Professional Documents
Culture Documents
SUPREME COURT defendant declared in default has the remedy set forth in Section 2,
paragraph 3 of Rule 41 of the old Rules of Court. 2 Petitioner then cited
SECOND DIVISION in her motion, "Section 2, paragraph 3 or (c) of the Rules of Civil
Procedure."3
(c) Appeal by certiorari. In all cases where only questions of law are
2. The sum of TWO HUNDRED THOUSAND PESOS (P200,000.00) raised or involved, the appeal shall be to the Supreme Court by petition
AS AND BY WAY OF Attorneys fee; for review on certiorari in accordance with Rule 45. (Emphasis
supplied)
3. The sum of TWO HUNDRED THOUSAND PESOS (P200,000.00)
as exemplary damages in order to deter others from doing similar act In Cerezo vs. Tuazon,4 the Court reiterated the remedies available to a
in withholding possession of a property to another to which he/she has party declared in default:
no right to possess; and
The filing of the present petition is clearly not the proper remedy to
assail the default judgment rendered by the trial court. Petitioner still Both Sections 5(f) and 6 of Rule 57 use the term "may," denoting
has the available remedy of filing with the Regional Trial Court a discretion on the part of the Court in dismissing the appeal or referring
motion for new trial or an ordinary appeal to the Court of Appeals from the case to the Court of Appeals. The question of fact involved in the
the trial courts default judgment. Note that petitioner admits that she appeal and substantial ends of justice warrant a referral of this case to
was "properly declared in default."6 Thus, there is no question of any the Court of Appeals for further appropriate proceedings.
improvident or improper declaration of default by the trial court, and the
remedy of filing a special civil action for certiorari has been effectively WHEREFORE, the motion for reconsideration is GRANTED. The
foreclosed on petitioner. Her only recourse then is to file an ordinary petition is reinstated and the case is REFERREDto the Court of
appeal with the Court of Appeals under Section 2(a), Rule 41 of the Appeals for appropriate action.
1997 Rules of Civil Procedure, as amended.
SO ORDERED.
Instead, she came directly to this Court via petition for review
on certiorari, without setting forth substantial reasons why the ordinary MA. ALICIA AUSTRIA-MARTINEZ
remedies under the law should be disregarded and the petition
entertained. Petitioner cannot even find solace in the Matute case as
the old Rules of Court then applicable explicitly laid down the remedy Associate Justice
of anordinary appeal to the Court of Appeals, and not appeal
by certiorari to this Court, by a defendant declared in default.
Petitioner further argues that the petition involved questions of law, and
the Court should have taken cognizance of the case. The grounds set
forth in her petition prove otherwise, viz.:
GROUNDS
II
III
IV
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 with the HIGC on July 27, 1989 covering Phases
West I, East I and East II. It filed its by-laws on July 26, 1989.
May the failure of a corporation to file its by-laws within one month Rebuffed, the South Association in turn appealed to the Court of
from the date of its incorporation, as mandated by Section 46 of the Appeals, raising two issues. First, whether or not LGVHAI's failure to
Corporation Code, result in its automatic dissolution? file its by-laws within the period prescribed by Section 46 of the
Corporation Code resulted in the automatic dissolution of
This is the issue raised in this petition for review on certiorari of the LGVHAI. Second, whether or not two homeowners' associations may
Decision 1 of the Court of Appeals affirming the decision of the Home be authorized by the HIGC in one "sprawling subdivision." However, in
Insurance and Guaranty Corporation (HIGC). This quasi-judicial body the Decision of August 23, 1994 being assailed here, the Court of
recognized Loyola Grand Villas Homeowners Association (LGVHA) as Appeals affirmed the Resolution of the HIGC Appeals Board.
the sole homeowners' association in Loyola Grand Villas, a duly
registered subdivision in Quezon City and Marikina City that was In resolving the first issue, the Court of Appeals held that under the
owned and developed by Solid Homes, Inc. It revoked the certificates Corporation Code, a private corporation commences to have corporate
of registration issued to Loyola Grand Villas homeowners (North) existence and juridical personality from the date the Securities and
Association Incorporated (the North Association for brevity) and Loyola Exchange Commission (SEC) issues a certificate of incorporation
Grand Villas Homeowners (South) Association Incorporated (the South under its official seal. The requirement for the filing of by-laws under
Association). Section 46 of the Corporation Code within one month from official
notice of the issuance of the certificate of incorporation presupposes
LGVHAI was organized on February 8, 1983 as the association of that it is already incorporated, although it may file its by-laws with its
homeowners and residents of the Loyola Grand Villas. It was articles of incorporation. Elucidating on the effect of a delayed filing of
registered with the Home Financing Corporation, the predecessor of by-laws, the Court of Appeals said:
herein respondent HIGC, as the sole homeowners' organization in the
said subdivision under Certificate of Registration No. 04-197. It was We also find nothing in the provisions cited by the
organized by the developer of the subdivision and its first president petitioner, i.e., Section 46 and 22, Corporation Code, or in
was Victorio V. Soliven, himself the owner of the developer. For any other provision of the Code and other laws which
unknown reasons, however, LGVHAI did not file its corporate by-laws. provide or at least imply that failure to file the by-laws results
in an automatic dissolution of the corporation. While Section
Sometime in 1988, the officers of the LGVHAI tried to register its by- 46, in prescribing that by-laws must be adopted within the
laws. They failed to do so. 2 To the officers' consternation, they period prescribed therein, may be interpreted as a
discovered that there were two other organizations within the mandatory provision, particularly because of the use of the
subdivision the North Association and the South Association. word "must," its meaning cannot be stretched to support the
According to private respondents, a non-resident and Soliven himself, argument that automatic dissolution results from non-
respectively headed these associations. They also discovered that compliance.
these associations had five (5) registered homeowners each who were
also the incorporators, directors and officers thereof. None of the
We realize that Section 46 or other provisions of the is integrated in its very essence MUST is always
Corporation Code are silent on the result of the failure to enforceable by the inevitable consequence that is, "OR
adopt and file the by-laws within the required period. Thus, ELSE". The use of the word MUST in Sec. 46 is no
Section 46 and other related provisions of the Corporation exception it means file the by-laws within one month after
Code are to be construed with Section 6 (1) of P.D. 902-A. notice of issuance of certificate of registration OR ELSE.
This section empowers the SEC to suspend or revoke The OR ELSE, though not specified, is inextricably a part
certificates of registration on the grounds listed therein. ofMUST . Do this or if you do not you are "Kaput". The
Among the grounds stated is the failure to file by-laws (see importance of the by-laws to corporate existence compels
also II Campos: The Corporation Code, 1990 ed., pp. 124- such meaning for as decreed the by-laws is "the
125). Such suspension or revocation, the same section government" of the corporation. Indeed, how can the
provides, should be made upon proper notice and hearing. corporation do any lawful act as such without by-laws.
Although P.D. 902-A refers to the SEC, the same principles Surely, no law is indeed to create chaos. 7
and procedures apply to the public respondent HIGC as it
exercises its power to revoke or suspend the certificates of Petitioner asserts that P.D. No. 902-A cannot exceed the scope and
registration or homeowners association. (Section 2 [a], E.O. power of the Corporation Code which itself does not provide sanctions
535, series 1979, transferred the powers and authorities of for non-filing of by-laws. For the petitioner, it is "not proper to assess
the SEC over homeowners associations to the HIGC.) the true meaning of Sec. 46 . . . on an unauthorized provision on such
matter contained in the said decree."
We also do not agree with the petitioner's interpretation that
Section 46, Corporation Code prevails over Section 6, P.D. In their comment on the petition, private respondents counter that the
902-A and that the latter is invalid because it contravenes requirement of adoption of by-laws is not mandatory. They point to P.D.
the former. There is no basis for such interpretation No. 902-A as having resolved the issue of whether said requirement is
considering that these two provisions are not inconsistent mandatory or merely directory. Citing Chung Ka Bio v. Intermediate
with each other. They are, in fact, complementary to each Appellate Court, 8 private respondents contend that Section 6(I) of that
other so that one cannot be considered as invalidating the decree provides that non-filing of by-laws is only a ground for
other. suspension or revocation of the certificate of registration of
corporations and, therefore, it may not result in automatic dissolution of
The Court of Appeals added that, as there was no showing that the the corporation. Moreover, the adoption and filing of by-laws is a
registration of LGVHAI had been validly revoked, it continued to be the condition subsequent which does not affect the corporate personality
duly registered homeowners' association in the Loyola Grand Villas. of a corporation like the LGVHAI. This is so because Section 9 of the
More importantly, the South Association did not dispute the fact that Corporation Code provides that the corporate existence and juridical
LGVHAI had been organized and that, thereafter, it transacted personality of a corporation begins from the date the SEC issues a
business within the period prescribed by law. certificate of incorporation under its official seal. Consequently, even if
the by-laws have not yet been filed, a corporation may be considered
On the second issue, the Court of Appeals reiterated its previous a de facto corporation. To emphasize the fact the LGVHAI was
ruling 5 that the HIGC has the authority to order the holding of a registered as the sole homeowners' association in the Loyola Grand
referendum to determine which of two contending associations should Villas, private respondents point out that membership in the LGVHAI
represent the entire community, village or subdivision. was an "unconditional restriction in the deeds of sale signed by lot
buyers."
Undaunted, the South Association filed the instant petition for review
on certiorari. It elevates as sole issue for resolution the first issue it had In its reply to private respondents' comment on the petition, petitioner
raised before the Court of Appeals, i.e., whether or not the LGVHAI's reiterates its argument that the word " must" in Section 46 of the
failure to file its by-laws within the period prescribed by Section 46 of Corporation Code is mandatory. It adds that, before the ruling in Chung
the Corporation Code had the effect of automatically dissolving the Ka Bio v. Intermediate Appellate Court could be applied to this case,
said corporation. this Court must first resolve the issue of whether or not the provisions
of P.D. No. 902-A prescribing the rules and regulations to implement
the Corporation Code can "rise above and change" the substantive
Petitioner contends that, since Section 46 uses the word "must" with provisions of the Code.
respect to the filing of by-laws, noncompliance therewith would result in
"self-extinction" either due to non-occurrence of a suspensive condition
or the occurrence of a resolutory condition "under the hypothesis that The pertinent provision of the Corporation Code that is the focal point
(by) the issuance of the certificate of registration alone the corporate of controversy in this case states:
personality is deemed already formed." It asserts that the Corporation
Code provides for a "gradation of violations of requirements." Hence, Sec. 46. Adoption of by-laws. Every corporation formed
Section 22 mandates that the corporation must be formally organized under this Code, must within one (1) month after receipt of
and should commence transaction within two years from date of official notice of the issuance of its certificate of incorporation
incorporation. Otherwise, the corporation would be deemed dissolved. by the Securities and Exchange Commission, adopt a code
On the other hand, if the corporation commences operations but of by-laws for its government not inconsistent with this Code.
becomes continuously inoperative for five years, then it may be For the adoption of by-laws by the corporation, the
suspended or its corporate franchise revoked. affirmative vote of the stockholders representing at least a
majority of the outstanding capital stock, or of at least a
Petitioner concedes that Section 46 and the other provisions of the majority of the members, in the case of non-stock
Corporation Code do not provide for sanctions for non-filing of the by- corporations, shall be necessary. The by-laws shall be
laws. However, it insists that no sanction need be provided "because signed by the stockholders or members voting for them and
the mandatory nature of the provision is so clear that there can be no shall be kept in the principal office of the corporation, subject
doubt about its being an essential attribute of corporate birth." To to the stockholders or members voting for them and shall be
petitioner, its submission is buttressed by the facts that the period for kept in the principal office of the corporation, subject to
compliance is "spelled out distinctly;" that the certification of the inspection of the stockholders or members during office
SEC/HIGC must show that the by-laws are not inconsistent with the hours; and a copy thereof, shall be filed with the Securities
Code, and that a copy of the by-laws "has to be attached to the articles and Exchange Commission which shall be attached to the
of incorporation." Moreover, no sanction is provided for because "in the original articles of incorporation.
first place, no corporate identity has been completed." Petitioner
asserts that "non-provision for remedy or sanction is itself the tacit Notwithstanding the provisions of the preceding paragraph,
proclamation that non-compliance is fatal and no corporate existence by-laws may be adopted and filed prior to incorporation; in
had yet evolved," and therefore, there was "no need to proclaim its such case, such by-laws shall be approved and signed by all
demise." 6 In a bid to convince the Court of its arguments, petitioner the incorporators and submitted to the Securities and
stresses that: Exchange Commission, together with the articles of
incorporation.
. . . the word MUST is used in Sec. 46 in its universal literal
meaning and corollary human implication its compulsion
In all cases, by-laws shall be effective only upon the statutum), 14 Section 46 aforequoted reveals the legislative intent to
issuance by the Securities and Exchange Commission of a attach a directory, and not mandatory, meaning for the word "must" in
certification that the by-laws are not inconsistent with this the first sentence thereof. Note should be taken of the second
Code. 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
The Securities and Exchange Commission shall not accept mandatory compliance with the requirement of filing the by-laws "within
for filing the by-laws or any amendment thereto of any bank, one (1) month after receipt of official notice of the issuance of its
banking institution, building and loan association, trust certificate of incorporation by the Securities and Exchange
company, insurance company, public utility, educational Commission." It necessarily follows that failure to file the by-laws within
institution or other special corporations governed by special that period does not imply the "demise" of the corporation. By-laws
laws, unless accompanied by a certificate of the appropriate may be necessary for the "government" of the corporation but these
government agency to the effect that such by-laws or are subordinate to the articles of incorporation as well as to the
amendments are in accordance with law. Corporation Code and related statutes. 15 There are in fact cases where
by-laws are unnecessary to corporate existence or to the valid exercise
of corporate powers, thus:
As correctly postulated by the petitioner, interpretation of this provision
of law begins with the determination of the meaning and import of the
word "must" in this section Ordinarily, the word "must" connotes an In the absence of charter or statutory provisions to the
imperative act or operates to impose a duty which may be enforced. 9 It contrary, by-laws are not necessary either to the existence of
is synonymous with "ought" which connotes compulsion or a corporation or to the valid exercise of the powers conferred
mandatoriness. 10 However, the word "must" in a statute, like "shall," is upon it, certainly in all cases where the charter sufficiently
not always imperative. It may be consistent with an exercise of provides for the government of the body; and even where
discretion. In this jurisdiction, the tendency has been to interpret "shall" the governing statute in express terms confers upon the
as the context or a reasonable construction of the statute in which it is corporation the power to adopt by-laws, the failure to
used demands or requires. 11 This is equally true as regards the word exercise the power will be ascribed to mere nonaction which
"must." Thus, if the languages of a statute considered as a whole and will not render void any acts of the corporation which would
with due regard to its nature and object reveals that the legislature otherwise be valid. 16 (Emphasis supplied.)
intended to use the words "shall" and "must" to be directory, they
should be given that meaning. 12 As Fletcher aptly puts it:
In this respect, the following portions of the deliberations of the It has been said that the by-laws of a corporation are the rule
Batasang Pambansa No. 68 are illuminating: of its life, and that until by-laws have been adopted the
corporation may not be able to act for the purposes of its
MR. FUENTEBELLA. Thank you, Mr. Speaker. creation, and that the first and most important duty of the
members is to adopt them. This would seem to follow as a
matter of principle from the office and functions of by-laws.
On page 34, referring to the adoption of by-laws, are we Viewed in this light, the adoption of by-laws is a matter of
made to understand here, Mr. Speaker, that by-laws must practical, if not one of legal, necessity. Moreover, the peculiar
immediately be filed within one month after the issuance? In circumstances attending the formation of a corporation may
other words, would this be mandatory or directory in impose the obligation to adopt certain by-laws, as in the
character? case of a close corporation organized for specific purposes.
And the statute or general laws from which the corporation
MR. MENDOZA. This is mandatory. derives its corporate existence may expressly require it to
make and adopt by-laws and specify to some extent what
MR. FUENTEBELLA. It being mandatory, Mr. Speaker, what they shall contain and the manner of their adoption. The
would be the effect of the failure of the corporation to file mere fact, however, of the existence of power in the
these by-laws within one month? corporation to adopt by-laws does not ordinarily and of
necessity make the exercise of such power essential to its
corporate life, or to the validity of any of its acts. 17
MR. MENDOZA. There is a provision in the latter part of the
Code which identifies and describes the consequences of
violations of any provision of this Code. One such Although the Corporation Code requires the filing of by-laws, it does
consequences is the dissolution of the corporation for its not expressly provide for the consequences of the non-filing of the
inability, or perhaps, incurring certain penalties. same within the period provided for in Section 46. However, such
omission has been rectified by Presidential Decree No. 902-A, the
pertinent provisions on the jurisdiction of the SEC of which state:
MR. FUENTEBELLA. But it will not automatically amount to
a dissolution of the corporation by merely failing to file the
by-laws within one month. Supposing the corporation was Sec. 6. In order to effectively exercise such jurisdiction, the
late, say, five days, what would be the mandatory penalty? Commission shall possess the following powers:
MR. MENDOZA. I do not think it will necessarily result in the xxx xxx xxx
automatic or ipso facto dissolution of the corporation.
Perhaps, as in the case, as you suggested, in the case of El (1) To suspend, or revoke, after proper notice and hearing,
Hogar Filipino where a quo warranto action is brought, one the franchise or certificate of registration of
takes into account the gravity of the violation committed. If corporations, partnerships or associations, upon any of the
the by-laws were late the filing of the by-laws were late by, grounds provided by law, including the following:
perhaps, a day or two, I would suppose that might be a
tolerable delay, but if they are delayed over a period of xxx xxx xxx
months as is happening now because of the absence
of a clear requirement that by-laws must be completed within
a specified period of time, the corporation must suffer certain 5. Failure to file by-laws within the required period;
consequences. 13
xxx xxx xxx
This exchange of views demonstrates clearly that automatic corporate
dissolution for failure to file the by-laws on time was never the intention In the exercise of the foregoing authority and jurisdiction of
of the legislature. Moreover, even without resorting to the records of the Commission or by a Commissioner or by such other
deliberations of the Batasang Pambansa, the law itself provides the bodies, boards, committees and/or any officer as may be
answer to the issue propounded by petitioner. created or designated by the Commission for the purpose.
The decision, ruling or order of any such Commissioner,
Taken as a whole and under the principle that the best interpreter of a bodies, boards, committees and/or officer may be appealed
statute is the statute itself (optima statuli interpretatix est ipsum to the Commission sitting en banc within thirty (30) days
after receipt by the appellant of notice of such decision, It should be stressed in this connection that substantial
ruling or order. The Commission shall promulgate rules of compliance with conditions subsequent will suffice to perfect
procedures to govern the proceedings, hearings and appeals corporate personality. Organization and commencement of
of cases falling with its jurisdiction. transaction of corporate business are but conditions
subsequent and not prerequisites for acquisition of corporate
The aggrieved party may appeal the order, decision or ruling personality. The adoption and filing of by-laws is also a
of the Commission sitting en banc to the Supreme Court by condition subsequent. Under Section 19 of the Corporation
petition for review in accordance with the pertinent Code, a Corporation commences its corporate existence and
provisions of the Rules of Court. juridical personality and is deemed incorporated from the
date the Securities and Exchange Commission issues
certificate of incorporation under its official seal. This may be
Even under the foregoing express grant of power and authority, there done even before the filing of the by-laws, which under
can be no automatic corporate dissolutionsimply because the Section 46 of the Corporation Code, must be adopted "within
incorporators failed to abide by the required filing of by-laws embodied one month after receipt of official notice of the issuance of its
in Section 46 of the Corporation Code. There is no outright "demise" of certificate of incorporation." 21
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 That the corporation involved herein is under the supervision of the
explain their neglect or omission and remedy the same. HIGC does not alter the result of this case. The HIGC has taken over
the specialized functions of the former Home Financing Corporation by
virtue of Executive Order No. 90 dated December 17, 1989. 22 With
That the failure to file by-laws is not provided for by the Corporation respect to homeowners associations, the HIGC shall "exercise all the
Code but in another law is of no moment. P.D. No. 902-A, which took powers, authorities and responsibilities that are vested on the
effect immediately after its promulgation on March 11, 1976, is very Securities and Exchange Commission . . . , the provision of Act 1459,
much apposite to the Code. Accordingly, the provisions abovequoted as amended by P.D. 902-A, to the contrary notwithstanding." 23
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. WHEREFORE, the instant petition for review on certiorari is hereby
Every statute must be so construed and harmonized with other DENIED and the questioned Decision of the Court of Appeals
statutes as to form a uniform system of jurisprudence. 18 AFFIRMED. This Decision is immediately executory. Costs against
petitioner.
THIRD DIVISION
MELO, J.:
With reference to the pertinent issue at hand, respondent court opined: Before we focus our attention on the subject of whether or not there
was valid compliance in regard to the required publication, we shall
briefly discuss the other observations of respondent court vis-a-
The Notices of Sale of appellant's foreclosed
vis herein private respondent's ascriptions raised with the appellate
properties were published on March 228, April 11
court when his suit for reconveyance was dismissed by the court of
and April 12, 1969 issues of the newspaper "Daily
origin even as private respondent does not impugn the remarks of
Record" (Amended Record on Appeal, p. 108).
respondent court along this line.
The date March 28, 1969 falls on a Friday while
the dates April 11 and 12, 1969 are on a Friday
and Saturday, respectively. Section 3 of Act No. Although respondent court acknowledged that there was an ambiguity
3135 requires that the notice of auction sale shall on the date of execution of the third promissory note (June 30, 1961)
be "published once a week for at least three and the date of maturity thereof (October 28, 1958), it was nonetheless
consecutive weeks". Evidently, defendant-appellee established that the bank introduced sufficient proof to show that the
bank failed to comly with this legal requirement. discrepancy was a mere clerical error pursuant to Section 7, Rule l30
The Supreme Court has held that: of the Rules of Court. Anent the second disputation aired by private
respondent, the appellate court observed that inasmuch as the original
as well as the subsequent mortgage were foreclosed only after private
The rule is that statutory
respondent's default, the procedure pursued by herein petitioner in
provisions governing
publication of notice of
foreclosing the collaterals was thus appropriate albeit the petition because the period for the first week should be reckoned
therefor contained only a copy of the original mortgage. from March 28, 1969 until April 3, 1969 while the second
week should be counted from April 4, 1969 until April 10,
It was only on the aspect of publication of the notices of sale under Act 1969. It is clear that the announcement on April 11, 1969
No. 3135, as amended, and attorney's fees where herein private was both theoretically and physically accomplished during
respondent scored points which eliminated in the reversal of the trial the first day of the third week and cannot thus be equated
court's decision. Respondent court was of the impression that herein with compliance in law. Indeed, where the word is used
petitioner failed to comply with the legal requirement and the sale simply as a measure of duration of time and without
effected thereafter must be adjudged invalid following the ruling of this reference to the calendar, it means a period of seven
Court in Tambunting vs. Court of Appeals (167 SCRA 16 [1988]); p. 8, consecutive days without regard to the day of the week on
Decision, p. 24, Rollo). In view of petitioner's so-called indifference to which it begins (1 Tolentino, supra at p. 467 citing Derby).
the rules set forth under Act No. 3135, as amended, respondent court
expressly authorized private respondent to recover attorney's fees Certainly, it would have been absurd to exclude March 28, 1969 as
because he was compelled to incur expenses to protect his interest. reckoning point in line with the third paragraph of Article 13 of the New
Civil Code, for the purpose of counting the first week of publication as
Immediately upon the submission of a supplemental petition, the to the last day thereof fall on April 4, 1969 because this will have the
spouses Conrado and Marina De Vera filed a petition in intervention effect of extending the first week by another day. This incongruous
claiming that the two parcels of land involved herein were sold to them repercussion could not have been the unwritten intention of the
on June 4, 1970 by petitioner for which transfer certificates of title were lawmakers when Act No. 3135 was enacted. Verily, inclusion of the first
issued in their favor (p. 40, Rollo). On the other hand, private day of publication is in keeping with the computation in Bonnevie vs.
respondent pressed the idea that the alleged intervenors have no more Court of Appeals (125 SCRA 122 [1983]) where this Court had
interest in the disputed lots in view of the sale effected by them to occasion to pronounce, through Justice Guerrero, that the publication
Teresa Castillo, Aquilino and Antonio dela Cruz in 1990 (pp. 105- of notice on June 30, July 7 and July 14, 1968 satisfied the publication
106, Rollo). requirement under Act No. 3135. Respondent court cannot, therefore,
be faulted for holding that there was no compliance with the strict
requirements of publication independently of the so- called
On March 9, 1992, the Court resolved to give due course to the petition admission in judicio.
and required the parties to submit their respective memoranda (p.
110, Rollo).
WHEREFORE, the petitions for certiorari and intervention are hereby
dismissed and the decision of the Court of Appeals dated April 17,
Now, in support of the theory on adherence to the conditions spelled in 1991 is hereby affirmed in toto.
the preliminary portion of this discourse, the pronouncement of this
Court in Bonnevie vs. Court of Appeals (125 SCRA [1983]; p.
135, Rollo) is sought to be utilized to press the point that the notice SO ORDERED.
need not be published for three full weeks. According to petitioner,
there is no breach of the proviso since after the first publication on Feliciano, Bidin, Davide and Romero, JJ., concur.
March 28, 1969, the second notice was published on April 11, 1969
(the last day of the second week), while the third publication on April
12, 1969 was announced on the first day of the third week. Petitioner
thus concludes that there was no violation from the mere
happenstance that the third publication was made only a day after the
second publication since it is enough that the second publication be
made on any day within the second week and the third publication, on
any day within the third week. Moreover, in its bid to rectify its
admission in judicio, petitioner asseverates that said admission alluded
to refers only to the dates of publications, not that there was non-
compliance with the publication requirement.
Private respondent, on the other hand, views the legal question from a
different perspective. He believes that the period between each
publication must never be less than seven consecutive days (p. 4,
Memorandum; p. 124,Rollo).
In this petition for review under Rule 45 of the Rules of Court, San
the publication effected on April 11, 1969 cannot be
Pablo Manufacturing Corporation (SPMC) assails the July 19,
construed as sufficient advertisement for the second week
20001 and April 3, 2001 resolutions of the Court of Appeals in CA-G.R. SPMCs petition in the Court of Appeals did not indicate that the person
SP No. 59139. who signed the verification/certification on non-forum shopping was
authorized to do so. SPMC merely relied on the alleged inherent power
SPMC is a domestic corporation engaged in the business of milling, of its chief financial officer to represent SPMC in all matters regarding
manufacturing and exporting of coconut oil and other allied products. It the finances of the corporation including, among others, the filing of
was assessed and ordered to pay by the Commissioner of Internal suits to defend or protect it from assessments and to recover
Revenue the total amount of P8,182,182.852 representing deficiency erroneously paid taxes. SPMC even admitted that no power of
millers tax and manufacturers sales tax, 3 among other deficiency attorney, secretarys certificate or board resolution to prove the affiants
taxes,4 for taxable year 1987. The deficiency millers tax was imposed authority was attached to the petition. Thus, the petition was not
on SPMCs sales of crude oil to United Coconut Chemicals, Inc. properly verified. Since the petition lacked proper verification, it was to
(UNICHEM) while the deficiency sales tax was applied on its sales of be treated as an unsigned pleading subject to dismissal.12
corn and edible oil as manufactured products.
In PET Plans, Inc. v. Court of Appeals,13 the Court upheld the dismissal
SPMC opposed the assessments but the Commissioner denied its by the Court of Appeals of the petition on the ground that the
protest. SPMC appealed the denial of its protest to the Court of Tax verification and certification against forum shopping was signed by
Appeals (CTA) by way of a petition for review docketed as CTA Case PET Plans, Inc.s first vice-president for legal affairs/corporate
No. 5423. secretary without any certification that he was authorized to sign in
behalf of the corporation.
In its March 10, 2000 decision, the CTA cancelled SPMCs liability for
deficiency manufacturers tax on the sales of corn and edible oils but In BPI Leasing Corporation v. Court of Appeals,14 the Court ruled that
upheld the Commissioners assessment for the deficiency millers tax. the petition should be dismissed outright on the ground that the
SPMC moved for the partial reconsideration of the CTA affirmation of verification/certification against forum shopping was signed by BPI
the millers tax assessment but it was denied. Leasing Corporations counsel with no specific authority to do so.
Since the counsel was purportedly acting for the corporation, he
needed a resolution issued by the board of directors that specifically
SPMC elevated the case to the Court of Appeals via a petition for authorized him to institute the petition and execute the certification.
review of the CTA decision insofar as it upheld the deficiency millers Only then would his actions be legally binding on the corporation.15
tax assessment. In its July 19, 2000 resolution, the appellate court
dismissed the petition on the principal ground 5 that the verification
attached to it was signed merely by SPMCs chief financial officer In this case, therefore, the appellate court did not commit an error
without the corporate secretarys certificate, board resolution or power when it dismissed the petition on the ground that it was signed by a
of attorney authorizing him to sign the verification and certification person who had not been issued any authority by the board of
against forum shopping. SPMC sought a reconsideration of the directors to represent the corporation.
resolution but the same was denied. Hence, this petition.
Neither can the Court subscribe to SPMCs claim of substantial
Did the Court of Appeals err when it dismissed SPMCs appeal? compliance or to its plea for a liberal application of the rules. Save for
the most persuasive of reasons, strict compliance with procedural rules
is enjoined to facilitate the orderly administration of
SPMC contends that its appeal should have been given due course justice.16 Substantial compliance will not suffice in a matter involving
since it substantially complied with the requirements on verification and strict observance such as the requirement on non-forum shopping, 17 as
certification against forum shopping. It insists on the liberal application well as verification. Utter disregard of the rules cannot justly be
of the rules because, on the merits of the petition, SPMC was not liable rationalized by harping on the policy of liberal construction.18
for the 3% millers tax. It maintains that the crude oil which it sold to
UNICHEM was actually exported by UNICHEM as an ingredient of
fatty acid and glycerine, hence, not subject to millers tax pursuant to But even if the fatal procedural infirmity were to be disregarded, the
Section 168 of the 1987 Tax Code. petition must still fail for lack of merit.
For SPMC, Section 168 of the 1987 Tax Code contemplates two As the CTA correctly ruled, SPMCs sale of crude coconut oil to
exemptions from the millers tax: (a) the milled products in their original UNICHEM was subject to the 3% millers tax. Section 168 of the 1987
state were actually exported by the miller himself or by another person, Tax Code provided:
and (b) the milled products sold by the miller were actually exported as
an ingredient or part of any manufactured article by the buyer or Sec. 168. Percentage tax upon proprietors or operators of rope
manufacturer of the milled products. The exportation may be effected factories, sugar central mills, coconut oil mills, palm oil mills, cassava
by the miller himself or by the buyer or manufacturer of the milled mills and desiccated coconut factories. Proprietors or operators of rope
products. Since UNICHEM, the buyer of SPMCs milled products, factories, sugar central and mills, coconut oil mills, palm oil mills,
subsequently exported said products, SPMC should be exempted from cassava mills and desiccated coconut factories, shall pay a tax
the millers tax. equivalent to three percent (3%) of the gross value in money of all the
rope, sugar, coconut oil, palm oil, cassava flour or starch, dessicated
The petition must fail. coconut, manufactured, processed or milled by them, including the by-
product of the raw materials from which said articles are produced,
processed or manufactured, such tax to be based on the actual selling
Under Rule 43, Section 5 of the Rules of Court, appeals from the CTA price or market value of these articles at the time they leave the factory
and quasi-judicial agencies to the Court of Appeals should be verified. or mill warehouse:Provided, however, That this tax shall not apply
A pleading required to be verified which lacks proper verification shall to rope, coconut oil, palm oil and the by-product of copra from
be treated as an unsigned pleading.6 which it is produced or manufactured and dessicated coconut, if
such rope, coconut oil, palm oil, copra by-products and
Moreover, a petition for review under Rule 43 requires a sworn dessicated coconuts, shall be removed for exportation by the
certification against forum shopping.7 Failure of the petitioner to comply proprietor or operator of the factory or the miller himself, and are
with any of the requirements of a petition for review is sufficient ground actually exported without returning to the Philippines, whether in
for the dismissal of the petition.8 their original state or as an ingredient or part of any manufactured
article or products: Provided further, That where the planter or the
A corporation may exercise the powers expressly conferred upon it by owner of the raw materials is the exporter of the aforementioned milled
the Corporation Code and those that are implied by or are incidental to or manufactured products, he shall be entitled to a tax credit of the
its existence through its board of directors and/or duly authorized miller's taxes withheld by the proprietor or operator of the factory or
officers and agents.9 Hence, physical acts, like the signing of mill, corresponding to the quantity exported, which may be used
documents, can be performed only by natural persons duly authorized against any internal revenue tax directly due from him: and Provided,
for the purpose by corporate by-laws or by specific act of the board of finally, That credit for any sales, miller's or excise taxes paid on raw
directors.10 In the absence of authority from the board of directors, no materials or supplies used in the milling process shall not be allowed
person, not even the officers of the corporation, can bind the against the miller's tax due, except in the case of a proprietor or
corporation.11 operator of a refined sugar factory as provided hereunder. (emphasis
supplied)
The language of the exempting clause of Section 168 of the 1987 Tax
Code was clear. The tax exemption applied only to the exportation of
rope, coconut oil, palm oil, copra by-products and dessicated coconuts,
whether in their original state or as an ingredient or part of any
manufactured article or products, by the proprietor or operator of the
factory or by the miller himself.
SO ORDERED.
RENATO C. CORONA
Associate Justice
W/N the CA erred in affirming the decision of the RTC based on the
Stipulation of Facts that was not signed by the Petitioner nor his
counsel.
HELD:
REP. OF THE PHILIPPINES vs. HON. MIGRINIO AND TECSON The CA erred. Case is re-opened to receive evidence of Petitioner.
Sec. 4 of the Rules on Criminal Procedure provides, No agreement or
FACTS: admission made or entered during the pre-trial conference shall
be used in evidence against the accused unless reduced to
Acting on information received, which indicated the acquisition of writing and signed by him and his counsel.Because of the word
wealth beyond his lawful income, the Philippine Anti-Graft shall, in its language, the rule is mandatory. Negative words and
Board required Private Respondent to submit his explanation or phrases are to be regarded as mandatory while those in the affirmative
comment, together with his supporting evidence. Private are merely directory. Therefore, the signature of the Petitioner and the
Respondent, a retired lt. colonel, was unable to produce his counsel is mandatory. Also, penal statues are to be liberally construed
supporting evidence, despite several postponements, because they in favor of the accused.
were allegedly in the custody of his bookkeeper who had gone abroad.
The anti-graft Board was created by the PCGG to investigate the BERSABAL vs. SALVADOR
unexplained wealth and corrupt practices of AFP personnel, both
retired and in active service. FACTS:
FULE vs. COURT OF APPEALS W/N the imports of dental cream stabilizers and flavors are subject to
a 17% transportation tax exemption under the Exchange Tax Law.
FACTS:
HELD:
Petitioner, an agent of the Towers Assurance Corporation, issued and
made out check No. 26741 in favor of Roy Nadera. Said check was No. The refusal to deny refund was based on the following argument:
dishonored for the reason that the said checking account was already
closed, thus in violation of BP 22, the Bouncing Checks Law. Upon the All the items enumerated for the tax exemption fall under one specific
hearing, prosecution presented its evidence and the Petitioner waived class, namely: food products, books supplies/ materials and medical
his right. Instead, he submitted a memorandum confirming the supplies. The stabilizers and flavors the petitions refer to are items
Stipulation of Facts. He was convicted by the trial court, and on appeal, which must fall under the category of food products. Because such
the Appellate Court. items will be used for toothpaste, it is not a food product and therefore
ISSUE:
not subject to exemptionPetitioners arguments effected the grant of
the refund: