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Wednesday, February 19, 2014 Blog Archive

► 2017 (7)
Case Digest: Loyola Grand Villas Homeowners (South) ► 2016 (4)
Association v. CA ► 2015 (6)

ENCARNACION and HORATIO AYCARDO, respondents. ► April (3)
► March (4)
G.R. No. 117188 August 7, 1997
▼ February (6)
ROMERO, J.: Case Digest: Matrido v. People
Case Digest: Roehr v. Rodriguez
Loyola Grand Villas Homeowners Association, Inc. (LGVHAI) was organized on 8 February 1983
Case Digest: Peña v. CA
as the homeoenwers' association for Loyola Grand Villas. It was also registered as the sole
Case Digest: Matugas v. COMELEC
homeowners' association in the said village with the Home Financing Corporation (which
eventually became Home Insurance Guarantee Corporation ["HIGC"]). However, the association Case Digest: Grace Christian High
was not able file its corporate by-laws. School v. CA
Case Digest: Loyola Grand Villas
The LGVHAI officers then tried to registered its By-Laws in 1988, but they failed to do so. They Homeowners (South...
then discovered that there were two other homeowners' organizations within the subdivision - the
Loyola Grand Villas Homeowners (North) Association, Inc. [North Association] and herein ► 2010 (8)
Petitioner Loyola Grand Villas Homeowners (South) Association, Inc.["South Association]. ► 2009 (40)
► 2008 (192)
Upon inquiry by the LGVHAI to HIGC, it was discovered that LGVHAI was dissolved for its failure
to submit its by-laws within the period required by the Corporation Code and for its non-user of
corporate charter because HIGC had not received any report on the association's activities. These
paved the way for the formation of the North and South Associations.

LGVHAI then lodged a complaint with HIGC Hearing Officer Danilo Javier, and questioned the
revocation of its registration. Hearing Officer Javier ruled in favor of LGVHAI, revoking the
registration of the North and South Associations.

Petitioner South Association appealed the ruling, contending that LGVHAI's failure to file its by-
laws within the period prescribed by Section 46 of the Corporation Code effectively automatically
dissolved the corporation. The Appeals Board of the HIGC and the Court of Appeals both rejected
the contention of the Petitioner affirmed the decision of Hearing Officer Javier.

Issue: W/N LGVHAI's failure to file its by-laws within the period prescribed by Section 46 of the
Corporation Code had the effect of automatically dissolving the said corporation.

Ruling: No.

The pertinent provision of the Corporation Code that is the focal point of controversy in this case

Sec. 46. Adoption of by-laws. - Every corporation formed under this Code, must
within one (1) month after receipt of official notice of the issuance of its certificate of
incorporation by the Securities and Exchange Commission, adopt a code of by-laws
for its government not inconsistent with this Code.

Ordinarily, the word "must" connotes an imposition of duty which must be enforced. However, the
word "must" in a statute, like "shall," is not always imperative. It may be consistent with an ecercise
of discretion. If the language of a statute, considered as a whole 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.
My Blog List
The legislative deliberations of the Corporation Code reveals that it was not the intention of
Congress to automatically dissolve a corporation for failure to file the By-Laws on time. Ellen Tordesillas
ASEAN COC framework affirms Duterte’s
policy shift in PH dealing with China
Moreover, By-Laws may be necessary to govern the corporation, but By-Laws are still subordinate 1 day ago
to the Articles of Incorporation and the Corporation Code. In fact, there are cases where By-Laws
are unnecessary to the corporate existence and to the valid exercise of corporate powers. Quotable Quotes
1 year ago

The Corporation Code does not expressly provide for the effects of non-filing of By-Laws. However, The Critical Thinker(tm)
these have been rectified by Section 6 of PD 902-A which provides that SEC shall possess the Understanding the “Spiritual but not
power to suspend or revoke, after proper notice and hearing, the franchise or certificate of Religious”
2 years ago
registration of corporations upon failure to file By-Laws within the required period.
Inspector Flix
This shows that there must be notice and hearing before a corporation is dissolved for failure to file 3D Printing is the Future
its By-Laws. Even assuming that the existence of a ground, the penalty is not necessarily 3 years ago
revocation, but may only be suspension.
have a nice day
By-Laws are indispensable to corporations, since they are required by law for an orderly 4 years ago
management of corporations. However, failure to file them within the period prescribed does not
Enteng Blogs
equate to the automatic dissolution of a corporation.
Summer Is Here
6 years ago
Posted by P.L.S. at 7:16 PM
Manuel L. Quezon III: The Daily Dose
Labels: By-Laws, Case Digest, Corporation
1 comment: Freakonomics

megan Carter April 10, 2015 at 2:46 AM Legal Resources

I found your blog quite interesting and the concern in the blog is really impressive. Thanks for Supreme Court
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