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Loyola Grand Villas Homeowners (South) Association Inc. vs. CA [G.R. No. 117188. August 07, 1997]

15 Aug

Ponente: ROMERO, J.

FACTS:

[T]his is a petition for review on certiorari of the Decision of the Court of Appeals affirming the decision of the Home Insurance and Guaranty Corporation (HIGC). This quasi-judicial body recognized Loyola Grand Villas Homeowners Association (LGVHA) as the sole homeowners’ association in Loyola Grand Villas, a duly registered subdivision in Quezon City and Marikina City that was owned and developed by Solid Homes, Inc. For unknown reasons, however, LGVHAI did not file its corporate by-laws. LGVHAI was informed by HIGC that they had been automatically dissolved. LGVHAI lodged a complaint with the HIGC. They questioned the revocation of LGVHAI’s certificate of registration without due notice and hearing and concomitantly prayed for the cancellation of the certificates of registration of the North and South Associations by reason of the earlier issuance of a certificate of registration in favor of LGVHAI. After due notice and hearing, private respondents obtained a favorable ruling from HIGC recognizing them as the duly registered and existing homeowners association for Loyola Grand Villas homeowners and declaring the Certificates of Registration of Loyola Grand Villas Homeowners (North) Association, Inc. and Loyola Grand Villas Homeowners (South) Association, Inc. as hereby revoked or cancelled.

The South Association appealed to the Appeals Board of the HIGC but was dismissed for lack of merit. Rebuffed, the South Association in turn appealed to the Court of Appeals, but it simply reiterated HIGC’s ruling.

ISSUE:

Whether or not the failure of a corporation to file its by-laws within one month from the date of its incorporation, as mandated by Section 46 of the Corporation Code, result in its automatic dissolution.

HELD:

NO. Petition DENIED. Decision of the Court of Appeals AFFIRMED.

RATIO:

[U]nder the principle that the best interpreter of a statute is the statute itself (optima statuli interpretatix est ipsum statutum), Section 46 of the Corporation Code reveals the legislative intent to attach a directory, and not mandatory, meaning for the word “must” in the first sentence thereof. Note should be taken of the second paragraph of the law which allows the filing of the by-laws even prior to incorporation. This provision in the same section of the Code rules out mandatory compliance with the requirement of filing the by-laws “within one (1) month after receipt of official notice of the issuance of its certificate of incorporation by the Securities and Exchange Commission.” It necessarily follows that failure to file the by-laws within that period does not imply the “demise” of the corporation. By-laws may be necessary for the “government” of the corporation but these are subordinate to the articles of incorporation as well as to the Corporation Code and related statutes.

[I]f the languages of a statute considered as a whole and with due regard to its nature and object reveals that the legislature intended to use the words “shall” and “must” to be directory, they should be given that meaning. 

 
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Posted by on August 15, 2012 in Case Digests, Statutory Construction

 

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