* EC ND DI I I N.

21

G.R. N . 158805. A i 16, 2009.* . 585, A I 16, 2009 219

Valle G lf and C n Cl b, Inc. . Vda. de Ca am

VALLEY GOLF & COUNTRY CLUB, INC., pe i ioner, .
ROSA O. VDA. DE CARAM, re ponden .
tion Code pro ides: SEC. 91. Te a f e be .
Membership shall be e a ed he a e a d f he
C a La ; N -S c C a ; T e ced e ca e ded he a c e f c a he b -
de Sec 67 f e C a C de f e c a . Termination of membership shall ha e the effect of
c a ec e ad b c a a - e tinguishing all rights of a member in the corporation or in its
c c a - - a e be a d g d e . To propert , unless other ise pro ided in the articles of
bolster its cause, Valle Golf proffers the proposition that b incorporation or the b -la s. Clearl , the right of a non-stock
irtue of the b -la pro isions a lien is created on the shares of its corporation such as Valle Golf to e pel a member through the
members to ensure pa ment of dues, charges and other forfeiture of the Golf Share ma be established in the b -la s
assessments on the members. Both the SEC and the Court of alone, as is the situation in this case. Thus, both the SEC and the
Appeals debunked the tenabilit or applicabilit of the proposition appellate court are rong in holding that the establishment of a
through t o common thrusts. F , the correctl noted that lien and the loss of the Golf Share consequent to the enforcement
the procedure under Section 67 of the Corporation Code for the of the lien should ha e been pro ided for in the articles of
stock corporation s recourse on unpaid subscriptions is inapt to a incorporation.
non-stock corporation - - a member s outstanding dues. The
basic factual backdrops in the t o situations are disperate. In the Sa e; Sa e; Sa e; Ge e a e , a - c
latter, the member has full paid for his membership share, hile c a a e e effec e e a f a e be
in the former, the stockholder has not et full paid for the share a g c ea e e e be a e
or shares of stock he subscribed to, thereb authori ing the stock de a e e e ab a e ce f e g e a e a b c
corporation to call on the unpaid subscription, declare the shares a c . Valle Golf has sought to accomplish the termination of
delinquent and subject the delinquent shares to a sale at public Caram s membership through the sale of the Golf Share,
auction. Sec d , the t o bodies belo concluded that follo ing justif ing the sale through the constitution of a lien on the Golf
Section 6 of the Corporation Code, hich pro ides: The shares of Share under Section 1, Article VIII of its b -la s. Generall in
stock of stock corporation ma be di ided into classes or series of theor , a non-stock corporation has the po er to effect the
shares, or both, an of hich classes or series of shares ma ha e termination of a member ithout ha ing to constitute a lien on
such rights, pri ileges or restrictions as ma be stated in the the membership share or to undertake the elaborate process of
articles of incorporation the lien on the Golf Share in fa or of selling the same at public auction. The articles of incorporation or
Valle Golf is not alid, as the po er to constitute such a lien the b -la s can er ell simpl pro ide that the failure of a
should be pro ided in the articles of incorporation, and not merel member to pa the dues on time is cause for the board of directors
in the b -la s. to terminate membership. Yet Valle Golf as organi ed in such a
a that membership is adjunct to o nership of a share in the
Sa e; Sa e; B -La ; T e g fa - c c a club; hence the necessit to dispose of the share to terminate
e e a e be g e f fe e f c e be a e a membership.
be e ab ed eb -a a e. There is a specific pro ision
under the Title XI, on Non-Stock Corporations of the Corporation Sa e; Sa e; S a e e d ce a e d e
Code dealing ith termination of membership. Section 91 of the e ca e e ea a e a f e be a a
Corpora- ead e f ge e f e g . Share o nership
introduces another dimension to the case the realit that
termination of membership ma also lead to the infringement of
propert rights. E en though Valle Golf is a non-stock the manner of depri ation of such propert right should also be in
corporation, as e inced b the fact that it is not authori ed to accordance ith the pro isions of the Ci il Code.
distribute to the holder of its shares di idends or allotments of the Sa e; Sa e; I a ab e b c c e e
surplus profits on the basis of shares held, the Golf Share has an ae e a f e be a - c c a be
assigned alue reflected on the certifi- d e acc da ce b a a ce. It is unmistakabl
ise
220

221

220 E EC E A A ED

Valle G lf and C n Cl b, Inc. . Vda. de Ca am . 585, A I 16, 2009 221

Valle G lf and C n Cl b, Inc. . Vda. de Ca am

cate of membership itself. Termination of membership in Valle
Golf does not merel lead to the ithdra al of the rights and public polic to require that the termination of membership in a
pri ileges of the member to club properties and facilities but also non-stock corporation be done in accordance ith substantial
to the loss of the Golf Share itself for hich the member had full justice. No matter ho one ma precisel define such term, it is
paid. The claim of Valle Golf is limited to the amount of unpaid e ident in this case that the termination of Caram s membership
dues plus incremental costs. On the other hand, Caram s loss ma betra ed the dictates of substantial justice.
encompass not onl the amount he had paid for the share but also
the price it ould ha e fetched in the market at the time his Sa e; Sa e; T e - c c a ac ed c ea bad
membership as terminated. fa e e ef a ce a e be de e ee e
e be e ed be a e, e fac ad e e
Sa e; Sa e; W e e f e be a - c
a e ad a ead d ed. Valle Golf did not claim before
c a a e a e f e g , e a e f
the Court of Appeals that the had learned of Caram s death onl
de a f c e g d a be acc da ce
after the auction sale. It also appears that Valle Golf had
e f eC C de. Does the Corporation Code
conceded before the SEC that some of the notices it had sent ere
permit the termination of membership ithout due notice to the
addressed to the estate of Caram, and not the decedent himself.
member? The Code itself is silent on that matter, and the
What do these facts re eal? Valle Golf acted in clear bad faith
argument can be made that if no notice is pro ided for in the
hen it sent the final notice to Caram under the pretense the
articles of incorporation or in the b -la s, then termination ma
belie ed him to be still ali e, hen in fact the had er ell
be effected ithout an notice at all. Support for such an
kno n that he had alread died. That it as in the final notice
argument can be dra n from our ruling in L g . Ba a (366
that Valle Golf had perpetrated the duplicit is especiall
SCRA 113 [2001]), hich pertains to a religious corporation that
blame orth , since it as that notice that carried the final threat
is also a non-stock corporation. Therein, the Court upheld the
that his Golf Share ould be sold at public auction should he fail
e pulsion of church members despite the absence of an pro ision
to settle his account on or before 31 Ma 1987.
on prior notice in the b -la s, stating that the members had
ai ed such notice b adhering to those b -la s[,] became Sa e; Sa e; H a Re a ; N - c c a a d
members of the church oluntaril [,] entered into its co enant e ff ce a e e e f e b ga ed b
and subscribed to its rules [and b ] doing so, the are bound b A c e 19, 20, a d 21 de eC a e H a Re a f
their consent. Ho e er, a distinction should be made bet een e C C de, c e c a e a ge e a b ga
membership in a religious corporation, hich ordinaril does not de a f e e e ac fa a d g d fa a d
in ol e the purchase of o nership shares, and membership in a e a e . Valle Golf could ha e er ell addressed that
non-stock corporation such as Valle Golf, here the purchase of notice to the estate of Caram, as it had done ith the third and
an o nership share is a condition e a . Membership in fourth notices. That it did not do so signifies that Valle Golf as
Valle Golf entails the acquisition of a propert right. In turn, the bent on selling the Golf Share, imper ious to potential
loss of such propert right could also in ol e the application of complications that ould impede its intentions, such as the need
aspects of ci il la , in addition to the pro isions of the to pursue the claim before the estate proceedings of Caram. B
Corporation Code. To put it simpl , hen the loss of membership pretending to assume that Caram as then still ali e, Valle Golf
in a non-stock corporation also entails the loss of propert rights, ould ha e been able to capitali e on his pre ious
unresponsi eness to their notices and proceed in feigned good c ed a ec ec e a c a b ga , c a e
faith ith the sale. Whate er the reason Caram as unable to d e a d fee ; T e e a e a ea c ac a de de e
respond to the earlier notices, the fact remains that a he e C C de b c e a e ca be ed ec e a
f he f a ce, Va e G f e ha Ca a , ha g c a b ga e f g a c ac f edge,
d ed a d g e, d be ab e e e he b ga e e ec d g ac a e gage. The arrangement
h e f, e he e ed e d g h ce pro ided for in the afore-quoted b -la s of Valle Golf hereb a
de a c f eg a he e g a e. That lien is constituted on the membership share to ans er for
reason alone, e ocati e as it subsequent obligations to the corporation finds applicable
parallels under the Ci il Code. Membership shares are
222
223

222 E EC E A A ED
. 585, A I 16, 2009 223
Valle G lf and C n Cl b, Inc. . Vda. de Ca am
Valle G lf and C n Cl b, Inc. . Vda. de Ca am
is of the absence of substantial justice in the sale of the Golf
Share, is sufficient to nullif the sale and sustain the rulings of considered as mo able or personal propert , and the can be
the SEC and the Court of Appeals. Moreo er, the utter and constituted as securit to secure a principal obligation, such as
appalling bad faith e hibited b Valle Golf in sending out the the dues and fees. There are at least t o contractual modes under
final notice to Caram on the deliberate pretense that he as still the Ci il Code b hich personal propert can be used to secure a
ali e could bring into operation Articles 19, 20 and 21 under the principal obligation. The first is through a contract of pledge,
Chapter on Human Relations of the Ci il Code. These pro isions hile the second is through a chattel mortgage. A pledge ould
enunciate a general obligation under la for e er person to act require the pledgor to surrender possession of the thing pledged,
fairl and in good faith to ards one another. Non-stock .e., the membership share, to the pledge in order that the
corporations and its officers are not e empt from that obligation. contract of pledge ma be constituted. Is deli er of the share
Sa e; Sa e; T e b - a f Va e G f d c f g cannot be effected, the suitable securit transaction is the chattel
e g a fa de a f a ce a d ea g mortgage. Under Article 2124 of the Ci il Code, mo ables ma be
ced e bef e a e be a e a be e ed a d d. The the object of a chattel mortgage. The Chattel mortgage is
b -la s of Valle Golf is discomfiting enough in that it fails to go erned b Act No. 1508, other ise kno n The Chattel
pro ide an formal notice and hearing procedure before a Mortgage La , and the Ci il Code.
member s share ma be sei ed and sold. The Court ould ha e
PETITION for re ie on cer iorari of a deci ion of he
been satisfied had the b -la s or the articles of incorporation
Co r of Appeal .
established a procedure hich assures that the member ould in
The fac are a ed in he opinion of he Co r .
realit be actuall notified of the pending accounts and pro ide
Abej & Pa e La Office for pe i ioner.
the opportunit for such member to settle such accounts before
De L A gele , Ag i e, Olag e & S . D i g La
the membership share could be sei ed then sold to ans er for the
Office for re ponden .
debt. As e ha e emphasi ed, membership in Valle Golf and
man other like-situated non-stock corporations actuall in ol es TINGA, J.:
the purchase of a membership share, hich is a substantiall Ma a non- ock corpora ion ei e and di po e of he
e pensi e propert . As a result, termination of membership does member hip hare of a f ll -paid member on acco n of i
not onl lead to loss of bragging rights, but the actual depri ation npaid deb o he corpora ion hen i i a hori ed o do
of propert . o nder he corpora e b -la b no b he Ar icle of
Sa e; Sa e; T e a a ge e ded f eb -a f Incorpora ion? S ch i he cen ral i e rai ed in hi
Va e G f e eb a e c ed e e be a e pe i ion, hich aro e af er pe i ioner Valle Golf & Co n r
a e f b e e b ga e c a f d Cl b (Valle Golf) old he member hip hare of a member
a cab e a a e de eC C de e be a e a e ho had been delinq en in he pa men of hi mon hl
c de ed a ab e e a e , a d e ca be d e .
 I. 2 A former representati e from Iloilo.
The fac ha preceded hi pe i ion are imple. Valle 3 SEC Records, p. 61.
Golf & Co n r Cl b (Valle Golf) i a d l con i ed 4 Rollo, p. 60.
non- ock, non-profi corpora ion hich opera e a golf 5 Id., at p. 82.
co r e. The member and heir g e are en i led o pla 6 Id., at p. 83.
golf on he aid 7 Id., at p. 84.

224 225

224 C A A D . 585, A 16, 2009 225

Valle G lf and C n Cl b, Inc. . Vda. de Ca am Valle G lf and C n Cl b, Inc. . Vda. de Ca am

co r e and o her i e a ail of he facili ie and pri ilege
pro ided b Valle Golf.1 The hareholder are like i e
a e ed mon hl member hip d e .
In 1961, he la e Congre man Fermin Z. Caram, Jr.
(Caram),2 he h band of he pre en re ponden ,
b cribed o p rcha ed and paid for in f ll one hare (Golf
Share) in he capi al ock of Valle Golf. He a i ed
S ock Cer ifica e No. 389 da ed 26 Jan ar 1961 for he
Golf Share.3 The S ock Cer ifica e like i e indica e a par
al e of P9,000.00.
Valle Golf o ld b eq en l allege ha beginning 25
Jan ar 1980, Caram opped pa ing hi mon hl d e ,
hich ere con in all a e ed n il 31 J ne 1987. Valle
Golf claim o ha e en fi e (5) le er o Caram
concerning hi delinq en acco n i hin he period from
27 Jan ar 1986 n il 3 Ma 1987, all for arded o P.O.
Bo No. 1566, Maka i Commercial Cen er Po Office, he
mailing addre hich Caram allegedl f rni hed Valle
Golf.4 The fir le er informed Caram ha hi acco n a
of 31 December 1985 a delinq en and ha hi cl b
pri ilege ere pended p r an o Sec ion 3, Ar icle
VII of he b -la of Valle Golf.5 De pi e ch no ice of
delinq enc , he econd le er, da ed 26 A g 1986,
a ed ha ho ld Caram acco n remain npaid for 45
da , hi name o ld be incl ded in he delinq en li o Af er a erie of corre pondence, he Caram heir
be po ed on he cl b b lle in board. 6 The hird le er,
da ed 25 Jan ar 1987, again informed Caram of hi
delinq en acco n and he pen ion of hi cl b
pri ilege .7 The fo r h le er, da ed 7 March 1987,
informed Caram ha ho ld he fail o e le hi
delinq encie , hen o aling P7,525.45, i hin en (10) da
from receip hereof Valle
_______________
1 Rollo, p. 8.
Golf o ld e erci e i righ o ell he Golf Share o a i f
he o anding amo n , again p r an o he pro i ion
of he b -la . The final le er, da ed 3 Ma 1987, i ed a
final deadline n il 31 Ma 1987 for Caram o e le hi
acco n , or o her i e face he ale of he Golf Share o
a i f he claim of Valle Golf.
The Golf Share a old a p blic a c ion on 11 J ne
1987 for P25,000.00 af er he Board of Direc or had
a hori ed he ale in a mee ing on 11 April 1987, and he
No ice of A c ion Sale a p bli hed in he 6 J ne 1987
edi ion of he Phili i e Dail I i e .10
A i rned o , Caram had died on 6 Oc ober 1986.
Re ponden ini ia ed in e a e proceeding before he
Regional Trial Co r (RTC) of Iloilo Ci , Branch 35, o
e le her h band e a e.11 Una are of he pending
con ro er o er he Golf Share, he Caram famil and he
RTC incl ded he ame a par of Caram e a e. The RTC
appro ed a projec of par i ion of Caram e a e on 29
A g 1989. The Golf Share a adj dica ed o
re ponden , ho paid he corre ponding e a e a d e,
incl ding ha on he Golf Share.
I a onl hro gh a le er da ed 15 Ma 1990 ha he
heir of Caram learned of he ale of he Golf Share
follo ing heir inq ir i h Valle Golf abo he hare.
ere
b eq en l informed, in a le er da ed 15 Oc ober 1990,
ha he ere en i led o he ref nd of P11,066.52 o of
he proceed of he ale of he Golf Share, hich amo n
had been in he c od of Valle Golf ince 11 J ne 1987.12
Re ponden filed an ac ion for recon e ance of he hare
i h damage before he Sec ri ie and E change Commi -
_______________
8 Id., at p. 85.
9 Id., at p. 86.
10 Id., at p. 59.
 11 Id., at p. 30. 227
12 Id., at p. 59.

226 . 585, A 16, 2009 227

226 C A
Valle G lf and C n Cl b, Inc. . Vda. de Ca am
ion (SEC) again Valle Golf.13 On 15 No ember 1996,
SEC Hearing Officer Elpidio S. Salgado rendered a deci ion
in fa or of re ponden , ordering Valle Golf o con e
o ner hip of he Golf Share or in he al erna i e o i e appear in he ar icle of incorpora ion, b -la
one f ll paid hare of ock of Valle Golf he ame cla
a he Golf Share o re ponden . Damage o aling
P90,000.00 ere al o a arded o re ponden .14
The SEC hearing officer no ed ha nder Sec ion 67,
paragraph 2 of he Corpora ion Code, a hare ock co ld
onl be deemed delinq en and old in an e raj dicial ale
a p blic a c ion onl pon he fail re of he ockholder o
pa he npaid b crip ion or balance for he hare. The
ec ion co ld no ha e applied in Caram ca e ince he had
f ll paid for he Golf Share and he had been a e ed no
for he hare i elf b for hi delinq en cl b d e .
Proceeding from he foregoing premi e , he SEC hearing
officer concl ded ha he a c ion ale had no ba i in la
and a h a n lli .
The SEC hearing officer did en er ain Valle Golf
arg men ha he ale of he Golf Share a a hori ed
nder he b -la . Ho e er, i a r led ha p r an o
Sec ion 6 of he Corpora ion Code, a pro i ion crea ing a
lien pon hare of ock for npaid deb , liabili ie , or
a e men of ockholder o he corpora ion, ho ld be
embodied in he Ar icle of Incorpora ion, and no merel
in he b -la , beca e Sec ion 6 (par.1) pre cribe ha he
hare of ock of a corpora ion ma ha e ch righ ,
pri ilege and re ric ion a ma be a ed in he ar icle
of incorpora ion. 15 I a ob er ed ha he Ar icle of
Incorpora ion of Valle Golf did no im-
_______________
13 Docketed as SEC Case No. 4160.
14 P50,000.00 in moral damages, P10,000.00 in e emplar
and P30,000.00 in litigation e penses and attorne s fees. Rollo, pp. 80-81.
15 Id., at p. 76. Cited as a thorit for this holding
Philippine Corporation La (H. DE LEON, THE CORPORATION CODE
PHILIPPINES, p. 464 [1989 ed.]), hich in t rn cited an SEC Opinion dated
13 April 1981.
Valle G lf and C n Cl b, Inc. . Vda. de Ca am
A D
po e an lien, liabili or re ric ion on he Golf Share or,
for ha ma er, e en an condi ionali ha he Golf Share
o ld be bjec o a e men of mon hl d e or a lien on
he hare for non-pa men of ch d e .16 In he ame ein,
i a opined ha ince Sec ion 98 of he Corpora ion Code
pro ide ha re ric ion on ran fer of hare ho ld
and he
cer ifica e of ock o be alid and binding on an p rcha er
in good fai h, here a more rea on o appl he aid r le
o cl b delinq encie o con i e a lien on golf hare .17
The SEC hearing officer f r her held ha he
delinq enc in mon hl cl b d e a merel an ordinar
deb enforceable b j dicial ac ion in a ci il ca e. The
deci ion generall affirmed re ponden a er ion ha
Caram a no properl no ified of he delinq encie ,
ci ing Caram le er da ed 7 J l 1978 o Valle Golf abo
he change in hi mailing addre . He al o no ed ha
Valle Golf had en mo of he le er af er Caram
dea h. In all, he deci ion concl ded ha he ale of he
Golf Share a effec i el a depri a ion of proper
i ho d e proce of la .
On appeal o he SEC e ba c,1 aid bod prom lga ed
a deci ion1 on 9 Ma 2000, affirming he hearing officer
deci ion i . Again, he SEC fo nd ha Sec ion 67 of
he Corpora ion Code co ld no j if he ale of he Golf
Share ince i applie onl o npaid b crip ion and no
o delinq en member hip d e . The SEC al o ci ed a
general r le, form la ed in American j ri pr dence, ha a
corpora ion ha no righ o di po e of hare of ock for
delinq en a e men , d e , er ice fee and o her
nliq ida ed charge nle here i an e pre gran o do
o, ei her b he a e i elf or b
_______________
16 Id.
17 Id., at p. 76.
damages,
18 Docketed as SEC-AC No. 595.
19 Signed b SEC Chair[person] Lilia R. Ba tista, and Associate
as a te tbook on
Commissioners Fe Eloisa C. Gloria, Edijer A. Martine and Rosalinda U.
OF THE
Casig ran. See Rollo, p. 63.
22
228 C A A D The Co r of Appeal al o adop ed he finding of he
hearing officer ha he no ice had no been properl
Valle G lf and C n Cl b, Inc. . Vda. de Ca am
er ed on Caram or hi heir , h effec i el depri ing
re ponden of proper i ho d e proce of la . While i
he char er of a corpora ion.20 Said r le, aken in pheld he a ard of damage , he appella e co r r ck
conj nc ion i h Sec ion 6 of he Corpora ion Code, do n he a ard of a orne fee ince here a no
mili a ed again he alidi of he ale of he Golf Share, di c ion on he ba i of ch a ard in he bod of he
he SEC re ed. In ie of he e premi e , hich deci ion of bo h he hearing officer and he SEC.25
according o he SEC en ailed he n lli of he ale, he There i one o her fac of no e, men ioned in pa ing b
bod fo nd i nnece ar o r le on he her here a he SEC hearing officer26 b ignored b he SEC e ba c
alid no ice of he ale a p blic a c ion. and he Co r of Appeal . Valle Golf hird and fo r h
Valle Golf ele a ed he SEC deci ion o he Co r of demand le er da ed 25 Jan ar 1987 and 7 March 1987,
Appeal b a of a pe i ion for re ie .21 On 4 April 2003, re pec i el , ere bo h addre ed o E . of Fermin Z.
he appella e co r rendered a deci ion22 affirming he Caram, Jr. The abbre ia ion E . can onl be aken o
deci ion of he SEC and he hearing officer, ih refer o E a e. Unlike he fir o demand le er , he
modifica ion con i ing of he dele ion of he a ard of hird and fo r h le er ere en af er Caram had died on
a orne fee . Thi ime, Valle Golf cen ral arg men 6 Oc ober 1986. Ho e er, he fif h and final demand le er,
a ha i b -la , ra her han Sec ion 67 of he da ed 3 Ma 1987 or en -eigh (28) da before he ale,
Corpora ion Code, a hori ed he a c ion ale of he Golf a again addre ed o Fermin Caram him elf and no o
Share. None hele , he Co r of Appeal fo nd ha he hi e a e, a if he ere ill ali e. The foregoing par ic lar
b -la pro i ion ci ed b Valle Golf are of do b f l fac are e peciall ignifican o o r di po i ion of hi
alidi , a he p rpor edl conflic i h Sec ion 6 of he ca e.
Code, hich manda e ha righ pri ilege or II.
re ric ion a ached o a hare of ock ho ld be a ed in In i pe i ion before hi Co r , Valle Golf concede
he ar icle of incorpora ion.23 I no ed ha ha or ho ha Sec ion 67 of he Corpora ion Code, hich a hori e
had become delinq en a a Mr. Caram him elf and he a c ion ale of hare i h delinq en b crip ion , i
no hi golf hare, and ch being he ca e, he npaid no applicable in hi ca e. None hele , i arg e ha he
acco n ho ld ha e been filed a a mone claim in he b -la of Valle Golf a hori e he ale of delinq en
proceeding for he e lemen of hi e a e, in ead of he hare and ha he b -la con i e a alid la or
pe i ioner elling hi golf hare o a i f he acco n . 24 con rac al agreemen be een he corpora ion and i
ockholder or heir re pec i e cce or . Caram, b
_______________ becoming a member of Valle Golf, bo nd him elf o
20 Rollo, pp. 61-62. Primar citation as made to another local ob er e i b -la hich con i e he r le and
te tbook (R. Lope , THE CORPORATION CODE OF THE PHILIPPINES, Vol. II, 1994 reg la ion or pri a e la enac ed b
Ed.), hich in t rn cited Sch ch . Fa me Union Milling and G ain Co.,
116 Neb. 14; 22 CRA (NS) 1015; and 18 Am. J r., 2 Ed 880.
_______________
21 Docketed as CA-G.R. SP No. 59083.
25 Id., at p. 37.
22 Penned b J stice Sal ador J. Valde , Jr., and conc rred in b
26 Id., at p. 74.
J stices Bien enido L. Re es and Danilo B. Pine.
23 Rollo, p. 34. 230
24 Id., at p. 35.

22 230 C A A D
Valle G lf and C n Cl b, Inc. . Vda. de Ca am
. 585, A 16, 2009 229
he corpora ion o reg la e, go ern and con rol i o n
Valle G lf and C n Cl b, Inc. . Vda. de Ca am
ac ion , affair and concern and i ockholder or
member and direc or and officer i h rela ion here o
and among hem el e in heir rela ion o i . 27 I al o
poin o ha he b -la i elf had d l pa ed he SEC Section 1. L e . The Club has the first lien on the share of
cr in and appro al. the stockholder ho has, in his/her/its name, or in the name of an
Valle Golf f r her arg e ha i a error on he par assignee, outstanding accounts and liabilities in fa or of the Club
of he Co r of Appeal o rel , a i did, pon Sec ion 6 of to secure the pa ment thereof.
he Corpora ion Code o n llif he bjec pro i ion of
he B -La . 2 Sec ion 6 referr o re ric ion on he Section 3. The account of an member shall be presented to
hare of ock hich ho ld be a ed in he ar icle of such member e er month. If an statement of accounts remains
incorpora ion, a differen ia ed from lien hich nder unpaid for a period fort -fi e (45) da s after cut-off date, said
he b -la o ld er e a ba i for he a c ion ale of he member ma be ( c) posted as deliqnuent ( c). No delinquent
hare. Since Sec ion 6 refer o re ric ion and no o lien , member shall be entitled to enjo the pri ileges of such
Valle Golf bmi ha lien are e cl ded from he membership for the duration of the deliquenc ( c). After the
ambi of he pro i ion. I f r her proffer ha a ming member shall ha e been posted as delinquent, the Board ma
ha lien and re ric ion are non mo , Sec ion 6 i elf order his/her/its share sold to satisf the claims of the club; after
ili e he permi i e ord ma , h e incing he non- hich the member loses his/her/its rights and pri ileges
manda or charac er of he req iremen ha re ric ion permanentl . No member can be indebted to the Club at an time
or lien be a ed in he ar icle of incorpora ion. an amount in e cess of the credit limit set b the Board of
Valle Golf al o arg e ha he Co r of Appeal erred Directors from time to time. The unpaid account referred to here
in rel ing on he fac al finding of he hearing officer, includes non-pa ment of dues, charges and other assessments and
hich are allegedl reple e i h error and con radic ion . non-pa ment for subscriptions. 32
Finall , i a ail he a ard of moral and e emplar
damage . To bol er i ca e, Valle Golf proffer he propo i ion
III. ha b ir e of he b -la pro i ion a lien i crea ed on
A fo nd b he SEC and he Co r of Appeal , he he hare of i member o en re pa men of d e ,
Ar icle of Incorpora ion of Valle Golf doe no con ain an charge and o her a e men on he member . Bo h he
pro i ion a hori ing he corpora ion o crea e an lien on SEC and he Co r of Appeal deb nked he enabili or
a member Golf Share a a con eq ence of he member applicabili of he propo i ion hro gh o common
npaid a e men or d e o Valle Golf. Before hi hr .
Co r , Valle Golf a er ha ch a pro i ion i Fi l , he correc l no ed ha he proced re nder
con ained in i b -la . We req ired he par ie o bmi Sec ion 67 of he Corpora ion Code for he ock
a cer ified cop of he b -la corpora ion

_______________ _______________

27 Id., at p. 15. 29 Id., at p. 168.

28 Id., at p. 16. 30 Id., at p. 182.

31 Id., at p. 174.
231 32 Id., at pp. 181-182.

232
. 585, A 16, 2009 231
Valle G lf and C n Cl b, Inc. . Vda. de Ca am 232 C A A D
Valle G lf and C n Cl b, Inc. . Vda. de Ca am
of Valle Golf in effec a of 11 J ne 1987.2 In compliance,
Valle Golf bmi ed a cop of i b -la , originall
adop ed on 6 J ne 195830 and amended on 26 No ember reco r e on npaid b crip ion i inap o a non- ock
31
1986. The amendmen bear no rele ance o he i e of corpora ion i - - i a member o anding d e . The
delinq en member hip d e . The rele an pro i ion , ba ic fac al backdrop in he o i a ion are di pera e.
fo nd in Ar icle VIII en i led Cl b Acco n , are In he la er, he member ha f ll paid for hi member hip
reprod ced belo : hare, hile in he former, he ockholder ha no e f ll
paid for he hare or hare of ock he b cribed o,
 hereb a hori ing he ock corpora ion o call on he
npaid b crip ion, declare he hare delinq en and
bjec he delinq en hare o a ale a p blic a c ion.33
Sec dl , he o bodie belo concl ded ha follo ing
Sec ion 6 of he Corpora ion Code, hich pro ide :
The shares of stock of stock corporation ma be di ided into
classes or series of shares, or both, an of hich classes or series
of shares ma ha e such rights, pri ileges or restrictions as ma
be stated in the articles of incorporation 34
he lien on he Golf Share in fa or of Valle Golf i no
alid, a he po er o con i e ch a lien ho ld be
pro ided in he ar icle of incorpora ion, and no merel in
he b -la .
Ho e er, here i a pecific pro i ion nder he Ti le XI,
on Non-S ock Corpora ion of he Corpora ion Code dealing
i h ermina ion of member hip. Sec ion 91 of he
Corpora ion Code pro ide :
Gi en ha he ca e for ermina ion of member hip in a
non- ock corpora ion ma be e abli hed hro gh he b -
la alone and need no be e for h in he ar icle of
incorpora ion, i here an ca e o in alida e he lien and
he b eq en ale of he Golf Share b Valle Golf?
Former SEC Chairper on, Ro ario Lope , in her
commen arie on he Corpora ion Code, e plain he
impor of Sec ion 91 in a manner rele an o hi ca e:
The pre ailing rule is that the pro isions of the articles of
incorporation or b -la s of termination of membership must be
strictl complied ith and applied to the letter. Thus, an
association hose member fails to pa his membership due and
annual due as required in the b -la s, and hich pro ides for the
termination or suspension of erring members as ell as prohibits
the latter from inter ening in an manner in the operational
acti ities of the association, must be obser ed because b -la s are
self-imposed pri ate la s binding on all members, directors and
officers of the corporation. 35

SEC. 91. Te a f e be . Membership shall E amining clo el he rele an b -la pro i ion of
be e a ed he a e a d f he ca e ded Valle Golf,36 i appear ha ermina ion of member hip
he a c e f c a he b - a . Termination ma occ r hen he follo ing cce i e condi ion are
of membership shall ha e the effect of e tinguishing all rights of a me : (1) pre en a ion of he acco n of he member; (2)
member in the corporation or in its propert , unless other ise fail re of he member o e le he acco n i hin for -fi e
pro ided in the articles of incorporation or the b -la s. da af er he c -off
(Emphasis supplied)

Clearl , he righ of a non- ock corpora ion ch a _______________

Valle Golf o e pel a member hro gh he forfei re of he 35 R. Lope , III The Co o a ion Code of he Phili ine (1994 ed.), at
Golf 976; citings SEC Opinion dated 16 J ne 1992, Mr. Emerito Sematano.
36 S a note 32.

_______________ 234
33 See al o Corporation Code, Sec. 68.
34 Corporation Code, Sec. 6.
234 C A A D
233
Valle G lf and C n Cl b, Inc. . Vda. de Ca am

. 585, A 16, 2009 233 da e; (3) po ing of he member a delinq en ; and (4)
Valle G lf and C n Cl b, Inc. . Vda. de Ca am i ance of an order b he board of direc or ha he
hare of he delinq en member be old o a i f he
claim of Valle Golf. The e condi ion fo nd in b -la
Share ma be e abli hed in he b -la alone, a i he
d l appro ed b he SEC arran d e re pec and e are
i a ion in hi ca e. Th , bo h he SEC and he
di inclined o r le again he alidi of he b -la
appella e co r are rong in holding ha he
pro i ion .
e abli hmen of a lien and he lo of he Golf Share
A he ame ime, o poin arran pecial a en ion.
con eq en o he enforcemen of he lien ho ld ha e been
A.
pro ided for in he ar icle of incorpora ion.
Valle Golf ha o gh o accompli h he ermina ion of
IV.
Caram member hip hro gh he ale of he Golf Share,
j if ing he ale hro gh he con i ion of a lien on he he lo ained b he delinq en member i
Golf Share nder Sec ion 1, Ar icle VIII of i b -la . commen ra e o he ac al deb o ed o Valle Golf. Af er
Generall in heor , a non- ock corpora ion ha he po er all, appl ing ci il la concep , he pec niar inj r
o effec he ermina ion of a member i ho ha ing o ained b Valle Golf a rib able o he delinq en
con i e a lien on he member hip hare or o nder ake member i onl o he e en of he npaid deb , and i
he elabora e proce of elling he ame a p blic a c ion. o ld be diffic l o fore ee ha righ nder la Valle
The ar icle of incorpora ion or he b -la can er ell Golf o ld ha e o he remainder of he ale proceed .
impl pro ide ha he fail re of a member o pa he d e A ref nd mechani m ma di q ie concern of nd e
on ime i ca e for he board of direc or o ermina e lo of proper righ corre ponding o ermina ion of
member hip. Ye Valle Golf a organi ed in ch a a member hip. Ye no iceabl , he b -la of Valle Golf doe
ha member hip i adj nc o o ner hip of a hare in he no req ire he Cl b o ref nd o he di charged member
cl b; hence he nece i o di po e of he hare o he remainder of he proceed of he ale af er he
ermina e member hip. o anding obliga ion i e ing i hed. Af er pe i ioner had
Share o ner hip in rod ce ano her dimen ion o he filed her complain ho gh, Valle Golf did inform her ha
ca e he reali ha ermina ion of member hip ma al o he heir of Caram are en i led o ch ref nd.
lead o he infringemen of proper righ . E en ho gh B.
Valle Golf i a non- ock corpora ion, a e inced b he Le no rn o he o her ignifican concern.
fac ha i i no a hori ed o di rib e o he holder of
i hare di idend or allo men of he rpl profi on _______________
he ba i of hare held,37 he Golf Share ha an a igned dent, as of 1999, the cl b share as being traded at 1.2 Million Pesos.
al e reflec ed on he cer ifica e of member hip i elf.3 Id., at p. 62.
Termina ion of mem-
236

_______________
37 See Corporation Code, Sec. 3. 236 C A A D
38 Caram s Certificate, iss e din 1961, bore a stated par al e of Nine
Valle G lf and C n Cl b, Inc. . Vda. de Ca am
Tho sand Pesos. See Records, p. 61. According to respon-

235 The b -la doe no pro ide for a mode of no ice o he

member before he board of direc or p p he Golf
. 585, A 16, 2009 235
Share for ale, e he ale mark he ermina ion of
member hip. Wha e er emblance of a no ice ha i
Valle G lf and C n Cl b, Inc. . Vda. de Ca am afforded i bare a be , ambig o a mo . The member i
en i led o recei e a a emen of acco n e er mon h;
ber hip in Valle Golf doe no merel lead o he ho e er, he mode b hich he member i o recei e ch
i hdra al of he righ and pri ilege of he member o no ice i no elabora ed pon. If he member fail o pa
cl b proper ie and facili ie b al o o he lo of he Golf i hin 45 da from he d e da e, Valle Golf i
Share i elf for hich he member had f ll paid. immedia el en i led o ha e he member po ed a
The claim of Valle Golf i limi ed o he amo n of delinq en . While he a igna ion of delinq en a i
npaid d e pl incremen al co . On he o her hand, e iden eno gh, i i no a clear ha he ord po ed
Caram lo ma encompa no onl he amo n he had en ail . Conno a i el , he ord co ld impl he ph ical
paid for he hare b al o he price i o ld ha e fe ched po ing of he no ice of delinq enc i hin he cl b
in he marke a he ime hi member hip a ermina ed. premi e , ch a a b lle in board, hich e recogni e i
There i an ea a o remed ha i ob io l an of en he ca e. S ill, he ac al po ing modali i
nfair i a ion. Taking he ame e ample, Valle Golf ncer ain from he lang age of he b -la .
ei e he hare, ell i o i elf or a hird per on for The momen he member i po ed a delinq en ,
P100.000.00, hen ref nd P99,000.00 back o he Valle Golf i immedia el enabled o ei e he hare and
delinq en member. On i face, ch a mechani m ell he ame, hereb ermina ing member hip in he cl b.
ob ia e he ineq i of he fir e ample, and a re ha The b -la doe no req ire an no ice o he member
from he ime delinq enc i po ed o he da he ale of ha e relinq i hed hi member hip and ma be e cl ded
he hare i ac all held. The e p i o he e reme from he room of he a ocia ion and hi cer ifica e of
de rimen o he member, ho pon being no ified ha he member hip hall be old a a c ion, and an rpl of he
lien on hi hare i d e for e ec ion o ld be d l proceed be paid o er him, doe no i fac ermina e he
mo i a ed o e le hi acco n o foreclo e ch member hip of one ho e d e are a ear in arrear ; he
po ibili . remed gi en for non-pa men of d e i no e cl i e
Doe he Corpora ion Code permi he ermina ion of beca e he corpora ion, o long a he remain a member,
member hip i ho d e no ice o he member? The Code ma e on hi agreemen and collec hem.42
i elf i ilen on ha ma er, and he arg men can be
made ha if no no ice i pro ided for in he ar icle of _______________
incorpora ion or in he b -la , hen ermina ion ma be 41 S a note 39.
effec ed i ho an no ice a all. S ppor for ch an 42 R. Agpalo, Commen on he Co o a ion Code of he Phili ine , p.
arg men can be dra n from o r r ling in L g . Ba a,3 390; citing SEC Opinion dated 10 March 1987. The SEC Q arterl
hich per ain o a religio corpora ion ha i al o a non- B lletin, Vol. XXI, No. 1, March 1987, pp. 14-15.
ock corpora ion.40
23

_______________
39 G.R. Nos. 134693-94, 27 September 2001, 366 SCRA 113. 238 C A A D
40 See Corporation Code, Sec. 109.
Valle G lf and C n Cl b, Inc. . Vda. de Ca am
237
V.
. 585, A 16, 2009 237
Wi h he e foregoing concern in mind, ere he ac ion
of Valle Golf concerning he Golf Share and member hip
Valle G lf and C n Cl b, Inc. . Vda. de Ca am of Caram arran ed? We belie e no .
I ma be conceded ha he ac ion of Valle Golf ere,
Therein, he Co r pheld he e p l ion of ch rch echnicall peaking, in accord i h he pro i ion of i b -
member de pi e he ab ence of an pro i ion on prior la on ermina ion of member hip, ag el defined a
no ice in he b -la , a ing ha he member had he e are. Ye e peciall ince he ermina ion of
ai ed ch no ice b adhering o ho e b -la [,] became member hip in Valle Golf i ine ricabl linked o he
member of he ch rch ol n aril [,] en ered in o i depri a ion of proper righ o er he Golf Share, he
co enan and b cribed o i r le [and b ] doing o, he emergence of ch ad er e con eq ence make legal and
are bo nd b heir con en . 41 eq i able andard come o fore.
Ho e er, a di inc ion ho ld be made be een The commen arie of Lope ad er o an SEC Opinion
member hip in a religio corpora ion, hich ordinaril da ed 29 Sep ember 1987 hich e can ci e i h appro al.
doe no in ol e he p rcha e of o ner hip hare , and Lope ci e :
member hip in a non- ock corpora ion ch a Valle Golf,
here he p rcha e of an o ner hip hare i a condi ion [I]n order that the action of a corporation in e pelling a
i e a . Member hip in Valle Golf en ail he member for cause ma be alid, it is essential, in the absence of a
acq i i ion of a proper righ . In rn, he lo of ch ai er, that there shall be a hearing or trial of the charge against
proper righ co ld al o in ol e he applica ion of a pec him, ith reasonable notice to him and a fair opportunit to be
of ci il la , in addi ion o he pro i ion of he Corpora ion heard in his defense. (Fletcher C c. Corp., a) If he e h d
Code. To p i impl , hen he lo of member hip in a f a eg a ed b he b - a f he a ca ,
non- ock corpora ion al o en ail he lo of proper h d a ea e b a a ce. The hearing must
righ , he manner of depri a ion of ch proper righ be conducted fairl and openl and the bod of persons before
ho ld al o be in accordance i h he pro i ion of he Ci il hom it is heard or ho are to decide the case must be
Code. unprejudiced. (SEC opinion dated September 29, 1987, Bacalaran-
I ha been held ha a b -la pro iding ha if a Sucat Dri ers Association)
member fail o pa d e for a ear, he hall be deemed o
 I i nmi akabl i e p blic polic o req ire ha he 44 Like ise, at the time of said sale, petitioner had no kno ledge of
ermina ion of member hip in a non- ock corpora ion be Mr. Caram s recent death, nor did it recei e an notice thereof from Mr.
done in accordance i h b an ial j ice. No ma er ho Caram s heirs or his estate administrator. See id., at p. 157.
one ma preci el define ch erm, i i e iden in hi 45 The decision of the SEC Hearing Officer, in narrating the ersion of
ca e ha he ermina ion of Caram member hip be ra ed facts as presented b Valle Golf in its Ans er, states: That defendant
he dic a e of b an ial j ice. had d tif ll informed the late Congressman Fermin Caram, Jr. d ring
Valle Golf allege in i pre en pe i ion ha i a his lifetime abo t the npaid acco nts ith defendant and that the estate
no ified of he dea h of Caram onl in March of 1990,43 a of the late Fermin Caram, Jr. as like ise informed that the share of the
claim deceased had been posted delinq ent See Rollo, p. 71.

240
_______________
43 Rollo, p. 10.
240 C A A D
23
Valle G lf and C n Cl b, Inc. . Vda. de Ca am

. 585, A 16, 2009 239 e peciall blame or h , ince i a ha no ice ha

Valle G lf and C n Cl b, Inc. . Vda. de Ca am carried he final hrea ha hi Golf Share o ld be old a
p blic a c ion ho ld he fail o e le hi acco n on or
hich i rei era ed in i Repl o re ponden Commen .44 before 31 Ma 1987.
Ye hi claim i belied b he er demand le er en b Valle Golf co ld ha e er ell addre ed ha no ice o
Valle Golf o Caram mailing addre . The le er da ed he e a e of Caram, a i had done i h he hird and
25 Jan ar 1987 and 7 March 1987, bo h of hich ere fo r h no ice . Tha i did no do o ignifie ha Valle
en i hin a fe mon h af er Caram dea h are bo h Golf a ben on elling he Golf Share, imper io o
addre ed o E . of Fermin Z. Caram, Jr. ; and he po en ial complica ion ha o ld impede i in en ion ,
abbre ia ion [e] . can onl be aken o refer o e a e. ch a he need o p r e he claim before he e a e
Thi i o be di ing i hed from he o earlier le er , bo h proceeding of Caram. B pre ending o a me ha
en prior o Caram dea h on 6 Oc ober 1986, hich ere Caram a hen ill ali e, Valle Golf o ld ha e been
addre ed o Caram him elf. Ine plicabl , he final le er able o capi ali e on hi pre io nre pon i ene o heir
da ed 3 Ma 1987 a again addre ed o Caram him elf, no ice and proceed in feigned good fai h i h he ale.
al ho gh he fac ha he o pre io le er ere Wha e er he rea on Caram a nable o re pond o he
direc ed a he e a e of Caram and a incon ro er ible earlier no ice , he fac remain ha a he i e f he
proof ha Valle Golf had kno n of Caram dea h e en fi a ice, Va e G f k e ha Ca a , ha i g
prior o he a c ion ale. died a d g e, d be ab e e e he
In ere ingl , Valle Golf did no claim before he Co r b iga i hi e f, e he e i ed i e di g hi
of Appeal ha he had learned of Caram dea h onl ice ide a c f eg a i he
af er he a c ion ale. I al o appear ha Valle Golf had e i g a e.
conceded before he SEC ha ome of he no ice i had Tha rea on alone, e oca i e a i i of he ab ence of
en ere addre ed o he e a e of Caram, and no he b an ial j ice in he ale of he Golf Share, i
deceden him elf.45 fficien o n llif he ale and ain he r ling of he
Wha do he e fac re eal? Valle Golf ac ed in clear SEC and he Co r of Appeal .
bad fai h hen i en he final no ice o Caram nder he Moreo er, he er and appalling bad fai h e hibi ed b
pre en e he belie ed him o be ill ali e, hen in fac Valle Golf in ending o he final no ice o Caram on he
he had er ell kno n ha he had alread died. Tha i delibera e pre en e ha he a ill ali e co ld bring in o
a in he final no ice ha Valle Golf had perpe ra ed he opera ion Ar icle 19, 20 and 21 nder he Chap er on
d plici i H man Rela ion of he Ci il Code.46 The e pro i ion
en ncia e a
_______________
_______________
 46 Art. 19. E er person m st in the e ercise of his rights and in the compensate the latter for the damage.
performance of his d ties, act ith j stice, gi e e er one his d e, and
242
obser e honest and good faith.
Art. 20. E er person ho, contrar to la , illf ll or negligentl
ca ses damage to another, shall indemnif the latter for the same. 242 C A A D
241 Valle G lf and C n Cl b, Inc. . Vda. de Ca am

. 585, A 16, 2009 241

ch ca e o refer o b an i e la . S ch a fla a end
he ar icle of incorpora ion and b -la of Valle Golf. The
Valle G lf and C n Cl b, Inc. . Vda. de Ca am Co r deem i j dicio o refer o he pro ec ion afforded
b he Ci il Code, i h re pec o he pre er a ion,
general obliga ion nder la for e er per on o ac fairl main enance, and defen e from lo of proper righ .
and in good fai h o ard one ano her. Non- ock The arrangemen pro ided for in he afore-q o ed b -
corpora ion and i officer are no e emp from ha la of Valle Golf hereb a lien i con i ed on he
obliga ion. member hip hare o an er for b eq en obliga ion o
VI. he corpora ion find applicable parallel nder he Ci il
Ano her poin . The b -la of Valle Golf i di comfi ing Code. Member hip hare are con idered a mo able or
eno gh in ha i fail o pro ide an formal no ice and per onal proper ,47 and he can be con i ed a ec ri
hearing proced re before a member hare ma be ei ed o ec re a principal obliga ion, ch a he d e and fee .
and old. The Co r o ld ha e been a i fied had he b - There are a lea o con rac al mode nder he Ci il
la or he ar icle of incorpora ion e abli hed a Code b hich per onal proper can be ed o ec re a
proced re hich a re ha he member o ld in reali principal obliga ion. The fir i hro gh a con rac of
be ac all no ified of he pending acco n and pro ide he pledge,4 hile he econd i hro gh a cha el mor gage.4
oppor ni for ch member o e le ch acco n before A pledge o ld req ire he pledgor o rrender po e ion
he member hip hare co ld be ei ed hen old o an er of he hing pledged, i.e., he member hip hare, o he
for he deb . A e ha e empha i ed, member hip in Valle pledge in order ha he con rac of pledge ma be
Golf and man o her like- i a ed non- ock corpora ion con i ed.50
ac all in ol e he p rcha e of a member hip hare, I deli er of he hare canno be effec ed, he i able
hich i a b an iall e pen i e proper . A a re l , ec ri ran ac ion i he cha el mor gage. Under Ar icle
ermina ion of member hip doe no onl lead o lo of 2124 of he Ci il Code, mo able ma be he objec of a
bragging righ , b he ac al depri a ion of proper . cha el mor gage. The Cha el mor gage i go erned b Ac
The Co r ha no in en ion o in erfere i h ho non- No. 1508, o her i e kno n The Cha el Mor gage La ,51
ock corpora ion ho ld r n heir dail affair . The Co r and he Ci il Code.
al o re pec he fac ha member hip i non- ock In hi ca e, Caram had no igned an doc men ha
corpora ion i a ol n ar arrangemen , and ha he manife hi agreemen o con i e hi Golf Share a
member ho ign p i bo nd o adhere o ha he ec ri in fa or of Valle Golf o an er for hi obliga ion
ar icle of incorpora ion or he b -la pro ide, e en if o he cl b. There i no doc men e can a e ha i i
pro i ion are de rimen al o he in ere of he member. b an iall complian i h he form of cha el mor gage
A he ame ime, in he ab ence of a a i fac or proced re nder
nder he ar icle of incorpora ion or he b -la ha
afford a member he oppor ni o defend again he _______________
depri a ion of ignifican proper righ in accordance 47 See Ci il Code, Art. 414.
i h b an ial j ice, he erm of he b -la or ar icle 48 See Ci il Code, Art. 2085 in relation to Arts. 2093 & 2095.
of incorpora ion ill no ffice. There ill be need in 49 See Ci il Code, Art. 2124.
50 See Ci il Code, Art. 2093.
_______________ 51 Act No. 1508, as amended.
Art. 21. An person ho illf ll ca ses loss or inj r to another in a
243
manner that is contrar to morals, good c stoms or p blic polic shall
 . 585, A 16, 2009 243
Valle G lf and C n Cl b, Inc. . Vda. de Ca am

Sec ion 5 of Ac No. 1508. The b -la co ld no ffice for

ha p rpo e ince i i no de igned a a bila eral con rac
be een Caram and Valle Golf, or a ehicle b hich
Caram e pre ed hi con en o con i e hi Golf Share
a ec ri for hi acco n i h Valle Golf.
VII.
We finall rn o he ma er of damage . The a ard of
damage ained b he Co r of Appeal a for moral
damage in he m of P50,000.00 and e emplar damage
in he m of P10,000.00. Bo h a ard ho ld be ained.
In pre ending o gi e ac al no ice o Caram de pi e f ll
kno ledge ha he a in fac dead, Valle Golf e hibi ed
er bad fai h.
The a ard of moral damage a ba ed on a finding b
he hearing officer ha Valle Golf had con iderabl
be mirched he rep a ion and good credi anding of he
plain iff and her famil , ch j ifica ion ha ing
fo nda ion nder Ar icle 2217 of he Ci il Code. No ca e
ha been bmi ed o de rac from ch a ard. In
addi ion, e emplar damage ere a arded o [Valle
Golf] defendan from repea ing imilar ac in he f re
and o pro ec he in ere of i ockholder and b a
of e ample or correc ion for he p blic good. S ch
concl ion i in accordance i h Ar icle 2229 of he Ci il
Code, hich e abli he liabili for e emplar damage .
WHEREFORE, he pe i ion i DENIED. Co again
pe i ioner .
SO ORDERED.

Q i bi g (Chai e ), Ca i -M ale , Vela c ,

J . and B i , JJ., conc r.

Pe i i de ied.

C g 2021 Ce a B S , I c. A g e e ed.