G.R. No.

153468 August 17, 2006

PAUL LEE TAN, ANDREW LIUSON, ESTHER WONG, STEPHEN CO, JAMES TAN, JUDITH TAN,
ERNESTO TANCHI JR., EDWIN NGO, VIRGINIA KHOO, SABINO PADILLA JR., EDUARDO P.
LIZARES and GRACE CHRISTIAN HIGH SCHOOL, Petitioners,vs.PAUL SYCIP and MERRITTO LIM,
Respondents.

FACTS: Grace Christian High School (GCHS) is a nonstock, non-profit educational corporation with 15
regular members, who also constitute the board of trustees. During the annual members’ meeting, there
were only 11 living member-trustees, as 4 have already died. Out of the 11, 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 four deceased
member-trustees. The controversy reached SEC and the petitioners maintained that the deceased
member-trustees should not be counted in the computation of the quorum because, upon their death,
members automatically lost all their rights (including the right to vote) and interests in the corporation.
SEC declared the meeting null and void and ruled that the phrase “entitled to vote” under Sec 24 should
be read with Sec 89 of Corpo Code.

ISSUE: In a non-stock corporation, should dead members still be counted in determination of quorum for
purposed of conducting the Annual Members’ Meeting?

HELD: For stock corporations, the "quorum" referred to in Section 52 of the Corporation Code is based
on the number of outstanding voting stocks. For nonstock corporations, only those who are actual, living
members with voting rights shall be counted in determining the existence of a quorum during members’
meetings. Dead members shall not be counted.

One of the most important rights of a qualified shareholder or member is the right
to vote -- either personally or by proxy -- for the directors or trustees who are to manage the corporate
affairs. The right to vote is inherent in and incidental to the ownership of corporate stocks. In nonstock
corporations, the voting rights attach to membership. The principle for determining the quorum for stock
corporations is applied by analogy to nonstock corporations, only those who are actual members with
voting rights should be counted. Under Section 52, the majority of the members representing the actual
number of voting rights, not the number or numerical constant that may originally be specified in the
articles of incorporation, constitutes the quorum.

Having thus determined that the quorum in a members’ meeting is to be reckoned as the actual number
of members of the corporation, the next question to resolve is what happens in the event of the death of
one of them. In stock corporations, 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. On the other hand,
membership in and all rights arising from a nonstock corporation are personal and non-transferable,
unless the articles of incorporation or the bylaws of the corporation provide otherwise. In other words, the
determination of 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.

Under the By-Laws of GCHS, membership in the corporation shall, among others, be terminated by the
death of the member. Applying Section 91, dead members who are dropped from the membership roster
in the manner and for the cause provided for in the By-Laws of GCHS are not to be counted in
determining the requisite vote in corporate matters or the requisite quorum for the annual members’
meeting. With 11 remaining members, the quorum in the present case should be 6. Therefore, there being
a quorum, the annual members’ meeting was valid.