The Supreme Court ruled that a complaint filed by an unauthorized attorney-in-fact on behalf of a corporation is legally defective. The absence of a board resolution specifically authorizing the attorney-in-fact to file the suit renders the complaint ineffective. This decision underscores the importance of verifying the authority of individuals representing corporations in legal proceedings, ensuring compliance with procedural rules, and safeguarding the rights and interests of all parties involved.

Corporate Lawsuits: Can an Attorney-in-Fact Represent a Corporation Without Explicit Authority?

This case revolves around a dispute over real property. The World War II Veterans Legionnaires of the Philippines, Inc. (WWVLPI) filed a complaint for recovery of possession and damages against Neil Tamondong and others, alleging ownership of certain lots in Quezon City. The complaint was verified and certified against forum shopping by Sorovabel Esteves, identified as the attorney-in-fact and allocatee of the disputed lot. However, the Regional Trial Court (RTC) dismissed the complaint, reasoning that Esteves lacked the proper authority to file the case on behalf of WWVLPI. This prompted an appeal to the Court of Appeals (CA), which reversed the RTC’s decision. Tamondong then elevated the matter to the Supreme Court, questioning the CA’s ruling and the authority of Esteves to represent WWVLPI.

The central issue before the Supreme Court was whether the CA erred in reversing the RTC’s dismissal of the complaint. This hinged on whether Esteves, as an attorney-in-fact, had the requisite authority to file the complaint for and in behalf of WWVLPI. Furthermore, the court considered whether the respondent’s choice of appeal was proper given that it involved questions of law.

The Supreme Court held that the CA erred in reversing the RTC’s dismissal. The Court emphasized that a complaint filed by an unauthorized individual on behalf of a corporation is legally defective. Building on this principle, the Court explained that Section 5, Rule 7 of the Rules of Court requires that the certification against forum shopping must be executed by the plaintiff or principal party. Since the plaintiff is a corporation, the certification must be executed by an officer or member of the board of directors or by one who is duly authorized by a resolution of the board of directors.

In this case, Esteves, as a mere attorney-in-fact without a board resolution authorizing him, could not validly execute the certification. Building on this point, the Supreme Court noted that the verification of the complaint by Esteves, without proper authorization, was insufficient to confer jurisdiction upon the trial court. This requirement ensures that corporations act deliberately and are fully aware of the legal actions taken in their name.

The Court cited the legal principle that if a complaint is filed for and in behalf of the plaintiff who is not authorized to do so, the complaint is not deemed filed. An unauthorized complaint does not produce any legal effect, and the court should dismiss it for lack of jurisdiction over the complaint and the plaintiff.

The Supreme Court also addressed the issue of whether the appeal to the CA was proper. It noted that the RTC dismissed the complaint based on the allegations and the verification-certification embedded in the complaint, raising questions of law. Under Section 2(c) of Rule 41 of the Rules of Court, if only questions of law are raised or involved, the appeal should be taken to the Supreme Court by petition for review on certiorari. The remedy chosen by the respondent was therefore incorrect.

The practical implication of this ruling is significant. It reinforces the need for strict compliance with procedural rules when filing lawsuits on behalf of corporations. It also serves as a reminder that litigation requires careful preparation and adherence to legal formalities.

FAQs

What was the key issue in this case?	The key issue was whether an attorney-in-fact, without specific authorization from a corporation’s board of directors, could validly file a complaint on behalf of the corporation.
What did the Supreme Court decide?	The Supreme Court ruled that the attorney-in-fact lacked the authority to file the complaint, rendering the complaint legally defective and requiring its dismissal.
Why was the attorney-in-fact deemed unauthorized?	The attorney-in-fact was deemed unauthorized because there was no board resolution from the corporation specifically authorizing him to file the complaint.
What is the requirement for certification against forum shopping in corporate cases?	The certification against forum shopping must be executed by an officer or member of the board of directors, or by someone duly authorized by a resolution of the board of directors.
What happens if a complaint is filed by an unauthorized person?	If a complaint is filed by an unauthorized person, it is considered not filed, has no legal effect, and the court lacks jurisdiction over it.
What type of appeal should have been filed in this case?	Since the issues raised were questions of law, the appeal should have been a petition for review on certiorari filed with the Supreme Court, not the Court of Appeals.
Who is the proper party to file a case on behalf of a corporation?	The proper party is the corporation itself, represented by its authorized officers or a person specifically authorized by a board resolution.
What is the main practical takeaway from this case?	Corporations must ensure that individuals representing them in legal proceedings have explicit authorization, typically through a board resolution, to comply with procedural rules.

In conclusion, the Supreme Court’s decision in this case highlights the critical importance of ensuring proper authorization when representing a corporation in legal proceedings. Failure to comply with these procedural requirements can result in the dismissal of the case and prejudice the corporation’s rights. The strict application of the rules ensures accountability and prevents unauthorized actions that could harm the corporation’s interests.

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: Neil Tamondong vs. Court of Appeals and World War II Veterans Legionnaires of the Philippines, Inc., G.R. No. 158397, November 26, 2004