G.R. No. 165443 - Calatagan Golf Club, Inc. vs. Clemente, Jr.

Petitioner Calatagan Golf Club, Inc. (Calatagan) filed a Rule 45 petition seeking reversal of the Court of Appeals’ decision and reinstatement of the Securities and Exchange Commission (SEC) decision.
Respondent Sixto Clemente, Jr. (Clemente) was a member and shareholder of Calatagan.

Clemente applied for membership and purchased one share of stock from Calatagan, paying P120,000.00 on May 2, 1990, obtaining Certificate of Stock No. A-01295.
Clemente provided his mailing address as "Phimco Industries, Inc. - P.O. Box 240, MCC," along with residential and office telephone numbers.
Calatagan charges monthly dues for general operations and maintenance, incorporated in its Articles of Incorporation and By-Laws, and printed at the back of each stock certificate.
The clause on dues stated dues not less than P50.00 monthly; at the time of Clemente's membership the dues were P400.00.

Clemente paid monthly dues amounting to P8,400.00 but then stopped paying, resulting in a balance of P400.00 and later P5,600.00 as of October 31, 1992.
Calatagan sent three repeated demand letters dated September 21, October 22, and December 7, 1992 to Clemente’s mailing address; the first two returned due to closed address, and the third—final warning letter, signed by the Corporate Secretary—was also returned undelivered.

Calatagan’s Board of Directors on December 1, 1992, authorized foreclosure of delinquent shares including Clemente’s and scheduled a public auction for January 15, 1993.
Auction notice was posted at the club premises on January 5, 1993.
Clemente’s share sold to Nestor A. Virata for P64,000.00.
Calatagan published a notice of foreclosure in Business World on May 26, 1993.
Clemente only learned of the sale in November 1997, almost four years later.

Clemente filed a complaint with SEC for restoration of his share and damages; SEC dismissed the complaint on November 15, 2000, citing prescription per Section 69 of the Corporation Code (action must be within six months).
Clemente filed a petition for review with the Court of Appeals.
The Court of Appeals reversed the SEC on June 1, 2004, restoring Clemente’s share and awarding damages totaling P400,000.00, less unpaid dues of P5,200.00.

Calatagan argued the action had prescribed under Section 69 of the Corporation Code, claimed compliance with notice requirements in the by-laws and law.
They also contended alternative prescriptions periods under Civil Code Articles 1146 and 1149 might apply.
The Court of Appeals held the action was not barred and Section 69 applies only to unpaid subscriptions to capital stock, not monthly dues of a non-stock corporation.
The By-Laws provide detailed procedures for billing, declaring delinquency, constitution of lien, foreclosure, and sale of shares which Calatagan allegedly failed to comply with in good faith, particularly due to lack of proper notice knowing the mailing address had been closed.

Whether the action for the recovery of Clemente’s share after its sale for unpaid monthly dues is barred by prescription under Section 69 of the Corporation Code.
Whether Calatagan Golf Club, Inc. complied with the notice and procedural requirements under its Articles of Incorporation and By-Laws prior to the foreclosure and auction sale of Clemente’s share.
Whether Clemente is entitled to damages for the alleged wrongful foreclosure and sale of his share due to failure of proper notice and bad faith on Calatagan’s part.