GRACE CHRISTIAN HIGH SCHOOL, petitioner, vs.

THECOURT OF APPEALS,
GRACE VILLAGE ASSOCIATION, INC., ALEJANDRO G. BELTRAN, and ERNESTO
L. GO, respondents.

281 SCRA 133?

Facts: Petitioner Grace Christian High School is an educational institution offering

preparatory, kindergarten and secondary courses at the Grace Village in Quezon City.

On the other hand, private respondent Grace Village Association, Inc., 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.

Based on its by-laws that was adopted in 1968, Article IV of which states that annual
meeting shall be held every first Sunday of January to elect by plurality of vote by secret
balloting the board of directors composed of 11 members.

HOWEVER, in 1975 the committee of the board of directors made a draft of an

amendment to the by –laws, material portion of which states that fifteen members
of its board of director only 14 members would be elected while the remaining
member would be the representative of Grace Christian as Permanent director of
the Association. But this draft was never presented to the general membership
for approval. Despite that, from 1975 up to 1990 Grace Christian High School has
been given a permanent seat on the board of directors of the association.

In 1990, the Grace Village Association Committee informed the principal of Grace
Christian High School that ALL directors should be elected and Grace Christian
was no longer entitled to a permanent seat in the board.

Notices were then sent for the election but Grace Christian HS requested that the
notice be changed since they will be unlawfully deprived of their vested right [to] a
permanent seat in the board. Such request was denied and this prompted the
school to file a suit for mandamus before the Home Insurance and Guaranty
Corporation (HIGC).

Meanwhile, Grace Village Assoc sought the opinion of SEC and SEC rendered an
opinion to the effect that the practice of allowing unelected members in the board was
contrary to the existing by-laws of the association and to Sec 92 of the Corporation
Code (B.P. Blg. 68).
HIGC dismissed Grace Christian HS’s petition for mandamus. Appeals board of HIGC
affirmed said decision. On appeal to CA, the school lost again. Then the case was
brought to SC.

Issues: (a) Are the amended by-laws of the Association valid?

(b) Is the inclusion of a permanent director without the benefit of election allowed under
the law?

(c) Does Grace Christian have vested right to a permanent seat in the board?

Ruling: (a) The amended by-laws is not valid for being contrary to law which requires
directors to be elected. Since the provision in questions Contrary to law, the fact that for
15 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 it can attain validity through acquiescence because, if contrary to
law, it is beyond the power of the members of the association to waive its invalidity. No
provision of the by-laws can be adopted if it is contrary to law.

(b) The Inclusion of a permanent director in the board of director is contrary to law. The
members of the board of director corporations must be elected from among stock
holders or members for a term of one year and until their successors are elected and
qualified.

(c) Grace Question does not have vested right to a seat in the board of the Association.
Practice, no matter how long continued, cannot give rise to any vested right if it is
contrary to law (Grace Christian High School v. Court of Appeals (281 SCRA 133).