Opinion No. 19-43 Re: Non-holding of Annual Membership Meeting

Securities and Exchange Commission Republic of the Philippines Department of Finance

OFFICE OF THE GENERAL COUNSEL

19 September 2019

RE: Non-holding of Annual SEC-0GC Opinion No. 19- 43 Meeting Membership

Legaspi Village, Makati City 1226 Arthur Michael E. De Castro Resident and 0wner; Unit 905 The Asia Tower Condominium Member, The Asia Tower Condominium Corporation Benavidez Street, Corner Paseo De Roxas

Dear Mr. De Castro:

opinion on certain legal matters affecting your corporation, The Asia Tower Condominium Corporation ("TATCC"). This refers to your letter dated 03 January 2019 requesting the Commission's

of Trustees ("BOT") for failure to achieve a quorum. AMM originally fixed on 15 July 2018 was postponed several times by TATCC's Board of an annual membership meeting (AMM) every month of July. However, the 2018 In your letter, you stated that the Bylaws of TATCC provides for the holding

intends to proceed with the filing of its 2018 General Information Sheet (GIS) by availing of a provision which seemingly allows corporations that were unable to hold their AMM to submit its GIS "not later than January of the following year." You further stated that despite the non-holding of the 2018 AMM, TATCC

You likewise stated that a TATCC trustee resigned in October 2018.

From the foregoing, you raise the following queries:

2. How should a vacancy in the BOT due to resignation of a trustee be reflected in 3. What are TATCC's recourse to hold recalcitrant members accountable for their 1. Whether or not a GIS submitted by TATCC within the month of January 2019 be valid notwithstanding failure to conduct an AMM for calendar year 2018; failure to participate in the AMM. the 2019 GIS; and

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FIRST QUERY

2 of the General Instructions found in the GIS Form for Non-Stock Corporations attached as Annex C to SEC Memorandum Circular No. 17, Series of 20192, with an addendum stating that: "should an annual members'meeting be held thereafter; a new GIS shall be submitted/filed." corporation is unable to hold the meeting for the calendar year, the GIS shall be filea not later than January 30 of the following year." This is also reflected under paragraph SEC Memorandum Circular No. 3, Series of 20071 provides in part: "if the

violation of Section 493 of the Revised Corporation Code ("RCC") and subject to a corresponding penalty pursuant to Section 1704 of the same Code. Please be informed, however, that non-holding of an annual meeting is a

SECOND QUERY

Section 25 of the RCC provides in part:

"xx Should a director, trustee or officer die, resign or in any manner cease to hold office, the secretary, or the director, trustee or officer of the corporation, knowledge thereof, report in writing such fact to the Commission." or in case of death, the officer's heirs shall, within seven (7) days from

the amended GIS. highlighted in an Amended GIS to be submitted by the above authorized persons within 7 days from knowledge of the trustee's resignation. In the absence of a replacement trustee to the vacated position, the same may be reflected as vacant in change in the composition of the BOT which must be reflected and clearly As applied to your case, the resignation by a trustee of TATCC is considered a

vacancy in the BOT, to wit: In relation, please be guided by Section 28 of the RCC in the filling-up of

Any vacancy occurring in the board of directors or trustees other than by removal or by expiration of term may be filled by the vote of at least a majority of the remaining directors or trustees, if still constituting a quorum; otherwise, said "Section 28. Vacancies in the Office of Director or Trustee; Emergency Board.

2 2019 Revision of the General Information Sheet. bylaws, or if not so fixed, on any date after April 15 of every year as determined by the board of directors specifically penalized therein shall be punished by a fine of not less than Ten Thousand Pesos (P10,000.00) but not more than One Million Pesos (P1,000,000.00) xxx 4 Section 170. Violations of any of the other provisions of this Code or its amendments not otherwise 3 Section 49. Regular meetings of stockholders or members shall be held annually on a date fixed in the or trustees. xxx Amendment of Reportorial Requirements

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vacancies must be filled by the stockholders or members in a regular or special meeting called for that purpose.

be referred to as replacement director or trustee and shall serve only for the unexpired term of the predecessor in office. xxx" xxx In all other cases. the election must be held no later than forty-five (45) days from the time the vacancy arose. A director or trustee elected to fill a vacancy shall

elect a replacement trustee to the Board without necessarily holding an AMM. Thus, if the remaining trustees of TATCC still constitute a quorum, they may

THIRD QUERY

matters which involve the substantive and contractual rights of private parties who would, in all probability, contest the same in court if the opinion turns out to be adverse to their interest.5 As a matter of policy, the Commission refrains from rendering opinion on

results to no quorum for at least two (2) attempts at meetings for the purpose of electing directors/trustees, Section 256 of the RCC applies. cannot coerce its members to attend members' meetings for the same should be done voluntarily or of their own volition. However, if the members' non-attendance However, for purposes of information, please be advised that a corporation

issue raised therein and shall not be used in the nature of a standing rule binding facts relied upon are different, this opinion shall be rendered void.7 solely on the facts and circumstances disclosed and relevant solely to the particular upon the Commission in other cases or upon the courts whether similar or dissimilar circumstances. If, upon further inquiry and investigation, it will be disclosed that the It shall be understood, however, that the foregoing opinion is rendered based

Please be guided accordingly.

C&MYU'S!CORKEA General Counsel comy

6 Section 25. xxx If no new date has been designated, or if the rescheduled election is likewise not held, the for the determination of stockholders or members entitled to vote. have the power to issue such orders as may be appropriate, including orders directing the issuance of a notice stating the time and place of the election, designated presiding officer, and the record date or dates the unjustified non-holding of the election, summarily order that an election be held. The Commission shall Commission may, upon the application of a stockholder, member, director or trustee, and after verification of

Notwithstanding any provision of the articles of incorporation or bylaws to the contrary, the shares of stock or membership represented at such meeting and entitled to vote shall constitute a quorum for purposes of conducting an election under this section. xx 7 SEC Memorandum Circular No. 15, Series of 2003