Absolute Management Corporation v. Metropolitan Bank and Trust Company
REITERATIONFacts
The Antecedents: Sherwood Holdings Corporation and Spouses Sandy Ang and Arlene Ang filed a case for sum of money against Absolute Management Corporation (AMC). AMC filed an answer and a third-party complaint against Metropolitan Bank and Trust Company (MBTC). Procedural History: The Regional Trial Court (RTC) set the case for pre-trial. AMC's counsel failed to present a Secretary's Certificate and Special Power of Attorney (SPA) authorizing her to represent MBTC during the pre-trial hearing on November 20, 2006. Consequently, the RTC, upon motion of MBTC, declared AMC in default and allowed MBTC to present evidence ex parte. AMC filed a Motion to Lift Order of Default, attaching an Affidavit of Merit, a Secretary's Certificate dated July 16, 2006, and an SPA dated December 5, 2006. The RTC denied this motion and its subsequent motion for reconsideration. MBTC filed a petition for certiorari with the Court of Appeals (CA), alleging grave abuse of discretion by the RTC. The CA reversed the RTC's ruling, holding that the RTC's determination that MBTC's counsel could not validly represent MBTC due to lack of authorization lacked merit, citing the presumption of a lawyer's authority to appear. The CA ruled that the RTC gravely abused its discretion and ordered the RTC to allow MBTC to participate in the proceedings. The Petition: AMC filed a Petition for Review on Certiorari with the Supreme Court, assailing the CA's decision and resolution.
Issue(s)
Whether the Court of Appeals erred in holding that a Special Power of Attorney need not be presented in court during pre-trial hearings since the authority of a lawyer to appear in behalf of his client is presumed. Whether the Court of Appeals erred in holding that there was grave abuse of discretion on the part of the lower court, when in fact the lower court only properly applied the provisions of the law requiring the presentation of a Special Power of Attorney during pre-trial. Whether the Court of Appeals erred in holding that the liberal application of the rules should be applied in the case of respondent. Whether the Court of Appeals erred when it ordered respondent to participate in the trial of the collection case filed with the Regional Trial Court.
Ruling
The petition is GRANTED. The Decision and Resolution of the Court of Appeals are REVERSED. The Orders dated May 2, 2007 and September 3, 2007 of the Regional Trial Court of Quezon City, Branch 80, are REINSTATED and UPHELD.
Ratio Decidendi
On the issue of whether a Special Power of Attorney need not be presented in court during pre-trial hearings since the authority of a lawyer to appear in behalf of his client is presumed: The Supreme Court disagreed with the Court of Appeals. While the authority of a counsel to appear as an attorney is presumed, this presumption does not extend to their capacity as a representative authorized to enter into substantive agreements during pre-trial. Section 4, Rule 18 of the Rules of Court specifically mandates that a representative appearing on behalf of a party must be fully authorized in writing. In this case, AMC's counsel failed to present such written authority when required by the RTC during the pre-trial on November 20, 2006. The Court found that AMC's explanation of excusable negligence and the subsequent submission of an SPA dated December 5, 2006 (after the pre-trial) were insufficient to overcome the requirement. On the issue of whether the Court of Appeals erred in holding that there was grave abuse of discretion on the part of the lower court: The Supreme Court held that the RTC did not commit grave abuse of discretion. The RTC merely applied the law when it declared that AMC's counsel did not have the authority to act as its representative during the pre-trial. Grave abuse of discretion implies a capricious or whimsical exercise of judgment equivalent to a lack of jurisdiction, which was not present here. The RTC's order to declare AMC in default was a consequence of its failure to comply with the procedural requirements for representation at pre-trial as mandated by the Rules of Court. On the issue of whether the Court of Appeals erred in holding that the liberal application of the rules should be applied in the case of respondent: The Supreme Court found that the facts of the case did not warrant a liberal construction of the rules. AMC's sole explanation for its representative's lack of authority was its impression that the required documents were already submitted in 2004, an impression that could not be substantiated by the production of the documents themselves. The SPA later submitted was dated after the pre-trial hearing, undermining AMC's claim of prior authorization. The Court emphasized that the objective of pre-trial, which is the simplification and expedition of trials, would be undermined by a liberal application in this instance. On the issue of whether the Court of Appeals erred when it ordered respondent to participate in the trial of the collection case: Given that the Supreme Court reinstated the RTC's order declaring AMC in default, the CA's order for AMC to participate in the trial was necessarily reversed. The default order meant that AMC was not allowed to present evidence ex parte in support of its defense, and thus, its participation in the trial as a defendant would be contrary to the RTC's ruling. The Court found that the RTC's decision to declare AMC in default was a proper application of the rules, not a grave abuse of discretion.
Main Doctrine
The failure of a party's counsel to present a written authority to act as a representative during pre-trial, when specifically required by the court, can lead to the party being declared in default, as the presumption of authority of counsel as an attorney does not extend to their capacity as a special representative for substantive agreements.