SPOUSES EUGENE L. LIM AND CONSTANCIA LIM, PETITIONERS, VS. THE COURT OF APPEALS-MINDANAO STATION, HON. FLORENCIA D. SEALANA-ABBU, PRESIDING JUDGE OF BRANCH 20, REGIONAL TRIAL CO…

Lim versus Court of Appeals

The Case

This is a petition for review on certiorari brought by Spouses Eugene Lim and Constancia Lim against the Court of Appeals of Mindanao Station, the presiding judge of the Regional Trial Court of Cagayan de Oro City, and the Bank of the Philippine Islands. The spouses ask the Supreme Court to reverse the denial of their motion to dismiss a collection suit filed against them by the bank. The case matters because it settles a procedural question every litigator meets: when a corporate officer signs the verification and certification against forum shopping without express authority at the time of filing, can the corporation cure that defect afterward? The Court answers yes, through ratification and substantial compliance.

Procedural History

The Bank of the Philippine Islands filed a complaint for collection of money with a prayer for preliminary injunction before the Regional Trial Court of Cagayan de Oro City, Branch 20. The spouses moved to dismiss on the ground of a pending foreclosure action before the Regional Trial Court of Ozamis City. The trial court denied the motion, and later denied reconsideration, finding different causes of action. The spouses also sought consolidation with the Ozamis cases; the trial court denied that motion and the motion for reconsideration as well.

Years later, the spouses filed a second motion to dismiss, this time attacking the verification and certification against forum shopping for failure to show the signer's representative authority. The trial court denied it, and denied reconsideration. The spouses then filed a petition for certiorari with the Court of Appeals, which dismissed the petition and later denied reconsideration. Hence the petition for review on certiorari before the Supreme Court.

Facts

On January 26, 1999, the Bank of the Philippine Islands sued the spouses to collect a sum of money. The verification and certification against forum shopping attached to the complaint were signed by Francisco Ramos, then the bank's Assistant Vice-President and Mindanao Region Lending Head.

The spouses first moved to dismiss on the ground of a pending foreclosure case in Ozamis City, but the trial court found the causes of action different and denied the motion. The spouses also failed to obtain consolidation of the cases.

On May 26, 2008, the spouses filed a second motion to dismiss, arguing that the verification and certification did not state that Ramos was acting in a representative capacity or was authorized by the board. The bank responded by submitting a Special Power of Attorney executed on July 8, 2008, and a Corporate Secretary's Certificate executed on February 21, 2007, showing that the bank's Executive Committee had authorized the grant of such powers. The trial court and the Court of Appeals both upheld the bank, and the spouses elevated the matter to the Supreme Court.

Issues

• Whether or not the Court of Appeals gravely erred in affirming the trial court's refusal to dismiss the complaint despite the alleged lack of authority of Francisco Ramos to file the complaint and sign the verification and certification against forum shopping.
• Whether or not the Special Power of Attorney and the Corporate Secretary's Certificate, belatedly submitted, constituted substantial compliance with the rules on verification and certification against forum shopping.

Applicable Provisions

The decision rests on the rule governing verification and certification against forum shopping, which the Court describes in these terms:

Verification is required to secure an assurance that the allegations in the petition have been made in good faith or are true and correct, and not merely speculative.

This explains why a defect in verification is not fatal and may be cured by one who has ample knowledge of the facts alleged.

On the certification requirement, the Court states the underlying principle:

On the other hand, the certification against forum shopping is required based on the principle that a party-litigant should not be allowed to pursue simultaneous remedies in different fora.

This principle anchors the rule that a defective certification may be corrected or cured under special circumstances or on the ground of substantial compliance.

The Court also invokes the civil law on agency, noting that the acts of an agent beyond the scope of his authority do not bind the principal unless the latter ratifies the same expressly or impliedly, as provided in Articles 1898 and 1910 of the Civil Code. Ratification is the bridge that saves the bank's complaint.

Ruling

On the first issue, the Court held that the Court of Appeals did not gravely err. A denial of a motion to dismiss is an interlocutory order that cannot be appealed until final judgment, and may be assailed by certiorari only for lack of or excess of jurisdiction or grave abuse of discretion. The Court examined the records and found that when the complaint was filed in January 1999, Ramos indeed lacked express authority; the Special Power of Attorney came only in July 2008 and the Secretary's Certificate in February 2007. But the Court held that the later execution of the Special Power of Attorney ratified Ramos's unauthorized representation, since a corporation can ratify the unauthorized acts of its officers. The Court also noted that Ramos was the highest bank official in Northern Mindanao, a position sufficiently high and authoritative to verify the truthfulness of the allegations.

On the second issue, the Court held that the belated submissions amounted to substantial compliance. Verification and certification requirements are not jurisdictional. Non-compliance with verification does not render a pleading fatally defective, and a defective certification may be cured by subsequent correction or submission under special circumstances or compelling reasons, or on the ground of substantial compliance. The petition was therefore denied.

Doctrine

A corporation acts only through duly authorized natural persons, but it may ratify the unauthorized acts of its corporate officers. The subsequent execution of a Special Power of Attorney authorizing the officer who signed the verification and certification against forum shopping cures the defect, because ratification confirms what the agent did without sufficient authority.

The requirements of verification and certification against forum shopping are not jurisdictional. Verification is substantially complied with when signed by one with ample knowledge of the truth of the allegations. A defective certification may be cured by subsequent correction or submission under special circumstances or compelling reasons, or on the ground of substantial compliance.

Certain officials, such as the Chairperson of the Board, the President, and the General Manager, may sign without a board resolution; for other officers, sufficiency of authority is determined on a case-to-case basis, considering rank and standing in the corporate hierarchy.

Disposition

The Supreme Court denied the petition for review on certiorari and affirmed the Court of Appeals, with costs against the petitioners.

Remember This

Memorize this line: verification and certification against forum shopping are not jurisdictional, and a corporation's later Special Power of Attorney ratifies a corporate officer's unauthorized signature, curing the defect by substantial compliance. Examiners use this case in civil procedure questions on defective verification and certification, and in corporation law questions on ratification of unauthorized corporate acts.