Quorum Quagmire: Can Non-Unit Owners Decide a Condo's Fate?

The Supreme Court's 2017 ruling in Lim v. Moldex Land, Inc. (G.R. No. 206038) clarifies three important questions for condominium owners: How is a quorum counted in a condominium corporation's membership meeting? Can a developer who still owns unsold units vote? And can the developer's representatives sit on the board of directors?

The case arose from a contentious 2012 annual meeting of the 1322 Roxas Boulevard Condominium Corporation (Condocor), which manages the Golden Empire Tower in Manila. A unit owner challenged the validity of that meeting, the election of four directors, and the subsequent election of corporate officers.

The Facts

Mary E. Lim, a registered unit owner, objected when only 29 of 108 unit buyers showed up for the July 21, 2012 annual general membership meeting. Despite this, the corporate secretary certified a quorum existed. The declaration relied on the voting rights of Moldex Land, Inc., the owner-developer, which held 220 unsold units in the building and cast votes through its representatives.

Lim and the other unit owners present walked out. The remaining attendees—including Moldex's four representatives—proceeded to elect a new board and officers. Lim sued to annul the meeting and the elections.

The Issue

The central legal questions were whether the meeting had a valid quorum, whether Moldex was a member of Condocor, and whether non-unit owners could be elected as directors.

Quorum in Non-Stock Corporations

The Court first addressed how quorum should be determined. Condocor is a non-stock, non-profit corporation. Under Section 52 of the Corporation Code, a quorum for non-stock corporations consists of a majority of the members, unless the by-laws provide otherwise.

The Court rejected the trial court's approach of counting "voting rights" rather than members. Quorum and voting are distinct concepts. For Condocor, whose by-laws require "a simple majority of the members who are in good standing," the quorum should have been a majority of the members in good standing—not a majority of the total voting rights.

With only 29 of 108 unit buyers present, no quorum existed. The meeting was therefore null and void, and so were all resolutions passed during it.

The Developer as a Member

The Court then considered whether Moldex could be a member of Condocor at all. Under Section 2 of the Condominium Act (Republic Act No. 4726), holders of separate interests in a condominium project automatically become members of the condominium corporation. The Court held that ownership of a unit—regardless of how it was acquired—entities the owner to membership.

Moldex, as the registered owner of 220 unsold units, was therefore a member. The Court distinguished the situation from a homeowners association under Presidential Decree No. 957, which is a different legal creature from a condominium corporation.

Proxies vs. Directors

While Moldex could validly appoint representatives to vote on its behalf under Section 58 of the Corporation Code, those representatives could not be elected to the board. Section 23 of the Corporation Code requires that directors or trustees be members of the corporation. A proxy holder who is not a member in his own right cannot be elected as a director.

Because the individual respondents were not unit owners, their election as directors was invalid. This also voided the election of officers, since the President must be a director, and the by-laws required the Vice-President and Secretary to be member-directors.

Practical Takeaways

• Quorum is about members, not votes. In a non-stock condominium corporation, a quorum is a majority of the members in good standing, unless the by-laws clearly state otherwise. Do not confuse quorum with the voting rights needed to pass a resolution.
• Developers can be members. An owner-developer holding unsold units is a member of the condominium corporation and may vote through authorized representatives.
• Board seats require membership. A proxy can vote, but cannot be elected as a director or trustee unless that person is a member of the corporation in his or her own right.
• Check the by-laws. Condominium by-laws may impose additional qualifications, such as "good standing" requirements, that affect who may vote and who may be elected.
• A void meeting is a void election. If a meeting lacks a quorum, every act taken during that meeting—including elections and officer appointments—is without legal effect.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.