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 Catherines 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 clubs By-Laws apply, which requires notice and
hearing prior to a members suspension. In this case, Catherine did not receive notice
specifically advising her that she could be suspended for nonpayment of the special
assessment. The respondents 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 clubs day-
to-day operations. But the special assessment arose from an extraordinary circumstance.
However, there is no doubt that Catherines suspension was justifiable for not paying
the special assessment. The Court finds no bad faith on the part of respondents in
implementing Catherines 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.