64. Grace Christian High School v. The Court Of Appeals

Doctrine: No provision of the by-laws can be adopted if it is contrary to law.

FACTS: Grace Village Association, Inc. is an organization of lot and/or building owners, lessees and residents at Grace Village. In 1968, the by-laws of the Association provided that the Board of Directors shall be composed of 11 members to serve for 1 year until their successors are duly elected and have qualified. In 1975, a committee of the Board of Directors prepared a draft of an amendment to the by-laws stating that the Board of Directors shall be composed of 14 directors from the Association members while one permanent seat shall be given to the representative of Grace Christian High School. This draft was never presented to the general membership for approval. From 1975 up to 1990, Grace Christian School was given a permanent seat in the board of directors of the Association. Thereafter, the association informed the principal of the Grace Christian High School that its representative would no longer be given a sure seat in the Board of Directors.

ISSUE: Whether Grace Christian School has a vested right over the permanent seat in the Board of Directors of Grace Village Association, Inc.

RULING: Petition DENIED. 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 by-laws 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 by-laws can be adopted if it is contrary to law.