Calatagan v. Clemente
Calatagan v. Clemente
Calatagan v. Clemente
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* SECOND DIVISION.
301
prescriptive period for actions based upon injury to the rights of the
plaintiff on the hypothesis that the suit is purely for damages. As a
second alternative still, Calatagan posits that ClementeÊs action is
governed by Article 1149 of the Civil Code which sets five (5) years
as the period of prescription for all other actions whose prescriptive
periods are not fixed in the Civil Code or in any other law. Neither
article is applicable but Article 1140 of the Civil Code which
provides that an action to recover movables shall prescribe in eight
(8) years. CalataganÊs action is for the recovery of a share of stock,
plus damages.
Same; Same; Damages; Petitioner failed to duly observe both
the spirit and letter of its own by-laws.·The petition must fail
because Calatagan had failed to duly observe both the spirit and
letter of its own by-laws. The by-law provisions was clearly
conceived to afford due notice to the delinquent member of the
impending sale, and not just to provide an intricate façade that
would facilitate CalataganÊs sale of the share. But then, the bad
faith on CalataganÊs part is palpable. As found by the Court of
Appeals, Calatagan very well knew that ClementeÊs postal box to
which it sent its previous letters had already been closed, yet it
persisted in sending that final letter to the same postal box. What
for? Just for the exercise, it appears, as it had known very well that
the letter would never actually reach Clemente.
Same; Same; Same; The utter bad faith exhibited by Calatagan
brings into operation Articles 19, 20 and 21 of the Civil Code under
the Chapter on Human Relations; The obligation of a corporation to
treat every person honestly and in good faith extends even to its
shareholders or members, even if the latter find themselves
contractually bound to perform certain obligations to the
corporation.·The utter bad faith exhibited by Calatagan brings
into operation Articles 19, 20 and 21 of the Civil Code, under the
Chapter on Human Relations. These provisions, which the Court of
Appeals did apply, enunciate a general obligation under law for
every person to act fairly and in good faith towards one another. A
non-stock corporation like Calatagan is not exempt from that
obligation in its treatment of its members. The obligation of a
corporation to treat every person honestly and in good faith extends
even to its shareholders or members, even if the latter find
themselves contractually bound to perform
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TINGA, J.:
Seeking the reversal of the Decision1 dated 1 June 2004
of the Court of Appeals in CA-G.R. SP No. 62331 and the
reinstatement of the Decision dated 15 November 2000 of
the
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1 Rollo, pp. 47-64; Penned by Associate Justice Arturo D. Brion (now a
member of this Court, with Associate Justices Ruben T. Reyes (later
appointed to and retired from this Court) and Eliezer De Los Santos,
concurring.
303
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2 Rollo, pp. 47-48, 145.
3 Id., at pp. 48, 145.
4 Id., at pp. 48, 145-146.
304
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5 Id., at pp. 48, 146.
6 Id., at pp. 48-49, 146-147.
7 Rollo, p. 49.
8 Records, p. 250.
305
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9 Id.
10 Records, p. 250.
11 Rollo, pp. 49, 147.
306
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12 Id., at p. 13.
307
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13 Rollo, p. 20.
308
But that is not the case here, and there is no purpose for us
to apply Section 69 to the case at bar.
Calatagan argues in the alternative that ClementeÊs suit
is barred by Article 1146 of the Civil Code which
establishes four (4) years as the prescriptive period for
actions based upon injury to the rights of the plaintiff on
the hypothesis that the suit is purely for damages. As a
second alternative still, Calatagan posits that ClementeÊs
action is governed by Article 1149 of the Civil Code which
sets five (5) years as the period of prescription for all other
actions whose prescriptive periods are not fixed in the Civil
Code or in any other law. Neither article is applicable but
Article 1140 of the Civil Code which provides that an action
to recover movables shall prescribe in eight (8) years.
CalataganÊs action is for the recovery of a share of stock,
plus damages.
CalataganÊs advertence to the fact that the constitution
of a lien on the memberÊs share by virtue of the explicit
provisions in its Articles of Incorporation and By-Laws is
relevant but ultimately of no help to its cause. CalataganÊs
Articles of Incorporation states that the „dues, together
with all other obligations of members to the club, shall
constitute a first lien on the shares, second only to any lien
in favor of the national or local government, and in the
event of delinquency such shares may be ordered sold by
the Board of Directors in the manner provided in the By-
Laws to satisfy said dues or other obligations of the
stockholders.‰14 In turn, there are several provisions in the
By-laws that govern the payment of dues, the lapse into
delinquency of the member, and the constitution and
execution on the lien. We quote these provisions:
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14 See Rollo, pp. 79-80.
309
account of bill of a member for said month will be prepared and sent
to him. If the bill of any member remains unpaid by the 20th of the
month following that in which the bill was incurred, the Treasurer
shall notify him that if his bill is not paid in full by the end of the
succeeding month his name will be posted as delinquent the
following day at the Clubhouse bulletin board. While posted, a
member, the immediate members of his family, and his guests, may
not avail of the facilities of the Club.
(b) Members on the delinquent list for more than 60 days shall
be reported to the Board and their shares or the shares of the
juridical entities they represent shall thereafter be ordered sold by
the Board at auction to satisfy the claims of the Club as provided for
in Section 32 hereon. A member may pay his overdue account at any
time before the auction sale.
Sec. 32. Lien on Shares; Sale of Share at Auction.·The club
shall have a first lien on every share of stock to secure debts of the
members to the Club. This lien shall be annotated on the
certificates of stock and may be enforced by the Club in the
following manner:
(a) Within ten (10) days after the Board has ordered the sale at
auction of a memberÊs share of stock for indebtedness under Section
31(b) hereof, the Secretary shall notify the owner thereof, and shall
advise the Membership Committee of such fact.
(b) The Membership Committee shall then notify all applicants
on the Waiting List and all registered stockholders of the
availability of a share of stock for sale at auction at a specified date,
time and place, and shall post a notice to that effect in the Club
bulletin board for at least ten (10) days prior to the auction sale.
(c) On the date and hour fixed, the Membership Committee
shall proceed with the auction by viva voce bidding and award the
sale of the share of stock to the highest bidder.
(d) The purchase price shall be paid by the winning bidder to
the Club within twenty-four (24) hours after the bidding. The
winning bidder or the representative in the case of a juridical entity
shall become a Regular Member upon payment of the purchase
price and issuance of a new stock certificate in his name or in the
name of the juridical entity he represents. The proceeds of the sale
shall be paid by the Club to the selling stockholder after deducting
his obligations to the Club.
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„In accordance with this provision, Calatagan sent the third and
final demand letter to Clemente on December 7, 1992. The letter
states that if the amount of delinquency is not paid, the share will
be included among the delinquent shares to be sold at public
auction. This letter was signed by Atty. Benjamin Tanedo, Jr.,
Calatagan Golf Ês Corporate Secretary. It was again sent to
ClementeÊs mailing address·Phimco Industries Inc., P.O.
Box 240, MCC Makati. As expected, it was returned because the
post office box had been closed.
Under the By-Laws, the Corporate Secretary is tasked to „give or
cause to be given, all notices required by law or by these By-Laws...
and ⁄ keep a record of the addresses of all stockholders. As quoted
above, Sec. 32 (a) of the By-Laws further provides that „within ten
(10) days after the Board has ordered the sale at auction of a
memberÊs share of stock for indebtedness under Section 31 (b)
hereof, the Secretary shall notify the owner thereof and shall advise
the Membership Committee of such fact.,‰ The records do not
disclose what report the Corporate Secretary transmitted to the
Membership Committee to comply with Section 32(a). Obviously,
the reason for this mandatory requirement is to give the
Membership Committee the opportunity to find out, before the
share is sold, if proper notice has been made to the shareholder
member.
We presume that the Corporate Secretary, as a lawyer is
knowledgeable on the law and on the standards of good faith and
fairness that the law requires. As custodian of corporate records, he
should also have known that the first two letters sent to Clemente
were returned because the P.O. Box had been closed. Thus, we are
surprised·given his knowledge of the law and of corporate records
·that he would send the third and final letter·ClementeÊs last
chance before his share is sold and his membership lost·to the
same P.O. Box that had been closed.
Calatagan argues that it „exercised due diligence before the
foreclosure sale‰ and „sent several notices to ClementeÊs specified
mailing address.‰ We do not agree; we cannot label as due diligence
CalataganÊs act of sending the December 7, 1992 letter to
ClementeÊs mailing address knowing fully well that the P.O. Box
had been closed. Due diligence or good faith imposes upon the
Corporate Secretary·the chief repository of all corporate records·
the obligation to check ClementeÊs other address which, under the
By-Laws, have to be kept on file and are in fact on file. One obvious
purpose of
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15 G.R. No. 133107, 25 March 1999, 305 SCRA 449.
313
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16 Art. 19. Every person must in the exercise of his rights and in
the performance of his duties, act with justice, give everyone his due, and
observe honesty and good faith.
Art. 20. Every person who, contrary to law, willfully or negligently
causes damage to another, shall indemnify the latter for the same.
Art. 21. Any person who willfully causes loss or injury to another in
a manner that is contrary to morals, good customs or public policy shall
compensate the latter for the damage.
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