LOYOLA GRAND VILLAS HOMEOWNERS (SOUTH) ASSOCIATION V.

CA

Facts: Loyola Grand Villas Homeowners Association, Inc. (LGVHAI) was organized on 8
February 1983 as the homeowners' association for Loyola Grand Villas. It was also registered
as the sole homeowners' association in the said village with the Home Financing Corporation
(which eventually became Home Insurance Guarantee Corporation ["HIGC"]). However, the
association was not able file its corporate by-laws.

The LGVHAI officers then tried to registered its By-Laws in 1988, but they failed to do so. They
then discovered that there were two other homeowners' organizations within the subdivision -
the Loyola Grand Villas Homeowners (North) Association, Inc. [North Association] and herein
Petitioner Loyola Grand Villas Homeowners (South) Association, Inc.["South Association].

Upon inquiry by the LGVHAI to HIGC, it was discovered that LGVHAI was dissolved for its
failure to submit its by-laws within the period required by the Corporation Code and for its non-
user of corporate charter because HIGC had not received any report on the association's
activities. These paved the way for the formation of the North and South Associations.

LGVHAI then lodged a complaint with HIGC Hearing Officer Danilo Javier, and questioned the
revocation of its registration. Hearing Officer Javier ruled in favor of LGVHAI, revoking the
registration of the North and South Associations.

Petitioner South Association appealed the ruling, contending that LGVHAI's failure to file its by-
laws within the period prescribed by Section 46 of the Corporation Code effectively
automatically dissolved the corporation. The Appeals Board of the HIGC and the Court of
Appeals both rejected the contention of the Petitioner affirmed the decision of Hearing Officer
Javier.

Issue: W/N LGVHAI'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.

Ruling: No.

The pertinent provision of the Corporation Code that is the focal point of controversy in this case
states:
Sec. 46. Adoption of by-laws. - Every corporation formed under this Code, must within one
(1) month after receipt of official notice of the issuance of its certificate of incorporation by
the Securities and Exchange Commission, adopt a code of by-laws for its government not
inconsistent with this Code.

Ordinarily, the word "must" connotes an imposition of duty which must be enforced. However,
the word "must" in a statute, like "shall," is not always imperative. It may be consistent with an
exercise of discretion. If the language of a statute, considered as a whole with due regard to its
nature and object, reveals that the legislature intended to use the words "shall" and "must" to be
directory, they should be given that meaning.

The legislative deliberations of the Corporation Code reveals that it was not the intention of
Congress to automatically dissolve a corporation for failure to file the By-Laws on time.
Moreover, By-Laws may be necessary to govern the corporation, but By-Laws are still
subordinate to the Articles of Incorporation and the Corporation Code. In fact, there are cases
where By-Laws are unnecessary to the corporate existence and to the valid exercise of
corporate powers.

The Corporation Code does not expressly provide for the effects of non-filing of By-Laws.
However, these have been rectified by Section 6 of PD 902-A which provides that SEC shall
possess the power to suspend or revoke, after proper notice and hearing, the franchise or
certificate of registration of corporations upon failure to file By-Laws within the required period.

This shows that there must be notice and hearing before a corporation is dissolved for failure to
file its By-Laws. Even assuming that the existence of a ground, the penalty is not necessarily
revocation, but may only be suspension.

By-Laws are indispensable to corporations, since they are required by law for an orderly
management of corporations. However, failure to file them within the period prescribed does not
equate to the automatic dissolution of a corporation.

OFFICE OF THE OMBUDSMAN, Petitioner, v. MERCEDITAS DE SAHAGUN, MANUELA T.

WAQUIZ and RAIDIS J. BASSIG, Respondent

Facts: On November 13, 1992, respondent Raidis J. Bassig, Chief of the Research and
Publications Division of the Intramuros Administration, submitted a Memorandum to then
Intramuros Administrator Edda V. Henson recommending that Brand Asia, Ltd. be
commissioned to produce a video documentary for a television program, as well implement a
media plan and marketing support services for Intramuros.

On November 17, 1992, the Bids and Awards Committee (BAC) of the Intramuros
Administration, composed of respondent Merceditas de Sahagun, with respondent Manuela T.
Waquiz and Dominador C. Ferrer, Jr. (Ferrer), submitted a recommendation to Henson for the
approval of the award of said contract to Brand Asia, Ltd. On the same day it was approved and
issued a Notice of Award to Brand Asia, Ltd.

On November 23, 1992, a contract of service to produce a video documentary on Intramuros for
TV program airing was executed between Henson and Brand Asia, Ltd.

On June 2, 1993, the BAC, with Augusto P. Rustia (Rustia) as additional member,
recommended to Henson the approval of the award of contract for print collaterals to Brand
Asia, Ltd. On the same day, Henson approved the recommendation and issued a Notice of
Award/Notice to Proceed to Brand Asia, Ltd.

On August 8, 1996, an anonymous complaint was filed with the Ombudsman against the BAC in
relation to the latter's participation in the contracts with Brand Asia, Ltd. for which Henson was
dismissed from service.

On September 5, 2000, Fact-Finding Intelligence Bureau (FFIB) filed criminal and administrative
charges against respondents, along with Ferrer and Rustia, for violation of Section 3 (a) and (c)
of R.A. No. 3019 in relation to Section 1 of Executive Order No. 302 and grave misconduct,
conduct grossly prejudicial to the best interest of the service and gross violation of Rules and
Regulations pursuant to the Administrative Code of 1987 which was dismissed on February 27,
2002 for lack of probable cause.

However, then Ombudsman Simeon V. Marcelo disapproved the recommendation. He held that
there was substantial evidence to hold respondents administratively liable since the contracts
awarded to Brand Asia, Ltd. failed to go through the required procedure for public bidding under
Executive Order No. 301 dated July 26, 1987. Respondents and Ferrer were found guilty of
grave misconduct and dismissed from service. Rustia was found guilty of simple misconduct
and suspended for six months without pay.

On March 17, 2003, respondents, along with Rustia, filed a Motion for Reconsideration.

On June 24, 2003, Ombudsman Marcelo issued an Order partially granting the motion for
reconsideration. Respondents and Ferrer were found guilty of the lesser offense of simple
misconduct and suspended for six months without pay. Rustia's suspension was reduced to
three months.

Dissatisfied, respondents filed a Petition for Review with the CA assailing the Orders dated
March 10, 2003 and June 24, 2003 of the Ombudsman.

On April 28, 2005, the CA rendered a Decision setting aside the Orders the Ombudsman. The
CA held that respondents may no longer be prosecuted since the complaint was filed more than
seven years after the imputed acts were committed which was beyond the one year period
provided for by Section 20 (5) of Republic Act (R.A.) No. 6770, otherwise known as "The
Ombudsman Act of 1989"; and that the nature of the function of the Ombudsman was purely
recommendatory and it did not have the power to penalize erring government officials and
employees.

Issues: Whether or not Section 20 (5) of R.A. No. 6770 prohibits administrative investigations
in cases filed more than one year after commission

Ruling: The Court rules in favor of the petitioner.

Well-entrenched is the rule that administrative offenses do not prescribe. Administrative

offenses by their very nature pertain to the character of public officers and employees. In
disciplining public officers and employees, the object sought is not the punishment of the officer
or employee but the improvement of the public service and the preservation of the public's faith
and confidence in our government.13

Respondents insist that Section 20 (5) of R.A. No. 6770, to wit:

SEC. 20. Exceptions. - The Office of the Ombudsman may not conduct the necessary
investigation of any administrative act or omission complained of if it believes that:

xxx

(5) The complaint was filed after one year from the occurrence of the act or omission
complained of. (Emphasis supplied)
proscribes the investigation of any administrative act or omission if the complaint was filed after
one year from the occurrence of the complained act or omission.

In Melchor v. Gironella,14 the Court held that the period stated in Section 20(5) of R.A. No. 6770
does not refer to the prescription of the offense but to the discretion given to
the Ombudsman on whether it would investigate a particular administrative offense. The use of
the word "may" in the provision is construed as permissive and operating to confer
discretion.15 Where the words of a statute are clear, plain and free from ambiguity, they must be
given their literal meaning and applied without attempted interpretation.16

In Filipino v. Macabuhay,17 the Court interpreted Section 20 (5) of R.A. No. 6770 in this manner:

Petitioner argues that based on the abovementioned provision [Section 20(5) of RA

6770)], respondent's complaint is barred by prescription considering that it was filed
more than one year after the alleged commission of the acts complained of.

Petitioner's argument is without merit.

The use of the word "may" clearly shows that it is directory in nature and not mandatory
as petitioner contends. When used in a statute, it is permissive only and operates to
confer discretion; while the word "shall" is imperative, operating to impose a duty which
may be enforced. Applying Section 20(5), therefore, it is discretionary upon the
Ombudsman whether or not to conduct an investigation on a complaint even if it
was filed after one year from the occurrence of the act or omission complained of.
In fine, the complaint is not barred by prescription.18 (Emphasis supplied)

The declaration of the CA in its assailed decision that while as a general rule the word "may" is
directory, the negative phrase "may not" is mandatory in tenor; that a directory word, when
qualified by the word "not," becomes prohibitory and therefore becomes mandatory in character,
is not plausible. It is not supported by jurisprudence on statutory construction.

It is, therefore, discretionary upon the Ombudsman whether or not to conduct an investigation of
a complaint even if it was filed after one year from the occurrence of the act or omission
complained of. Thus, while the complaint herein was filed only on September 5, 2000, or more
than seven years after the commission of the acts imputed against respondents in November
1992 and June 1993, it was within the authority of the Ombudsman to conduct the investigation
of the subject complaint.

ROOS INDUSTRIAL CONSTRUCTION INC VS NLRC

Facts: On 9 April 2002, private respondent Jose Martillos filed a complaint against petitioners
for illegal dismissal and money claims such as the payment of separation pay in lieu of
reinstatement plus full backwages, service incentive leave, 13th month pay, litigation expenses,
underpayment of holiday pay and other equitable reliefs before the National Labor Relations
Commission.
Respondent alleged that he had been hired as a driver-mechanic sometime in 1988 but was not
made to sign any employment contract by petitioners. As driver mechanic, respondent was
assigned to work at Carmona, Cavite and he worked daily from 7:00 a.m. to 10:00 p.m. at the
rate of P200.00 a day. He was also required to work during legal holidays but was only paid an
additional 30% holiday pay. He likewise claimed that he had not been paid service incentive
leave and 13th month pay during the entire course of his employment. On 16 March 2002, his
employment was allegedly terminated without due process.

Petitioners denied respondent’s allegations. They contended that respondent had been hired on
several occasions as a project employee and that his employment was coterminous with the
duration of the projects. They also maintained that respondent was fully aware of this
arrangement. Considering that respondent’s employment had been validly terminated after the
completion of the projects, petitioners concluded that he is not entitled to separation pay and
other monetary claims, even attorney’s fees.

The Labor Arbiter ruled that respondent had been illegally dismissed after finding that he had
acquired the status of a regular employee as he was hired as a driver with little interruption from
one project to another, a task which is necessary to the usual trade of his employer. The Labor
Arbiter ordered petitioners to pay respondent the aggregate sum of P224,647.17 representing
backwages, separation pay, salary differential, holiday pay, service incentive leave pay and
13th month pay.

On 29 December 2003, the last day of the reglementary period for perfecting an appeal,
petitioners filed a Memorandum of Appeal before the NLRC and paid the appeal fee. However,
instead of posting the required cash or surety bond within the reglementary period, petitioners
filed a Motion for Extension of Time to Submit/Post Surety Bond.

Petitioners stated that they could not post and submit the required surety bond as the
signatories to the bond were on leave during the holiday season, and made a commitment to
post and submit the surety bond on or before 6 January 2004. The NLRC did not act on the
motion. Thereafter, on 6 January 2004, petitioners filed a surety bond equivalent to the award of
the Labor Arbiter.12

The Second Division of the NLRC dismissed petitioners’ appeal for lack of jurisdiction. The
NLRC stressed that the bond is an indispensable requisite for the perfection of an appeal by the
employer and that the perfection of an appeal within the reglementary period and in the manner
prescribed by law is mandatory and jurisdictional. In addition, the NLRC restated that its Rules
of Procedure proscribes the filing of any motion for extension of the period within which to
perfect an appeal. The NLRC likewise denied petitioners’ Motion for Reconsideration for lack of
merit in another Resolution

Petitioners elevated the dismissal of their appeal to the Court of Appeals by way of a special
civil action of certiorari. They argued that the filing of the appeal bond evinced their willingness
to comply and was in fact substantial compliance with the Rules. They likewise maintained that
the NLRC gravely abused its discretion in failing to consider the meritorious grounds for their
motion for extension of time to file the appeal bond. Lastly, petitioners contended that the NLRC
gravely erred in issuing an entry of judgment as the assailed resolution is still open for review.
On 12 January 2006, the Court of Appeals affirmed the challenged resolution of the NLRC.
Hence, the instant petition.
Issue: Whether or not the motion for extension of time to file cash or surety bond before the
NLRC toll the reglementary period to appeal

Ruling: No. The Court reiterates the settled rule that an appeal from the decision of the Labor
Arbiter involving a monetary award is only deemed perfected upon the posting of a cash or
surety bond within ten (10) days from such decision.

Contrary to petitioners’ assertion, the appeal bond is not merely procedural but jurisdictional.
Without said bond, the NLRC does not acquire jurisdiction over the appeal. Indeed, non-
compliance with such legal requirements is fatal and has the effect of rendering the judgment
final and executory. It must be stressed that there is no inherent right to an appeal in a labor
case, as it arises solely from the grant of statute.

Evidently, the NLRC did not acquire jurisdiction over petitioners’ appeal within the ten (10)-day
reglementary period to perfect the appeal as the appeal bond was filed eight (8) days after the
last day thereof. Thus, the Court cannot ascribe grave abuse of discretion to the NLRC or error
to the Court of Appeals in refusing to take cognizance of petitioners’ belated appeal.

While indeed the Court has relaxed the application of this requirement in cases where the failure
to comply with the requirement was justified or where there was substantial compliance with the
rules, the overpowering legislative intent of Article 223 remains to be for a strict application of
the appeal bond requirement as a requisite for the perfection of an appeal and as a burden
imposed on the employer. As the Court held in the case of Borja Estate v. Ballad:

The intention of the lawmakers to make the bond an indispensable requisite for the
perfection of an appeal by the employer is underscored by the provision that an appeal
may be perfected "only upon the posting of a cash or surety bond." The word "only"
makes it perfectly clear that the LAWMAKERS intended the posting of a cash or surety
bond by the employer to be

the exclusive means by which an employer’s appeal may be considered completed. The
law however does not require its outright payment, but only the posting of a bond to
ensure that the award will be eventually paid should the appeal fail. What petitioners
have to pay is a moderate and reasonable sum for the premium of such bond.

Moreover, no exceptional circumstances obtain in the case at bar which would warrant a
relaxation of the bond requirement as a condition for perfecting the appeal. It is only in highly
meritorious cases that this Court opts not to strictly apply the rules and thus prevent a grave
injustice from being done and this is not one of those cases.

Lastly, the Court does not agree that the Borja doctrine should only be applied prospectively. In
the first place, Borjais not a ground-breaking precedent as it is a reiteration, emphatic though, of
long standing jurisprudence. It is well to recall too our pronouncement in Senarillos v.
Hermosisima, et al. that the judicial interpretation of a statute constitutes part of the law as of
the date it was originally passed, since the Court’s construction merely establishes the
contemporaneous legislative intent that the interpreted law carried into effect. Such judicial
doctrine does not amount to the passage of a new law but consists merely of a construction or
interpretation of a pre-existing one, as is the situation in this case.

PNB VS CA
Facts: Private respondent, Epifanio de la Cruz (Epifanio), mortgaged two (2) lots located in
Bunlo, Bocaue, Bulacan, under the common names of the private respondent, his brother and
his sister, to the petitioner, Philippine National Bank (PNB) to guarantee the following
promissory notes:

(1) a promissory note for Pl2,000.00, dated September 2, 1958, and payable
within 69 days (date of maturity — Nov. l0, 1958);

(2) a promissory note for P4,000.00, dated September 22, 1958, and payable
within 49 days (date of maturity — Nov. 10, 1958);

(3) a promissory note for P4,000.00, dated June 30, 1958 and payable within 120
days (date of maturity — Nov. 10, 1958) See also Annex C of the complaint
itself).

On September 6, 1961, because Epifanio defaulted on his loan, PNB presented under Act No.
3135 a foreclosure petition of the mortgaged properties, above, before the Sheriff’s Office at
Malolos, Bulacan. Accordingly, the two lots were sold or auctioned off with PNB as the highest
bidder. A Certificate of Sale and a Final Deed of Sale were then executed in favor of PNB on
January 15, 1963 and March 7, 1963, respectively. Since Epifanio did not redeem the lots, PNB
sold the same on January 4, 1970 to a third party.

Notices of sale were published on March 28, April 11 and 12, 1969 issues of the newspaper
“Daily Record.” Section 3 of Act No. 3135, as amended by Act No. 4118, requires that: “the
notices of sale on extra-judicial foreclosure of real estate mortgage are required to be posted for
not less than twenty days in at least three public places of the municipality or city where the
property is situated, and if such property is worth more than four hundred pesos, such notices
shall also be published once a week for at least three consecutive weeks in a newspaper of
general circulation in the municipality or city.”

Epifanio sued PNB in the Court of the First Instance (CFI), for the reconveyance to him of the
mortgaged properties, which the defendant allegedly unlawfully foreclosed. PNB argued that the
extrajudicial foreclosure, consolidation of ownership, and subsequent sale to the third parties
were all valid. CFI ruled in favour of PNB. The Court of Appeals, on Epifanio’s appeal, reversed
CFI’s ruling and declared void, the auction sale of the foreclosed pieces of realty, the final deed
of sale, and the consolidation of ownership on the ground that PNB did not comply with Section
3 of Act No. 3135, as amended, above. Hence, the petition at bar.

PNB argues that it complied with the said provision since the first notice was published on
March 28, 1969, the second notice on April 11, 1969 (last day of the 2nd week), and the third
notice on April 1 2, 1969 (first day of the 3rd week). Epifanio, on the other hand, argues that the
period between each publication must never be less than seven (7) consecutive days.

ISSUE: Whether or not the PNB complied with the required publication of the notices of sale on
the foreclosed properties under Sec 3, Act No. 3135, as amended?
HELD: No. The Supreme Court declared that where the word “week” is used simply as a
measure of duration of time and without reference to the calendar, it means a period of seven
(7) consecutive days without regard to the day of the week on which it begins. In the case at
bar, the period for the first week should be reckoned from March 28 until April 3, 1969, while the
second week should be from April 4 until April 10, 1969. The publication on April 11, 1969
cannot be construed as sufficient notice for the second week. It is clear that the notice published
on April 11, 1969 was both theoretically and physically accomplished on the first day of the third
week which is not compliant with the law.

Certainly, it would have been absurd to exclude March 28, 1969 as 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 to the last day thereof fall on April 4, 1969 because this will have the effect of
extending the first week by another day. This incongruous repercussion could not have been the
unwritten intention of the lawmakers when Act No. 3135 was enacted. Verily, inclusion of the
first day of publication is in keeping with the computation in Bonnevie vs. Court of
Appeals where this Court had occasion to pronounce, through Justice Guerrero, that the
publication of notice on June 30, July 7 and July 14, 1968 satisfied the publication 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
admission in judicio.