G.R. No. L-36929 June 18, 1976
CHINESE YOUNG MEN’S CHRISTIAN ASSOCIATION OF THE PHILIPPINE ISLANDS, WILLIAM GOLANGCO, and JUANITO K. TAN, petitioners, vs. VICTOR CHING and THE COURT OF APPEALS, respondents.

FACTS

The Chinese Young Men’s Christian Association (Chinese YMCA) conducted its 1966 annual membership campaign from September 27 to November 26, 1965. Respondent Victor Ching, a member of the Board of Directors, filed a mandamus action against the Association and its officers, alleging that only 175 applications were submitted by the deadline. He sought to annul the campaign results, contending that the subsequent approval of 174 applications by the Board was invalid due to alleged irregularities in the filing process. This legal action stemmed from an internal rivalry between two factions within the association.
Petitioners, the Association and its officers, asserted that 249 applications were timely filed. They explained that the membership process required screening by a Membership Committee, favorable endorsement to the Board, and final approval by a two-thirds vote of the Board. The Board, on December 7, 1965, approved 174 applications. Seventy-five applications, which were part of a batch submitted by Ching himself, were not approved because Ching had issued stop-payment orders on the accompanying checks for the membership fees.

ISSUE

Whether the Court of Appeals erred in affirming the trial court’s decision which annulled the 1966 membership campaign and the subsequent approval of 174 members by the Chinese YMCA’s Board of Directors.

RULING

Yes, the Supreme Court reversed the Court of Appeals. The Court held that the lower courts committed a grave error by annulling the entire membership list without clear, positive evidence that the approved applications were filed after the campaign deadline. The documentary evidence presented by petitioners positively established that the applications were filed within the prescribed period. The trial court’s reliance on a mere suspicion, expressed as “not improbable” that some were filed late, was insufficient to overturn the corporate action.
The Supreme Court emphasized the fundamental principle that courts should not unduly interfere with the internal affairs of corporations, particularly concerning the right to determine its own membership. The approval of the 174 applications by the Board of Directors, over Ching’s objection during the board meeting, constituted a valid corporate act. This Board action could be deemed a waiver of any procedural technicalities, as the corporation is estopped from asserting non-compliance with formal steps when it has accepted the benefits, such as the membership dues. Furthermore, the decision below unlawfully stripped approved members of their membership without cause and without their being impleaded in the suit. Consequently, the petition was granted, the appealed decision was set aside, and the complaint in the lower court was dismissed.