[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.

ROMERO, J:

Facts:

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 HIGC, as the
sole homeowners' organization in the said subdivision under Certificate of Registration No. 04-197. It was organized
by the developer of the subdivision and its first president was Victorio V. Soliven, himself the owner of the developer.
For unknown reasons, however, LGVHAI did not file its corporate by-laws.

Sometime in 1988, the officers of the LGVHAI tried to register its by-laws. They failed to do so. 2 'To the officers'
consternation, they discovered that there were two other organizations within the subdivision — the North Association
and the South Association. According to private respondents, a non-resident and Soliven himself, respectively
headed these associations. They also discovered that these associations had five (5) registered homeowners each
who were also the incorporators, directors and officers thereof. None of the members of the LGVHAI was listed as
member of the North Association while three (3) members of LGVHAI were listed as members of the South
Association. 3 The North Association was registered with the HIGC on February 13, 1989 under Certificate of
Registration No. 04-1160 covering Phases West II, East III, West III and East IV. It submitted its by-laws on
December 20, 1988.

In July, 1989, when Soliven inquired about the status of LGVHAI, 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 corporate
charter because HIGC had not received any report on the association's activities. Apparently, this information
resulted in the registration of the South Association.

These developments prompted the officers of the LGVHAI to lodge 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.

HIGC: In favor of private respondents. LGVHAI duly registered and existing, cancelledt si south and north. South,
appealed to HIGC; dismissed for lack of merit.

CA: south appealed: WON failure by LGHVAI to file by laws resulted to automatic dissolution. WON 2 homeowners
assoc. be allowed by HIGC in one sprawling subdivision. CA affirmed HIGC resolution.

1. Filing of the by-laws within one month from official notice of the issuance of the certificate of incorp.
presupposes that it is already incorporated. Registration of LGHVAI had not been validly revoked.
2. HIGC has the authority to order the holding of a referendum to determine which of the two contending assoc
should represent the entire community, village or subdivision.

South filed the instant petition for review on certiorari.

Issue:

WON the LGHVAI’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
Held:

The exchange of views at the deliberations of BP No. 68 (Corpo. Code) demonstrates clearly that automatic
corporate dissolution for failure to file the by-laws on time was never the intention of the legislature. Moreover, even
without resorting to the records of deliberations of the Batasang Pambansa, the law itself provides the answer to the
issue propounded by petitioner.

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), 14 Section 46 aforequoted 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.

Although the Corporation Code requires the filing of by-laws, it does not expressly provide for the consequences of
the non-filing of the same within the period provided for in Section 46. However, such omission has been rectified by
Presidential Decree No. 902-A: suspend, or revoke, after proper notice on the ground of the failure to file by-laws.

Even under the foregoing express grant of power and authority, there can be no automatic corporate dissolution
simply because the incorporators failed to abide by the required filing of by-laws embodied in Section 46 of the
Corporation Code. There is no outright "demise" of corporate existence. Proper notice and hearing are cardinal
components of due process in any democratic institution, agency or society. In other words, the incorporators must
be given the chance to explain their neglect or omission and remedy the same.

That the failure to file by-laws is not provided for by the Corporation Code but in another law is of no moment. P.D.
No. 902-A, which took effect immediately after its promulgation on March 11, 1976, is very much apposite to the
Code. Accordingly, the provisions abovequoted supply the law governing the situation in the case at bar, inasmuch as
the Corporation Code and P.D. No. 902-A are statutes in pari materia. Interpretare et concordare legibus est optimus
interpretandi. Every statute must be so construed and harmonized with other statutes as to form a uniform system of
jurisprudence.

[G.R. No. 117604. March 26, 1997.]

CHINA BANKING CORPORATION , petitioner, vs . COURT OF APPEALS, and VALLEY GOLF and COUNTRY
CLUB, INC., respondents.

KAPUNAN, J:

Facts:

On 21 August 1974, Galicano Calapatia, Jr. (Calapatia, for brevity) a stockholder of private respondent Valley Golf &
Country Club, Inc. (VGCCI, for brevity), pledged his Stock Certificate No. 1219 to petitioner China Banking
Corporation (CBC, for brevity). On 3 August 1983, Calapatia obtained a loan of P20,000.00 from petitioner, payment
of which was secured by the aforestated pledge agreement still existing between Calapatia and petitioner.

Due to Calapatia's failure to pay his obligation, petitioner, on 12 April 1985, filed a petition for extrajudicial foreclosure
before Notary Public Antonio T. de Vera of Manila, requesting the latter to conduct a public auction sale of the
pledged stock. On 14 May 1985, petitioner informed VGCCI of the above-mentioned foreclosure proceedings and
requested that the pledged stock be transferred to its (petitioner's) name and the same be recorded in the corporate
books. However, on 15 July 1985, VGCCI wrote petitioner expressing its inability to accede to petitioner's request in
view of Calapatia's unsettled accounts with the club. Despite the foregoing, Notary Public de Vera held a public
auction on 17 September 1985 and petitioner emerged as the highest bidder at P20,000.00 for the pledged stock.
Consequently, petitioner was issued the corresponding certificate of sale. On 21 November 1985, VGCCI sent
Calapatia a notice demanding full payment of his overdue account in the amount of P18,783.24. 8 Said notice was
followed by a demand letter dated 12 December 1985 for the same amount 9 and another notice dated 22 November
1986 for P23,483.24.
On 4 December 1986, VGCCI caused to be published in the newspaper Daily Express a notice of auction sale of a
number of its stock certificates, to be held on 10 December 1986 at 10:00 a.m. Included therein was Calapatia's own
share of stock (Stock Certificate No. 1219). Through a letter dated 15 December 1986, VGCCI informed Calapatia of
the termination of his membership due to the sale of his share of stock in the 10 December 1986 auction.

On 5 May 1989, petitioner advised VGCCI that it is the new owner of Calapatia's Stock Certificate No. 1219 by virtue
of being the highest bidder in the 17 September 1985 auction and requested that a new certificate of stock be issued
in its name. On 2 March 1990, VGCCI replied that "for reason of delinquency" Calapatia's stock was sold at the public
auction held on 10 December 1986 for P25,000.00.

On 9 March 1990, petitioner protested the sale by VGCCI of the subject share of stock and thereafter filed a case
with the Regional Trial Court of Makati for the nullification of the 10 December 1986 auction and for the issuance of a
new stock certificate in its name.

RTC: dismissed, lack of jurisdiction: intra-corporate dispute. Motion for Recon (petitioner): denied.

Petitioner filed a complaint with SEC for the nullification of the sale of Calapatia’s stock by VGCCI.

SEC: in favor of VGCCI; said share is delinquent VGCCI had valid reason not to transfer the share in the name of the
petitioner in the books of VGCCI until liquidation of delinquency. MR(petitioner): denied. Appealed to SEC en banc.

SEC en banc: reversed. Petitioner: has prior right over the pledged share, may proceed with the foreclosure of the
sale. VGCCI: recon; denied.

CA: nullifying and setting aside SEC decision for lack of jurisdiction. Not intra-corporate dispute. Recon: denied.

Hence, this petition.

Issue:

1. WON the petitioner is a stockholder of VGCCI

2. WON SEC has jurisdiction over the case
3. WON petitioner is bound by the by laws if VGCCI

Held:

1. There is no question that the purchase of the subject share or membership certificate at public auction by
petitioner (and the issuance to it of the corresponding Certificate of Sale) transferred ownership of the same
to the latter and thus entitled petitioner to have the said share registered in its name as a member of VGCCI.
It is readily observed that VGCCI did not assail the transfer directly and has in fact, in its letter of 27
September 1974, expressly recognized the pledge agreement executed by the original owner, Calapatia, in
favor of petitioner and has even noted said agreement in its corporate books. 25 In addition, Calapatia, the
original owner of the subject share, has not contested the said transfer. By virtue of the afore-mentioned
sale, petitioner became a bona fide stockholder of VGCCI and, therefore, the conflict that arose between
petitioner and VGCCI aptly exemplifies an intra-corporate controversy between a corporation and its
stockholder under Sec. 5(b) of P.D. 902-A.

It is significant to note that VGCCI began sending notices of delinquency to Calapatia after it was informed
by petitioner (through its letter dated 14 May 1985) of the foreclosure proceedings initiated against
Calapatia's pledged share, although Calapatia has been delinquent in paying his monthly dues to the club
since 1975. Stranger still, petitioner, whom VGCCI had officially recognized as the pledgee of Calapatia's
share, was neither informed nor furnished copiesof these letters of overdue accounts until VGCCI itself sold
the pledged share at anotherpublic auction. By doing so, VGCCI completely disregarded petitioner's rights
 as pledgee. It even failed to give petitioner notice of said auction sale. Such actuations of VGCCI thus belie
its claim of good faith.
2. The courts cannot or will not determine a controversy involving a question which is within the jurisdiction of
an administrative tribunal, where the question demands the exercise of sound administrative discretion
requiring the special knowledge, experience, and services of the administrative tribunal to determine
technical and intricate matters of fact, and a uniformity of ruling is essential to comply with the purposes of
the regulatory statute administered."

In this case, the need for the SEC's technical expertise cannot be over-emphasized involving as it does the
meticulous analysis and correct interpretation of a corporation's by-laws as well as the applicable provisions
of the Corporation Code in order to determine the validity of VGCCI's claims. The SEC, therefore, took
proper cognizance of the instant case.

3. In order to be bound, the third party must have acquired knowledge of the pertinent by-laws at the time the
transaction or agreement between said third party and the shareholder was entered into, in this case, at the
time the pledge agreement was executed. VGCCI could have easily informed petitioner of its by-laws when
it sent notice formally recognizing petitioner as pledgee of one of its shares registered in Calapatia's name.
Petitioner's belated notice of said by-laws at the time of foreclosure will not suffice.

SEC En Banc provides in its ruling:

By-laws signifies the rules and regulations or private laws enacted by the corporation to regulate, govern
and control its own actions, affairs and concerns and its stockholders or members and directors and officers
with relation thereto and among themselves in their relation to it. In other words, by-laws are the relatively
permanent and continuing rules of action adopted by the corporation for its own government and that of the
individuals composing it and having the direction, management and control of its affairs, in whole or in part,
in the management and control of its affairs and activities. The purpose of a by-law is to regulate the conduct
and define the duties of the members towards the corporation and among themselves. They are self-
imposed and, although adopted pursuant to statutory authority, have no status as public law. Therefore, it is
the generally accepted rule that third persons are not bound by bylaws, except when they have knowledge
of the provisions either actually or constructively.

[G.R. No. 121791. December 23, 1998.]

ENRIQUE SALAFRANCA, petitioner, vs . PHILAMLIFE (PAMPLONA) VILLAGE HOMEOWNERS ASSOCIATION,

INC., BONIFACIO DAZO and THE SECOND DIVISION, NATIONAL LABOR RELATIONS COMMISSION (NLRC),
respondents.

ROMERO, J:

Facts:

Petitioner Enrique Salafranca started working with the private respondent Philamlife Village Homeowners Association
on May 1, 1981 as administrative officer for a period of six months. From this date until December 31, 1983, petitioner
was reappointed to his position three more times. 1 As administrative officer, petitioner was generally responsible for
the management of the village's day to day activities. 2 After petitioner's term of employment expired on December
31, 1983, he still continued to work in the same capacity, albeit, without the benefit of a renewed contract.

Sometime in 1987, private respondent decided to amend its by-laws. Included therein was a provision regarding
officers, specifically, the position of administrative officer under which said officer shall hold office at the pleasure of
the Board of Directors. In view of this development, private respondent, on July 3, 1987, informed the petitioner that
his term of office shall be coterminus with the Board of Directors which appointed him to his position. Furthermore,
until he submits a medical certificate showing his state of health, his employment shall be on a month-to-month basis.
3 Oddly, notwithstanding the failure of herein petitioner to submit his medical certificate, he continued working until
his termination in December 1992. 4 Claiming that his services had been unlawfully and unceremoniously dispensed
with, petitioner filed a complaint for illegal dismissal with money claims and for damages.