This Supreme Court decision clarifies the extent of a corporate president’s authority to represent the corporation in legal matters, specifically concerning the verification and certification against forum shopping. The Court ruled that a corporate president, by virtue of their position, generally possesses the authority to sign these documents without needing a specific board resolution. This simplifies the process for corporations engaging in litigation and underscores the importance of the president’s role in ensuring the truthfulness and correctness of the allegations in legal filings.

From Sum of Money to Supreme Scrutiny: Does a Manager’s Authority Extend Beyond the Trial Court?

Cebu Metro Pharmacy, Inc. faced a lawsuit from Euro-Med Laboratories Philippines, Inc. for unpaid debts. After losing in the lower courts, Cebu Metro appealed to the Court of Appeals (CA). The CA dismissed the appeal because the verification and certification against forum shopping were signed by Cebu Metro’s Manager, Carmel T. Albao, without express authorization from the Board of Directors. The central legal question became whether Albao, as President and Manager, inherently possessed the authority to represent the corporation in the appeal process, including the signing of crucial legal documents. This case highlights the intersection of corporate law, procedural rules, and the practical realities of business operations.

The Court addressed the necessity of a specific board resolution authorizing a corporate officer to sign the verification and certification of non-forum shopping. It acknowledged that while corporate powers are generally exercised by the board of directors, certain officers are presumed to have the authority to act on behalf of the corporation within the scope of their usual duties. Building on this principle, the Court cited previous cases to support the idea that a president of a corporation generally has the power to sign the verification and certification of non-forum shopping, without needing a separate board resolution. This stems from the president’s inherent role in managing the corporation’s affairs and their presumed knowledge of the facts involved in the litigation.

The Supreme Court emphasized the practical considerations that underpin this presumption. The Court in Hutama-RSEA/Super Max Phils., J.V. v. KCD Builders Corporation stated:

A pleading is verified by an affidavit that an affiant has read the pleading and that the allegations therein are true and correct as to his personal knowledge or based on authentic records. The party does not need to sign the verification. A party’s representative, lawyer, or any person who personally knows the truth of the facts alleged in the pleading may sign the verification.

Furthermore, the Supreme Court acknowledged that, even if a specific act falls outside the president’s usual powers, subsequent ratification by the corporation can validate the action. The Court also considered Cebu Metro’s argument that its By-Laws granted the President the power to represent the corporation in all functions and proceedings. Even without a specific resolution, the Court found Albao’s actions valid due to her position as President and Manager.

The Court also cited Cagayan Valley Drug Corporation v. Commissioner of Internal Revenue, reiterating the authority of certain officers and employees of the corporation to sign the verification and certification of non-forum shopping:

In sum, we have held that the following officials or employees of the company can sign the verification and certification without need of a board resolution: (1) the Chairperson of the Board of Directors, (2) the President of a corporation, (3) the General Manager or Acting General Manager, (4) Personnel Officer, and (5) an Employment Specialist in a labor case.

This approach contrasts with a strict interpretation of corporate law that would require explicit authorization for every action taken on behalf of the corporation. Such a rigid approach could lead to unnecessary delays and procedural hurdles, hindering the efficient resolution of legal disputes. The Court favored a more pragmatic approach that recognizes the realities of corporate management and the inherent authority vested in certain officers.

The Supreme Court ultimately concluded that the CA erred in dismissing Cebu Metro’s appeal based on a technicality. The Court emphasized that procedural rules should be applied to promote justice, not to create unnecessary obstacles to litigation. The Court has previously held in Mid-Pasig Land Development Corporation v. Tablante:

The rules of procedure ought not to be applied in a very rigid, technical sense for they have been adopted to help secure, not override, substantial justice. For this reason, courts must proceed with caution so as not to deprive a party of statutory appeal; rather they must ensure that all litigants are granted the amplest opportunity for the proper and just ventilation of their causes, free from the constraint of technicalities.

Given Albao’s position as President and Manager, and the subsequent ratification by the Board of Directors, the Court found that she possessed the authority to sign the verification and certification. The case was remanded to the CA for a decision on the merits.

FAQs

What was the key issue in this case?	The key issue was whether the President and Manager of a corporation needed a specific board resolution to sign the verification and certification against forum shopping.
What is a verification and certification against forum shopping?	It’s a sworn statement attesting that the party has read the pleading and that the allegations are true, and that the party has not filed similar actions in other courts. Its purpose is to prevent litigants from pursuing the same case simultaneously in different venues.
What did the Court of Appeals initially decide?	The Court of Appeals dismissed Cebu Metro’s petition because the verification and certification were signed without a specific board resolution authorizing the signatory.
What was the Supreme Court’s ruling?	The Supreme Court reversed the Court of Appeals’ decision, holding that the President and Manager of a corporation generally has the authority to sign these documents.
Why did the Supreme Court rule in favor of Cebu Metro?	The Court reasoned that the President and Manager, by virtue of their position, are presumed to have the authority to act on behalf of the corporation. Also, the subsequent ratification by the Board of Directors further solidified this authority.
What are the implications of this ruling for corporations?	This ruling simplifies the process for corporations involved in litigation, as it clarifies that the president generally doesn’t need a specific board resolution to sign these documents.
Can a corporation’s by-laws affect this authority?	Yes, the corporation’s by-laws can grant the President the power to represent the corporation in all functions and proceedings, negating the need for a board resolution.
What happens if the President’s actions are outside their usual powers?	Even if a specific act falls outside the president’s usual powers, subsequent ratification by the corporation can validate the action.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Cebu Metro Pharmacy, Inc. vs. Euro-Med Laboratories, Philippines, Inc., G.R. No. 164757, October 18, 2010