G.R. No. 55630 March 6, 1990
IMPERIAL INSURANCE, INC., represented by BERNARDITO R. PULVERA, petitioner, vs. THE HONORABLE EULALIO D. ROSETE, Judge of the Court of First Instance of Misamis Oriental, and CHIU ENG HUA, respondents.

FACTS

Private respondent Chiu Eng Hua filed a complaint for specific performance and damages against petitioner Imperial Insurance, Inc. in the Court of First Instance of Misamis Oriental. After filing an answer, the case was set for pre-trial. At the pre-trial conference, petitioner was represented by Atty. Arturo A. Magallanes, who presented a special power of attorney executed by Bernardito R. Pulvera, the petitioner’s regional branch manager for Mindanao and Visayas. The authority granted Atty. Magallanes to represent the corporation at the pre-trial and to enter into an amicable settlement. Presiding Judge Eulalio D. Rosete refused to honor the document, ruling that only the Board of Directors could authorize such representation and that the manager could not delegate his functions. Despite counsel for the private respondent manifesting willingness to give petitioner a chance to produce appropriate authority, the respondent judge declared petitioner in default.
Petitioner filed a motion to set aside the order of default, arguing for liberal construction of the rules, good faith in submitting the special power of attorney, and the existence of meritorious defenses. The motion explained that a request for formal authority from the main office was pending. The respondent judge denied the motion and a subsequent motion for reconsideration, prompting the petition for certiorari and/or mandamus.

ISSUE

Whether the respondent judge committed grave abuse of discretion in declaring the petitioner in default for failure to present a board resolution authorizing its representative at the pre-trial conference, despite the presentation of a special power of attorney from its regional manager and a plea for liberality under the Rules.

RULING

Yes, the respondent judge committed grave abuse of discretion. The Supreme Court reversed the default orders and remanded the case for further proceedings. The legal logic centers on the principle of liberal construction of procedural rules to secure just, speedy, and inexpensive disposition of cases. The Court found the respondent judge’s action to be unnecessarily harsh and inconsistent with this principle.
First, the authority of Regional Manager Pulvera was established. In a prior case (Civil Case No. 6316) presided over by the same judge, a special power of attorney executed by the same manager in favor of a different representative was accepted, and a compromise agreement signed by that representative was approved by the court. This constituted judicial recognition of the manager’s authority to represent the corporation in litigation and to settle claims. Furthermore, a similar special power of attorney was honored in another case in Surigao, leading to an approved compromise. As an agent with such authority, Pulvera could appoint a substitute unless prohibited, which he was not.
Second, even assuming a board resolution was technically required, the private respondent’s counsel expressed willingness to allow petitioner time to comply. The judge’s immediate declaration of default, despite this and petitioner’s filed answer asserting meritorious defenses, was a denial of the opportunity to be heard. The Rules favor affording parties their day in court over rigid technicalities, especially where a valid defense is alleged. The default was therefore a grave abuse of discretion warranting corrective action.