Case Digest (G.R. No. 165443)
Facts:
Calatagan Golf Club, Inc. v. Sixto Clemente, Jr., G.R. No. 165443, April 16, 2009, Supreme Court Second Division, Tinga, J., writing for the Court. Petitioner Calatagan Golf Club, Inc. sought review by petition under Rule 45 to reverse the Court of Appeals’ decision and to reinstate the Securities and Exchange Commission’s earlier dismissal of respondent Sixto Clemente, Jr.’s complaint.
Clemente applied for and purchased one share of Calatagan’s membership stock, paying P120,000 and receiving Certificate of Stock No. A-01295 on May 2, 1990; his membership application listed a mailing address as “Phimco Industries, Inc. - P.O. Box 240, MCC,” plus a residential address and telephone numbers. Calatagan’s certificates and by-laws included a provision that shareholders are subject to monthly dues (then P400) and that unpaid dues may result in a lien on and sale of shares.
Clemente paid several dues installments (P3,000 on March 21, 1991; P5,400 on December 9, 1991) and then ceased payments; his balance later amounted to P400, and by October 31, 1992 his arrears were listed as P5,600. Calatagan sent demand letters on September 21 and October 22, 1992; both were returned marked that the P.O. box had been closed. The board authorized foreclosure and public auction by resolution of December 1, 1992. A final demand letter dated December 7, 1992, signed by the Corporate Secretary, was again mailed to the closed P.O. box.
Following posting of auction notices on January 5, 1993, Calatagan auctioned the shares on January 15, 1993; Clemente’s share was sold for P64,000 to Nestor A. Virata (Certificate of Sale). At sale the accrued dues were P5,200. Notice of foreclosure was published May 26, 1993. Clemente learned of the sale only in November 1997 and filed a complaint with the Securities and Exchange Commission (SEC) for restoration of his share and damages.
On November 15, 2000, the SEC dismissed Clemente’s complaint as prescribed under Section 69 of the Corporation Code, holding that actions to question sale of delinquent stock must be commenced within six months from date of sale; the SEC also found Calatagan complied with requirements and that Clemente had acted in bad faith by not notifying the club of a change in address. Clemente appealed to the Court of Appeals, which on June 1, 2004 reversed the SEC, ordered restoration of the share (less unpaid dues), and awarded P400,000 in damages (P200,000 moral, P100,000 exemplary, P100,000 attorney’s fees). The Court of Appeals relied on SEC precedent (Caram v. Valley Golf Country Club, Inc.) to find Section 69 inapplicable and applied prescription under Article 1140 of the Civil Code (8 years); it also found Calatagan failed to comply with its by-laws and acted in bad faith in sending the final notice to a known-closed P.O. box.
Petitioner Calatagan filed the present Rule 45 petition asking the Supreme Court to reverse the Court of Appeals and reinstate the SEC decis...(Subscriber-Only)
Issues:
- Was Clemente’s action to recover his share barred by prescription under Section 69 of the Corporation Code?
- Did Calatagan comply with its by-laws and act in good faith in notifying Clemente before the foreclosure sale of his share?
- Were the Court of Appeals’ awards of restoration of the share and damages (actual, moral, exempla...(Subscriber-Only)
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)