 “term” time during which the officer may claim to hold
Valle Verde Country Club V. Africa (2009)
FACTS:
 February 27, 1996: Ernesto Villaluna, Jaime C. Dinglasan
(Dinglasan), Eduardo Makalintal (Makalintal), Francisco
Ortigas III, Victor Salta, Amado M. Santiago, Jr.,
Fortunato Dee, Augusto Sunico, and Ray Gamboa
were elected as BOD during the Annual Stockholders’
Meeting of petitioner Valle Verde Country Club, Inc.
(VVCC)
 1997 - 2001: Requisite quorum could not be obtained so
they continued in a hold-over capacity
 September 1, 1998: Dinglasan resigned, BOD still
constituting a quorom elected Eric Roxas (Roxas)
 November 10, 1998: Makalintal resigned
 on March 6, 2001: Jose Ramirez (Ramirez) was elected
by the remaining BOD
 Respondent Africa (Africa), a member of VVCC,
questioned the election of Roxas and Ramirez as
members of the VVCC Board with the Securities and
Exchange Commission (SEC) and the Regional Trial
Court (RTC) as contrary to:
 Sec. 23. The board of directors or trustees. - Unless
otherwise provided in this Code, the corporate powers of
all corporations formed under this Code shall be
exercised, all business conducted and all property of such
corporations controlled and held by the board of
directors or trustees to be elected from among the holders
of stocks, or where there is no stock, from among the
members of the corporation, who shall hold office for 1
year until their successors are elected and qualified.
 Sec. 29. Vacancies in the office of director or trustee. -
Any vacancy occurring in the board of directors or
trustees other than by removal by the stockholders or
members 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
vacancies must be filled by the stockholders in a regular
or special meeting called for that purpose. A director or
trustee so elected to fill a vacancy shall be elected only
for the unexpired term of his predecessor in office. xxx.
 Makalintal's term should have expired after 1996 there
being no unexpired term. The vacancy should have been
filled by the stockholders in a regular or special meeting
called for that purpose
 RTC: Favored Africa - Ramirez as Makalintal's
replacement = null and void
 SEC: Roxas as Vice hold-pver director of Dinglasan =
null and void
 VVCC appealed in SC for certiorari being partially
contrary to law and jurisprudence
ISSUES:
1. W/N there is an unexpired term - NO
2. W/N the remaining directors of a corporation’s Board, still
constituting a quorum, can elect another director to fill in a
vacancy caused by the resignation of a hold-over director. -
NO
HELD: Petition Denied. RTC Affirmed.
1. NO
the office as of right
 not affected by the holdover
 fixed by statute and it does not change simply because the
office may have become vacant, nor because the
incumbent holds over in office beyond the end of the term
due to the fact that a successor has not been elected and
has failed to qualify.
 “tenure”
 term during which the incumbent actually holds office.
 Section 23 of the Corporation Code: term of BOD only 1
year - fixed and has expired (1 yr after 1996)
2. NO
 underlying policy of the Corporation Code is that the
business and affairs of a corporation must be governed by
a board of directors whose members have stood for
election, and who have actually been elected by the
stockholders, on an annual basis. Only in that way can the
directors' continued accountability to shareholders, and
the legitimacy of their decisions that bind the
corporation's stockholders, be assured. The shareholder
vote is critical to the theory that legitimizes the exercise
of power by the directors or officers over properties that
they do not own.
 theory of delegated power of the board of directors
 Section 29 contemplates a vacancy occurring within the
director’s term of office (unexpired)
 vacancy caused by Makalintal’s leaving lies with the
VVCC’s stockholders, not the remaining members of its
board of directors
Tan V. Sycip (2006)
FACTS:
 Grace Christian High School (GCHS) is a nonstock, non-
profit educational corporation w/ 15 regular members,
who also constitute the board of trustees.
 April 6, 1998: During the annual members’ meeting only
11 living member-trustees, as 4 had already died.
 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 4
deceased member-trustees.
 SEC: meeting void due to lack of quorum (NOT living
but based on AIC)
 Sec 24 read together with Sec 89
 CA: Dismissed due to technicalities
ISSUE: W/N dead members should still be counted in the
quorum - NO based on by-laws
HELD: NO. remaining members of the board of trustees of
GCHS may convene and fill up the vacancies in the board
 Except as provided, the vote necessary to approve a
particular corporate act as provided in this Code shall be
deemed to refer only to stocks with voting rights:
 1. Amendment of the articles of incorporation;
 2. Adoption and amendment of by-laws;
 3. Sale, lease, exchange, mortgage, pledge or other
disposition of all or substantially all of the corporation
property;
 4. Incurring, creating or increasing bonded indebtedness;
 5. Increase or decrease of capital stock;
 6. Merger or consolidation of the corporation with
another corporation or other corporations;
 7. Investment of corporate funds in another corporation or
business in accordance with this Code; and
 8. Dissolution of the corporation.
 quorum in a members’ meeting is to be reckoned as the
actual number of members of the corporation
 stock corporations - shareholders may generally transfer
their shares
 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
 nonstock corporation - personal and non-
transferable unless the articles of incorporation or the
bylaws of the corporation provide otherwise
 Section 91 of the Corporation Code: termination
extinguishes all the rights of a member of the corporation,
unless otherwise provided in the articles of incorporation
or the bylaws.
 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
 By-Laws of GCHS: membership in the corporation shall
be terminated by the death of the member
 With 11 remaining members, the quorum = 6.
 SECTION 29. Vacancies in the office of director or
trustee. -- Any vacancy occurring in the board of directors
or trustees other than by removal by the stockholders or
members 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
vacancies must be filled by the stockholders in a regular
or special meeting called for that purpose. A director or
trustee so elected to fill a vacancy shall be elected only
for the unexpired term of his predecessor in office.
 the filling of vacancies in the board by the remaining
directors or trustees constituting a quorum is merely
permissive, not mandatory
 either by the remaining directors constituting a quorum,
or by the stockholders or members in a regular or special
meeting called for the purpose
 By-Laws of GCHS prescribed the specific mode of filling
up existing vacancies in its board of directors; that is, by a
majority vote of the remaining members of the board
 remaining member-
trustees must sit as a board (as a body in a lawful
meeting)
in order to validly elect the new ones
115 Lopez Realty v. Fontecha
G.R. No. 76801, August 11, 1995
J. Puno
FACTS
Lopez Realty is a corp engaged in real estate business while
pet. Asuncion Gonzales is one if its majority stockholders.
Except for Arturo Lopez, the rest of the shareholders also sit as
members of the BOD. As found by Labor Arbiter, in 1978,
Arturo submitted a proposal relative to the distribution of
certain assets of the corp among its 3 main shareholders. The
proposal had 3 aspects: (1) sale of assets of corp to pay for its
obligations; (2) transfer of certain assets of company to 3 main
shareholders while some assets shall remain w/ the company;
(3) reduction of employees w/ provision for their gratuity pay. It
was approved in a special meeting of BOD held on Apr. 7,
1978.
Corp approved 2 resolutions providing for the gratuity pay – (a)
Resolution 6 which was passed on Sept. 8, 1980 resolving to
set aside, twice a year, certain sum of money for the gratuity
pay of its retiring employees and create a Gratuity Fund; (b)
Resolution 10, setting aside P157,750 as Gratuity Fund
covering 1950-1980.
Aug. 17, 1981 except for Asuncion Gonzales, who was then
abroad, convened a special meeting and passed a resolution
(a) those who will be laid off be given full amount of gratuity
and (b) those who will be retained will receive 25% of their
gratuity pay due Sept. 1, 1981 and another 25% on Jan. 1,
1982 and 50% to be retained by the office.
Private resps were the retained employees of the corp. In a
letter, they requested for the payment of their gratuity pay. It
was granted in a special meeting held. At that time, Gonzales
was still abroad. Allegedly, while she was abroad, she sent
telegram to the corp objecting to certain matters taken by the
board in her absence such as the sale of some assets. Upon
her return, she filed a derivative suit w/ SEC against majority
shareholder Arturo Lopez.
Notwithstanding the “corporate squabble” between Gonzales
and Lopez, the 1st two installments of gratuity pay of private
resps were paid. Also, the corp has prepared cash vouchers
and check for 3rd installment. For some reason, said vouchers
were cancelled by Gonzales. Despite demands for gratuity pay,
corporation refused to pay the same.
Labor Arbiter ruled in favor of private resps. NLRC affirmed.
ISSUE
Whether the corporation is bound to grant its employees
gratuity pay despite the lack of notice to a BOD during the
meeting wherein the said resolution was passed.
HELD
YES. As a general rule, a corporation through its BOD should
act in the manner and within the formalities prescribed by its
charter or by the general law. Thus, directors must act as a
body in a meeting called pursuant to the law or corporations
by-laws, otherwise any action may be questioned by any
objecting stockholder. However, an action of the BOD during a
meeting, which was illegal for lack of notice may be ratified
either expressly or by the action of the directors in subsequent
legal meeting or impliedly by the corporation’s subsequent
course of conduct.

In this case, pet. corp did not issue any resolution revoking nor
nullifying the resolutions. Instead, they paid the gratuity pay,
the 1st two installments of Fontecha, et al. Despite the alleged
lack of notice to Asuncion, from the records, she was aware of
the corp’s obligation under the resolutions and she acquiesced
thereto. She affixed her signature on cash vouchers evidencing
the 2nd installments of the gratuity pay of respondents. She is
estopped from assailing the validity of the resolutions.

Furthermore, assuming there was no notice given, resolutions

cannot be considered ultra vires since providing gratuity pay for
its employees is one of the express powers of the corp.

When private resps tendered their resignation, they were

already entitled to receive the gratuity pay. And Sec. 28 ½ of
Corp Law (now Sec. 40) is not applicable in this case as it
refers to sale, lease, exchange, disposition of all or
substantially all of the assets, including goodwill where it
requires the authorization of stockholders.

Except for Arturo Lopez, stockholders of petitioner also sit as

members of the BOD. Under the circumstances, it will be
illogical and superfluous to require the stockholder’s approval
of the subject resolutions.