PSCFC Financial Corporation v. Court of Appeals
REITERATIONFacts
The Antecedents: Petitioner PSC Financial Corporation (PSCFC) filed a complaint against respondent Banco Filipino Savings & Mortgage Bank (Banco Filipino) for annulment of foreclosure proceedings and damages. PSCFC alleged it borrowed P6,630,690.00 from Banco Filipino under a Home Financing Plan, with the loan maturing only after development and sale of mortgaged lots, and substitution of mortgagors. However, Banco Filipino foreclosed the mortgage extrajudicially on September 25, 1987, before the loan matured. Procedural History: PSCFC filed a complaint for annulment of foreclosure and damages. In its answer, Banco Filipino admitted the loan amount and promissory note but denied the Home Financing Plan, averring the loan was due one year from its date (January 5, 1986) and foreclosure was valid under Act No. 3135. PSCFC served a request for admission regarding the Home Financing Plan and the circumstances of the foreclosure. Banco Filipino's counsel responded, admitting some facts but denying the existence of the Home Financing Plan and its specific terms on maturity. PSCFC made a second request for admission, questioning the foreclosure notice and publication, and objected to the first reply being signed by counsel who lacked personal knowledge. The trial court denied PSCFC's motion to consider the matters admitted. The Court of Appeals affirmed the trial court's decision. The Petition: PSCFC petitioned the Supreme Court, arguing that requests for admission under Rule 26 must be answered by the party themselves, not their counsel, and that failure to do so constitutes an implied admission. They cited Koh v. IAC to support their claim that only a client could make a binding admission in discovery proceedings.
Issue(s)
Whether a request for admission directed to an adverse party under Sec. 1, Rule 26, of the Rules of Court may be answered only by the party himself and not by his counsel. Whether the matters sought to be admitted in the second request for admission should be considered impliedly admitted due to the answer being signed by counsel who allegedly lacked personal knowledge, and if the adverse party can impugn the counsel's authority if the client does not object.
Ruling
The Court denied the petition for lack of merit. It held that a counsel has the authority to bind their client in matters of ordinary judicial procedure, including responding to requests for admission. The client, Banco Filipino, did not object to the response made by its counsel. The Court also required petitioner's counsel to show cause why she should not be administratively dealt with for misquoting a previous decision.
Ratio Decidendi
On whether a request for admission can be answered by counsel: The Court ruled that a counsel has the authority to appear in court and bind their client in any case by any agreement in relation thereto made in writing and in all matters of ordinary judicial procedure, as provided by Section 23 of Rule 138 of the Rules of Court. This authority extends to responding to requests for admission under Rule 26, as a restrictive interpretation would negate the principles of agency and the established role of attorneys. The Court emphasized that the theory that only a party himself can make a binding admission in discovery proceedings is untenable and would undermine the efficacy of legal representation. Therefore, a response to a request for admission signed by counsel is generally sufficient and does not automatically lead to an implied admission. On the sufficiency of the response and the client's prerogative: The Court further clarified that even if the counsel were deemed to have overstepped their authority, it is only the client, respondent Banco Filipino, which has the prerogative to impugn such acts, not the adverse party, petitioner PSCFC. Since Banco Filipino did not object to the response made by its counsel, the petitioner cannot use this as a basis for claiming implied admission. The Court noted that the purpose of discovery proceedings is to allow parties to lay their cards on the table, and this is facilitated through counsel who represent the parties' interests. The Court found no reason to deviate from the established rules on agency and the authority of attorneys in this specific instance.
Main Doctrine
A counsel has the authority to bind their client in matters of ordinary judicial procedure, including responding to requests for admission under Rule 26 of the Rules of Court, unless specific exceptions apply. The client, not the adverse party, has the prerogative to question the acts of their counsel.