G.R. No. 86505 ; February 11, 1991
FOUNTAINHEAD INTERNATIONAL PHILIPPINES, INC. AND HON. SANTIAGO RANADA, petitioners, vs. HON. COURT OF APPEALS AND ROYAL INSURANCE (INT.) LTD., respondents.

FACTS

Private respondent Royal Insurance (Int.) Ltd. (Royal) filed a complaint for reimbursement as subrogee against petitioner Fountainhead International Philippines (Fountainhead) for damages arising from a breach of contract of carriage. The case was set for pre-trial. On the pre-trial date, Royal’s counsel presented a special power of attorney executed by Michael Gourlay, Royal’s Branch Manager, authorizing the counsel to negotiate a settlement. Fountainhead’s counsel also presented a special power of attorney from Grace R. dela Rosa. The trial judge, respondent Santiago Ranada, Jr., found both documents insufficient for failing to show that Gourlay and dela Rosa were themselves empowered by their respective principals to execute such authorities. Consequently, the court dismissed the complaint and counterclaim for failure of the parties to properly appear for pre-trial as required by the rules.
Royal filed a motion for reconsideration, attaching a document showing Gourlay’s appointment as attorney-in-fact with authority to compromise claims. The motion was denied, though the dismissal was deemed without prejudice. Royal then filed a petition for certiorari with the Court of Appeals, which ruled that the trial judge committed grave abuse of discretion. The appellate court held that instead of dismissing the case, the judge should have merely postponed the pre-trial to allow counsel to secure the proper authority.

ISSUE

Whether the Court of Appeals erred in finding that the trial court committed grave abuse of discretion in dismissing the complaint for the plaintiff’s failure to present a proper special power of attorney at the pre-trial conference.

RULING

The Supreme Court granted the petition, reversed the Court of Appeals, and reinstated the trial court’s order of dismissal. The Court held that the trial judge did not commit grave abuse of discretion. Pre-trial in civil actions is mandatory, requiring the presence of the parties or their duly authorized representatives with special authority to compromise. The special authority must be duly established, and a lawyer’s self-serving assertion is insufficient. The special power of attorney presented by Royal’s counsel was defective as it did not establish that the signatory, Michael Gourlay, had the power from the company to delegate settlement authority to the lawyer.
The legal logic is grounded on the mandatory nature of pre-trial and the requirement for a party’s valid appearance. Under the Rules of Court, if a party fails to appear, they may be non-suited. A lawyer appearing as a representative, not just as counsel, must have special written authority for substantive acts like compromise. The trial court, in its discretion, found the presented authority insufficient and acted within its power to dismiss for non-appearance. The Court found no capricious or whimsical exercise of judgment equivalent to lack of jurisdiction. The subsequent submission of the proper document in the motion for reconsideration did not rectify the failure to comply at the scheduled pre-trial. Compliance with procedural rules is not discretionary and is essential to the orderly administration of justice.