Chinese Young Men's Christian Association of the Philippine Islands vs. Ching

Findings of fact grounded entirely on speculation, surmises, or conjectures are not binding on the Supreme Court and will be set aside; the courts cannot strip a member of a non-stock, non-profit corporation of membership without cause, and a corporation's approval of membership applications operates as a waiver of the formal requirements prescribed in its by-laws.

The Chinese Young Men's Christian Association of the Philippine Islands (Chinese YMCA) is a non-stock, non-profit association whose Constitution and By-Laws govern the acquisition of active membership. Under Article II, Sections 2 and 4, and Article VIII, Section 8 of its Constitution and By-Laws, applicants must be proposed in writing to the Membership Committee, screened as to character, favorably endorsed to the Board of Directors, and elected by a two-thirds vote of the membership present; only active members may vote and hold office. Victor Ching was a member of the Board of Directors, while William Golangco and Juanito K. Tan served as President and Recording Secretary, respectively. A rivalry had developed between two groups within the association, one headed by Ching and the other by Golangco, in the campaign for membership for the year 1966.

The Chinese Young Men's Christian Association of the Philippine Islands (Chinese YMCA) is a non-stock, non-profit association. Victor Ching was a member of its Board of Directors, while William Golangco and Juanito K. Tan served as its President and Recording Secretary, respectively. In the campaign for membership for the year 1966, a rivalry developed between two groups within the association, one headed by Ching and the other by Golangco.

The 1966 annual membership campaign ran from September 27, 1965 to November 26, 1965. Under the association's Constitution and By-Laws, membership applications had to be proposed in writing to the Membership Committee, screened by that committee as to the character of each applicant, favorably endorsed to the Board of Directors, and approved by the latter body by a two-thirds majority vote of the membership present. Only active members were entitled to vote and hold office.

On the last day of the campaign, November 26, 1965, Ching and Golangco were both in the office of the Chinese YMCA located at Room 336, Republic Supermarket Building, Florentino Torres, Manila. After it was agreed that there would be no extension of the membership campaign and that no application would be received after 5:00 p.m. that afternoon, Ching caused the counting of the number of applications actually in the possession of the General Secretary of the association at the close of office hours, and the number of applications thus submitted was 175. Two days later, the November 28, 1965 issue of the Chinese Commercial News reported that some 240 applications for membership had been received by the Chinese YMCA during the last day of its membership campaign.

Ching anchored his action on the claim that only 175 applications for membership were submitted, canvassed, and accepted on the last day of the campaign. The petitioners, on the other hand, alleged that 249 membership applications, including 106 submitted through Ching, were filed during the campaign period. Of the 249 applications, 174 were favorably endorsed by the Membership Committee to the Board of Directors and subsequently approved by the latter. Seventy-five applications, which were among those submitted by Ching, were not approved because Ching had given stop-payment orders on the checks submitted by him and some others to cover payment of the fees corresponding to those applications. At the board meeting of the association held on December 7, 1965, a list of 174 applications for membership, old and new, was submitted to the board and approved by the latter, over the objection of Ching, who was present at the meeting.

On January 17, 1966, Ching filed an action for mandamus with preliminary injunction in the Court of First Instance of Manila. The trial court annulled the 1966 membership campaign and the approval of the 174 applications to constitute the active membership of the association, and permanently enjoined the holding of the annual election, on the basis of its finding that Juan Bautista Lee, as chairman of the membership committee, had stated on the November 26, 1965 deadline that only 175 applications were received in the association's office, while the newspaper reported two days later a total of 240 applications filed and received. The trial court reasoned that although the applications and receipts on their face showed that they were filed and paid not later than November 26, 1965, some applications were undated and those bearing dates did not show the time when they were received or filed, so that it was "not improbable" that some applications were filed after the deadline. The Court of Appeals affirmed these findings.

• Annulment of the 1966 Membership Campaign: Petitioners argued that the Court of Appeals erred in annulling the 1966 annual membership campaign of the YMCA and in declaring invalid the approval by the YMCA of 174 applications for membership.
• Validity of Memberships Processed and Approved: Petitioners maintained that even granting that some applications were not filed in the office of the YMCA, the memberships of some 70 members should not be invalidated because their applications were admittedly processed by the YMCA's screening committee and favorably endorsed by the latter to the YMCA's Board of Directors, which in turn approved them in conformity with the Constitution and By-Laws of the YMCA.
• Speculation as Basis for Invalidation: Petitioners contended that the Court of Appeals erred in declaring invalid the memberships of 174 members on the strength merely of speculation, inference, or assumption, supported neither by fact nor by law, that there was a possibility that some of the applications supporting those memberships could have been filed after the deadline imposed in the membership campaign.

• Only 175 Applications Filed: Respondent Ching anchored his action on the claim that the membership campaign of the Chinese YMCA for 1966, held from September 27, 1965 up to November 26, 1965, involved only 175 applications for membership that were submitted, canvassed, and accepted on the last day of the campaign, November 26, 1965, at 5:00 p.m.

• Annulment of the 1966 Membership Campaign: Whether the Court of Appeals erred in annulling the 1966 annual membership campaign of the YMCA and in declaring invalid the approval by the YMCA of 174 applications for membership.
• Validity of Memberships Processed and Approved: Whether the Court of Appeals erred in invalidating the memberships of some 70 members whose applications were processed by the YMCA's screening committee and favorably endorsed to, and approved by, the Board of Directors in conformity with the Constitution and By-Laws.
• Speculation as Basis for Invalidation: Whether the Court of Appeals erred in declaring invalid the memberships of 174 members on the strength merely of speculation, inference, or assumption that some applications could have been filed after the deadline.

• Annulment of the 1966 Membership Campaign: Yes, the Court of Appeals erred. The annulment was grounded entirely on the trial court's conjecture that some applications might have been filed after the deadline, a conclusion that falls within the recognized exception to the conclusiveness of factual findings and is belied by the documentary evidence of timely filing and payment.
• Validity of Memberships Processed and Approved: Yes, the Court of Appeals erred. The Board of Directors' approval of the 174 applications at its December 7, 1965 meeting operated as a waiver of any technicality or requirement of form, and the courts cannot strip a member of a non-stock, non-profit corporation of membership without cause.
• Speculation as Basis for Invalidation: Yes, the Court of Appeals erred. The invalidation of the 174 memberships rested on speculation and conjecture rather than on evidence positively pinpointing any application filed after the deadline.

• Annulment of the 1966 Membership Campaign: The Court began with the general rule, restated in Ramos vs. Court of Appeals, that the appellate court's findings are conclusive, subject to recognized exceptions, among them when the conclusion is grounded entirely on speculation, surmises, or conjectures. The trial court annulled the 1966 membership campaign and the approval of the 174 applications on the basis of its conjecture that "it is not improbable that some of those applications were filed after said deadline, or after said hour on November 26, 1965, or even on subsequent dates." The Court found this position, affirmed by the appellate court, to be unjustified. The documentary evidence cited by the trial court itself — the applications and the receipts for payment of the membership fees — showed that they were filed and paid not later than the November 26, 1965 deadline. This was further supported by the bank statement of the YMCA deposit account with the China Banking Corporation and the checks paid by certain members to the YMCA, which showed that the application fees corresponding to the questioned 74 applications (which raised the total to 249 from 175) were already paid to the YMCA at the time of the deadline. No evidence was cited by the trial court to rebut this well-nigh conclusive documentary evidence other than the respondent's unsupported suspicion. The Court held that if there were indeed any applications filed after the deadline, they should have been positively pinpointed and specifically annulled.

• Validity of Memberships Processed and Approved: The Court held that the appealed decision contravened the established principle that the courts cannot strip a member of a non-stock, non-profit corporation of his membership therein without cause, since otherwise there would be unwarranted and undue interference with the well-established right of a corporation to determine its membership. The Court noted that 175 membership applications were undisputedly filed within the deadline, including the 75 withdrawn by the respondent, and yet the 100 remaining unquestioned memberships were nullified without the individuals concerned ever having been impleaded or heard, except for the individual petitioners president and secretary. Relying on Fletcher's Cyclopedia of Corporations, the Court reiterated that provisions in the by-laws as to formal steps to be taken to acquire membership may be waived by the corporation, or it may be estopped to assert that they have not been taken. Applying this doctrine, the Court held that the Board of Directors' action at its December 7, 1965 meeting, approving the 174 membership applications of old and new members as duly processed and screened by the authorized committee, must be deemed a waiver on the association's part of any technicality or requirement of form, since otherwise the association would be practically paralyzed and deprived of the substantial revenues from the membership dues of P17,400.00 (at P100.00 per application).

• Speculation as Basis for Invalidation: The Court applied the exception to the conclusiveness of factual findings recognized in Ramos vs. Court of Appeals — that a conclusion grounded entirely on speculation, surmises, or conjectures is not binding. The trial court's finding that it was "not improbable" that some applications were filed after the deadline was precisely such a conjecture, unsupported by any positive evidence and contradicted by the documentary record. The Court thus set aside the factual findings of both the trial court and the Court of Appeals insofar as they invalidated the 174 memberships on that basis.

• Conclusiveness of Findings of Fact and Its Exceptions — The general rule is that the findings of fact of the appellate court are conclusive on the Supreme Court. This rule admits of recognized exceptions, including: (1) when the conclusion is a finding grounded entirely on speculation, surmises, or conjectures; (2) when the inference made is manifestly mistaken, absurd, or impossible; (3) where there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; and (5) when the Court of Appeals, in making its findings, went beyond the issues of the case and the same are contrary to the admissions of both appellant and appellee. In this case, the Court applied the first exception, holding that the trial court's and the Court of Appeals' annulment of the membership campaign rested on conjecture rather than on evidence.

• Right of a Non-Stock Corporation to Determine Its Membership — Courts cannot strip a member of a non-stock, non-profit corporation of his membership therein without cause; otherwise, that would be an unwarranted and undue interference with the well-established right of a corporation to determine its membership. The Court applied this principle in holding that the nullification of the 100 unquestioned memberships — without the individuals concerned having been impleaded or heard — contravened the corporation's right to determine its own membership.

• Waiver of Formal Requirements in By-Laws — Provisions in the by-laws as to formal steps to be taken to acquire membership may be waived by the corporation, or it may be estopped to assert that they have not been taken. The Court applied this doctrine in holding that the Board of Directors' approval of the 174 membership applications at its December 7, 1965 meeting, as duly processed and screened by the authorized committee, constituted a waiver of any technicality or requirement of form.

• "It is not improbable that some of those applications were filed after said deadline, or after said hour on November 26, 1965, or even on subsequent dates." — This is the trial court's conjecture, quoted by the Supreme Court, which both the trial court and the Court of Appeals relied upon to annul the campaign and the 174 memberships; the Supreme Court held this basis insufficient to justify the annulment.
• "We find as in the above-cited Ramos case, that the position adopted by both the trial court and the Court of Appeals on the basis of the trial court's conjecture and speculation is not justified." — This passage states the ratio decidendi on the first issue, applying the exception to the conclusiveness of factual findings where the conclusion is grounded entirely on speculation.
• "The appealed decision thus contravened the established principle that the courts cannot strip a member of a non-stock non-profit corporation of his membership therein without cause." — This articulates the doctrine on corporate membership, which the Court used to invalidate the nullification of the 100 unquestioned memberships without the members having been impleaded or heard.
• "Such action of the petitioner association's board of directors approving the 174 membership applications of old and new members constituting its active membership as duly processed and screened by the authorized committee just be deemed a waiver on its part of any technicality or requirement of form, since otherwise the association would be practically paralyzed and deprived of the substantial revenues from the membership dues of P17,400.00 (at P100.00 per application)." — This passage states the waiver doctrine as applied to the Board of Directors' approval of the applications at the December 7, 1965 meeting.

• Ramos vs. Court of Appeals, 63 SCRA 331 — Controlling precedent restating the general rule that the appellate court's findings are conclusive, together with the recognized exceptions; the Court applied the exception for conclusions grounded entirely on speculation, surmises, or conjectures.
• Joaquin vs. Navarro, 93 Phil. 257 — Cited as authority for the exception that a conclusion grounded entirely on speculation, surmises, or conjectures is not binding.
• Luna vs. Lina, 74 Phil. 15 — Cited as authority for the exception that an inference manifestly mistaken, absurd, or impossible is not binding.
• Buyco vs. People, 51 O.G. 2929 — Cited as authority for the exception of grave abuse of discretion.
• Cruz vs. Sosing, 94 Phil. 26 — Cited as authority for the exception that a judgment based on a misapprehension of facts is not binding.
• Evangelista vs. Alto, 103 Phil. 401 — Cited as authority for the exception that findings made beyond the issues and contrary to the admissions of both appellant and appellee are not binding.
• Garcia vs. Court of Appeals, 33 SCRA 622 — Cited in the Court's enumeration of the recognized exceptions to the conclusiveness of factual findings.
• Roque vs. Buan, 21 SCRA 642 — Cited in the Court's enumeration of the recognized exceptions to the conclusiveness of factual findings.

• Article II, Section 2, Constitution and By-Laws of the Chinese YMCA — Provides that male members in good standing in the Roman Catholic Church or in any other Christian Church who are eighteen years of age or over may become active members by declaring in accordance with the Paris Basis of membership, and that only active members shall have the right to vote and hold office. This provision frames the significance of the membership dispute, since the annulled memberships would determine the composition of the voting membership.
• Article II, Section 4, Constitution and By-Laws of the Chinese YMCA — Provides that any member may propose an applicant for membership in writing to the Membership Committee, and that any applicant reported favorably may be elected at a subsequent meeting of the Board of Directors by a two-thirds vote of the membership present. The Court relied on the Board of Directors' approval of the 174 applications as a waiver of the formal requirements of this provision.
• Article VIII, Section 8, Constitution and By-Laws of the Chinese YMCA — Provides that the Membership Committee shall receive all propositions for membership and, after such inquiry as may be necessary concerning the character of each person proposed, shall report in writing at a monthly meeting of the Board those recommended for election. The applications in question were processed and favorably endorsed by this committee before approval by the Board.
• Article II, Sections 1 and 5, Constitution and By-Laws of the Chinese YMCA — Provide that any young man of good moral character may become a member upon payment of the annual fee, and that the annual fees are payable at the office of the association. The documentary evidence of payment within the campaign deadline was central to the Court's finding that the applications and fees were timely filed and paid.

Makasiar, Muñoz Palma, Aquino, and Martin, JJ.