Citibank vs Chua

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Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 102300. March 17, 1993. CITIBANK, N A , petitione!, "s #ON SE$%NDINO $ C#%A, SANTIA$O M KAP%NAN an& '%IS ' VICTOR, ASSOCIATE (%STICES O) T#E #ON CO%RT O) APPEA'S, T#IRD DIVISION, MANI'A, #ON 'EONARDO B CANARES, (u&*e of Re*ional, T!ial Cou!t of Cebu, B!anch +,, an& SPO%SES CRESENCIO AND -ENAIDA VE'E-, !espon&ents S.''AB%S + COMMERCIA' 'A/0 PRIVATE CORPORATIONS0 'EVE'S O) CONTRO' IN CORPORATE #IERARC#.0 BOARD O) DIRECTORS MA. VA'ID'. DE'E$ATE SOME )%NCTIONS TO INDIVID%A' O))ICERS OR A$ENTS 1 In the co!po!ate hie!a!ch2, the!e a!e th!ee le"els of cont!ol3 4+5 the boa!& of &i!ecto!s, 6hich is !esponsible fo! co!po!ate policies an& the *ene!al 7ana*e7ent of the business affai!s of the co!po!ation0 485 the office!s, 6ho in theo!2 e9ecute the policies lai& &o6n b2 the boa!&, but in p!actice often ha"e 6i&e latitu&e in &ete!7inin* the cou!se of business ope!ations0 an& 4:5 the stoc;hol&e!s 6ho ha"e the !esi&ual po6e! o"e! fun&a7ental co!po!ate chan*es, li;e a7en&7ents of the a!ticles of inco!po!ation #o6e"e!, <ust as a natu!al pe!son 7a2 autho!i=e anothe! to &o ce!tain acts in his behalf, so 7a2 the boa!& of &i!ecto!s of a co!po!ation "ali&l2 &ele*ate so7e of its functions to in&i"i&ual office!s o! a*ents appointe& b2 it 8 ID 0 ID 0 #O/ CORPORATE PO/ERS CON)ERRED %PON CORPORATE O))ICERS OR A$ENTS0 E>ERCISE O) PO/ERS INCIDENTA' TO E>PRESS PO/ERS CON)ERRED 1 Co!po!ate po6e!s 7a2 be &i!ectl2 confe!!e& upon co!po!ate office!s o! a*ents b2 statute, the a!ticles of inco!po!ation, the b2?la6s o! b2 !esolution o! othe! act of the boa!& of &i!ecto!s In a&&ition, an office! 6ho is not a &i!ecto! 7a2 also appoint othe! a*ents 6hen so autho!i=e& b2 the b2?la6s o! b2 the boa!& of &i!ecto!s Such a!e !efe!!e& to as e9p!ess po6e!s The!e a!e also po6e!s inci&ental to e9p!ess po6e!s confe!!e& It is a fun&a7ental p!inciple in the la6 of a*enc2 that e"e!2 &ele*ation of autho!it2, 6hethe! *ene!al o! special, ca!!ies 6ith it, unless the cont!a!2 be e9p!esse&, i7plie& autho!it2 to &o all of those acts, natu!all2 an& o!&ina!il2 &one in such cases, 6hich a!e !easonabl2 necessa!2 an& p!ope! to be &one in o!&e! to ca!!2 into effect the 7ain autho!it2 confe!!e& Since the b2?la6s a!e a sou!ce of autho!it2 fo! co!po!ate office!s an& a*ents of the co!po!ation, a !esolution of the Boa!& of Di!ecto!s of Citiban; appointin* an atto!ne2 in fact to !ep!esent an& bin& it &u!in* the p!e?t!ial confe!ence of the case at ba! is not necessa!2 because its b2?la6s allo6 its office!s, the E9ecutin* Office! an& the Sec!eta!2 P!o? Te7, to e9ecute a po6e! of atto!ne2 to a &esi*nate& ban; office!, /illia7 / )e!*uson in this case, clothin* hi7 6ith autho!it2 to &i!ect an& 7ana*e co!po!ate affai!s : ID 0 ID 0 ADOPTION O) B.?'A/S0 PROVISION O) SECTION @A O) CORPORATION CODE RE)ERRIN$ TO E))ECTIVIT. O) CORPORATE B.?'A/S APP'ICAB'E ON'. TO DOMESTIC CORPORATIONS 1 A co!po!ation can sub7it its b2?la6s, p!io! to inco!po!ation, o! 6ithin one 7onth afte! !eceipt of official notice of the issuance of its ce!tificate of inco!po!ation b2 the SEC /hen the thi!& pa!a*!aph of the abo"e p!o"ision 7entions Bin all casesB, it can onl2 !efe! to these t6o options0 i e , 6hethe! a&opte& p!io! to inco!po!ation o! 6ithin one 7onth afte! inco!po!ation, the b2?la6s shall be effecti"e onl2 upon the app!o"al of the SEC But e"en 7o!e i7po!tant, sai& p!o"ision sta!ts 6ith the ph!ase BE"e!2 co!po!ation fo!7e& un&e! this Co&eB, 6hich can onl2 !efe! to co!po!ations inco!po!ate& in the Philippines #ence, Section @A, in so fa! as it !efe!s to the effecti"it2 of co!po!ate b2?la6s, applies onl2 to &o7estic co!po!ations an& not to fo!ei*n co!po!ations

@ ID 0 )OREI$N CORPORATIONS0 ISS%ANCE O) 'ICENSE TO TRANSACT B%SINESS IN T#E P#I'IPPINES0 REC%ISITES0 $RANT O) 'ICENSE IN E))ECT APPROVA' B. SEC O) )OREI$N CORPORATIONDS B.?'A/S 1 Section +8E of the sa7e Co&e !eFui!es that a fo!ei*n co!po!ation appl2in* fo! a license to t!ansact business in the Philippines 7ust sub7it, a7on* othe! &ocu7ents, to the SEC, a cop2 of its a!ticles of inco!po!ation an& b2?la6s, ce!tifie& in acco!&ance 6ith la6 %nless these &ocu7ents a!e sub7itte&, the application cannot be acte& upon b2 the SEC In the follo6in* section, the Co&e specifies 6hen the SEC can *!ant the license applie& fo! Section +8A p!o"i&es in pa!t3 BSEC +8A Issuance of a license 1 If the Secu!ities an& E9chan*e Co77ission is satisfie& that the applicant has co7plie& 6ith all the !eFui!e7ents of this Co&e an& othe! special la6s, !ules an& !e*ulations, the Co77ission shall issue a license to the applicant to t!ansact business in the Philippines fo! the pu!pose o! pu!poses specifie& in such license B Since the SEC 6ill *!ant a license onl2 6hen the fo!ei*n co!po!ation has co7plie& 6ith all the !eFui!e7ents of la6, it follo6s that 6hen it &eci&es to issue such license, it is satisfie& that the applicantDs b2?la6s, a7on* the othe! &ocu7ents, 7eet the le*al !eFui!e7ents This, in effect, is an app!o"al of the fo!ei*n co!po!ations b2?la6s It 7a2 not ha"e been 7a&e in e9p!ess te!7s, still it is clea!l2 an app!o"al The!efo!e, petitione! ban;Ds b2?la6s, thou*h o!i*inatin* f!o7 a fo!ei*n <u!is&iction, a!e "ali& an& effecti"e in the Philippines E CIVI' 'A/0 A$ENC.0 SPECIA' PO/ER O) ATTORNE.0 /#EN PO/ER O) ATTORNE. COMPRE#ENSIVE ENO%$# TO INC'%DE A%T#ORIT. TO APPEAR AT PRE?TRIA' CON)ERENCE 1 It is also e!!o! on the pa!t of the Cou!t of Appeals to state that the po6e! of atto!ne2 *i"en to the fou! 4@5 Citiban; e7plo2ees is not a special po6e! of atto!ne2 as !eFui!e& in pa!a*!aph :, A!ticle +GHG of the Ci"il Co&e an& Section + 4a5, Rule 8, of the Rules of Cou!t In the case of T!opical #o7es, Inc "s Villalu=, the special po6e! of atto!ne2 e9ecute& b2 petitione! ban; the!ein containe& the follo6in* pe!tinent te!7s 1 Bto appea! fo! an& in its behalf in the abo"e?entitle& case in all ci!cu7stances 6he!e its appea!ance is !eFui!e& an& to bin& it in all sai& instancesB The cou!t !ule& that3 BAlthou*h the po6e! of atto!ne2 in Fuestion &oes not specificall2 7ention the autho!it2 of petitione!Ds counsel to appea! an& bin& the petitione! at the p!e?t!ial confe!ence, the te!7s of sai& po6e! of atto!ne2 a!e co7p!ehensi"e enou*h as to inclu&e the autho!it2 to appea! fo! the petitione! at the p!e? t!ial confe!ence B A ID 0 ID 0 ID 0 'E$A' CO%NSE' APPOINTED TO REPRESENT BANK IN CO%RT P%RS%ANT TO B.?'A/ PROVISION CONSIDERED AN EMP'O.EE )OR A SPECIA' P%RPOSE 1 Atto!ne2 6as sufficient un&e! the b2?la6 p!o"ision autho!i=in* )e!*uson to &ele*ate an2 of his functions to an2 one o! 7o!e e7plo2ees of the petitione! ban; A !easonable inte!p!etation of this p!o"ision 6oul& inclu&e an appoint7ent of a le*al counsel to !ep!esent the ban; in cou!t, fo!, un&e! the ci!cu7stances, such le*al counsel can be consi&e!e&, an& in fact 6as consi&e!e& b2 the petitione! ban;, an e7plo2ee fo! a special pu!pose )u!the!7o!e, )e!*uson, 6ho hea&s the Philippine office thousan&s of 7iles a6a2 f!o7 its 7ain office in the %nite& States, 7ust be un&e!stoo& to ha"e sufficient po6e!s to act p!o7ptl2 in o!&e! to p!otect the inte!ests of his p!incipal H REMEDIA' 'A/0 CIVI' PROCED%RE0 PRECIPITATE ORDERS O) DE)A%'T )RO/NED %PON B. S%PREME CO%RT0 REASON T#ERE)OR0 /#EN PART. MA. BE PROPER'. DE)A%'TED 1 /e !eite!ate the p!e"ious a&7onitions of this Cou!t a*ainst Bp!ecipitate o!&e!s of &efault as these ha"e the effect of &en2in* the liti*ant the chance to be hea!& /hile the!e a!e instances, to be su!e, 6hen a pa!t2 7a2 be p!ope!l2 &efaulte&, these shoul& be the e9ceptions !athe! than the !ule an& shoul& be allo6e& onl2 in clea! cases of an obstinate !efusal o! ino!&inate ne*lect to co7pl2 6ith the o!&e!s of the cou!t Absent such a sho6in*, the pa!t2 7ust be *i"en e"e!2 !easonable oppo!tunit2 to p!esent his si&e an& to !efute the e"i&ence of the a&"e!se pa!t2 in &efe!ence to &ue p!ocess of la6B G 'E$A' ET#ICS0 A%T#ORIT. O) ATTORNE.S TO BIND C'IENTS 1 %n&e! Rule +:G, Section 8: of the Rules of Cou!t, an atto!ne2 has autho!it2 to bin& his client in an2 case b2 an

a*!ee7ent in !elation the!eto 7a&e in 6!itin*, an& this autho!it2 6oul& inclu&e ta;in* appeals an& all 7atte!s of o!&ina!2 <u&icial p!oce&u!e But he cannot, 6ithout special autho!it2, co7p!o7ise his clientDs liti*ation o! !ecei"e an2thin* in &ischa!*e of a clientDs clai7 but the full a7ount in cash The special po6e!s of atto!ne2 sepa!atel2 e9ecute& b2 )lo!encia Ta!!iela an& /illia7 / )e!*uson *!ante& to ( P $a!cia I Associates a!e "e!2 e9plicit in thei! te!7s as to the counselDs autho!it2 in the case at ba! DECISION CAMPOS, (R , ( p3 Petitione! is a fo!ei*n co77e!cial ban;in* co!po!ation &ul2 license& to &o business in the Philippines P!i"ate !espon&ents, spouses C!esencio an& -enai&a Vele=, 6e!e *oo& clients of petitione! ban;Ds b!anch in Cebu until Ma!ch +@, +JGA 6hen the2 file& a co7plaint fo! specific pe!fo!7ance an& &a7a*es a*ainst it in Ci"il Case No CEB?@HE+ befo!e the Re*ional T!ial Cou!t of Cebu, B!anch +, P!i"ate !espon&ents alle*e& in thei! co7plaint that the petitione! ban; e9ten&e& to the7 c!e&it lines sufficientl2 secu!e& 6ith !eal estate an& chattel 7o!t*a*es on eFuip7ent The2 clai7 that petitione! offe!e& the7 special a&&itional acco77o&ation of )i"e Million Pesos 4PE,,,,,,,, ,,5 to be a"aile& of in the follo6in* 7anne!3 Ba Defen&ant 6oul& an& &i& pu!chase chec; o! chec;s f!o7 the plaintiffs b2 e9chan*in* it 6ith &efen&antDs 7ana*e!Ds chec; on a !e*ula! &ail2 basis as !eflecte& in the &efen&antDs o6n le&*e! fu!nishe& to plaintiffs0 b It 6as fu!the! a*!ee& that on the follo6in* &a2, &efen&ant CITIBANK 6oul& a*ain pu!chase f!o7 the plaintiffs, chec; o! chec;s, b2 e9chan*in* the sa7e 6ith &efen&antDs 7ana*e!Ds chec;, 6hich chec;, ho6e"e!, 6ill be &eposite& b2 the plaintiffs 6ith thei! othe! ban;s to co"e! the chec; o! chec;s p!e"iousl2 issue& b2 the plaintiffs 7entione& abo"e0 c The sa7e !e*ula! an& a*!ee& acti"it2 6oul& be un&e!ta;en b2 the plaintiffs an& &efen&ant CITIBANK he!ein e"e!2 ban;in* &a2 the!eafte!0B + This arrangemen s ar e! on Se" em#er $, 19%& 'n i( March 11, 19%), *hen "ri+a e res"on!en s rie! o e,change *i h "e i ioner #an- si, chec-s amo'n ing o P3,09&,000.00 #' "e i ioner #ana((ege!(. re/'se! o con in'e *i h he arrangemen e+en a/ er re"ea e! !eman!s. 0ns ea!, "e i ioner #an- s'gges e! o "ri+a e res"on!en s ha he o a( amo'n co+ere! #. he 1arrangemen #e res r'c 're! o hir . 2303 mon hs *i h "re+ai(ing in eres ra e on he !iminishing #a(ance1. 8 Pri+a e res"on!en s agree! o s'ch a "ro"osa(. Then as a sign o/ goo! /ai h, he. iss'e! an! !e(i+ere! a chec- /or P7&,000.00 in /a+or o/ "e i ioner #an- *hich *as re/'se! #. he (a er !eman!ing ins ea! /'(( "a.men o/ he en ire amo'n . 4or he /ai('re o/ "e i ioner #an- o com"(. *i h his res r'c 'ring agreemen res"on!en s s'e! /or s"eci/ic "er/ormance an! !amages. "ri+a e

Petitione! ban; has a &iffe!ent "e!sion of the business !elationship that e9iste& bet6een it an& p!i"ate !espon&ents Thus3 B sta!tin* so7eti7e on Septe7be! @ of +JGE, he 4p!i"ate !espon&ent C!escencio Vele=5 &eposite& his unfun&e& pe!sonal chec;s 6ith his cu!!ent account 6ith the petitione! But p!io! to &epositin* sai& chec;s, he 6oul& p!esent his pe!sonal chec;s to a ban; office! as;in* the latte! to ha"e his pe!sonal chec;s i77e&iatel2 c!e&ite& as if it 6e!e a cash &eposit an& at the sa7e ti7e assu!in* the ban; office! that his pe!sonal chec;s 6e!e full2 fun&e& #a"in* al!ea&2 *aine& the t!ust an& confi&ence of the office!s of the ban; because of his past t!ansactions, the ban;Ds office! 6oul& al6a2s acco77o&ate his !eFuest Afte! his !eFuests a!e *!ante& 6hich is &one b2 6a2 of the ban; office! affi9in* his si*natu!e on the pe!sonal chec;s, p!i"ate !espon&ent C!esencio Vele= 6oul& then &eposit his p!io!l2 app!o"e&

pe!sonal chec;s to his cu!!ent account an& at the sa7e ti7e 6ith&!a6 su7s of 7one2 f!o7 sai& cu!!ent account b2 6a2 of petitione! ban;Ds 7ana*e!Ds chec; P!i"ate !espon&ent 6oul& then &eposit petitione! ban;Ds 7ana*e!Ds chec; to his "a!ious cu!!ent accounts in othe! co77e!cial ban;s to co"e! his p!e"iousl2 &eposite& unfun&e& pe!sonal chec;s 6ith petitione! ban; Na 'ra((., "e i ioner #an- an! i s o//icers ne+er !isco+ere! ha his "ersona( chec- !e"osi s *ere 'n/'n!e! On the cont!a!2, it *a"e the petitione! ban; the false i7p!ession that p!i"ate !espon&entDs const!uction business 6as &oin* "e!2 6ell an& that he 6as one bi* client 6ho coul& be t!uste& This &ecepti"e an& c!i7inal sche7e he &i& e"e!2 ban;in* &a2 6ithout fail f!o7 Septe7be! @, +JGE up to Ma!ch ++, +JGA The a7ounts that he 6as &epositin* an& 6ith&!a6in* &u!in* this pe!io& 4Septe7be! @, +JGE to Ma!ch ++, +JGA5 p!o*!essi"el2 beca7e bi**e! It sta!te& at P@A,,,, ,, on Septe7be! @, +JGE an& on Ma!ch ++, +JGA the a7ount of &eposit an& 6ith&!a6al al!ea&2 !eache& o"e! P:,,,,,,,, ,, At this point in ti7e 4Ma!ch ++, +JGA5, the p!i"ate !espon&ent C!esencio Vele= p!esu7abl2 al!ea&2 feelin* that soone! o! late! he 6oul& be cau*ht an& that he al!ea&2 6ante& to cash in on his e"il sche7e, &eci&e& to !un a6a2 6ith petitione!Ds 7one2 On March 11, 19%), he !e"osi e! +ario's 'n/'n!e! "ersona( chec-s o a((ing P3,09&,000.00 an! re5'es e! a #an- o//icer ha he same #e cre!i e! as cash an! a/ er sec'ring he a""ro+a( o/ sai! #an- o//icer, !e"osi e! his +ario's "ersona( chec-s in he amo'n o/ P3,09&,000.00 *i h his c'rren acco'n an! a he same ime *i h!re* he s'm o/ P3,2$$,000.00 in he /orm o/ "e i ioner6s manager6s chec-. Instea& of usin* the p!ocee&s of his 6ith&!a6als to co"e! his unfun&e& pe!sonal chec;s, he !an a6a2 6ith petitione! ban;Ds 7one2 Th's, "ri+a e res"on!en Cresencio 7e(e86s "ersona( chec-s !e"osi e! *i h "e i ioner #an- on March 11, 19%) in he o a( aggrega e amo'n o/ P3,09&,000.00 #o'nce!. The chec;s bounce& afte! sai& pe!sonal chec;s 6e!e 7a&e the substantial basis of his 6ith&!a6in* the su7 of P:,8@@,,,, ,, f!o7 his cu!!ent account 6ith petitione! ban; B : SubseFuentl2, on Au*ust +J, +JGA, petitione! ban; file& a c!i7inal co7plaint a*ainst p!i"ate !espon&ents fo! "iolation of Batas Pa7bansa Bl* 88 4Bouncin* Chec;s 'a65 an& estafa 4si9 counts5 un&e! A!ticle :+E pa! 84&5 of the Re"ise& Penal Co&e On Ap!il 8G, +JGG, the in"esti*atin* fiscal !eco77en&e& the filin* of an info!7ation a*ainst p!i"ate !espon&ents fo! "iolations of the 7entione& la6s On (une +:, +JGJ, petitione! ban; sub7itte& its ans6e! to the co7plaint file& b2 p!i"ate !espon&ents In the O!&e! &ate& )eb!ua!2 8,, +JJ,, the case 6as set fo! p!e?t!ial on Ma!ch :,, +JJ, an& petitione! ban; 6as &i!ecte& to sub7it its p!e?t!ial b!ief at least : &a2s befo!e the p!e?t!ial confe!ence Petitione! ban; onl2 file& its p!e?t!ial b!ief on Ma!ch :,, +JJ, On Ma!ch :,, +JJ,, the &ate of the p!e?t!ial confe!ence, counsel fo! petitione! ban; appea!e&, p!esentin* a special po6e! of atto!ne2 e9ecute& b2 Citiban; office! )lo!encia Ta!!iela in fa"o! of petitione! ban;Ds counsel, the ( P $a!cia I Associates, to !ep!esent an& bin& petitione! ban; at the p!e? t!ial confe!ence of the case at ba! Inspite of this special po6e! of atto!ne2, counsel fo! p!i"ate !espon&ents o!all2 7o"e& to &ecla!e petitione! ban; as in &efault on the *!oun& that the special po6e! of atto!ne2 6as not e9ecute& b2 the Boa!& of Di!ecto!s of Citiban; Petitione! ban; 6as then !eFui!e& to file a 6!itten opposition to this o!al 7otion to &ecla!e it as in &efault In sai& opposition petitione! ban; attache& anothe! special po6e! of atto!ne2 7a&e b2 /illia7 / )e!*uson, Vice P!esi&ent an& hi*hest !an;in* office! of Citiban;, Philippines, constitutin* an& appointin* the ( P $a!cia I Associates to !ep!esent an& bin& the BANK at the p!e?t!ial confe!ence an&Ko! t!ial of the case of BC!esencio Vele=, et al "s Citiban;, N A B @ In an O!&e! &ate& Ap!il 8:, +JJ,, !espon&ent <u&*e &enie& p!i"ate !espon&entsD o!al 7otion to &ecla!e petitione! ban; as in &efault an& set the continuation of the p!e?t!ial confe!ence fo! Ma2 8, +JJ, On the sche&ule& p!e?t!ial confe!ence, p!i"ate !espon&ents !eite!ate&, b2 6a2 of as;in* fo! !econsi&e!ation, thei! o!al 7otion to &ecla!e petitione! ban; as in &efault fo! its failu!e to appea!

th!ou*h an autho!i=e& a*ent an& that the &ocu7ents p!esente& a!e not in acco!&ance 6ith the !eFui!e7ents of the la6 Petitione! ban; a*ain file& on Ma2 +@, +JJ, its opposition the!eto, statin* as follo6s3 B /hile it has been the p!actice of Citiban; to appoint its counsels as its atto!ne2?in?fact in ci"il cases because it consi&e!s sai& counsels eFui"alent to a Citiban; e7plo2ee, 2et, in o!&e! to a"oi& fu!the! a!*u7ents on the 7atte!, the &efen&ant Citiban; 6ill secu!e anothe! po6e! of atto!ne2 f!o7 M! /illia7 / )e!*uson in fa"o! of its e7plo2eeKs 6ho 6ill !ep!esent the &efen&ant Citiban; in the p!e? t!ial confe!ences of this case As soon as the sai& special po6e! of atto!ne2 is secu!e&, the &efen&ant 6ill p!esent it befo!e this #ono!able Cou!t an& in pu!suance the!e6ith, the &efen&ant he!eb2 7a;es a !ese!"ation to p!esent such &ocu7ent as soon as a"ailable B E In co7pliance 6ith the abo"e p!o7ise, petitione! ban; file& a 7anifestation, &ate& Ma2 8:, +JJ,, attachin* the!e6ith a special po6e! of atto!ne2 e9ecute& b2 /illia7 / )e!*uson in fa"o! of Citiban; e7plo2ees to !ep!esent an& bin& Citiban; on the p!e?t!ial confe!ence of the case at ba! A On Au*ust +E, +JJ,, !espon&ent <u&*e issue& an o!&e! &ecla!in* petitione! ban; as in &efault This o!&e!, !ecei"e& b2 petitione! ban; on Septe7be! 8H, +JJ,, cite& the follo6in* as !eason fo! the &ecla!ation of &efault3 BDefen&ant?ban;, althou*h a fo!ei*n co!po!ation, is boun& b2 Philippine la6s 6hen &oin* an& con&uctin* business in the Philippines 4Sec +8J, B P Bl* AG5, an& its co!po!ate po6e!s coul& onl2 be e9e!cise& b2 its Boa!& of Di!ecto!s 4Sec 8:, B P Bl* AG5 The e9e!cise b2 the Boa!& of Di!ecto!s of such po6e! coul& onl2 be "ali& if it bea!s the app!o"al of the 7a<o!it2 of the Boa!& 4Sec 8E, pa! 8, Co!po!ation Co&e5 The !eco!&s &oes not sho6 the !eFuisite &ocu7ent The alle*e& autho!it2 4Special Po6e! of Atto!ne2, Anne9 BAB5 e9ecute& b2 M! /illia7 / )e!*uson in fa"o! of the alle*e& Citiban; e7plo2ees, assu7in* the sa7e to be a &ele*able autho!it2, to !ep!esent the &efen&ant in the p!e?t!ial confe!ence, ma!e no men ion o/ 9.P. Garcia : ;ssocia es as one o/ he em"(o.ees o/ he !e/en!an . 0 s an!s o reason here/ore, ha he !e/en!an <#an- has no "ro"er re"resen a ion !'ring he "re< ria( con/erence on Ma. 2, 1990 /or "'r"oses o/ Sec. 2, R'(e 20 o/ he R'(es o/ Co'r .1 7 On Octobe! +, +JJ,, petitione! ban; file& a 7otion fo! !econsi&e!ation of the abo"e o!&e! but it 6as &enie& on Dece7be! +,, +JJ, Petitione! ban; then file& a petition fo! ce!tio!a!i, p!ohibition an& 7an&a7us 6ith p!eli7ina!2 in<unction an&Ko! te7po!a!2 !est!ainin* o!&e! 6ith the Cou!t of Appeals On (une 8A, +JJ+, the Cou!t of Appeals &is7isse& the petition on the follo6in* *!oun&s3 B In the fi!st place, petitione! a&7itte& that it &i& not an& coul& not p!esent a Boa!& !esolution f!o7 the ban;Ds Boa!& of Di!ecto!s appointin* its counsel, Att2 (ulius - Ne!i, as its atto!ne2?in?fact to !ep!esent an& bin& it &u!in* the p!e?t!ial confe!ence of this case This a&7ission is containe& on pa*es +8 an& +: of the instant petition In the secon& place, the BB2?'a6sB of petitione! 6hich on its face autho!i=es 4sic5 the appoint7ent of an atto!ne2?in?fact to !ep!esent it in an2 liti*ation, has not been app!o"e& b2 the Secu!ities an& E9chan*e Co77ission, as !eFui!e& b2 Section @A of the Co!po!ation Co&e of the Philippines Appa!entl2, the BB2?'a6sB in Fuestion 6as 4sic5 app!o"e& un&e! the la6s of the %nite& States, but the!e is no sho6in* that the sa7e 6as *i"en the !eFui!e& i7p!i7atu! b2 the Secu!ities an& E9chan*e Co77ission Since petitione! is a fo!ei*n co!po!ation &oin* business in the Philippines, it is boun& b2 all la6s, !ules an& !e*ulations applicable to &o7estic co!po!ations 4Sec +8J, Co!po!ation Co&e5

In the thi!& place, no special po6e! of atto!ne2 6as p!esente& autho!i=in* petitione!Ds counsel of !eco!&, Att2 (ulius Ne!i an&Ko! ( P $a!cia Associates, to appea! fo! an& in behalf of petitione! &u!in* the p!e? t!ial /hat petitione! e9hibite& to the cou!t a Fuo 6as a *ene!al po6e! of atto!ne2 *i"en to one /illia7 / )e!*uson 6ho in tu!n e9ecute& a po6e! of atto!ne2 in fa"o! of fi"e 4E5 4sic5 Citiban; e7plo2ees to act as atto!ne2?in?fact in Ci"il Case No CEB?@HE+ .et, &u!in* the p!e?t!ial not one of sai& e7plo2ees appea!e&, e9cept counsel 6ho is not e"en a ban; e7plo2ee )u!the!7o!e, e"en assu7in* the "ali&it2 of the po6e! of atto!ne2 issue& b2 petitione! in fa"o! of )e!*uson as 6ell as the po6e! of atto!ne2 he issue& to fi"e 4E5 4sic5 Citiban; e7plo2ees, sai& po6e! of atto!ne2 has not been sho6n to be a Special Po6e! of Atto!ne2 p!ecisel2 inten&e& not onl2 to !ep!esent the ban; at the p!e?t!ial of the case on a ce!tain &ate but also to ente! into an2 co7p!o7ise as !eFui!e& in pa!a*!aph :, A!ticle +GHG of the Ci"il Co&e an& Section + 4a5, Rule 8,, Rules of Cou!t B G #ence, this instant petition Petitione! ban; conten&s that no boa!& !esolution 6as necessa!2 fo! its le*al counsel, Att2 (ulius Ne!i, o! Citiban; e7plo2ees to act as its atto!ne2?in?fact in the case at ba! because petitione! ban;Ds b2? la6s *!ant to its E9ecutin* Office! an& Sec!eta!2 P!o?Te7 the po6e! to &ele*ate to a Citiban; office!, in this case /illia7 / )e!*uson, the autho!it2 to !ep!esent an& &efen& the ban; an& its inte!ests )u!the!7o!e, it conten&s that the Cou!t of Appeals e!!e& in hol&in* that the b2?la6s of petitione! ban; cannot be *i"en effect because it &i& not ha"e the i7p!i7atu! of the Secu!ities an& E9chan*e Co77ission 4SEC5 as !eFui!e& b2 Section @A of the Co!po!ation Co&e of the Philippines P!i"ate !espon&ents !efute both contentions The2 assail the autho!it2 of petitione! ban;Ds le*al counsel to appea! at the p!e?t!ial confe!ence on t6o *!oun&s, na7el23 fi!st, that the autho!it2 &i& not co7e f!o7 the Boa!& of Di!ecto!s 6hich has the e9clusi"e !i*ht to e9e!cise co!po!ate po6e!s0 an& secon&, that the autho!it2 *!ante& to the E9ecutin* Office! in the b2?la6s 6as ineffecti"e because the sa7e 6e!e not sub7itte& to, no! app!o"e& b2, the SEC The!e a!e thus t6o issues in this case 4irs , *he her a reso(' ion o/ he #oar! o/ !irec ors o/ a cor"ora ion is a(*a.s necessar. /or gran ing a' hori . o an agen o re"resen he cor"ora ion in co'r cases. ;n! secon!, *he her he #.<(a*s o/ he "e i ioner /oreign cor"ora ion *hich has "re+io's(. #een gran e! a (icense o !o #'siness in he Phi(i""ines, are e//ec i+e in his ='ris!ic ion. If the b2?la6s a!e "ali& an& a boa!& !esolution is not necessa!2 as petitione! ban; clai7s, then the &ecla!ation of &efault 6oul& ha"e no basis In the co!po!ate hie!a!ch2, the!e a!e th!ee le"els of cont!ol3 4+5 the boa!& of &i!ecto!s, 6hich is !esponsible fo! co!po!ate policies an& the *ene!al 7ana*e7ent of the business affai!s of the co!po!ation0 485 the office!s, 6ho in theo!2 e9ecute the policies lai& &o6n b2 the boa!&, but in p!actice often ha"e 6i&e latitu&e in &ete!7inin* the cou!se of business ope!ations0 an& 4:5 the stoc;hol&e!s 6ho ha"e the !esi&ual po6e! o"e! fun&a7ental co!po!ate chan*es, li;e a7en&7ents of the a!ticles of inco!po!ation #o6e"e!, <ust as a natu!al pe!son 7a2 autho!i=e anothe! to &o ce!tain acts in his behalf, so 7a2 the boa!& of &i!ecto!s of a co!po!ation "ali&l2 &ele*ate so7e of its functions to in&i"i&ual office!s o! a*ents appointe& b2 it Section 8: of the Co!po!ation Co&e of the Philippines in pa!t p!o"i&es3 BSEC 8: The boa!& of &i!ecto!s o! t!ustees %nless othe!6ise p!o"i&e& in this Co&e, the co!po!ate po6e!s of all co!po!ations fo!7e& un&e! this Co&e shall be e9e!cise&, all business con&ucte& an& all p!ope!t2 of such co!po!ations cont!olle& an& hel& b2 the boa!& of &i!ecto!s o! t!ustees to be electe&

f!o7 a7on* the hol&e!s of stoc;s, o! 6he!e the!e is no stoc;, f!o7 a7on* the 7e7be!s of the co!po!ation, 6ho shall hol& office fo! one 4+5 2ea! an& until thei! successo!s a!e electe& an& Fualifie& 999 999 999B 4E7phasis supplie&5 Thus, althou*h as a *ene!al !ule, all co!po!ate po6e!s a!e to be e9e!cise& b2 the boa!& of &i!ecto!s, e9ceptions a!e 7a&e 6he!e the Co&e p!o"i&es othe!6ise Section 8E of sai& Co&e p!o"i&es that the &i!ecto!s of the co!po!ation shall elect its co!po!ate office!s, an& fu!the! p!o"i&es as follo6s3 BSEC 8E Co!po!ate office!s0 Fuo!u7 1 The &i!ecto!s o! t!ustees an& office!s to be electe& shall pe!fo!7 the &uties en<oine& on the7 b2 la6 an& b2 the b2?la6s of the co!po!ation B )u!the!7o!e, Section @H of the sa7e Co&e enu7e!ates 6hat 7a2 be containe& in the b2?la6s, a7on* 6hich is a p!o"ision fo! the BFualifications, &uties an& co7pensation of &i!ecto!s o! t!ustees, office!s an& e7plo2eesB 4E7phasis supplie& 5 Ta;in* all the abo"e p!o"isions of la6 to*ethe!, it is clea! that co!po!ate po6e!s 7a2 be &i!ectl2 confe!!e& upon co!po!ate office!s o! a*ents b2 statute, the a!ticles of inco!po!ation, the b2?la6s o! b2 !esolution o! othe! act of the boa!& of &i!ecto!s In a&&ition, an office! 6ho is not a &i!ecto! 7a2 also appoint othe! a*ents 6hen so autho!i=e& b2 the b2?la6s o! b2 the boa!& of &i!ecto!s Such a!e !efe!!e& to as e9p!ess po6e!s J The!e a!e also po6e!s inci&ental to e9p!ess po6e!s confe!!e& It is a fun&a7ental p!inciple in the la6 of a*enc2 that e"e!2 &ele*ation of autho!it2, 6hethe! *ene!al o! special, ca!!ies 6ith it, unless the cont!a!2 be e9p!esse&, i7plie& autho!it2 to &o all of those acts, natu!all2 an& o!&ina!il2 &one in such cases, 6hich a!e !easonabl2 necessa!2 an& p!ope! to be &one in o!&e! to ca!!2 into effect the 7ain autho!it2 confe!!e& +, Since the b2?la6s a!e a sou!ce of autho!it2 fo! co!po!ate office!s an& a*ents of the co!po!ation, a !esolution of the Boa!& of Di!ecto!s of Citiban; appointin* an atto!ne2 in fact to !ep!esent an& bin& it &u!in* the p!e?t!ial confe!ence of the case at ba! is not necessa!2 because its b2?la6s allo6 its office!s, the E9ecutin* Office! an& the Sec!eta!2 P!o?Te7, LL to e9ecute a po6e! of atto!ne2 to a &esi*nate& ban; office!, /illia7 / )e!*uson in this case, clothin* hi7 6ith autho!it2 to &i!ect an& 7ana*e co!po!ate affai!s The !ele"ant p!o"ision in the *ene!al po6e! of atto!ne2 *!ante& to hi7 a!e as follo6s3 BA That the E9ecutin* Office! an& the Sec!eta!2 P!o?Te7 a!e of full a*e, co7petent to act in the p!e7ises, to 7e pe!sonall2 ;no6n, an& that the2 a!e autho!i=e& to e9ecute this inst!u7ent b2 "i!tue of the po6e!s *!ante& to the7 pu!suant to the B2?'a6s of the Ban; an& the la6s of the %nite& States of A7e!ica, an& that the E9ecutin* Office! sai& that he, on the one han&, he!eb2 !e"o;es an& cancels an2 inst!u7ent of po6e! of atto!ne2 p!e"iousl2 e9ecute& on behalf of the Ban; fo! use in the P#I'IPPINES, in fa"o! of /I''IAM / )ER$%SON 4he!einafte! !efe!!e& to as the BAtto!ne2?in? factB5, of le*al a*e, a Ban;e!, an& no6 !esi&in* in the P#I'IPPINES, an& that he 4the E9ecutin* Office!5, on the othe! han&, &oes he!eb2 autho!i=e an& e7po6e! the Atto!ne2?in?fact, actin* in the na7e o! on behalf of the Ban;, o! an2 of its B!anches, o! an2 inte!est it o! the2 7a2 ha"e o! !ep!esent, sai& !e"ocation an& autho!i=ation to be effecti"e as of this &ate as follo6s3 999 999 999 >VII To !ep!esent an& &efen& the Ban; an& its inte!est befo!e an2 an& all <u&*es an& cou!ts, of all classes an& <u!is&ictions, in an2 action, suit o! p!ocee&in* in 6hich the Ban; 7a2 be a pa!t2 o! 7a2 be inte!este& in a&7inist!ati"e, ci"il, c!i7inal, contentious o! contentious?a&7inist!ati"e 7atte!s, an& in all ;in&s of la6suits, !ecou!ses o! p!ocee&in*s of an2 ;in& o! natu!e, 6ith co7plete an& absolute !ep!esentation of the Ban;, 6hethe! as plaintiff o! &efen&ant, o! as an inte!este& pa!t2 fo! an2 !eason 6hatsoe"e!

999 999 999 >>I To substitute o! &ele*ate this Po6e! of Atto!ne2 in 6hole o! in pa!t in fa"o! of such one o! 7o!e e7plo2ees of the Ban;, as he 7a2 &ee7 a&"isable, but 6ithout &i"estin* hi7self of an2 of the po6e!s *!ante& to hi7 b2 this Po6e! of Atto!ne20 an& to *!ant an& e9ecute in fa"o! of an2 one o! 7o!e such e7plo2ees, po6e!s of atto!ne2 containin* all o! such autho!i=ations, as he 7a2 &ee7 a&"isable B ++ Since pa!a*!aph >>I abo"e specificall2 allo6s )e!*uson to &ele*ate his po6e!s in 6hole o! in pa!t, the!e can be no &oubt that the special po6e! of atto!ne2 in fa"o!, fi!st, of ( P $a!cia I Associates an& late!, of the ban;Ds e7plo2ees, constitutes a "ali& &ele*ation of )e!*usonDs e9p!ess po6e! 4un&e! pa!a*!aph >VII abo"e5 to !ep!esent petitione! ban; in the p!e?t!ial confe!ence in the lo6e! cou!t This b!in*s us to the secon& Fue!23 6hethe! petitione! ban;Ds b2?la6s, 6hich constitute the basis fo! )e!*usonDs special po6e! of atto!ne2 in fa"o! of petitione! ban;Ds le*al counsel a!e effecti"e, consi&e!in* that petitione! ban; has been p!e"iousl2 *!ante& a license to &o business in the Philippines The Cou!t of Appeals !elie& on Section @A of the Co!po!ation Co&e to suppo!t its conclusion that the b2?la6s in Fuestion a!e 6ithout effect because the2 6e!e not app!o"e& b2 the SEC Sai& section !ea&s as follo6s3 BSEC @A A&option of b2?la6s 1 E"e!2 co!po!ation fo!7e& un&e! this Co&e 7ust, 6ithin one 4+5 7onth afte! !eceipt of official notice of the issuance of its ce!tificate of inco!po!ation b2 the Secu!ities an& E9chan*e Co77ission, a&opt a co&e of b2?la6s fo! its *o"e!n7ent not inconsistent 6ith this Co&e )o! the a&option of b2?la6s b2 the co!po!ation, the affi!7ati"e "ote of the stoc;hol&e!s !ep!esentin* at least a 7a<o!it2 of the outstan&in* capital stoc;, o! of at least a 7a<o!it2 of the 7e7be!s in the case of non?stoc; co!po!ations, shall be necessa!2 The b2?la6s shall be si*ne& b2 the stoc;hol&e!s o! 7e7be!s "otin* fo! the7 an& shall be ;ept in the p!incipal office of the co!po!ation, sub<ect to the inspection of the stoc;hol&e!s o! 7e7be!s &u!in* office hou!s0 an& a cop2 the!eof, &ul2 ce!tifie& to b2 a 7a<o!it2 of the &i!ecto!s o! t!ustees an& counte!si*ne& b2 the sec!eta!2 of the co!po!ation, shall be file& 6ith the Secu!ities an& E9chan*e Co77ission 6hich shall be attache& to the o!i*inal a!ticles of inco!po!ation Not6ithstan&in* the p!o"isions of the p!ece&in* pa!a*!aph, b2?la6s 7a2 be a&opte& an& file& p!io! to inco!po!ation0 in such case, such b2?la6s shall be app!o"e& an& si*ne& b2 all the inco!po!ato!s an& sub7itte& to the Secu!ities an& E9chan*e Co77ission, to*ethe! 6ith the a!ticles of inco!po!ation In all cases, b2?la6s shall be effecti"e onl2 upon the issuance b2 the Secu!ities an& E9chan*e Co77ission of a ce!tification that the b2?la6s a!e not inconsistent 6ith this Co&e B A ca!eful !ea&in* of the abo"e p!o"ision 6oul& sho6 that a co!po!ation can sub7it its b2?la6s, p!io! to inco!po!ation, o! 6ithin one 7onth afte! !eceipt of official notice of the issuance of its ce!tificate of inco!po!ation b2 the SEC /hen the thi!& pa!a*!aph of the abo"e p!o"ision 7entions Bin all casesB, it can onl2 !efe! to these t6o options0 i e , 6hethe! a&opte& p!io! to inco!po!ation o! 6ithin one 7onth afte! inco!po!ation, the b2?la6s shall be effecti"e onl2 upon the app!o"al of the SEC But e"en 7o!e i7po!tant, sai& p!o"ision sta!ts 6ith the ph!ase BE"e!2 co!po!ation fo!7e& un&e! this Co&eB, 6hich can onl2 !efe! to co!po!ations inco!po!ate& in the Philippines #ence, Section @A, in so fa! as it !efe!s to the effecti"it2 of co!po!ate b2?la6s, applies onl2 to &o7estic co!po!ations an& not to fo!ei*n co!po!ations On the othe! han&, Section +8E of the sa7e Co&e !eFui!es that a fo!ei*n co!po!ation appl2in* fo! a license to t!ansact business in the Philippines 7ust sub7it, a7on* othe! &ocu7ents, to the SEC, a cop2 of its a!ticles of inco!po!ation an& b2?la6s, ce!tifie& in acco!&ance 6ith la6 %nless these &ocu7ents a!e sub7itte&, the application cannot be acte& upon b2 the SEC In the follo6in* section, the Co&e specifies 6hen the SEC can *!ant the license applie& fo! Section +8A p!o"i&es in pa!t3

BSEC +8A Issuance of a license 1 If the Secu!ities an& E9chan*e Co77ission is satisfie& that the applicant has co7plie& 6ith all the !eFui!e7ents of this Co&e an& othe! special la6s, !ules an& !e*ulations, the Co77ission shall issue a license to the applicant to t!ansact business in the Philippines fo! the pu!pose o! pu!poses specifie& in such license B Since the SEC 6ill *!ant a license onl2 6hen the fo!ei*n co!po!ation has co7plie& 6ith all the !eFui!e7ents of la6, it follo6s that 6hen it &eci&es to issue such license, it is satisfie& that the applicantDs b2?la6s, a7on* the othe! &ocu7ents, 7eet the le*al !eFui!e7ents This, in effect, is an app!o"al of the fo!ei*n co!po!ations b2?la6s It 7a2 not ha"e been 7a&e in e9p!ess te!7s, still it is clea!l2 an app!o"al The!efo!e, petitione! ban;Ds b2?la6s, thou*h o!i*inatin* f!o7 a fo!ei*n <u!is&iction, a!e "ali& an& effecti"e in the Philippines In pu!suance of the autho!it2 *!ante& to hi7 b2 petitione! ban;Ds b2?la6s, its E9ecutin* Office! appointe& /illia7 / )e!*uson, a !esi&ent of the Philippines, as its Atto!ne2?in?)act e7po6e!in* the latte!, a7on* othe! thin*s, to !ep!esent petitione! ban; in cou!t cases In tu!n, /illia7 / )e!*uson e9ecute& a po6e! of atto!ne2 in fa"o! of ( P $a!cia I Associates 4petitione! ban;Ds counsel5 to !ep!esent petitione! ban; in the p!e?t!ial confe!ence befo!e the lo6e! cou!t This act of &ele*ation is e9plicit2 autho!i=e& b2 pa!a*!aph >>I of his o6n appoint7ent, 6hich 6e ha"e p!e"iousl2 cite& It is also e!!o! fo! the Cou!t of Appeals to insist that the special po6e! of atto!ne2, p!esente& b2 petitione! ban; autho!i=in* its counsel, Att2 (ulius Ne!i an&Ko! ( P $a!cia I Associates, to appea! fo! an& in behalf of petitione! ban; &u!in* the p!e?t!ial, is not "ali& The !eco!&s &o not sustain this fin&in* /e Fuote 6ith app!o"al the contention of petitione! ban; as it is bo!ne b2 the !eco!&s, to 6it3 B The !eco!&s of this case 6oul& sho6 that at the sta!t, the petitione!, th!u counsel, p!esente& a special po6e! of atto!ne2 e9ecute& b2 then Citiban; Office! )lo!encio 4sic5 ( Ta!!iela 6hich 6as 7a!;e& as E9hibit B+B in the p!e?t!ial of this case This is p!ecisel2 the !eason 6h2 the cou!t &enie&, in an O!&e! &ate& Ap!il 8:, +JJ, the p!i"ate !espon&entDs o!al 7otion to &ecla!e the &efen&ant in fault The sai& special po6e! of atto!ne2 e9ecute& b2 )lo!encio 4sic5 ( Ta!!iela 6as *!ante& b2 M! Rafael B Buena"entu!a, 6ho 6as then the Senio! Vice?P!esi&ent of Citiban; an& the hi*hest !an;in* office of Citiban; in the Philippines Consi&e!in* that at the ti7e of the p!esentation of the sai& special po6e! of atto!ne2 Rafael B Buena"entu!a 6as no lon*e! connecte& 6ith Citiban;, the petitione! a*ain p!esente& anothe! special po6e! of atto!ne2 e9ecute& b2 /illia7 / )e!*uson in fa"o! of ( P $a!cia I Associates, )in&in* that the autho!it2 of /illia7 / )e!*uson to &ele*ate his autho!it2 to act fo! an& in behalf of the ban; in an2 ci"il suit is li7ite& to in&i"i&uals 6ho a!e e7plo2ees of the ban; the petitione! a*ain on Ma2 8:, +JJ, p!esente& anothe! special po6e! of atto!ne2 &ate& Ma2 +A, +JJ, 6he!ein /illia7 / )e!*uson appointe& as atto!ne2?in?fact the follo6in* e7plo2ees of petitione!, na7el23 Robe!to Re2es, Ne7esio Solo7on, Ai7ee .u an& To7as .ap The sai& special po6e! of atto!ne2 6as file& an& p!esente& b2 the petitione! th!ou*h its Manifestation file& in the T!ial Cou!t on Ma2 8:, +JJ,, B +8 %n&e! Rule +:G, Section 8: of the Rules of Cou!t, an atto!ne2 has autho!it2 to bin& his client in an2 case b2 an a*!ee7ent in !elation the!eto 7a&e in 6!itin*, an& this autho!it2 6oul& inclu&e ta;in* appeals an& all 7atte!s of o!&ina!2 <u&icial p!oce&u!e But he cannot, 6ithout special autho!it2, co7p!o7ise his clientDs liti*ation o! !ecei"e an2thin* in &ischa!*e of a clientDs clai7 but the full a7ount in cash The special po6e!s of atto!ne2 sepa!atel2 e9ecute& b2 )lo!encia Ta!!iela an& /illia7 / )e!*uson *!ante& to ( P $a!cia I Associates a!e "e!2 e9plicit in thei! te!7s as to the counselDs autho!it2 in the case at ba! /e Fuote the !ele"ant p!o"isions of the special po6e!s of atto!ne2 sho6in* sufficient co7pliance 6ith the !eFui!e7ents of Section 8:, Rule +:G, to 6it3 BThat the BANK fu!the! autho!i=e& the sai& ( P $ARCIA I ASSOCIATES to ente! into an a7icable settle7ent, stipulation of facts an&Ko! co7p!o7ise a*!ee7ent 6ith the pa!t2 o! pa!ties in"ol"e& un&e!

such te!7s an& con&itions 6hich the sai& ( P $ARCIA I ASSOCIATES 7a2 &ee7 !easonable 4un&e! pa!a7ete!s p!e"iousl2 &efine& b2 the p!incipal5 an& e9ecute an& si*n sai& &ocu7ents as 7a2 be app!op!iate #EREB. $IVIN$ AND $RANTIN$ unto ( P $ARCIA I ASSOCIATES full po6e! an& autho!it2 6hatsoe"e! !eFuisite necessa!2 o! p!ope! to be &one in o! about the p!e7ises, as full2 to all intents an& pu!poses as the BANK 7i*ht o! coul& la6full2 &o o! cause to be &one un&e! an& b2 "i!tue of these p!esents B +: It is also e!!o! on the pa!t of the Cou!t of Appeals to state that the po6e! of atto!ne2 *i"en to the fou! 4@5 Citiban; e7plo2ees is not a special po6e! of atto!ne2 as !eFui!e& in pa!a*!aph :, A!ticle +GHG of the Ci"il Co&e an& Section + 4a5, Rule 8, of the Rules of Cou!t In the case of T!opical #o7es, Inc "s Villalu=, +@ the special po6e! of atto!ne2 e9ecute& b2 petitione! ban; the!ein containe& the follo6in* pe!tinent te!7s 1 Bto appea! fo! an& in its behalf in the abo"e?entitle& case in all ci!cu7stances 6he!e its appea!ance is !eFui!e& an& to bin& it in all sai& instancesB The cou!t !ule& that3 BAlthou*h the po6e! of atto!ne2 in Fuestion &oes not specificall2 7ention the autho!it2 of petitione!Ds counsel to appea! an& bin& the petitione! at the p!e?t!ial confe!ence, the te!7s of sai& po6e! of atto!ne2 a!e co7p!ehensi"e enou*h as to inclu&e the autho!it2 to appea! fo! the petitione! at the p!e?t!ial confe!ence B In the sa7e 7anne!, the po6e! of atto!ne2 *!ante& to petitione! ban;Ds e7plo2ees shoul& be consi&e!e& a special po6e! of atto!ne2 The !ele"ant po!tion !ea&s3 B/#EREAS, the Ban; is the Defen&ant in Ci"il Case No CEB?@HE+, entitle& BC!esencio Vele=, et al "s Citiban;, N A ,B pen&in* befo!e the Re*ional T!ial Cou!t of Cebu Cit2, B!anch >0 NO/, T#ERE)ORE, un&e! an& b2 "i!tue of A!ticle >>I of the Po6e! of Atto!ne2 e9ecute& b2 the Ban; in fa"o! of the Atto!ne2?in?)act 4Anne9 BAB5, 6hich p!o"ision is Fuote& abo"e, the Atto!ne2?in? )act has no7inate&, &esi*nate& an& appointe&, as b2 these p!esents he no7inates, &esi*nates an& appoints, as his substitutes an& &ele*ates, 6ith !espect to the sai& Po6e! of Atto!ne2, ROBERTO RE.ES, Vice P!esi&ent an&Ko! NEMESIO SO'OMON, (R , Mana*e!, AIMEE .%, Assistant Vice P!esi&ent an&Ko! TOMAS .AP, Assistant Mana*e! 4he!einafte! !efe!!e& to as the BDE'E$ATESB5, all of le*al a*e, citi=ens of the Republic of the Philippines an& 6ith business a&&!ess at Citiban; Cente!, Paseo &e Ro9as, Ma;ati, Met!o Manila, Philippines, the Atto!ne2?in?)act he!eb2 *!antin*, confe!!in* an& &ele*atin* such autho!ities an& bin&in* the Ban; in the P!e?T!ial Confe!ence an&Ko! T!ial of the abo"e7entione& case, pu!suant to Rule 8, of the Re"ise& Rules of Cou!t, to the DE'E$ATES The atto!ne2?in?)act fu!the!7o!e he!eb2 !atif2in* an& confi!7in* all that the DE'E$ATES shall la6full2 &o o! cause to be &one un&e! an& b2 "i!tue of these p!esents B +E )!o7 the outset, petitione! ban; sho6e& a 6illin*ness, if not =eal, in pu!suin* an& &efen&in* this case It e"en acce&e& to p!i"ate !espon&entDs insistence on the Fuestion of p!ope! !ep!esentation &u!in* the p!e?t!ial b2 p!esentin* not <ust one, but th!ee, special po6e!s of atto!ne2 Initiall2, the special po6e! of atto!ne2 6as e9ecute& b2 )lo!encia Ta!!iela in fa"o! of ( P $a!cia I Associates, petitione! ban;Ds counsel P!i"ate !espon&ents insiste& that this 6as not p!ope! autho!it2 !eFui!e& b2 la6 To a"oi& fu!the! a!*u7ent, a secon& special po6e! of atto!ne2 6as p!esente& b2 petitione! ban;, e9ecute& b2 /illia7 / )e!su*on, the hi*hest !an;in* office! of Citiban; in the Philippines, in fa"o! of its counsel ( P $a!cia I Associates But since the autho!it2 to &ele*ate of /illia7 A )e!su*on in fa"o! of an a*ent is li7ite& to ban; e7plo2ees, anothe! special po6e! of atto!ne2 f!o7 /ilia7 / )e!su*on in fa"o! of the Citiban; e7plo2ees 6as p!esente& But the !espon&ent t!ial cou!t <u&*e &is!e*a!&e& all these an& issue& the assaile& &efault o!&e! The!e is nothin* to sho6 that petitione! ban; B7ise!abl2 faile& to obli*eB0 on the cont!a!2, th!ee special po6e!s of atto!ne2 7anifest p!u&ence an& &ili*ence on petitione! ban;Ds pa!t

In fact, the!e 6as no nee& fo! the thi!& po6e! of atto!ne2 because 6e belie"e that the secon& po6e! of atto!ne2 6as sufficient un&e! the b2?la6 p!o"ision autho!i=in* )e!su*on to &ele*ate an2 of his functions to an2 one o! 7o!e e7plo2ees of the petitione! ban; A !easonable inte!p!etation of this p!o"ision 6oul& inclu&e an appoint7ent of a le*al counsel to !ep!esent the ban; in cou!t, fo!, un&e! the ci!cu7stances, such le*al counsel can be consi&e!e&, an& in fact 6as consi&e!e& b2 the petitione! ban;, an e7plo2ee fo! a special pu!pose )u!the!7o!e, )e!su*on, 6ho hea&s the Philippine office thousan&s of 7iles a6a2 f!o7 its 7ain office in the %nite& States, 7ust be un&e!stoo& to ha"e sufficient po6e!s to act p!o7ptl2 in o!&e! to p!otect the inte!ests of his p!incipal /e !eite!ate the p!e"ious a&7onitions of this Cou!t a*ainst Bp!ecipitate o!&e!s of &efault as these ha"e the effect of &en2in* the liti*ant the chance to be hea!& /hile the!e a!e instances, to be su!e, 6hen a pa!t2 7a2 be p!ope!l2 &efaulte&, these shoul& be the e9ceptions !athe! than the !ule an& shoul& be allo6e& onl2 in clea! cases of an obstinate !efusal o! ino!&inate ne*lect to co7pl2 6ith the o!&e!s of the cou!t Absent such a sho6in*, the pa!t2 7ust be *i"en e"e!2 !easonable oppo!tunit2 to p!esent his si&e an& to !efute the e"i&ence of the a&"e!se pa!t2 in &efe!ence to &ue p!ocess of la6B +A Consi&e!in* fu!the! that petitione! ban; has a 7e!ito!ious &efense an& that the a7ount in contest is substantial, the liti*ants shoul& be allo6e& to settle thei! clai7s on the a!ena of the cou!t base& on a t!ial on the 7e!its !athe! than on 7e!e technicalities /#ERE)ORE, in "ie6 of the fo!e*oin*, the petition is he!eb2 $RANTED The &ecision of the Cou!t of Appeals &ate& (une 8A, +JJ+ an& its !esolution &en2in* the 7otion fo! !econsi&e!ation of petitione! ban; &ate& Septe7be! 8A, +JJ+ a!e both REVERSED an& SET ASIDE The o!&e! of &efault issue& on Au*ust +E, +JJ, in Ci"il Case CEB?@HE+ of the Re*ional T!ial Cou!t of Cebu is ANN%''ED an& SET ASIDE an& the case is he!eb2 REMANDED to the cou!t of o!i*in fo! fu!the! p!ocee&in*s SO ORDERED Na!"asa, C ( , Pa&illa, Re*ala&o an& Nocon, (( , concu! )ootnotes + Anne9 BCB of Petition, pp +?80 Rollo, pp @A?@H 8 Ibi& , p @G : Petition, pp 8?@0 Rollo, pp @?A @ Anne9 BBB of Anne9 B)B of Petition, Rollo, p HH E Anne9 B#B of Petition, pp :?@0 Rollo, pp J+?J8 A Robe!to Re2es, Ne7esio Solo7on, (! , Ai7ee .u an& To7as .ap Citiban; e7plo2ees &ul2 constitute& as atto!ne2s?in?fact H O!&e!, Anne9 B(B of Petition, p 80 Rollo, p JG G CA Decision, Anne9 BAB of Petition, pp @?E0 Rollo, pp @8?@: J )'ETC#ER, C.C'OPEDIA O) CORPORATIONS :8, +, I& , p :88 LL (ane )uchs an& Steinbe!*, !especti"el2 ++ Anne9 BCB of Anne9 B)B of Petition, pp @?E0 Rollo, pp +HH, +G,?+G+ +8 Sup!a, note : at pp 88?8:0 Rollo, pp 8@?8E +: Rollo, pp AJ, HH

+@ +H, SCRA EHH, EG8 4+JGJ5 +E Anne9 BAB of Anne9 BIB of Petition, p 80 Rollo, p JE +A 'e2te "s Cusi, (! +E8 SCRA @JA, @JH 4+JGH5, also cite& in T!opical #o7es, Inc "s Villalu=, sup!a, note +@

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