GCHS v CA
G.R. No. 108905
October 23, 1997
SEC 23. The Board of Directors or Trustees. — Unless otherwise provided in this Code, the corporate powers of all
corporations formed under this Code shall be exercised, all business conducted and all property of such
corporations controlled and held by the board of directors or trustees to be elected from among the holders of
stocks, or where there is no stock, from among the members of the corporation, who shall hold office for one (1)
year and until their successors are elected and qualified.
Facts: Petitioner Grace Christian High School (GCHS) is an educational institution offering preparatory,
kindergarten and secondary courses at the Grace Village in Quezon City. Private respondent Grace Village
Association, Inc.(GVAI), on the other hand, is an organization of lot and/or building owners, lessees and residents
at Grace Village, while private respondents Alejandro G. Beltran and Ernesto L. Go were its president and chairman
of the committee on election, respectively, in 1990, when this suit was brought.
The original 1968 by-laws provide that the Board of Directors, composed of eleven (11) members, shall
serve for one (1) year until their successors are duly elected and have qualified. On 20 December 1975, a
committee of the board of directors prepared a draft of an amendment to the by-laws which provides that "GRACE
CHRISTIAN HIGH SCHOOL representative is a permanent Director of the ASSOCIATION." However, this draft was
never presented to the general membership for approval. Nevertheless, from 1975 to 1990, petitioner was given a
permanent seat in the board of directors of the association. Thus, for fifteen years — from 1975 until 1989 —
petitioner’s representative had been recognized as a "permanent director" of the association.
But on February 13, 1990, petitioner received notice from the association’s committee on election that
the latter was "reexamining" (actually, reconsidering) the right of petitioner’s representative to continue as an
unelected member of the board as the association's committee on election sought to change the by-laws. As the
board denied petitioner’s request to be allowed representation without election, petitioner brought an action for
mandamus in the Home Insurance and Guaranty Corporation. Its action was dismissed by the hearing officer
whose decision was subsequently affirmed by the appeals board. Petitioner appealed to the Court of Appeals,
which in turn upheld the decision of the HIGC’s appeals board. Hence this petition.
Issue: Whether or not the permanent seat of the GCHS is valid.
HELD: NO. The board of directors of corporations must be elected from among the stockholders or members.
There may be corporations in which there are unelected members in the board but it is clear that in the examples
cited by petitioner the unelected members sit as ex officio members, i.e., by virtue of and for as long as they hold a
particular office. But in the case of petitioner, there is no reason at all for its representative to be given a seat in
the board. Nor does petitioner claim a right to such seat by virtue of an office held. In fact it was not given such
seat in the beginning. It was only in 1975 that a proposed amendment to the bylaws sought to give it one.
Since the provision in question is contrary to law, the fact that for fifteen years it has not been questioned
or challenged but, on the contrary, appears to have been implemented by the members of the association cannot
forestall a later challenge to its validity. Neither can it attain validity through acquiescence because, if it is contrary
to law, it is beyond the power of the members of the association to waive its invalidity. For that matter the
members of the association may have formally adopted the provision in question, but their action would be of no
avail because no provision of the bylaws can be adopted if it is contrary to law.
It is probable that, in allowing petitioner’s representative to sit on the board, the members of the
association were not aware that this was contrary to law. It should be noted that they did not actually implement
the provision in question except perhaps insofar as it increased the number of directors from 11 to 15, but
certainly not the allowance of petitioner’s representative as an unelected member of the board of directors. It is
more accurate to say that the members merely tolerated petitioner’s representative and tolerance cannot be
considered ratification.
Nor can petitioner claim a vested right to sit in the board on the basis of "practice." Practice, no matter
how long continued, cannot give rise to any vested right if it is contrary to law. Even less tenable is petitioner’s
claim that its right is "coterminus with the existence of the association."
