In the Philippine legal system, appearing at a pre-trial conference requires specific authorization, especially for representatives acting on behalf of a party. The Supreme Court, in Absolute Management Corporation v. Metropolitan Bank and Trust Company, ruled that a representative, other than the counsel, must possess a special power of attorney (SPA) to validly represent a party at the pre-trial stage. This means that without proper written authorization, any agreements or admissions made by the representative may not bind the represented party, potentially leading to default and adverse judgments.

The Case of the Missing Authorization: When Absence Meant Default

The case revolves around a sum of money claim filed by Sherwood Holdings Corporation against Absolute Management Corporation (AMC), who then filed a third-party complaint against Metropolitan Bank and Trust Company (Metrobank). During a pre-trial conference, Metrobank’s counsel failed to present a Secretary’s Certificate and a Special Power of Attorney (SPA) authorizing her to represent the bank. Consequently, the Regional Trial Court (RTC) declared Metrobank in default, allowing AMC to present evidence ex parte. Metrobank filed a motion to lift the order of default, submitting the required documents, but the RTC denied the motion. Metrobank then appealed to the Court of Appeals (CA), which reversed the RTC’s decision. The CA reasoned that a lawyer’s authority to appear on behalf of a client is presumed, and the lack of formal authorization should not invalidate the proceedings. AMC then elevated the case to the Supreme Court, questioning the CA’s ruling.

The core issue before the Supreme Court was whether the RTC committed grave abuse of discretion in declaring Metrobank in default due to the absence of a Special Power of Attorney authorizing its counsel to represent it during pre-trial. The Supreme Court emphasized that grave abuse of discretion implies a capricious or whimsical exercise of judgment, tantamount to a lack of jurisdiction. Here, the RTC based its decision on Section 4, Rule 18 of the 1997 Rules of Civil Procedure, which explicitly requires a representative to have written authorization to enter into amicable settlements, submit to alternative dispute resolution, and make stipulations or admissions of facts and documents.

SEC. 4. Appearance of parties. – It shall be the duty of the parties and their counsel to appear at the pre-trial. The non-appearance of a party may be excused only if a valid cause is shown therefor or if a representative shall appear in his behalf fully authorized in writing to enter into an amicable settlement, to submit to alternative modes of dispute resolution, and to enter into stipulations or admissions of facts and of documents.

The Supreme Court underscored the importance of pre-trial conferences in civil actions, citing Development Bank of the Philippines v. Court of Appeals, highlighting that pre-trial aims to simplify, abbreviate, and expedite trials. The Court noted that the parties must be prepared to discuss the possibility of amicable settlements, submission to arbitration, and other matters that aid in the prompt resolution of the action. This preparation extends to ensuring that any representative attending in place of a party has the necessary “special authority” to make substantive agreements.

That “special authority” should ordinarily be in writing or at the very least be “duly established by evidence other than the self-serving assertion of counsel (or the proclaimed representative) himself.” Without that special authority, the lawyer or representative cannot be deemed capacitated to appear in place of the party; hence, it will be considered that the latter has failed to put in an appearance at all, and he [must] therefore “be non-suited or considered as in default,” notwithstanding his lawyer’s or delegate’s presence.

The Court differentiated between the authority of a counsel to appear on behalf of a client as legal representation and the authority to act as a representative of the client during pre-trial. While the former is generally presumed upon the filing of a notice of appearance, the latter requires explicit written authorization. Metrobank’s counsel appeared not only as the bank’s attorney but also as its representative, necessitating a Special Power of Attorney (SPA), which was absent during the pre-trial conference. This distinction is vital because pre-trial proceedings often involve critical decisions and agreements that bind the client.

Metrobank argued that its counsel’s failure to present the required authorization was due to “excusable negligence,” believing the documents had been submitted during a previous pre-trial in 2004. However, the Supreme Court found this explanation unsubstantiated. The bank failed to produce any evidence of such prior submission, and the SPA later submitted was dated after the pre-trial conference in question. The court emphasized that Metrobank had not provided sufficient justification for its representative’s lack of authority, and therefore, the RTC acted within its discretion in declaring Metrobank in default.

The Supreme Court reversed the Court of Appeals’ decision, reinstating the RTC’s orders. The ruling reaffirms the strict application of procedural rules, particularly the requirement for a Special Power of Attorney for representatives attending pre-trial conferences. This requirement ensures that decisions made during pre-trial are duly authorized and binding, promoting efficiency and fairness in legal proceedings. The implications of this case are significant for corporations and other entities that often rely on representatives to attend legal proceedings on their behalf. It underscores the need for meticulous compliance with procedural rules and the importance of ensuring that representatives are properly authorized with a Special Power of Attorney.

FAQs

What was the key issue in this case?	The central issue was whether a representative of a corporation must have a Special Power of Attorney (SPA) to validly represent the corporation at a pre-trial conference. The Supreme Court ruled that an SPA is indeed required for such representation.
What is a Special Power of Attorney (SPA)?	A Special Power of Attorney (SPA) is a legal document that authorizes a person to act on behalf of another in specific circumstances. In this case, it authorizes a representative to make decisions and agreements during a pre-trial conference.
Why is an SPA necessary for pre-trial representation?	An SPA ensures that the representative has the authority to enter into amicable settlements, submit to alternative modes of dispute resolution, and make stipulations or admissions of facts and documents, which can bind the party. Without it, the representative’s actions may not be valid.
What happens if a representative lacks an SPA during pre-trial?	If a representative lacks an SPA, the court may consider the party as having failed to appear at the pre-trial conference, potentially leading to adverse consequences such as being declared in default. This could mean the party loses the opportunity to present its case.
Can a lawyer act as a representative without an SPA?	While a lawyer has the authority to represent a client legally, acting as a representative during pre-trial requires a separate SPA. This authorizes the lawyer to make specific agreements or admissions on behalf of the client.
What was the Court of Appeals’ initial decision?	The Court of Appeals initially reversed the trial court’s decision, stating that a lawyer’s authority to represent a client is presumed and that the lack of formal authorization should not invalidate the proceedings. However, this was overturned by the Supreme Court.
What was the Supreme Court’s final ruling?	The Supreme Court reversed the Court of Appeals’ decision, holding that the trial court did not commit grave abuse of discretion in declaring Metrobank in default due to the absence of an SPA. The court emphasized the importance of adhering to procedural rules.
What is the practical implication of this ruling?	The ruling reinforces the need for corporations and entities to ensure their representatives have proper written authorization, such as a Special Power of Attorney, when attending pre-trial conferences. Failure to do so can result in being declared in default.

The Absolute Management Corporation v. Metropolitan Bank and Trust Company case serves as a crucial reminder of the importance of procedural compliance in Philippine litigation. Ensuring that representatives are duly authorized with a Special Power of Attorney is essential for safeguarding a party’s rights and interests during pre-trial proceedings. This diligence prevents potential default judgments and ensures a fair and efficient legal process.

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: Absolute Management Corporation v. Metropolitan Bank and Trust Company, G.R. No. 190277, July 23, 2014