Agdao Residents Inc. v. Maramion

G.R. No. 188642, 17 October 2016

FACTS:

Petitioners are Agdao Landless Residents Association, Inc. (ALRAI), a non-stock, non-profit corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines, and its board of directors.

Dakudao & Sons, Inc. (Dakudao) executed six Deeds of Donation in favor of ALRAI covering 46 titled lots (donated lots). One Deed of Donation prohibits ALRAI, as donee, from partitioning or distributing individual certificates of title of the donated lots to its members, within a period of five years from execution, unless a written authority is secured from Dakudao. A violation of the prohibition will render the donation void, and title to and possession of the donated lot will revert to Dakudao. The other five Deeds of Donation do not provide for the five-year restriction.

In the board of directors and stockholders meetings, members of ALRAI resolved to directly transfer 10 of the donated lots to individual members and non¬ members of ALRAI.

Respondents filed a Complaint against petitioners alleging that petitioners expelled them as members of ALRAI, and that petitioners are abusing their powers as officers. Respondents further alleged that petitioners were engaged in anomalous and illegal acts. In their Answer, petitioners alleged that ALRAI transferred lots to Alcantara as attorney’s fees ALRAI owed to her late husband, who was the legal counsel of ALRAI. On the other hand, Javonillo and Armentano, as president and secretary of ALRAI, respectively, made a lot of sacrifices for ALRAI, while Dela Cruz provided financial assistance to ALRAI. Petitioners also alleged that respondents who are non-members of ALRAI have no personality to sue. They also claimed that the members who were removed were legally ousted due to their absences in meetings.

The court a quo treated the case as an intra-corporate dispute. It found respondents to be bona fide members of ALRAI to which the CA affirmed. Under Section 2, Article III of ALRAI’s Amended Constitution and By-Laws (ALRAI Constitution), the corporate secretary should give written notice of all meetings to all members at least three days before the date of the meeting. The CA found that respondents were not given notices of the meetings held for the purpose of their termination from ALRAI at least three days before the date of the meeting.

Being existing members of ALRAI, respondents are entitled to inspect corporate books and demand accounting of corporate funds in accordance with Section 1, Article VII and Section 6, Article V ofthe ALRAI Constitution. The CA nullified the transfers made to Javonillo and Armentano because these transfers violated Section 6 of Article IV of the ALRAI Constitution. Section 6 prohibits directors from receiving any compensation, except for per diems, for their services to ALRAI. The CA upheld the validity of the transfers to Dela Cruz and Alcantara because the ALRAI Constitution does not prohibit the same. The CA held that as a consequence, the subsequent transfer of the lot covered by TCT No. T-41366 to Loy from Alcantara was also valid.

Both parties filed separate motions for reconsideration with the CA but these were denied in a Resolution. Thus, the parties filed separate petitions for review on certiorari under Rule 45 of the Rules of Court with this Court.

ISSUE:

Whether respondents were legally dismissed as members of ALRAI.

RULING:

Respondents were illegally dismissed from ALRAI.

Section 91 of the Corporation Code of the Philippines (Corporation Code) provides that membership in a non-stock, non-profit corporation (as in petitioner ALRAI in this case) shall be terminated in the manner and for the cases provided in its articles of incorporation or the by-laws.

In tum, Section 5, Article II of the ALRAI Constitution states:

Sec. 5. – Termination of Membership – Membership may be lost in any of the following: a) Delinquent in the payment of monthly dues; b) failure to [attend] any annual or special meeting of the association for three consecutive times without justifiable cause, and c) expulsion may be exacted by majority vote of the entire members, on causes which herein enumerated: 1) Act and utterances which are derogatory and harmful to the best interest of the association; 2) Failure to attend any annual or special meeting of the association for six (6) consecutive months, which shall be construed as lack of interest to continue his membership, and 3) any act to conduct which are contrary to the objectives, purpose and aims of the association as embodied in the charter[.]

Petitioners allege that the membership of respondents in ALRAI was terminated due to (a) non-payment of membership dues and (b) failure to consecutively attend meetings. However, petitioners failed to substantiate these allegations. In fact, the court a quo found that respondents submitted several receipts showing their compliance with the payment of monthly dues. Petitioners likewise failed to prove that respondents’ absences from meetings were without any justifiable grounds to result in the loss of their membership in ALRAI.

Even assuming that petitioners were able to prove these allegations, the automatic termination of respondents’ membership in ALRAI is still not warranted. As shown above, Section 5 of the ALRAI Constitution does not state that the grounds relied upon by petitioners will cause the automatic termination of respondents’ membership.

Moreover, although termination of membership from ALRAI may be made by a majority of the members, the court a quo found that the “guideline (referring to Section 2, Article III of the ALRAI Constitution) was not followed, hence, complainants’ ouster from the association was illegally done.

*Case Digest by Nikki P. Ebillo, JD-4, Andres Bonifacio Law School, SY 2019-2020

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