G.R. No. 190277 - Absolute Management Corp. vs. Metropolitan Bank and Trust Co.

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 (private respondent) before the Regional Trial Court (RTC) of Quezon City, Branch 80, docketed as Civil Case No. Q-00-42105.
Absolute Management Corporation filed its answer and incorporated a third-party complaint against petitioner Metropolitan Bank and Trust Company (petitioner).

The trial court set a pre-trial on February 7, 2004, but it was cancelled due to petitioner filing a motion for a fourth-party complaint against the Estate of Jose L. Chua.
On September 5, 2005, the court ordered petitioner to produce and allow private respondent to copy several bank documents.
The pre-trial was set again on November 20, 2006. During this pre-trial, when counsels were asked to present their authorizations to appear, petitioner’s counsel said they had submitted authority during the 2004 pre-trial. However, petitioner’s counsel failed to produce any written authorization at that time.
Consequently, the trial court declared petitioner in default upon motion of private respondent and allowed private respondent to present evidence ex parte without waiting for the written order.

On December 5, 2006, petitioner filed a Motion to Lift Order of Default attaching an Affidavit of Merit, a Secretary’s Certificate dated July 16, 2006, and a Special Power of Attorney (SPA) dated December 5, 2006, seeking reconsideration of the default order.
The RTC denied the motion on May 2, 2007.
Petitioner's motion for reconsideration was also denied on September 3, 2007.

Respondent filed a petition for certiorari with the CA alleging grave abuse of discretion by the RTC in issuing the default orders.
On August 13, 2009, the CA reversed the RTC, ruling that respondent’s counsel had presumed authority to represent respondent and that the RTC gravely abused its discretion by denying her participation.
The CA emphasized the presumption of authority of counsel to appear on behalf of clients and that the courts should avoid a rigid application of rules that would frustrate the just, speedy, and inexpensive determination of controversies.
Petitioner’s motion for reconsideration was denied by the CA on November 13, 2009.

Petitioner filed a Petition for Review on Certiorari questioning the CA’s ruling on the necessity of a Special Power of Attorney and the proper application of rules governing appearances in pre-trial.
Petitioner raised several assignments of errors, focusing on:

The necessity of a written authorization to appear as a representative during pre-trial.
The proper application of the law by the RTC.
The improper liberal application of rules by the CA.
The prejudice and potential delay caused by respondent’s participation without valid defense.

Whether the trial court gravely abused its discretion in declaring petitioner in default for failure of its counsel to present a Special Power of Attorney authorizing her to represent petitioner during the pre-trial conference.

Whether the Court of Appeals erred in ruling that the authority of counsel to appear in behalf of a client is presumed such that presenting a Special Power of Attorney is unnecessary in pre-trial conferences.

Whether the absence of a written authority from petitioner’s counsel constitutes a valid ground to declare petitioner in default in a pre-trial conference.

Whether the liberal application of procedural rules justifies the CA’s reversal of the RTC’s orders and allowing respondent to participate despite lack of written authority.