G.R. No. 190277 , July 23, 2014
ABSOLUTE MANAGEMENT CORPORATION, Petitioner, vs. METROPOLITAN BANK AND TRUST COMPANY, Respondent.

FACTS

On October 5, 2000, Sherwood Holdings Corporation and Spouses Sandy Ang and Arlene Ang filed a sum of money case against Absolute Management Corporation (petitioner) before the Regional Trial Court (RTC) of Quezon City, Branch 80, docketed as Civil Case No. Q-00-42105. Petitioner filed its answer with a third-party complaint against Metropolitan Bank and Trust Company (respondent). During the pre-trial on November 20, 2006, the RTC required counsels to present authorizations to appear. Respondent’s counsel failed to present a Secretary’s Certificate or Special Power of Attorney authorizing her to represent respondent at the pre-trial, claiming she had submitted it during the initial pre-trial in 2004. Upon verification, no such authorization was found in the records. Consequently, the RTC declared respondent in default and allowed petitioner to present evidence ex parte. Respondent filed a Motion to Lift Order of Default, attaching a Secretary’s Certificate dated July 16, 2006, and a Special Power of Attorney dated December 5, 2006, and explaining that the failure was due to excusable negligence. The RTC denied the motion in its Orders dated May 2, 2007, and September 3, 2007. Respondent filed a petition for certiorari with the Court of Appeals (CA), which reversed the RTC, ruling that the authority of a lawyer to appear for a client is presumed and that the RTC committed grave abuse of discretion. Petitioner appealed to the Supreme Court.

ISSUE

Whether the Court of Appeals erred in ruling that the RTC committed grave abuse of discretion in declaring respondent in default for failure of its counsel to present a written authorization to represent it during the pre-trial.

RULING

The Supreme Court granted the petition, reversing the CA Decision and Resolution. The Court held that the RTC did not commit grave abuse of discretion. Under Section 4, Rule 18 of the 1997 Rules of Civil Procedure, the non-appearance of a party at pre-trial may be excused only if a valid cause is shown or if a representative appears fully authorized in writing to enter into settlements, stipulations, or admissions. The Court distinguished between a lawyer’s authority to appear as counsel (which is presumed) and a representative’s authority to act on behalf of a party during pre-trial (which requires written authorization). Respondent’s counsel failed to present the required written authorization during the pre-trial, and her explanation of excusable negligence was insufficient. The RTC properly applied the rules, and its declaration of default was not capricious or whimsical. The Court reinstated the RTC Orders dated May 2, 2007, and September 3, 2007.