CREATIVE CONCEPTS, INC., PETITIONER, VS. EVERBEST GRAPHIC SYSTEMS, INC. REP. BY YOLANDA V. VIZMANOS, RESPONDENT.

Creative Concepts versus Everbest Graphic Systems

The Case

This is a petition for review filed by Creative Concepts, Inc. against Everbest Graphic Systems, Inc., a corporation engaged in lithography and color separation services. Everbest sued Creative Concepts to collect an unpaid sum of money for services rendered. Creative Concepts resisted the complaint on two procedural grounds: that the person who signed the verification and certification against forum shopping was not authorized to do so, and that the complaint failed to state a cause of action. The case matters because it gathers in one decision the rules on verification, on the certification against forum shopping signed on behalf of a corporation, and on the test of sufficiency of a cause of action — all favorite ground for bar questions.

Procedural History

Everbest filed a complaint for sum of money before the Metropolitan Trial Court of Makati City, Branch 61. In a decision dated July 31, 2012, the Metropolitan Trial Court ruled in favor of Everbest, ordering Creative Concepts to pay the principal amount of 104,115.11 pesos with interest of 12 percent per annum from June 16, 2009, plus 5,000 pesos as attorney's fees, and costs of suit. Creative Concepts appealed to the Regional Trial Court of Makati City, Branch 57. In a decision dated January 28, 2013, the Regional Trial Court affirmed the Metropolitan Trial Court in full. Aggrieved, Creative Concepts filed a petition for review under Rule 42 of the Rules of Court before the Supreme Court, assigning as errors the failure to dismiss the complaint for lack of authority of the signatory and the failure of the complaint to state a cause of action.

Facts

Everbest is a domestic corporation engaged in lithography and color separation services. On various occasions from March 25, 2004 until January 31, 2007, Everbest rendered lithography and color separation services for Creative Concepts valued at 104,115.11 pesos, as evidenced by nine sales invoices. Creative Concepts failed to pay despite demand.

On June 18, 2009, Everbest filed a complaint for sum of money. Attached to the complaint was a Secretary's Certificate dated May 26, 2009, in which corporate secretary Atty. Phydias Emmanuel R. Ramos certified that during a special meeting of the board of directors held on April 25, 2009, the board appointed Yolanda Vizmanos and the law firm of Pamaran Ramos and Partners as attorneys-in-fact to file a civil action for sum of money against Creative Concepts, with full power and authority to sign, receive for and in behalf of the corporation, and bind the same in any matter relevant to the cause of action.

Creative Concepts answered, praying for dismissal on the ground that the complaint failed to state a cause of action and that Yolanda Vizmanos was not specifically authorized to file the complaint or to sign the verification and certification against forum shopping. Creative Concepts also set up a counterclaim for damages and attorney's fees. Both the Metropolitan Trial Court and the Regional Trial Court rejected these defenses, prompting the present petition.

Issues

• Whether or not the Regional Trial Court erred in not dismissing the complaint outright on the ground that attorney-in-fact Yolanda Vizmanos had no authority to sign the verification and certification against forum shopping.
• Whether or not the Regional Trial Court erred in finding Creative Concepts liable to Everbest considering that the complaint failed to state facts sufficient to constitute a cause of action.

Applicable Provisions

Article 2208 of the Civil Code provides:

In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except: x x x When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest.

This provision is the basis for sustaining the award of 5,000 pesos as attorney's fees, because Creative Concepts' unjustified refusal to pay compelled Everbest to litigate.

Ruling

On the first issue, the Court held that the petition is bereft of merit. Verification of a pleading is formal, not jurisdictional; it is merely a condition affecting the form of the pleading, and non-compliance does not necessarily render the pleading fatally defective. The lack of a certification against forum shopping, on the other hand, is generally not curable by mere amendment and is a cause for dismissal without prejudice, and the same rule applies to certifications signed on behalf of a corporation which are unaccompanied by proof that the signatory is authorized to file the complaint. Only individuals vested with authority by a valid board resolution may sign the certificate on behalf of a corporation, and proof of such authority must be attached.

Here, however, the Secretary's Certificate clearly and expressly authorized Yolanda Vizmanos not only to file the action but also to sign the certification against forum shopping. The Court quoted paragraph 8 of the certificate:

To sign, receive for and in behalf of the corporation and bind the same in any matter relevant to the cause of action of the herein plaintiff corporation.

The Court distinguished the case of Metropolitan Cebu Water District versus Adala, where the attorney-in-fact had a blanket authority to file cases but no authority to sign any verification or certification. The Court also stressed that the submission of a certificate against forum shopping, while obligatory, is not jurisdictional, and the rules may be relaxed on grounds of substantial compliance or special circumstances, as in Ateneo de Naga University versus Manalo.

On the second issue, the Court held that the complaint sufficiently stated a cause of action. Failure to state a cause of action refers to the insufficiency of the pleading and is a ground for dismissal under Rule 16 of the Rules of Court. The ruling thereon must be based only on the facts alleged in the complaint, assuming them to be true. The test of sufficiency is whether, hypothetically admitting the facts alleged to be true, the court can render a valid judgment in accordance with the prayer. The complaint alleged that Everbest rendered services valued at 104,115.11 pesos as evidenced by sales invoices, that Creative Concepts failed and refused to pay despite demand, and that Everbest was compelled to litigate. From these allegations alone, a cause of action is present. Creative Concepts did not specifically deny engaging the services or failing to pay, so the Metropolitan Trial Court correctly ordered payment.

Doctrine

A Bar candidate should retain these rules. First, verification is formal, not jurisdictional; its absence does not render a pleading fatally defective, and the court may act on an unverified pleading when the ends of justice so require. Second, the certification against forum shopping, while obligatory, is also not jurisdictional; it may be relaxed on grounds of substantial compliance or compelling reasons. Third, when a corporation files suit, the certification must be signed by a person duly authorized by a valid board resolution, and proof of that authority must be attached; but where the Secretary's Certificate expressly grants the signatory the power to sign documents on behalf of the corporation in any matter relevant to the cause of action, the requirement is satisfied. Fourth, failure to state a cause of action is tested solely on the facts alleged in the complaint, hypothetically admitted as true, and the question is whether the court can render a valid judgment in accordance with the prayer. Fifth, attorney's fees may be awarded under Article 2208 of the Civil Code when the defendant's unjustified act or omission compelled the plaintiff to litigate.

Disposition

The Supreme Court denied the petition and affirmed the decision of the Regional Trial Court dated January 28, 2013, holding Creative Concepts liable to Everbest for 104,115.11 pesos with interest, plus 5,000 pesos as attorney's fees and costs of suit.

Remember This

Memorize this line: verification and the certification against forum shopping are not jurisdictional, and a corporate signatory's authority is sufficiently shown by a Secretary's Certificate expressly empowering her to sign on the corporation's behalf. Examiners use this case to test the distinction between a formal defect in verification and a jurisdictional defect, and to test the hypothetical-admission test for sufficiency of a cause of action.