Saturday, January 22, 2011

POWERS THAT BE: Board Resolution vs. Special Power of Attorney (Case Digest: Bank of the Philippine Islands vs. Hon. Court of Appeals, et al., G.R. No. 168313. October 6, 2010)

By Siesta-friendly

Why the Supreme Court can still be bothered with an issue as simple as that involved in this case is a failure in the system leading to unnecessary clogging of courts’ dockets and further delay in the disposition of cases with substantial issues.

Anyway, below is the condensed form of the case.

First Union Group Enterprises (First Union) borrowed from Bank of the Philippine Islands (BPI) PhP5,000,000.00 and USD123,218.32. As partial security for the loan, Spouses Linda and Eddy Tien executed a Real Estate Mortgage Agreement covering 2 condominium units.  Linda also executed a Comprehensive Surety Agreement where she agreed to be solidarily liable with First Union for its obligations to BPI.   Despite repeated demands, First Union failed to pay BPI the amounts due.

First Union’s and Linda’s continued failure to settle their outstanding obligations prompted BPI to file a complaint for collection of sum of money.  The complaint’s verification and certificate of non-forum shopping were signed by Ma. Cristina F. Asis (Asis) and Kristine L. Ong (Ong)However, no Secretary’s Certificate or Board Resolution was attached to evidence Asis’ and Ong’s authority to file the complaint.  Instead of submitting a board resolution, BPI attached a “Special Power of Attorney” (SPA) executed by Zosimo A. Kabigting (Zosimo), Vice-President of BPI.  The SPA authorized Asis and Ong or any lawyer from the Benedicto Versoza Gealogo and Burkley Law Offices to initiate any legal action against First Union and Linda. 

First Union and Linda filed a motion to dismiss on the ground that BPI violated Rule 7, Section 5 of the Rules of Civil Procedure (Rules); BPI failed to attach to the complaint the necessary board resolution authorizing Asis and Ong to institute the collection action against First Union and Linda. 

BPI filed an “Opposition to the Motion to Dismiss,” arguing that the verification and certificate of non-forum shopping sufficiently established Asis’ and Ong’s authority to file the complaint and proof of their authority could be presented during the trial.  Further, BPI alleged that a complaint “can only be dismissed under Section 5, Rule 7 of the 1997 Rules of Civil Procedure if there was no certification against forum shopping.”  The provision, according to BPI, “does not even require that the person certifying should show proof of his authority to do so.” 

The RTC granted First Union’s and Linda’s Motion to Dismiss.

The CA affirmed.

BPI filed a petition for review on certiorari before the SC.  It contended that in Shipside v. Court of Appeals (February 20, 2001, G.R. No. 143377, 352 SCRA 334),  the SC excused Shipside’s belated submission of its Secretary’s Certificate and held that it substantially complied with the rule requiring the submission of a verification and certificate of non-forum shopping as it did, in fact, make a submission.

BPI’s cited Shipside case also involved the absence of proof – attached to the petition – that the filing officer was authorized to sign the verification and non-forum shopping certification. In the Motion for Reconsideration that followed the dismissal of the case, the movant attached a certificate issued by its board secretary stating that 10 days prior to the filing of the petition, the filing officer had been authorized by petitioner’s board of directors to file said petition.  Thus, proper authority existed but was simply not attached to the petition.  On this submission, the petitioner sought and the SC positively granted relief.

In the present case, the SC did not see a situation comparable to the cited Shipside. BPI did not submit any proof of authority in the first instance because it did not believe that a board resolution evidencing such authority was necessary. Instead of immediately submitting an appropriate board resolution – after the First Union and Linda filed their motion to dismiss – BPI argued that it was not required to submit one and even argued that: 

The Complaint can only be dismissed under Section 5, Rule 7 of the 1997 Rules of Civil Procedure if there was no certification against forum shopping.  The Complaint has.  The provision cited does not even require that the person certifying show proof of his authority to do so x x x.

In fact, BPI merely attached to its opposition a special power of attorney issued by Mr. Kabigting, a bank vice-president, granting Asis and Ong the authority to file the complaint.  Thus, no direct authority to file a complaint was initially ever given by BPI – the corporate entity in whose name and behalf the complaint was filed.  Only in its Reply to the Comment to plaintiff’s Opposition to the Motion to Dismiss did BPI “beg the kind indulgence of the Honorable Court as it inadvertently failed to submit with the Special Power of Attorney the Corporate Secretary’s Certificate which authorized Mr. Zosimo Kabigting to appoint his substitutes.”  Even this submission, however, was a roundabout way of authorizing the filing officers to file the complaint. 

BPI, interestingly, never elaborated nor explained it’s belatedly claimed inadvertence in failing to submit a corporate secretary’s certificate directly authorizing its representatives to file the complaint; it particularly failed to specify the circumstances that led to the claimed inadvertence. Under the given facts, rather than an inadvertence, there was an initial unwavering stance that the submission of a specific authority from the board was not necessary.  In blunter terms, the omission of the required board resolution in the complaint was neither an excusable deficiency nor an omission that occurred through inadvertence.  In the usual course in the handling of a case, the failure was a mistake of counsel that BPI never cared to admit but which nevertheless bound it as a client.  From this perspective, BPI’s case is different from Shipside so that the ruling in this cited case cannot apply. 

The SC held that the dismissal of the case is appropriate without prejudice to its refiling as the Rules allow.

It bears mention that under the Corporation Code, the “corporate powers of all corporations xxx shall be exercised, all business conducted and all property of such corporations controlled and held by the board of directors xxx (Section 23).” No corporate officer can just execute an SPA to delegate corporate authority. 


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