Case Digest (G.R. No. 164686)
Facts:
Forest Hills Golf and Country Club, Inc. (Petitioner) is a non‑profit stock corporation operating an exclusive private golf club; Gardpro, Inc. (Respondent) purchased Class C shares entitling it to designate two corporate nominees for membership. In 1997 Gardpro's nominees were admitted after paying membership fees; when Gardpro later sought to replace its nominees Forest Hills demanded new membership fees, Gardpro refused and filed a complaint with the Securities and Exchange Commission in July 1999; the SEC ruled for Gardpro, the Court of Appeals affirmed on September 26, 2003, and Forest Hills appealed to the Supreme Court.
Issues:
- Did the replacement nominees of Gardpro have to pay new membership fees under the club's articles of incorporation and by‑laws?
- Did the Court of Appeals unlawfully encroach upon Forest Hills' prerogative to determine its membership rules and interpret its by‑laws?
- Was the denial of leave for the *amicus curiae* intervention by the Federation proper?
Ruling:
The Supreme Court affirmed the Court of Appeals' decision and denied the petition. The Court held that replacement nominees were not required to pay new membership fees and that only the applicable transfer fee under the by‑laws could be imposed; the CA did not usurp Forest Hills' corporate prerogatives; and the CA properly denied the Federation leave to appear as amicus curiae.
Ratio:
The Court applied the plain‑meaning rule of Article 1370 of the Civil Code and read the by‑laws as a whole under Article 1374 of the Civil Code, finding that the corporate member (Gardpro) was the real member and that Section 2.2.2 authorized a transfer fee for change of designated nominees while Section 13.7 confined membership fees to registration of the share after approval. The Court further noted the by‑laws are binding private statutes, that allowing repeated membership charges would unjustly enrich Forest Hills and deprive Gardpro of its property rights, and that the CA acted within its judicial function in interpreting those provisions; the CA's refusal to admit a partisan amicus curiae was within its discretion.
Doctrine:
- The by‑laws of a corporation are binding private statutes and must be strictly complied with.
- Where contract terms are clear, the literal meaning controls per Article 1370 of the Civil Code.
- Contractual stipulations must be read together under Article 1374 of the Civil Code.
- A juridical shareholder is the real corporate member; its change of nominees ordinarily triggers only a transfer fee, not a separate membership fee.
- Courts may refuse leave to appear as *amicus curiae* where the proposed intervenor is partisan or the parties are adequately represented.