Title
Bank of the Philippine Islands vs. Court of Appeals
Case
G.R. No. 168313
Decision Date
Oct 6, 2010
BPI filed a collection case against First Union and Linda Wu Hu for unpaid loans. The complaint was dismissed due to BPI's failure to attach a board resolution authorizing the signatories, a mandatory procedural requirement. The Supreme Court upheld the dismissal, emphasizing strict compliance with procedural rules.
dismissal of complaint
procedural requirement
board resolution

Case Summary (G.R. No. 168313)

Factual Background

First Union borrowed PhP5,000,000.00 and USD123,218.32 from BPI, evidenced by separate promissory notes. To secure First Union’s obligation, Linda and her spouse executed a Real Estate Mortgage Agreement dated August 29, 1997 covering two condominium units, and Linda executed a Comprehensive Surety Agreement dated April 14, 1997, agreeing to be solidarily liable with First Union. After First Union defaulted, BPI initiated extra-judicial foreclosure with the RTC of Pasig on October 16, 2000. The properties were sold at public auction on June 29, 2001, where BPI was the highest bidder at PhP5,798,400.00. The auction proceeds were applied to foreclosure costs and to First Union’s PhP5,000,000.00 obligation, leaving an outstanding peso balance of PhP4,742,949.32 and an unpaid foreign currency obligation of USD175,324.35 as of December 21, 2001.

Trial Court Proceedings

On January 3, 2002, BPI filed a complaint for collection of sum of money in the RTC of Makati, Branch 61. The complaint’s verification and certificate of non-forum shopping were signed by Ma. Cristina F. Asis and Kristine L. Ong but lacked an attached Secretary’s Certificate or board resolution evidencing their authority to file on behalf of the corporate plaintiff. On April 1, 2002, First Union and Linda moved to dismiss the complaint pursuant to Sec. 5, Rule 7, arguing that BPI failed to attach the requisite board resolution authorizing Asis and Ong. BPI opposed on August 7, 2002, contending that the verification and certificate themselves established authority and that proof of authority could be presented at trial; BPI also asserted that dismissal was warranted only when there was no certification against forum shopping. BPI attached a Special Power of Attorney dated December 20, 2001 executed by Zosimo A. Kabigting, a BPI vice-president, authorizing Asis and Ong or counsel to initiate legal action, but did not initially submit a corporate secretary’s certificate or board resolution. On August 26, 2002, the RTC granted the motion to dismiss. BPI’s motion for reconsideration was denied on November 13, 2002.

Proceedings before the Court of Appeals

BPI filed a petition for certiorari under Rule 65 before the Court of Appeals, alleging grave abuse of discretion by the RTC in dismissing the complaint despite submission of the SPA and a corporate secretary’s certificate. First Union and Linda argued that the dismissal was final and appealable, but the CA held the RTC dismissal was without prejudice and thus interlocutory, making certiorari an available remedy. The CA found that BPI failed to comply with procedural requirements for two reasons: the certificate of non-forum shopping must be signed by a duly authorized representative when the petitioner is a corporation; and BPI failed to show proof of authority by an appropriate board resolution attached to the initiatory pleading. The CA therefore affirmed the RTC’s dismissal.

Issues Presented

The central issue was whether the failure of BPI to attach a board resolution or secretary’s certificate authorizing the signatories of the verification and certificate of non-forum shopping warranted dismissal of the complaint under Sec. 5, Rule 7, Rules of Court, or whether the Court should apply the Court’s liberal exceptions and permit belated compliance as substantial compliance.

Petitioner’s Contentions

BPI argued that it submitted a verification and certificate of non-forum shopping and that jurisprudence such as Shipside v. Court of Appeals and General Milling Corporation v. NLRC permits relaxation of strict attachment requirements where authority existed and was later shown. BPI emphasized that it had tendered a Special Power of Attorney and later a corporate secretary’s certificate, and it urged the Court to favor substantial justice over procedural technicality.

Respondents’ Contentions

First Union and Linda maintained that BPI’s failure to attach the required board resolution was not inadvertent but a deliberate position that such attachment was unnecessary, as reflected in BPI’s opposition to the motion to dismiss. They contended that the SPA was not a substitute for the board resolution required when a juridical entity files a pleading and that the exception in Shipside requires special circumstances or compelling reasons which are absent here.

Supreme Court’s Ruling

The Supreme Court denied the petition and affirmed the CA decision and resolution. The Court held that dismissal without prejudice was appropriate because BPI failed to comply with Sec. 5, Rule 7, Rules of Court, and that the jurisprudential exception permitting relaxation of the requirement did not apply under the facts of the case.

Legal Reasoning

The Court reiterated that the verification and certificate of non-forum shopping are basic, necessary and mandatory for procedural orderliness. It emphasized that while the Court has relaxed procedural rules in exceptional cases to serve substantial justice, such relaxation must be justified by ample and sufficient reasons that do not undermine the mandatory character of the rule. The Court reviewed prior decisions, including Tible & Tible Company, Inc. v. Royal Savings and Loan Association, to explain that the subsequent compliance with the certification requirement does not generally excuse initial failure and t

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