Professional Documents
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FACTS
Petitioner Grace Christian High School is an educational institution at the Grace
Village in Quezon City while private respondent Grace Village Association, Inc., is an
organization of lot and/or building owners, lessees and residents at Grace Village.
On December 20, 1975, a committee of the board of directors of the Association
prepared a draft of an amendment to the 1968 by-laws of the Association providing,
among others, that the first 14 highest number of votes shall be elected as board of
directors and that "GRACE CHRISTIAN HIGH SCHOOL representative is a permanent
Director of the ASSOCIATION," but the 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. However, on February
13, 1990, the Association's committee on election informed the principal of the
school that all directors should be elected by members of the Association and that
making the School representative as a permanent director of the Association should
be reexamined. The School protested saying that it runs counter to the practice of
previous years and that it deprives the School of its vested right. As its request was
denied, the School then brought suit to compel the board of directors of the
Association to recognize its right to a permanent seat in the board before the Home
Insurance and Guaranty Corp.
The Association sought the opinion of the SEC which opined that the same was
contrary to existing by-laws and the Corporation Code. The petitioner claimed that
the amended by-laws is valid and binding and that the Association is now estopped
from questioning the practice. It also claimed that there was no prohibition as Sec.
92 of the Corporation Code only provides for the manner of the election. The HGIC
dismissed the case filed by Grace Christian HS. On appeal, the HIGC Appeals board
affirmed the decision. The Court of Appeals also affirmed the same decision.
ISSUE:
Whether or not Grace Christian High School has a vested right that allows it to be a
permanent director of the Association.
HELD:
No. The Corporation Law requires members of the boards of directors of
corporations to be elected. The provision in question is contrary to law. The fact that
for several years it has not been questioned but, on the contrary, appears to have
been implemented by the members of the Association, cannot forestall a later
challenge to its validity. Nor can petitioner claim a vested right to sit in the board on
the basis of "practice."
DTEAHI
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." 14