Supreme Court Clarifies Corporate Rights in Condo Boards
The Supreme Court has clarified that corporations owning units in a condominium building can nominate representatives to be elected to the condominium’s board of directors, even if these representatives are not unit owners themselves. This ruling confirms that corporate members have a voice in condominium management through their designated natural persons.
This decision centers on the Medical Plaza Makati Condominium Corporation (MPMCC), where in 2018, several individuals were elected to the board not as private owners, but as official representatives of corporations owning units. The Supreme Court emphasized that while only natural persons can hold board positions, these individuals represent their corporate members’ interests.
Background of the 2018 MPMCC Election
The issue arose during the MPMCC’s 20th annual general meeting on October 16, 2018. Gregorio Pastorfide presided over the meeting and announced seven candidates for the board, including himself and others who were representatives of corporations rather than individual unit owners. The condominium by-laws stated that only registered owners of units could be members and directors.
Questions emerged regarding the eligibility of these representatives, since they were not unit owners but officials of corporations that owned units. As there were no other nominees, the election committee declared all seven candidates elected without a formal vote.
Legal Challenge and Supreme Court Ruling
A unit owner filed a case challenging the election, arguing that non-unit owners should not hold director positions. The trial court initially nullified the election, but the Court of Appeals reversed this decision, stating the case lacked merit. The matter then reached the Supreme Court, which upheld the appellate court’s ruling.
The Court explained that corporations, as juridical persons, act through natural persons. Therefore, their representatives can be nominated, elected, and serve on the board on behalf of the corporation. The ruling stressed that this arrangement protects the essential ownership rights of corporations to participate in condominium governance.
The Court further warned that a corporation may only appoint one representative to avoid unfair dominance on the board, which might disrupt balanced decision-making.
Implications for Condominium Governance
This ruling ensures that corporate owners maintain their rights within condominium associations through their appointed representatives. It prevents any discrimination against juridical persons by recognizing their ability to influence board decisions legitimately.
By confirming that the corporation is the actual member and that natural person representatives act on its behalf, the Supreme Court has set a clear precedent for other condominium corporations facing similar issues.
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