Case Summary (G.R. No. 117188)
Facts
- LGVHAI was duly registered under Certificate of Registration No. 04-197 but did not file its by-laws within one month of incorporation as required by Section 46 of the Corporation Code.
- In 1988–1989, two new associations (North and South) each submitted by-laws and secured separate certificates of registration covering different phases of the subdivision.
- HIGC informed LGVHAI that its charter had been automatically dissolved for (a) failure to file by-laws on time and (b) non-user of its corporate charter.
- LGVHAI filed a complaint with HIGC; after notice and hearing, an HIGC hearing officer recognized LGVHAI as the sole registered homeowners’ association and revoked North and South certificates.
- The HIGC Appeals Board and subsequently the Court of Appeals affirmed this ruling, holding that LGVHAI’s corporate existence continued.
Issue
Does a corporation’s failure to file its by-laws within one month of notice of incorporation under Section 46 of the Corporation Code result in its automatic dissolution?
Court of Appeals’ Ruling
- A corporation’s juridical personality begins upon issuance of its certificate of incorporation by the SEC (or HIGC for homeowners’ associations).
- Although Section 46 employs mandatory language (“must”), it is to be construed as directory, not ipso facto fatal to corporate existence.
- PD 902-A, Section 6(1) expressly provides that failure to file by-laws is a ground for suspension or revocation of the corporate charter—but only after proper notice and hearing.
- There is no conflict between Section 46 and PD 902-A; they are complementary.
Supreme Court Analysis
- “Must” in a statute may be directory where the context, legislative history, and related provisions (e.g., allowance for pre-incorporation filing) demonstrate that non-compliance does not automatically extinguish corporate existence.
- Batasang Pambansa debates confirm that failure to file by-laws on time was not intended to produce automatic dissolution.
- By-laws are subordinate to the articles of incorporation and the Corporation Code; non-filing is a condition subsequent subject to enforcement, not a prerequisite for existence.
- PD 902-A Section 6(1) empowers the SEC (and by delegation the HIGC) to suspend or revoke a charter for fa
Case Syllabus (G.R. No. 117188)
Background and Corporate Organization
- Loyola Grand Villas Homeowners Association, Inc. (LGVHAI) was organized on February 8, 1983 by Solid Homes, Inc. as the sole homeowners’ association for the Loyola Grand Villas subdivision in Quezon City and Marikina City.
- LGVHAI secured Certificate of Registration No. 04-197 from the Home Financing Corporation (predecessor of HIGC) but failed to file its by-laws within one month after incorporation as mandated by Section 46, Corporation Code.
- In 1988, LGVHAI officers attempted belatedly to register its by-laws and discovered two competing corporations:
• Loyola Grand Villas Homeowners (North) Association, Inc. (“North Association”)
• Loyola Grand Villas Homeowners (South) Association, Inc. (“South Association”)
Registration of Competing Associations
- North Association registered with HIGC on February 13, 1989 (Cert. No. 04-1160) covering Phases West II, East III, West III, and East IV; it had filed by-laws on December 20, 1988.
- South Association registered on July 27, 1989 covering Phases West I, East I, and East II; it filed by-laws on July 26, 1989.
- HIGC legal officers informed Victorio Soliven (LGVHAI founding president) that LGVHAI was “automatically dissolved” for failure to file by-laws and for non-user of corporate charter.
Administrative Complaint and Hearing before HIGC
- LGVHAI protested the revocation of its certificate without notice or hearing and sought cancellation of the North and South Associations’ registrations on the ground of LGVHAI’s prior certificate.
- On January 26, 1993, HIGC Hearing Officer Danilo C. Javier rendered a decision:
• Recognized LGVHAI as the existing homeowners’ association (Cert. No. 04-197).
• Revoked the North and South Associations’ certificates.
• Ordered termination of receivership and turnover of assets and records to LGVHAI.
HIGC Appeals Board Resolution
- South Association appealed; on September 8, 1993, the HIGC Appeals Board dismissed the appeal for lack of merit without disturbing Hearing Officer Javier’s decision.
Court of Appeals Proceedings
- South Association elevated the case to the Court of Appeals, raising two issues:
- Whether LGVHAI’s failure to file by-laws under Section 46 automatically d