Cebu Country Club, Inc. , Sabino R. Dapat, Ruben D. Almendras, Julius Z. Neri, Douglas L. Luym, Cesar T. Libi, Ramontito E. Garcia and Jose B. Sala vs Ricardo F. Elizagaque

​G.R. NO. 160273               January 18, 2008
Cebu Country Club, Inc. , Sabino R. Dapat, Ruben D. Almendras, Julius Z. Neri, Douglas L. Luym, Cesar T. Libi, Ramontito E. Garcia and Jose B. Sala, Petitioners,                 vs
Ricardo F. Elizagaque, Respondents.
 
Facts:
Respondent filed with CCCI an application for proprietary membership
As the price of a proprietary share was around the P5 million range, Benito Unchuan, then president of CCCI, offered to sell respondent a share for only P3.5 million. Respondent, however, purchased the share of a certain Dr. Butalid for only P3 million. Consequently, on
September 6, 1996, CCCI issued Proprietary Ownership Certificate No. 1446 to respondent.
During the meetings dated April 4, 1997 and May 30, 1997 of the CCCI Board of Directors, action on respondent's application for proprietary membership was deferred. In another Board meeting held on July 30, 1997, respondent's application was voted upon. Subsequently, or on
August 1, 1997, respondent received a letter from Julius Z. Neri, CCCI's corporate secretary, informing him that the Board disapproved his application for proprietary membership.
On August 6, 1997, Edmundo T. Misa, on behalf of respondent, wrote CCCI a letter of reconsideration. As CCCI did not answer, respondent, on October 7, 1997, wrote another letter of reconsideration. Still, CCCI kept silent. On November 5, 1997, responden again sent CCCI a letter... inquiring whether any member of the Board objected to his application. Again, CCCI did not reply.
Consequently, on December 23, 1998, respondent filed with the Regional Trial Court (RTC), Branch 71, Pasig City a complaint for damages against petitioners, docketed a Civil Case No. 67190.
the RTC rendered its Decision dated February 14, 2001 in favor of respondent,
On appeal by petitioners, the Court of Appeals, in its Decision dated January 31, 2003, affirmed the trial court's Decision with modification,... Petitioners contend, inter alia, that the Court of Appeals erred in awarding exorbitant damages to respondent despite the lack of evidence that they acted in bad faith in disapproving the latter's application; and in disregarding their defense of damnum absque... injuria.
As shown by the records, the Board adopted a secret balloting known as the "black ball system" of voting wherein each member will drop a ball in the ballot box. A white ball represents conformity to the admission of an applicant, while a black ball means disapproval. Pursuant to
Section 3(c), as amended, cited above, a unanimous vote of the directors is required. When respondent's application for proprietary membership was voted upon during the Board meeting on July 30, 1997, the ballot box contained one (1) black ball. Thus, for lack of unanimity, his... application was disapproved.
 
Issue: Whether in disapproving respondent's application for proprietary membership with CCCI, petitioners are liable to respondent for damages, and if so, whether their liability is joint and several.
 
Ruling:
Yes. Obviously, the CCCI Board of Directors, under its Articles of Incorporation, has the right to approve or disapprove an application for proprietary membership. But such right should not be exercised arbitrarily. Articles 19 and 21 of the Civil Code on the Chapter on Human Relations provide restrictions, thus:
 Article 19. Every person must, in the exercise of his rights and in the performance of... his duties, act with justice, give everyone his due, and observe honesty and good faith.
Article 21. Any person who willfully causes loss or injury to another in a manner that... is contrary to morals, good customs or public policy shall compensate the latter for... the damage.
We believe respondent' testimony that he suffered... mental anguish, social humiliation and wounded feelings as a result of the arbitrary denial of his application. However, the amount of P2,000,000.00 is excessive. While there is no hard-and-fast rule in determining what would be a fair and reasonable amount of moral damages, the... same should not be palpably and scandalously excessive. Moral damages are not intended to impose a penalty to the wrongdoer, neither to enrich the claimant at the expense of the defendant.[8] Taking into consideration the attending circumstances here, we... hold that an award to respondent of P50,000.00, instead of P2,000,000.00, as moral damages is reasonable.
 
As to petitioners' reliance on the principle of damnum absque injuria or damage without injury, suffice it to state that the same is misplaced. In we held that this principle does not apply when there is an abuse of... a person's right, as in this case.