San Pablo Manufacturing Corporation vs. Commissioner of Internal Revenue

A petition signed by a corporate officer without board authorization or a secretary's certificate is treated as an unsigned pleading subject to dismissal, and substantial compliance does not excuse defects in verification and certification against forum shopping; moreover, the miller's tax exemption under Section 168 of the 1987 Tax Code applies only when the miller or operator exports the milled products, not when the buyer exports them.

San Pablo Manufacturing Corporation (SPMC), a domestic corporation engaged in the milling, manufacturing, and exporting of coconut oil and allied products, was assessed deficiency miller's tax and manufacturer's sales tax for the taxable year 1987. The deficiency miller's tax was imposed on SPMC's sales of crude coconut oil to United Coconut Chemicals, Inc. (UNICHEM), while the deficiency sales tax was applied to its sales of corn and edible oil. SPMC opposed the assessments, but the Commissioner of Internal Revenue denied the protest.

• The Assessment: For taxable year 1987, the Commissioner of Internal Revenue assessed SPMC a total of ₱8,182,182.85 representing deficiency miller's tax and manufacturer's sales tax, among other deficiency taxes. The miller's tax was imposed on SPMC's sales of crude oil to UNICHEM, while the sales tax was applied to its sales of corn and edible oil as manufactured products.
• The CTA Ruling: SPMC protested the assessment, which the Commissioner denied. SPMC appealed to the CTA. The CTA cancelled SPMC's liability for the deficiency manufacturer's tax on corn and edible oils but upheld the Commissioner's assessment for the deficiency miller's tax on the crude coconut oil sold to UNICHEM. SPMC's motion for partial reconsideration was denied.
• The Defective Verification: SPMC elevated the case to the Court of Appeals. The verification and certification against forum shopping attached to the CA petition were signed solely by SPMC's chief financial officer. No corporate secretary's certificate, board resolution, or power of attorney authorizing him to sign the verification and certification was attached to the petition. SPMC admitted the omission, relying instead on the alleged inherent power of the CFO to represent the corporation in all financial matters, including the filing of suits to defend it from assessments.
• The CA Dismissal: The Court of Appeals dismissed the petition on the principal ground that the verification was signed by an unauthorized person, rendering the pleading unsigned. A secondary ground for dismissal was SPMC's failure to attach copies of all pleadings and material portions of the record. SPMC's motion for reconsideration was denied.

• Substantial Compliance: SPMC argued that its appeal should have been given due course because it substantially complied with the requirements on verification and certification against forum shopping, pleading for a liberal application of the rules based on the merits of the case.
• Miller's Tax Exemption: SPMC maintained that it was not liable for the 3% miller's tax because the crude oil it sold to UNICHEM was actually exported by UNICHEM as an ingredient of fatty acid and glycerine, bringing it under the exemption in Section 168 of the 1987 Tax Code.
• Interpretation of Section 168: SPMC contended that Section 168 contemplates two exemptions: (1) milled products in their original state exported by the miller or another person, and (2) milled products sold by the miller and actually exported as an ingredient or part of a manufactured article by the buyer. Because UNICHEM, the buyer, subsequently exported the milled products, SPMC asserted it should be exempt from the miller's tax.

• Lack of Corporate Authority: The Commissioner countered that the chief financial officer lacked the requisite authority to sign the verification and certification against forum shopping on behalf of the corporation without a board resolution or secretary's certificate.
• Strict Compliance Required: The Respondent maintained that strict compliance with procedural rules on verification and certification against forum shopping is mandated, and substantial compliance is insufficient to cure the defect.
• Strict Interpretation of Tax Exemptions: The Commissioner argued that the exemption under Section 168 of the 1987 Tax Code must be strictly construed against the taxpayer and does not cover exportation by the buyer, as the statute explicitly limits the exemption to exportation by the proprietor, operator, or miller.

• Verification and Forum Shopping: Whether the Court of Appeals erred in dismissing the petition due to a verification and certification against forum shopping signed by a corporate officer without proof of board authorization.
• Scope of Miller's Tax Exemption: Whether a miller is exempt from the miller's tax under Section 168 of the 1987 Tax Code when the buyer, rather than the miller or operator, exports the milled products.

• Verification and Forum Shopping: The dismissal was affirmed. A pleading lacking proper verification is treated as an unsigned pleading subject to dismissal. Because corporate officers cannot bind the corporation without board authorization, the chief financial officer's signature without a secretary's certificate or board resolution was ineffective. Substantial compliance does not suffice in matters requiring strict observance, such as verification and certification against forum shopping; utter disregard of the rules cannot be rationalized by invoking liberal construction.
• Scope of Miller's Tax Exemption: The exemption does not apply when the buyer exports the milled products. The language of the exempting clause in Section 168 of the 1987 Tax Code explicitly limits the exemption to exportation by the proprietor, operator, or miller. The principle of expressio unius est exclusio alterius dictates that anything not included in the statutory enumeration is excluded. Tax exemptions are construed strictissimi juris against the taxpayer, and the proposed interpretation unduly enlarges the scope of the exemption beyond the very terms of the statute.

• Expressio unius est exclusio alterius — Where the law enumerates the subjects or conditions upon which it applies, it is construed as excluding from its effects all those not expressly mentioned. The rule proceeds from the premise that the legislature would not have made specific enumerations if it intended not to restrict its meaning. Applied to hold that the enumeration of "proprietor or operator of the factory or the miller himself" in the exemption proviso excludes purchasers or buyers.
• Strictissimi juris interpretation of tax exemptions — Tax exemptions are construed strictly against the taxpayer. The reasonable presumption is that the State has granted in express terms all it intended to grant, and the privilege cannot be enlarged by construction beyond the very terms of the statute. Applied to reject SPMC's interpretation that would unduly enlarge the scope of the miller's tax exemption.
• Corporate authority to sign pleadings — Physical acts like the signing of documents can be performed only by natural persons duly authorized by corporate by-laws or a specific act of the board of directors. In the absence of board authority, no person, not even officers of the corporation, can bind the corporation. Applied to hold that the CFO's signature without a board resolution or secretary's certificate rendered the verification defective.
• Strict compliance with verification and certification against forum shopping — Substantial compliance will not suffice in matters involving strict observance such as the requirement on non-forum shopping and verification. Utter disregard of the rules cannot be rationalized by harping on the policy of liberal construction. Applied to affirm the dismissal of the petition despite claims of substantial compliance.

• "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."
• "Substantial compliance will not suffice in a matter involving strict observance such as the requirement on non-forum shopping, as well as verification. Utter disregard of the rules cannot justly be rationalized by harping on the policy of liberal construction."
• "The rule is that the exemption must not be so enlarged by construction since the reasonable presumption is that the State has granted in express terms all it intended to grant and that, unless the privilege is limited to the very terms of the statute, the favor would be intended beyond what was meant."

• PET Plans, Inc. v. Court of Appeals, G.R. No. 148287 (2004) — Followed. Upheld the dismissal of a petition where the verification and certification against forum shopping was signed by a corporate officer without certification of authority to sign on behalf of the corporation.
• BPI Leasing Corporation v. Court of Appeals, G.R. No. 127624 (2003) — Followed. Ruled that a petition should be dismissed outright where the verification/certification against forum shopping was signed by corporate counsel without specific board authority, as a board resolution is needed to make the action legally binding on the corporation.
• Lung Center of the Philippines v. Quezon City, G.R. No. 144104 (2004) — Followed. Cited for the principle that tax exemptions must not be enlarged by construction and the State is presumed to have granted only what it intended in express terms.

• Section 168, 1987 Tax Code — Imposes a 3% miller's tax on the gross value of manufactured products and provides an exemption if such products are removed for exportation by the proprietor, operator, or miller. Applied to deny the exemption because the buyer, not the miller, exported the products.
• Section 4, Rule 7, Rules of Court — Provides that a pleading required to be verified which lacks proper verification shall be treated as an unsigned pleading. Applied to treat SPMC's defective petition as an unsigned pleading subject to dismissal.
• Sections 5 and 6, Rule 43, Rules of Court — Requires appeals from the CTA and quasi-judicial agencies to the Court of Appeals to be verified and accompanied by a sworn certification against forum shopping. Applied to justify the dismissal of the petition for failure to comply with these requirements.

Reynato S. Puno (Chairperson), Angelina Sandoval-Gutierrez, Adolfo S. Azcuna, Cancio C. Garcia.