Title
Absolute Management Corp. vs. Metropolitan Bank and Trust Co.
Case
G.R. No. 190277
Decision Date
Jul 23, 2014
A corporation's failure to present a Special Power of Attorney during pre-trial led to default; SC upheld strict compliance with procedural rules.
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Case Digest (G.R. No. 190277)

Facts:

Parties Involved:

  • Petitioner: Absolute Management Corporation
  • Respondent: Metropolitan Bank and Trust Company

Case Background:

  • On October 5, 2000, Sherwood Holdings Corporation and Spouses Sandy Ang and Arlene Ang filed a case for sum of money against Absolute Management Corporation before the Regional Trial Court (RTC) of Quezon City, Branch 80, docketed as Civil Case No. Q-00-42105.
  • Absolute Management Corporation filed a third-party complaint against Metropolitan Bank and Trust Company.

Procedural History:

  • The trial court scheduled pre-trial hearings, but delays occurred due to motions filed by the petitioner, including a motion to admit a fourth-party complaint against the Estate of Jose L. Chua.
  • On November 20, 2006, during a pre-trial hearing, petitioner’s counsel failed to present a Secretary’s Certificate and Special Power of Attorney (SPA) authorizing her to represent Metropolitan Bank and Trust Company.
  • The trial court declared the respondent in default and allowed the petitioner to present evidence ex-parte.

Post-Default Proceedings:

  • On December 5, 2006, respondent filed a Motion to Lift Order of Default, attaching an Affidavit of Merit, Secretary’s Certificate dated July 16, 2006, and SPA dated December 5, 2006.
  • The trial court denied the motion on May 2, 2007, and the subsequent motion for reconsideration on September 3, 2007.
  • Respondent filed a petition for certiorari with the Court of Appeals (CA), which reversed the trial court’s orders, ruling that the presumption of a lawyer’s authority to represent a client is strong and that the trial court gravely abused its discretion in declaring the respondent in default.

Issue:

  1. Whether the Court of Appeals erred in holding that a Special Power of Attorney need not be presented during pre-trial hearings since the authority of a lawyer to appear on behalf of a client is presumed.
  2. Whether the Court of Appeals erred in finding grave abuse of discretion on the part of the trial court for requiring the presentation of a Special Power of Attorney during pre-trial.
  3. Whether the Court of Appeals erred in applying the liberal application of the rules in favor of the respondent.
  4. Whether the Court of Appeals erred in ordering the respondent to participate in the trial of the collection case.

Ruling:

The Supreme Court granted the petition and reversed the decision of the Court of Appeals. The Court reinstated and upheld the trial court’s orders dated May 2, 2007, and September 3, 2007, which declared the respondent in default for failure to present a Special Power of Attorney during the pre-trial hearing.

Ratio:

  1. Mandatory Nature of Pre-Trial and Representation:

    • The Supreme Court emphasized that pre-trial in civil actions is mandatory under Rule 18 of the 1997 Rules of Civil Procedure.
    • A representative appearing on behalf of a party during pre-trial must be fully authorized in writing to enter into settlements, stipulations, and admissions.
  2. Authority of Counsel vs. Representative:

    • While the authority of a lawyer to appear as counsel for a client is presumed, a lawyer appearing as a representative during pre-trial must present a written authority (e.g., a Special Power of Attorney).
    • The respondent’s counsel failed to present such authority during the pre-trial hearing on November 20, 2006.
  3. Excusable Negligence Not Proven:

    • The respondent’s claim that the failure to present the authorization was due to excusable negligence was unsubstantiated.
    • The SPA submitted later was dated December 5, 2006, which was after the pre-trial hearing, and no evidence was provided to show that an earlier authorization existed.
  4. No Grave Abuse of Discretion by the Trial Court:

    • The trial court did not commit grave abuse of discretion in declaring the respondent in default. It merely applied the law requiring the presentation of a Special Power of Attorney for a representative during pre-trial.
  5. Liberal Application of Rules Not Warranted:

    • The facts of the case did not justify a liberal application of the rules. The respondent failed to comply with the mandatory requirement of presenting a written authorization, and its omission was not excusable.


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