SEC OGC Opinion No. 24-02: Re: Composition of Board of Trustees of a Condominium Corporation

The Securities and Exchange Commission (“SEC”) issued SEC-OGC Opinion No. 24-02 (“Opinion”) on 19 January 2024, which clarified the rule in case of inconsistencies in the Articles of Incorporation (“AOI”) and By-laws, and the Master Deed and Declaration of Restrictions (“MDDR”) of a condominium corporation. 

The Opinion arose from a query presented by The Cambridge Village Condominium Association, Inc. (“TCVCAI”), a non-stock, non-profit corporation. TCVCAI’s AOI and By-laws require 5 members of the Board of Trustees. On the other hand, TCVCAI’s MDDR requires 7 trustees to be appointed to the Board of Trustees. 

TCVCAI sought the opinion of the SEC to determine whether the prescribed number of trustees in the AOI and By-laws or the MDDR should be followed. 

Condominium Corporation’s Master Deed vs. AOI and By-laws

Section 10 of the Condominium Act provides that “the articles of incorporation or by-laws of the corporation shall not contain any provision contrary to or inconsistent with the provisions of this Act, the enabling or master deed, or the declaration of restrictions of the project.” In case of inconsistency in the provisions of the AOI/By-laws and the Master Deed, the provisions of the Master Deed shall prevail following Section 10 of the Condominium Act. This is in line with the basic principle that a special law prevails over a general law. 

TCVCAI’s AOI and By-laws must thus be amended to be consistent with the provisions of the MDDR. In the meeting to amend their AOI and By-laws, TCVCAI shall follow the quorum requirement as stated in the Revised Corporation Code (“RCC”).  For purposes of such meeting, the required quorum shall be the majority of 7 which is the prescribed number under the MDDR, following the principle that the MDDR prevails over the AOI and the By-laws. 

Pending the amendment of the AOI, and for purposes of election of the board of trustees, the number of trustees that shall be elected must also be 7.

Effect of Delinquency 

Section 70 of the RCC, although about stock corporations, may be applied to non-stock corporations like TCVCAI. As such, delinquent members, like delinquent stockholders, are not entitled to vote and should not be included in determining the existence of the required quorum.