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G.R. No.

160273

January 18, 2008

CEBU COUNTRY CLUB, INC., SABINO R. A!AT, RUBEN . AL"EN RAS, JULIUS #. NERI, OUGLAS L. LUY", CESAR T. LIBI, RA"ONTITO* E. GARCIA an$ JOSE B. SALA, petitioners, vs. RICAR O %. ELI#AGA&UE, respondent. ECISION SAN O'AL(GUTIERRE#, J.) For our resolution is the instant Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailin the !ecision 1 dated "anuar# $1, %&&$ and Resolution dated 'cto(er %, %&&$ of the Court of )ppeals in C)*+.R. C, -o. 715&.. /he facts are0 Ce(u Countr# Clu(, 1nc. 2CCC13, petitioner, is a domestic corporation operatin as a non*profit and non* stoc4 private mem(ership clu(, havin its principal place of (usiness in 5anilad, Ce(u Cit#. Petitioners herein are mem(ers of its 5oard of !irectors. 6ometime in 1977, 6an 8i uel Corporation, a special compan# proprietar# mem(er of CCC1, desi nated respondent Ricardo F. 9li:a a;ue, its 6enior ,ice President and 'perations 8ana er for the ,isa#as and 8indanao, as a special non*proprietar# mem(er. /he desi nation was thereafter approved (# the CCC1<s 5oard of !irectors. 1n 199., respondent filed with CCC1 an application for proprietar# mem(ership. /he application was indorsed (# CCC1<s two 2%3 proprietar# mem(ers, namel#0 9dmundo /. 8isa and 6ilvano =udo. )s the price of a proprietar# share was around the P5 million ran e, 5enito >nchuan, then president of CCC1, offered to sell respondent a share for onl# P$.5 million. Respondent, however, purchased the share of a certain !r. 5utalid for onl# P$ million. Conse;uentl#, on 6eptem(er ., 199., CCC1 issued Proprietar# 'wnership Certificate -o. 144. to respondent. !urin the meetin s dated )pril 4, 1997 and 8a# $&, 1997 of the CCC1 5oard of !irectors, action on respondent<s application for proprietar# mem(ership was deferred. 1n another 5oard meetin held on "ul# $&, 1997, respondent<s application was voted upon. 6u(se;uentl#, or on )u ust 1, 1997, respondent received a letter from "ulius ?. -eri, CCC1<s corporate secretar#, informin him that the 5oard disapproved his application for proprietar# mem(ership. 'n )u ust ., 1997, 9dmundo /. 8isa, on (ehalf of respondent, wrote CCC1 a letter of reconsideration. )s CCC1 did not answer, respondent, on 'cto(er 7, 1997, wrote another letter of reconsideration. 6till, CCC1 4ept silent. 'n -ovem(er 5, 1997, respondent a ain sent CCC1 a letter in;uirin whether an# mem(er of the 5oard o(@ected to his application. ) ain, CCC1 did not repl#. Conse;uentl#, on !ecem(er %$, 1997, respondent filed with the Re ional /rial Court 2R/C3, 5ranch 71, Pasi Cit# a complaint for dama es a ainst petitioners, doc4eted as Civil Case -o. .719&. )fter trial, the R/C rendered its !ecision dated Fe(ruar# 14, %&&1 in favor of respondent, thus0 AB9R9F'R9, @ud ment is here(# rendered in favor of plaintiff0 1. 'rderin defendants to pa#, @ointl# and severall#, plaintiff the amount of P%,$4&,&&&.&& as actual or compensator# dama es. %. 'rderin defendants to pa#, @ointl# and severall#, plaintiff the amount of P5,&&&,&&&.&& as moral dama es. $. 'rderin defendants to pa#, @ointl# and severall#, plaintiff the amount of P1,&&&,&&&.&& as eCemplar# dama es. 4. 'rderin defendants to pa#, @ointl# and severall#, plaintiff the amount of P1,&&&,&&&.&& as and (# wa# of attorne#<s fees and P7&,&&&.&& as liti ation eCpenses. 5. Costs of suit.

Counterclaims are here(# !1681669! for lac4 of merit. 6' 'R!9R9!.% 'n appeal (# petitioners, the Court of )ppeals, in its !ecision dated "anuar# $1, %&&$, affirmed the trial court<s !ecision with modification, thus0 AB9R9F'R9, premises considered, the assailed !ecision dated Fe(ruar# 14, %&&1 of the Re ional /rial Court, 5ranch 71, Pasi Cit# in Civil Case -o. .719& is here(# )FF1R89! with 8'!1F1C)/1'- as follows0 1. 'rderin defendants*appellants to pa#, @ointl# and severall#, plaintiff*appellee the amount ofP%,&&&,&&&.&& as moral dama esD %. 'rderin defendants*appellants to pa#, @ointl# and severall#, plaintiff*appellee the amount ofP1,&&&,&&&.&& as eCemplar# dama esD $. 'rderin defendants*appellants to pa#, @ointl# and severall#, plaintiff*appellee the mount of P5&&,&&&.&& as attorne#<s fees and P5&,&&&.&& as liti ation eCpensesD and 4. Costs of the suit. /he counterclaims are !1681669! for lac4 of merit. 6' 'R!9R9!.$ 'n 8arch $, %&&$, petitioners filed a motion for reconsideration and motion for leave to set the motion for oral ar uments. 1n its Resolution4 dated 'cto(er %, %&&$, the appellate court denied the motions for lac4 of merit. Bence, the present petition. /he issue for our resolution is whether in disapprovin respondent<s application for proprietar# mem(ership with CCC1, petitioners are lia(le to respondent for dama es, and if so, whether their lia(ilit# is @oint and several. Petitioners contend, inter alia, that the Court of )ppeals erred in awardin eCor(itant dama es to respondent despite the lac4 of evidence that the# acted in (ad faith in disapprovin the latter<s applicationD and in disre ardin their defense of damnum absque injuria. For his part, respondent maintains that the petition lac4s merit, hence, should (e denied. CCC1<s )rticles of 1ncorporation provide in part0 69,9-/B0 /hat this is a non*stoc4 corporation and mem(ership therein as well as the ri ht of participation in its assets shall (e limited to ;ualified persons who are dul# accredited owners of Proprietar# 'wnership Certificates issued (# the corporation in accordance with its 5#*=aws. Corollar#, 6ection $, )rticle 1 of CCC1<s )mended 5#*=aws provides0 69C/1'- $. B'A 89859R6 )R9 9=9C/9! E /he procedure for the admission of new mem(ers of the Clu( shall (e as follows0 2a3 )n# proprietar# mem(er, seconded (# another votin proprietar# mem(er, shall su(mit to the 6ecretar# a written proposal for the admission of a candidate to the F9li i(le*for*8em(ership =istFD 2(3 6uch proposal shall (e posted (# the 6ecretar# for a period of thirt# 2$&3 da#s on the Clu( (ulletin (oard durin which time an# mem(er ma# interpose o(@ections to the admission of the applicant (# communicatin the same to the 5oard of !irectorsD 2c3 )fter the eCpiration of the aforesaid thirt# 2$&3 da#s, if no o(@ections have (een filed or if there are, the 5oard considers the o(@ections unmeritorious, the candidate shall (e ;ualified for inclusion in the F9li i(le*for*8em(ership =istFD 2d3 'nce included in the F9li i(le*for*8em(ership =istF and after the candidate shall have ac;uired in his name a valid P'C dul# recorded in the (oo4s of the corporation as his own, he shall (ecome

a Proprietar# 8em(er, upon a non*refunda(le admission fee of P1,&&&.&&, provided that admission fees will onl# (e collected once from an# person. 'n 8arch 1, 1977, 6ection $2c3 was amended to read as follows0 2c3 )fter the eCpiration of the aforesaid thirt# 2$&3 da#s, the 5oard ma#, (# unan*+ou, -o./ o0 a11 $*r/2.or, 3r/,/n. a. a r/4u1ar or ,3/2*a1 +//.*n4 , approve the inclusion of the candidate in the F9li i(le*for*8em(ership =istF. )s shown (# the records, the 5oard adopted a secret (allotin 4nown as the F(lac4 (all s#stemF of votin wherein each mem(er will drop a (all in the (allot (oC. ) white (all represents conformit# to the admission of an applicant, while a (lac4 (all means disapproval. Pursuant to 6ection $2c3, as amended, cited a(ove, a unanimous vote of the directors is re;uired. Ahen respondent<s application for proprietar# mem(ership was voted upon durin the 5oard meetin on "ul# $&, 1997, the (allot (oC contained one 213 (lac4 (all. /hus, for lac4 of unanimit#, his application was disapproved. '(viousl#, the CCC1 5oard of !irectors, under its )rticles of 1ncorporation, has the ri ht to approve or disapprove an application for proprietar# mem(ership. 5ut such ri ht should not (e eCercised ar(itraril#. )rticles 19 and %1 of the Civil Code on the Chapter on Buman Relations provide restrictions, thus0 )rticle 19. 9ver# person must, in the eCercise of his ri hts and in the performance of his duties, act with @ustice, ive ever#one his due, and o(serve honest# and ood faith. )rticle %1. )n# person who willfull# causes loss or in@ur# to another in a manner that is contrar# to morals, ood customs or pu(lic polic# shall compensate the latter for the dama e. 1n GF Equity, Inc. v. Valenzona,5 we eCpounded )rticle 19 and correlated it with )rticle %1, thus0 /his article, 4nown to contain what is commonl# referred to as the principle of a(use of ri hts, sets certain standards which must (e o(served not onl# in the eCercise of oneGs ri hts (ut also in the performance of oneGs duties. /hese standards are the followin 0 to act with @usticeD to ive ever#one his dueD and to o(serve honest# and ood faith. /he law, therefore, reco ni:es a primordial limitation on all ri htsD that in their eCercise, the norms of human conduct set forth in )rticle 19 must (e o(served. A r*45., .5ou45 6y *.,/10 1/4a1 6/2au,/ r/2o4n*7/$ or 4ran./$ 6y 1a8 a, ,u25, +ay n/-/r.5/1/,, 6/2o+/ .5/ ,our2/ o0 ,o+/ *11/4a1*.y. 95/n a r*45. *, /:/r2*,/$ *n a +ann/r 85*25 $o/, no. 2on0or+ 8*.5 .5/ nor+, /n,5r*n/$ *n Ar.*21/ 1; an$ r/,u1., *n $a+a4/ .o ano.5/r, a 1/4a1 8ron4 *, .5/r/6y 2o++*../$ 0or 85*25 .5/ 8ron4$o/r +u,. 6/ 5/1$ r/,3on,*61/. 5ut while )rticle 19 la#s down a rule of conduct for the overnment of human relations and for the maintenance of social order, it does not provide a remed# for its violation. +enerall#, an action for dama es under either )rticle %& or )rticle %1 would (e proper. 29mphasis in the ori inal3 1n re@ectin respondent<s application for proprietar# mem(ership, we find that petitioners violated the rules overnin human relations, the (asic principles to (e o(served for the ri htful relationship (etween human (ein s and for the sta(ilit# of social order. /he trial court and the Court of )ppeals aptl# held that petitioners committed fraud and evident (ad faith in disapprovin respondent<s applications. /his is contrar# to morals, ood custom or pu(lic polic#. Bence, petitioners are lia(le for dama es pursuant to )rticle 19 in relation to )rticle %1 of the same Code. 1t (ears stressin that the amendment to 6ection $2c3 of CCC1<s )mended 5#*=aws re;uirin the unanimous vote of the directors present at a special or re ular meetin was not printed on the application form respondent filled and su(mitted to CCC1. Ahat was printed thereon was the ori inal provision of 6ection $2c3 which was silent on the re;uired num(er of votes needed for admission of an applicant as a proprietar# mem(er. Petitioners eCplained that the amendment was not printed on the application form due to economic reasons. Ae find this eCcuse flims# and unconvincin . 6uch amendment, aside from (ein eCtremel# si nificant, was introduced wa# (ac4 in 1977 or almost twent# 2%&3 #ears (efore respondent filed his application. Ae cannot fathom wh# such a presti ious and eCclusive olf countr# clu(, li4e the CCC1, whose mem(ers are all affluent, did not have enou h mone# to cause the printin of an updated application form.

1t is thus clear that respondent was left ropin in the dar4 wonderin wh# his application was disapproved. Be was not even informed that a unanimous vote of the 5oard mem(ers was re;uired. Ahen he sent a letter for reconsideration and an in;uir# whether there was an o(@ection to his application, petitioners apparentl# i nored him. Certainl#, respondent did not deserve this 4ind of treatment. Bavin (een desi nated (# 6an 8i uel Corporation as a special non*proprietar# mem(er of CCC1, he should have (een treated (# petitioners with courtes# and civilit#. )t the ver# least, the# should have informed him wh# his application was disapproved. /he eCercise of a ri ht, thou h le al (# itself, must nonetheless (e in accordance with the proper norm. Ahen the ri ht is eCercised ar(itraril#, un@ustl# or eCcessivel# and results in dama e to another, a le al wron is committed for which the wron doer must (e held responsi(le. . 1t (ears reiteratin that the trial court and the Court of )ppeals held that petitioners< disapproval of respondent<s application is characteri:ed (# (ad faith. )s to petitioners< reliance on the principle of damnum absque injuria or dama e without in@ur#, suffice it to state that the same is misplaced. 1n Amonoy v. Gutierrez,7 we held that this principle does not appl# when .5/r/ *, an a6u,/ o0 a 3/r,on<, r*45., as in this case. )s to the appellate court<s award to respondent of moral dama es, we find the same in order. >nder )rticle %%19 of the -ew Civil Code, moral dama es ma# (e recovered, amon others, in acts and actions referred to in )rticle %1. Ae (elieve respondent<s testimon# that he suffered mental an uish, social humiliation and wounded feelin s as a result of the ar(itrar# denial of his application. Bowever, the amount of P%,&&&,&&&.&& is eCcessive. Ahile there is no hard*and*fast rule in determinin what would (e a fair and reasona(le amount of moral dama es, the same should not (e palpa(l# and scandalousl# eCcessive. 8oral dama es are not intended to impose a penalt# to the wron doer, neither to enrich the claimant at the eCpense of the defendant.7 /a4in into consideration the attendin circumstances here, we hold that an award to respondent of P5&,&&&.&&, instead of P%,&&&,&&&.&&, as moral dama es is reasona(le. )nent the award of eCemplar# dama es, )rticle %%%9 allows it (# wa# of eCample or correction for the pu(lic ood. -onetheless, since eCemplar# dama es are imposed not to enrich one part# or impoverish another (ut to serve as a deterrent a ainst or as a ne ative incentive to cur( sociall# deleterious actions,9 we reduce the amount from P1,&&&,&&&.&& to P%5,&&&.&& onl#. 'n the matter of attorne#<s fees and liti ation eCpenses, )rticle %%&7 of the same Code provides, amon others, that attorne#<s fees and eCpenses of liti ation ma# (e recovered in cases when eCemplar# dama es are awarded and where the court deems it @ust and e;uita(le that attorne#<s fees and eCpenses of liti ation should (e recovered, as in this case. 1n an# event, however, such award must (e reasona(le, @ust and e;uita(le. /hus, we reduce the amount of attorne#<s fees 2P5&&,&&&.&&3 and liti ation eCpenses 2P5&,&&&.&&3 to P5&,&&&.&& andP%5,&&&.&&, respectivel#. =astl#, petitioners< ar ument that the# could not (e held @ointl# and severall# lia(le for dama es (ecause onl# one 213 voted for the disapproval of respondent<s application lac4s merit. 6ection $1 of the Corporation Code provides0 69C. $1. =ia(ilit# of directors, trustees or officers. H !irectors or trustees who willfull# and 4nowin l# vote for or assent to patentl# unlawful acts of the corporation or who are uilt# of ross ne li ence or 6a$ 0a*.5in directin the affairs of the corporation or ac;uire an# personal or pecuniar# interest in conflict with their dut# as such directors, or trustees shall (e 1*a61/ =o*n.1y an$ ,/-/ra11y for all dama es resultin therefrom suffered (# the corporation, its stoc4holders or mem(ers and other persons. 29mphasis ours3 9>ERE%ORE, we ENY the petition. /he challen ed !ecision and Resolution of the Court of )ppeals in C)*+.R. C, -o. 715&. are A%%IR"E with modification in the sense that 2a3 the award of moral dama es is reduced fromP%,&&&,&&&.&& to P5&,&&&.&&D 2(3 the award of eCemplar# dama es is reduced from P1,&&&,&&&.&& toP%5,&&&.&&D and 2c3 the award of attorne#<s fees and liti ation eCpenses is reduced from P5&&,&&&.&& andP5&,&&&.&& to P5&,&&&.&& and P%5,&&&.&&, respectivel#. Costs a ainst petitioners. SO OR ERE .

Puno, C.J., C air!erson, Corona, Azcuna, "eonardo#de Castro, JJ., concur.

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