Case Digest (G.R. No. 158805)
Facts:
Valley Golf & Country Club, Inc. v. Rosa O. Vda. de Caram, G.R. No. 158805, April 16, 2009, Supreme Court Second Division, Tinga, J., writing for the Court. Petitioner was Valley Golf & Country Club, Inc. (a non-stock, non-profit corporation operating a golf course); respondent was Rosa O. Vda. de Caram, heir of the late Fermin Z. Caram, Jr., holder of Stock Certificate No. 389 (a fully paid “Golf Share”).In 1961 Caram acquired and fully paid for one Golf Share. Valley Golf asserted that Caram became delinquent in monthly dues beginning January 25, 1980, and sent several demand letters between 1986 and 1987. Two of the letters (January 25, 1987 and March 7, 1987) were addressed to the “Est. of Fermin Z. Caram, Jr.” (i.e., his estate); a final demand (May 3, 1987) was addressed to Caram personally. The Board authorized sale and the Golf Share was publicly auctioned on June 11, 1987 for P25,000. Caram had died on October 6, 1986; his estate proceedings in the Regional Trial Court (Iloilo City, Branch 35) adjudicated the Golf Share to respondent, who paid estate taxes.
Respondent sued Valley Golf before the Securities and Exchange Commission (SEC) for reconveyance and damages (SEC Case No. 4160). The SEC hearing officer ruled for respondent, finding Section 67 of the Corporation Code inapplicable (it covers unpaid subscriptions, not fully paid shares), and concluding that a by-law alone could not validly create a lien on shares absent incorporation in the Articles of Incorporation under Section 6. The hearing officer found the auction sale null and void, awarded reconveyance (or issuance of an equivalent fully paid share) and damages.
The SEC en banc affirmed the hearing officer’s decision on May 9, 2000, reiterating that corporations may not dispose of shares for unpaid dues absent express statutory or charter authority. Valley Golf petitioned the Court of Appeals (CA) — CA affirmed the SEC decisions on April 4, 2003, deleting attorney’s fees but sustaining reconveyance and awards, and noting inadequate notice and due process.
Valley Golf elevated the case to the Supreme Court by petition. The Supreme Court considered the corporate documents (Articles and by-laws), the pr...(Pro-only)
Issues:
- May a non-stock corporation validly create, by by-law alone (without inclusion in the Articles of Incorporation), a lien on a fully paid membership share and sell that share to extinguish a member’s unpaid dues?
- Was the sale of the Golf Share valid in view of the notices sent, the fact of Caram’s prior death and Valley Golf’s conduct (including alleged bad faith)?
- Were the awards of m...(Pro-only)
Ruling:
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Ratio:
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Doctrine:
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