VICAR INTERNATIONAL CONSTRUCTION, INC., AND CARMELITA V. LIM, PETITIONERS, VS. FEB LEASING AND FINANCE CORPORATION (NOW BPI LEASING CORPORATION), RESPONDENT.

Vicar International Construction versus FEB Leasing and Finance

The Case

This is a petition for review on certiorari brought by Vicar International Construction, Inc. and its president and general manager, Carmelita V. Lim, against FEB Leasing and Finance Corporation, now BPI Leasing Corporation. The action asks the Supreme Court to reverse the Court of Appeals, which had dismissed the corporation's petition for certiorari outright because the verification and certification against forum shopping was signed by Lim without any attached proof of her authority to sign for the corporation. The case matters because it is the Court's clearest statement that this defect is curable, and that procedural rules exist to promote, not obstruct, substantial justice.

Procedural History

The controversy began in the Regional Trial Court of Makati, where Vicar sued FEB for unjust enrichment and damages, and FEB in turn sued Vicar, Carmelita Chaneco Lim, and one John Doe for a sum of money, damages, and replevin. In the replevin case, the trial court quashed Vicar's property counterbond and denied its motion to dismiss, which was grounded on forum shopping. It later denied Vicar's motion for reconsideration and its motion for voluntary inhibition of the trial judge.

Vicar then went up to the Court of Appeals on certiorari to stop the implementation of the writ of replevin. The Court of Appeals dismissed the petition outright for lack of proper verification and certification against forum shopping, since Lim had executed it without showing any authority from the corporation. Vicar moved for reconsideration and asked that the attached secretary's certificate be admitted, but the Court of Appeals denied the motion, holding that the belated filing of the certificate did not cure the defect. Vicar came to the Supreme Court by petition for review on certiorari under Rule 45.

Facts

Vicar, a construction corporation, obtained loans from FEB to purchase heavy equipment. In obtaining the loans, the parties executed deeds of absolute sale with a lease-back provision, under which Vicar appeared to have sold the equipment to FEB and leased it back. For a total loan of 30,315,494 pesos, Vicar claims it paid an aggregate of 19,042,908 pesos in monthly amortizations. FEB maintains that about 22,000,000 pesos remained outstanding despite the extrajudicial foreclosure of sixty-three subdivision lots in Calamba, Laguna, with an aggregate area of 20,300 square meters, which produced 17,000,000 pesos at auction.

In the replevin case, the trial court issued several orders on the custody of eight units of equipment. On August 2, 2002, it quashed Vicar's counterbond and denied the motion to dismiss. On September 30, 2002, it denied reconsideration and inhibition. On October 3, 2002, Vicar filed its petition for certiorari in the Court of Appeals.

The petition was dismissed on October 23, 2002, because the verification and certification had been executed by Lim without any showing of authority from the corporation. Vicar received a copy on November 11, 2002, and filed the very next day an omnibus motion for reconsideration and for admission of the attached secretary's certificate. The certificate showed that on October 2, 2002, the board of directors had unanimously authorized Lim to file the petition and to execute and sign the verification and certification against forum shopping. Counsel admitted the certificate was inadvertently not attached, having prepared the petition overnight without sleep to avoid the seizure of the equipment, the corporation's only means of livelihood. The Court of Appeals still denied the motion.

Issues

• Whether or not compelling reasons exist that warrant a liberal construction of the rules on the petition for certiorari.
• Whether or not the subsequent submission of the secretary's certificate is sufficient compliance with the requirement of the law.
• Whether or not the policy of the law is to afford a party the fullest opportunity to establish the merits of his case.

Applicable Provisions

Section 3 of Rule 46 of the Rules of Court, on the contents and filing of the petition, provides:

The petitioner shall also submit together with the petition a sworn certification that he has not theretofore commenced any other action involving the same issues in the Supreme Court, the Court of Appeals or different divisions thereof, or any other tribunal or agency; if there is such other action or proceeding, he must state the status of the same; and if he should thereafter learn that a similar action or proceeding has been filed or is pending before the Supreme Court, the Court of Appeals, or different divisions thereof, or any other tribunal or agency, he undertakes to promptly inform the aforesaid courts and other tribunal or agency thereof within five days therefrom.

This is the certification requirement whose defective execution the Court of Appeals treated as fatal.

Section 5 of Rule 46, on the action by the court, provides:

The court may dismiss the petition outright with specific reasons for such dismissal or require the respondent to file a comment on the same within ten days from notice. Only pleadings required by the court shall be allowed. All other pleadings and papers may be filed only with leave of court.

This is the authority the respondent invoked for the outright dismissal, and which the Court now measures against the higher goal of substantial justice.

Ruling

On the first issue, the Court held that compelling reasons existed. Petitioners did not deliberately ignore the circular on forum shopping; a verification and certification stating the required information was in fact attached, and only the concrete proof of Lim's authority was missing. Counsel's overnight preparation and the urgency of avoiding the seizure of the equipment explained the oversight.

On the second issue, the Court held that the subsequent submission of the secretary's certificate was substantial compliance. The certificate was filed the day after the dismissal, and that swiftness indicated that the board resolution authorizing Lim did exist at the time the petition was filed. The Court relied on its earlier rulings in Shipside, General Milling, and BA Savings Bank, where the later submission of a secretary's certificate or board resolution mitigated the same oversight. It quoted its own guidance from BA Savings Bank:

Indeed, while the requirement as to certificate of non-forum shopping is mandatory, nonetheless the requirements must not be interpreted too literally and thus defeat the objective of preventing the undesirable practice of forum-shopping.

On the third issue, the Court held that the policy of the law is to afford a party the fullest opportunity to establish the merits of his case. It stressed that technical rules of procedure should be used to promote, not frustrate, justice, and that while the swift unclogging of court dockets is a laudable objective, the granting of substantial justice is an even more urgent ideal. Rules of procedure are but tools designed to facilitate, not obstruct, the attainment of justice.

Doctrine

The requirement of a verification and certification against forum shopping is mandatory, but it must not be interpreted too literally. The failure to attach proof that the corporate signatory was authorized to execute the certification is a curable defect, and the subsequent submission of a secretary's certificate or board resolution showing prior authority constitutes substantial compliance. Technical rules of procedure must be used to promote, not obstruct, substantial justice. These rules tie directly to Section 3 of Rule 46, which requires the sworn certification, and to Section 5 of Rule 46, which allows outright dismissal, since the Court holds that the power to dismiss outright must yield to the higher ideal of substantial justice where the defect is promptly cured.

Disposition

The petition was granted, the assailed resolutions of the Court of Appeals were reversed and set aside, and the case was remanded to the Court of Appeals, which was directed to continue the proceedings with deliberate speed, without costs.

Remember This

Memorize the line: rules of procedure are but tools designed to facilitate, not obstruct, the attainment of justice. Examiners use this case in remedial law and civil procedure, on the liberal treatment of a defective or belatedly supported certification against forum shopping by a corporate petitioner.