G.R. No. 117188 August 7, 1997
Loyola Grand Villas Homeowners (South) Association, Inc., petitioner, vs. Hon. Court of Appeals, Home Insurance and Guaranty Corporation, Emden Encarnacion and Horatio Aycardo, respondents.

FACTS

Loyola Grand Villas Homeowners Association, Inc. (LGVHAI) was organized and registered with the Home Financing Corporation (HIGC’s predecessor) in 1983 as the sole homeowners’ association for the Loyola Grand Villas subdivision. However, LGVHAI failed to file its corporate by-laws. In 1988, its officers discovered two other registered associations within the same subdivision: the North Association and the South Association. The HIGC’s legal department informed LGVHAI’s president that LGVHAI had been automatically dissolved for failure to submit its by-laws as required by the Corporation Code and for non-user of corporate charter. This led to the registration of the South Association in 1989. LGVHAI then filed a complaint with the HIGC, contesting the revocation of its registration and seeking the cancellation of the North and South Associations’ certificates.

ISSUE

The primary legal issue is whether 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, results in its automatic dissolution.

RULING

The Supreme Court, affirming the Court of Appeals, ruled that failure to file by-laws within the prescribed period does NOT cause automatic corporate dissolution. The Court clarified that a corporation commences its juridical existence from the date the Securities and Exchange Commission (SEC) issues its certificate of incorporation. The filing of by-laws, while mandatory, is a subsequent procedural requirement. The Court emphasized that nothing in Section 46 or other provisions of the Corporation Code states that non-compliance leads to automatic dissolution. Instead, the power to suspend or revoke a certificate of registration for failure to file by-laws is a regulatory function vested in the SEC (and, for homeowners’ associations, the HIGC), which must be exercised after due notice and hearing. The HIGC’s earlier pronouncement of automatic dissolution was therefore erroneous. Consequently, LGVHAI remained the validly registered association, and the certificates of the subsequently formed North and South Associations were properly revoked by the HIGC. The ruling underscores that corporate dissolution is not a self-executing penalty for procedural lapses but requires official regulatory action.