Plan, plan and plan some more

QUESTION: Is Stonewall Central a better name for the property?
UPDATE (click): 2012 Audited Financial Statements
UPDATE (click): 2013 Annual Meeting packet
UPDATE (click): 2013 Special Meeting packet

AUDITED FINANCIAL STATEMENTS ANALYSIS 2009-2012 (click): A CPA analysis of SOHO Central Condominium Corporation's Audited Financial Statements

The Fantasy Vision

Does everyone remember this among the wonderful ads and brochures and how about the salespeople and what they told us. I hear such fantasies continue. So after watching and remembering, cry and then laugh at the truth that is being exposed.









And, if the above is not enough and you need elevated blood pressure, here is the project's brochure.

Many posts are still issues and need to be read once again. At this main hub of postings watch for new posts and updates. Please get involved by spreading the word as to the issues here. We must document all that is taking place. Many documents need retrieval and assistance is needed in getting them scanned and posted.

Wednesday, January 29, 2014

Official By-Laws Announcement: Annual Meeting

Official By-Laws Announcement

Annual Meeting

August 29, 2014


Please tell all Unit Owners you know or come into contact with to plan for being at the meeting.  If the Board does not attend, Unit Owners or their proxies may elect a chair for the meeting and conduct a meeting among ourselves.

By-Laws

Section 5. Annual Meeting. -The annual meeting of the members of the corporation for the election of directors/trustees and such other matters pertaining to the corporation shall be held at the principal office of the corporation at Mandaluyong City, Philippines or at such other place that the Board may determine, on the Last Friday of August of each year. Should a scheduled meeting be a legal holiday, the annual meeting shall be held on the next succeeding business day at the same place and time.

TRUE?

TRUE?



Given all that is wrong, I had to end the month and begin the Year of the Wooden Horse with a little humor after seeing this posted.

Controversy between PICAR and Century Properties

Controversy between PICAR and Century Properties

The following are two recent reports as to the current situation in Makati.


Court ruling benefits two feuding developers

http://www.tribune.net.ph/business/court-ruling-benefits-two-feuding-developers

Written by  Ed Velasco | Monday, 27 January 2014

Two feuding property giants, Picar Development Inc. and Century City Development Corp. (CCDC), benefitted from a Makati Regional Trial Court order over a disputed road that both companies co-owned along Kalayaan Avenue in Makati.
The Makati RTC has prohibited CCDC from resuming construction work and other alterations on a stretch of road along Kalayaan Avenue in Makati which it co-owns with Picar Development Inc.
The injunction issued recently said Century admitted in court that the 4,462 square meter property is co-owned with Picar.
CCDC said it respects the court’s issuance of a writ of preliminary injunction to maintain the status quo in the common-owned road, even as it maintains its position and resolve that the remaining works on the said road must be completed for the benefit of both its clients and the general public.
CCDC which is the majority owner of the former International School Property, maintains that it has conducted works on the common-owned road with the proper permissions and in full compliance with the law.
CCDC said it, however, considers the court’s latest order for Picar to remove their barricade on the common-owned road last Friday, as a positive development, as it provides relief to residents and tenants who have now regained access to the road.
Picar asked for the partitioning of the property.
Until that happens, the court said Picar’s right must be respected by Century which on two occasions last December “forcibly” installed traffic lights and signages, and did construction and landscaping works in the area without the consent of Picar.
The court said if Century can “arrogate (upon itself) the administration and use of the co-owned property…(Picar) would be effectively deprived of its property without due process.”
Hence, it added, Picar has the “right to be notified and to give or withhold its consent” to Century’s work proposal.
The co-owned road is flanked by the two condominium towers which the two companies are building separately: Stratford Residences and Gramercy.
In front of Stratford is Buddha Bar.
This is not the first skirmish between the two companies. Last year, Picar complained that Century added additional floors on its Gramercy condominium without the proper permits.
Picar, which claims to have the tallest residential condominium tower in the country, said Century pitched Gramercy as the tallest as a result of the extra floors.
The Makati RTC branch issued two successive court orders, the first on Jan. 16 and the second on Jan. 23 that compelled Picar (Development Corp.) to remove the boom gates, buses and other motor vehicles that it used to barricade a road that it co-owns with a neighboring project, while at the same time issued a writ of preliminary injunction ordering CCDC to refrain from conducting final works on the road.


***

Makati RTC issues injunction vs Century

http://www.mb.com.ph/makati-rtc-issues-injunction-vs-century/

January 27, 2014

Judge Bonifacio S. Pascua of the Makati Regional Trial Court has prohibited Century City Development Corp. (CCDC) from resuming construction work and other alterations on a stretch of road along Kalayaan Ave in Makati which it co-owns with Picar Development Inc.
The injunction issued last Friday said Century had admitted in court that the 4,462 square meter property is co-owned with Picar.
Picar has asked for the partitioning of the property. Until that happens, the court said Picar’s right must be respected by Century which on two occasions last December “forcibly” installed traffic lights and signages, and did construction and landscaping works in the area without the consent of Picar.
The court said if Century can “arrogate (upon itself) the administration and use of the co-owned property…(Picar) would be effectively deprived of its property without due process.”
Hence, it added, Picar’s has the “right to be notified and to give or withhold its consent” to Century’s work proposal.
The co-owned road is flanked by the two condominium towers the two companies are building separately: Stratford Residences and Gramercy. In front of Stratford is Buddha Bar.
This is not the first skirmish between the two companies. Last year, Picar complained that Century added additional floors on its Gramercy condominium without the proper permits.
Picar, which claims to be the tallest residential condominium tower in the country, said Century pitched Gramercy as the tallest as a result of the extra floors.

Cigarette Butts

Cigarette Butts


This and all the other garbage thrown off balconies is an old story we have talked and written about with other Unit Owners.  Of course, the worst case are the balconies of the 4th floor Mayflower Tower which are quite large and useless due to the falling debris.  This and other writings have been posted as well as photos.

We have a rule after we had packaged and delivered the garbage from the balcony, whatever lands is thrown out immediately.  Yes, there have been items dropped on to the balcony that may have been wanted but they became immediate garbage since we are sick of this endless situation.

All that may be said of this issue begins and ends with the managing of the building.  If the managing were done correctly which has never taken place, there would be fliers and memos educating Unit Owners and residents from the start.  But, this has never taken place.  There are other issues this would be appropriate for but why do anything that makes sense.

This post is made due to a recent memo acting after the fact as usual.

Saturday, January 25, 2014

Follow-up Complaint on Elevator Non-Answer Answer

UPDATE (02/03/14):  As of today, still no copies for 1, 2 and 3 in the follow-up on the complaint.  I do not understand.  Is anyone able to explain this?  Why the delay? Ryan once again went to the administration office and was told "trying to make it available."  What does this mean?
UPDATE (01/31/14):  As of today, still no copies for 1, 2 and 3 in the follow-up on the complaint.  I do not understand why making copies of all three would take so long since they already appear to have given the insurance policies.  Is anyone able to explain this?  Why the delay?
UPDATE (01/28/14):  Ryan has just had copies of the insurance policies delivered which appear to be complete as far as numbers 4 and 5 of the list provided in the most recent elevator complaint.  These copies also give the former and most recent past insurance policies.  We had always asked to pay for what documents we had been able to get and were told it was not necessary.  But given the writing about charges for copies, we wanted to assure and let everyone know we had always asked.  They now have charged for these copies and Ryan asked for an Official Receipt.  We have now scanned and posted copies to be viewed for free by all those accessing the links below.  Of course, they may be downloaded, too.

Charter Ping An Insurance Corporation Policy No. FI-REG-HO-13-0001641-00
Please note on page 3 that this policy is signed for and on behalf of four (4) insurers with the following percentage coverage :  Charter Ping An Insurance Corp. 45%; Federal Phoenix Assurance Co., Inc. 25%; PNB General Insurers Company, Inc. 15%; UCPB General Insurers Co., Inc. 15%.

former Prudential Guarantee and Assurance, Inc. Policy No. FL-FLR-HOM-0055897 and Oriental Assurance Corporation Policy No. H11FD12056/RO1.  These two insurance carriers' coverage was the same at PhP 697,000,000.00.  This seems to differ from the "panel" coverage we now have with only percentages covered which, I believe, would leave us at a loss if one or more fail.
 
Ryan was told while paying the 4th floor administration office in cash that the other copies requested are being gathered.
 
The current insurance policy is "Exclusively for:  Soho Central Condominium Corporation "as principal"; and/or Greenfield Development Corporation; and/or Meridien Development Group, Inc.; and/or Century Project Management and Construction Corp.; and/or Century Properties Management, Inc."  BUT, who pays the part for the elevators since Soho Central Condominium Corporation (SCCC) does not own the elevators as stated in the non-answer answer?  Why is SCCC paying for others?  Are the others reimbursing SCCC?

Here is the bill and receipt since this has been mentioned in the past.  Why is unknown since we always were willing to pay and told no.

 
Please everyone examine and think about all the details.  Who pays for what?
 

Follow-up Complaint on Elevator Non-Answer Answer


Of course, there have been many complaints concerning the elevators in one form or another in many forums.  The last complaint form submitted was replied to with no answer.  The non-answer answers really must cease.

http://sohocentralcondominium.blogspot.com/2014/01/new-complaint-form-for-elevators.html

Below is the response to the non-answer answer and the non-answer answer.  After the follow-up complaint below submitted to and acknowledged by the admin office and also given to the city, a memo was posted regarding preventive maintenance.  What has taken place as far as preventive maintenance much less fully installed elevators since turnover in 2009?

It is written in the memo with a schedule for this supposed maintenance "... to prevent /or minimize frequent elevator breakdowns that we are encountering now."  "Encountering now?"  We have been encountering the elevators on-going and continual failure since 2009.  Now we have emergency repairs and the idea of a light at the end of the long dark tunnel.  Given the falling elevators, I can only pray that the light is not the journey we will all eventually take.

Follow-up Complaint:




Of course, I take exception to "they malfunction every once in a while."  The elevators have now been malfunctioning for years.  The non-answer answer below states to repair or rehabilitate.  Rehabilitate is used and is faulty in its implication since no Unit Owner I know wants the elevators in the prior state which is malfunctioning.  It would seem the elevators have never been fully installed.  Installation of fully functioning and safe elevators is what we expect, paid for and demand.

Further to the unnamed "private reputable engineering firm", when was it "commissioned?"  When and where was this expense approved and reflected in what Minutes & Resolution?  How much was this expense?

Non-Answer Answer:


Complaint made last September:



Answer to Complaint last September:


Friday, January 24, 2014

Panel of Four Insurance Carriers

Panel of Four Insurance Carriers


I have written and will write about this new insurance coverage situation for the property which as so much else we are surprised with due to lack of transparency.  We have not gotten copies of the policies or policy and the payment made to each.

If anyone is able to get information, please let us know.

I was just told of an incident today of a severe leak that took place and who paid.  I believe the Unit Owner should not have paid anything.  The problem has been lack of knowledge on who to contact if information is kept from us.

Here are the insurance companies and contact information I was able to get from the government website.

Charter Ping An Insurance Corporation
Ground & 2nd Floors, Skyland Plaza
Sen. Gil Puyat Avenue cor. Tindalo St.
Makati City
President - Melecio Mallillin
892-53-02; 844-70-44
 
Federal Phoenix Assurance Co., Inc.
9th Floor, Pacific Star Building
Sen. Gil Puyat Avenue cor. Makati Avenue
Makati City
President - Ramon Yap Dimacali
811-51-11 to 27; 859-12-00
federalphoenix.com
 
PNB General Insurance Company, Inc.
2nd Floor PNB Financial Center
Diosdado Macapagal Avenue
Roxas Boulevard
Pasay City
President & CEO - Reynaldo P. Manalac
526-36-40; 832-03-12
 
UCPB General Insurance Company, Inc.
24th & 25th Floors, LKG Tower
6801 Ayala Avenue
Makati City
President - Isabelo P. Africa
884-12-34

Service Elevator Entrances: Floors 41-40

Service Elevator Entrances:  Floors 41-40


The repair of the entrances I find to be unacceptable low quality work.  We will take photos of the entrances and post them in groups as we go down floor by floor.  There is no reason that quality work could not have been performed to have them appear as before the demolition.

The color is not matching, painting is poorly done, gaps are not sealed, paint is on the floor since proper covering was not made, moulding was not replaced but cement and/or spackle used in its place, the light fixtures were not covered during the work, and the top corners were not caused to be the same as the previous look so as to match the other elevator entrances.

I would ask everyone to take a look at your floors to compare and judge the work.
















 
 

Thursday, January 23, 2014

The Cages

The Cages

I have written about the 40th floor roof on the Shaw Tower and to a lesser extent the 40th floor on the Mayflower Tower in small part due to that roof's door being locked at times.  Is that a violation of the fire laws?  No escape to that roof for those in dire trouble.

If anyone wants a tour and all that I may recall of that roof area, let me know.  Now there are cages there for laundry decided upon at one of the private & secret meetings we are not allowed to attend and witness much less comment.

The cages, in my opinion, have lowered the value of the two unit with balconies facing the common roof area.  If planning, planning and more planning was done that may have generated thought as to the blocking of views.  Perhaps the cages could have been placed in two sections away from the balconies allowing the one to be free of the damaging effect and the other a line of sight to the north.  But why think of the Unit Owners at those meetings.

Of course, when one or two units have lowered values there is a ripple effect throughout the building, if anything, for lack of consideration reflecting the managing of the building.

Could the cages have been placed on the Mayflower Tower roof?

 


 

Master Deeds' Rules on Election of Directors

Master Deeds' Rules on Election of Directors

As Armando Ang, author of Guide to Homeownership, wrote, get the By-Laws and Master Deed before you buy.  The developers do not want buyers to see these documents.

Here is the section in three Master Deeds for election of Directors.  It seems that as Century Properties continues in its projects the deeds become more restrictive for control.

Soho Central:


Nominees for all members of the condominium corporation to vote on become nominees with restricted voting in the next two.  I would think that this needs to be reviewed by the SEC in view of the Corporate Code.  Section 23 of the Code makes no mention of limiting voting of Directors for members.

Gramercy:


Knightsbridge:


***

It is time for some legal review and opinion.

Corporate Code Section 23:

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 one (1) year until their successors are elected and qualified.

The Slope

The Slope

Has anyone noticed the slope from the front of the new building, Greenfield's Twin Oaks, next door to the front of our building?  Did the Board notice this?  Did the Directors on the Board notice this?  Did anyone in managing the building notice this?

Think rain along with dirt aimed for our front.

Did anyone think to require, at the very least, a metal grill drain to be placed on their property since they sloped into Soho Central's?  After all someone thought to require the shield in the pool area from falling debris though paint was not stopped from what I was told happened.

Many times again, if all the meetings were open and not private & secret such matters may be brought up and planned for with greater efficiency.  Rational logical sense is needed.



Monday, January 20, 2014

Valle Verde vs Africa (2009): Holdover Directors Cannot Appoint New Directors

Valle Verde vs Africa (2009):  Holdover Directors Cannot Appoint New Directors


Here is the decision I have linked to but needs continuous emphasis since I suspect this decision is being violated in many condominium corporations.  Directors under law only have terms for one (1) year.  If there is no election due to lack of quorum, sitting Directors have their terms end but their tenure on the Board continues.  But, they cannot appoint new Directors if there are vacancies.  Only the members may fill the seats through elections.  Why has and is this decision being violated?

(Click here for a .pdf of the decision.)
 
 
                                                 SECOND DIVISION
 
                                                                  
VALLE VERDE COUNTRY CLUB, INC., ERNESTO VILLALUNA, RAY GAMBOA, AMADO M. SANTIAGO, JR., FORTUNATO DEE, AUGUSTO SUNICO, VICTOR SALTA, FRANCISCO ORTIGAS III, ERIC ROXAS, in their capacities as members of the Board of Directors of Valle Verde Country Club, Inc., and JOSE RAMIREZ,
                                             Petitioners,
 
 
- versus -
 
 
VICTOR AFRICA,
                                         Respondent.
        G.R. No. 151969
 
        Present:
 
   Quisumbing, J., Chairperson,
   CARPIO-MORALES,
   brion,
        DEL CASTILLO, and
   ABAD, JJ.
 
 
 
 
 
 
        Promulgated:
     
 
                    September 4, 2009

x ---------------------------------------------------------------------------------------------- x

 

 

                                                  D E C I S I O N


 

BRION, J.:
 
In this petition for review on certiorari,[1] the parties raise a legal question on corporate governance: Can the members of a corporation’s board of directors elect another director to fill in a vacancy caused by the resignation of a hold-over director?
 
 
THE FACTUAL ANTECEDENTS
 
 
On February 27, 1996, during the Annual Stockholders’ Meeting of  petitioner Valle Verde Country Club, Inc. (VVCC), the following were elected as members of the VVCC Board of Directors: 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.[2]  In the years 1997, 1998, 1999, 2000, and 2001, however, the requisite quorum for the holding of the stockholders’ meeting could not be obtained.  Consequently, the above-named directors continued to serve in the VVCC Board in a hold-over capacity.
 
On September 1, 1998, Dinglasan resigned from his position as member of the VVCC Board.  In a meeting held on October 6, 1998, the remaining directors, still constituting a quorum of VVCC’s nine-member board, elected Eric Roxas (Roxas) to fill in the vacancy created by the resignation of Dinglasan. 
 
A year later, or on November 10, 1998, Makalintal also resigned as member of the VVCC Board.  He was replaced by Jose Ramirez (Ramirez), who was elected by the remaining members of the VVCC Board on March 6, 2001.
 
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), respectively.  The SEC case questioning the validity of Roxas’ appointment was docketed as SEC Case No. 01-99-6177.  The RTC case questioning the validity of Ramirez’ appointment was docketed as Civil Case No. 68726. 
 
In his nullification complaint[3] before the RTC, Africa alleged that the election of Roxas was contrary to Section 29, in relation to Section 23, of the Corporation Code of the Philippines (Corporation Code).  These provisions read:
 
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 one (1) year until their successors are elected and qualified.
 
x x x x
 
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. [Emphasis supplied.]
 
 
Africa claimed that a year after Makalintal’s election as member of the VVCC Board in 1996, his [Makalintal’s] term – as well as those of the other members of the VVCC Board – should be considered to have already expired.  Thus, according to Africa, the resulting vacancy should have been filled by the stockholders in a regular or special meeting called for that purpose, and not by the remaining members of the VVCC Board, as was done in this case.   
 
Africa additionally contends that for the members to exercise the authority to fill in vacancies in the board of directors, Section 29 requires, among others, that there should be an unexpired term during which the successor-member shall serve.  Since Makalintal’s term had already expired with the lapse of the one-year term provided in Section 23, there is no more “unexpired term” during which Ramirez could serve.
 
          Through a partial decision[4] promulgated on January 23, 2002, the RTC ruled in favor of Africa and declared the election of Ramirez, as Makalintal’s replacement, to the VVCC Board as null and void. 
 
          Incidentally, the SEC issued a similar ruling on June 3, 2003, nullifying the election of Roxas as member of the VVCC Board, vice hold-over director Dinglasan.  While VVCC manifested its intent to appeal from the SEC’s ruling, no petition was actually filed with the Court of Appeals; thus, the appellate court considered the case closed and terminated and the SEC’s ruling final and executory.[5]   
 
THE PETITION
 
          VVCC now appeals to the Court to assail the RTC’s January 23, 2002 partial decision for being contrary to law and jurisprudence.  VVCC made a direct resort to the Court via a petition for review on certiorari, claiming that the sole issue in the present case involves a purely legal question.
 
As framed by VVCC, the issue for resolution is whether the remaining directors of the 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. 
 
Citing law and jurisprudence, VVCC posits that the power to fill in a vacancy created by the resignation of a hold-over director is expressly granted to the remaining members of the corporation’s board of directors.  
 
Under the above-quoted Section 29 of the Corporation Code, a vacancy occurring in the board of directors caused by the expiration of a member’s term shall be filled by the corporation’s stockholders.  Correlating Section 29 with Section 23 of the same law, VVCC alleges that a member’s term shall be for one year and until his successor is elected and qualified; otherwise stated, a member’s term expires only when his successor to the Board is elected and qualified.  Thus, “until such time as [a successor is] elected or qualified in an annual election where a quorum is present,” VVCC contends that “the term of [a member] of the board of directors has yet not expired.”
 
As the vacancy in this case was caused by Makalintal’s resignation, not by the expiration of his term, VVCC insists that the board rightfully appointed Ramirez to fill in the vacancy. 
 
In support of its arguments, VVCC cites the Court’s ruling in the 1927 El Hogar[6] case which states:
 
Owing to the failure of a quorum at most of the general meetings since the respondent has been in existence, it has been the practice of the directors to fill in vacancies in the directorate by choosing suitable persons from among the stockholders.  This custom finds its sanction in Article 71 of the By-Laws, which reads as follows:
 
            Art. 71.  The directors shall elect from among the shareholders members to fill the vacancies that may occur in the board of directors until the election at the general meeting.
 
xxxx
 
Upon failure of a quorum at any annual meeting the directorate naturally holds over and continues to function until another directorate is chosen and qualified. Unless the law or the charter of a corporation expressly provides that an office shall become vacant at the expiration of the term of office for which the officer was elected, the general rule is to allow the officer to hold over until his successor is duly qualified. Mere failure of a corporation to elect officers does not terminate the terms of existing officers nor dissolve the corporation. The doctrine above stated finds expression in article 66 of the by-laws of the respondent which declares in so many words that directors shall hold office "for the term of one year or until their successors shall have been elected and taken possession of their offices." xxx.
 
It results that the practice of the directorate of filling vacancies by the action of the directors themselves is valid. Nor can any exception be taken to the personality of the individuals chosen by the directors to fill vacancies in the body. [Emphasis supplied.]
 
          Africa, in opposing VVCC’s contentions, raises the same arguments that he did before the trial court.
 
 
THE COURT’S RULING
 
 
We are not persuaded by VVCC’s arguments and, thus, find its petition unmeritorious.
 
To repeat, the issue for the Court to resolve is whether 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.  The resolution of this legal issue is significantly hinged on the determination of what constitutes a director’s term of office. 
 
The holdover period is not part of the term of office of a member of the board of directors
 
The word “term” has acquired a definite meaning in jurisprudence.  In several cases, we have defined “term” as the time during which the officer may claim to hold the office as of right, and fixes the interval after which the several incumbents shall succeed one another.[7]  The term of office is not affected by the holdover.[8]  The term is 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.
 
Term is distinguished from tenure in that an officer’s “tenure” represents the term during which the incumbent actually holds office.  The tenure may be shorter (or, in case of holdover, longer) than the term for reasons within or beyond the power of the incumbent.
 
Based on the above discussion, when Section 23[9] of the Corporation Code declares that “the board of directors…shall hold office for one (1) year until their successors are elected and qualified,” we construe the provision to mean that the term of the members of the board of directors shall be only for one year; their term expires one year after election to the office.  The holdover period – that time from the lapse of one year from a member’s election to the Board and until his successor’s election and qualification – is not part of the director’s original term of office, nor is it a new term; the holdover period, however, constitutes part of his tenure.  Corollary, when an incumbent member of the board of directors continues to serve in a holdover capacity, it implies that the office has a fixed term, which has expired, and the incumbent is holding the succeeding term.[10]
 
          After the lapse of one year from his election as member of the VVCC Board in 1996, Makalintal’s term of office is deemed to have already expired.  That he continued to serve in the VVCC Board in a holdover capacity cannot be considered as extending his term.  To be precise, Makalintal’s term of office began in 1996 and expired in 1997, but, by virtue of the holdover doctrine in Section 23 of the Corporation Code, he continued to hold office until his resignation on November 10, 1998.  This holdover period, however, is not to be considered as part of his term, which, as declared, had already expired.
 
With the expiration of Makalintal’s term of office, a vacancy resulted which, by the terms of Section 29[11] of the Corporation Code, must be filled by the stockholders of VVCC in a regular or special meeting called for the purpose.  To assume – as VVCC does – that the vacancy is caused by Makalintal’s resignation in 1998, not by the expiration of his term in 1997, is both illogical and unreasonable.  His resignation as a holdover director did not change the nature of the vacancy; the vacancy due to the expiration of Makalintal’s term had been created long before his resignation.  
 
The powers of the corporation’s board of directors emanate from its stockholders
 
          VVCC’s construction of Section 29 of the Corporation Code on the authority to fill up vacancies in the board of directors, in relation to Section 23 thereof, effectively weakens the stockholders’ power to participate in the corporate governance by electing their representatives to the board of directors.  The board of directors is the directing and controlling body of the corporation. It is a creation of the stockholders and derives its power to control and direct the affairs of the corporation from them. The board of directors, in drawing to themselves the powers of the corporation, occupies a position of trusteeship in relation to the stockholders, in the sense that the board should exercise not only care and diligence, but utmost good faith in the management of corporate affairs.[12] 
 
          The 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.[13]
 
          This theory of delegated power of the board of directors similarly explains why, under Section 29 of the Corporation Code, in cases where the vacancy in the corporation’s board of directors is caused not by the expiration of a member’s term, the successor “so elected to fill in a vacancy shall be elected only for the unexpired term of the his predecessor in office.”  The law has authorized the remaining members of the board to fill in a vacancy only in specified instances, so as not to retard or impair the corporation’s operations; yet, in recognition of the stockholders’ right to elect the members of the board, it limited the period during which the successor shall serve only to the “unexpired term of his predecessor in office.” 
         
While the Court in El Hogar approved of the practice of the directors to fill vacancies in the directorate, we point out that this ruling was made before the present Corporation Code was enacted[14] and before its Section 29 limited the instances when the remaining directors can fill in vacancies in the board, i.e., when the remaining directors still constitute a quorum and when the vacancy is caused for reasons other than by removal by the stockholders or by expiration of the term.
 
It also bears noting that the vacancy referred to in Section 29 contemplates a vacancy occurring within the director’s term of office. When a vacancy is created by the expiration of a term, logically, there is no more unexpired term to speak of.  Hence, Section 29 declares that it shall be the corporation’s stockholders who shall possess the authority to fill in a vacancy caused by the expiration of a member’s term. 
 
As correctly pointed out by the RTC, when remaining members of the VVCC Board elected Ramirez to replace Makalintal, there was no more unexpired term to speak of, as Makalintal’s one-year term had already expired.  Pursuant to law, the authority to fill in the vacancy caused by Makalintal’s leaving lies with the VVCC’s stockholders, not the remaining members of its board of directors.
 
WHEREFORE, we DENY the petitioners’ petition for review on certiorari, and AFFIRM the partial decision of the Regional Trial Court, Branch 152, Manila, promulgated on January 23, 2002, in Civil Case No. 68726. Costs against the petitioners.
 
SO ORDERED.
 
ARTURO D. BRION
Associate Justice
 
WE CONCUR:
 
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
 
 
 
CONCHITA CARPIO MORALES
Associate Justice
 
 
 
MARIANO C. DEL CASTILLO
Associate Justice
 
 
ROBERTO A. ABAD
Associate Justice
 
 
ATTESTATION
 
          I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.
 
 
                                                LEONARDO A. QUISUMBING
                                                            Associate Justice
                                                               Chairperson
 
 
                                           CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

 
 
                                                         REYNATO S. PUNO
                                                               Chief Justice  



[1]  Filed under Rule 45 of the Rules of Court; rollo, pp. 11-23.
[2] Also co-petitioners of VVCC in the present petition.
[3] Africa’s complaint before the RTC was denominated as “Nullification of the ‘Election’ of a ‘New Regular/Hold-Over (?) Director’ and Damages”; rollo, pp. 31-46.
[4] Id., pp. 28-30.
[5] CA Resolution dated August 27, 2003; id., p. 124.
[6] Government of the Philippine Islands v. El Hogar Filipino, 50 Phil. 399 (1927).
[7] See Topacio Nueno v. Angeles, 76 Phil. 12, 21-22 (1946); Alba v. Evangelista, 100 Phil. 683, 694 (1957); Paredes v. Abad, 155 Phil. 494 (1974); Aparri v. Court of Appeals, No. L-30057, January 31, 1984, 127 SCRA 231.
[8] Gaminde v. Commission on Audit, G.R. No. 140335, December 13, 2000, 347 SCRA 655.
[9]  The full text of which reads:
 
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 one (1) year until their successors are elected and qualified.
 
Every director must own at least one (1) share of the capital stock of the corporation of which he is a director, which share shall stand in his name on the books of the corporation. Any director who ceases to be the owner of at least one (1) share of the capital stock of the corporation of which he is a director shall thereby cease to be a director. Trustees of non-stock corporations must be members thereof. A majority of the directors or trustees of all corporations organized under this Code must be residents of the Philippines.
[10]  Words & Phrases, Vol. 19, p. 576.
[11]  The full text of which reads:
 
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 or the unexpired term of his predecessor in office.
 
A directorship or trusteeship to be filled by reason of an increase in the number of directors or trustees shall be filled only by an election at a regular or at a special meeting of stockholders or members duly called for the purpose, or in the same meeting authorizing the increase of directors or trustees if so stated in the notice of the meeting.
[12]  Legarda  v.  La Previsora Filipina, 66 Phil. 173 (1938), citing Angeles v. Santos, 64 Phil. 697 (1937).
[13] Comac Partners, L.P., et al., v. Ghaznavi, et al., Del. Ch., 793 A.2d 372 (2001), citing Bentas v. Haseotes, Del. Ch., 769 A.2d 70, 76 (2000) and Blasius Indus., Inc. v. Atlas Corp., Del. Ch., 564 A.2d 651, 659 (1988).
[14]  The Corporation Code or Batas Pambansa Blg. 68 was enacted on May 1, 1980.