GR 108905; (October, 1997) (Digest)
G.R. No. 108905 October 23, 1997
GRACE CHRISTIAN HIGH SCHOOL, petitioner, vs. THE COURT OF APPEALS, GRACE VILLAGE ASSOCIATION, INC., ALEJANDRO G. BELTRAN, and ERNESTO L. GO, respondents.
FACTS
Petitioner Grace Christian High School is an educational institution located at Grace Village. Private respondent Grace Village Association, Inc. is an organization of lot/building owners, lessees, and residents at Grace Village. The association’s by-laws, as adopted in 1968, provided for the election of an 11-member Board of Directors annually. On December 20, 1975, a committee prepared a draft amendment to the by-laws which stated, among other things, that “GRACE CHRISTIAN HIGH SCHOOL representative is a permanent Director of the ASSOCIATION.” This draft was never presented to the general membership for approval. Nevertheless, from 1975 to 1989, petitioner’s representative was allowed to sit as a permanent, unelected member of the board. On February 13, 1990, the association’s election committee informed petitioner that it was reexamining this practice, deeming it undemocratic and a deprivation of the members’ right to vote for all directors. The association subsequently decided to follow the 1968 by-laws for the 1990 elections. Petitioner filed an action for mandamus with the Home Insurance and Guaranty Corporation (HIGC) to compel its recognition as a permanent director, claiming a vested right based on the 1975 draft amendment and 15 years of practice. The HIGC hearing officer and appeals board dismissed the petition, a decision affirmed by the Court of Appeals.
ISSUE
Whether petitioner Grace Christian High School has a vested right to a permanent, unelected seat on the Board of Directors of Grace Village Association, Inc., based on a 1975 draft amendment to the by-laws and a 15-year practice of toleration.
RULING
No. The Supreme Court affirmed the decision of the Court of Appeals. The 1975 provision making petitioner’s representative a permanent director was never validly enacted as an amendment to the by-laws because it was never approved by the majority of the association’s members as required by Article XIX of the existing 1968 by-laws and Section 22 of the Corporation Law. The practice of allowing petitioner’s representative to sit on the board for 15 years was mere tolerance and cannot be considered ratification of an invalid provision. Furthermore, the provision is contrary to Section 92 of the Corporation Code (B.P. Blg. 68), which mandates that the board of trustees (or directors) of non-stock corporations shall be elected, unless otherwise provided in the articles of incorporation or by-laws. The Court held that no vested right can arise from a practice that is contrary to law. The association’s subsequent correction of this long-standing practice was valid.