Bank of the Philippine Islands v. First Union Group Enterprises
REITERATIONFacts
The Antecedents: First Union Group Enterprises (First Union) obtained loans from Bank of the Philippine Islands (BPI) amounting to PhP5,000,000.00 and USD123,218.32. Linda Wu Hu (Linda) and her spouse executed a Real Estate Mortgage Agreement and a Comprehensive Surety Agreement, making Linda solidarily liable for First Union's obligations. Procedural History: Upon First Union's failure to pay, BPI initiated extra-judicial foreclosure proceedings. After the auction sale, a deficiency remained. BPI then filed a complaint for collection of sum of money against First Union and Linda. The complaint's verification and certificate of non-forum shopping were signed by Ma. Cristina F. Asis and Kristine L. Ong, but no board resolution or secretary's certificate was attached to prove their authority. First Union and Linda filed a motion to dismiss on this ground. BPI opposed, arguing that the verification and certificate sufficiently established authority and that proof could be presented during trial. BPI later attached a Special Power of Attorney (SPA) from a BPI Vice-President authorizing Asis and Ong, and subsequently, a Corporate Secretary's Certificate authorizing the Vice-President. The Regional Trial Court (RTC) granted the motion to dismiss. BPI filed a petition for certiorari with the Court of Appeals (CA), alleging grave abuse of discretion. The CA affirmed the RTC's dismissal, holding that while the dismissal was without prejudice, BPI failed to comply with the procedural requirements regarding proof of authority for the signatories of the certificate of non-forum shopping. The Petition: BPI seeks the reversal of the CA decision, arguing substantial compliance and that technicality should not defeat substantial justice, citing cases where belated submissions were excused.
Issue(s)
Whether the Court of Appeals erred in affirming the dismissal of the complaint for failure to attach a board resolution or secretary's certificate to prove the authority of the signatories to the verification and certificate of non-forum shopping, and whether BPI's actions constitute excusable deficiency or a mistake of counsel. Whether BPI substantially complied with the requirements of Rule 7, Section 5 of the Rules of Civil Procedure, considering their initial stance and subsequent submission of documents.
Ruling
The petition is denied. The decision of the Court of Appeals is affirmed, and the complaint filed against the respondents is dismissed without prejudice.
Ratio Decidendi
On the issue of failure to attach a board resolution and substantial compliance: The Supreme Court reiterated the mandatory nature of procedural rules. BPI's initial stance was that a board resolution was not necessary, and it only submitted proof of authority belatedly and indirectly. This was not an excusable deficiency but rather a mistake of counsel. The liberal application of rules was not warranted. Subsequent compliance does not excuse initial non-compliance, and liberal construction is only for excusable formal deficiencies. The dismissal of the case without prejudice was the appropriate ruling. On the issue of substantial compliance: The Court found that BPI did not substantially comply with the rules. The initial failure to submit proof of authority, coupled with BPI's arguments that such proof was unnecessary, demonstrated a disregard for the procedural requirements. The belated submission of documents did not constitute substantial compliance. BPI's position was one of defiance rather than inadvertence, making the strict application of the rule necessary.
Main Doctrine
The requirement for a board resolution authorizing the filing of an initiatory pleading by a corporation is mandatory. Failure to submit such proof of authority, especially when coupled with an initial stance that it is not required, constitutes a violation of procedural rules that is not curable by mere amendment and warrants dismissal without prejudice, absent special circumstances or compelling reasons justifying a liberal application of the rules.