Legally Yours

Loyola Grand Villas Association v. CA

Statutory Construction. Optima statuli interpretatix est ipsum statutum.
Loyola Grand Villas (South) Association Inc. v. CA
G.R. No. 117188 August 7, 1997

Loyola Grand Villas Homeowners Association Inc. (LGVHAI) was organized on February 8, 1983, as the association of homeowners and residents of the Loyola Grand Villas. It was registered with the Home Financing Corporation, the predecessor of herein respondent Home Insurance and Guaranty Corporation (HIGC). For unknown reasons, however, LGVHAI did not file its corporate by-laws. In July 1989, Soliven, the president of LGVHAI inquired about the status of the association. Atty. Joaquin A. Bautista, the head of the legal department of the HIGC, informed him that LGVHAI had been automatically dissolved for two reasons. First, it did not submit its by-laws within the period required by the Corporation Code and, second, there was non-user of the corporate charter because HIGC had not received any report on the association’s activities. These developments prompted the officers of the LGVHAI to lodge a complaint with the HIGC. After some time, the HIGC ruled in favor of LGVHAI revoking 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 and that the receivership terminated and that the receiver is ordered to render an accounting and turn-over to LGVHAI all assets and records of the Association under his custody and possession. Hence, petitioner now raises the issue of certiorari.

Whether or not the failure of a corporation to file its by-laws within one month from its incorporation results in its automatic dissolution?

Under the Corporation Code, a private corporation commences to have corporate existence and juridical personality from the date the Securities and Exchange Commission (SEC) issues a certificate of incorporation under its official seal. There was no showing that the registration of LGVHAI had been validly revoked, it continued to be the duly registered homeowners’ association in the Loyola Grand Villas. It has been held that automatic corporate dissolution for failure to file the by-laws on time was never the intention of the legislature. Taken as a whole and under the principle that the best interpreter of a statute is the statute itself (optima statuli interpretatix est ipsum statutum), Section 46 of the Corporate 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.

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