 1981, granting gratuity pay to their retained employees, are ultra vires on the ground that petitioner Asuncion
Lopez Gonzales was not duly notified of the said special meetings. They aver, further, that said board resolutions
were not ratified by the stockholders of the corporation pursuant to Section 28 1/2 of the Corporation Law
(Section 40 of the Corporation Code). They also insist that the gratuity pay must be given only to the retiring
employees, to the exclusion of the retained employees or those who voluntarily resigned from their posts.

ISSUES:
Whether or not the subject resolutions require for their validity stockholders’ approval.
RULING:

YES.
The general rule is that a corporation, through its hoard of directors, should act in the manner and within the
formalities, if any, prescribed by its charter or by the general law.[14] Thus, directors must act as a body in a meeting
called pursuant to the law or the corporation's by-laws, otherwise, any action taken therein may be questioned by
any objecting director or shareholder.

Board of directors during a meeting, which was illegal for lack of notice, may be ratified either expressly, by the
action of the directors in subsequent legal meeting, or impliedly, by the corporation's subsequent course of
conduct.

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Ratification by directors may be by an express resolution or vote to that effect, or it may be implied from adoption
of the act, acceptance or acquiescence. Ratification may be effected by a resolution or vote of the board of
directors expressly ratifying previous acts either of corporate officers or agents; but it is not necessary, ordinarily,
to show a meeting and formal action by the board of directors in order to establish a ratification

In this case, it was established that petitioner corporation did not issue any resolution revoking nor nullifying the
board resolutions granting gratuity pay to private respondents. Instead, they paid the gratuity pay, particularly,
the first two (2) installments thereof, of private respondents Florentina Fontecha, Mila Refuerzo, Marcial Mamaril
and Perfecto Bautista.

The Court is not persuaded that the subject resolutions had no force and effect in view of the non-
approval thereof during the Annual Stockholders' Meeting held on March 1, 1982. To strengthen their position,
petitioners cite section 28 1/2 of the Corporation Law (Section 40 of the Corporation Code).
The cited provision is not applicable to the case at bench as it refers to the sale, lease, exchange or
disposition of all or substantially all of the corporation's assets, including its goodwill. In such a case, the action
taken by the board of directors requires the authorization of the stockholders on record.
It will be observed that, except for Arturo Lopez, the stockholders of petitioner corporation also sit as
members of the board of directors. Under the circumstances in field, it will be illogical and superfluous to require
the stockholders' approval of the subject resolutions. Thus, even without the stockholders' approval of the subject
resolutions, petitioners are still liable to pay private respondents' gratuity pay.

Despite the alleged lack of notice to petitioner Asuncion Lopez Gonzales at that time the assailed resolutions
were passed, we can glean from the records that she was aware of the corporation's obligation under the said
resolutions. More importantly, she acquiesced thereto. As pointed out by private respondents, petitioner
Asuncion Lopez Gonzales affixed her signature on Cash Voucher

therefore, that the conduct of petitioners after the passage of resolutions dated August 17, 1981 and September
1, 1981, had estopped them from assailing the validity of said board resolutions.

Petition is dismissed.

The general rule is that a corporation, through its board of directors, should act in the manner and within the
formalities, if any, prescribed by its charter or by the general law. 14 Thus, directors must act as a body in a meeting
called pursuant to the law or the corporation's by-laws, otherwise, any action taken therein may be questioned by
any objecting director or shareholder. 15

Board of Liquidators vs Heirs of Kalaw, 20 SCRA 987 (1967)

BOARD OF LIQUIDATORS V KALAW G.R. No. L-18805 August 14, 1967 THE BOARD OF
LIQUIDATORS representing THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES,
plaintiff-appellant, vs. HEIRS OF MAXIMO M. KALAW, JUAN BOCAR, ESTATE OF THE DECEASED
CASIMIRO GARCIA, and LEONOR MOLL, defendants-appellees.

FACTS:

The National Coconut Corporation (NACOCO, for short) was chartered as a non-profit governmental
organization for the protection, preservation and development of the coconut industry in the Philippines. On
August 1, 1946, NACOCO's charter was amended [Republic Act 5] to grant that corporation the express power
to buy and sell copra. The charter amendment was enacted to stabilize copra prices, to serve coconut producers

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by securing advantageous prices for them, to cut down to a minimum, if not altogether eliminate, the margin of
middlemen, mostly aliens. General manager and board chairman was Maximo M. Kalaw; defendants Juan Bocar
and Casimiro Garcia were members of the Board; defendant Leonor Moll became director only on December 22,
1947. NACOCO, after the passage of Republic Act 5, embarked on copra trading activities.

Four devastating typhoons visited the Philippines in 1947. When it became clear that the contracts would be
unprofitable, Kalaw submitted them to the board for approval. It was not until December 22, 1947 when the
membership was completed. Defendant Moll took her oath on that date. A meeting was then held. Kalaw made
a full disclosure of the situation, apprised the board of the impending heavy losses. No action was first taken on
the contracts but not long thereafter, that is, on January 30, 1948, the board met again with Kalaw, Bocar, Garcia
and Moll in attendance. They unanimously approved the contracts hereinbefore enumerated.

NACOCO partially performed the contracts. The buyers threatened damage suits, some of which were settled.
But buyer, Louis Dreyfus & Go. (Overseas) Ltd., did in fact sue before the Court of First Instance of Manila. The
cases culminated in an out-of- court amicable settlement when the Kalaw management was already out.
With particular reference to the Dreyfus claims, NACOCO put up the defenses that:

(1) the contracts were void because Louis Dreyfus & Co. (Overseas) Ltd. did not have license to do business here;
and
(2) failure to deliver was due to force majeure, the typhoons. All the settlements sum up to P1,343,274.52.
In this suit started in February, 1949, NACOCO seeks to recover the above sum of P1,343,274.52 from general
manager and board chairman Maximo M. Kalaw, and directors Juan Bocar, Casimiro Garcia and Leonor Moll. It
charges Kalaw with negligence under Article 1902 of the old Civil Code (now Article 2176, new Civil Code); and
defendant board members, including Kalaw, with bad faith and/or breach of trust for having approved the
contracts. By Executive Order 372, dated November 24, 1950, NACOCO, together with other government-
owned corporations, was abolished, and the Board of Liquidators was entrusted with the function of settling and
closing its affairs.

DECISION OF LOWER COURTS:

1. CFI-Manila: dismissed the complaint. Plaintiff was ordered to pay the heirs of Maximo Kalaw the sum of
P2,601.94 for unpaid salaries and cash deposit due the deceased Kalaw from NACOCO.

ISSUE:
1. Whether plaintiff Board of Liquidators has lost its legal personality to continue with this suit since the three
year period has elapsed, the Board of Liquidators may not now continue with, and prosecute, the present case to
its conclusion
2. whether the case at bar is to be taken out of the general concept of the powers of a general manager, given the
cited provision of the NACOCO by-laws requiring prior directorate approval of NACOCO contracts.

RULING:
1. No, the provision should be read not as an isolated provision but in conjunction with the whole. So reading, it
will be readily observed that no time limit has been tacked to the existence of the Board of Liquidators and its
function of closing the affairs of the various government owned corporations, including NACOCO.
The President thought it best to do away with the boards of directors of the defunct corporations; at the same
time, however, the President had chosen to see to it that the Board of Liquidators step into the vacuum. And
nowhere in the executive order was there any mention of the lifespan of the Board of Liquidators.
3 methods by which corporation may wind up it its affairs:
1. Voluntary dissolution, "such disposition of its assets as justice requires, and may appoint a receiver to collect
such assets and pay the debts of the corporation;
2. Corporate existence is terminated - "shall nevertheless be continued as a body corporate for three years after
the time when it would have been so dissolved, for the purpose of prosecuting and defending suits by or against
it and of enabling it gradually to settle and close its affairs, to dispose of and convey its property and to divide
its capital stock, but not for the purpose of continuing the business for which it was established;"
3. corporation, within the three year period just mentioned, "is authorized and empowered to convey all of its

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 property to trustees for the benefit of members, stockholders, creditors, and others interested

Corpus Juris Secundum likewise is authority for the statement that "[t]he dissolution of a corporation ends its
existence so that there must be statutory authority for prolongation of its life even for purposes of pending
litigation

Board of Liquidators escapes from the operation thereof for the reason that "[o]bviously, the complete loss of
plaintiff's corporate existence after the expiration of the period of three (3) years for the settlement of its affairs
is what impelled the President to create a Board of Liquidators, to continue the management of such matters as
may then be pending."
The Board of Liquidators thus became the trustee on behalf of the government. It was an express trust. The legal
interest became vested in the trustee — the Board of Liquidators. The beneficial interest remained with the sole
stockholder — the government. At no time had the government withdrawn the property, or the authority to
continue the present suit, from the Board of Liquidators. If for this reason alone, we cannot stay the hand of the
Board of Liquidators from prosecuting this case to its final conclusion. The provisions of Section 78 of the
Corporation Law — the third method of winding up corporate affairs — find application.

2. The movement of the market requires that sales agreements be entered into, even though the goods are not yet
in the hands of the seller. Known in business parlance as forward sales, it is concededly the practice of the trade.
Above all, NACOCO's limited funds necessitated a quick turnover. Copra contracts then had to be executed on
short notice — at times within twenty-four hours. To be appreciated then is the difficulty of calling a formal
meeting of the board So pleased was NACOCO's board of directors that, on December 5, 1946, in Kalaw's
absence, it voted to grant him a special bonus "in recognition of the signal achievement rendered by him in putting
the Corporation's business on a self-sufficient basis within a few months after assuming office, despite numerous
handicaps and difficulties."

These previous contract it should be stressed, were signed by Kalaw without prior authority from the board.
Existence of such authority is established, by proof of the course of business, the usage and practices of
the company and by the knowledge which the board of directors has, or must be presumed to have, of
acts and doings of its subordinates in and about the affairs of the corporation.

If the by-laws were to be literally followed, the board should give its stamp of prior approval on all corporate
contracts. But that board itself, by its acts and through acquiescence, practically laid aside the by-law
requirement of prior approval.

Under the given circumstances, the Kalaw contracts are valid corporate acts. Bad faith does not simply
connote bad judgment or negligence; it imports a dishonest purpose or some moral obliquity and conscious
doing of wrong; it means breach of a known duty thru some motive or interest or ill will; it partakes of the nature
of fraud. Applying this precept to the given facts herein, we find that there was no "dishonest purpose," or "some
moral obliquity," or "conscious doing of wrong," or "breach of a known duty," or "Some motive or interest or ill
will" that "partakes of the nature of fraud."

No. This is a case of damnum absque injuria. Conjunction of damage and wrong is here absent. There cannot be
an actionable wrong if either one or the other is wanting. Of course, Kalaw could not have been an insurer of
profits. He could not be expected to predict the coming of unpredictable typhoons. And even as
typhoons supervened Kalaw was not remissed in his duty. He exerted efforts to stave off losses. That Kalaw
cannot be tagged with crassa negligentia or as much as simple negligence, would seem to be supported by the fact
that even as the contracts were being questioned in Congress and in the NACOCO board itself, President Roxas
defended the actuations of Kalaw.

It is a well known rule of law that questions of policy of management are left solely to the honest decision
of officers and directors of a corporation, and the court is without authority to substitute its judgment
for the judgment of the board of directors; the board is the business manager of the corporation, and so

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long as it acts in good faith its orders are not reviewable by the courts."

Acuna vs. Batac Producers Cooporative Marketing Association, 20 SCRA 526 (1967)
Acuna v. Batac Producers G.R. No. L-20333 June 30, 1967

Facts:
Plaintiff Acuña filed a complaint against the defendant Batac Producers Cooperative Marketing Association, Inc.,
(Batac Procoma). The complaint alleged that on May 5, 1962 it was tentatively agreed upon between plaintiff and
defendant Leon Q. Verano, as Manager of the defendant Batac Procoma that the complainant would seek and
obtain the sum of not less, than P20,000.00 to be advanced to the defendant Batac Procoma to be utilized by it
as additional funds for its Virginia tobacco buying operations during the current redrying season.

Emiliano Acuña would be constituted as the corporation's representative in Manila to assist in handling and
facilitating its continuous shipments of tobacco and their delivery to the redrying plants and in speeding up the
prompt payment and collection of all amounts due to the corporation for such shipments.

For his services Acuña would be paid a remuneration at the rate of P0.50 per kilo of tobacco. The said tentative
agreement was favorably received by the Board of Directors of the Batac Procoma and unanimously authorized
defendant Leon Q. Verano, by a formal resolution, to execute any agreement with any person or entity, on behalf
of the corporation, and defendant Leon Q. Verano was acceptable to the corporation, except that the
remuneration for the plaintiff Emiliano Acuña’s services would be P0.30 per kilo of tobacco.

The formal "Agreement" was executed between plaintiff Emiliano Acuña and defendant Leon Q. Verano, as
Manager of the defendant corporation, duly authorized by its Board of Directors for such purpose. On the same
date, plaintiff gave Emiliano Acuña turned over to the defendant corporation, thru its treasurer, the sum of
P20,000.00. From then on, plaintiff Emiliano Acuña diligently and religiously kept his part of the "Agreement;"
that plaintiff even furnished the defendant corporation, upon request of its Manager Leon Q. Verano three
thousand (3,000) sacks which it utilized in the shipment of its tobacco costing P6,000.00 and that plaintiff
Emiliano Acuña had personally advanced out of his own personal funds the total sum of P5,000.00 with the full
knowledge, acquiescence and consent of all the individual defendants.
After the defendant corporation was enabled to replenish its funds with continuous collections from the PVTA
for tobacco delivered due to the help, assistance and intervention of plaintiff Emiliano Acuña, for which the said
corporation collected from the PVTA the total sum of P381,495.00, the "Agreement" was disapproved by its
Board of Directors. Upon the foregoing allegations plaintiff filed a complaint before the court.
The lower court: the issuance of a writ of preliminary attachment against the properties of the defendants and on
the following day, after the plaintiff had posted the required bond, the writ was accordingly issued by the Clerk
of Court.

The defendants filed a motion to dismiss the complaint on the ground that it stated no cause of action and to
discharge the preliminary attachment on the ground that it was improperly or irregularly issued. In support of the
motion defendants alleged that the contract for services was never perfected because it was not approved or
ratified but was instead disapproved by the Board of Directors of defendant Batac Procoma, Inc., and that on the
basis of plaintiff's pleadings the contract is void and unenforceable. Defendants further denied the fact that
plaintiff had performed his part of the contract, alleging that he had not in any manner intervened in the delivery
and payment of tobacco pertaining to the defendant corporation. The trial court sustained defendants' motion
and states that the complaint states no cause of action and that contract in question is void ab initio.

Issue:
1.Whether or not the case at bar should be dismissed due to no cause of action?
2.Whether or not the Board of Directors did not allow the contract between them and petitioner Emilio Acuña.

Held:

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1.No, the case at bar should not be dismissed due to no case of action?
2.Yes, the Board of Directors allows the contract between them and petitioner Emilio Acuña?

Ratio:
1.It is a settled principle that when a motion to dismiss is based on the ground that the complaint does not state
a cause of action, the averments in the complaint are deemed hypothetically admitted and the inquiry is limited to
whether or not they make out a case on which relief can be granted. If said motion assails directly or indirectly
the veracity of the allegations, it is improper to grant the motion upon the assumption that the averments therein
are true and those of the complaint are not. The sufficiency of the motion should be tested on the strength of the
allegations of facts contained in the complaint, and no other.

2.A perusal of the complaint reveals that it contains sufficient allegations indicating such approval or at least
subsequent ratification.

On the first point we note the following averments, the plaintiff met with each and all of the individual defendants,
who constituted the entire Board of Directors and discussed with them extensively the tentative agreement and
he was made to understand that it was acceptable to them, except as to plaintiff's remuneration.

It was finally agreed between plaintiff and all said Directors that his remuneration would be P0.30 per kilo of
tobacco. After the agreement was formally executed, he was assured by said Directors that there would be
no need of formal approval by the Board. It should be noted in this connection that although the contract
required such approval it did not specify just in what manner the same should be given.
On the question of ratification the complaint alleges that plaintiff delivered to the defendant corporation the sum
of P20,000.00 as called for in the contract. He rendered the services by furnishing 3,000 sacks at a cost of
P6,000.00 and advanced to it the further sum of P5,000.00 and that he did all of these things with the full
knowledge, acquiescence and consent of each and all of the individual defendants who constitute the
Board of Directors of the defendant corporation.

There is abundant authority in support of the proposition that ratification may be express or implied, and that
implied ratification may take diverse forms, such as by silence or acquiescence, by acts showing approval or
adoption of the contract, or by acceptance and retention of benefits flowing therefrom.

Tan vs Sycip, 499 SCRA 216 (2006)

Tan versus Sycip
G.R. No. 153468; August 17, 2006
For stock corporations, the quorum referred to in Section 52 of the Corporation Code is based on the number of
outstanding voting stocks. For nonstock corporations, only those who are actual, living members with voting
rights shall be counted in determining the existence of a quorum during members meetings. Dead members shall
not be counted.

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.

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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.

Issue:

Whether or not in NON-STOCK corporations, dead members should still be counted in determination of
quorum for purpose of conducting the Annual Members Meeting.

Ruling:

The Right to Vote in Nonstock Corporations

In nonstock corporations, the voting rights attach to membership. Members vote as persons, in
accordance with the law and the bylaws of the corporation. Each member shall be entitled to one vote
unless so limited, broadened, or denied in the articles of incorporation or bylaws. 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.

Section 25 of the Code specifically provides that a majority of the directors or trustees, as fixed in the articles of
incorporation, shall constitute a quorum for the transaction of corporate business (unless the articles of
incorporation or the bylaws provide for a greater majority). If the intention of the lawmakers was to base the
quorum in the meetings of stockholders or members on their absolute number as fixed in the articles of
incorporation, it would have expressly specified so. Otherwise, the only logical conclusion is that the legislature
did not have that intention.

Effect of the Death of a Member or Shareholder

In stock corporations, shareholders may generally transfer their shares. Thus, on the death of a
shareholder, the executor or administrator duly appointed by the Court is vested with the legal title to
the stock and entitled to vote it. Until a settlement and division of the estate is effected, the stocks of the
decedent are held by the administrator or executor.

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. 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.

Under the By-Laws of GCHS, membership in the corporation shall, among others, be terminated by the
death of the member. Section 91 of the Corporation Code further provides that termination extinguishes all the
rights of a member of the corporation, unless otherwise provided in the articles of incorporation or the 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 members present, was valid.