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BPI v.

Court of Appeals
G.R. No. 168313 October 6, 2010 J. Brion petitioners Bank of the Philippine Islands (BPI) respondents Court of Appeals, Hon. Romeo Barza (RTC Br. 61 Makati), First Union Group, Linda Wu Hu

summary FU borrowed a large sum of money from BPI, which it was not able to do so. After

extrajudicial foreclosure proceedings the proceeds were not enough so BPI instituted money claims. Complaints verification and certificate against forum shopping was signed by CK, supported by SPA from BPIs VP. SC held that liberal interpretation of rules only allowed under special circumstances and upon showing of substantial compliance. Mistake of BPIs counsel in believing that board resolution was unnecessary cost BPI the case.

facts of the case

First Union (FU) borrowed from BPI PHP 5,000,000. 00 and $ 123,218.32, evidenced by PNs. Linda and her spouse Eddy Tien executed a Real Estate Mortgage against 2 condo units to secure the loan. Linda also agreed to be solidarily liable with FU for obligations with BPI. However, FU was eventually unable to pay its loan upon maturity. BPI initiated extrajudicial foreclosure proceedings with the Sheriff of RTC Pasig against the 2 condo units to satisfy the solidary obligation. The properties were eventually sold at a public auction, with BPI as highest bidder. After applying the proceeds, FU still owed BPI PHP 4,742,949.32. Also, the dollar loan remained unpaid and has already amounted to 175,324.35. BPI filed a complaint for collection of sum of money in RTC Makati, with the complaints verification and certificate of non-forum shopping signed by Ma. Cristina Asis and Kristine Ong (CK). However, no Secretarys Certificate or Board Resolution was attached to evidence Asis and Ongs authority to file the complaint. FU and Linda filed a motion to dismiss on the ground of violation of Sec. 5, Rule 7 of the Rules, stating that BPI failed to attach to the complaint the necessary board resolution authorizing CK to institute collection action against FU and Linda. BPI opposed, stating that verification and certificate of non-forum shopping established CKs authority to file complaint and proof of their authority could be presented during trial. BPI further alleges that a complaint can only be dismissed under Sec. 5, Rule 7 if there was no certification against forum shopping . BPI also states that the provision does not even require that the person certifying should show proof of authority to do so. Instead of a board resolution, BPI attached a Special Power of Attorney (SPA) executed by Zosimo A. Kabigting (Zosimo), Vice-President of BPI. This authorized CK or any lawyer from the Benedicto Versoza Gealogo and Burkley Law Offices to initiate any legal action against FU and Linda. FU countered, citing Public Estates Authority v. Elpidio Uy, stating that an initiatory pleading which does not contain a board resolution authorizing the person to show proof of his authority is equally guilty (sic) of not satisfying the requirements in the Certification against Non-Forum Shopping. It is as if though (sic) no certification has been filed. RTC granted FU and Lindas Motion to Dismiss. Upon appeal, CA decided that BPI failed to comply with the procedural requirements on non-forum shopping, stating that the requirement that a petition should sign the certificate of non-forum shopping applies even to corporations since the Rules of Court do not distinguish between natural and civil persons. The CA did not question the authority of CK as bank representatives, however BPI failed to show through an appropriate board resolution the proof of authority as representatives . BPI now goes to the SC, arguing against CAs interpretation of Shipside vs. CA, stating that the SC actually excused Shipsides belated submission of its Secretarys 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 was in fact, in a better position as it also submitted the SPA signed by Zosimo. BPI also cited GMC vs. NLRC, where the SC held that GMCs belated submission was considered in substantial compliance with the Rules.

Whether BPI was in substantial compliance with the Rules through its submission of the Board Resolution with SPA. NO.

In ruling for FU and Linda, the SC emphasized the need to abide by the Rules, pointing out that the verification of a complaint and attachment of a certificate of non-forum shopping are requirements that are basic, necessary and mandatory for procedural orderliness . The SC did not find any reason for it to generally apply the liberal jurisprudential exception held in the Shipside case to excuse the failure to submit a Board Resolution. The rule for the submission of a certificate of non-forum shopping, proper in form and substance, remains to be a strict and mandatory rule. A liberal application has to be justified by ample and sufficient reasons that maintain the integrity of, and do not 1

detract from, the mandatory character of the rule. Citing Tible & Tible Company, Inc. v. Royal Savings and Loan Association and Mediserv v. Court of Appeals, the SC stated that it will only allow the liberal interpretation of the rules if special circumstances or compelling reasons which will make the strict application of the Rules inequitable exist, and even then the SC will look for a reasonable attempt at (substantial) compliance with the rules. These were not seen in the case of BPI, who 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, and even argued that Sec. 5, Rule 7 does not require proof of authority as a necessity for the certification against forum shopping. In fact, BPI only attached the SPA issued by Zosimo, granting authority to CK. Therefore, no direct authority was initially ever given by BPI. Only in the Reply to the Comment did BPI ask the Court to allow submission of the Corporate Secretarys Certificate authorizing Zosimo to appoint substitutes. BPI did not even elaborate or explain on its claimed inadvertence in failing to submit the Corporate Secretarys Certificate. The SC held, therefore, that the failure was a mistake of counsel that BPI never cared to admit but which nevertheless bound it as a client .