G.R. No. 117188 – 342 Phil. 651 – 276 SCRA 681 – 94 OG No. 19 – Mercantile Law – Corporation Law – Failure to File By-Laws
In 1983, the Loyola Grand Villas Association, Inc. (LGVAI) was incorporated by the homeowners of the Loyola Grand Villas (LGV), a subdivision. The Securities and Exchange Commission (SEC) issued a certificate of incorporation to LGVAI in the same year. LGVAI was likewise recognized by the Home Insurance and Guaranty Corporation (HIGC), a government-owned-and-controlled corporation whose mandate is to oversee associations like LGVAI.
Later, LGVAI found out that there are two homeowners associations within LGV, namely: Loyola Grand Villas Homeowners (South) Association, Inc. (LGVAI-South) and Loyola Grand Villas Homeowners (North) Association, Inc. (LGVAI-North). The two associations asserted that they have to be formed because LGVAI is inactive. When LGVAI inquired about its status with HIGC, HIGC advised that LGVAI was already terminated; that it was automatically dissolved when it failed to submit its By-Laws after it was issued a certificate of incorporation by the SEC.
ISSUE: Whether or not a corporation’s failure to submit its by-laws results in its automatic dissolution.
HELD: No. A private corporation like LGVAI 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. The submission of its by-laws is a condition subsequent but although it is merely such, it is a MUST that it be submitted by the corporation. Failure to submit however does not warrant automatic dissolution because such a consequence was never the intention of the law. The failure is merely a ground for dissolution which may be raised in a quo warranto proceeding. It is also worthwhile to note that failure to submit can’t result in automatic dissolution because there are some instances when a corporation does not require by-laws.
