Case Summary (G.R. No. 211485)
Trial and Intermediate Rulings
Respondents filed for damages and a preliminary injunction before the Regional Trial Court. The RTC ordered them to settle their obligations but also awarded actual damages and attorney’s fees against MWAI. On appeal, the Court of Appeals affirmed that MWAI had committed an ultra vires act by suspending berthing privileges—exceeding its authority under its charter and MARINA regulations—and awarded temperate damages (₱40,000 for Basnig; ₱20,000 for Auguis) plus reduced attorney’s fees (₱30,000) with 12% interest.
Issue on Ultra Vires Corporate Acts
Section 45 of the Corporation Code limits corporate exercise of power to those explicitly or incidentally granted by law or charter. The CA held that MWAI lacked express or implied authority to suspend members’ certificates of public convenience or berthing rights, a prerogative of the Maritime Industry Authority. The Supreme Court was tasked with determining whether the suspension fell within MWAI’s corporate powers or constituted an ultra vires act exposing it to liability.
Authority to Suspend Member Privileges
The Supreme Court observed that MWAI’s by-laws bind members “[t]o obey and comply with the by-laws, rules and regulations” and “[t]o pay membership dues and other assessments.” Suspension of privileges for nonpayment serves MWAI’s corporate ends by enforcing financial obligations essential to its operations. Jurisprudence confirms that a corporation may exercise powers not explicitly listed if they are necessary or incidental to its legitimate objectives. Accordingly, the suspension was a lawful exercise of MWAI’s powers rather than an ultra vires act.
Legitimacy of Suspension Measures
Denying access to MWAI’s berthing facilities until dues were paid was a reasonable and proportionate sanction to secure prompt payment. Without such measures, MWAI would lack any effective mechanism to enforce its financial requirements, jeopardizing its ability to maintain seaport operations and member compliance.
Impropriety of Temperate Damages Award
Temperate damages compensate for pecuniary loss when actual damages cannot be precisely proven; they presuppose an unlawful act that injuriously affects the claimant. Because MWAI validly exercised its corporate rights, any loss incurred by respondents resulted from a lawful action and does not give rise to damnum injuria—no injury in law. Co
...continue readingCase Syllabus (G.R. No. 211485)
Facts of the Case
- Magallanes Watercraft Association, Inc. (MWAI) is a local association of motorized banca owners and operators ferrying cargo and passengers between Magallanes, Agusan del Norte, and Butuan City.
- Respondents Margarito C. Auguis and Dioscoro C. Basnig were officer‐members of MWAI, serving as vice‐president and secretary respectively.
- Auguis had an outstanding balance of ₱4,059.00 in membership dues and berthing fees; Basnig owed ₱7,552.00.
- On December 5, 2003, MWAI’s Board passed Resolution No. 1, Series of 2003, and issued Memorandum No. 001 suspending respondents’ membership rights and privileges for 30 days due to non‐payment.
- When respondents still failed to settle, MWAI issued Memorandum No. 002, Series of 2004 (dated January 8, 2004), extending the suspension for another 30 days.
- The suspension effectively barred respondents from using MWAI’s berthing facilities, although their Certificates of Public Convenience remained valid.
Procedural History
- February 6, 2004: Respondents filed an action for damages, attorney’s fees, and a writ of preliminary injunction before the Regional Trial Court (RTC), Branch 33, Butuan City (SEC Case No. 11-2004/Civil Case No. 5420).
- January 11, 2007: The RTC ordered respondents to pay their unpaid dues but awarded them actual damages and attorney’s fees against MWAI.
- MWAI appealed to the Court of Appeals (CA) in CA-G.R. CV No. 01170-MIN.
- March 14, 2013: The CA affirmed the RTC decision with modifications—deleted actual damages, awarded temperate damages (₱40,000.00 to Basnig; ₱20,000.00 to Auguis), legal interest at 12% p.a., and reduced attorney’s fees to ₱30,000.00.
- J