Name: Charelle Mei Sy
Topic: By-Laws
Law or Provision Cited: Sec. 35 of the By-Laws of QCSC
Title: Catherine Ching, et.al v. Quezon City Sports Club, Inc., et.al
Source, Date: GR No. 200150. 07 November 2016
Facts
Quezon City Sports Club (QCSC) is a duly registered domestic corporation providing recreational activities,
and sports facilities. Catherine Ching became a member where her membership privileges were extended to
immediate family members. Because QCSC was not in a financial position to pay the monetary awards in an NLRC
case, a special assessment was approved where the members would be required to pay P2,500.00 payable in 5
equal monthly installments. Catherine was duly notified of its implementation through a letter. Catherine avoided
payment. The Board of Directors then passed a board resolution suspending the privilege of the QCSC members
who had not paid the special assessment. QCSC then refused to accommodate Catherine and her family members.
After failed attempts at demanding the recall of the suspension of her privileges, the petitioners filed a complaint
against QCSC. The RTC rendered judgement in favor petitioners, but CA reversed it.
Issue
Whether or not Catherine’s suspension was done in violation of her right to due process
Held
Yes. Petition partly granted.
Ruling
In Forest Hills Golf and Country Club, Inc. v. Gardpro, Inc., the Court ruled that articles of incorporation
and by-laws of a country club are the fundamental documents governing the conduct of the corporate affairs of
said club; they establish the norms of procedure for exercising rights, and reflected the purposes and intentions of
the incorporators. The by-laws are self-imposed private laws binding on all members, directors, and officers of the
country club. The prevailing rule is that the provisions of the articles of incorporation and the by-laws must be
strictly complied with and applied to the letter.
In the case at bar, Sec. 35(a) of the club’s By-Laws apply, which requires notice and hearing prior to a
member’s suspension. In this case, Catherine did not receive notice specifically advising her that she could be
suspended for nonpayment of the special assessment. The respondent’s contention that Sec. 33(a) of the By-Laws
should apply, which allows suspension of a member with unpaid bills after notice, is incorrect. Such By-Law refers
to regular dues and ordinary accounts that requires immediate payment for the club’s day-to-day operations. But
the special assessment arose from an extraordinary circumstance.
However, there is no doubt that Catherine’s suspension was justifiable for not paying the special
assessment. The Court finds no bad faith on the part of respondents in implementing Catherine’s suspension.
There was no evidence of malice or ill will on their part. However, her right to due process was violated as she was
not afforded notice and hearing prior to the suspension.
Thus, the respondent Club shall be liable for the nominal damages because in the absence of malice and
bad faith, officers of a corporation cannot be made personally liable for the liabilities of the corporation which, by
legal fiction, has a personality separate and distinct from its officers, stockholders, and members.