Spec Pro Class 2020

Facts: 

Spouses Delfino and HelendaRaniel are members in good standing of the Luz Village Tennis Club, Inc. Teodoro B. Vesagas, who claims to be the club's duly elected president, with Wilfred D. Asis, who, in turn, claims to be its duly elected vice-president and legal counsel, allegedly summarily stripped them of their lawful membership, without due process of law. Thereafter, the spouses filed a Complaint with the Securities and Exchange Commission (SEC) on 26 March 1997 against the Vesagas and Asis (SEC Case 03-97-5598). The spouses Raniel asked the Commission to declare as illegal their expulsion from the club as it was allegedly done in utter disregard of the provisions of its by-laws as well as the requirements of due process. They likewise sought the annulment of the amendments to the by-laws changing the annual meeting of the club from the last Sunday of January to November and increasing the number of trustees from nine to fifteen. Finally, they prayed for the issuance of a Temporary Restraining Order and Writ of Preliminary Injunction. 

The application for TRO was denied by SEC Hearing Officer Soller Before the hearing officer could start proceeding with the case, however, Vesagas and Asis filed a motion to dismiss on the ground that the SEC lacks jurisdiction over the subject matter of the case. Said motion was denied. Motion for Reconsideration was likewise denied. Unperturbed, they filed a petition for certiorari with the SEC En Banc seeking a review of the hearing officer's orders. The petition was again denied for lack of merit, and so was the motion for its reconsideration in separate orders, dated 14 July 1998 and 17 November 1998, respectively. Dissatisfied with the verdict, Vesagas and Asis promptly sought relief with the Court of Appeals contesting the ruling of the Commission en banc. The appellate court, however, dismissed the petition for lack of merit. It similarly denied their motion for reconsideration. Hence, Vesagas and Asis filed the petition for review on certiorari. 

Issue: 

Whether the club has already ceased to be a corporate body. 

​

Held: 

The Corporation Code establishes the procedure and other formal requirements a corporation needs to follow in case it elects to dissolve and terminate its structure voluntarily and where no rights of creditors may possibly be prejudiced. Section 118 (Voluntary dissolution where no creditors are affected) of the Corporation Code provides that "If dissolution of a corporation does not prejudice the rights of any creditor having a claim against it, the dissolution may be effected by majority vote of the board of directors or trustees and by a resolution duly adopted by the affirmative vote of the stockholders owning at least two-thirds (2/3) of the outstanding capital stock or at least two-thirds (2/3) of the members at a meeting to be held upon call of the directors or trustees after publication of the notice of time, place and object of the meeting for three (3) consecutive weeks in a newspaper published in the place where the principal office of said corporation is located; and if no newspaper is published in such place, then in a newspaper of general circulation in the Philippines, after sending such notice to each stockholder or member either by registered mail or by personal delivery at least 30 days prior to said meeting. A copy of the resolution authorizing the dissolution shall be certified by a majority of the board of directors or trustees and countersigned by the secretary of the corporation. The Securities and Exchange Commission shall thereupon issue the certificate of dissolution."

​

To substantiate their claim of dissolution, Vesagas and Asis submitted only two relevant documents: the Minutes of the First Board Meeting held on 5 January 1997, and the board resolution issued on 14 April 1997 which declared "to continue to consider the club as a non-registered or a non-corporate entity and just a social association of respectable and respecting individual members who have associated themselves, since the 1970's, for the purpose of playing the sports of tennis." These two documents will not suffice. The requirements mandated by the Corporation Code should have been strictly complied with by the members of the club. The records reveal that no proof was offered by Vesagas and Asis with regard to the notice and publication requirements. Similarly wanting is the proof of the board members' certification. Lastly, and most important of all, the SEC Order of Dissolution was never submitted as evidence.