Group 5 Case Digests: Mandatory and Directory Statutes

Case1: Loyola Grand Villas Homeowners (South) Association, Inc., vs. Court of
Appeals
G.R. No. 117188 August 7, 1997

Facts: Loyola Grand Villas Homeowners Association 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 Home Insurance and Guarantee Corporation (HIGC), as the sole
homeowners' organization in the said subdivision. For unknown reasons, LGVHAI did
not file its corporate by-laws.

In July, 1989, when Soliven, the developer and president of LGVHAI inquired about
the status of the corporation, the head of the legal department of the HIGC, informed
the former that LGVHAI had been automatically dissolved because, among other
reasons, it did not submit its by-laws within the period required by the Corporation
Code.

Issue: May 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, result in
its automatic dissolution?

Held: No.The records of the deliberations of the Batasang Pambansa No. 68 suggest
that automatic corporate dissolution for failure to file the by-laws on time was never the
intention of the legislature. Moreover, 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), reveals the legislative intent to attach a directory, and not mandatory,
meaning for the word "must" in the first sentence of Section 46 of the Corporation
Code.

There can also 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.

CASE2: DIOKNO vs. REHABILITATION FINANCE CORPORATION

Facts: Plaintiff is the holder of a backpay certificate of indebtedness issued by the

Treasurer of the Philippines under the provisions of Republic Act No. 304 of a face
value of P75,857.14 dated August 30, 1948. On or about November 10, 1050, when
the action was brought, he had an outstanding loan with the Rehabilitation Finance
Corporation, contracted therewith on January 27, 1950, in the total sum of P50,000,
covered by a mortgage on his property situated at 44 Alhambra, Ermita, Manila, with
interest at 4 per cent per annum, of which P47,355.28 was still unpaid. In this action he
seeks to compel the defendant corporation to accept payment of the balance of his
indebted with his backpay certificate. The defendant resists the suit on the ground that
plaintiffs' demand is not only not authorized by section 2 of Republic Act No. 304 but
contrary to the provisions thereof, and furthermore because plaintiff's loan was obtain
on January 27, 1950, much after the passage of Republic Act No. 304, and because
the law permits only "acceptance or discount of backpay certificates," not the
repayment of loans. The court a quo held that section 2 of Republic Act No. 304 is
permissive merely, and that even if where mandatory, plaintiff's case can not fall
thereunder because he is not acquiring property for a home or construing a residential
house, but compelling the acceptance of his backpay certificate to pay a debt he
contracted after the enactment of Republic Act No. 304. It, therefore, dismissed the
complaint with costs.

The appeal involves the interpretation of section 2 of Republic Act No. 302, which
provides:
. . . And provided, also, That investment funds or banks or other financial institutions
owned or controlled by the Government shall, subject to the availability of loanable
funds, and any provision of the their charters, articles of incorporation's, by-laws, or
rules and regulations to the contrary notwithstanding, accept or discount at not more
than two per centum per annum for ten years such certificate for the following purposes
only: (1) the acquisition of real property for use as the applicant's home, or (2) the
building or construction of the residential house of the payee of said certificate: . . .

It is first contended by the appellant that the above provision is mandatory, not only
because it employs the word "shall", which in its ordinary signification is mandatory, not
permissive, but also because the provision is applicable to institutions of credit under
the control of the Government, and because otherwise the phrases "subject to
availability of loanable funds" and "any provisions of this charter, . . . and regulations to
the contrary notwithstanding" would be superfluous.

Issue: How shall Sec. 2 of RA No. 302 be interpreted?

Held: In the provision subject controversy, it is to be noted that the verb-phrase "shall
accept or discount" has two modifiers, namely, "subject to availability of loanable
funds" and "at not more that two per centum per annum for ten years." As to the
second modifier, the interest to be charged, there seems to be no question that the
verb phrase is mandatory, because not only does the law use "at not more" but the
legislative purpose and intent, to conserve the value of the backpay certificate for the
benefit of the holders, for whose benefit the same have been issued, can be carried
out by fixing a maximum limit for discounts. But as to when the discounting or
acceptance shall be made, the context and the sense demand a contrary
interpretation. The phrase "subject" means "being under the contingency of" (Webster's
Int. Dict.) a condition. If the acceptance or discount of the certificates to be "subject" to
the condition of the availability of a loanable funds, it is evident that the Legislature
intended that the acceptance shall be allowed on the condition that there are "available
loanable funds." In other words, acceptance or discount is to be permitted only if there
are loanable funds.

Let us now consider the meaning of the condition imposed for accepting or discounting
certificates, the "availability of loanable funds." On this issue the appellant contends
that the mere fact that P50,000 was loaned to him and that the Rehabilitation Finance
Corporation has been granting loans up to the time plaintiff offered to pay the loan with
his certificate — these prove that there are "available loanable funds". As the court a
quo did not pass on such availability, he also contends that this is a question of fact to
be determined by the courts. The defendant denies the existence of "available loanable
funds." The gist of plaintiffs' contention is that any and all funds of the Rehabilitation
Finance Corporation are subject to the provision of the discount or acceptance of the
certificates; that of defendant-appellee is that only funds made available for the
purpose of discounting backpay certificates may be used for such purpose and that at
the time the action was filed there was no such funds.

Case3: Reyes vs CA G.R. No. 118233 December 10, 1999

Facts: The Sangguniang Bayan of San Juan, Metro Manila implemented several tax
ordinances on the following:
1) Ord. No. 87 - imposing municipal tax on business of printing and publication;
2) Ord. No. 91 - transfer tax on sale, donation, barter, or any other mode of
transferring ownership or title of real property;
3) Ord. No. 95 - social housing tax;
4) Ord. No. 100 - new rates of business taxes;
5) Ord. No. 101 - levying an annual “Ad Valorem” tax on real property.

These ordinances in question took effect in the months of September and October
1992. However, it was only on May 21, 1993 that petitioners filed an appeal with the
Department of Justice assailing the constitutionality of these tax ordinances allegedly
because they were promulgated without previous public hearings thereby constituting
deprivation of property without due process of law.

Respondent Secretary of Justice dismissed the appeal for having been filed out of
time citing Section 187, R.A. No. 7160.
Sec. 187 of R.A. 7160, provides
Sec. 187 — Procedure for Approval and Effectivity of Tax Ordinances and Revenue
Measures; Mandatory Public Hearings. — The procedure for approval of local tax
ordinances and revenue measures shall be in accordance with the provisions of this
Code:
That any question on the constitutionality or legality of tax ordinances or revenue
measures may be raised on appeal within thirty (30) days from the effectivity thereof to
the Secretary of Justice who shall render a decision within sixty (60) days from the date
of receipt of the appeal:
xxx
Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of
the sixty-day period without the Secretary of Justice acting upon the appeal, the
aggrieved party may file appropriate proceedings with a court of competent jurisdiction.

Issue: WON Sec. 187 of RA 7160 on process of appeal is mandatory and failures to
appeal within prescribe period renders the dismissal of the case.

Held: Yes. Clearly, the law requires that the dissatisfied taxpayer who questions the
validity or legality of a tax ordinance must file his appeal to the Secretary of Justice,
within 30 days from effectivity thereof.

In case the Secretary decides the appeals, a period also of 30 days is allowed for an
aggrieved party to go to court.

But if the Secretary does not act thereon, after the lapse of 60 days, a party could
already proceed to seek relief in court.

These three separate periods are clearly given for compliance as a prerequisite before
seeking redress in a competent court.

Such statutory periods are set to prevent delays as well as enhance the orderly and
speedy discharge of judicial functions. For this reason, the courts construe these
provisions of statutes as mandatory.

Case4: Gachon vs. Devera, Jr. G.R. No. 116695. June 20, 1997
Facts: A complaint for forcible entry was filed by, respondent Guevara against
petitioners Gachon and Guevara before the MTCC. Summons was served on and
received by petitioners directing them to file an answer within the reglementary period
of 10 days. However, petitioners failed to do so because he was abroad. Petitioners
filed with the MTCC an urgent motion for extension of time to file an answer. The
MTCC denied the motion on the ground that it was a prohibited pleading under the
Rule on Summary Procedure. It likewise denied all other pleadings and MR.
The MTCC issued a decision resolving the complaint for forcible entry in favor of
herein private respondents. Aggrieved, they filed a petition for certiorari and injunction
before RTC. RTC likewise dismiss petition.

Issue: Are the provisions of the Rules on Summary Procedure on the period of
pleadings to be applied STRICTLY or LIBERALLY.

Held: Applied strictly.

Sec. 5. Answer. — Within ten (10) days from service of summons, the defendant shall
file his answer to the complaint and serve a copy thereof on the plaintiff . . .
Sec. 6. Effect of failure to answer. — Should the defendant fail to answer the
complaint within the period above provided, the Court, motu proprio, or on motion of
the plaintiff, shall render judgment as may be warranted by the facts alleged in the
complaint and limited to what is prayed for therein: . . .
The word "shall" ordinarily connotes an imperative and indicates the mandatory
character of a statute. This, however, is not an absolute rule in statutory construction.
The import of the word ultimately depends upon a consideration of the entire provision,
its nature, object and the consequences that would follow from construing it one way or
the other.

As a general principle, rules prescribing the time within which certain acts must be
done, or certain proceedings taken, are considered absolutely indispensable to the
prevention of needless delays and to the orderly and speedy discharge of judicial
business. By their very nature, these rules are regarded as mandatory.

The Rule on Summary Procedure, in particular, was promulgated for the purpose of
achieving "an expeditious and inexpensive determination of cases." For this reason,
the Rule frowns upon delays and prohibits altogether the filing of motions for extension
of time. Consistent with this reasoning is Section 6 of the Rule, which allows the trial
court to render judgment, even motu proprio, upon the failure of a defendant to file an
answer within the reglementary period.

Indeed, the Judiciary Reorganization Act of 1980, mandating the promulgation of the
Rule on Summary Procedure, authorizes the Court to stipulate that the period for filing
pleadings in cases covered by the Rule on Summary Procedure shall be “non-
extendible.”
It is clear that the use of the word "shall" in the Rule on Summary Procedure
underscores the mandatory character of the challenged provisions. Giving the
provisions a directory application would subvert the nature of the Rule on Summary
Procedure and defeat its objective of expediting the adjudication of suits.

Case5: De Mesa vs Mencias G.R. No. L-24583 October 29, 1966

Facts: Francisco De Mesa and Maximino Argana were opponents for the mayoralty of
Muntinlupa, Rizal in the 1963 elections. De Mesa won the election and thereafter
proclaimed and assumed office. Meanwhile, the defeated candidate Argana, filed and
election protest against De Meas charging him of the perpetration of frauds, terrorism
and other irregularities in certain precincts. De Mesa on the other hand filed a counter-
protest and sought to shift responsibility for irregularities to the protestant and his
followers. However, while the case is pending Mayor de Mesa was assinated.

Protestant Argana moved for the constitution of committees on revision of ballots.

Accordingly, the court a quo required the protestee's widow and children to appear
within fifteen days from notice in order to be substituted for said protestee, if they so
desired. They did not, however, comply. Proceeding ex parte, on June 11, 1964, the
protestant Argana reiterated his move for the appointment of commissioners on
revision of ballots. And so, without notice to the protestee and/or his legal
representative the trial court granted the motion.

With the constitution of the committee on revision of ballots the trial court, in its
decision adjudged the protestant Maximino Argana as the duly elected mayor of
Muntinlupa in the 1963 elections.

De Mesa's widow and the local chapter of the Liberal Party of which the deceased
protestee was a member, filed a petition which include among others for the
reconsideration of the August 10, 1964 decision upon the ground that, for failure to
order the protestant to procure the appointment of a legal representative of the
deceased protestee after his widow and children had failed to appear, pursuant to the
applicable provisions of the Rules of Court, it was legally improper for the trial court to
have proceeded ex parte with the election case.

The trial court denied the movants’ for leave to represent the deceased protestee, and
order stricken from the record their motion for reconsideration and new trial and their
cautionary notice of appeal. The movants elevated the case to the CA petition for
certiorari and mandamus, with preliminary injunction to nullify for lack of jurisdiction the
proceedings taken by the trial court in the election case without allowing the
intervention and/or the inclusion of a legal representative of the deceased protestee.

Issue: WON Sec. 17, Rule 3 of the Old Rules of Court requires a directory or
mandatory compliance.

Held: It is mandatory. SEC. 17. Death of party.—After a party dies and the claim is not
thereby extinguished, the court shall order, upon proper notice, the legal representative
of the deceased to appear and to be substituted for the deceased, within a period of
thirty (30) days, or within such time as may be granted.

If the legal representative fails to appear within said time, the court may order the
opposing party to procure the appointment of a legal representative of the deceased
within a time to be specified by the court, and the representative shall immediately
appear for and on behalf of the interest of the deceased. . . . (Rule 3.)

The trial court, it will be recalled in its order of May 6, 1964, required the widow and
children of the deceased protestee to appear and be substituted for and on his behalf
and to protect his interest in the case. But when they failed to comply at the instance of
the protestant, declared said widow and children non- suited, proceeded with the case
ex parte, and effectively blocked all attempts at intervention and/or substitution in
behalf of the deceased protestee.

It is the Courts considered view that Section 17, Rule 3 of the Rules of Court applies to
election contests to the same extent and with the same force and effect as it does in
ordinary civil actions. And the court declares that unless and until the procedure therein
detailed is strictly adhered to, proceedings taken by a court in the absence of a duly
appointed legal representative of the deceased protestee must be stricken down as
null and void.

Considering that, in the case at bar, the trial court failed to order the protestant to
procure the appointment of a legal representative of the deceased protestee after the
latter's widow and children had failed to comply with the court order requiring their
appearance to be substituted in lieu of their predecessor, but instead — in derogation
of the precepts of the Rule in question and in the total absence of a legal
representative of the deceased protestee. It is no argument against this conclusion to
contend that the requirement for the procurement of a legal representative of a
deceased litigant is couched in the permissive term "may" instead of the mandatory
word "shall."

While the ordinary acceptations of these terms may indeed be resorted to as guides in
the ascertainment of the mandatory or directory character of statutory provisions, they
are in no wise absolute and inflexible criteria in the vast areas of law and equity.
Depending upon a consideration of the entire provision, its nature, its object and the
consequences that would follow from construing it one way or the other, the
convertibility of said terms either as mandatory or permissive is a standard recourse in
statutory construction.

"Where the statute provides for the doing of some act which is required by justice or
public duty, or where it invests a public body, municipality or public officer with power
and authority to take some action which concerns the public interest or rights of
individuals, the permissive language will be construed as mandatory and the execution
of the power may be insisted upon as a duty" (Black, Interpretation of Laws, pp. 540-
543).

Case6: Marcelino vs. Cruz, Jr. G.R. No. 42428 March 18, 1983

Facts: A petition for prohibition and writ of habeas corpus to enjoin respondent Judge
Fernando Cruz, Jr. from promulgating his decision, entitled People of the Philippines
versus Bernardino Marcelino, and for release from detention of petitioner, the accused
in said case, on the ground of loss of jurisdiction of respondent trial court over the case
for failure to decide the same within the period of ninety [90] days from submission
thereof.

Petitioner was charged with the crime of rape before the Court of First Instance of
Rizal. Trial was conducted and the same was concluded when the accused rested his
case on August 4, 1975. On the date set for promulgation of the decision, counsel for
accused moved for postponement, raising for the first time the alleged loss of
jurisdiction of the trial court for failure to decide the case within 90 days from
submission thereof for decision. Petitioner espouses the thesis that the three-month
period prescribed by Section 11[l] of Article X of the 1973 Constitution, being a
constitutional directive, is mandatory in character and that non-observance thereof
results in the loss of jurisdiction of the court over the unresolved case.

Issue: WON the decision rendered beyond the period prescribed in the Constitution is
null and void.

Held: NO. The constitutional provision requiring that trial judges shall decide a case
within 90 days from submission is merely a procedural rule and is not mandatory, but
only directory. The provision in question indicates that it falls within the exception rather
than the general rule. And there can be no doubt that said provision, having
incorporated for reasons of expediency, relates merely to matters of procedure.

The Supreme Court had at various times, upon proper application and for meritorious
reason, allowed judges of inferior courts additional time beyond the three-month period
within which to decide cases submitted to them. The reason is that a departure from
said provision would result in less injury to the general public than would its strict
application. To hold that non-compliance by the courts with the aforesaid provision
would result in loss of jurisdiction, would make the courts, through which conflicts are
resolved, the very instrument to foster unresolved causes by reason merely of having
failed to render a decision within the allotted term.

Case7: Querubin vs. CA G.R. No. 2581 December 2, 1948

Facts: Petitioner challenges the jurisdiction of the Court of Appeals to continue taking
cognizance of the appeal in the election case of Fidel Querubin vs. Felipe Mamuri,
concerning the mayoralty of Ilagan. Isabel, because of the expiration of the three-
month period provided for in section 178 of the Revised Election code, which read as
follows:
“SEC.178. Appeal from the decision in election contests. – x x x. Such appeal shall be
decided within three months after the filing of the case in the office of the clerk of court
to which the appeal has been taken.”

The record of the appealed case was received by the Court of Appeals on May 22,
1948. On August 23, 1948, petitioner filed a motion to dismiss the appeal on the
ground that the three-month period provided for by section 178 of the Revised Election
Code expired on August 22, 1948, and that, consequently, the Court of Appeals had
lost its jurisdiction over the case.

Issue: WON CA has jurisdiction in deciding the election case although the required
period to resolve it has expired.

Held: YES. The lapse of the period of time provided for said section should not have
the effect of defeating the purposes of the system of judicial settlement of protests. To
dismiss an election contest or the appeal taken therein because the respective courts,
regardless of cause or reason, have failed to render final decisions within the time
limits of said section, is to defeat the administration of justice upon factors beyond the
control of the parties.
The dismissal in such case will constitute a miscarriage of justice. The speedy trial
required by the law would be turned into a denial of justice.