Title
Agdao Landless Residents Association, Inc. vs. Maramion
Case
G.R. No. 188642
Decision Date
Oct 17, 2016
ALRAI members expelled without due process; land transfers violated donation terms; SC upheld CA, restoring membership, annulling void transfers, and requiring accounting records.

Case Digest (G.R. No. L-10952)
Expanded Legal Reasoning Model

Facts:

  • Parties and Procedural Background
    • The case consolidated petitions for review on certiorari filed by:
      • Petitioners – Agdao Landless Residents Association, Inc. (ALRAI) and its board of directors (including Armando Javonillo, Ma. Acelita Armentano, Alex Josol, Salcedo de la Cruz, Jr., Claudio Lao, Antonia Amorada, Julius Alinsub, Pompeniano Espinosa, Consorcio Delgado, Romeo Cabillo, Benjamin Lamigo, Ricardo Bacong, Rodolfo Galenzoga, and Asuncion Alcantara).
      • Respondents – Alleged ousted members of ALRAI (including Rolando Maramion, Leonidas Jamisola, Virginia Canoy, Elizabeth Gonzales, Crispiniano Quire-Quire, Ernestino Dunlao, Ella Demandante, Ella Ria Demandante, Elgin Demandante, Saturnina Witara, Virgilio Dayondon, Melencia Maramion, Angelica Penkian, Presentacion Tan, Hernani Gregory, Rudy Gimarino, Valentin Cameros, Rodel Cameros, Zoilo Jabonete, Luisito Tan, Joseph Quire-Quire, Fred Dunlao, Liza Maramion, Clarita Robilla, Renato Dunlao, and Prudencio Juariza, among others).
    • The dispute originated from a Regional Trial Court (RTC) Decision dated July 11, 2007 in an intra-corporate controversy involving membership rights and the disposition of donated lands.
    • The Court of Appeals (CA) subsequently modified and affirmed the RTC ruling, which was later partially modified by the Supreme Court.
  • Donation of Lands and Corporate Transactions
    • Dakudao & Sons, Inc. executed six Deeds of Donation in favor of ALRAI covering 46 titled lots.
      • One deed imposed a restriction: ALRAI, as donee, was prohibited from partitioning or distributing individual certificates of title of the donated lots for five years unless written authority was secured; a violation rendered the donation void and reverted title to the donor.
      • The other five deeds did not include such a restriction.
    • ALRAI’s board resolved in meetings (January 2000) to transfer 10 of the donated lots to individual members and even non-members.
      • Various Transfer Certificates of Title (TCT) were issued to petitioners – for instance, transfers to Romeo Dela Cruz, Armando Javonillo, Ma. Acelita Armentano, and Asuncion Alcantara.
      • One transferred lot (originally under TCT No. T-41366, later TCT No. T-322970) was later sold to Lily Loy.
  • Allegations and Claims
    • Respondents claimed:
      • They were illegally expelled from ALRAI without due process.
      • Petitioners abused their powers by enacting anomalous and illegal acts including:
        • Charging exorbitant arrear fees contrary to the By-Laws.
        • Partially distributing donated lands in violation of the Deeds of Donation.
        • Withholding proper accounting records and membership notices.
        • Engaging in self-dealing, particularly in the transfer of ALRAI’s properties.
      • They also contested the status of Lily Loy as a buyer in bad faith, having known the disputed nature of the property.
    • Petitioners argued:
      • The expelled respondents had been ousted for non-payment of dues and repeated absences at meetings.
      • The transfers of properties benefited the corporation by compensating officers for their services or covering advanced expenses, as well as addressing legal fees.
  • Decisions of Lower Courts
    • The RTC ruled in favor of respondents by:
      • Restoring respondents’ membership due to a lack of due notice and the absence of proper procedures in expulsion.
      • Annulment of the transfers of the donated lots which violated the five-year prohibition and other restrictions.
      • Directing the production and inspection of ALRAI’s accounting records by petitioners/members.
    • The CA, in its decisions and resolutions, affirmed the RTC ruling with modifications:
      • Some transfers (those to John Dela Cruz and Lily Loy) were initially declared valid based on the ALRAI Constitution, while transfers to Javonillo, Armentano, and Alcantara were annulled for violating both the five-year restriction and constitutional provisions regarding self-dealing.
      • The CA emphasized that proper notice requirements for terminating membership were not met.
  • Consolidation and Nature of the Suit
    • The Supreme Court noted that the complaint regarding the corporate property (donated lands) appeared to be a derivative suit, although pursued by individual respondents.
    • The Court ruled that even when a case involves derivative claims, if the relief is for the benefit of the corporation, it may be liberally treated as such.
    • The case involved intricate corporate governance issues including the validity of corporate transactions and the enforcement of fiduciary duties.

Issues:

  • Validity of the Membership Termination
    • Whether the termination (or expulsion) of respondents from ALRAI was legally effectuated.
    • Whether the procedural requirements and due process (including proper and timely notice of meetings) were observed in the process of expulsion.
  • Validity of the Transfer of Donated Lots
    • Whether the transfers of the donated lots by ALRAI’s board (to petitioners such as Javonillo, Armentano, Dela Cruz, Alcantara, and the subsequent sale to Lily Loy) were valid.
    • Whether such transfers contravened the conditions stipulated in the Deeds of Donation (including the five-year prohibition on partition/distribution without donor’s written authority).
    • Whether the transfers served a legitimate corporate purpose or merely resulted in self-dealing and personal benefit to the directors/officers.
  • The Nature of the Suit
    • Whether the remedy sought (regarding the diversion of corporate properties) properly falls within the ambit of a derivative suit rather than an individual suit.
    • The implications of improper classification on the reliefs and proceedings.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)

Doctrine:

  • (Subscriber-Only)
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